China leads green H2 projects

China leads world on green hydrogen projects, dominates equipment manufacturing, IEA says

China leads world on green hydrogen projects, dominates equipment manufacturing, IEA says

China accounts for 40 per cent of all new low-emission hydrogen production projects that have received the financial green light in the past year and is dominant in the sector’s manufacturing, according to an International Energy Agency (IEA) report.

The nation is expanding its capacity to make electrolysers, which use renewable electricity to split water into hydrogen and oxygen, and that will lower the cost of the device around the world, the IEA said. Electrolysers are critical for producing low-emission hydrogen from renewable or nuclear electricity.

Of the 6.5 gigawatts (GW) of electrolyser capacity that was approved in the past year, China accounted for more than 40 per cent, the intergovernmental organisation said on Wednesday. In the same period, Europe’s capacity quadrupled to more than 2GW with a share of 32 per cent, while India’s reached 1.3GW.

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The IEA said,

The country’s expertise in mass manufacturing of clean energy technologies, including electrolysers, means it is home to 60 per cent of global electrolyser manufacturing capacity,

“At 25GW per year, it is well above the average deployment rate globally.”

Several large Chinese manufacturers of solar panels have started making electrolysers and together they account for about a third of China’s manufacturing capacity in the space, the report said.

The total electrolyser capacity that received financial backing amounted to 20GW globally, which could raise the annual global output of low-emission hydrogen by five-fold by 2030, it said.

Last month, a report from industry body the Hydrogen Council and consultancy McKinsey said the global pipeline of low-carbon hydrogen projects that have won financial backing grew to 434 with US$75 billion worth of investment this year from 102 requiring US$10 billion in 2020.

Last year, coal-based production accounted for a fifth of global hydrogen output, while natural gas contributed nearly two-thirds, the IEA said. Another 15 per cent was from by-products of oil refineries and petrochemical plants. Low-emission production accounted for less than 1 per cent of global production.

High electrolyser costs are the biggest hurdles for low-emission hydrogen proliferation. Sticking with existing policies would lead the cost gap with fossil fuel-based hydrogen to fall by 30 per cent, according to the IEA, compared with a decline of 50 per cent if countries strengthened policies in alignment with the global goal to reach net zero carbon emission by 2050.

While the growing pipeline of projects suggests investors are interested, low-emission hydrogen production projects will only spread in scope with supportive policies to support demand, IEA executive director Fatih Birol said.

He said,

The report highlights a gap between government goals for production and demand,

“Policymakers and developers must look carefully at the tools for supporting demand creation.”

Targets set by governments worldwide for low-emission hydrogen production are expected to amount to 43 million tonnes by 2030, dwarfing demand of only 11 million tonnes, the IEA said.

Some governments have already announced or implemented policies to stimulate demand.

This includes mandatory blended use of sustainable fuels in aviation and shipping in the European Union, as well as contracts in Germany for the state to compensate firms who adopt low-emission manufacturing technology when carbon emission permit prices fall.

Source: Hydrogencentral