East Asia Blog Series

Hydrogen Energy Could Be Key to Carbon Neutrality in the PRC

Jinmiao Xu and Darshak Mehta 13 Aug 2021
The People’s Republic of China is working toward carbon neutrality. Photo: Wong Zihoo

Renewable hydrogen is an essential direction for the development of green and low-carbon energy in the future as the People’s Republic of China seeks to lower greenhouse gas emissions.

Hydrogen energy is clean and storable with no tailpipe emission except water vapor after combustion. It produces neither carbon dioxide.

Unfortunately, most hydrogen energy still produces the carbon dioxide that contributes to climate change. Across the world, more than 95% of hydrogen energy is produced using fossil fuels containing carbon. As a result, the emissions avoided at the tailpipe are shifted to the production process upstream.

Why low carbon hydrogen now? In order to make low carbon hydrogen, there are two options. Carbon dioxide emissions from the production of hydrogen can be abated with carbon capture and storage technologies or it can be produced using renewable electricity— often called renewable hydrogen or green hydrogen.

Low carbon hydrogen is an important initiative right now for countries around the world and particularly in the People’s Republic of China, one of the world’s largest producers of hydrogen energy. In 2020, the world’s production of hydrogen was approximately 72 million tons. The People’s Republic of China produced about 20 million tons in 2019. One percent or less was renewable energy hydrogen with the remainder being hydrogen produced from fossil energy (70-80%) and from industrial by-products (more than 20%).

According to the country’s hydrogen industry development report 2020, the proportion of hydrogen produced using renewable energy will increase from about 1% to 5% by 2025 and to 10% by 2030.

So, while the most desirable form of renewable energy-based hydrogen—“green” hydrogen—will be available in substantial quantities only after 2030, between now and then useful experience can be gained. Now is a good time to start building the engineering code, infrastructure and uses of hydrogen.

Hydrogen produces neither carbon dioxide nor pollutants such as

sulfur oxide and nitrogen oxide.

Policymakers in the People’s Republic of China shall consider these steps when moving forward with hydrogen energy:

What is the role of carbon capture utilization and storage for low carbon hydrogen?

In the initial stages, hydrogen can be sourced in the most cost-effective way available and later be switched to the most environmentally cost-effective method. Green hydrogen can unlock approximately 8% of global energy demand with a hydrogen production cost of $2.50 per kg. If the hydrogen price drops to $1.80 per kg it would unlock as much as 15% of global energy demand by 2030.

Low carbon hydrogen can be a transition fuel which will avoid stranded assets and prepare the world to shift to a new way to deliver energy, which is environmentally friendly as well as economical. This approach is also in line with climate science which shows that early actions today are much better than more massive responses later.

Carbon capture utilization and storage in the hydrogen production process has also attracted much attention and is more economical at present than electrolysis-based green hydrogen. It could also provide an early opportunity to transit to a low carbon hydrogen economy. The early availability of low carbon hydrogen using carbon capture will ensure that the downstream hydrogen infrastructure is ready by the time electrolysis-based green hydrogen is cost effective.

The People’s Republic of China has well-established coal mining infrastructure but lacks availability of cheap domestic natural gas. Carbon capture technology can decarbonize fossil fuel-based hydrogen, which will enable hydrogen economy and reduce carbon dioxide emissions in the short and medium term.

While the production and consumption of green hydrogen is a long-term goal, carbon capture is becoming more viable and could be a great accelerator for the expansion of the hydrogen economy.

What is the trend for low carbon hydrogen?

In near term, the existing hydrogen supply, marketing and utilization systems are relatively mature and stable. On the other hand, carbon capture technology will not be commercialized and popularized in five years because of its high cost. As a result of this, the current structure of hydrogen production will not change greatly in the near future.

The annual increment in low carbon hydrogen supply of about 2 million tons cannot be filled by the development of renewable energy hydrogen. Renewable hydrogen can only supplement about 40% of the increment. Therefore, in the near term, hydrogen production from fossil energy (especially from coal) will still be dominant in the People’s Republic of China. Carbon capture technology shall be promoted to help in the decarbonization of hydrogen production from fossil energy.

In the medium term, say until around 2030, the annual demand for hydrogen in People’s Republic of China will reach about 35 million tons, an increase of 75% in absolute terms. By this time, the proportion of hydrogen production from renewable energy will reach 10%, which is 10 times that of the present 1%.

From now to 2030, carbon capture technology, electrolyzer cost and renewable energy cost will continue to decline, and various hydrogen production demonstration projects will continue to appear. By 2030, carbon capture technology will be more mature and the cost of hydrogen will be reduced.

Many carbon capture technologies will be demonstrated in the early stage of commercialization, and many industries will enter the time window of this transformation. Combined with carbon capture technology, coal hydrogenation and renewable energy electrolytic water hydrogen production will become the main effective hydrogen suppliers.

In long term, by 2050, the People’s Republic of China’s annual demand for hydrogen will reach 60 million tons. Its energy structure will change from traditional fossil energy to a diversified energy structure with renewable energy as the main body, and the electricity price of renewable energy will be further reduced.

At that time, hydrogen energy supply will be based on renewable energy electrolytic water hydrogen as the main body of effective hydrogen supply. Carbon capture technology used for fossil energy hydrogen production, biomass hydrogen production, and nuclear hydrogen production will be effective supplements.

Carbon 2030 and 2060 targets need low carbon hydrogen.

Hydrogen is an important medium during energy transition, and renewable hydrogen is an essential direction for the development of green and low-carbon energy in the future. Under the background of carbon neutral and zero carbon goals, carbon capture is becoming more and more important. If the People’s Republic of China wants to achieve the goal of carbon neutrality by 2060, the development of renewable energy hydrogen and carbon capture technology are indispensable.

Jinmiao Xu

Jinmiao Xu

Energy Specialist, Energy Sector Group, Sustainable Development and Climate Change Department, ADB

Darshak Mehta

Darshak Mehta

Consultant, Energy Sector Group, Sustainable Development and Climate Change Department, ADB

This blog is reproduced from Asian Development Blog.

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