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China Revamps Hydrogen Strategy

Already mentioned in the “Made in China 2020” Government plan, hydrogen is part of China’s strategy to become less dependent on other nations for energy. The first focus, however, was on electrification; although there have been some obstacles along the way, one can safely say that China has been pretty successful in promoting electric vehicles.

Government Work Report

Someone in the Plan Bureau must have had a look at the MIC 2020 strategy and decide that it’s about time to get all things hydrogen going. Amongst the many revisions of the Government Work Report, which is usually a pretty dull affaire, was a proposal to promote the development and construction of hydrogen fuel-cell stations.

Investors didn’t wait long before making up their minds: all of a sudden, fuel-cell related stocks became the stock exchange’s favourite an gained over USD 4 billion in value in only a couple of minutes. And it’s probably the start of the newest Chinese hype

Why hydrogen?

Electric vehicles might be clean, but electricity still needs to be produced. Many countries have started to invest in sustainable energy years ago, thus providing a way out of nuclear, gas or coal based electricity generation, even if this is not bound to happen any time soon. China however still operates mainly on traditional power centrals.

In addition, EVs might have become cheaper (in China, a basic EV is available for about USD 10K), but it’s still a hassle to charge them… Finally, China relies on large vehicles (trains, trucks) to transport goods and people across the country and electric powertrains seem to be less suitable for those.

Obstacles

China is now putting in place policies that will have to overcome the 3 main objections to hydrogen. Firstly, there’s the cost of the fuel cell. Hydrogen cars are very expensive; a Toyota Mirai, for example, goes for USD 70,000 – that’s 7 cheap EVs.

Secondly, hydrogen is still extracted mainly from fossil fuels, such as coal. This doesn’t solve China’s dependency problem, nor does it contribute to carbon reduction. Finally, there’s the infrastructure. At USD 1.5 million, the cost of a hydrogen fuel station is pretty high for the country’s 5000 hydrogen cars…

Give it a go!

But China will try to make hydrogen a success. The country has the advantage of stable policy and has a surprisingly high amount of available electricity that could be deployed to create hydrogen, which can be stored much easier than electricity. Also, the Chinese have demonstrated over and again that, even though there’s no real market for hydrogen, it’s a good strategy to start early and invest a lot. To be continued.

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