Hydrogen Cars Get Boost as Shanghai and Beijing Given Go-Ahead to Grow Fuel Cell Sector

Shanghai, the Beijing-Tianjin-Hebei region and Guangdong province have all been approved to participate in a state-run demonstration program for fuel-cell vehicles, as the country ramps up the commercialization of hydrogen-powered automobiles.

The Guangdong Development and Reform Commission announced Thursday on WeChat (link in Chinese) that under the four-year program, more than a dozen cities in the southern province including Foshan, Guangzhou, Shenzhen, Zhuhai and Dongguan will coordinate on developing hydrogen supply, establishing an industry chain, promoting hydrogen-fuelled cars and formulating related policies.

The commission also said it aims to roll out more than 10,000 hydrogen fuel-cell vehicles in the province within the four-year period.

Beijing and Shanghai also announced their approvals on Aug. 23 and Aug. 26 (links in Chinese) respectively, which were obtained from five ministries including the Ministry of Finance, Ministry of Industry and Information, Ministry of Science and Technology and National Energy Administration.

The finance ministry had said it would review and give out approvals batch by batch, and more cities and clusters could take part in the demonstration project in the future, a hydrogen energy expert at a state-owned enterprise with knowledge of the selection process told Caixin.

The program was launched by the Chinese government in September last year following a winding down of years-long subsidies to manufacturers and buyers of hydrogen fuel-cell vehicles, and a shift in focus toward research into fundamental technologies and applications.

The main goal of the program is to conduct large-scale promotion of hydrogen-powered vehicles as well as achieve breakthroughs in the research and development of eight core technologies for these cars. If certain targets are met, a demonstration region will be awarded as much as 1.7 billion yuan ($263 million) as a fiscal bonus.

Beijing authorities previously announced plans to launch 5,300 hydrogen fuel-cell cars in the Beijing-Tianjin-Hebei cluster within the four year period, while Shanghai said in June that it aims to roll out 5,000 hydrogen-powered vehicles, which include 3,400 trucks, 1,400 passenger vehicles and 200 coaches.

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Cover Story: China Pushes Hydrogen Energy to Achieve Carbon Goals

When hydrogen — a gaseous element in great abundance — is used in fuel cells, it produces zero-emission electricity by combining with oxygen, which could help boost the number of new-energy vehicles on the road and support the government’s goals of peaking carbon emissions before 2030 and achieving carbon neutrality by 2060.

But most of the world’s hydrogen is currently made from fossil fuels such as coal, meaning its use simply moves carbon emissions and pollution further down the chain.

A roadmap drawn up by the China Society of Automotive Engineers estimates that the number of hydrogen fuel-cell vehicles in use will reach 100,000 by 2025 and 1 million by 2035.

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Four Things to Know About China’s Hydrogen Roadmap

Right now, hydrogen fuel-cell energy is not widely used due to high production costs. The breakthrough won’t be easy as China’s success in the electric vehicle industry chain cannot simply be replicated in the hydrogen sector, industry experts have said. The hydrogen industry chain is more complex, and every stage of production, including extraction, storage, refueling and transportation, is under great pressure to reduce costs.

At current market prices, hydrogen to power a fuel cell car in China costs about 70 yuan per kilogram. The figure needs to come down to less than 49 yuan per kilogram before hydrogen-powered cars can compete with traditional gasoline-fueled vehicles, according to an estimate by Fu Guanyun, a researcher at the National Development and Reform Commission (NDRC), China’s state planner.

Denise Jia also contributed to the report.

Contact reporter Kelsey Cheng (kelseycheng@caixin.com) and editor Flynn Murphy (flynnmurphy@caixin.com)

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