According to the China National Coal Association, “green hydrogen,” accounted for only 1% of China’s hydrogen production in 2020 due to high costs and emerging technologies. Coal accounted for two-thirds of China’s hydrogen production, while natural gas-generated hydrogen, or “blue hydrogen,” accounted for the remaining 19%.
Only China produces considerable amounts of hydrogen from coal. According to the International Renewable Energy Agency, by the end of 2021, natural gas will account for over 47% of the world’s hydrogen production, followed by coal (27%), oil (22%), and only around 4% electrolysis.
Additionally, coal-based hydrogen is less expensive than green hydrogen in price. According to the IEA, the cost of producing blue hydrogen ranged from US$3.1 to US$9.7 per kilogram depending on the source and accessibility of the electricity, while the average cost of producing hydrogen from coal with CCUS is currently between US$1.4 and US$3.1 per kilogram.
According to the findings, CCUS deployment and hydrogen generation can work well together and reinforce one another. China’s acquisition of low-emission hydrogen is projected to be affordable thanks to hydrogen generation using CCUS technology. The report also stated that using CCUS to produce hydrogen can aid in early CCUS scale-up.
According to Shen Xinyi, a researcher at the Centre for Research on Energy and Clean Air, a Helsinki-based think tank, “using CCUS to enable fossil fuel-based hydrogen generation to considerably reduce carbon emissions may be an opportunity in the near term, but relying on it is perilous” (CREA).
She warned that investing in the incorrect infrastructure will result in “carbon lock-in,” when fossil fuel-intensive systems continue, stall, or obstruct the switch to low-carbon alternatives.
“If businesses rely on CCUS to help fossil fuel-based hydrogen generation as a way to reduce carbon emissions, it would instead extend the life of high-emission infrastructure that should be phased out at an accelerated rate,” she said.
As a transition plan from the current fossil fuel-based hydrogen sector to one that is based on renewable resources, several experts claimed that China must adopt CCUS to help with hydrogen production.
According to Lin Boqiang, head of the China Centre for Energy Economics Research at Xiamen University, “the hydrogen generation pathway must eventually be closely coupled with renewable energy.”
Due to falling electrolyzer costs and the utilization of renewable energy, electrolysis is expected to account for the majority of hydrogen production starting in the 2030s and up to 80% of China’s hydrogen supply by 2060, according to the IEA. Long-term price declines of renewable-based hydrogen are anticipated to reach about US$1.5 per kilogram.
However, Shen from CREA notes that more governmental guidance is required to prioritize renewable-based hydrogen as the primary approach rather than supporting fossil fuel-based production in order to hasten the development of China’s hydrogen industry.
China needs to use hydrogen energy to meet its dual-carbon reduction targets, and only green hydrogen can do that, according to Shen.