Sinopec to lead green hydrogen in China

In 2023, Sinopec will control China’s hydrogen market.

This year, several upstream production and equipment manufacturing projects will finish or begin. The corporation has made tiny but steady progress toward its hydrogen plan for “autonomy and self-control” across the production chain since September. Sinopec expects its flagship Kuqa project in Xinjiang to become the world’s largest solar-powered electrolyzer generating green hydrogen by June.

The Sinopec Kuqa green hydrogen plant, which commenced ground in late 2021, is 80% complete and expected to start operations by June. Sinopec has invested about 2.2 billion yuan ($320 million) in the project, which is expected to cost 3 billion. Kuqa’s 250 MW electrolyzer would produce 20,000 tons of green hydrogen per year.

Kuqa would dwarf a 150 MW Ningxia project. Baofeng’s Ningxia project, seven times larger than Air Liquide’s 20 MW plant in Canada, is the world’s largest green hydrogen electrolysis facility.


Sinopec is investing billions in Inner Mongolia to enhance its green hydrogen production. The company received authority to build two additional projects in Ulanqab and Ordos, Inner Mongolia. Ulanqab’s capacity is 100,000 tons per year, five times Kuqa’s.

The 20.5 billion yuan ($2.9 billion) Ulanqab project would incorporate a 1.7-gigawatt (GW) wind farm with an 804-megawatt (MW) solar farm to generate renewable electricity for electrolysis of green hydrogen. Construction begins December 2023 and finishes June 2027.

A long-distance pipeline would bring Ulanqab’s green hydrogen to Sinopec’s Beijing Yanshan petrochemical plant, which already has a hydrogen purification unit that supplied clean fuel for the Beijing Winter Olympics.

While China is making progress in manufacturing green hydrogen, it has struggled to increase downstream demand, as has the US and Europe. Hydrogen is mostly used in refining and chemicals. Kuqa’s green hydrogen will replace natural gas-derived gray hydrogen at Sinopec’s nearby Tahe refinery. Green hydrogen advocates claim it might be used in other hard-to-decarbonize industries like steel.

Transportation is another possible demand target, although China’s success in popularizing battery-driven electric cars (BEVs) has not been mirrored in hydrogen-powered fuel cell electric vehicles (FCEVs), especially in heavy duty. The China Association of Automobile Manufacturers reported 3,000 FCEV sales in 2022, including large vehicles. The 6.9 million BEVs and plug-in hybrids sold in China last year dwarf this. China is far from attaining its 2025 goal of 50,000 FCEVs.

China’s FCEV policy targets diesel-powered commercial buses, trucks, and tractors. FCEVs are better for heavy-duty use than BEVs, which are ideal for light-duty gasoline-powered passenger automobiles. However, the FCEV industry is still strongly dependent on government financial incentives and assistance under a dedicated policy that prioritizes fuel cell technical breakthroughs and commercialization, which favors mostly medium- to heavy-duty FCEVs.

FCEV companies are struggling. SinoHytec, China’s largest FC systems maker, has been losing money since 2020. SinoHytec stated in its Dec. 29 Hong Kong IPO prospectus that company expects to continue losing money until 2025. The FCEV business in China is still young, posing “difficulties and unexpected dangers in the process of investigating the large-scale commercialization of our goods,” the company said.