Local governments have responded with enthusiasm to the Chinese government’s call – and offers of subsidies – to devise a supply chain that can make hydrogen fuel cell vehicles commercially viable.
Almost 20 city clusters have submitted applications for the scheme, which would finance infrastructure build-outs and demonstration programmes to help China realise its decarbonisation objective, according to Alfred Wong of Ballard Power Systems.
“We understand that around 19 city clusters have applied to the new subsidy scheme,” said the Asia Pacific managing director of the Canadian firm that makes fuel cell power systems for heavy duty vehicles at two ventures in Guangdong and Shandong provinces. They include clusters of cities, or districts, in Beijing, Shanghai, Guangdong, Shandong, Hubei, Jiangsu, Inner Mongolia and Hebei provinces, according to the industry portal Qingyunlian.com.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
“Many local authorities have indicated they would provide support even if they do not win central government funding in the first round of city clusters selection,” Wong said. Hydrogen has been mentioned as a key industry to be supported in economic and industrial policy documents released recently by some 13 regional and local governments, he noted.
President Xi Jinping unveiled a goal last September for China’s carbon emission to peak before 2030, part of the ambitious programme for the world’s largest emitter of greenhouse gases to become carbon neutral by 2060. “Green” hydrogen produced from renewable energy is a viable low carbon replacement for diesel and petroleum, if costs can be brought down to commercially viable levels.
To finance the development of a supply chain to dive costs lower, the government revamped a subsidy scheme for the purchase of fuel-cell vehicles at around the same time.
Cities have been asked form “clusters” to join a four-year “demonstration” programme, under which up to 1.7 billion yuan (US$259 million) will be given to selected teams of companies, from component makers to refuelling station operators.
To qualify, the clusters must have already put at least 100 fuel cell vehicles on the road, and two refuelling stations in operation. To receive the full subsidy, they must be producing at least 5,000 tonnes of hydrogen annually, and have deployed over 1,000 vehicles in the four years, each having travelled at least 30,000 kilometres on average.
Deployment of at least 50 refuelling stations is also expected, charging no more than 35 yuan per kilogram. Local governments have subsequently issued hydrogen plans.
In October, the Beijing municipal government published a plan to nurture five to 10 “internationally influential” supply chain leaders that would be able to put 10,000 fuel cell vehicles on the road by 2025, and create a supply chain with annual output worth 24 billion yuan.
This was followed in November by the Guangdong provincial government’s goal to have 300 hydrogen fuel cell stations. It pledged to join lower levels of governments to give subsidies totalling up to 5 million yuan for each station completed by the end of next year.
Not to be outdone, Shanghai’s government unveiled subsidies in February to help achieve the goal of deploying at least 10,000 fuel cell vehicles, including 50 buses by 2025, with 70 hydrogen refuelling stations in operation.
Just over 6,000 fuel cell vehicles have been registered in China by December, of which 40 per cent were in Guangdong, according to China Society of Automotive Engineers. Buses made up just over half the total, followed by logistics trucks at 37 per cent.
The nascent industry is expected to see explosive growth under state support, much like the battery-powered electric vehicles sector a decade ago. The industry for key components used in fuel cells is also booming.
The cost of fuel cell systems, up to 40 per cent the cost of the vehicle, has declined to 6 yuan per watt last year from 10 yuan in 2017. It may fall to 2 yuan by 2025, due to greater production scale, according to Shanghai-based energy and chemicals advisory AsiaChem Consulting.
“Two years ago there were only a handful key component players, now there are around 70,” Wong said.
More from South China Morning Post:
This article Local authorities jump on the Chinese government’s clarion call to fund the construction of hydrogen fuel cell supply chain as they erect the infrastructure for China to go green first appeared on South China Morning Post