Jing Chunmei: 250 Billion Subsidies Were Given to China’s Electric Vehicle Industry, How Should We Develop the Hydrogen Fuel-cell Vehicles Industry?

China’s development of hydrogen energy is ready for industrialization but there are still problems such as lack of key materials and core technologies, insufficient diversification of applications and lack of commercialization. On January 8, the Hydrogen Energy Research Group of CCIEE has released a book with the title of “Research on China’s Policy for Hydrogen Energy Industry”, evaluating hydrogen energy strategies in countries and regions such as the United States, Europe, Japan and South Korea, and analyzing technological benefits and environmental impact of the entire hydrogen energy industry.

At the “2019 China Automotive Impact Forum and the Press Conference for China’s Hydrogen Industry Policy Research”, Zhang Xiaoqiang, Executive Vice-Chairman of CCIEE said that the current hydrogen energy industry is more or less overheated. We should determine the position of the industry based on China’s national conditions and energy development strategy, avoid disorder in competition and overcapacity-related risks and promote sustainable development by encouraging the application of hydrogen energy. Furthermore, we should maximize institutional advantages, push forward the development of core technologies, establish the regulatory system and standardization as soon as possible, and explore diversified applications of hydrogen energy.

Specifically speaking, the development of the hydrogen energy industry should follow the following principles.

First of all, we should take a gradual approach to demonstrate the applications of the hydrogen energy industry.

In March 2019, “promoting the construction of hydrogen facilities” was written into the government work report and on October 11, 2019, the National Energy Commission meeting proposed to explore the commercialization of hydrogen energy. Moreover, there are at least 36 cities launched policies for supporting the hydrogen energy and fuel cell industries.

Zhang Xiaoqiang pointed out that hydrogen fuel cell vehicles have become the focus of hydrogen energy development in many places. All of them have the same goal of building a complete industrial chain, which is likely to cause duplicated construction and excessive capacity. At the same time, competition among various places will create huge demand for foreign advanced technology and equipment, key materials and talents, which will lead to unrealistic high prices. This will not benefit the long-term development of the hydrogen energy industry but only to pay for the R&D of foreign enterprises.

Li Yizhong, former Minister of Industry and Information Technology and President of the China Federation of Industrial Economics, pointed out that the development of energy-saving and new energy vehicles is an inevitable trend. China’s electric vehicles have achieved significant results. For example, the production and ownership of electric vehicles account for half of the world’s total, and the quality of batteries and motors has reached an advanced level. Nonetheless, we still need to make unremitting efforts. The central government has invested 120 billion yuan in electric vehicles and the local government has subsidized 120-130 billion yuan but there are still many problems remain unsolved.

The production of hydrogen fuel cell vehicles has increased year by year. By 2025, hydrogen fuel cell vehicles will reach 100,000 and 2 million by 2030. To meet this expectation requires better hydrogen energy storage facilities and infrastructure. It is very difficult to make breakthroughs in key technologies of hydrogen fuel cells, the infrastructure of hydrogen energy needs large investment, and the industrial chain is quite long. All these factors will make the promotion of hydrogen fuel cell vehicles more difficult than pure electric vehicles.

Wan Gang, Chairman of the China Association for Science and Technology, emphasized that the location selection of hydrogen energy development should be made according to local conditions and priority should be given to areas with sufficient hydrogen sources, good industrial foundation and environmental protection. By establishing demonstration zones with different characteristics, we can get more experience in the commercialization and operation of hydrogen fuel cell vehicles to promote the industrialized application of hydrogen energy and fuel cell vehicles. Government subsidies and supporting policies should give preference to commercialized demonstration zones of hydrogen energy and fuel cell vehicles.

Regarding the relationship between pure electric vehicles and hydrogen fuel cell vehicles, Wan Gang pointed out that they are equally important and will co-exist for a long time. They complement each other and will develop together in technological innovation.

The application should match China’s independent innovation progress.

Despite the enthusiasm for hydrogen energy development, we should realize the technical shortcomings of the hydrogen fuel cell vehicle industry in China.

Jing Chunmei, deputy director of the Information Department of CCIEE and the leader of the hydrogen energy research group, pointed out that China has not made a major breakthrough in key technologies of hydrogen energy. Most of the profits of the hydrogen fuel cell vehicle industry are in the upstream of the industrial chain and the core technologies are controlled by other countries who are expecting a return on their years of investment in technology research and development. If we open the hydrogen energy market completely, this will inevitably lead to a large outflow of profits, which means that we spend money to help others expanding their market. If we have trade frictions with these countries, it will make us vulnerable to their sanctions. Therefore, the promotion of the end-user market should match the progress of China’s independent innovation in hydrogen energy.

In recent years, Chinese enterprises have increased their awareness of independent research and development and many of them have made great efforts in fuel cell research and development.

In order to create sufficient technical support for the fuel cell industrialization, we should strengthen the research on the new material system of fuel cells and its electrochemical excitation process. Government funds should focus on basic research and development to make achievements in certain core technologies as soon as possible.

The book recommends that we should give play to the advantages of the new scientific research system and enable the National Energy Commission to play an important role in the top-level design of hydrogen energy, such as coordinating relevant departments and capital resources to form a joint force and break key technical bottlenecks.

In his speech, Wan Gang stated that we should analyze the technical shortcomings and competitiveness of the current hydrogen fuel cell industry, accelerate the progress made in basic materials development, core technologies and components, and realize the systematic advancement of independent innovation and high-level cooperation. Apart from that, we should overcome difficulties, strengthen basic research, explore new technologies for efficient hydrogen production, improve research and development of fuel cell engines, increase investment and system integration.

Hydrogen energy will promote international energy cooperation. In recent years, Japan has cooperated with Australia, Brunei, Norway and Saudi Arabia on hydrogen fuel procurement through international energy trade and other methods. At the same time, it is also exploring the possibility of transporting lignite-made hydrogen from Australia to Japan through a liquid hydrogen ship. If the experiment works, it will expand the international trade of hydrogen. In addition, Japan is also actively selling its hydrogen fuel cell vehicles to other countries. For instance, Toyota and Honda have sold hydrogen fuel cell vehicles to Europe, the United States and other places, apart from establishing technical cooperation relationships with companies such as GM and Daimler.

The book also mentions that South Korea is establishing bilateral or multilateral cooperation in hydrogen energy with the United States, Canada and Europe. It also hopes to strengthen exchanges with China and Japan in the field of hydrogen energy and expand its overseas markets.

In response to the question “Why do we develop hydrogen energy?” Jing Chunmei said that Japan is trying to ensure sufficient energy supply by encouraging the development of hydrogen energy. As for China, the main reason is to make energy cleaner and greener.

She explained that the development of hydrogen energy in China is promoted through optimizing the energy structure. On the one hand, we shall make energy cleaner and greener. On the other hand, we should reduce our dependence on oil and gas. Moreover, hydrogen energy can drive the development of renewable energy and promote low-carbon transformation in industries such as construction, industry and transportation.

The book mentions that there is a great opportunity for hydrogen trade between European countries and the natural gas network is most likely to become the carrier of the transaction, while cross-border pipelines or domestic waterways can also be used for hydrogen trade.

However, hydrogen energy is still in the introduction period and international trade has not yet started. Also, international cooperation mechanisms have not been established.

Jing Chunmei said that the global hydrogen energy industry is developing rapidly and has huge potential for cooperation in international trade, infrastructure construction, product development, scientific and technological cooperation, standardization and governance mechanism. As the world’s largest hydrogen-producing country and potential market, China should plan ahead and use hydrogen energy as an important starting point for strengthening international energy cooperation and participating in global energy governance.