Energy & Resources

The greenest gas?

Why Sinopec is betting big on a hydrogen future


Sinopec: set to lead in hydrogen?

If you believe that the universe was formed as the result of a Big Bang, then hydrogen was the first element that was created. Physicists think that hydrogen constitutes 75% of the universe’s matter. And if things go to plan, hydrogen might save the planet from global warming too.

The H2Zero initiative ranked as one of the main achievements at the recent COP26 summit in Glasgow. A group of global energy companies led by BP, EDF, Iberdrola, Shell and TotalEnergies agreed to accelerate the usage of decarbonised hydrogen in helping the world move towards net-zero energy systems. And although there were no Chinese signatories to the deal, the country’s leading oil and gas refiner Sinopec has just announced the world’s biggest renewables-to-hydrogen power project as part of its own clean energy drive.

Over the next few years we’re likely to hear a lot more about fuel cells that produce electricity by combining hydrogen and oxygen atoms. We will also get a better understanding of the different hues of hydrogen, the chemical element that ranks as number 1 on the periodic table.

In its natural state, hydrogen is a colourless and odourless gas. But a colour scheme flagged at COP26 focuses more on the pollution that is created when hydrogen gas is formed by separating water from oxygen using electricity. If the power source is coal, then the output is ‘black’ hydrogen. But if the fuel is natural gas, the hydrogen is ‘grey’. The hydrogen produced is then deployed as a power source for industrial processes and as fuel for heavy transport.

The plan is to switch to using much cleaner forms of energy to make the gas, however, relying more on carbon capture (‘blue’ hydrogen) or best of all, renewables (known as ‘green’ hydrogen).

Sinopec currently produces 3.9 million tonnes of hydrogen a year. The majority comes from natural gas and coal, which emits roughly 1.5 tonnes of carbon dioxide per tonne of hydrogen produced.

By 2025 Sinopec is targeting annual production of 500,000 kilotons of green hydrogen, some of it from a new 10,000 mt/year hydrogen electrolyser facility in Xinjiang. This will break water into hydrogen and oxygen using electricity from a 300 MW photovoltaic power station. Starting production in 2023, the power facility will service Sinopec’s nearby petrochemical plant.

The energy giant has two similar projects on the launch pad in Inner Mongolia: a 10,000 mt/year wind and solar project in Ordos and an even bigger 100,000 mt/year renewables-based hydrogen plant in Ulanqab. Overall, the company has announced Rmb30 billion ($4.71 billion) in investment to build up its green hydrogen business through to 2025. About half the total will go into hydrogen refuelling stations, with the remainder allocated to hydrogen purification facilities and materials development.

Recharge magazine estimates that Chinese entities have ploughed Rmb110 billion into 35 hydrogen refuelling station and fuel cell projects during the first five months of this year alone. Sinopec already has 20 hydrogen refuelling stations but says it will have installed 1,000 by the mid-point of the decade.

As of June this year, Japan had 147 hydrogen fuelling points nationwide, compared to 80 in Germany and 45 in the US.

Tesla founder Elon Musk has chastised hydrogen-powered cars as “extremely silly”, not least because of how combustible the gas is. But the China Hydrogen Alliance (CHA), an industry body, released a white paper recently setting out ambitious plans for 100 GW of electrolyser capacity by 2030. To put that figure into perspective, there is currently 76 MW of global hydrogen production capacity through electrolysers, according to International Energy Agency figures.

China accounts for 25 million tonnes of the 70 million tonnes of hydrogen production already in play. But nearly two-thirds is from coal gasification. One of the major challenges in the transition to greener hydrogen is the higher costs of production compared to use of coal and natural gas. The CHA is calling for more government subsidies to stimulate growth in green hydrogen output, speeding the path to cost parity in the energy grid in the same way other energy technologies like wind and solar power were encouraged.

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