Inner Mongolia Greenlights China’s Biggest Hydrogen Deal Yet

China will launch renewables-to-hydrogen projects in Inner Mongolia this autumn intended to transform the coal-bearing region into a renewables hub.

Green hydrogen: an alternative that reduces emissions and cares for our planet.
Credit: Leestat/Getty Images/iStockphoto.

The Energy Bureau of China’s Inner Mongolia Autonomous Region has approved a demonstration project to generate green hydrogen beginning in June 2023 from a network of wind- and solar-powered plants intended to transform one of China’s major coal-mining regions into a renewable-energy hub.

The cluster of projects scheduled to break ground in October envisions construction of five wind/solar hydrogen demonstration projects in Ordos City and two similar projects in Baotou City. Together, they would use 1.85 GW of solar and 369,500 MW of wind to produce 66,900 tons of green hydrogen a year, according to a report issued by China’s Hydrogen Energy Industry Promotion Association.

The cluster of demonstration projects in Inner Mongolia is the Chinese government’s biggest yet, and the hydrogen produced could displace nearly 180 million gallons of gasoline a year if consumed by electric vehicles, a Bloomberg analyst said.

China’s annual demand for hydrogen is forecast to hit 60 million tons by 2050, an amount that would eliminate 700 million tons of carbon emissions, Sinopec, the China Petroleum and Chemical Corporation, said in a news release in March when China announced its latest 5-year plan, which targets hydrogen as a key to China’s realizing its goal of achieving carbon neutrality by 2060.

To realize its ambitions, however, the country’s hydrogen industry needs not only to produce hydrogen but also to debottleneck parts of its supply chain over the next 5 years, including the development of storage and the infrastructure needed to supply hydrogen as a fuel, Bloomberg reported, quoting Securities Daily, a Chinese-language financial newspaper.

China’s Hydrogen Association notes that the Inner Mongolia project will require at least 465 MW of electrolysis capacity to produce the volume of hydrogen targeted, more than the 400 MW of electrolysis capacity that are forecast to be installed throughout the entire global market in 2021, Bloomberg reported.

The Inner Mongolian project differs from China’s other renewables efforts to develop hydrogen projects in that it will allocate 80% of the power generated to the production of green hydrogen with only 20% fed into the power grid, China’s hydrogen association said.

In the past, China’s green hydrogen projects send the bulk of electricity produced by renewables to the grid, reserving just enough power for hydrogen production to win government approvals.

In 2020, Sinopec accelerated construction of an integrated hydrogen energy industry across the spectrum of capital investment, research and development, production storage and transportation, network distribution, and social cooperation. The company current produces 3.5 million tons of hydrogen per year, according to its website.

Sinopec has built hydrogen refueling stations in Guangdong, Shanghai, Zhejiang, and Guangxi and has put into operation 10 oil/hydrogen mixing stations.

Another major player is the Ningxia Baofeng Energy Group, which currently produces coal chemical products and is set to complete a 150-MW solar-powered electrolyzer array in 2021 at one of its coal-to-chemical plants, according to Bloomberg.

China Baowu Steel Group has also said it plans 1.5 GW of renewable-powered electrolysis capacity.

China’s hydrogen association said that Inner Mongolia is positioned ideally as a renewable energy hub from which electricity and hydrogen can be exported considering that the region receives an estimated 3,100 hours of sunlight annually and is located along air flow patterns out of Siberia to the south that can power large wind farms.

In July, DNV released results of a survey of 1,100 senior energy professionals in which 78% said that repurposing of existing infrastructure (as China hopes to do in coal-rich Inner Mongolia) is required to make up for a lack of investment so far in hydrogen. A further 73% said meeting Paris Agreement targets will be impossible without a large-scale hydrogen economy.