China Seeks To Dominate New Hydrogen Power Sector

China Seeks To Dominate New Hydrogen Power Sector

Generous subsidies from the Chinese government have led to huge cuts in the cost of silicon cell solar panels over the last decade. While many of the enterprises manufacturing them have failed since these subsidies were withdrawn, the healthiest survive and dominate the global industry. The same pattern now seems set to unfold, perhaps to an even greater extent, with the latest technology in the world of energy production – hydrogen cell battery technology.

An alternative to electrical batteries and the internal combustion engine they are set to replace, hydrogen power is exactly the kind of emerging industry that China sees as a strategic sector. The ‘Made in China 2025’ policy is focused on the evolution of the largest manufacturing hub in the world. Chinese authorities are determined to oversee a pivot from China being a cheap labour resource for the manufacture of overseas technology, such as Apple, towards it being a technology powerhouse in its own right and manufacturing patented technologies at the cutting edge of science.

The electric and driverless car industry is seen as central to those plans and Beijing is thought to have already spent close to $60 billion subsidising its development over the past decade. The result has been the world’s largest all-electric cars market and an increasingly commanding position in the batteries sector, propelling China ahead of both Japan and South Korea. China is also forecast to become the most valuable international market for driverless cars, which computer chipmaker Intel Corp. and research firm Strategy Analytics believe could be worth a colossal $7 trillion by 2050.

It is believed hydrogen fuel cell technology will be best suited to larger vehicles such as buses and trucks as well as trains and ships rather than cars. Electrical batteries, which are quickly falling in cost, are likely to be the more cost effective solution for the latter over the foreseeable future.

Despite China’s push on the technology not everyone believes in the potential of hydrogen fuel cell batteries as electrical alternatives fall in price, weight and efficiency. Not one to take a diplomatic position, Tesla’s Elon Musk has rubbished fuel cell technology as “mind-bogglingly stupid”. However, he is not unknown to make categorical statements without being fully informed. There are plenty of leading scientists who believe the technology holds significant potential, even if it still is at an early stage of development. Toyota is a big believer in the technology and launched Mirai, its first fuel cell car as long ago as 2014.

China is still significantly behind Japan and South Korea in its pursuit of the fuel cell sector but is pulling out the stops to change that. A 13.4 km2 industrial park focused on the development of companies along the fuel cell R&D and supply chain has been developed in the town of Yunfu in Guangdong province. In an effort to catch up Chinese companies, supported by the state which last year invested an estimated $12.4 billion in industry subsidies, have been investing significantly to acquire stakes in foreign companies that own advanced fuel cell technology with a view to acquiring and integrating it. China’s Weichai recently paid £48 million for a 20% holding in Ceres Power, a UK-based fuel cell company. The state is thought to be planning for a continuation of subsidies to develop the fuel cell industry in China until 2025. That has helped put over 5000 fuel cell powered vehicles into commercial operation across the country two years ahead of target. State owned companies are also currently in the process of building out the country’s network of hydrogen refuelling stations.


Hydrogen power also fits into China’s wider energy mix. While the country has invested huge sums into renewable energy sources such as solar and wind, a huge amount is wasted as it can’t always be efficiently integrated into the grid. This can be used to produce hydrogen through a process termed electrolysis, which splits water. It is energy inefficient but makes sense when there is a supply of free electricity from renewable sources going to waste. Around 150 gigawatts of renewable energy is wasted in China every year. That could produce the hydrogen to power up to 18 million cars.

The biggest challenge facing China’s fuel cell sector is reaching sustainability before subsidies end in 2025. But if other industries such as solar panels can be relied upon as parallels, while there will be numerous casualties at that point, the industry should also have given birth to enough enterprises robust enough to survive and flourish beyond 2025. They may then lead the world in another new technology.

Leave a Comment