【HaiChuan Discussion】Chemical hydrogen production: The next hot investment opportunity?
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In 1978, the UCC company in the United States built the world’s first hydrogen production facility using coke oven gas, with a capacity of 500 cubic meters per hour; today, the largest such facilities worldwide have a capacity of over 20,000 cubic meters per hour. The world record for natural gas-based hydrogen production is held by Saudi Aramco’s plant with a capacity of 13,400 cubic meters per hour. On March 6, 2020, the FH2R project in Fukushima, Japan, brought online the world’s largest photovoltaic-electrolysis hydrogen production facility at that time: a 20-megawatt photovoltaic system combined with an electrolyzer capable of producing 1,200 cubic meters of hydrogen per hour. However, by the end of this year, this title of \"largest\" will be taken over by the integrated photovoltaic-electrolysis hydrogen production project developed by Baofeng Energy Co., Ltd. in Ningxia, China, which has a capacity of 20,000 standard cubic meters of hydrogen per hour. In July 2019, the 60,000 cubic meters per hour production facility built by Luqing Petrochemical Co., Ltd. in Shouguang, Shandong Province, China, came online, marking the birth of the world’s largest methanol-to-hydrogen production plant. Following the commissioning of a 2-megawatt hydrogen fuel power plant in September 2016, China Yingchuang Sanzheng (Yingkou) Fine Chemicals Co., Ltd. is planning to build the world’s largest hydrogen production facility using gas generated as a by-product of chlor-alkali production (155 million cubic meters per year). Zhejiang Satellite Petrochemical Co., Ltd. has become China’s largest enterprise for producing hydrogen via light hydrocarbon cracking, thanks to the 334 million cubic meters per year of hydrogen generated by its propane dehydrogenation plants with a total capacity of 900,000 tons per year. In 2008, China Shenhua Group’s pressure swing adsorption hydrogen production facility with a capacity of 280,000 cubic meters per hour, used to support its million-ton-per-year coal direct liquefaction project in Ordos, was once hailed as the \"world’s leading hydrogen producer\"; however, this title now belongs to China Hengli Petrochemical (Dalian) Co., Ltd., whose coal-based hydrogen production facility, designed to support its 20 million tons per year oil refining plant, has a capacity of 500,000 cubic meters per hour. Not only that, but the first phase of the integrated refining and chemical production project at Zhejiang Petrochemical Co., Ltd., which is already in operation, as well as the 1.8 million tons per year coal-to-ethylene glycol project at Yulin Chemical Co., Ltd. belonging to Shaanxi Coal Group, which is set to go into operation soon, are both equipped with hydrogen production facilities capable of producing 490,000 cubic meters per hour and 480,000 cubic meters per hour respectively – figures that break the records held by the \"world’s top hydrogen producers\". In terms of hydrogen energy utilization, hydrogen fuel is currently the most promising option. Tests have shown that, when burning the same weight of coal, gasoline, and hydrogen, hydrogen produces the most energy. Moreover, when hydrogen burns, it produces neither ash nor exhaust gases, nor does it generate carbon dioxide or sulfur dioxide; only water is produced. As fuels, the reserves of coal and oil are limited, whereas hydrogen can be produced continuously. Therefore, hydrogen energy is regarded as the most ideal energy source of the 21st century. For these reasons, since the beginning of this century, many countries have **successively introduced ambitious development plans for hydrogen fuel cell vehicles and enacted a range of favorable policies.
The chemical industry has unique hydrogen production routes. Whether it is petrochemicals, natural gas chemicals, coal chemicals, or biomass chemicals, their production processes involve steps such as hydrogen production, separation, hydrogen purification, and the use of hydrogen. Currently, the total amount of hydrogen produced and used in the global energy and chemical industry accounts for over 90% of the total amount used across society as a whole. In 2018, the hydrogen production capacity of refineries in China was 3.5 million tons, that of modern coal chemical plants was 7 million tons, that of traditional coal chemical plants was 18.5 million tons, that of natural gas-based chemical plants was 4 million tons, that of the coking industry was 6 million tons, that of the chlor-alkali industry was 1 million tons, and that of industries such as ethane/propane dehydrogenation was 600,000 tons.
Chemical methods have the lowest cost for hydrogen production. Experts have calculated that, assuming the prices of natural gas, coal, and methanol are 2.2–3.5 yuan per cubic meter, 400–800 yuan per ton, and 1800–3400 yuan per ton respectively, the costs of producing hydrogen using these materials would be 1.04–1.48 yuan per standard cubic meter, 0.83–1.13 yuan per standard cubic meter, and 1.79–2.78 yuan per standard cubic meter, respectively. The total cost of producing hydrogen from coke oven gas, from by-gases generated in chlor-alkali plants, from off-gases from ammonia/methanol production facilities, and from by-gases in refineries is no more than 0.6 yuan per cubic meter; the cost of hydrogen produced as a by-product of propane/propylene cracking is even less than 0.2 yuan per cubic meter. Even with the currently most efficient and cost-effective method of producing hydrogen through water electrolysis, and assuming an electricity cost of 0.5 yuan per kilowatt-hour, the total cost still amounts to 3 yuan per cubic meter.
The output of hydrogen as a by-product of the chemical industry is astonishing. It is understood that a coking plant with an annual capacity of 1 million tons can produce 19,178 cubic meters of hydrogen per hour. In China’s coking industry, 3.25 million tons of hydrogen are produced annually, enough to supply 22.73 million hydrogen-powered vehicles. In the 1 million tons per year PVC project, aside from 40% of the hydrogen produced being used by downstream industries, the remaining 12,500 cubic meters per hour of hydrogen is available. Across the entire industry, 256,000 tons of hydrogen are produced annually, enough to supply 1.79 million hydrogen fuel vehicles. Apart from the hydrogen used internally, the hydrogen generated as a by-product of the 450,000 tons per year propane dehydrogenation plant amounts to 15,000 tons per year, which is equivalent to 19,000 cubic meters per hour. Across the country, propane dehydrogenation plants produce 305,000 tons of hydrogen per year, while the planned projects will generate 113,000 tons of hydrogen per year – enough to supply 2.92 million hydrogen fuel vehicles. An ethane cracking unit with a capacity of 1.25 million tons per year for producing ethylene can generate 80,000 tons per year of hydrogen, which is equivalent to 100,000 cubic meters per hour. Current units are capable of producing 275,000 tons per year of hydrogen, while planned units will be able to produce 659,000 tons per year of hydrogen, enough to supply 6.53 million hydrogen-powered vehicles.
In 2019, in China alone, petrochemical enterprises such as those involved in chlor-alkali production, coking, refinery operations, methanol production, synthetic ammonia production, and the comprehensive utilization of light hydrocarbons released or burned off 3.772 million tons of hydrogen. According to the plans, by 2030, the total amount of hydrogen used in hydrogen fuel cell vehicles in China will be only 1.0167 million tons, and by 2050 it will be just 1.6 million tons. This means that if the hydrogen currently wasted is recovered, separated, and purified, it will not only meet the demand for hydrogen fuel cell vehicles across the country over the next 30 years, but it will also generate an additional net profit of 16.5 billion yuan per year for the energy and chemical industry (calculated at a selling price of 1 yuan per cubic meter, a total cost of 0.6 yuan per cubic meter, and a net profit of 0.4 yuan per cubic meter). At the same time, 81.4 million tons of carbon dioxide were reduced, and 30.6 million tons of standard coal were saved (based on the current low-cost method of producing hydrogen from coal).
In fact, due to the promising application prospects of hydrogen energy, a number of hydrogen-related projects have already begun construction. On April 13, 2019, Zhejiang Satellite Hydrogen Energy Technology Co., Ltd. announced that its parent company’s propane dehydrogenation plant with an annual capacity of 900,000 tons in Jiaxing, Zhejiang, as well as the light hydrocarbon comprehensive utilization project with an annual capacity of 4 million tons in Lianyungang, could produce 30,000 tons and 250,000 tons of hydrogen respectively per year. The company will actively engage in the development of technologies for hydrogen utilization and the construction of hydrogen refueling stations, aiming to turn the hydrogen produced as a by-product into a new source of profit growth. On November 6, 2019, Sinopec Group Corporation and Air Liquide France signed a memorandum of cooperation. According to the memorandum, Sinopec will establish a hydrogen energy company, bring in internationally leading hydrogen energy enterprises as strategic investors, and work together to build a hydrogen energy industry chain and a hydrogen energy economic ecosystem. On December 25, 2019, Shanxi Lu’an Group successfully held the commissioning ceremony for the 10,000-ton-scale demonstration project for purifying coke oven gas to produce hydrogen, as well as for the integrated energy station that utilizes hydrogen, electricity, oil, and gas. This energy station has a hydrogen filling capacity of 500 kilograms. Ma Junxiang, the company’s deputy general manager, revealed that at present, Lu’an Group has collaborated with the German company Aspens to develop a technology for the metal membrane separation of coke oven gas to produce ultra-pure hydrogen ； Collaborate with the American company AP on the construction of hydrogen refueling stations as well as the transportation and storage of hydrogen. By 2024, Lu’an Group will have built 20 hydrogen refueling stations in Shanxi Province. By 2025, it will complete the development of the entire hydrogen industry chain, aiming to achieve a daily hydrogen refueling capacity of 10 tons and an annual output value of 200 million yuan. At the same time, it will establish a production capacity of 1,000 sets of hydrogen fuel cell and system manufacturing lines. On December 31, 2019, Shanxi Yangmei Chemical Industry Co., Ltd. issued a announcement stating that it would inject an additional 1.7 billion yuan into its subsidiary, Hebei Zhengyuan Hydrogen Energy Technology Co., Ltd., to develop projects for the clean and efficient comprehensive utilization of coal. This investment is intended to raise the company’s hydrogen supply capacity to 648 million cubic meters per year, thereby making Zhengyuan Hydrogen Energy Technology Co., Ltd. the largest hydrogen supplier in North China. In January 2020, Shanxi Xiaoyi Pengfei Group signed a strategic agreement with the U.S.-based GCES company to carry out technical cooperation in the production of hydrogen from coke oven gas, and to jointly develop hydrogen energy projects. Shaanxi Coal Industry New Energy Technology Co., Ltd., a subsidiary controlled by Shaanxi Coal Group, plans to work together with relevant research institutions to develop an integrated set of technologies and equipment for efficient hydrogen production through water electrolysis, hydrogen storage, hydrogen supply, hydrogen fuel power generation, and heating (hot water). The approach and technical methodology used are similar to those of hydrogen fuel cells in Japan, with the goal of making these technologies available in ordinary households.
The key issue is that the costs of storing and transporting hydrogen are too high....:L