[Haichuan Hydrogen Energy] Hydrogen is a renewable energy source with such a wide range of applications – why then, after decades or even centuries of development worldwide, has it not been able to be commercialized on a large scale?

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Hydrogen is a renewable energy source with such a wide range of applications – why then, after decades or even centuries of development worldwide, has it not been able to be commercialized on a large scale? In fact, compared to China, hydrogen energy was much earlier adopted by countries such as Japan, the United States, and South Korea as an important part of their energy strategies; strategic planning activities such as policy evaluation, business prospect forecasting, and technology development began back in the 1990s. For example, 94% of its energy supply comes from overseas markets, particularly Japan. In an effort to reduce dependence on external energy sources, there has been a pursuit of creating a \"hydrogen society.\" In 2017, a \"Basic Hydrogen Strategy\" was announced, with the goal of making hydrogen fuel competitive in cost with other fuels, thereby enabling it to replace traditional energy sources. However, since the supply and application of hydrogen energy involve not only traditional industries such as coal chemical processing, oil refining, and coking, but also emerging industries like hydrogen fuel cell vehicles and solid-state fuel cell energy storage, there are numerous technical challenges related to supply and application that need to be overcome. Furthermore, compared to traditional energy sources such as natural gas, oil, and coal, the costs associated with their production and use are too high, which is why traditional coal, oil, and natural gas have remained the dominant energy sources worldwide in the past. For example, take the simple process of producing hydrogen as an example. Unlike directly extracted energy sources such as coal, oil, and natural gas, hydrogen is a secondary energy source; that is, it needs to be extracted or produced from other energy sources through certain technical processes or methods. Currently, the methods for extraction or production include conventional fossil fuel-based hydrogen production methods such as hydrogen production from coal and natural gas reforming, as well as methods for producing hydrogen by purifying industrial by-products such as coke oven gas and chlor-alkali process off-gases ； There is also the method of producing hydrogen through water electrolysis, which was covered in junior high school* (due to its high cost, this method is used to a small extent for hydrogen production at present). Regardless of the aforementioned production methods, the technical costs in the past were considerably higher than those of other traditional energy sources. The most important point is that hydrogen energy offers economic benefits that are far inferior to those of traditional energy sources; moreover, the breadth and depth of its application areas are not on the same scale. As a result, hydrogen energy has accounted for a very small proportion in the global energy supply structure over these several decades. Today, as hydrogen-related technologies continue to evolve, the technologies involved in hydrogen production, storage, and fuel cells have all seen significant improvements, resulting in lower costs compared to the past. Against this backdrop, and with the ongoing changes in the global energy structure, hydrogen is regarded as an important means for utilizing renewable energy, for energy storage and transportation, as well as for achieving energy transition and carbon neutrality goals. Driven by factors such as reducing carbon emissions, ensuring energy security, and promoting economic growth, there is a growing interest in hydrogen worldwide, and the development of the hydrogen energy industry has become part of the global effort to achieve carbon neutrality. In recent years, various ** and regions around the world have issued hydrogen energy development roadmaps. The EU has successively introduced two new energy strategies: the \"EU Hydrogen Strategy\" and the \"EU Energy System Integration Strategy\", with the goal of achieving carbon neutrality by 2050 ； The Netherlands plans to build 50 hydrogen refueling stations by 2025, and deploy 15,000 hydrogen fuel cell vehicles as well as 3,000 heavy-duty vehicles ； By 2030, 300,000 hydrogen fuel cell vehicles will be put into use. France is more aggressive; it has declared its intention to use hydrogen fuel in large aircraft, with a goal of achieving this by 2035 ； Japan, which took an early approach to advancing hydrogen energy development, has also increased its investment in the hydrogen industry. In addition, countries such as the United States and South Korea are **increasing their investment to support the development of the hydrogen energy industry. In recent years, our country has **accelerated the introduction of policies for the hydrogen energy industry, providing comprehensive support for the fuel cell and hydrogen energy sectors in areas such as basic research, industrial guidance, pilot projects, and subsidies for complete vehicles. For example, the \"14th Five-Year Plan for Comprehensive Transportation Services\" issued by the Ministry of Transport recently specifies the need to accelerate the planning, development, and construction of infrastructure such as charging and battery swapping facilities, as well as hydrogen refueling stations. In addition, local supportive policies are also emerging one after another. For example, recently, Zhejiang Province issued the “Notice on the Implementation Plan for Accelerating the Development of the Hydrogen Fuel Cell Vehicle Industry in Zhejiang Province” (hereinafter referred to as the “Plan”). The plan specifies that by 2025, an industrial ecosystem will have been essentially established, with a number of competitive and leading enterprises in the industry chain. Significant progress has been made in the industrial application of these technologies in key areas; nearly 5,000 hydrogen fuel cell vehicles have been deployed in sectors such as public transportation, ports, and intercity logistics, and nearly 50 hydrogen refueling stations are under construction. In addition, throughout the year, more than 50 prefecture-level cities, including those in Shandong, Jiangsu, Hebei, Beijing, and Shanghai, successively introduced plans for the hydrogen energy industry. According to the predictions of the International Hydrogen Energy Commission, by 2050, hydrogen energy will create 30 million jobs, reduce carbon dioxide emissions by 6 billion tons, generate $2.5 trillion in economic value, and is expected to account for 18% of the global energy supply. The hydrogen trend is on the rise, with fuel cells ready for use. In fact, just like pure electric vehicles, hydrogen fuel cell vehicles are also part of the development direction for new energy vehicles in our country. Compared to pure electric vehicles, hydrogen fuel cell vehicles can almost overcome the shortcomings of current pure electric new energy vehicles, such as short range and long time required for energy replenishment. However, despite hydrogen fuel cell vehicles having greater advantages over pure electric vehicles, the industrialization of hydrogen fuel cell vehicles lags far behind that of pure electric vehicles. According to the available data, the sales volume of hydrogen fuel cell vehicles in China was 1,272 units in 2017, 1,527 units in 2018, and 2,737 units in 2019. Meanwhile, the sales volume of new energy vehicles reached 777,000 units, 1.256 million units, and 1.206 million units respectively during those years. The reasons for such a large disparity between the two lie, in addition to the immature key technologies related to hydrogen energy mentioned above and the high costs associated with its storage and transportation, in the inadequate infrastructure for hydrogen energy. Issues such as high construction costs for hydrogen refueling stations, high costs of hydrogen itself, delayed subsidy policies, and imperfect approval and management mechanisms also contribute to the slow progress in the construction of hydrogen refueling stations in China, resulting in poor commercial prospects for the entire industry chain. However, the problems that currently hinder the commercialization of hydrogen fuel cells are expected to be overcome thanks to the current global surge in interest in hydrogen, as well as China’s strong support for the hydrogen energy industry (such as the implementation of policies that provide incentives instead of direct subsidies), which could bring about new opportunities for development. According to the White Paper on China’s Hydrogen Energy and Fuel Cell Industry, by 2025 the number of hydrogen fuel cell vehicles in China is expected to reach 50,000 units. Based on a 1:1 ratio, there is potential for over a million additional units in this sector alone in the future, indicating huge development potential for the hydrogen fuel cell market. According to CICC’s estimates, by 2030 and 2060, the annual sales volume of hydrogen fuel cell vehicles (both commercial and passenger vehicles) will reach 290,000 units and 2 million units respectively, while the total number of such vehicles in use will be 1.34 million units and 15.46 million units. The corresponding total demand for hydrogen will be 1.29 million tons and 30.31 million tons respectively. The development of hydrogen fuel cells is still in its early stages, and domestic companies have the potential to make significant progress in this field. At present, the development of hydrogen energy batteries in China is still in its initial phase; the overall competitive landscape within the country is not yet clear, and there is still a significant gap compared to international standards in some specific areas. This means that as the entire hydrogen fuel cell industry develops further, China is likely to give rise to leading enterprises in high-quality niche segments. Specifically, the upstream part of the hydrogen fuel cell vehicle industry chain consists of industries involved in the production of engine components such as membrane electrodes, bipolar plates, various pipes, valves, sensors, and on-board high-pressure hydrogen storage tanks. The midstream part of the chain relates to the manufacturing of fuel cell engine systems and stack integrations, while the downstream part involves the production and operation of fuel cell vehicles.