China is looking into developing its hydrogen industry as part of its decarbonization strategy.

A directive has been published by three major government bodies, including the Ministry of Industry and Information Technology (MIIT), to both develop the industry and scale up the production of hydrogen vehicles, and to slash the price of hydrogen at the pump to around €3 per kg.

In Europe and North America, it seems hydrogen will not become a viable mainstream alternative to “traditional” battery-electric vehicles, in either passenger cars or trucks.

The higher range and quick refueling don’t seem to outweigh high pump prices, a lack of infrastructure, and expensive vehicles, not to mention the lack of energy efficiency in the production process.

100,000 vehicles by 2030

Regardless, it seems China wants to find out whether hydrogen can still play a role in the electrification of road transport if prices come down significantly.

The country wants to double its fuel cell fleet to 100,000 vehicles by 2030, mostly focusing on heavy-duty vehicles like trucks and buses, but also including passenger cars.

To achieve this, pilot programs are being launched to develop city clusters for the complete hydrogen supply chain, from production to end-user utilization. This mimics other industry sectors in China, which are often concentrated in clusters or hubs.

Hydrogen hubs, like other industry sectors

For example, most Chinese electronics companies are based in Shenzhen, while the automotive industry is mostly developed in Changchun and Chongqing.

These locations are chosen for their proximity to rivers or coasts, and integrating the supply chain not only reduces lead times but also enables the development of specialized labor skills and infrastructure expertise.

The central government allocates up to 1.6 billion yuan (€200 million) to these pilot city clusters to develop the hydrogen industry.

The hydrogen will not only be used for vehicles, but also for the production of green ammonia and methanol, hydrogen-based chemical materials, and hydrogen metallurgy.

Slashing hydrogen prices in half

But to make hydrogen viable, it also needs to become affordable. That’s why China wants to cut the average end-use price of hydrogen to below 25 yuan (around €3,15) per kg, or even below 15 yuan (€1,9) per kg in ideally located regions.

That’s around half of the current price of hydrogen in China, which ranges from 35 to 50 yuan (€4.5 to €6.25) per kg. For context: in Belgium, a kg of hydrogen at the pump costs around €10.

This move does not mean that China thinks hydrogen vehicles are a better solution than BEVs. With only 100,000 vehicles expected by 2030, or less than 25,000 new vehicles per year, this will amount to less than 0.1% of total car sales, not even counting commercial vehicles. But if hydrogen were to become in vogue after all, China will be ready.