China’s infant hydrogen fuel-cell industry gets vital help
Anglo American Platinum says demand for platinum could increase as the government offers sector subsidies and incentive programmes
A new source of platinum demand is gaining traction in China as the government throws its financial might behind the development of hydrogen fuel cells for vehicles, potentially creating a market for 500,000oz of the metal and offsetting declines in antipollution devices in diesel engines.
China’s government set out a target of 2-million new electric vehicles (NEV), including hydrogen-powered vehicles on its roads by 2020, a figure that Benny Oeyen, the new head of marketing at Anglo American Platinum and former senior manager in various car companies, extrapolated to use up to 500,000oz of platinum in the systems converting hydrogen into electricity.
The question raised by analysts is the offset of platinum used in autocatalyst systems on diesel engines to scrub noxious gases from exhaust systems and whether the new environmentally friendly trucks and buses will cannibalise the long-standing source of platinum demand over the longer term.
A visit to major cities in southern China showed the nascent hydrogen fuel cell industry that is gaining traction on the back of generous national and provincial government subsidies and incentive programmes from local authorities to encourage the uptake of hydrogen vehicles to cut pollution.
The subsidy, which flows through to the maker of the fuel cell driven commercial vehicle, could reach 1-million yuan, which is about $144,000, compared with the sales price of about 800,000 yuan, providing the critical subsidy to underpin nascent vehicle makers as they strive for critical mass and stand-alone profitability.
The key bottleneck is refuelling stations, which are scarce, but the government has a plan to roll out 500 stations in the Yangtze River Delta by 2030, particularly on major arterial routes between cities, facilitating truck and bus uptake by operators.
The $2m it costs to build a 1,000kg a day hydrogen refuelling station would receive a subsidy from the government too, encouraging their construction to drive the state strategy.
The potential scale of the market for these vehicles with sustained backing from the government for another five years beyond the current 2020 deadline is immense, dwarfing similar such industries in the US and Europe.
The Chinese government set a target of 20% of all automotive sales to be made up of new-energy vehicles by 2025. These vehicles include those using hydrogen fuel cells, batteries recharged off the grid and hybrids using fossil fuels and batteries.
As one market commentator says, battery vehicles are essentially coal burners, with the majority of the world’s electricity supply coming from coal-fired power plants.
The same argument can be made about hydrogen, which is created from pumping electricity into water to split hydrogen and oxygen, but the relative efficiency of hydrogen, which is used to create electricity rather than store it, puts it ahead of prevailing battery technology, certainly for larger industrial vehicles.
China has 150GW of electricity generated from renewable sources like solar and wind in the north of the country that go to waste each year, says Jun Wang, deputy secretary-general of the International Hydrogen Fuel Cell Association.
This would make an ideal source of electricity to convert water to hydrogen. There is a loss of energy in the conversion, which makes using coal-fired electricity impractical, but using electricity that was low cost and going to waste would be an ideal opportunity, she said.
One way to move hydrogen around China could be to deploy a system of attaching it to a special oil produced by SA’s Sasol at a plant in Germany and creating an inert, incombustible liquid, said Daniel Teichmann, CEO of Hydrogenious Technologies.
One cubic metre of the reusable oil can carry 57kg of hydrogen, giving a passenger car a theoretical range of 5,700km using the ratio of 1kg of hydrogen providing 100km of travel, he said.
“It will shake up the gas monopolies by providing a way to easily and cheaply transport hydrogen and then introduce competition,” Teichmann said.
The development of a manufacturing base of new electric vehicles (NEV) and their sales to the domestic market is one of the key policies in the Chinese government to address some of the world’s worst urban pollution problems, especially in cities that are home to tens of millions of people.
Passenger vehicle sales in these cities are tightly controlled, with regular lottery-style allocations of licence plates. New electric vehicles are given green number plates and these are freely granted, with commercial vehicles showing green plates given easier access to cities, marking out one of the major incentives for consumers to switch to carbon emission-free vehicles.
Statistics from the Chinese government show the growing uptake of NEVs, with sales more than doubling in the first half of the year to 412,000 vehicles, with production rising by a similar quantum to 413,000 vehicles, keeping China firmly as the leading market for NEVs. In 2017, the NEV market accounted for 777,000 vehicles.
In SA, total sales of passenger and commercial vehicles reached 558,000 in 2017, putting the size of the Chinese NEV market into context.
In China, 12-million passenger vehicles were sold in the first half of 2018 and 2.3-million commercial vehicles were sold, resulting in a total 6% increase on the same period the previous year.
Seccombe was Anglo American Platinum’s guest in China