Could Hong Kong be a leader in hydrogen use? Don’t hold your breath

There is scant evidence of trailblazing progress on the ground in Hong Kong, but mainland China is making headway and the city could play a role in these efforts
Globally, however, investment in green hydrogen will need to be scaled up dramatically to make a significant contribution to reducing carbon emissions

David Dodwell

Published: 6:15am, 1 Jul 2023

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For as long as I can remember, through years of debate on climate change and how to get to net zero carbon emissions, somewhere in the footnotes there has always been discussion of hydrogen, always in the form of “pilots”, “trials” or “prototypes”. In the International Energy Agency’s Global EV Outlook 2023, released in April, hydrogen warranted only a few token mentions and two charts.

So when I read in the Post last week that “Hong Kong has the potential to be a leader in hydrogen ulitisation”, my curiosity reignited. Can Hong Kong really lead the world in a technology that has tantalised and frustrated for decades?

In short, we should not hold our breath. The Post report outlined plans for a first hydrogen refuelling station. Behind this is a single Citybus trial of a hydrogen-fuelled double-decker bus, hopefully to start in the second half of this year, with long-term plans for the use of hydrogen in road transport set to be formulated by the government by 2025. It is still illegal in Hong Kong to use “highly flammable liquid hydrogen” as fuel or even to transport it by road.

There is scant evidence of any trailblazing aspirations here in Hong Kong, but that does not mean potentially significant progress is not being made elsewhere. Hydrogen-powered trains have been piloted in Germany, hydrogen power plants in Japan and hydrogen-powered iron and steel production in Sweden.

At the national level, China is particularly active, with more than 120 renewable hydrogen projects reportedly in progress. China also leads with its development plan for the hydrogen industry, prioritising mobility and then looking to applications in steelmaking, petrochemicals and chemicals.

But China’s progress also comes with problems. Two-thirds of its 33 megatonnes of annual hydrogen production comes from coal. So while China’s hydrogen-powered vehicles produce no roadside carbon dioxide, the original production of the hydrogen produces a thumping 360 megatonnes of CO2 emissions.

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To deliver “green hydrogen” that is truly CO2-free will need the industry either to shift to using renewables such as wind or solar power to produce hydrogen, or to build massive capacity in carbon capture, use and storage, which remains experimental worldwide.

A recent report by the Financial Times highlights the daunting cost likely to be involved in getting to “green hydrogen”. It also illustrates why recent decades have produced so much talk around hydrogen but so little practical progress.

The report argues that hydrogen remains “abysmally inefficient” compared to batteries in electric vehicles, except when the vehicles are exceptionally large and must travel long distances. Its use would also require “unfeasibly large tanks in aircraft and ships” unless it is combined with nitrogen to make ammonia, which is more energy dense.

A view of a “green hydrogen” factory in Xinjiang as part of China’s efforts to reduce carbon emissions. The project uses renewable energy sources, including solar and wind power, to produce hydrogen that can then be liquefied and transported long distances through natural gas pipelines. Photo: CCTV

This leaves a limited, highly specific range of viable uses for hydrogen beyond long-haul heavy transport. These include its use in chemical processes, such as making fertiliser, or in processing iron and steel. Green hydrogen could also have value in long-term energy storage, such as by “storing summer sun for winter heat” according to the Financial Times report.

There are three key elements involved in producing green hydrogen: producing the renewable energy needed to make hydrogen that is considered green, creating the electrolysers used in the hydrogen production process and building the infrastructure to deliver hydrogen wherever it is needed.

Incidentally, it is on hydrogen delivery that Hong Kong might have potential to be a trailblazer. Towngas is poised to make its 3,700km gas network available to ensure cheap and widespread distribution.

In aggregating the cost of these three elements in developing a meaningful “hydrogen economy”, the Financial Times report concludes that hydrogen will either be very expensive or require constant subsidy. It notes that today the cheapest hydrogen in Europe costs over US$150 per megawatt-hour without transport and storage compared to US$32 per MWh for natural gas.

As China leads the way, a ‘hydrogen society’ may get closer to reality

It also calculated that investment in green hydrogen will need to be scaled up dramatically from present levels to contribute meaningfully to getting to net zero. So far, according to Hydrogen Council, about 1,000 new hydrogen projects have been announced worldwide, which would need investment of around US$320 billion.

However, the Financial Times report estimates that a net zero energy system could need about 500 megatonnes of green hydrogen annually, requiring around US$20 trillion in investment by 2050. Only 0.15 per cent of that investment has been committed to so far.

In sum, we have at last reached a point where green hydrogen will begin to play a significant but specialised role in helping us to get to net zero. China’s plans are the most ambitious and developed, but they will count for nothing unless they are underpinned by carbon capture technology to ensure the hydrogen is green.

Just as China has fast emerged as the world’s most significant market for electric vehicles, so we could quickly see China take the lead in hydrogen-powered buses and heavy goods vehicles. As a significant shipbuilder, it ought to become a leader in hydrogen power for ships, which implies significant investment in green hydrogen delivered to China’s ports – including Hong Kong.

On its own, Hong Kong seems unlikely to become a leader. In collaboration with mainland China, and in particular the Greater Bay Area, we might come to play a significant role. That should be ambition enough.

David Dodwell is CEO of the trade policy and international relations consultancy Strategic Access, focused on developments and challenges facing the Asia-Pacific over the past four decades