Oil refining giant China Petroleum & Chemical Corporation (commonly known as Sinopec) has unveiled a multi-billion dollar strategy to become the region’s largest producer of hydrogen for use as a transportation fuel by 2025.
The company has confirmed it will plough about $6.35 billion into the set-up of 1,000 hydrogen refuelling stations across the country over the next four years, which will have a combined 200,000 tonnes of annual capacity.
It has so far built 20 stations, with another 60 under construction or in the planning and approvals stage.
The facilities will be run by renewable energy using 7,000 solar panels with a total generating capacity of 400 megawatts to produce over 1 million tonnes of the zero-emission hydrogen fuel each year.
Sinopec president Ma Yongsheng announced plans to build the nation’s largest supply chain for automotive hydrogen at a press conference this week following release of the company’s interim half-year results.
The target is a decade ahead of the nation’s goal of becoming carbon neutral by 2060.
Sinopec currently has the biggest service station retail network in China, with approximately 30,716 branded outlets.
In addition to sourcing supplies from its own refineries, it accepts around 25% of the barrels supplied to its network from independent refineries and state-owned peers.
Carbon neutral goal
Sinopec’s hydrogen refuelling infrastructure could assist China – currently the world’s largest greenhouse gas emitter responsible for around 30% of total emissions – to meet its goal of becoming carbon neutral by 2060.
Carbon neutrality means cutting out as much carbon dioxide emissions as possible and then off-setting the amounts that cannot be eliminated.
For a country, this could mean switching to renewable energy such as solar power instead of coal and investing in projects that absorb carbon dioxide, such as reforestation.
China’s ambitious announcement was made last September by president Xi Jinping at a virtual meeting of the United Nations General Assembly, during which he also declared the nation would aim for a carbon dioxide emissions peak before 2030.
Initial efforts are believed to have been already undermined at a regional level, partly by provinces continuing to launch high-energy and high-emissions projects and resulting in the country’s emissions for the first quarter of 2021 having grown at their fastest rate in more than a decade.
Sinopec plans to “expand forcefully” into making hydrogen from renewable energy, and zero in on hydrogen for transportation fuel and green hydrogen for refining.
“As a major energy company, we have accumulated rich experience and technological advantages in hydrogen production and utilisation,” Mr Ma said.
“Our fuel station network throughout China will also give us an edge on hydrogen distribution [and] we will seize the historic opportunity to accelerate our hydrogen business.”
A preliminary budget will fund the production of hydrogen, purification, treatment, storage and transport facilities, as well as the research and development of key materials needed.
“The goal for the hydrogen supply chain and utilisation initiatives is to avoid the emission of 10Mt of carbon dioxide per year by 2025,” Mr Ma said.
“We will upgrade our refineries and petrochemical plants to use green hydrogen in their operations to reduce their carbon footprint.”
Mr Ma said the company would pursue ways to make Sinopec’s business more competitive through valued-added product diversification and by phasing out older units, while adopting processes that could contribute toward lowering the footprint.
The world’s top refinery by capacity will be looking to diversify into petrochemical products to cushion against an anticipated slowdown in demand for oil products, while it keeps investing in upstream projects in line with the national goal for future energy security.
Last week, Sinopec announced an $8.27 billion net profit for the first six months of 2021 on the back of renewed fuel demand and a rebound in oil prices amid a recovery from the impact of COVID-19.
The company posted a $4.87 billion loss during the same period last year as the pandemic hit fuel demand and oil prices.
This year’s interim profit compares with a $6.63 billion profit for the same period in 2019.
Revenue for the first six months rose 22.1% from last year’s low base to $0.27 trillion following a recovery in global oil prices and robust demand for fuel and petrochemical products.
Capital expenditure for the period came in at $12.26 billion, representing about 35% of Sinopec’s full-year investment plan of $35.37 billion.