China’s state energy producers outlined initiatives to develop hydrogen and wind power after their earnings slumped along with the oil price in the first half of the year, but their renewables projects could take years to materialize.
The tentative plans laid out by PetroChina, Sinopec and CNOOC Ltd. come as global energy majors like BP Plc prepare to spend billions on renewable energy assets to stay relevant in a low-carbon future.
Sinopec, the world’s largest oil refiner, wants to lead China’s hydrogen push, with plans for hydrogen refueling stations alongside its petrol stations on the east coast, its top executive said this week, but will tread cautiously.
“It’s a strategic move,” Sinopec chairman Zhang Yuzhuo, previously a coal industry veteran, said during an earnings briefing Aug. 31. “But as it’s not going to bring immediate return for shareholders, we’ll proceed with caution.”
Last week, larger rival PetroChina became the first Asian state-owned firm to set a target for near-zero emissions by 2050, while offshore oil explorer CNOOC will start its first offshore wind farm by the end of 2020.
The green targets lag those set by European energy majors, as Beijing’s energy policy still views natural gas and low-emission coal as transitional fuels ahead of a more comprehensive renewables push.
Sinopec said only that it planned to build a “certain scale” of high-purity hydrogen supply by 2025.
“It’s a small step in the right direction...Question is how quickly they can make that change,” said Neil Beveridge of Bernstein Research.
Lin Boqiang, dean of the China Institute for Studies in Energy Policy, said the promise of a hydrogen economy risks being over-hyped as provinces jostle for investment from Beijing.
“As China’s renewable resources concentrate in the north and northwestern parts, transporting green energy-based hydrogen to the consuming hubs in the east and south will be a tremendous challenge,” Lin said.
China’s demand for natural gas, which emits half the CO2 of coal, is set to rise to 15% of total primary energy consumption by 2030, spurred by power generation and residential sectors.
PetroChina lumps gas power generation into its green investments, while CNOOC vows to raise its natural gas share in total output to 30% by 2025 from 19% currently. Sinopec plans to double its shale gas output during the same period.
China’s rapidly growing solar and wind market, bolstered by government subsidies and plunging costs, is already crowded with private manufacturers and state-owned power generators, leaving limited space for the oil giants to realize their green ambitions.
($1 = 6.8260 Chinese yuan renminbi)
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