China's Search For New Energy Sources
The demand for alternative fuels in China is driven by the Chinese government’s desire to reduce air pollution, particularly in urban centres, and reduce the country’s dependence on imported oil. Preparing to host the 2008 Olympics is also putting pressure on the Government of China to make the necessary investments. The annual alternative fuels market in China is projected to grow from $75 million in 2002 to $1.8 billion by 2008.
The main opportunities for fuel cell technologies are in the development of prototypes of fuel cell engines and for fuel cell fuelling stations. The main opportunities for compressed natural gas (CNG) and liquified petroleum gas (LPG) technologies are for retrofitting old diesel engines, building new engines, providing engine and related parts that improve the efficiency of CNG/LPG engines and building refuelling stations.
The Chinese fuel cell market has strong local players including the Fuyuan Century Fuel Cell Power Co. Ltd., the Dalian Institute of Chemical Physics and Shanghai Shen-Li High Tech Co Ltd. U.S. firms have been successful at penetrating the CNG/LPG bus market in China. Some examples firms include Cummins-Westport, Impco Technologies and Witco Systems.
Transport authorities are looking for well-designed buses that suit their individual local environments, maintenance staff training and a high level of service.
CNG engine testing must be done in China and there are adequate test facilities exist. Once a vehicle is on the road there is no formal testing nor any requirement for regular in-service emissions testing. However, strict maintenance and training is essential to maintain strong customer satisfaction.
The Chinese government’s goals to improve the quality of air in major Chinese cities and to reduce its dependence on imported oil are the main long-term drivers of market growth in the alternative fuel bus market in China. With the world’s eyes on China for the 2008 summer Olympics, the Chinese government is actively investing in alternative fuel buses to demonstrate the progressiveness of their country to the world.
China has six of the world’s 10 most-polluted cities. The Chinese government has set a time line to improve emission standards for vehicles in China. Vehicles were to meet Euro II standards by January 1, 2003 in Beijing and by January 1, 2005 in the rest of China. Chinese emission standards are to increase to meet Euro III by January 1, 2005 in Beijing and by January 1, 2010 in the rest of the country.
China's National Development and Reform Commission (NDRC) has issued a new automotive Industry Development Policy. The new policy, that became effective on June 1, 2004, stipulates that average fuel consumption of new cars should be reduced by 15% by the year 2010. Although the policy does not provide details as to how this objective will be met, it is expected that the development and application of new technologies to reduce reliance on fuel will be strongly encouraged by NDRC.
Approximately 1 million buses were produced in China in 2002. This was an increase of 25% over production in 2001.
The annual alternative fuels market in China is projected to grow from $75 million in 2002 to $1.8 billion by 2008.
Alternative fuel technologies that represent the greatest opportunities for Canadian firms in China are compressed natural gas, liquified petroleum gas and fuel cells. In terms of market development, CNG/LPG engines are fully commercialized and are in a growth market, while fuel cell engines are still in the pre-commercialization stage.
China represents one of the largest potential markets for fuel cells in the world. Transportation is considered to be the most important initial market for fuel cells in China. The market for replacing batteries in electric bicycles is expected to be the earliest market to be commercialized, followed by buses.
Seventy-four percent of the application of fuel cells in China focuses on transportation. Fifty-four percent of fuel cell technology in China is based on proton exchange membrane fuel cell (PEMFC), the most prominent fuel cell technology for transportation applications worldwide.
About 350 employees at more than 60 institutions and companies work on the development of fuel cell technology. Sixty percent of these organizations are located in the provinces of Beijing and Shanghai.
Under China’s fuel cell roadmap, more than 100 buses will have been tested under demonstration projects between 2005 and 2010. More than 1000 fuel cellpowered buses will be utilized in regular bus operations between 2008 and 2020.
The Chinese government began encouraging the use of alternative fuels in 1999 with a clean vehicle demonstration project in China’s 12 largest cities.
China is ranked seventh in the world in the number of vehicles using CNG/LPG fuel, behind major developing countries like Argentina, Brazil and India. In 2003, there were approximately 110 000 CNG/LPG vehicles on China’s roads, 19 000 of those vehicles being buses. That year, China had 368 refuelling stations, with over half located in Shanghai and Beijing.
The choice between LPG or CNG as alternative fuel mainly depends on the availability of that particular fuel in a city or province. The limited number of refuelling stations is one of the main inhibitors of changing from diesel to CNG or LPG.
The main opportunities for fuel cell technologies are in the development of prototypes of fuel cell engines and fuel cell fuelling stations. These research and development (R&D) opportunities require a partnership with relevant Chinese organizations.
In 2002, the Chinese government announced that it would invest approximately $18 million in a three-year PEMFC development program. Most of these funds will go toward the development of 75 kW and 150 kW PEMFC systems at the Dalian Institute of Chemical Physics.
China’s two main cities, Beijing and Shanghai, have been selected by the Global Environment Facility (GEF) of the World Bank for the Fuel Cell Bus Demonstration Project. Under this project, the GEF will sponsor the deployment of six fuel cell buses and one hydrogen filling station each to both Beijing and Shanghai. The three-year demonstration trials will see these buses log over 1.6 million kilometres. The project is funded with $18 million from the GEF, $15 million from Chinese government, $7.5 million each from the cities of Beijing and Shanghai and $6 million from private companies. Opportunities stemming from the project are to supply completed fuel cell buses, build hydrogen refuelling stations and provide consulting services to train Chinese bus operations personnel with the new technology.
During China’s 10th five-year plan (2001-2005), the Chinese Ministry of Science and Technology (MOST) approved a $165-million R&D program to develop advanced hybrid—electric drive and fuel cell—vehicles. Private companies are likely to invest another $300-450 million over the same time period. One major aim of the project is to develop two prototypes for 150 kW fuel cell buses by 2005. Under the funding, Shen-Li High Tech and Dalian Sunrise will develop hydrogen-based engine prototypes for vehicles to be assembled by Tsinghua University and the Shanghai Fuel Cell Vehicle Powertrain Company.
Under the MOST’s 973 program, the Government is spending approximately $5.6 million on the research of hydrogen storage materials, fuel cell membranes and catalysts. One of the main grantees under this program is Hong Kong University (HKUST), which is working on carbon nano materials as a hydrogen storage solution.
In addition to the GEF hydrogen station, Shanghai is working on its own hydrogen infrastructure project. The city will host the World Expo in 2010 and is trying to deploy its own clean energy and fuel cell buses for the event. The supply of hydrogen as a fuel in Shanghai will not be as difficult as in many other cities, mainly due to the region’s vast and flexible fuel sources. In Shanghai alone, four chemical companies have been producing enough hydrogen as an industrial by-product to at least meet the short-term consumer needs of Shanghai.
The main opportunities for CNG/LPG technologies are for retrofitting old diesel engines, building new engines that meet current emission standards, providing engine and related parts that improve the efficiency of CNG/LPG engines and in building refuelling stations.the development of 75 kW and 150 kW PEMFC systems at the Dalian Institute of Chemical Physics.
The Beijing transport authority currently has 2000 buses that run on CNG engines. The authority plans to have its 118 000 bus fleet running on clean energy by the 2008 Olympics. Ninety percent of the fleet will be retrofitted to use CNG and the remaining buses will be replaced with new CNG new engine buses.
The Shanghai Government plans to purchase 3000 CNG buses in the next 2-3 years and put 20 hydrogen buses, 300 hydrogen taxi & 1000 electric vehicles in operation by 2010.
Guangzhou Transportation Commission and its subordinated bus companies has a fleet of 6802 buses. It currently has 603 buses running on LPG engines. In the end of 2004, Guangzhou will complete switching old diesel engines to LPG engines in 2,390 buses. Guangzhou plans to make all the buses in the city into LPG buses by 2005. In the first half of 2004, Guangzhou had built 3 new LPG fueling stations. Guangzhou plans to set up 20 new LPG fuelling stations by the end of 2004.
The transport authorities of Tianjin (LPG), Xian (CNG), Chongqing (CNG), Guangzhou (LPG), Harbin (LPG), Shenzhen (LPG), Urumchi (CNG/LPG), Changchun (LPG/CNG), Hainan province (LPG) and the middle area of Sichuan (CNG) are following Beijing’s lead in moving to alternative fuel-powered buses.
The Hong Kong SAR government has initiated a scheme to replace 18 000 diesel taxis to LPG models by 2005. It is expected that the project will be extended to the 8000 mini-buses and 6000 city buses for replacement to LPG/CNG or fuel cell models. For more information go to: http://www.emsd.gov.hk/emsd/eng/sgi/lpg.shtml
The five largest bus manufacturers in China account for 58% of local bus production. They are (by percentage of local production) Changan Auto (15.7%), Harbin Harfei (14.4%), Chancghe Aircraft (11.9%), Shanghai-GM-Wuling (8.2%) and FAW (7.9%).
The Fuyuan Century Fuel Cell Power company is developing PEMFC technology. It has developed stacks ranging in size from 3 kW to 30 kW. In 1998, the company developed the first fuel cell-powered passenger vehicle in China in conjunction with the Automotive Engineering Department of Tsinghua University, installing a 5 kW stack into a prototype golf cart. More recently, Fuyuan has built and tested 40 kW PEMFCs for buses, and commenced work on a 100 kW PEMFC program for electric buses. Its sister company, Fuyuan Pioneer New Energy Material, specializes in the R&D and production of PEMFC components, including carbon, composite and metal bipolar plates, and PEMFC membrane.
Dalian Institute of Chemical Physics (DICP) has been carrying out fuel cell R&D for more than 30 years. A dedicated fuel cell R&D centre was established in 1998. The centre employs more than 50 researchers and engineers. Most of these employees are working on PEMFC development. DICP has filed around 25 patents concerning PEMFC technology. Research areas have included the development of thin metal bipolar plates that are easy to manufacture, and the development of MEA manufacturing processes. In spring 2003, the DICP supplied its new 75 kW PEM stack to Tsinghua University, which integrated the unit in a bus.
Founded in 1998, Shanghai Shen-Li High Tech Co. Ltd. is developing PEM fuel cells for a whole array of applications, including mini-buses. Currently employing about 30 people in a 1500-square-metre facility, it has developed a series of prototypes, ranging in output from 10 kW to 50 kW.
Beijing Jinfeng Aerospace S&T Development Company is the country’s largest producer of hydrogen storing metals. The company is working on possible uses of hydrogen for transport applications.
The China Association for Hydrogen Energy (CAHE) aims to promote hydrogen as a clean fuel for fuel cells and various other applications. The association is organizing the HYFORUM event, one of the largest hydrogen- and fuel cellrelated conferences in China. A Mercedes-Benz Citaro bus powered by a hydrogen fuel cell built by Ballard was showcased at the HYForum conference in Beijing in May 2004.
Tsinghua University is in charge of two national key fundamental projects: Fundamental Research for Hydrogen Production, Storage and Transportation in Large Scale and Relative Fuel Cells, and Fuel Cell Engines Used for Buses. The university is working on developing PEM fuel cells, fuel cell engines and making hydrogen from ethanol. Together with Beijing LN Power Sources, Tsinghua University demonstrated various vehicles in 2001, one of which was a small, 12seater bus (top speed 90 km/h, range 160 km). Tsinghua University is expected to use a 80 kW engine to develop another prototype bus.
Cummins Westport Inc. (CWI) and Dongfeng Cummins Engine Company Ltd. (DCEC) signed a Memorandum of Understanding for a comprehensive supply agreement enabling DCEC to manufacture CWI natural gas B-series engines in China. CWI will supply natural gas-specific components for the B Gas International (BGI) engine to be manufactured by DCEC at its manufacturing facilities located in Xiangfan. Manufacturing is expected to begin in early 2005. This agreement to manufacture in China will enable CWI to access a broader customer base and to continue lowering its product cost. To date CWI has sold more than 2000 CNG engines in Beijing, 40 in Chongqing and 10 in Chengdu.
In 2004, Witco Systems Inc. (U.S.) and Pressed Steel Tank Co. formed a joint venture company, Jian Cui Vehicles Co. Ltd. The joint venture will install 60 fast-fill CNG stations in southwestern China’s Sichuan province and then begin converting more than 50 000 diesel-fueled buses to allow them to run on a combination of diesel fuel and compressed natural gas. Work on the CNG stations was finished in July 2004. Other suppliers to the joint venture include CleanFuel USA Inc. U.S.), an alternative fuel technology company; FuelMaker Corp. (Toronto, Ontario), a manufacturer of refuelling systems; Angi International (Milton, Ontario), a manufacturer of fast-fill stations for compressed natural gas; and Fueling Technologies Inc (Concord, Ontario), a manufacturer of large fast-fill stations and dispensers.
Canadian firms active in China's CNG/LPG market include Kraus Global and IMW Industries who have sold and installed CNG dispensers/refueling stations in China.
In 2003, IMPCO Technologies (U.S.), a manufacturer of alternative fuel systems technology for internal combustion, formed a joint venture with China Natural Gas Corporation (CNGC), a subsidiary of the China National Petroleum Corporation, to market and sell their gaseous fuel products in Western China.
Guangzhou Denway Motors Ltd., the first LPG single-fuel bus maker in South China, has produced over 100 LPG single-fuel buses, which were launched in Guangzhou and Shenzhen.
Who is Buying?
Bejing’s transport authority has the largest, low-emissions CNG bus fleet in the world, with over 2000 CNG engines. The Authority plans to have its entire 118 000 bus fleet operating on clean energy by the 2008 Olympics (90% retrofitted and 10% replaced with new engines). It has 400 trained service personnel for CNG-powered buses. Key contacts in Beijing include the Beijing Municipal Committee of Transportation which sets objectives/plans and implement them, and the Beijing Public Transportation Corporation and Beijing Bashi Corporation which operate the buses.
The following government bureaus in the province of Shanghai are involved in developing and implementing the plans for alternative fuel vehicles:
”¢ Shanghai Environment Bureau is responsible for setting up the environment protection standards to the products
”¢ Shanghai Development & Reform Commission (SDRC) is responsible for the detailed plan to reach the government’s goal of developing vehicles with alternative energy
”¢ Shanghai Urban Transit Administration Bureau is responsible for implementing SDRC's plan (including procurement) and provide feedback to SDRC
”¢ Shanghai Science & Technology Commission is responsible for promoting the new technology
Transport authorities are looking for well-designed buses that are suited to their individual local environments, proper training of their maintenance staff and, when needed, a high-level of service from the original manufacturer.