Foshan’s Hydrogen Transportation Market Strategy Derailed By Battery Dominance – CleanTechnica

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At the beginning of the year, I highlighted a few epicenters of hydrogen folly, cities or states that decided at some point in the past that hydrogen was the molecule they were going to double down on. Today, news arose of the inevitable failure of one of the signature hydrogen solutions in one of them, Foshan, where its hydrogen tram has been shut down, likely permanently.

Foshan’s focus on hydrogen energy began in earnest around 2015, when the city set its sights on becoming a leader in China’s clean energy revolution. As part of Guangdong Province’s broader efforts to reduce carbon emissions, Foshan quickly embraced hydrogen as a key solution for powering public transportation and industry. How are they doing, ten years later?

Let’s start with the tram. The project, launched in 2019, initially benefited from fiscal incentives, including subsidies for infrastructure and operational costs, but struggled with low ridership, which was a key factor in its eventual suspension. The incentives were necessary, as the costs were high, approximately US$118 million (838 million yuan) to develop. This substantial investment included the construction of a 6.5-kilometer route and related infrastructure. This isn’t out of line with overhead catenary tram line costs, but the operational costs of electrical trams is dirt cheap compared to hydrogen, and the reliability is much higher.

Several factors contributed to the lack of passengers. The tram route did not align well with major commuter patterns, leading to limited convenience for daily travelers. The rise of alternative transportation options, such as electric buses — more on that later — and ride-hailing services, offered more flexible and often cheaper alternatives for residents. Regular maintenance issues meant the service was unreliable, leading to customers coming to focus on alternatives. Despite government efforts to subsidize fares, these issues compounded, making it difficult to sustain ridership levels after COVID.

This is par for the course for any enactment of the tragicomedy, The Odyssey of the Hydrogen Fleet. Four to five years is pretty standard.

However Foshan’s focus hasn’t just been on its signature tram line, but on hydrogen buses, trucks and cars. Perhaps those categories are faring better?

The city began by investing heavily in the development of hydrogen production, storage, and distribution infrastructure. One of its key moves was the establishment of multiple hydrogen refueling stations, ensuring that fuel cell vehicles, including buses and trucks, had the necessary support to operate efficiently. By 2020, Foshan had become one of the leading cities in China for hydrogen infrastructure, with a growing network of refueling stations serving both public and industrial sectors. Of course, it was all gray hydrogen coming out of the pumps, as was the hydrogen driving the trains. Actually low-carbon hydrogen was always a future promise, as is the case with virtually every hydrogen transportation scheme, and one that rarely emerges due to the even higher costs of green and blue hydrogen than their high-carbon sibling.

Additionally, Foshan worked closely with private industry to attract major players in the hydrogen sector, fostering partnerships between technology providers, vehicle manufacturers, and local authorities. Companies like Re-Fire Technology and SinoHytec established a presence in the city, contributing to the development of hydrogen fuel cell vehicles and related technologies. To further promote hydrogen use, the local government rolled out policies aimed at encouraging the deployment of hydrogen-powered public transportation, including buses and municipal vehicles.

Foshan was aggressive with subsidies, creating an ambitious program that includes a 1:1 matching scheme between city and state funds. This initiative doubles the financial incentives available to manufacturers and operators, covering up to 60% of the purchase price of hydrogen fuel cell vehicles.

Bought and paid for refueling infrastructure. 60% of the cost of hydrogen vehicles covered. That should have moved the needle a lot. Let’s start with cars, the most obvious point of failure in hydrogen transportation schemes. Foshan is in China, and as has been broadly reported, China is buying more electric cars than the rest of the world combined.

Foshan is seeing a steady rise in car ownership, with an estimated 30% to 35% of residents owning vehicles, in line with Guangdong Province in which it is sited. This translates to roughly 2.85 million to 3.32 million cars on the city’s roads. While traditional vehicles still dominate, electric vehicles (EVs) are gaining traction, with an estimated 6% to 7% of the total being electric. This suggests there are approximately 171,000 to 232,000 new energy cars in Foshan.

Surely the incentives and focus on hydrogen cars would mean that a sizeable portion of the cars would be hydrogen? Apparently not. The only news on hydrogen cars is that the city itself operates a fleet of 85 of them. There’s no indication that hydrogen cars are more than a rounding error otherwise.

But what about buses? With all of that infrastructure and all of those incentives, surely fleet operators went big on hydrogen and battery electric buses couldn’t compete? There are certainly more hydrogen buses, approximately 397 operating across 32 routes. In comparison, the city has deployed a significantly larger fleet of electric buses, with estimates indicating around 2,500 electric buses on its streets. The adoption of electric buses far outpaces hydrogen, driven by lower costs and even more established infrastructure. Why is the infrastructure more established despite the city spending so much on refueling stations? Because electric bus refueling technology is vastly cheaper and easier to deploy, so it’s just a lot more common.

Perhaps trucks provide a glimmer of light for Foshan? It’s operating 595 hydrogen-powered trucks as part of its efforts to promote hydrogen fuel in heavy-duty transportation. In comparison, while specific data for battery electric trucks (BEVs) in Foshan is less available, it is estimated that the city operates around 2,000 to 5,000 electric trucks, primarily for urban logistics and short-haul transport.

Foshan created a business development strategy centered around hydrogen for transportation, with a focus on both the very large Chinese domestic market and the international export market. Yet even inside city limits, hydrogen vehicles are a fraction of the number of battery electric vehicles. A failed tram. 85 hydrogen cars vs hundreds of thousands of electric cars. Hundreds of hydrogen buses vs thousands of electric buses. Hundreds of hydrogen trucks vs thousands of battery electric trucks.

Maybe the rest of China is doing more with hydrogen? What about things that run on rails, now that Foshan’s tram is off them. Well, one small passenger train has been tested. Meanwhile, every city is riddled with subways and light rail that runs on electricity, and the 45,000 km of high speed rail that runs between cities is all electric with nary a drop of hydrogen in sight. What about buses? 8,400 hydrogen buses, which sounds like a lot until you compare it to 500,000 to 600,000 electric buses. Cars? 3,000 to 5,000 hydrogen cars compared to about 10 million electric cars. Trucks? Perhaps 5,000 hydrogen trucks of various sizes vs estimates ranging from 250,000 to 500,000 trucks.

Foshan has forced vastly more hydrogen vehicles as a ratio to battery electric vehicles onto its roads with its policies and subsidies than exist in the rest of China, which only has higher subsidies for hydrogen vehicles than for electric ones. In a country of 1.4 billion people, no one is buying hydrogen vehicles without lots of governmental money, just like the rest of the world. In a country which has pretty much eliminated direct subsidies for electric vehicles — although tax, usage and charging incentives still exist —, everyone is still buying battery vehicles.

Surely Foshan is reconsidering its devotion to the slippery molecule? It’s hard to say. One commentator suggested it was, but it didn’t appear to be privileged insider information and I wasn’t able to confirm it from third party sources. If the city isn’t looking at the raw numbers locally, domestically and globally, it should be, and should be reconsidering its focus. And so should other epicenters of hydrogen folly like Vancouver, California, Essen and Aberdeen.