Japan and China partner on clean alternative for natural gas
Cost remains hurdle in bringing synthetic methane to market
TOKYO -- Japan and China will work together to develop a renewable alternative to natural gas for industrial and household use.
Japanese engineering company Hitachi Zosen and China's Yulin Chemical will oversee the trial project in an industrial park in Shaanxi Province, aiming to start operations by 2025.
Hitachi Zosen will build a plant that produces methane -- the main component of so-called city gas -- from hydrogen and carbon dioxide, which will be supplied from local factories by Yulin Chemical.
The project is part of an initiative set for approval Monday at a bilateral forum on energy conservation and the environment, backed by Japan's Ministry of Economy, Trade and Industry and China's National Development and Reform Commission.
The plant, capable of producing 500 cu. meters of synthetic methane an hour, will be among the largest of its kind. Plans call for eventually raising output to 5,000 cu. meters.
Hitachi Zosen has proprietary catalytic technology for producing methane. And with China striving to become carbon-neutral by 2060, the company aims for commercialization by 2030 to take advantage of the burgeoning market. It will seek to team up with local renewable energy operators and look for candidate sites.
Natural gas in China is priced at slightly over 2 yuan ($0.30) per cu. meter. Methane is currently several times more expensive. The trial project makes use of the hydrogen and CO2 produced as a byproduct of factory activity, paving the way for profitability. Recycling the CO2 reduces greenhouse gas emissions as well.
METI estimates the cost of producing hydrogen from natural gas overseas at 11.5 yen ($0.10) per cu. meter, with green hydrogen costing even more. Reducing this cost will hold the key to the project.
Many renewable energy sites operate in China's interior. Tapping into the surpluses faced by some regional operators would help lower procurement costs.
Hitachi Zosen, together with Japanese material maker Toray, also aims to lower the cost of equipment for producing green hydrogen. METI has set a goal of reducing the cost to a sixth of current levels by 2030 and will provide funding through its 2 trillion yen fund to support decarbonization technologies.
Demand has yet to grow for hydrogen itself as a power source, such as for electricity or cars. Converting to methane opens the door to utilizing the existing gas pipelines to supply factories and other clients. It is seen as a promising bridge until hydrogen fuel goes mainstream.