China is working to lure international energy giants ready to diversify into renewable energies to participate in the nation’s emerging hydrogen market.

UK supermajor Shell and Middle East giant Saudi Aramco have either set up a joint venture or signed an agreement with local hydrogen players for their debut in China’s hydrogen market as the country has rolled out a major campaign to give the sector a boost as part of the government’s larger plan to hit its target of carbon dioxide emissions peak by 2030 and carbon neutrality in 2060.

Last week, Aramco signed a memorandum of understanding with China’s second largest oil company Sinopec.

Among wide-ranging areas on which the two companies will collaborate are carbon capture and hydrogen production processes.

While little detail is available, well-placed sources said the two companies will join hands in the research and engineering of carbon capture during grey hydrogen production at Sinopec refineries in China.

Other areas for co-operation cover engineering, procurement and construction, oilfield services, upstream and downstream technologies.

Sinopec president Yu Baocai said the MoU introduces a new chapter of the partnership with Saudi Arabia.

The agreement with Aramco is in line with Sinopec’s ambition to become China’s largest hydrogen company.

Sinopec has committed to increasing investment in green hydrogen projects as part of its mission to achieve a carbon emissions peak before 2030 and carbon neutrality in 2050, 10 years ahead of the Chinese government’s 2060 target.

By 2025, the company plans to raise its green hydrogen production capacity to 500,000 tonnes per annum, compared with its current output of 3.9 million tpa of grey hydrogen from fossil fuels.

By 2025, Sinopec will increase the number of hydrogen refilling stations to 1000, from 74 now, which will be able to supply 200,000 tpa of hydrogen. Other initiatives include building 7000 photovoltaic generation stations for electric vehicle charging.

Sinopec’s agreement with Aramco on hydrogen expansion follows a similar pact announced by Shell in late July involving hydrogen retailing in China.

Shell and Shanghai-based power utility Shenergy have decided to set up a joint venture to establish a hydrogen distribution hub in Shanghai.

The Shanghai Shenergy Shell New Energy plans to build up to 10 hydrogen refilling stations in the Yangtze River Delta region around Shanghai in the next five years, expandable to 30 by 2030.

When established, it will be Shell’s first hydrogen distribution network in Asia, the UK supermajor said.

A recent report by Shell quoted studies suggesting that China’s total hydrogen production can surpass 580 million tpa of coal equivalent by 2060, accounting for 16% of the nation’s expected energy consumption.

Growth will be mainly driven by the use of hydrogen as a fuel for industry and long-distance transportation, Shell said.

China is already the world’s top hydrogen producer, with output of about 20 million tpa, most of which is grey hydrogen produced from reforming and naphtha cracking units or gas refinery byproducts.

A recent white paper from the China Hydrogen Energy Alliance said China’s demand for hydrogen will increase to 35 million tpa in 2030, growing to 60 million tpa by 2050, when it will account for 10% of the energy demand mix.