China Xuyang Group seizes the opportunity of "hydrogen" to create a new chapter of green and high-quality development

Strategic emerging industries and future industries are the main battlegrounds for creating new productive forces. With the acceleration of the new round of technological revolution and industrial transformation, major global economies will all regard hydrogen energy as an important choice for energy transformation and upgrading, and nurturing new economic growth points. China's "Medium and Long-Term Plan for the Hydrogen Industry (2021-2035)" clearly states that hydrogen energy, as one of the important directions of new productive forces, is a key development direction for strategic emerging industries and future industries. It is actively promoting in the aspects of "new", "quality", and "productive forces", gradually building it into an important engine to promote the green, low-carbon, high-quality, and sustainable development of China's economy and industry.

According to the Intelligent Wealth APP, China Xuyang Group (01907) actively responds to the needs of the times, upholding the overall positioning of "undertaking the landing of energy strategies, assisting carbon neutrality, and creating new business growth poles". Relying on its six major advantages of hydrogen resources, cost, geography, quality, technology, and low carbon, the company started overall planning and layout of the hydrogen energy industry development in 2020. In the same year, the 1 ton/day high-purity hydrogen Phase I project was successfully put into operation in July, and the Xuyang Hydrogen Energy parent company - Dingzhou Xuyang Hydrogen Energy Co., Ltd. (referred to as "Xuyang Hydrogen Energy") was registered in December. Subsequently, in 2021, Xuyang Hydrogen Energy registered and established three subsidiary companies in Xingtai, Hohhot, and Yuncheng, and established the Xuyang Hydrogen Energy Research Institute. In January 2022, it obtained the "Road Transport Operation License of the People's Republic of China" and established a hydrogen transportation fleet with dangerous goods transportation qualifications. In March 2022, Baoding Xuyang Hydrogen Energy Co., Ltd. was registered to carry out the implementation of the hydrogen energy strategic cooperation agreement with the Baoding Municipal People's Government, thus basically completing the market entity setting, organizational structure design, and layout of the Xuyang Hydrogen Energy sector.

From 2020 to the present, after three years of development, Xuyang Group has been steadily promoting the construction of hydrogen energy projects and scenario applications, forming an effective, efficient, and applicable Xuyang Hydrogen Energy ecosystem. It has built and put into operation 3 production lines totaling 14 tons/day of high-purity hydrogen, becoming the fifth largest high-purity hydrogen producer and supplier in the country and the largest in the Beijing-Tianjin-Hebei region. It has built and put into operation 3 hydrogen refueling stations, becoming the enterprise with the most independently built refueling stations in Hebei Province, forming a stable profit model for the entire industry chain of production - storage - transportation - refueling - utilization. The hydrogen products have passed the national clean hydrogen certification, with a comprehensive carbon emission of only 0.49 kg CO2e/kg H2 throughout the production cycle, far below the clean hydrogen certification standard value of 4.90 kg CO2e/kg H2, achieving an annual carbon reduction of 58,000 tons.

In terms of financial performance, Xuyang Hydrogen Energy sector has experienced rapid development since 2021, with hydrogen sales volume and hydrogen energy business revenue showing exponential growth. In 2023, hydrogen sales volume reached 9.3 million cubic meters, a year-on-year increase of 2.36 times; hydrogen energy business revenue increased from 21.1 million yuan in 2021 to 64 million yuan last year, continuously strengthening its comprehensive profitability.

In terms of application scenarios, Xuyang Hydrogen Energy has currently established multiple hydrogen heavy-duty truck transportation routes such as Dingzhou to Xinji, Dingzhou to Tianjin, and Baoding Rongyi Line, replacing traditional fuel vehicles to transport products such as coke and coal, with a capacity of nearly 5000 tons per day. In 2023, more than 60 fuel cell vehicles will be added to assist Xuyang Park in achieving green transportation targets. At the same time, applications of hydrogen heavy-duty trucks for short-distance transportation, loading, and self-unloading within the park are also gradually expanding.

In terms of research and innovation, Xuyang Hydrogen Energy is accelerating the improvement of its research platform system. It has established a hydrogen laboratory in Dingzhou Park, equipped with over 20 core devices such as electrochemical workstations and vacuum tube furnaces. Research is being conducted on key materials such as hydrogenation catalysts and liquid hydrogen catalysts. As a major drafting unit, it has participated in the drafting of two national hydrogen energy standards: "Safety Technical Requirements for High-Purity Hydrogen Conversion from Coke Oven Gas" and "Operating Management Specifications for Hydrogenation Stations." This not only fills the gap in standardization in related areas of domestic hydrogen energy industry development but also signifies a solid step towards a more scientifically standardized direction in the industry's system construction.

Looking towards the future, Xuyang Hydrogen Energy will further deepen the implementation of the "Xuyang Group Hydrogen Energy Development Plan." It will continue to develop according to the "One Line, One Network, Two Wings, Four Phases" development concept, improve the hydrogen energy ecological model of production-storage-transportation-refueling + research, establish a hydrogen production, storage, distribution network layout, accelerate the establishment of an integrated closed-loop hydrogen energy industry circle, and gradually build a clean low-carbon energy supplier, energy ecosystem integrator, advanced energy technology developer, and ultimately become an outstanding service provider in energy transformation.

In terms of market development, plans are in place to establish four hydrogen supply bases in Dingzhou, Xingtai, Tangshan, and Hohhot to achieve continuous growth in hydrogen sales volume. Following the principle of "developing markets with by-product hydrogen, gradually replacing with green hydrogen," green hydrogen projects will be planned and constructed in stages to gradually form a 5000 tons/year green hydrogen production capacity. It will also collaborate with the group's chemical industry sector to produce green methanol, green synthetic ammonia, and other products.

In terms of storage and transportation enhancement, efforts will be made to liquefy and establish pipelines to form an intensive and integrated hydrogen supply network. On December 25, 2023, the Xuyang Hydrogen Dingzhou-Gaobeidian Pure Hydrogen Pipeline Project, with a total length of 164km and a designed total supply capacity of 100,000 tons/year, was approved by the Hebei Provincial Development and Reform Commission. The project will be steadily implemented according to plan. Additionally, with the breakthrough of domestic hydrogen liquefaction equipment, there are plans to invest 300 million RMB to build a 5TPD liquid hydrogen project.

In terms of development assurance, efforts will be made to follow the national industrial layout process and increase investment in the hydrogen energy sector. The goal is to exceed a hydrogen production capacity of over 100,000 tons/year from the near term to 2026, with more than 5 hydrogen production plants on the business end. In the long term, continuous efforts will be made to increase the overall volume of hydrogen energy business, planning to form a multi-grade hydrogen gas production capacity of 200,000 tons/year, with over a thousand internal and external hydrogen vehicles, and establish hydrogen refueling stations across the country to achieve a reduction of 2.28 million tons/year in carbon dioxide emissions In short, Xuyang Hydrogen Energy will always adhere to the development concept of "innovation, coordination, green, openness, and sharing". Starting from building a hydrogen energy industry base, expanding the hydrogen energy market in Beijing-Tianjin-Hebei region, and creating the Xuyang Hydrogen Energy brand, it will vigorously strengthen a comprehensive innovation system that includes innovation by all, comprehensive innovation, systematic innovation, collaborative innovation, originality, and uniqueness. It will vigorously promote the development of new functional materials and hydrogen utilization projects, enhance the level of green and high-quality development, persistently work towards Xuyang's "two transformations" (shifting from large-scale manufacturing to service-oriented manufacturing, transitioning from market-driven investment to innovation-driven), continuously consolidate the two pillar industries of coking and chemical industry while simultaneously transforming and upgrading towards new energy, new materials, and fine chemicals through research and development innovation to create a third growth pole. It is for the national layout and global expansion of Xuyang's business, for the corporate vision of "a world-leading energy and chemical company - innovation leads the future" that Xuyang will strive hard, continue to strive, strive for the long term, and strive together