Abstract
In order to achieve the goals of peak global greenhouse gas (GHG) emissions by 2030 and carbon neutralization by 2050, it is necessary to promote the transformation of China's energy sector dominated by fossil energy. Hydrogen energy is considered as the “ultimate energy” in the 21st century. It is redefining, restructuring, and transforming the China's energy sector. Therefore, Chinese enterprises need to reshape their value proposition through business model innovation. This chapter selects 10 leading enterprises in China's hydrogen energy industry. Through the business model canvas analysis of their business models, along with policies and development trends of China's hydrogen energy industry, this chapter provides the basic knowledge of popular business models in China's hydrogen industry and puts forward suggestions and research directions for the long-term development of its enterprises.
TopIntroduction
Energy is the foundation of national economic and social development, and energy security is directly related to national and social security. At present, China is highly dependent on overseas crude oil resources, which poses some hidden dangers in domestic energy security. For a long time now, China's economic growth has been considerably restricted by the relationship between energy supply and demand. Starting 1993, China became a net importer (A country that imports more than it exports) of oil. In 1996, China's crude oil import and export deficit appeared. After the Iraq war, the international oil price hit a record high. Inevitably, China's total energy consumption and energy dependence also continued to soar, which had deeply affected the development of China's national economy. Subsequently, carbon emissions from using fossil fuels, imposed pressure on environment protection and preservation. Strategic restructuring, transformation, and upgradation of the national energy sector has become the Trend of The Times. Also low-carbon emissions and clean energy consumption has entered mainstream development (Tan & Yu, 2020). As a clean and carbon free secondary energy, hydrogen energy is taking its place in the energy strategies of various countries. With the in-depth development of technology, hydrogen energy will play a vital role in achieving the goals of “emission peak” and “carbon neutrality” defined by Chin1a.
Hydrogen is the simplest and the most abundant element in existence. While the gases in the universe are composed with 90% hydrogen in plasma or atomic state (in the stars, interstellar matters, other planets in solar systems etc.,) the earth's atmosphere is composed of only 14% hydrogen. Hydrogen is not available in natural gaseous form on Earth because it cannot be held by Earth's gravity, it exists in abundance in combined stable forms like water and hydrocarbons (found in organic materials) and can be produced from these sources (Ratnakar et al., 2021). Hydrogen energy is also a clean energy that can promote the transformation from traditional non-renewable energy to green energy. Its energy density is 140 megajoules per kilogram, which is 3 times that of oil and 4.5 times that of coal. It is regarded as the subversive technical direction of the future energy revolution (Liu et al., 2021).
Since 2011, China has issued “Energy Technology Revolution and Innovation Action Plan (2016-2030)”, “Made in China 2025” and other top-level plans. “Promoting hydrogen economy infrastructure construction” has also been written into the government work report to encourage the development of hydrogen energy and fuel cell technology and thereby the industry at large, which has been listed as strategic emerging industries and plays an important part of China's energy strategy. The hydrogen energy industry is thus embracing favorable development opportunities.
Peter F. Drucker (2006), the inventor of modern management, once said: “the competition between enterprises is not the competition of products, but the competition of business models”. At present, China is promoting the sustainable development strategy and is focusing on establishing a resource-saving and environment-friendly society. In order to accelerate the realization of this strategy, the Chinese government and enterprises are working together to promote the innovation of the hydrogen energy industry in business models, which is mainly oriented on sustainability, industrialization, and marketization.
Key Terms in this Chapter
Circular Economy: A circular economy (also referred to as “circularity” and “CE”) is “a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible”. A CE aims to tackle global challenges like climate change, biodiversity loss, waste, and pollution by emphasizing design-based implementation of the three base principles of the model. The three principles required for the transformation to a circular economy are: eliminating waste and pollution, circulating products and materials, and the regeneration of nature. CE is defined in contradistinction to the traditional linear economy.
Business model: A Business model provides information about an organization’s target market, their market’s need, and the role that the business’s products or services will play in meeting those needs.
Business Model Innovation: A business model innovation describes the process in which an organization adjusts its business model. Often times these innovations fundamentally change how a company delivers value to its customers, whether that’s through the development of new revenue streams or distribution channels.
Blue Sky Defense War: The three-year action plan for cleaner air, issued by the State Council in June 2018, is a comprehensive strategy to improve air quality through actions across all key sectors. Key objective of the action plan is to reduce emissions of major air pollutants and greenhouse gases and decreasing the number of days with high air pollution.
Beidou Foundation Enhancement System: It is also known as the Beidou continuously operating reference station network, and is built on the ground surface. This system consists of reference stations, communications networks, multilevel data center, and terminals for mobile Internet and users. These terminals can process Beidou signals. The Beidou foundation enhancement system essentially belongs to the information-physical fusion system ( Lu & Chen, 2005 ).
Emission Peak: Emission peak is the point at which carbon dioxide emissions stop rising to the peak and then gradually fall back.
Equity Incentive: Compensation means all equity-based compensation awards (including stock options, restricted stock, stock appreciation rights and cash restricted units) granted under the Company's stock and incentive plans, as in effect from time to time.
Carbon Neutrality: Carbon neutrality is a state of net-zero carbon dioxide emissions. This can be achieved by balancing emissions of carbon dioxide with its removal (often through carbon offsetting) or by eliminating emissions from society (the transition to the “post-carbon economy”). The term is used in the context of carbon dioxide-releasing processes associated with transportation, energy production, agriculture, and industry.
WBCSD: The World Business Council for Sustainable Development is a CEO-led organization of over 200 international companies. The Council is also connected to 60 national and regional business councils and partner organizations.