Sinopec's booth during the 2021 China International Fair for Trade in Services in September shows its layout in the hydrogen production sector. Photo: cnsphoto

China's state-owned oil giant Sinopec announced on Tuesday that the country's first 10,000-ton-level photovoltaic green hydrogen demonstration project has started construction in Kuqa city, Northwest China's Xinjiang Uygur Autonomous Region, the largest of its kind in the world.

With a total investment of nearly 3 billion yuan ($470 million), the project, which is expected to complete in 2023, will produce 20,000 tons of green hydrogen annually, according to a statement Sinopec sent to the Global Times on Tuesday.

The project aims to produce green hydrogen through a water electrolysis system powered by a 300-megawatt solar power station.

Green hydrogen is produced from renewable sources such as solar and wind energy. It basically does not produce greenhouse gas emissions during its production process, and is therefore considered "zero-carbon hydrogen."

It is estimated that the plant will reduce carbon dioxide emissions by 485,000 tons a year once it is put into operation, and will contribute 130 million yuan to local GDP while also generating more than 18 million yuan in tax revenues.

Meanwhile, key equipment and core material used in the project including photovoltaic module, electrolyzer and hydrogen storage tank will be locally manufactured, boosting the development of the domestic hydrogen production equipment sector, the company said.

Sinopec is currently the largest hydrogen producer in China, producing approximately 3.9 million tons of hydrogen per year.