China’s Hydrogen Transition: Green Hydrogen’s Rising Tide

China’s Hydrogen Transition: Green Hydrogen’s Rising Tide

The concept of hydrogen energy, hinging on the chemical reaction between hydrogen and oxygen to release clean energy, has garnered immense attention in recent years. With applications ranging from transportation to industrial sectors, hydrogen energy holds the promise of a sustainable, clean energy source. Notably, the field of fuel cells has taken center stage, and experts at the “High-Quality Implementation Seminar on Wind and Solar Energy Hydrogen Storage Application,” organized by China EV 100, project that by 2025 or 2026, hydrogen fuel cell costs could potentially match those of lithium-ion batteries.

Hydrogen energy is currently categorized into three types based on production methods: gray, blue, and green. Gray hydrogen, produced using fossil fuels like coal, is high in carbon content. Blue hydrogen is generated mainly from fossil fuels such as natural gas and is subjected to carbon capture and storage techniques, resulting in lower carbon emissions. Green hydrogen, on the other hand, is derived from renewable resources like solar, wind, and water. Its production process is environmentally friendly, avoiding emissions of air pollutants like carbon dioxide.

Compared to gray and blue hydrogen, green hydrogen stands out as the most environmentally friendly option, serving as a pivotal driver for sustainable energy and facilitating global renewable energy transformation. According to a report by Deloitte, renewable energy-derived green hydrogen currently accounts for less than 1% of total hydrogen production due to cost constraints. However, projections indicate that while blue hydrogen supply will continue to increase, it will gradually yield to green hydrogen starting in 2040. By 2050, green hydrogen is expected to make up a substantial 85% of hydrogen production, with an estimated annual trade value of $280 billion.

Within China, the proportion of hydrogen energy in terminal energy consumption is steadily rising. Presently, hydrogen energy demand is primarily concentrated in the chemical industry, with ammonia synthesis relying on hydrogen in stable demand of around 10 million tons. Sectors such as transportation and metallurgy are also showing significant growth potential for hydrogen use. By 2030 and 2050, China’s hydrogen production is projected to reach 37.15 million tons and 60 million tons, respectively, with proportions in terminal energy consumption at 5% and 10%.

China’s hydrogen energy landscape is influenced by its energy structure, which is rich in coal and scarce in natural gas. While natural gas-derived hydrogen has a high production cost, mature coal-based hydrogen production technologies are well-established, forming a complete industrial chain. Despite higher emission intensity, coal-based hydrogen accounts for over 60% of China’s total hydrogen production due to its stable coal supply and economic viability. With its significant scale, coal-based hydrogen is set to remain a crucial part of China’s hydrogen supply system, acting as a major source of low-cost hydrogen in the medium term.

Simultaneously, China’s green hydrogen development is rapidly advancing. According to Guotai Junan Securities, China’s green hydrogen penetration rate was around 2% in 2020. Since 2021, the number of green hydrogen demonstration projects in the country has been steadily increasing, and large-scale electrolysis for hydrogen production has entered a new stage of extensive demonstration. The appearance of high-capacity electrolyzers has facilitated the exploration of commercial operation models. These large-scale demonstrations are expected to enhance domestic engineering capabilities for renewable hydrogen production, expand green hydrogen production scale, and reduce costs. By 2025, alkaline and PEM electrolyzer costs are projected to decrease by 35-50% from current levels, further propelling the innovative application of hydrogen energy in diverse downstream scenarios and accelerating the substitution of gray hydrogen with green hydrogen.

China’s Hydrogen Energy Alliance predicts that by 2030, green hydrogen will constitute 15% of China’s hydrogen production, and this proportion is set to rise dramatically to 70% by 2050. As green hydrogen’s momentum surges, it is poised to play a pivotal role in shaping the landscape of clean energy transition in China and beyond.