Low-carbon hydrogen to get more support in 2025 from Beijing’s new policy push


Low-carbon hydrogen is expected to get more support in China after Beijing said it would accelerate its development as a part of a national decarbonisation push and high demand from the industrial, shipping and aviation sectors, according to analysts.

On Tuesday, the Ministry of Industry and Information Technology (MIIT), the National Development and Reform Commission and the National Energy Administration jointly unveiled a plan to accelerate the application of low-carbon hydrogen in the industrial sector.

The plan called for the country’s refiners and chemical companies to increase the use of hydrogen in their production processes to reduce emissions. It also encouraged the firms to step up their research and development efforts for green methanol and green ammonia, two zero-carbon fuels derived from hydrogen that can be used in the power generation and transport sectors.

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The plan also called for greater deployment of hydrogen fuel cell vehicles, as well as the development of hydrogen-powered ships, aircraft and locomotives.

By 2027, the industrial sector should be making “active progress” in the production and use of low-carbon hydrogen and derivative fuels, according to the plan.

“We think the potential of hydrogen in the industrial sector has been confirmed,” Wu Jiaxiong, an analyst at BOCI Securities said in a note on Tuesday.

With the new plan, China’s hydrogen-related projects are expected to get more government support in terms of funding, approvals and operations, he said.

A hydrogen-based production line for steel car panels in Zhangjiakou, China. Photo: Xinhua

The MIIT programme was released a day before China’s Energy Law, which is considered to be a major support measure for the hydrogen industry, came into force on Wednesday.

Under the law, which was passed last November, hydrogen will be classified as an energy resource like fossil fuels and renewables, not a dangerous chemical product.

The new legislation means hydrogen is likely to face fewer restrictions related to its production, application and storage. It is also expected to drive investment in the domestic hydrogen sector, Changjiang Securities said in a report last November.

Hydrogen, which does not emit carbon dioxide when burned, is considered by many to be the fuel of the future. In 2022, China introduced its first-ever national hydrogen strategy, a plan covering the development of the industry through 2035.

China is also the world’s largest producer of green hydrogen, the cleanest form of hydrogen that emits no carbon dioxide during the production process, with nearly 7 gigawatts (GW) of installed green hydrogen capacity in 2023, according to the International Energy Agency.

Driven by a favourable environment for renewable energy, Asia could see significant investments into hydrogen-related infrastructure, including storage facilities and electrolysers used to produce green hydrogen, according to Anthony Patten, a partner at London-based law firm Herbert Smith Freehills.

“China and Japan are scaling up projects, while the Japanese and South Korean governments have launched hydrogen subsidy programmes that start from 2025,” he said.

Based on its current capacity, China can become a major exporter of green hydrogen by producing it at a low cost, said Go Nakanishi, founder of Shanghai-based research firm Integral.

But the geopolitical landscape for hydrogen is intensifying, just like in the electric vehicle and the renewable energy sectors. Last December, the European Union (EU) added restrictions to its green hydrogen subsidy programme to protect against Chinese-made equipment.

A project will not be eligible for subsidies if electrolysers sourced from China account for more than 25 per cent of its output capacity, according to the EU authorities.

“Chinese companies don’t have quite as big an edge with electrolyser manufacturing as they do with solar yet, but it does seem like things are headed in that direction,” said Cosimo Ries, an analyst at Trivium China in Shanghai, adding that the EU might choose to implement additional restrictions.

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