China is taking a decisive step toward sustainability by spearheading the global green hydrogen movement. In December 2023, the government unveiled an ambitious strategy, crafted by the Ministry of Industry and Information Technology (MIIT), the National Development and Reform Commission, and the National Energy Administration, to integrate green hydrogen into industrial sectors. This initiative aligns with China’s ESG and carbon neutral strategy, targeting emissions reduction in hard-to-decarbonize industries. 

China leads globally in green hydrogen production, holding 49.57% of global capacity under construction for 2023/2024, as per Commodity Insights. The plan emphasizes producing carbon-neutral fuels like green methanol and ammonia, addressing energy autonomy while supporting the transition to clean energy. 

Despite its scale, China’s green hydrogen strategy faces challenges. A lack of structured purchase agreements hampers financial viability, with only a few facilities securing purchase coverage above 80%, a threshold critical for bank financing. Additionally, most projects cater to domestic demand, particularly in transportation and marine fuels, limiting export potential and global outreach. The government is actively promoting green ammonia use in coal-fired power plants, creating local demand for green hydrogen. While this move supports high-emission sectors, its long-term success depends on balancing subsidies with economic sustainability. 

China’s leadership in renewable energy and electrolyze technology showcases its innovative edge. However, technical and financial constraints continue to challenge market demand for these advancements. China’s green hydrogen strategy underscores its commitment to carbon neutrality and ESG principles, positioning it as a global leader in clean energy. With effective collaboration among policymakers, producers, and investors, the initiative holds the potential to redefine sustainable energy production. 

Sources: 

https://energynews.pro/en/china-mobilizes-49-of-global-green-hydrogen-capacity-in-2023/ 

https://www3.weforum.org/docs/WEF_Green_Hydrogen_in_China_A_Roadmap_for_Progress_2023.pdf 

https://www.oecd.org/content/dam/oecd/en/publications/reports/2024/02/scaling-hydrogen-financing-for-development_44818263/0287b22e-en.pdf  

https://www.rystadenergy.com/news/china-hydrogen-targets