Hydrogen energy strategy is further upgraded, industry going global at full speed, and green fuel penetration rate may continue to grow

As global oil prices soar, hydrogen energy, known as “green oil,” is once again in the spotlight.

As an alternative energy source, hydrogen has been known since the 1970s, when the oil crisis prompted the concept of a “hydrogen economy.” Electrolysis of water to produce hydrogen was seen as a future clean energy pathway, but limited by high costs and low renewable energy share, it remained mainly in laboratories and small-scale demonstrations.

In recent years, China has increased its focus on the hydrogen industry. The 2019 government work report mentioned “stabilizing automobile consumption, continuing to implement preferential policies for new energy vehicle purchases, and promoting the construction of charging and hydrogen refueling stations.” In 2024, the government again emphasized “accelerating the development of cutting-edge emerging industries such as hydrogen energy, new materials, and innovative medicines.”

China’s hydrogen industry has developed rapidly. Between these two milestones, Sinopec built over 300 hydrogen refueling stations nationwide, and the country’s first 10,000-ton green hydrogen project—the Sinopec Kuqa Green Hydrogen Demonstration Project—was completed and put into operation. Additionally, renewable energy companies like Longi Green Energy and Sungrow are advancing photovoltaic-based hydrogen projects to promote green hydrogen direct supply to industry.

Recently, hydrogen energy was again mentioned in the government work report, which highlighted accelerating the push for a comprehensive green transition. The report proposed establishing a National Low-Carbon Transition Fund, cultivating new growth points such as hydrogen energy and green fuels, effectively controlling high-energy-consuming and high-emission projects, accelerating the elimination of outdated capacities, and supporting innovation and application of green low-carbon technologies and equipment.

Guojin Securities analysts noted that the biggest difference in hydrogen energy between the 14th and 15th Five-Year Plans is the urgency of policies and the more complete infrastructure. Under the energy revolution—decarbonizing sectors beyond electricity—hydrogen and ammonia as key energy carriers are indispensable.

Meanwhile, as the strategic importance of hydrogen continues to rise, China’s green hydrogen supply chain—from production and storage to export—has been fully validated. On March 4, Envision Group shipped the world’s first commercial green ammonia from Chifeng Zero-Carbon Industrial Park in Inner Mongolia, successfully arriving at the Port of Lianyungang and potentially delivered to Lotte Chemical in South Korea.

Currently, many companies in the hydrogen industry are exploring overseas markets. In January, Longi Hydrogen announced the delivery of its first European electrolyzer system—a 5MW alkaline water electrolysis hydrogen production system. Guofu Hydrogen also announced a pre-purchase agreement with Line Hydrogen Pty Ltd for equipment related to the hydrogen project in Tasmania, Australia, including electrolyzers and refueling station equipment.

▌Green Hydrogen and Ammonia Are Gaining Momentum

Hydrogen’s importance lies not only in its role as an energy fuel but also as a vital chemical raw material.

According to production sources, the World Energy Council classifies hydrogen into gray, blue, and green categories. Gray hydrogen is the most common, produced through processes that release CO2, hence the name. Blue hydrogen involves carbon capture and storage (CCS) to retain carbon during production, reducing emissions by about 90%, but at higher costs.

Green hydrogen is the most ideal form of hydrogen utilization. It is produced by using renewable energy sources like wind and solar to generate electricity, which then electrolyzes water to produce hydrogen, with minimal greenhouse gas emissions during the process. When green hydrogen reacts with nitrogen or carbon dioxide, it can produce green ammonia, green methanol, and sustainable aviation fuel (SAF), among other hydrogen-based green fuels.

From an absorption perspective, China International Capital Corporation (CICC) pointed out that green hydrogen has numerous downstream applications, but its penetration remains low. Policies such as direct connection to green electricity are reducing costs, promoting cost reductions in green hydrogen. Currently, wind and solar hydrogen projects are becoming economically viable, driving demand for electrolyzers. Storage and transportation technologies for hydrogen are diverse, benefiting from terminal demand and maintaining high growth potential.

Internationally, some regions like Europe have clear demand gaps for green fuels driven by policies, with multiple collaborations already underway with domestic companies. By December 2025, China Energy Construction signed a long-term purchase agreement with Belgian shipping giant CMB.TECH for green ammonia as marine fuel, marking the world’s first green ammonia marine fuel sales contract. This year, China Power Green Energy also signed a green ammonia procurement agreement with EDF, paving the way for exports to Europe.

CITIC Securities stated that during the 14th and 15th Five-Year Plans, as the “carbon peaking” target approaches, and with strengthened domestic carbon emission assessments and increasing overseas green trade demands, the demand for decarbonization in industry will further grow. This is expected to boost the penetration of green hydrogen in chemical and metallurgical industries. Starting around 2026, green hydrogen’s role in industrial decarbonization will become more prominent, with demand potentially exceeding 500,000 tons and electrolyzer installations growing at nearly 50% annually.

GF Securities estimates that green ammonia, as a basic chemical raw material, is expanding its fuel attributes. The “dual carbon” policies support the development of green ammonia as a fuel, with production and demand expected to grow significantly. By 2050, green ammonia could account for over 70% of domestic production. Green methanol, a renewable form of methanol with multiple production pathways, has been heavily deployed during the 14th Five-Year Plan. As the cost of green electricity decreases, green methanol is expected to become an important decarbonization option, widely used in transportation and chemicals.

In terms of investment strategies, these institutions emphasize that the trend toward decarbonization and ongoing exploration of green hydrogen business models will gradually promote industry commercialization. The deep integration of green hydrogen, new energy, and computing power may bring new growth opportunities; focus should be on three main areas: green hydrogen electrolyzer equipment, hydrogen storage and transportation, green fuels, and fuel cell industry chain companies with safe margins and growth potential.

(Article source: Cailian Press)