Current Development Status, Policy Support and Promotion Path of China’s Green Hydrogen Industries under the Target of Carbon Emission Peaking and Carbon Neutrality

Abstract

The green hydrogen industry, highly efficient and safe, is endowed with flexible production and low carbon emissions. It is conducive to building a low-carbon, efficient and clean energy structure, optimizing the energy industry system and promoting the strategic transformation of energy development and enhancing energy security. In order to achieve carbon emission peaking by 2030 and neutrality by 2060 (dual carbon goals), China is vigorously promoting the green hydrogen industry. Based on an analysis of the green hydrogen industry policies of the U.S., the EU and Japan, this paper explores supporting policies issued by Chinese central and local authorities and examines the inherent advantages of China’s green hydrogen industry. After investigating and analyzing the basis for the development of the green hydrogen industry in China, we conclude that China has enormous potential, including abundant renewable energy resources as well as commercialization experience with renewable energy, robust infrastructure and technological innovation capacity, demand for large-scale applications of green hydrogen in traditional industries, etc. Despite this, China’s green hydrogen industry is still in its early stage and has encountered bottlenecks in its development, including a lack of clarity on the strategic role and position of the green hydrogen industry, low competitiveness of green hydrogen production, heavy reliance on imports of PEMs, perfluorosulfonic acid resins (PFSR) and other core components, the development dilemma of the industry chain, lack of installed capacity for green hydrogen production and complicated administrative permission, etc. This article therefore proposes that an appropriate development road-map and integrated administration supervision systems, including safety supervision, will systematically promote the green hydrogen industry. Enhancing the core technology and equipment of green hydrogen and improving the green hydrogen industry chain will be an adequate way to reduce dependence on foreign technologies, lowering the price of green hydrogen products through the scale effect and, thus, expanding the scope of application of green hydrogen. Financial support mechanisms such as providing tax breaks and project subsidies will encourage enterprises to carry out innovative technological research on and invest in the green hydrogen industry.

1. Introduction

As a signatory to the Paris Climate Agreement, China’s Central Government made a major strategic decision closely related to China’s sustainable development and forming a community of human destiny. The ‘dual carbon goals’ is a solemn commitment made by China as a responsible power to mitigate global climate change in accordance with Chinese national conditions [1], and it provides Chinese solutions to promote structural changes in energy supply and consumption, transformation, upgrading traditional industries and building a low-carbon society [2]. Green hydrogen has comparative advantages, such as low-carbon emissions, high energy density, flexible and diverse production methods, abundant raw material sources and a wide range of applications [3]. Moreover, major developed countries and regions, such as the United States, the European Union and Japan, see hydrogen energy as an energy transformation strategy [4,5], and place a high value on establishing a green hydrogen industry based on hydrogen production from renewable energy sources, such as photovoltaic and wind power.

Although the definition and criteria for green hydrogen are still debated in academic and practical circles, it is widely accepted that ‘green hydrogen’ is a renewable form of energy hydrogen production, defined as ‘the use of renewable electricity to produce hydrogen by the electrolysis of water to achieve a complete clean hydrogen process’ [6]. The China Hydrogen Energy Consortium defines green hydrogen as having a carbon footprint of less than 4.9 kgCO₂/kgH₂ and a renewable energy source for hydrogen production [7]. The process of renewable energy hydrogen production produces no or lower carbon emissions, making it a completely green way of producing hydrogen.

Green hydrogen industry development is one of the crucial measures to realize China’s dual carbon goals. To effectively address global climate change, the transformation of the energy structure and to meet the ‘dual carbon goals’, it is urgent to promote the growth of the green hydrogen industry in China. The green hydrogen industry, which can achieve zero or low-carbon emissions using renewable or clean energy, has emerged as the industry’s future development trend. Therefore, in 2020, China implemented the Standard Determination (NO.T/CAB0078-2020), the first official standard to quantify the carbon emissions of hydrogen energy in China. As a strategic emerging industry, the green hydrogen industry not only undertakes the critical task of transforming energy terminal and heavy pollution industries, but also bears the responsibility of building a green, low-carbon industry and driving economic growth [8]. One of the most important initiatives to combat global climate change, the green hydrogen industry could ensure Chinese energy security and promote industrial transformation. Under the impetus of external pressures, such as energy conservation and emission reduction, as well as the internal driving force of societal low-carbon transformation, China’s green hydrogen industry will create diverse application ecology through industry chain integration and technological innovation.

Through field research and interviews with green hydrogen enterprises, industry regulators and industry associations, adequate data and information have been collected on the development of the green hydrogen industry, current obstacles and administrative regulation methods. Based on the analysis and collation of these data, the originality of the thesis is reflected in the proposal that China’s green hydrogen industry has potentials such as abundant renewable resources and commercialization experience, strong innovation ability and rich application scenarios in traditional industries. The novelty of the paper lies in comprehensive measures for the development of China’s green hydrogen industry, including the integration of development planning, a policy system, the construction of an administrative regulatory model and technological breakthroughs in line with the industrial development, so as to cultivate a market-oriented and government-guided green hydrogen industry development pattern.

The content of this article is organized as follows. Section 2 analyzes classifications of hydrogen energy and the advantages of green hydrogen. Section 3 assesses the development and policies of the green hydrogen industry in the U.S., the EU and Japan. Section 4 discusses green hydrogen industrial policies and their development potential in China. Section 6 proposes corresponding improvement measures based on research and discussions on the main obstacles in the development of the Chinese green hydrogen industry in Section 5.

2. The Advantages of Green Hydrogen Industry

2.1. Classifications of Hydrogen Energy

Grey, blue and green hydrogen are classified based on hydrogen production technology, raw material origin and carbon emissions. With its low-cost and mature technology, grey hydrogen is still at the forefront of global hydrogen production today. The main disadvantage of grey hydrogen is that it emits a lot of carbon dioxide. In some cases, its production cannot offset the carbon emissions from the manufacturing process. Blue hydrogen has the distinct advantage of low power consumption, which can be combined with carbon capture and storage technology (CCUS) to produce a carbon emission compensation effect. Its disadvantages include an unstable supply of raw materials, low hydrogen purity and limited consumption [9].

Green hydrogen has a low carbon footprint and clarity, is technically flexible and easy to deploy on a large scale and satisfies the requirements of the dual carbon goals and sustainable development. The green hydrogen industry chain is extensive, encompassing hydrogen preparation, storage and transportation, refueling and utilization. Green hydrogen’s share of the global energy market will rapidly grow. By 2028, the global green hydrogen market size will reach $9.8 billion according to the report issued by Allied Market Research [10]. With the boom in hydrogen energy, the production of green hydrogen is exponentially increasing (

Table 1. Comparison of the three hydrogen production processes.

Hydrogen Production	Raw Material Origins	Technology Line	Advantages	Disadvantages
Grey hydrogen	Fossil energy sources	Gas separation and reforming technologies	Technology Maturity	Limited raw material reserves high carbon emissions
Blue hydrogen	Chloride, alkali and other industrial by-product gases	Industrial purification combined with carbon capture and storage technology	Lower cost	Insufficient hydrogen purity and narrow application range
Green hydrogen	Water, renewable energy power	Electrolytic water technologies	No carbon emissions	Higher costs and technical difficulty

).

2.2. Advantages of Green Hydrogen Industry

China could achieve economic and social development, environmental, energy and other multi-domain targets with the accelerated development of green energy industries and technological innovation. Green hydrogen industries help China, as the world’s largest carbon emitter, to achieve extensive decarbonization in the energy, transport, construction and industrial sectors. Second, the development of the green hydrogen industry will stimulate the rapid development of other new industries, including hydrogen fuel cells, new materials, semiconductors and other fields. Third, the green hydrogen industry can be well matched with renewable energy power generation facilities, such as hydro power, wind power and photovoltaics with high volatility. China’s abundant renewable energy can be fully utilized.

To achieve the goal of carbon neutrality by 2060, China’s annual demand for hydrogen energy will reach 37.15 million tons in 2030 and increase to approximately 130 million tons by 2060. With the constraints of the dual carbon goals, Figure 1 illustrates that China’s share of green hydrogen will rise from 3% in 2020 to 15% in 2030 and reach 75% in 2060 in total hydrogen energy demand [11].

3. Overview of the Green Hydrogen Industry in Overseas Regions

More than 20 countries and regions worldwide are actively formulating hydrogen energy strategies and systematically developing the green hydrogen industry [12].

3.1. The U.S. Focuses on Building a Holistic Chain of the Green Hydrogen Industry and Frontier Technologies Development

The United States has pioneered promulgating a national hydrogen roadmap, developing hydrogen energy technologies, promoting hydrogen energy projects and enacting several energy industry plans [13]. With the return of the United States to the Paris Agreement, its hydrogen energy strategy is clearly shifting to research and the application of cutting-edge technologies [14], such as green hydrogen technology, rather than hydrogen energy core technology reserves and the commercialization of mature technologies, such as hydrogen fuel cells. The United States has accumulated relatively mature technology and project operation experience in hydrogen production via electrolytic water technology and will concentrate on core technology and the industrial development of hydrogen production via renewable energy sources, such as solar energy, as well as the development of a full chain for the green hydrogen industry and technology [15].

In 2014, the U.S. released the Comprehensive Energy Strategy, aiming to lay the foundation for a clean energy future, strengthen the deployment of low-carbon technologies and promote stronger investment in hydrogen energy, fuel cells and other clean energy research. The Hydrogen Energy Program Development Plan released in 2020 put forward an overall strategic framework for hydrogen energy research and a development blueprint for the next decade and beyond. In 2021, the hydrogen energy infrastructure was elected into the Infrastructure Investment and Jobs Act. According to the Act, the American government will construct four regional hydrogen energy hubs and invest in the research and development of the hydrogen energy industry chain. Furthermore, it proposed the technical route for the development of the hydrogen energy industry in coordination with fossil fuels, renewable energy and nuclear energy. The U.S. Department of Energy announced a $200 million investment to accelerate the “Energy Earth shots” program in six technology areas, including hydrogen energy and long-term energy storage to strengthen basic research on clean energy technologies. In the same year, the U.S. Department of Energy issued its National Clean Hydrogen Strategy and Roadmap (draft) providing a comprehensive overview of the potential for hydrogen production, transportation, storage and use in the United States. Meanwhile, to promote hydrogen energy development, key challenges to achieving clean hydrogen energy and strategies were included in this draft.

By systematically reviewing the National Clean Hydrogen Strategy and Roadmap issued by the U.S. Department of Energy and major industrial policies, hydrogen is no longer considered a separate energy industry but rather a key component of overall strategic goals, such as carbon neutrality, hydrogen economic development and global market leadership in hydrogen energy technology. The hydrogen energy industry in the United States has grown through policy analysis, scientific forecasting of commercial prospects, hydrogen energy industry development, hydrogen energy core technology research, hydrogen energy project demonstration and commercial application. After more than 30 years of development in the hydrogen energy industry, the United States relies on its strong scientific research and commercial capabilities, policy planning, the whole industrial chain and the complete technology reserve for developing the green hydrogen industry.

The United States has established a unique model of collaborative development for the green hydrogen industry—the federal government enacts laws or implements national strategies. The Department of Energy directs the research and development of hydrogen energy technology by scientific research institutions and industrial enterprises. Each state implements an industrial layout based on the current situation, and core enterprises and others conduct the commercial promotion.

3.2. The EU Has Laid out a Clear Roadmap for Developing a Green Hydrogen Industry

The Fuel Cells and Hydrogen Joint Undertaking (FCH JU) published the European Hydrogen Energy Roadmap: A Sustainable Pathway for the European Energy Transition in 2019 to increase the value of the EU hydrogen energy industry through the development of cleanable hydrogen energy [16]. In the same year, the European Commission introduced the trillion-dollar European Green Deal, sparking an investment boom in green hydrogen [17]. Following the publication of the EU Hydrogen Strategy, the European Commission identified green hydrogen as a key driver for achieving the 2050 carbon neutrality target and a priority for the future development of the hydrogen industry.

However, ‘blue hydrogen + carbon catalytic’ technology is a mature model for the EU hydrogen industry in the short to medium term. The ambitious EU Hydrogen Strategy, which will play an important role in achieving the 2050 climate neutrality goal of the European Green Deal, envisions 40 GW of green hydrogen production capacity by 2030, with annual output exceeding 10 million tons. The goal is to have 100% coverage of green hydrogen by 2050, with mature green hydrogen technologies accounting for all industries with difficulties in decarbonization.

Some researchers of the European hydrogen energy community have even suggested that the EU will be able to achieve world leadership in the green hydrogen industry by collaborating with neighboring countries to establish a 2 × 40 GW electrolyzer market, utilizing the abundant renewable resources in Ukraine, North Africa and other countries [18]. To reduce reliance on Russian fossil fuels and accelerate the green energy transition, the European Commission published the ‘REpower EU’ energy transition action program in 2022, which raises the share of renewable energy in final energy consumption from 40% to 45%, and additionally elaborates on the timing and geographical relevance of green hydrogen production via an enabling act. The European Commission is committed to supporting hydrogen production and market development, accelerate investment in the hydrogen value chain, resolving technical bottlenecks, develop hydrogen infrastructure and determining the regulatory framework for green hydrogen. Unlike the United States, which focuses on developing nuclear energy and reforming fossil resources to produce hydrogen (grey hydrogen), the EU’s future hydrogen energy industry prioritizes technologies, such as water electrolysis and bioenergy, to produce hydrogen. Although the EU has the advantages of a low-carbon and environmental protection concept, a good foundation for renewable energy generation, a leading hydrogen pipeline network, electrolysis tank technology, a complete infrastructure, such as natural gas transport pipelines, and excellent resource endowment, the EU’s high reliance on fossil energy for energy supply and soaring energy prices, such as for electricity, have cast a shadow over the EU’s green hydrogen development prospects [19].

3.3. Japan Actively Guides the Coupling and Synergistic Development of the Green Hydrogen Industry with Advantageous Industries

Japan has been one of the countries most interested in developing hydrogen energy in recent years. Japan was the first country in the world to promulgate the Basic Hydrogen Strategy and occupies the world’s leading position in multiple fields of hydrogen technology. Japan is eager to seek hydrogen energy to restructure its energy mix owing to geographical constraints and limited energy reserves.

Because of its geographical advantage of being surrounded by water, Japan has focused on using electrolytic water technology to produce green hydrogen. Its automotive industry is relatively advanced, and integrating green hydrogen into the new energy vehicle sector will help both industries achieve a win-win outcome. Japan’s Green Growth Strategy Through Achieving Carbon Neutrality in 2050 proposes expanding the scale of renewable energy hydrogen production technology and aggressively developing large-scale electrolyzer technology. The supply cost of hydrogen will be reduced to 30 yen/Nm³ by three-quarters in 2030, and hydrogen power generation cost will be cut to less than around 20 yen/Nm³ in 2050. The ‘Green Innovation Fund’ of two trillion yen was established by Japan’s New Energy Technology Development Organization in 2021 to guide essential industrial fields for a carbon-neutral society, such as the production of hydrogen from renewable energy sources, a hydrogen energy supply chain, the coupling and synergistic development of hydrogen energy with lignite and other fossil and renewable energy sources, hydrogen economy, etc. [20]. Japan’s Sixth Energy Basic Plan regards renewable energy as the top priority and emphasizes the establishment of an international hydrogen energy supply chain to achieve green economic and social development. The hydrogen supply target is supposed to reach three million tons every year in 2030 and twenty million tons by 2050.

Green hydrogen is still a new energy source that requires technological advances and industrial support. The policy system supporting green hydrogen energy in the U.S., the EU and Japan is characterized by being ‘government leading, government-enterprise collaboration and industry benefiting’. To maintain their global leadership in hydrogen production, storage, transportation and refilling, the U.S. and the EU have enacted policies to support the whole hydrogen energy industry chain and improve the hydrogen industry’s comprehensive strategic planning. To strengthen the exploration of frontier technologies and promote the large-scale application of green hydrogen, Japan has taken steps such as integrating the green hydrogen industry into profitable industries, including automobiles and establishing industrial support funds. Thus, it should improve hydrogen energy industry planning and design a policy framework of fiscal support for the hydrogen industry chain using China’s dual carbon goals [21].

4. China’s Green Hydrogen Industrial Policies and Its Development Advantages

4.1. The Green Hydrogen Industry Policy Released by Central Authorities

The implementation of the dual carbon goals has provided significant impetus to the restructuring of China’s energy system and the construction of a low-carbon society [22]. The ninth chapter of China’s 14th Five-Year Plan, called ‘developing strategic emerging industries’, clearly stipulates the development plan for hydrogen energy and energy storage [23].

The People’s Republic of China’s Energy Law (Draft for Comments) includes hydrogen energy as an energy source alongside traditional fossil fuels and renewable energy sources, such as biofuels [24]. The adoption of ‘the Medium- and Long-Term Plan for the Development of the Hydrogen Energy Industry (2021–2035)’ issued by the National Development and Reform Commission (NDRC) and the National Energy Administration (NEA) formalizes the incorporation of hydrogen into the energy industry system, making it an important component of the national energy supply [25]. The plan emphasizes the green hydrogen industry as the future direction of hydrogen energy development and lays the groundwork for its long-term growth. Since 2020, the State Council, the Ministry of Industry, Information Technology, the Energy Bureau and other central authorities have issued more than 12 supporting policies, focusing on the following four aspects: (1) to conduct large-scale demonstration projects; (2) to encourage the integration of green hydrogen development in other industries; (3) to increase the capacity of green hydrogen production technology and equipment; (4) to increase storage and transportation capacity (Figure 2).

4.2. The Green Hydrogen Industry Policy Released by Non-Central Authorities

By August 2022, nearly 30 provinces or cities, such as Shanghai, Shenzhen, Sichuan, Xinjiang, Shandong, Guangdong and Qinghai, had released hydrogen energy-related development plans or guidelines, with the north-western regions of Xinjiang, Qinghai, Gansu and Ningxia accounting for 30% and the south-western regions, such as Sichuan, accounting for 22% (Figure 3).

Although the layout of the whole hydrogen energy industry chain varies by region, the green industry is the key point of innovation and development in the local hydrogen energy field. Shanghai, Zhejiang, Shandong, Jiangsu and other eastern Chinese cities have a solid foundation for the green hydrogen industry. They continue to accelerate technology research and integrate green hydrogen with new energy vehicles and other industries while relying on strong scientific research. Local governments developed over 40 green hydrogen-supporting policies between October 2020 and August 2022 (Figure 4), covering the east region such as Shanghai and Guangdong Province, and western parts such as Gansu Province and Chongqing, including replacing traditional hydrogen production with green hydrogen, improving green hydrogen production technology, implementing green hydrogen projects and establishing a green hydrogen industrial base. Production, storage, transportation, a full-chain green hydrogen industrial system and financial subsidies were all included.

The local hydrogen energy policy and planning places more emphasis on the integration of hydrogen energy and the development of the green hydrogen industry chain. For example, Tianjin, Ningxia, Hebei and Guangdong Provinces have all issued plans for the development of the hydrogen energy industry, with more emphasis on the research and development of green hydrogen technology, the construction of hydrogen refuelling station infrastructure and the improvement of the industrial chain. At the same time, the output value and incentives for the hydrogen industry have been clearly documented in the plans released by Weifang City in Shandong Province, Tongling City in Anhui Province and Huangpu District in Guangzhou, etc.

4.3. Enormous Potential for Developing the Green Hydrogen Industry

The Medium and Long-Term Plan for the Development of the Hydrogen Energy Industry (2021–2035) unequivocally states that the proportion of green hydrogen in energy consumption should be steadily increased, while the percentage of hydrogen produced from fossil energy should be reduced, creating a favorable environment for the green hydrogen industry. China, the world’s largest producer of hydrogen, has a capacity of 41 million tons, with an annual output of more than 33 million tons, according to the white paper on the hydrogen energy and fuel cell industry in China 2020 released by the China Hydreon Alliance. However, grey hydrogen derived from fossil fuels remains in the mainstream. As shown in Figure 5, the proportion of grey hydrogen that forms fossil fuels is 77.30%, mainly with coal, 63.54%, with industrial by-products such as Chlor-alkali, 21.18%, and with only 1.52% of green hydrogen from renewable energy [26]. Taking Guangzhou, China, as an example, the Survey Report on Technological Innovation in the Guangzhou Hydrogen Energy Industry points out that the total number of invention patent applications in the field of hydrogen production technology in Guangzhou is 292. Among them, the number of invention patent applications related to green hydrogen production technologies, such as electrolytic water hydrogen production and new hydrogen production technologies, both ranked in the top two, with 84 and 66, respectively. Thus, it can be seen that the development of green hydrogen in China has greater potential.

4.4. Abundant Renewable Energy Resources and Commercialisation Experience

Geothermal energy, biomass, marine energy, wind power, photovoltaic resources and solid waste resources are abundant in China’s central and western regions. Simultaneously, China’s renewable energy industry is relatively mature, with a strong manufacturing capacity for renewable energy generating sets and equipment. As a result, China has built the world’s largest clean power generation system, with more than 12.13 billion kilowatts of installed power-generating capacity, accounting for more than 30% of the global capacity, and leads in the scale of installed hydropower, wind power, photovoltaic and biomass power generation and nuclear power under construction. Power generated from renewable energy reached 2.7 trillion kWh in 2022 [27].

Rapid growth in renewable energy industries can provide a solid foundation for the green hydrogen industry. Seven hydrogen production bases are strategically located in areas with abundant energy resources, for example, the Kuqa hydrogen base in the northwest of China with abundant wind power, the Ningdong base with abundant photovoltaic resources and the Sichuan base in the southwest of China known for its rich in hydropower. The Yangtze River Delta, the Pearl River Delta and Ningxia are home to China’s green hydrogen industry bases.

4.5. Robust Infrastructure and Technological Innovation Capacity

Green hydrogen demonstration projects, particularly megaprojects, have heavily relied on electrolytic water hydrogen production factories, hydrogen storage, transmission stations and other infrastructure. The first 10,000-ton photovoltaic green hydrogen project, the Xinjiang Kuqa Sinopec Green Hydrogen Demonstration Project, officially began construction at the end of 2021 with an investment of three billion RMB and is expected to produce 20,000 tons of green hydrogen per year and effectively reduce carbon emissions by 485,000 tons once operational [28]. Independent research strength on technology and equipment of the entire green hydrogen industrial chain has steadily improved. Furthermore, the number of new technology projects and the installed scale of single projects have increased.

Furthermore, the level of localization of large-scale electrolytic water hydrogen production has gradually increased, while scientific research in green hydrogen storage and transportation has significantly progressed. As a result, China’s first domestic megawatt-class system went online in 2021, signaling a breakthrough in that field. The system’s electrolysis power reached 1.3 MW, with a hydrogen production rate of 260 Nm³/h and a purity of 99.9995%. At the outlet, the hydrogen pressure reaches 3.8 MPa. Additionally, a 100% hydrogen supply can be achieved in 5 min.

Furthermore, advances in developing and commercializing hydrogen storage technologies, such as magnesium-based solid-state hydrogen storage, have been made. The Dalian Institute of Chemical Physics of the Chinese Academy of Sciences and Shandong Saikesaisi Hydrogen Energy Co. Ltd. has made progress in the development of large-scale equipment for hydrogen production using high-end PEM electrolysis equipment (Figure 6).

4.6. Demand for Large-Scale Applications of Green Hydrogen in Traditional Industries

Green hydrogen will promote significant carbon reduction in industrial processes, such as steel smelting, petrochemicals, metallurgical smelting, transportation, buildings and terminal energy consumption [29]. A hydrogen fuel cell is the primary application of green hydrogen in the transportation sector [30]. According to the statistics released by the China Automobile Industry Association, the number of Hydrogen Fuel Cell Vehicles (HFCVs) in China was estimated at 8922 in 2021. China’s new energy battery industry has rapidly developed and achieved a global level. There are still six Chinese enterprises in the top ten list of the global power battery installed capacity, with a market share of 65.7%. The main advantage of hydrogen fuel cell technology is its long range and quick refueling speed, which is currently primarily used in commercial vehicles in China [31].

The popularization of green HFCVs necessitates the integration of upstream and downstream integrations throughout the whole industry chain, including the automotive industry, vehicle operation and production, the storage and transportation of hydrogen refueling, as well as an increase in the number of HFCVs and adequate supporting facilities, such as hydrogen refueling stations [32,33]. By the end of June 2022, China had built 270 hydrogen refueling stations issued by the Chinese National Energy Administration [34]. According to the target set by ‘The Medium- and Long-Term Plan for the Development of the Hydrogen Energy Industry (2021–2035)’, the amount of hydrogen produced by renewable energy will reach 0.1–0.2 million tons/year, with 50,000 HFCVs by 2025, achieving a carbon dioxide emission reduction of 1–2 million tons/year [35]. Rapid growth has been seen in synergistic regional development, investment, hydrogen energy applications and hydrogen storage equipment. During the Beijing Winter Olympics, for example, the world’s largest HFCVs demonstration project of over 1200 HFCVs used 20 hydrogen refueling stations, reducing carbon emissions by 2700 tons [36].

In 2021, hydrogen demonstration projects were launched in Beijing, Tianjin, Hebei, the Yangtze River Delta and the Pearl River Delta cities, which implemented policies to support the hydrogen industry in order to promote the integration of the entire hydrogen industry chain and the development of regional synergies. Simultaneously, local governments are expanding hydrogen promotion and application in traditional industries such as transportation and construction through projects. Shanghai, for example, has promoted approximately 1500 HFCVs, built 12 hydrogen refueling stations and initially built a multi-mode hydrogen supply network, such as pure hydrogen and oil-hydrogen combined construction, and is a leading city in the development of the hydrogen energy and HFCVs industry, with strong competitiveness in core components such as electric reactors, membrane electrodes and bipolar plates. Shanghai has released the Medium- and Long-Term Plan for the Development of the Hydrogen Energy Industry in Shanghai [37], which plans to build seventy different types of hydrogen refueling stations by 2025, as well as three to five international first-class innovation and research and development platforms, with the ownership of hydrogen fuel cell vehicles expected to exceed 10,000.

As a result, the scale of the hydrogen energy industry chain is expected to reach above 100 billion yuan, with a reduction in carbon dioxide of 50 to 100 thousand tons/year in the field of transportation. At the same time, China has established the world’s first comprehensive project for green hydrogen production and application in the metallurgical and chemical sectors to promote deep decarbonization in the metallurgical industry [38].

5. Key Bottlenecks in the Development of China’s Green Hydrogen Industry

5.1. Lack of Clarity on the Strategic Position of the Dual Carbon Goals

Hydrogen production from electrolytic water is the most widely used in industrial applications in China, while other technologies such as biomass hydrogen production, nuclear energy and solar hydrogen generation are still at the stage of laboratory research and are far from being industrialized. The main electrolytic water hydrogen technologies are currently classified as Alkaline Water Electrolysis (AWE) technology, proton exchange membrane (PEM) water electrolysis technology, anion exchange membrane (AEM) water electrolysis technology and solid oxide water electrolysis (SOEC) technology, depending on the membrane material in the electrolyzer (hydrogen generator) compartment. The main technical route for hydrogen production from electrolytic water in China is alkaline water electrolysis technology. The four technology paths are evaluated based on hydrogen production efficiency, cost, operational difficulty, technical maturity and environmental protection, as illustrated in

Table 2. Comparison of four technical routes of electrolytic water technology. (Source: China Hydrogen Energy Industry Development 2022).

Electrolytic diaphragm	30% KOH asbestos film	Proton Exchange Membrane	Anion exchange membrane	Solid state oxide
Hydrogen production purity	≥99.8%	≥99.99%	≥99.99%	——
Difficulty of operation	Need to control differential pressure, need to dealkalize	Fast start/stop, water vapor only	Fast start/stop, water vapor only	No change in start/stop, water vapor only
Maintainability	Strong alkali corrosive	Non-corrosive media	Non-corrosive media	——
Environmental requirements	Asbestos air pollution	Non-polluting	Non-polluting	——
Technology Maturity	Industrial Scale-up	Rapid Commercialization	Initial demonstration run	Laboratory phase
Hydrogen production efficiency (kWh/kg of hydrogen)	50–70%	50–83%		45–55%
System Cost (USD/kW)	500–1000	700–1400		2000

[39].

AWE technology is mature, has a low economic cost and long service life, and it is China’s leading green hydrogen production method. However, AWE technology has serious limitations such as low hydrogen purity, low efficiency, high corrosiveness by strong alkali, difficulty in coupling renewable energy and compliance with environmental requirements. The PEM and AEM technologies represent the future direction of green hydrogen production technology [40]. PEM technology has been implemented with the benefits of ease of operation, ease of scale deployment, a small carbon footprint, fluctuation adaptability and flexible coupling with renewable energy sources [41].

There has been a failure to develop a separate development policy and industrial roadmaps for the green hydrogen industry in conjunction with the dual carbon goals by the national and local authorities. In particular, with the current dominance of grey hydrogen in China, specific development measures on how to develop the green hydrogen industry in phases are still lacking. The proportion of green hydrogen used by each major industry at different stages of the dual carbon goals cannot be clearly defined.

Furthermore, there is a lack of a unified national green hydrogen industry development map. The green hydrogen industry policies issued by local governments, often motivated by the economic development of local governments, fail to fully consider the important role of green hydrogen in changing the energy system, economic growth and lifestyle. Furthermore, ignoring the level of local economic development and industrial development, the influx of the green hydrogen industry may result in duplicate construction and vicious competition, which is not conducive to the establishment of the green hydrogen industry chain. The direction of the development of the green hydrogen industry should be different in local areas because of the different industrial bases. However, many local authorities have currently focused on hydrogen fuel cell vehicles.

5.2. Low Competitiveness in Green Hydrogen Production

Only by striking a comprehensive and reasonable balance in terms of technical difficulty, economic costs and carbon-neutral benefits will the green hydrogen industry achieve long-term development throughout the energy production value chain. Green hydrogen is two to three times more expensive than blue hydrogen in terms of the cost of capturing and storing the carbon emissions produced by fossil fuels. Soochow Securities published the Economic Estimation and Cost Reduction Outlook of China’s Hydrogen Energy Industry Chain in July 2022. According to the report, when coal prices range from 450 yuan(RMB)/tonne, the cost of producing hydrogen from coal is 10 yuan(RMB)/kg, with industrial byproduct hydrogen costing between 9 and 22 yuan(RMB)/kg. Electricity generation accounts for more than 70% of green hydrogen costs. When the cost of renewable energy-based electricity falls to 0.15 yuan(RMB)/kWh, the price of green hydrogen could fall to 16 yuan(RMB)/kg, matching the cost of blue hydrogen. When the price of electricity is 0.4 yuan(RMB)/kWh, the cost of hydrogen production from the industrialized application of AWE in China is approximately 30 yuan(RMB)/kg, whereas the cost of hydrogen production from PEM is approximately 40 yuan(RMB)/kg [42]. There are two major cost-cutting drivers for green hydrogen. In the first step, lowering the cost of renewable electricity is critical in lowering the overall cost of green hydrogen. The second step is to remove technical barriers to green hydrogen development [43]. Breakthroughs in key electrolyzer technologies, such as catalysts and PEMs, will not only lower electrolyzer prices through independent development, but will also reduce reliance on imports. The enhancement of electricity utilization efficiency is important. Energy losses account for a significant portion of the cost of green hydrogen, with energy losses of more than 30% during electrolysis and up to 50% in hydrogen fuel cell applications [44].

5.3. Heavy Reliance on Imports of PEMs, Perfluorosulfonic Acid Resins (PFSR), Catalysts, etc.

One key to lowering the cost of green hydrogen is the independent development of basic materials such as PEM, PFSR and catalysts, as well as core components such as the gas diffusion layer and bipolar plate. PEM and PFSR manufacturing is technically challenging [45].

In China, the time required to research and develop large-scale PEM production is relatively short. As a result, PEM electrolyzers, PEMs and PFSRs are mostly imported. DuPont Corporation’s perfluorinated sulfonic acid proton exchange membrane is used in most PEM electrolyzers. Sulfonated polymer membranes serve as the foundation for perfluorosulfonic acid PEMs [46]. Their performance is influenced owing to the following four factors: good proton conductivity, electro-permeability of water molecules in the membrane, gas permeability in the membrane and electrochemical stability [47]. To reduce the polarization of protons during the transfer process, maintain electrochemical performance and improve mass transfer capacity, the membrane must be ultra-thin (up to 10 µm thick) and durable to prevent fatigue damage, chemical degradation and even membrane failure under high load conditions. Membrane preparation techniques must also balance proton conductivity, hydrogen-oxygen cross-permeation and mechanical stability under high-pressure differentials while reducing membrane thickness [48].

China has yet to overcome technical barriers in the synthesis and sulfonation of perfluorinated substances, as well as the problems of polymer denaturation, degradation and proton polarization during the membrane formation process. As a result, there are still some gaps in key technical indicators such as membrane thickness, energy consumption per unit and the stability and reliability of domestically manufactured PEMS. The catalysts required for hydrogen production via PEM electrolysis significantly contribute to the high cost of green hydrogen [49]. The electrolyzer’s anode is in a highly acidic environment, necessitating a catalyst with corrosion resistance and overpotential reduction [50,51].

PEM electrolyzers in China commonly use the precious metals platinum and iridium as anode oxygen precipitation catalysts without effectively guaranteeing the activity of domestic synthetic catalysts. The cost of precious metal catalysts accounts for 10–40% of the total production cost of hydrogen produced from electrolytic water, severely limiting the future development of the green hydrogen industry because precious metal reserves of platinum and iridium are expensive to import [52]. Reducing the concentration of precious metals, such as platinum and iridium, improving catalytic function, maintaining stable performance and increasing catalyst lifespan have emerged as important scientific research directions in China’s green hydrogen electrocatalysts. The continuous development of the green hydrogen industry will stimulate future demand for PEM, PFSR and related chemical materials and equipment. As a result, the capability of technology development and localization will be enhanced. For example, Shandong Dongyue Future Hydrogen Energy Materials Co. has already achieved PFSR and PEM mass production, and its PEM performs in a similar way to the imported membranes. In 2021, the China National Power Investment Group Hydrogen Energy Technology Development Co. opened a hydrogen fuel cell PEM production line in Wuhan.

5.4. The Development Dilemma Facing the Whole Green Hydrogen Chain

First, there is a lack of installed capacity for green hydrogen production. By 2021, China had installed less than 1 GW of electrolytic cells for renewable energy hydrogen production, most of which were pilot demonstration projects. Large-scale commercial projects are scarce. The national electrolyzer manufacturing capacity is limited, with a total capacity of less than 5 GW, leaving a significant gap between the dual carbon goals. Improving hydrogen energy and renewable hydrogen equipment manufacturing and installed capacity has become critical. If the target of 100 GW of installed renewable hydrogen by 2030 is to be met, the number of installed units in China should be increased by approximately 7% per year [53] (Figure 7). The green hydrogen industry’s scale effect is an important support for improving the competitiveness of the green hydrogen market and expanding its application in many fields [54]. Expanding the scale of the green hydrogen industry and rapidly increasing installed capacity is another effective way to reduce costs.

Second, the green hydrogen infrastructure is not in a unified system. Although hydrogen energy is clearly defined as renewable energy in China, its production, storage, transportation and application still adhere to a hazardous chemical management system. Owing to the placement of hazardous chemicals, it is difficult to coordinate the planning and construction of support infrastructures such as hydrogen refueling stations and hydrogen transmission pipelines, severely limiting the efficiency of hydrogen energy transmission and utilization, as well as cross-regional large-scale deployment. Therefore, green hydrogen-supporting facilities are usually located in remote areas far away from residential areas or in industrial parks for hazardous chemicals. The regulation of hazardous chemicals also results in increased investment costs in storing and transporting green hydrogen.

Third, there are complicated administrative permission procedures for the green hydrogen industry. From infrastructure construction to project operation, the green hydrogen industry faces land acquisition, approval and management challenges. Administrative approval takes a long time, and the procedures are complicated. Additionally, there are no specific policy regulations or technical standards in place. Administrative permission procedures are complicated because hydrogen energy is considered a dangerous and novel energy that requires close monitoring. In China, the green hydrogen project necessitates four key administrative licenses, including fire protection approval, special equipment permits, hydrogen sales and operation permits and a hydrogen chemical park production permit. Different authorities issue these permits, such as the Housing and Construction, Market Supervision, Emergency Management and Energy departments. Various procedures are also involved. Green hydrogen-supporting projects typically require environmental evaluation, land planning and use, safety evaluations, water and electricity consumption and other demonstration aspects during the construction stage. These must be approved by environmental planning, housing and urban-rural construction and other departments.

Fourth, there is uneven development in the green hydrogen industry chain. A complete industrial chain of renewable energy generation, hydrogen production, storage and consumption is required. It can only achieve comprehensive development and economic cost control with a reasonable layout of the whole industrial chain and significant progress in core technology research and development [55]. Although China has significantly advanced in the hydrogen energy industry, many challenges still exist. The first factor is a geographical mismatch between the green hydrogen industry chain’s production and consumption ends. The mismatch makes effective industrial system integration difficult. For example, the manufacturing plant is in central and western China, where renewable energy is abundant, while the main consumption demand is in the southeast coastal region, which has a significant production chain of new energy vehicles. China’s green hydrogen storage and transportation are primarily high-pressure gaseous, with limited storage capacity and high risk. At present, the mainstream transportation approach in China is by tube trailer, which has low efficiency and is seriously restricted by long distance, while pipeline transportation and liquid hydrogen tank truck transportation as auxiliary means [56]. As a result, it cannot achieve long-distance transportation and continuous hydrogen supply, limiting the industrial chain’s expansion. In addition, the number of renewable energy hydrogen refueling stations that are operational or under construction is small. The locations are mostly concentrated in the Yangtze River Delta, the Pearl River Delta and the Beijing-Tianjin-Hebei region. The support infrastructure is still in its early stages.

Finally, comprehensive industrial convergence applications are still in their early stages. For example, in China, most hydrogen is used in petrochemical industries, such as synthetic methanol, synthetic ammonia and petroleum refining, while the proportion of hydrogen used in transportation, construction or daily consumption is relatively low, with less than 0.1% used in fuel cells. In 2019, the hydrogen consumed for the production of synthetic ammonia and methanol accounted for 32% and 27%, respectively, with the refining and chemical industries accounting for 25%. The share of hydrogen energy in other fields is only 16%.

6. Improvement of China’s Hydrogen Production Industry

6.1. Clarify the Important Role of Green Hydrogen Production in China’s Dual Carbon Goals

China should stipulate the proportion of green hydrogen to be used by major industries, and continuously reduce the reliance on fossil energy. At the same time, China could gradually improve the laws and regulations for the green hydrogen industry, such as safety regulations for hydrogen production and technical regulations for fuel cell vehicles. China should formulate a plan for the green hydrogen energy industry, systematically promote the construction of a green hydrogen production, supply, storage and marketing system. On this basis, China could coordinate the layout of the industry and regional development. Under the dual carbon goals, China’s green hydrogen industry will be divided into three stages:

The start-up phase (Present–2030): based on Grey hydrogen and industrial by-product hydrogen, China should support innovative hydrogen technologies and gradually promote the start-up of the green hydrogen energy industry.

The accelerated development phase (2030–2050): Green hydrogen is becoming more cost-competitive with the improvement of its trading market and infrastructure. Breakthroughs in key technologies for hydrogen production, storage and transportation are being achieved. The application scenarios of green hydrogen will be expanded to steel making, clean transportation and energy storage; the end consumption methods will be expanded and the demand will be more diversified. The proportion of fossil energy hydrogen production will gradually drop to zero, and new hydrogen technologies such as renewable green hydrogen will take the leading position. Accordingly, an integrated system of green hydrogen energy supply, heat supply and power supply will be built.

The marketization phase (2050–2060): the green hydrogen technology will be mature enough to be applied on a large scale, and the application scenarios will be extended to cover all fields where decarbonization is difficult. The green energy strategy will become an important part of the national low-carbon energy strategy. Grey hydrogen is being withdrawn from the hydrogen end-consumption market, and hydrogen will be mainly supplied by blue hydrogen and green hydrogen at hydrogen refueling stations nationwide, reaching 100% at refueling stations in megacities cities, such as Beijing, Shanghai, etc.

6.2. Enhance the Core Technology and Equipment of Green Hydrogen

To achieve the dual carbon goals, the development path of China’s Green hydrogen industry must be further explored as follows: green hydrogen technologies must be developed, green hydrogen industry planning must be gradually improved, the whole industrial chain must be developed and applications must be strengthened. The first step is to improve the catalyst activity, increase catalyst utilization, reduce platinum use, find platinum catalyst alternatives and reduce reliance on imports. Second, platinum catalyst consumption should be reduced to less than 0.25 g/kW by 2030, with a future goal of less than 0.1 g/kW. Technological breakthroughs in materials, such as PFSR and PEMs are required. Demand will rise as the cost of local substitution PEMs falls and the scale effect expands. Under the incremental market [57], the cost of PEMs will gradually decrease from $1428/ton in 2020 to $214/ton in 2050 (Figure 8).

The green hydrogen industry struggles to develop safe, efficient, low-cost storage and transportation technology. Owing to technical difficulties and high costs, the total length of hydrogen pipelines worldwide is only 5000 km, whereas natural gas pipelines are over 3 million km. With the German court allowing natural gas pipelines to transport hydrogen, determining how to safely and efficiently use natural gas pipelines has become an important direction for improving the competitiveness of the hydrogen energy supply [58]. In China, pilot projects were carried out for hydrogen-doped natural gas pipeline delivery [59]. As a result, the natural gas transmission network is complete, whereas the total mileage of pure hydrogen transmission pipelines is only one hundred kilometers. For example, regional hydrogen transmission pipeline networks are being built in Weifang City, Shandong Province. The total mileage of natural gas pipelines has reached approximately 116,000 km, according to the China Natural Gas Development Report 2022. The interconnection of major pipeline networks has also been accomplished. However, both technological advancement and the application of natural gas blending with hydrogen are in their early stages. The large-scale application still needs to improve the technical system, operation standards and so on. Policymakers should remove barriers to research and development on hydrogen transmission technology. China’s most critical infrastructure for hydrogen energy applications includes hydrogen refueling stations. The compressors in hydrogen refueling stations are primarily imported. The development of technology in the field of liquid hydrogen refueling stations should be accelerated.

6.3. Improve the Green Hydrogen Industry Chain

According to the Medium- and Long-Term Plan for the Development of the Hydrogen Energy Industry (2021–2035), hydrogen energy will be crucial in China’s future national energy system. Green hydrogen’s benefits should be realized in the green transformation of the energy structure [60]. China could effectively promote hydrogen station construction, hydrogen industry integration, hydrogen generation, hydrogenation stations and infrastructure construction. Local governments, for example, can optimize administrative approval management systems by establishing Green Channel or One-Stop procedures to improve efficiency and encourage space reservation for hydrogen refueling facilities. Shanghai’s Medium- and Long-Term Plan for the Development of the Hydrogen Energy Industry (2022–2035) has encouraged the provision of space for hydrogen refueling facilities in newly constructed gas refueling and charging stations. The scope of public facilities includes independent hydrogen refueling stations. There is no need to separately go through the approval procedures for hydrogenation stations to obtain land and construction licenses if the existing refueling, gas filling and charging stations meet the relevant specifications and safety conditions. Green hydrogen facilities can be built on existing land, and preparation, storage and transportation, refueling and utilization are all part of the green hydrogen industry chain [61]. Support policies and planning for the whole industrial chain of the green hydrogen industry should be developed based on converting hydrogen energy into an energy category. Regulation, testing and support all need to be improved. Green hydrogen integration with renewable energy power, significant carbon reduction in industry and multifaceted applications in transportation, aerospace, energy or other industrial parts should all be realized [62].

6.4. Clarify the Administrative Oversight in the Green Hydrogen Chain

The approval process for the whole green hydrogen industry chain, as well as the construction of supporting facilities, should be optimized. China’s Housing and Urban-Rural Development, Emergency Management, Market Supervision and other authorities should work together to develop administrative regulations and a list of Administrative Approval Powers to improve administrative approval efficiency. The legal conditions and procedures for fire protection approval, filling, hydrogen station operation, hydrogen production and other administrative permissions should be clearly defined. Different administrative departments could work together better. Subsequently, by issuing relevant policies, China could boost financial support for green hydrogen businesses [63]. Enterprises that produce green hydrogen or use it to refill local hydrogen filling stations are subsidized based on the price difference between the average price of industrial byproduct hydrogen and the annual supply of hydrogen. This standard subsidy should be adjusted over time in accordance with relevant national policies and in conjunction with the current local development situation. To reduce the costs of renewable energy generation and power grid connection, relevant support policies for green hydrogen enterprises should be issued.

Furthermore, local industry associations must promote the negotiation of electricity prices between the power sector and enterprises in the green hydrogen industry. The government could collaborate with banks, insurance companies and research organizations to provide preferential loan policies for enterprises or institutes involved in the green hydrogen chain and the development of innovative technological research, development and equipment [64].

6.5. Improve of Financial Support Mechanism

This step is to provide tax breaks to enterprises or research institutes engaged in green hydrogen technology research and development. These are specific grants for green hydrogen equipment and projects. According to the Catalogue of Preferential Income Tax for Public Infrastructure Projects issued by the State Taxation Administration (STA), the green hydrogen industry is entitled to three exemptions and a three-hundred-percentage-point income tax preference policy. The Income Tax Preference Policy exempts enterprises from paying corporate income tax from the first to third year of operation and reduces the tax by half from the fourth to sixth year. The primary goal of this policy is to encourage businesses to invest in infrastructure and environmental projects that the green hydrogen industry needs. Therefore, a green hydrogen preferential policy could greatly assist local entrepreneurs in achieving industrial development [65].

6.6. Enhance the Safety Supervision of the Green Hydrogen Industry Chain

Following the tax benefits, the vital option that should be implemented is to enhance the safety supervision of the whole green hydrogen industry chain. Because hydrogen has a low density and small molecules that can easily leak and cause an explosion, improved safety is critical for the future development of the green hydrogen industry [66]. The safety supervision mode of the whole industrial chain should be strengthened by strictly adhering to relevant regulations and standards. However, most policies regarding Measures for the Supervision and Management of Safety in the Hydrogen Industry have been established by local authorities other than the central government. Green hydrogen equipment design, facility construction, transportation and application should all be closely monitored. Green hydrogen equipment should have comprehensive safety functions, such as automatic safety control facilities, immediate alarm devices, exhaust device activation and an immediate shutdown of the production process by usage of intelligent techniques [67]. Green hydrogen production equipment has typical automatic alarm equipment, as shown in Figure 9. The automatic alarm device of the green hydrogen production equipment works in a similar way to a smoke sensor. Inside the equipment, in case of high temperature and other conditions, the automatic alarm device will send out an alarm in time and directly cut off the power to prevent hydrogen leakage, which could lead to an explosion. In the event of a hydrogen leak, a double alarm inside the equipment will sound, stopping electrolysis and activating the exhaust device. When gas diffuses across membrane permeation, the hydrogen content in anode oxygen can be monitored in real time. When the gas exceeds the alert level, the oxygen exhaust device activates and the electrolysis process is terminated. When the electric current is too high, the total voltage of the stack and chambers is automatically monitored. The electrolysis will be stopped and the air vent will be activated in the event of an abnormality.

7. Conclusions

This paper systematically examines the value, potential, challenges and improvement path of China’s green hydrogen industry. The following conclusions are drawn from the analysis above: Not only can the green hydrogen industry reduce the carbon emissions of traditional industries, but also contribute to the implementation of the Chinese dual carbon goals with low-carbon industrial system upgrading. China has abundant renewable energy, extensive consumption, infrastructure capability, a large domestic market and industrial advantages, such as new energy vehicles, all of which benefit the development of the green hydrogen industry. However, China’s green hydrogen industry still faces numerous challenges, including high import dependence on some core equipment and basic materials, insufficient supporting policies and administrative supervision and incomplete and unbalanced industry chains. In order to meet the dual carbon goals, developing a planning and policy system is indispensable in terms of integrating the industrial chains and consolidating administrative oversight and technological innovation.