While the US and European medias have dedicated signficant bandwidth to the topic of lowcarbon hydrogen in the United States and Europe, they have reported far less on unfolding developments around that topic in China. This disparity is especially notable because China stands as the foremost global player in hydrogen production and consumption. The country's substantial market size and extensive industrial infrastructure not only facilitate fast technological advancements in the hydrogen space, but also offer the potential to achieve economies of scale—two developments that can significantly influence the global hydrogen market landscape. In light of these circumstances, it is essential to understand China's hydrogen strategy, including how the country plans to start decarbonizing its current hydrogen consumption and expand future use and production.

A notable feature of China's hydrogen strategy is that it is not, in fact, singular, but instead comprised of a national strategy and a multitude of regional strategies. Since the release of China's Medium and Long-Term Strategy for the Development of the Hydrogen Energy Industry (2021–2035) (referred to as “the National Plan”) in March 2022, there has been signicant development in the country's hydrogen space. However, the National Plan's targets for renewable hydrogen production may appear conservative given the scale of hydrogen consumption in the country: a range of 100,000 to 200,000 tons per year by 2025 represents only 0.3 to 0.6 percent of the 33 million tons (Mt) of fossil-based hydrogen consumed in China in 2020. (For context, in 2022, electrolytic hydrogen's production level was still below 100,000 tons globally, and as of early 2023 about 4.5 Mt of renewable hydrogen globally by 2025 has been committed to, planned, and announced. Some regions appear more bullish, including the EU with its aspirational renewable hydrogen target of up to 1 Mt by 2024. By contrast, provinces, cities, and municipalities across China have introduced their own hydrogen development plans that establish far more ambitious renewable hydrogen goals. Hence, the provincial plans viewed together may offer a more accurate picture of China's hydrogen industry over the coming decades than the National Plan.

This commentary analyzes these somewhat divergent national and local hydrogen strategies comparatively to provide a nuanced understanding of China’s evolving hydrogen landscape. Its key findings are as follows:

• The targets of China's provinces combined are far more ambitious than its national targets, with Inner Mongolia leading the way. The latter province is aiming to reach 480,000 tons of renewable hydrogen production per year by 2025 (2.5 to 5 times the national target). China may have set a conservative national renewable hydrogen target to test the waters, allowing local governments to charge ahead.

• Inner Mongolia could reach around 60 percent of its 2025 target based on projects that are currently under construction (and excluding those still in the planning stage, which may or may not materialize). This region alone would largely meet the national target for renewable hydrogen. While the provinces' targets may not be fully met, they provide a more realistic view of what China can accomplish.

• Though climate mitigation is certainly one key underlying driver of China's hydrogen strategy, industrial and economic motivations seem more prominent in the short term. China has placed less emphasis on carbon intensity than the EU and the US, as evidenced by the Chinese government's lack of a formal denition of renewable hydrogen.

An Overview of China's Hydrogen Landscape

China holds a substantial share of global hydrogen production, contributing roughly one-third of total output at around 33 Mt per year. This production heavily relies on fossil fuels (79 percent)—and about 21 percent of it originates as industrial by-product—resulting in 360 Mt of CO2 emissions. Meanwhile, the contribution of renewable hydrogen remains marginal, accounting for less than 0.1 percent of production. 

Rather than evenly distributed across the country, hydrogen production in China is concentrated in the northwest and northeastern regions. The highest production levels are in the Autonomous Region of Inner Mongolia (hereafter “Inner Mongolia”) and Shandong, each of which accounts for more than 4 Mt per year, followed by Xinjiang, Shaanxi, and Shanxi, at more than 3 Mt per year.

The northwest and northeast regions are also known for high coal output, underscoring the strong link between hydrogen production and coal resources. Abundant coal reserves in places like Inner Mongolia, Shanxi, and Shandong (north China), which cater to the nearby petrochemical and chemical sectors, support hydrogen production and consumption, which typically occur within the same facility.The northwest is also positioned to become a hub for renewable hydrogen supply due to its high abundance of renewable energy resources. However, given that east and southeast China are anticipated to emerge as significant demand centers soon, a new challenge in the form of a geographical disjuncture between hydrogen supply and demand will likely present itself. China's lack of transport infrastructure represents an additional challenge: the country currently possesses only 400 kilometers of hydrogen pipelines.Recent initiatives to develop infrastructure such as short-distance hydrogen pipelines, hydrogen refueling stations, and liquid hydrogen storage facilities are primarily concentrated in four major industrial clusters—the Beijing-Tianjin-Hebei Region, the Yangtze River Delta, the Pearl River Delta, and the Ningdong Energy and Chemical Industry Base —so may not be able to connect renewable hydrogen supplies with primary demand centers.

China's National and Regional Hydrogen Development Strategies Compared

In September 2021, China announced what it called its “dual carbon goal” of carbon peak by 2030 and carbon neutrality by 2060. As a first step toward achieving that goal, China's State Council introduced an Action Plan for Carbon Dioxide Peaking Before 2030, which emphasized the role of hydrogen in sectors such as steel, petrochemicals, and transportation (including heavy-duty freight), as well as technologies such as renewable hydrogen production. This was soon followed by the announcement of China's National Plan, which lays out the vision for China's hydrogen industry by 2035. The National Plan strategically positions hydrogen as: (1) an important part of China's future energy system; (2) an important carrier for achieving a low-carbon energy transition in China; and (3) a key emerging industry and development direction of future industries in China. While most of China's specific targets in this strategic plan are for 2025, many other countries'national hydrogen strategies outline quantied targets for 2030 (and beyond), which can create the perception that their strategies are more ambitious. China's plan, however, includes the longterm vision to fully establish the hydrogen industry value chain by 2035. Nonetheless, among the most important of these 2025 targets is the deployment of 50,000 fuel cell vehicles and the production of 0.1 to 0.2 Mt of renewable hydrogen toward a broader goal of reducing annual CO2 emissions by 1 million to 2 million tons by 2025.

Other highlights from the National Plan include an aim to establish a hydrogen supply system that  uses both industrial by-product hydrogen and renewable hydrogen; meanwhile, the use of carbon capture and storage technologies to produce hydrogen from fossil fuels is absent from the strategy. The short-term emphasis on utilizing by-product hydrogen (which is unique to China) is due to the substantial volume of wasted by-product hydrogen (largely fossil-based) extracted from industrial waste gas in sectors such as coking, chlorine, and propane dehydrogenation. Aligned with this plan, numerous local governments (e.g., Anhui, Shanxi, Jilin, Hebei, Shandong, and Hunan) prioritize byproduct hydrogen as the primary supply source through 2025. The development of collection and purication technologies for this hydrogen is also given priority across regions.

The National Plan marked a signicant shift in China's overall energy strategy by making hydrogen a fundamental component of its emerging energy system, positioning the country well to achieve global leadership in hydrogen technologies such as fuel cell vehicles and electrolyzers. Out of the 34 regions that make up China,18 have independently introduced their own hydrogen industry 14th Five-Year Plan, a strategic blueprint outlining a province's economic and social development goals over a five-year period, while the others have incorporated hydrogen into their broader industrial strategies. Given their consideration of diverse provincial resources, infrastructure capacities, and strengths, these regional-level strategies hold valuable insights. One critical conclusion that can be drawn from them is that local policy and industry developments are already moving far beyond the conservative targets of the National Plan. The regions’cumulative targets for renewable hydrogen amount to over 1.1 to 1.2 Mt by 2025, or 5 to 12 times the national target. For instance, Inner Mongolia has an ambitious objective of 480,000 tons of renewable.