China's Hydrogen Development: A Tale of Three Cities

China is the world’s largest producer and consumer of hydrogen. The country has adopted a domestic strategy that targets significant growth in hydrogen consumption and production. Given the importance of hydrogen in the low-carbon energy transition, it is critical to understand China’s hydrogen policies and their implementation, as well as the extent to which these contribute to the country’s low-carbon goals.
Existing research has focused on understanding policies and regulations in China and their implications for the country’s hydrogen prospects. This study aims to improve our understanding of central-government initiatives and look at how China’s hydrogen policies are implemented at the local level. The paper examines the three cities of Zhangjiakou (in China’s renewable-rich Hebei province), Datong (in the country’s coal-heartland of Shanxi province), and Chengdu, which is rich in hydropower and natural gas. To be sure, the three cities analysed in this paper do not cover all regional plans and initiatives, but they offer a useful window into local hydrogen policy implementation. They also illustrate the major challenges facing green hydrogen as it moves beyond the narrow, highly subsidized field of fuel cell vehicles (FCVs). Indeed, costs as well as water, land availability, and technology continue to be constraints.
The hydrogen policies and road maps reviewed in this paper offer numerous targets—often setting quantitative goals for FCVs, hydrogen refuelling stations, hydrogen supply chain revenue, and new hydrogen technology companies—aligning with the view that hydrogen development is currently more of an industrial policy than a decarbonisation strategy. Indeed, hydrogen’s potential to decarbonise sectors such as manufacturing and chemicals is of secondary importance, if mentioned at all. But as the cities analysed here view hydrogen as part of their industrial programmes, economic development, and climate strategies, support is likely to remain significant, even as the specific incentive schemes will likely evolve.
Given this local hydrogen development model, rising demand for hydrogen in China could ultimately increase rather than decrease CO₂ emissions from fossil fuels in the short run. At the same time, even though the central government’s hydrogen targets (as laid out in its 2022 policy documents) seem relatively conservative, Chinese cities’ appetite for new sources of growth and the ability to fund various business models are worth watching.