ExplainerChina bets big on hydrogen in pursuit of carbon neutrality benchmarks

China, the world's largest emitter of greenhouse gases, is making significant strides towards its carbon neutrality goals. A key part of this strategy is the development of its burgeoning hydrogen energy industry. Hydrogen, a clean fuel source, offers a viable solution for reducing carbon emissions in sectors that are challenging to electrify, such as long-distance transport. Recently, China launched its first hydrogen-powered ship, a clear indication of its commitment to greening its transport sector. China is the world's largest producer and consumer of hydrogen, primarily due to its extensive chemical industry and oil refining capacity. In 2021, China's hydrogen production reached approximately 33 million tonnes, accounting for around 30% of the world's total output. However, despite the increase in production, demand for hydrogen is also growing. By 2030, China is projected to be the world's largest importer of clean hydrogen, requiring 13 million tonnes annually to decarbonise various sectors of its economy. China has committed to peaking its carbon emissions before 2030 and achieving carbon neutrality before 2060. To facilitate this, the country unveiled its first national hydrogen strategy in 2021, outlining its plan for the development of the fuel source from 2021 to 2035. By 2025, China aims to have at least 50,000 hydrogen fuel-cell electric vehicles on the road and produce 100,000 to 200,000 tonnes of 'green hydrogen' annually. Although China's hydrogen energy sector is still in its infancy, the applications of the technology are continually expanding. Chinese auto manufacturers have built tens of thousands of hydrogen fuel-cell cars in recent years, and aviation engineers are developing hydrogen-powered aircraft. Hydrogen is also a potential clean energy source for heavy transport. In June 2022, Chinese truck manufacturer FAW Jiefang delivered 300 hydrogen fuel-cell vehicles to customers across China. These vehicles can be used in logistics and urban construction. During the 2022 Winter Olympics and Paralympics in Beijing, over 1,000 fuel-cell vehicles and more than 30 hydrogen refuelling stations were deployed, marking the largest such deployment to date. However, there is still room for improvement. China is the world's leading producer of hydrogen energy, but it is also the only country deriving hydrogen from coal on a significant scale. Over two-thirds of China's dedicated hydrogen production comes from coal, and almost all the rest comes from natural gas, generating substantial emissions. The International Energy Agency suggests that equipping existing hydrogen production facilities with carbon capture, utilisation and storage technologies could be a complementary strategy to reduce emissions and increase the supply of low-emission hydrogen.