China’s Emerging Hydrogen Economy: Policies, Institutions, Actors

This report provides a comprehensive review of China’s emerging hydrogen economy with a particular focus on policy and regulation, both at the national and sub-national level. China’s promotion of the hydrogen sector is emblematic of its broader efforts to promote greenhouse gas reductions, while pursuing ambitious industrial development goals and promoting energy security. To date, industrial policy goals have clearly taken center stage, with a particular focus on fuel cell vehicles. For now, China is pursuing a diversified strategy in support of hydrogen supply, which includes all different types of hydrogen production, including coal-based hydrogen. Nevertheless, policy documents increasingly emphasize the potential of renewable hydrogen as a vehicle for stabilizing an electricity system based on variable renewable energy as well as broader decarbonization efforts. They also increasingly highlight the need to transition to an exclusively renewable hydrogen supply in the future. In a number of cases, local-level strategies have come out more strongly in support of renewable hydrogen than current central government policies. Local-level policy has also played a key role in the promotion of fuel cell vehicles. Policies for hydrogen-based decarbonization of industry are only at a nascent stage. Similarly, China’s ambitions to promote hydrogen storage and transport remain at a relatively early stage of development with an important emphasis on the promotion of innovation and acquisition of technological know-how.
Finally, both China’s hydrogen strategy and the engagement of its energy SOEs do not appear to be strongly motivated by considerations of geopolitics at this stage. To be sure, Chinese officials are considering increasing opportunities for investment in hydrogen projects around the world. In this vein, the national hydrogen development plan considers the importance of the Belt and Road Initiative (BRI) for promoting hydrogen-related standards and investments. Beyond these geoeconomic considerations, the role of hydrogen as a future energy commodity and its geopolitical implications do not figure prominently in Chinese policy efforts. Indeed, due to China’s relative abundance of renewable energy resources, it is does not exhibit major vulnerabilities related to the future provision of hydrogen. Conversely, hydrogen could even offer an opportunity to reduce its energy dependence in the future. This and other efforts to shape global hydrogen trade do not seem to be a significant driver of its policy efforts, however.