China’s green hydrogen ambitions are gaining momentum, with projections pointing to a potential 12 trillion yuan ($1.64 trillion) industry. Underpinned by state-led planning and bolstered by a surge in renewable capacity, the country is pursuing hydrogen not just as a clean energy alternative but as a structural pillar in its national energy transformation. Yet despite aggressive infrastructure buildouts and industrial enthusiasm, analysts warn that gaps in economic feasibility, market design, and system integration could derail expected returns.
Hydrogen’s Role in a Reshaped Energy Mix
The long-term vision is clear: hydrogen is expected to supply 10% of China’s terminal energy by 2050, rising to 15% by 2060, according to conservative estimates cited at the China International Hydrogen Congress 2025. This places hydrogen alongside electricity as a co-equal vector in end-use energy—a strategic orientation that redefines China’s decarbonization roadmap.
Gan Yong, an academician at the Chinese Academy of Engineering, emphasized the structural implications of this shift. “Hydrogen will become a primary energy consumer,” he said, particularly in logistics, steelmaking, and heavy transport sectors difficult to electrify. Yet, a critical eye is needed here: while the projections are ambitious, current end-use hydrogen penetration remains marginal in China’s overall energy system.
Port Demonstration Zones: Strategic, but Not a Panacea
The focus on logistics-intensive port areas for “diesel-to-hydrogen” demonstration projects presents a pragmatic test case. Ports concentrate diesel consumption and offer opportunities for economies of scale in hydrogen refueling. Large refueling stations dispensing 5 metric tons daily are being piloted, with Gan noting that proximity to steel and coking plants enables access to low-cost byproduct hydrogen.
However, port-centric strategies raise several caveats. First, many of these zones rely on grey hydrogen today. Second, while centralized infrastructure can lower unit costs, without guaranteed off-take agreements and logistical coordination, utilization risks remain. Prior demonstration projects in other sectors have shown inconsistent performance due to underused capacity and fragmented planning.
Fuel Cell Trucks and the Road to Parity
China’s deployment of over 20,000 hydrogen fuel cell vehicles by 2023 underscores progress, but it remains modest relative to the country’s commercial vehicle fleet. Heavy-duty hydrogen trucks could reach cost parity with diesel through scale and policy support, but current price differences—driven largely by fuel cost and vehicle capex—persist.
Hydrogen production and refueling must drop substantially in cost to become viable at fleet scale. In 2023, average hydrogen refueling costs in China still exceeded 35 yuan/kg in many regions, compared to sub-7 yuan/liter diesel equivalents. Policy support, such as subsidies and renewable energy discounts, remains essential to narrow this gap.
AI as a Catalyst or a Convenient Narrative?
The link between hydrogen and artificial intelligence—frequently raised in policy forums—is conceptually intriguing but analytically weak in its current form. Gan and others have posited that AI’s exponential energy footprint could make hydrogen essential for clean, flexible energy delivery. With tools like ChatGPT consuming over 500,000 kWh per day, energy planners are right to examine the implications.
Yet the argument rests on a speculative chain: AI will strain grids → Hydrogen is a flexible supplement → Therefore, hydrogen is a key AI enabler. What this overlooks is the relatively low round-trip efficiency of hydrogen for power generation. Until efficiency improves or AI computing centers colocate with hydrogen turbines or fuel cells—still largely theoretical—batteries and demand-side management remain more immediate solutions.
PV Growth Is Real, But Integration Remains a Bottleneck
China’s solar surge is undeniable. With 886 GW installed by end-2024 and 64% of new capacity additions coming from PV, the country leads global solar expansion. Hydrogen’s value proposition here lies in its potential to store excess PV output, smoothing grid volatility and enabling temporal energy shifts.
But the hydrogen-storage argument often glosses over the reality that current electrolysis operations in China remain underutilized. Many green hydrogen pilot projects face low load factors due to mismatched generation profiles and a lack of demand coordination. Without dynamic electricity pricing or co-located industry demand, hydrogen electrolysis assets risk becoming stranded.
Heavy Industry’s Hydrogen Pivot: Substance or Symbolism?
The steel sector’s roadmap is a rare example of detailed sector-specific hydrogen planning. SOEs like China Baowu are pushing for a complete hydrogen value chain by 2030, including 50 refueling stations and demonstrations in hydrogen-based shaft furnaces.
Yet, despite policy targets, techno-economic viability remains elusive. Hydrogen direct reduced iron (H-DRI) requires a consistent hydrogen supply at competitive cost—something not yet achieved in China. Even if green hydrogen prices fall below 20 yuan/kg by 2030, process adaptation and retrofit costs for legacy blast furnaces will be significant. It’s also unclear how emissions will be verified and monetized through China’s still-nascent carbon trading schemes.
Infrastructure Imbalance: Building Without Integration
As of mid-2024, China boasts 426 hydrogen refueling stations—more than any other country. However, many face low throughput due to sparse vehicle deployment and a lack of local hydrogen production. This reveals a deeper planning issue: infrastructure growth is outpacing ecosystem readiness.
Challenges persist in grid access for electrolysis projects and the development of large-scale hydrogen pipelines. Without cohesive planning across generations, storage, and end-use, many investments risk low returns. Gan called for stronger integration between hydrogen systems and the power grid to improve both economics and stability—a view echoed by developers frustrated by prolonged permitting and grid connection timelines.
The Policy Imperative: Remove Costs, Not Just Announce Targets
Zhong Baoshen of Longi Green Energy argues that cost removal—not just capacity targets—should be the policy priority. Green hydrogen from solar and wind can only scale if developers are relieved of burdensome transmission costs and supported in building multi-energy complexes.
This touches on a deeper issue: many of China’s green hydrogen pilot projects have been launched under provincial-level enthusiasm without consistent national policy harmonization. Projects often receive upfront capex support but struggle with operational viability due to electricity pricing distortions and missing market incentives.
China’s hydrogen push stands at a pivotal juncture: supported by infrastructure, encouraged by policy, yet constrained by fragmented execution and unresolved economics. The roadmap is clear, but success will depend not on slogans or standalone demonstrations but on coherent integration, credible business models, and rigorous cost management across the value chain. Whether hydrogen will fulfill its $1.64 trillion promise—or fall victim to its own hype—depends on how swiftly these realities are confronted.
