Despite weak domestic demand, the Chinese hydrogen sector is strategically pivoting towards production to enhance its competitive position in the international market.
Current data indicates that Chinese hydrogen projects can produce hydrogen at nearly half the cost of their Western counterparts, prompting a shift towards exporting hydrogen. This move aims to counteract domestic policy gaps that do not incentivize local consumption.
The industry is transitioning from strategies such as ammonia co-firing, which has proven costly and limits operational flexibility, to more efficient hydrogen turbines. Additionally, there is a noticeable shift in interest from the shipping sector towards sustainable aviation fuel (SAF), reflecting changing market dynamics.
For domestic producers targeting international markets, obtaining certifications like the ISCC EU certification is becoming increasingly important. However, a significant challenge remains in addressing outdated carbon intensity factors attributed to China in these certifications, complicating the accurate representation of their reduced environmental impact.
Overall, while domestic demand remains subdued, the Chinese hydrogen industry is focused on maintaining a competitive edge globally through cost-effective production and strategic export realignment. This approach involves navigating complex international certification processes and adapting to evolving market demands.
