China is aiming to exceed its 2025 national targets for green hydrogen production, with a goal of 220,000 tons per year by the end of 2024.
This achievement is driven by the rapid expansion of its electrolyzer infrastructure.
China’s Hydrogen Ambitions
Through its national plan, China has identified hydrogen as a key component in its low-carbon energy transition strategy. With the installation of 2.5 GW of electrolyzer capacity by the end of the year, China will produce 220,000 tons per annum (tpa) of green hydrogen. This production will surpass the combined output of the rest of the world by 6 kilotons per annum (ktpa).
In 2023, China installed a cumulative total of 1 GW of electrolyzer capacity, solidifying its position as a global leader in adopting this technology. However, a significant portion of China’s hydrogen still comes from “grey” sources, such as coal gasification or steam methane reforming (SMR).
To meet its climate goals of peak emissions by 2030 and carbon neutrality by 2060, China must transition to low-carbon hydrogen production methods. In 2022, the National Development and Reform Commission released the “Medium and Long-Term Strategy for the Development of the Hydrogen Energy Industry,” a roadmap detailing China’s hydrogen goals from 2021 to 2035. These goals are currently being met without major difficulty.
Challenges in Standards and Infrastructure
While China’s proposed standards represent progress, they fall short of the stricter criteria set by Europe. The ambiguity surrounding the definitions of “low-carbon” and “renewable” hydrogen is a concern.
To catalyze significant change, China must adopt clear and rigorous definitions aligned with global best practices. A geographical disparity exists between eastern China’s hydrogen demand centers and its abundant solar and wind resources in the north, ideal for green hydrogen production.
For example, Inner Mongolia and Gansu defined ambitious renewable hydrogen production targets by 2025, which, combined with efforts from other provinces, aims to exceed 1 million tons per year.
Pipeline Projects to Connect Production and Demand
A notable project is Sinopec’s development of a 400-kilometer pipeline connecting Ulanqab in Inner Mongolia to Yanshan in Beijing, with an initial capacity of 100,000 tpa and plans to reach 500,000 tpa. This pipeline marks China’s first long-distance hydrogen conduit.
Additionally, a 737-kilometer pipeline from Zhangjiakou to Caofeidian Port via Chengde and Tangshan is under development by Tangshan Haitai New Energy Technology in Hebei, with a cost of $845 million.
China has significant solar and wind potential in its northern and northwestern regions, including Xinjiang, Gansu, and Inner Mongolia. In 2023, solar photovoltaic capacity increased by 217 GW of new installations, 2.5 times more than the previous year. New wind installations reached 76 GW in 2023, also doubling from 2022.
Challenges in Operating at Full Capacity
Despite the commissioning of several projects, challenges remain in ensuring that electrolyzer installations operate at full capacity in China. A major bottleneck is the considerable renewable energy capacity required to power the electrolyzers.
For instance, producing 1 million tpa of green hydrogen requires approximately 20 GW of onshore wind capacity. Operating electrolyzers below their rated capacity can lead to safety risks.
Most alkaline electrolyzers currently used in China have an operating range between 30% and 100% of their rated output. If the available power limits hydrogen production to less than 30% of its maximum capacity, the electrolyzers shut down for safety reasons.
Future Outlook for Green Hydrogen in China
Despite these challenges, Rystad Energy forecasts continued growth in China’s share of green hydrogen, driven by the annual installation of new electrolyzer capacity at a globally unmatched pace, similar to the trajectory observed in the solar photovoltaic and wind industries that China continues to dominate.
By 2030, China’s four largest projects will account for up to half of the country’s total green hydrogen production capacity.