China’s Hydrogen Gamble: Building a Clean Energy Ecosystem
Pilot projects and industrial policies signal a new wave in renewable technology.
✍️ By Dr. Alan Hughes | Telecoms & Space Policy Analyst
Hydrogen has emerged as a key pillar of China’s clean energy transition. Long viewed as a niche technology, hydrogen is now central to Beijing’s efforts to decarbonize heavy industry, reduce reliance on fossil fuels, and strengthen energy security. In 2025, China’s “hydrogen gamble” is moving from policy blueprints to large-scale pilot projects, positioning the country as a potential global leader in the sector.
National Strategy and Policy Push
Beijing included hydrogen in its 14th Five-Year Plan, emphasizing its role in industrial decarbonization. Provincial governments have since rolled out dozens of local roadmaps, with hydrogen clusters developing in Hebei, Inner Mongolia, and coastal provinces like Guangdong.
Central support includes subsidies for electrolyzer manufacturing, tax incentives for hydrogen vehicle deployment, and funding for R&D in storage technologies. The government’s objective is clear: establish a full hydrogen value chain, from production to end-use.
Scaling Green Hydrogen Production
China remains the world’s largest producer of hydrogen, but much of it comes from coal—a “grey hydrogen” pathway with high emissions. The new focus is on green hydrogen, produced using renewable electricity.
Large-scale projects powered by wind and solar farms in Xinjiang and Inner Mongolia are being piloted, with electrolyzer capacity expanding rapidly. By 2024, China accounted for nearly half of global electrolyzer manufacturing, giving it the tools to dominate the next wave of hydrogen development.
Industrial Applications Take Shape
The greatest demand for hydrogen is expected in hard-to-abate sectors. Steelmaking, cement, and heavy transport all require energy-dense solutions that batteries alone cannot provide.
State-owned enterprises are already experimenting:
- Baowu Steel is piloting hydrogen-based furnaces.
- Logistics hubs in Shanghai and Tianjin are deploying hydrogen-powered trucks and forklifts.
- Coastal ports are testing hydrogen as a fuel for shipping.
These applications suggest hydrogen could become more than just a niche fuel, embedding itself into core industrial processes.
Competition and Global Positioning
Globally, the EU, Japan, and South Korea are investing heavily in hydrogen. Yet China’s scale and manufacturing base give it a unique advantage. By controlling electrolyzer production and scaling projects faster than rivals, China may establish cost leadership in green hydrogen, just as it did in solar panels.
This positioning could also reshape global energy trade, with hydrogen exports potentially complementing or even replacing parts of traditional fossil fuel flows.
Challenges and Risks
Despite momentum, several hurdles remain. Green hydrogen is still expensive compared to coal-based production, and storage and transportation infrastructure is underdeveloped. Safety concerns, particularly in dense urban areas, require strict regulation and technological innovation.
There is also a risk of overcapacity, as seen in solar and EV industries, where rapid expansion outpaced demand and led to market distortions.
Outlook
China’s hydrogen gamble reflects its broader approach to industrial strategy: invest early, scale aggressively, and dominate the supply chain. If successful, hydrogen could become a cornerstone of China’s clean energy transition, reducing emissions while creating new export opportunities.
The coming decade will determine whether this gamble pays off, but in 2025, the trajectory is clear—China is betting big on hydrogen as the fuel of the future.
