While China’s government-owned businesses invested in green hydrogen, “there was nothing at the national level,” like the 45V tax credits in America’s Inflation Reduction Act or the European hydrogen bank, said Anne-Sophie Corbeau, a hydrogen researcher at Columbia University’s Center on Global Energy Policy.
For example, Beijing backed fuel-cell vehicles, but the support came primarily as a reward for reaching manufacturing targets, not as direct subsidies, she said. The central government might give an annual reward of 1.6 billion yuan ($225 million) per city based on progress toward certain deployments of fuel-cell infrastructure, but “if you are underperforming, you may get nothing,” Corbeau said.
“Broadly, that means no state support for industrial applications like what we may have seen in other countries,” she said.
This month’s policy shift will direct Beijing’s funding hose at heavy industries that transition from coal and gas to hydrogen, including “power, steel, nonferrous metals, building materials, petrochemicals, chemicals, and machinery,” said Xinyi Shen, the China team lead at the Centre for Research on Energy and Clean Air, a Finnish research nonprofit.
“This policy sends a strong signal of China’s commitment to accelerating its green transition,” she said. “Given China’s current clean-energy momentum and industrial policy direction, the country may ultimately achieve deeper [emissions] cuts than it has formally committed to.”
Still, Shen warned, “green hydrogen remains costly.” But China’s capacity to swiftly scale industries that the government makes a priority has a history of sending prices plunging, as happened with solar panels and batteries. And China’s hydrogen sector “is expanding rapidly,” Ouyang said.
Between 2021 and 2023, she said, roughly 100 to 200 new hydrogen-related companies launched each year in the country. Today, China dominates manufacturing of the most popular type of electrolyzer, the machine used to make green hydrogen, representing roughly 60% of the global market. Thanks to that scale, a Western company buying a Chinese-made electrolyzer would pay one-third the price of a locally made counterpart.
If central government funding accelerates in the next year or two as expected, “China could solidify its leadership in the industry and achieve some of the world’s lowest-cost green hydrogen,” Ouyang said.
That could put the U.S. and Europe at risk of lagging behind China, just as they have with other steps in the clean-energy supply chain, experts say.
Corbeau said the conditions are already there for China to dominate the industry. Once the federal tax credits expire, she said, “nothing much will happen” beyond “a few projects” in America.
She noted that in Europe earlier this year, the regional hydrogen bank’s second offering of a public subsidy for hydrogen tried to limit funding for projects that had too many Chinese components. But “the scheme does not give much money, and some projects told me they are better off with Chinese technology because of the cost advantage,” Corbeau said.
“It’s almost too late already,” she added.
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