①The three ministries launched a comprehensive hydrogen energy application pilot program, with a total funding pool of up to 8 billion yuan for a single pilot city cluster. ②From upstream electrolyzers, midstream membrane materials to downstream fuel cell engines and integrated green hydrogen operations, the entire industry chain is moving away from single-point breakthroughs toward full-scale, cluster-based, and commercially closed-loop development.
The STAR Market Daily, March 21 (reporter Wang Chufan) – China’s hydrogen energy industry is entering a period of intensive policy releases and an industrial inflection point.
Recently, the Ministry of Industry and Information Technology (MIIT), the Ministry of Finance, and the National Development and Reform Commission jointly issued the ‘Notice on Launching Comprehensive Hydrogen Energy Application Pilot Work’ (hereinafter referred to as the ‘Notice’). The Notice proposes that regions apply for comprehensive hydrogen energy application pilot projects as urban clusters, with the central government providing up to 8 billion yuan in demonstration rewards over four years. Meanwhile, the 2026 Government Work Report further upgraded hydrogen energy to a new growth driver, marking the first time green fuels were included in the report. The ’15th Five-Year Plan’ even elevated it to the strategic level of a ‘future industry.’
Driven by dual imperatives of energy security and deep decarbonization, hydrogen energy is transitioning out of its demonstration phase. Most enterprises interviewed reached a consensus, stating they will continue to closely monitor hydrogen energy-related policy developments, accelerate government-enterprise alignment, leverage policy support to deploy across the entire industry chain, and seize early-mover advantages in industrial development.
Reward cap for a single urban cluster: 1.6 billion yuan.
The second article of the Energy Law of the People’s Republic of China, which will officially take effect in 2025, explicitly lists hydrogen energy alongside coal, oil, natural gas, nuclear energy, hydropower, wind energy, and solar energy as a statutory energy type, establishing the legal status of hydrogen energy for the first time. Article 33 of the law stipulates: ‘The state will actively and orderly promote the development and utilization of hydrogen energy and foster high-quality growth of the hydrogen energy industry.’ This fundamentally removes the institutional constraints previously imposed by classifying hydrogen energy as a hazardous chemical, providing fundamental legal assurance for the development of the hydrogen energy industry chain.
According to the Notice, the central government will adopt a ‘reward instead of subsidy’ approach to provide financial rewards to urban clusters. Reward standards are tiered based on the application of end products or hydrogen usage scale in various scenarios. Each urban cluster’s pilot period lasts four years, with a reward cap of 1.6 billion yuan per urban cluster during the pilot period. The reward funds are to be allocated by local governments to support comprehensive hydrogen energy applications and must not be used for balancing budgets, repaying government debt, or clearing overdue payments to enterprises for other purposes.
Following a ‘pre-disbursement followed by settlement’ mechanism, after the approval of the pilot urban cluster, the central government will pre-disburse a certain percentage of the reward funds to support the launch of comprehensive hydrogen energy application pilot work. At the end of each pilot year, the three departments will calculate reward points based on the annual performance evaluation results of the urban cluster (principally 1 point equals 80,000 yuan).
By 2030, hydrogen energy in urban clusters will achieve large-scale applications across diverse fields such as transportation and industry, with the average terminal hydrogen price dropping below 25 yuan per kilogram, aiming to reach around 15 yuan per kilogram in some advantageous regions. The nationwide stock of fuel cell vehicles will double compared to 2025 levels, striving to reach 100,000 units.
The head of the Energy Conservation and Comprehensive Utilization Department of the MIIT emphasized that the 1.6 billion yuan reward and subsidy is not a blanket distribution but, through a performance-linked mechanism of ‘pre-disbursement followed by settlement,’ ensures funds tilt toward ‘actual operational effectiveness,’ fundamentally addressing the previous industry issue of ‘subsidies upon vehicle purchase and idle vehicles.’
Specifically, the reward criteria are set at different levels based on the application of terminal products in various scenarios or the scale of hydrogen usage. After the end of each pilot year, the lead cities of each city cluster should compile a detailed summary of the pilot work from the previous year and prepare a self-assessment report. The three departments will commission a third-party agency to issue a performance evaluation report. Based on the results of the performance evaluation, the central government will disburse the reward funds following the prescribed procedures.
At the same time, to promptly monitor the progress of the city cluster pilots and better support the performance evaluation work, a comprehensive hydrogen energy application pilot management and service platform will be established. This platform will enable real-time supervision of the progress of hydrogen supply systems and application scenarios in the pilot city clusters, as well as hydrogen consumption data, providing robust data support for performance evaluations.
Policy issuance boosts industry confidence.
Regarding the Notice, project operators at the downstream application end have expressed cautious attitudes. Reporters from The STAR Market Daily contacted several relevant companies in the capacity of investors, and some enterprises stated that they were not yet aware of the notice.
Relevant staff from China Energy Engineering Corporation told reporters: ‘This policy has just been issued, but the company’s hydrogen energy layout has been underway for many years. A large-scale hydrogen energy project was commissioned at the end of last year, and there are also multiple project plans for the future.’ Regarding whether to apply for the pilot program, the person acknowledged: ‘It is currently uncertain whether the related projects fully meet the pilot requirements, and government-enterprise coordination efforts are still ongoing.’ The company’s Songyuan hydrogen energy project has received policy support from the National Development and Reform Commission, the National Energy Administration, and funding from ultra-long-term special treasury bonds.
Multiple enterprises affirmed the positive impact of the policy. Among them, a representative from Weichai Power stated: ‘The comprehensive hydrogen energy application pilot-related policy document issued by the Ministry of Industry and Information Technology is fundamentally a significant boost to the development of the industry. From the perspective of the entire hydrogen energy sector, the policy will effectively accelerate industrial growth and expedite commercialization. For our company, it represents a tangible benefit that will positively influence business development.’
Representatives from LONGi Green Energy Technology and Dongfang Electric Corporation also indicated that the policy has a positive guiding role in the development of the hydrogen energy industry. LONGi Green Energy Technology has established an integrated collaborative framework of ‘photovoltaics + energy storage + hydrogen energy,’ and its securities department personnel introduced that the company focuses on the research and development of large alkaline electrolyzers, achieving notable breakthroughs in key areas such as single-unit large-scale capacity and low direct current power consumption. Dongfang Electric Corporation has deep expertise in hydrogen production equipment, with its independently developed alkaline and high-power PEM electrolyzers having completed numerous engineering validations, ensuring full control over core technologies.
Weichai Power disclosed on an interactive platform that it has comprehensively deployed diverse hydrogen energy power technology routes, including hydrogen fuel cells, hydrogen internal combustion engines, and SOFC solid oxide fuel cells. Its hydrogen fuel cell systems cover power ranges from 13kW to 300kW, meeting multi-scenario demands, while its hydrogen internal combustion engine has achieved the commercialization of a 560-horsepower high-power product with a thermal efficiency of 45%.
Jidian Co., Ltd.’s Da’an Wind-Solar Green Hydrogen Ammonia Integration Demonstration Project is proceeding smoothly and has received demonstration approval support from the National Development and Reform Commission, becoming a national-level clean and low-carbon hydrogen energy benchmark project, highlighting the company’s leading position in the green hydrogen integration field.
A representative from East Materials Technology informed reporters that the company’s proton exchange membrane (PEM), a core material in the midstream hydrogen energy sector, has entered the small-scale supply and downstream customer certification stage, promoting the localization process of critical midstream components.
The industry still faces the challenge of high costs.
In terms of competitive landscape, the current hydrogen energy industry exhibits a healthy development trend characterized by ‘leadership from major enterprises and complementary roles played by small and medium-sized businesses.’
Leading upstream hydrogen production companies are building market barriers through technological and scale advantages. LONGi Green Energy Technology, through its controlling subsidiary LONGi Hydrogen, has become a globally leading supplier of large-scale alkaline electrolyzers, boasting scaled production capacity and core technology leadership. Sungrow Power’s subsidiary, Sungrow Hydrogen, focuses on renewable energy electrolysis-based hydrogen production technologies, with products including alkaline water electrolyzers and PEM electrolyzers, which have been applied in multiple photovoltaic and wind power hydrogen production projects.
The midstream core components sector has developed a differentiated competitive landscape. Weichai Power and Dongfang Electric, as dominant forces in the SOFC technology camp, compete strategically with companies such as Yihuatong and Shanghai Reshaping, which specialize in PEMFC technologies. Enterprises like Dongcai Technology are making continuous breakthroughs in niche areas such as proton exchange membranes. Dalian Mingyuan Technology, relying on the technical strength of the Dalian Institute of Chemical Physics under the Chinese Academy of Sciences, is continuously advancing in the field of fuel cell systems and has equipped 160 sets/systems.
At the downstream application end, Yihuatong, as an industry leader, has established a production base in Zhangjiakou. Its engine core components have achieved 100% localization, driving the implementation of more than 40 upstream and downstream projects, such as Hao’an Qingyuan Hydrogen Storage and Transportation Equipment. Yuntao Hydrogen, within just three years, has completed full vertical integration across the entire industrial chain—from bipolar plates and stacks to system integration—becoming a core driver for the development of the hydrogen energy industry in the Guangdong-Hong Kong-Macao Greater Bay Area.
Wood Mackenzie, an international energy research institute, noted in its report that China’s annual electrolyzer production capacity has exceeded 50GW, with unit costs decreasing from approximately 250 USD/kW to below 100 USD/kW, profoundly impacting the evolution of the global hydrogen energy industry.
Despite the gradual improvement of the industrial chain and ongoing policy support, the industry still faces core bottlenecks: for a long time, ‘unaffordability’ has been a key factor limiting the widespread adoption of hydrogen energy. Relevant sources from Weichai Power revealed that excessively high costs across the industrial chain remain a primary issue at this stage.
Wu Liang, Chief Engineer of Shanghai Hydrogen Era Technology Co., Ltd., believes that achieving large-scale hydrogen energy applications requires further breakthroughs in every link of the ‘production, storage, transportation, and usage’ chain. On one hand, this involves the maturity and stability of technology; on the other, it pertains to cost reduction. The large-scale application of the hydrogen energy industry necessitates comprehensive breakthroughs across the entire chain—from green hydrogen at the source to end-use consumption—with each link contributing collectively to make hydrogen energy economically viable.
