March 31, 2026
FOSHAN, GUANGDONG – Bright blue public buses powered by hydrogen zip along the streets of Nanhai district, known as the capital of China’s hydrogen energy industry. “The future is here,” proclaim the words emblazoned on their sides.
Nanhai, in the southern city of Foshan, is a proponent of hydrogen, long touted as a clean fuel of the future. But in China, as elsewhere, problems like high cost and patchy infrastructure have limited its broader adoption.
Undeterred, China announced in March that it will expand its push for hydrogen, targeting sizeable price reductions and more uses for the fuel, with an emphasis on green hydrogen made entirely from renewables.
It is one of seven frontier industries highlighted in its latest economic road map, the 15th Five-Year Plan, which also eyes advances in nuclear fusion energy, quantum technology and brain-computer interfaces.
China sees hydrogen energy as a “future industry” poised to drive growth in the longer run.
Even though the idea of a hydrogen economy has been around since the oil crisis of the 1970s, the sector has yet to go mainstream, not least because the gas is expensive to produce cleanly.
Hydrogen itself is a clean fuel in that it emits zero greenhouse gases when used. But traditional methods of producing hydrogen using natural gas or fossil fuels are polluting as carbon is emitted.
Today, countries including China are looking to tap low-carbon hydrogen – especially green hydrogen that is produced from renewables – as a way to cut emissions.
Hydrogen is not without its detractors, and there are questions over its efficiency as a fuel. Still, it is attractive as a stable carrier of renewable energy such as solar and wind that would otherwise be difficult to store long term.
The move to grow the niche sector represents a bet that if and when the economics for the fuel eventually work out, China will be well placed to benefit, say analysts.
For now, few are willing to foot the bill for the fuel.
On a recent Wednesday afternoon, the three bays at a hydrogen refuelling station in Nanhai stood empty during the hour that The Straits Times was there. Just one electric scooter pulled in – to deliver the station head’s lunch.
Mr Xie Linhui, who leads the facility, said it sells less than half of the two tonnes a day it needs to shift to turn a profit. When business is good, some 60 to 70 vehicles come to refuel – mostly public buses, sanitation vehicles and logistics trucks, he said.
There, the state’s hand is at play: Firms backed by the local government have in recent years bought or leased hydrogen-powered vehicles to provide public services, such as buses, sprinkler trucks and road-sweepers.
But even government support has shown signs of strain. Local media outlet Yicai reported in January that about half of Nanhai’s hydrogen bus fleet was out of service, given high operating costs and declining ridership.
One hydrogen bus driver told ST that his vehicle cost about 200 yuan (S$37) to 300 yuan more to operate per day than an electric one. “Hydrogen is expensive,” he said.
The cost is one of the problems that Beijing is determined to tackle.
It announced on March 16 a pilot programme that aims to cut prices of hydrogen to below 25 yuan per kilogram for end users by 2030. Currently, prices are generally above 35 yuan per kilogram, according to Yicai.
Beijing also wants to increase hydrogen’s industrial applications – such as in producing green ammonia, which can be used to make fertiliser or as fuel for ships.
This marks an expansion from an earlier focus on promoting hydrogen-powered vehicles, which are also known as fuel cell electric vehicles (FCEVs).
Adoption on the vehicle front has fallen short of Beijing’s goals. China sold a total of about 40,000 FCEVs up until the end of 2025, missing its target of 50,000. It is now aiming for a total of 100,000 FCEVs on its roads by 2030, a downgrade from the one million it had anticipated back in 2016.
Elsewhere, too, hydrogen-powered transport has struggled. In Japan, sales of FCEVs dropped 83 per cent between 2021 and 2025, Nikkei Asia reported, while the number of refuelling stations shrank 10 per cent.
And globally, the forecast production capacity of low-carbon hydrogen by 2030 fell nearly a quarter in 2025 from a year earlier as projects were delayed or cancelled, according to a report by the International Energy Agency. Most were green hydrogen projects.
Although the maths may not work out for now and some applications struggle to take off, China is pressing on.
Hydrogen is seen as one of few possible ways to decarbonise tricky sectors like steel, chemicals and long-distance transport, said Ms Shen Xinyi, a researcher at the Centre for Research on Energy and Clean Air think-tank. These are industries where electrification alone may not be enough to lower emissions.
“So even if (the) near-term economics are weak, there is a strong incentive to prepare early for long-term decarbonisation needs.”
China’s calculation is that its build-out of renewable energy will eventually help lower the cost of green hydrogen, said Professor Lin Boqiang, dean of the China Institute for Studies in Energy Policy at Xiamen University.
The country has been installing solar and wind farms at a rapid clip. In 2025, it added more solar and wind capacity than the rest of the world combined.
The electricity generated can be used to make clean hydrogen by splitting water into hydrogen and oxygen through a process called electrolysis. China is developing green hydrogen production bases in regions like Inner Mongolia where this can be done.
“The prerequisite is that wind and solar must be extremely cheap, and the scale extremely large, to be able to truly support hydrogen energy,” said Prof Lin.
Having conquered clean technologies such as solar and wind, China is “eager to expand to the next battlefield” and is looking to position itself early in the game, said Mr Li Shuo, director of the China Climate Hub at the Asia Society Policy Institute think-tank.
He said China likely reckoned that the business case for green hydrogen would “eventually be there” – if not in the 2020s then in the 2030s – and that placing an early bet would put it in a strong position when this came to pass.
China is “a big enough country to put bets in many different places”, said Mr Li. “Sometimes, those bets will indeed pay off.”
