Hydrogen Energy Policies in the 15th Five-Year Plan: From Pilot Demonstration to Large-Scale Commercialization

The newly released Renewable Energy Development Plan for the 15th Five-Year Period has accelerated the large-scale growth of China’s hydrogen energy industry. For the first time, hydrogen energy is officially incorporated into China’s non-fossil energy system, with a clear target of scaling renewable hydrogen production to 2 million tons annually by 2030. This milestone marks the end of the industry’s pilot phase and the start of a new commercial era focused on capacity expansion, quality improvement and viable energy substitution.

The new policy targets key bottlenecks holding back green hydrogen adoption. While China has built one of the world’s largest hydrogen production capacities in recent years, the industry has yet to achieve economic viability. Green hydrogen remains costly to produce, with power expenses accounting for over 60% of total costs, making it uncompetitive against conventional grey hydrogen. Production bases are mostly concentrated in China’s Three-North regions, whereas industrial and transportation hydrogen demand is centered in coastal eastern China, leaving long-distance transportation and storage as a major operational hurdle. Most projects still rely on government subsidies and lack self-sustaining business models.

Demand Expansion: Policy-Driven Market Offtake Guarantees Stable Demand

The Plan is reshaping the hydrogen market by shifting policy support from passive subsidies to mandatory non-power consumption assessments and blending standards, creating guaranteed market demand for green hydrogen. Hard regulatory and market incentives are pushing high-carbon sectors — including ammonia co-firing in coal power, hydrogen metallurgy in steel manufacturing, and green methanol for shipping — to adopt clean alternatives, unlocking tens of millions of tons of new market demand for green ammonia and green methanol.

Yu Zhuoping, professor at Tongji University and chair of the Expert Committee of the China Hydrogen Alliance, put forward a clear cost reduction roadmap for the 15th Five-Year period. The core goals include cutting green hydrogen production costs below 15 RMB per kilogram, lowering 100-kilometer transportation costs to 3–5 RMB per kilogram, and achieving cost parity between green hydrogen and traditional fuels for both transportation and industrial natural gas-based hydrogen use. This resolves the long-standing supply-demand deadlock constraining industry growth.

Infrastructure Upgrade: Building Transportation Networks to Fix Regional Supply-Demand Mismatch

The Plan prioritizes infrastructure improvement, shifting the industry’s focus from pure production capacity to efficient transportation and end-use application. China will build integrated green hydrogen, ammonia and methanol bases in Northeast China, the Yellow River Bend area, and remote desert and gobi regions. Wind-solar-hydrogen integrated development will generate scale effects to drive down costs for core equipment such as electrolyzers. Meanwhile, cross-regional hydrogen pipeline networks are under accelerated development, including the Ulanqab–Beijing-Tianjin-Hebei hydrogen pipeline and feasibility studies for dedicated green methanol pipelines. This new network will effectively connect resource-rich renewable energy bases with major consumption markets.

Zheng Nanfeng, CAS academician and dean of the College of Energy at Xiamen University, noted that current hydrogen, ammonia and methanol projects still follow outdated chemical industry standards. Construction, installation and auxiliary facility costs are more than three times higher than core equipment costs, pushing up capital expenditures (CAPEX). Pipeline transportation can slash long-distance hydrogen logistics costs to around 3 RMB per kilogram per 1,000 kilometers, far more cost-effective than traditional tanker delivery.

Value Enhancement: Securing Global Carbon Asset Pricing Power

Beyond industrial upgrades, the Plan lays the groundwork for sustainable commercial operations and global carbon pricing influence. It supports Shanghai’s development into an international green fuel bunkering and trading hub, and promotes the establishment of unified green fuel sustainability certification systems. This allows China’s green hydrogen industry to shift from simply selling raw energy products to exporting certified low-carbon energy with verifiable carbon footprints. Amid global carbon trade barriers such as the EU CBAM, enterprises that master international carbon certification and carbon credit monetization will capture premium benefits from global decarbonization trends.

The next five years will bring unprecedented certainty to China’s hydrogen market. Industry profits will gradually polarize: leading players with core material R&D capabilities, carbon asset pricing advantages and integrated operational resources will dominate high-margin sectors. Enterprises with low-end, redundant production capacity, no stable low-cost green power supply and no fixed end-use scenarios will be phased out. Only full-industry-chain operators will seize the massive growth dividends of China’s trillion-yuan hydrogen energy market.