CITIC Securities: Hydrogen Energy Comprehensive Application Subsidy Plan Released to Unblock Industry Development Bottlenecks and Pain Points

CITIC Securities research report states that the Ministry of Industry and Information Technology, the Ministry of Finance, and the National Development and Reform Commission jointly issued a notice on the pilot work for comprehensive hydrogen energy applications, which will select city clusters with strong industrial foundations, diverse scenarios, robust hydrogen supply capabilities, and complete industrial chains to carry out pilot projects in a “ranking and leadership” manner. The pilot will promote the expansion of hydrogen energy application scenarios from fuel cell vehicles to diverse fields such as transportation and industry, enhance the capacity for clean low-carbon hydrogen supply, tackle technological bottlenecks in hydrogen energy applications, break through industrial constraints, and ultimately form replicable commercial application models, build an efficient comprehensive hydrogen energy application system, promote the integrated development of the entire “production, storage, transportation, and utilization” industrial chain, improve the industrial policy environment, and create a high-quality industrial ecosystem.

Full text as follows

Electricity New｜Subsidy plan for comprehensive hydrogen energy applications launched to unblock industrial development bottlenecks

The Ministry of Industry and Information Technology, the Ministry of Finance, and the National Development and Reform Commission jointly issued a notice on the pilot work for comprehensive hydrogen energy applications, which will select city clusters with strong industrial foundations, diverse scenarios, robust hydrogen supply capabilities, and complete industrial chains to carry out pilot projects in a “ranking and leadership” manner. The pilot will promote the expansion of hydrogen energy application scenarios from fuel cell vehicles to diverse fields such as transportation and industry, enhance the capacity for clean low-carbon hydrogen supply, tackle technological bottlenecks in hydrogen energy applications, break through industrial constraints, and ultimately form replicable commercial application models, build an efficient comprehensive hydrogen energy application system, promote the integrated development of the entire “production, storage, transportation, and utilization” industrial chain, improve the industrial policy environment, and create a high-quality industrial ecosystem.

▍ Each city cluster will prioritize selecting fuel cell vehicles, green ammonia and methanol, hydrogen-based chemical raw materials replacement, hydrogen metallurgy, and hydrogen blending combustion scenarios that meet conditions for hydrogen energy pilot projects, actively explore innovative applications, and build a “1 general fuel cell vehicle scenario + N industrial application scenarios + X innovative application scenarios” ecosystem for comprehensive hydrogen energy applications.

Among them, the fuel cell vehicle scenario focuses on the construction of hydrogen highways and hydrogen corridors, with an emphasis on promoting the large-scale application of medium and heavy commercial vehicles, and encouraging exploration in urban operation vehicles and passenger vehicle scenarios; the green ammonia and methanol scenario focuses on improving technological economics and expanding downstream consumption; the hydrogen-based chemical raw material replacement scenario focuses on carbon reduction in refining and coal chemical industries, replacing fossil fuel hydrogen production with renewable energy hydrogen production, and encouraging supporting hydrogen storage and transportation facilities; the hydrogen metallurgy scenario focuses on the low-carbon transformation of the steel industry, relying on clean hydrogen sources to build low-carbon metallurgy facilities, and expanding downstream consumption channels for low-carbon steel; the hydrogen blending combustion scenario focuses on low-carbon heating, promoting the blending of hydrogen into natural gas networks, boilers, kilns, etc., while ensuring safety, and gradually increasing the hydrogen blending ratio; the innovative application scenario explores innovative applications of hydrogen energy in multiple fields such as rail transportation, shipping, energy storage, backup power, and electronic pharmaceuticals.

▍The total scale of subsidies reaches 8 billion yuan to resolve bottlenecks in hydrogen application scenarios.

This pilot for comprehensive hydrogen energy applications is submitted by city clusters, with the leading city coordinating the preparation of a clear task pilot plan, clarifying the division of responsibilities with participating cities and obtaining task commitment letters. After review and guidance by the leading province’s departments of industry, finance, and development and reform, it will be submitted to the three departments via the hydrogen energy comprehensive application pilot management service platform by April 15, 2026; the three departments will entrust a third-party organization to conduct evaluations, and the applicant will revise and improve the plan based on evaluation opinions before resubmitting. Ultimately, five pilot city clusters will be selected based on merit, and as soon as a plan is mature, it will be implemented. The central government will provide support in a “reward instead of subsidy” manner, with a maximum reward of 1.6 billion yuan for each city cluster during the four-year pilot period. The reward funds are limited to supporting comprehensive hydrogen energy applications and must effectively reduce hydrogen costs and transmit them to the end consumption link.

▍The green hydrogen and methanol project emphasizes the energy consumption of the electrolyzer and the flexible load adjustment capability of the project.

The requirements for the green hydrogen and methanol pilot project are as follows: 1) The alkaline water electrolysis hydrogen production system (including power conversion, gas-liquid separation, and purification) should have energy consumption ≤ 5 kWh/Nm3, and the electrolyzer current increase/decrease rate should be ≥ 1%/s; the proton exchange membrane (PEM) water electrolysis hydrogen production system (including power conversion, gas-liquid separation, and purification) should have energy consumption ≤ 4.8 kWh/Nm3, and the electrolyzer current increase/decrease rate should be ≥ 10%/s; 2) The green ammonia and green methanol production systems should achieve dynamic load adjustments of 30%-110% and 60%-110%, respectively.

The pilot goals are: 1) to build a complete industrial chain covering renewable energy hydrogen production, green ammonia, green methanol products, and their downstream consumption, with terminal hydrogen prices not exceeding 25 yuan/kg; 2) the actual output of green ammonia and green methanol should not be less than 60% of the designed capacity, forming stable downstream consumption channels. The focus is on improving the economic efficiency of green methanol technology and expanding downstream consumption, innovating advanced technologies such as flexible intelligent control, and promoting the large-scale production and application of green methanol. Establish stable downstream consumption channels for products like green synthetic ammonia and green methanol, exploring sustainable commercial models. Integrate construction of renewable energy hydrogen production projects that adapt to the fluctuating characteristics of wind and solar power, promote the large-scale application and technological iteration of electrolyzers, and develop off-grid hydrogen production tailored to local conditions. Encourage the construction of large-scale hydrogen storage and transportation infrastructure such as hydrogen pipelines.

▍Risk factors:

Policy subsidies may not be disbursed as expected, industrial technology iteration may not meet expectations, and changes in energy strategy routes.

▍Investment strategy.

Focus on recommending integrated operators of wind power hydrogen and methanol. After the subsidy plan is clarified, operators with large-scale production capabilities and excellent flexible preparation capabilities will clearly benefit, with per-ton production costs decreasing and economic efficiency continuing to improve.

(Source: Yicai)