China will tighten its grip on the global green hydrogen sector in 2026 as it accelerates the manufacture of low-cost electrolysers, scales up production and makes further advances in new applications for the energy vector.
Capital and operational costs will continue to fall as the green hydrogen supply chain matures and developers tap the country’s vast pool of renewable power.
Supportive policies at both the national and provincial level will underpin the industry’s growth as policymakers hardwire green hydrogen into their technology, energy and decarbonisation strategies. The central government recently highlighted its commitment to clean hydrogen by including support for the industry in its five-year plan for 2026–30.
Policy support has already helped to propel China ahead of Europe and the US, the clean hydrogen industry’s early frontrunners.
Investment of about $33b has been committed to projects in China to 2030, according to industry group the Hydrogen Council. The US ranks second, with $23b, while Europe has slipped to third, with about $19b.
China accounts for 65% of global electrolyser capacity that has been installed or reached FID, according to the IEA. The average size of projects in China is rising more rapidly than elsewhere, implying it is focused firmly on commercial production, rather than pilot projects.
China’s green hydrogen sector was expected to hit a 2025 production target of 100,000–200,000t/yr, a goal set out in the central government’s medium-to-long-term plan for 2021–35 as a growing number of large projects come online.
Renewables technology company Envision recently commissioned what it said was the world's largest and most advanced green hydrogen and ammonia production facility, in Chifeng in Inner Mongolia.
Producing at a rate of 320,000t/yr of green ammonia, the plant was expected to start exporting before the end of 2025. Crucially, Envision has signed a long-term offtake deal with Japanese trading house Marubeni. Production is expected to rise to 1.5mt/yr by 2028.
The project will be powered entirely by an off-grid renewable energy system and will be the first of its kind to be fully AI-enabled, achieving real-time optimisation and stability at scale, according to Envision.
Envision is collaborating on technology with Germany company BASF, reflecting a growing trend that has seen other international operators—including French company Air Liquide and US firm Air Products—enter the Chinese market, partnering with local developers in areas such as hydrogen refuelling infrastructure.
In terms of the sheer size of projects, China’s main rival is arguably the Middle East. Saudi Arabia seems determined to develop the world’s largest individual projects, despite ongoing doubts about its ability to secure offtakers for the product in key exports markets such as Europe. The $8.4b Neom project has long been hailed as the clean hydrogen industry’s largest, while an even bigger green hydrogen and ammonia complex is under development at the port city of Yanbu on the Kingdom’s Red Sea coast. Here too, China will benefit, with oil company Sinopec contracted to engineer and build the project.
Demand
Unlike Saudi Arabia, China’s strategy on green hydrogen demand is weighted heavily towards its domestic market. That is not surprising, given that China is already the world’s largest consumer of grey hydrogen, accounting for about a third of global demand. That means it has a ready-made market for the green product in existing applications.
However, securing offtakers for a premium green product has not been easy in China, as in the rest of the world, and the government launched an ‘implementation plan’ in late 2024 to drive forward the use of clean hydrogen in industry, as well as in new applications such as mobility.
Current offtake is focused on ammonia, refining and power generation, with growing deployment of commercial fuel-cell vehicles. Near-term targets include the deployment of 50,000 hydrogen fuel-cell vehicles. To support this expansion, it aims to have 2,000 refuelling stations in place by 2035.
Technology
China’s breathtaking expansion of wind and solar, and more recently electric vehicles, over recent decades has been as much about building a dominant position in clean energy technologies as decarbonisation. Hydrogen is no different. Clean technology firms such as solar specialist Longi are entering the electrolyser manufacturing sector with an eye on domestic and export markets.
China is home to nearly 60% of the world’s electrolyser manufacturing capacity, according to the IEA.
Trade tensions with the US and EU may hamper the efforts of Chinese electrolyser exporters over the coming months, but cost pressures will continue to work in their favour as they refine their technology and align more closely with international standards.
The cost of domestically produced electrolysers in the US and Europe continued to rise in 2025, allowing Chinese manufacturers to compete in some cases. However, China’s cost advantage remains relatively small when taking into account freight and tariffs, according to the IEA. Based on IEA analysis of the market in 2024, the cost of installing a Chinese electrolyser outside China was $1,500–2,400/kW, compared with $2,000–2,600/kW for a non-Chinese electrolyser. China’s focus on alkaline technologies, rather than proton-exchange-membrane versions, also limits its target market outside of China.
In addition, Chinese electrolysers also face efficiency and underperformance issues and need to be adapted to local export market standards. “This can drive up operational costs, which can in turn make the overall production of hydrogen more expensive and diminish any investment cost advantages,” the IEA said.
“However, Chinese manufacturers are now addressing many of these barriers through innovation and exploring the expansion of manufacturing operations overseas,” it added.
This does not mean China’s electrolyser manufacturing is immune to some of the challenges facing the industry in other regions. Manufacturing capacity growth in China has outpaced demand, and some sector consolidation is expected in 2026.
Policy
On the world stage, policy shifts in the US and the EU have arguably opened the way for China in green hydrogen, despite anxiety among Western policymakers about a potential repeat of China’s takeover of the solar PV market.
In the EU, member states have been slow to implement policies agreed in Brussels, while the industry is pushing back against the imposition of strict definitions of “green”.
China’s top-down clean hydrogen policy, which includes direct subsidies and measures to generate demand, is more effective, according to some in the industry.
“Here we start with the perfect. In China they start with the possible and get to the perfect,” Hydrogen Council CEO Ivana Jemelkova told Hydrogen Economist in an interview. “In China, they are building an industry that now has the power to take on the world.”
In the US, where enthusiasm for the wider energy transition looks to have peaked, policy support for clean hydrogen has been watered down. The 45V production tax credit, introduced under the Inflation Reduction Act, is now available only for facilities that begin construction before 2028 rather than the originally proposed date of 1 January 2033 in the IRA.
Risk management firm DNV has cut its 2050 forecast for North American hydrogen production by 30% in response to this change.
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