Carbon Discussion | Hydrogen Energy Industry Sees Accelerated Recovery as Government Work Report Mentions It Again

“Establish a National Low-Carbon Transition Fund to Cultivate New Growth Points such as Hydrogen Energy and Green Fuels.” After first proposing the hydrogen energy industry in 2024, the 2026 Government Work Report released on March 5th once again mentioned hydrogen energy.

This day coincides with the lunar Jie Zhe solar term, and the continuous policy signals are seen as injecting new confidence into industry development.

Policy-Driven Large-Scale Development

The keyword “hydrogen energy” has appeared three times in government work reports over the past seven years, with related statements continuously evolving. In 2019, the government work report proposed “promoting the construction of charging and hydrogen refueling facilities,” marking hydrogen energy as a form of infrastructure for fuel cell vehicles into national policy. In 2024, the report explicitly included “accelerating the development of frontier emerging industries such as hydrogen energy, new materials, and innovative medicines” when deploying future industry cultivation, marking hydrogen energy for the first time as an “industry” in the government work report.

“Revisiting hydrogen energy in the government work report signals not just ‘whether to develop’ but indicates that ‘hydrogen energy has moved from pilot projects into a strategic sequence for national energy security, transformation, and industry cultivation,’” Zhang Yanfeng, director of the Shanghai Yangtze River Delta Hydrogen Technology Research Institute, told the Zero Carbon Research Institute. Notably, the 2026 government work report proposes establishing a “National Low-Carbon Transition Fund to cultivate new growth points such as hydrogen energy and green fuels,” indicating a shift in policy positioning from single technology demonstration to systematic deployment linked with industry funds, green finance, zero-carbon parks, and key industry decarbonization.

“The hydrogen industry will enter a period of rapid growth, attracting more people and capital,” several companies told the Zero Carbon Research Institute, expecting hydrogen energy to usher in a year of significant development.

Along with multiple mentions in the government work report, the positioning of hydrogen energy within China’s energy system is becoming clearer.

Lu Chenyu, secretary-general of the Zhongguancun Hydrogen and Fuel Cell Technology Innovation Industry Alliance, told the Beijing News Zero Carbon Research Institute, “The Energy Law of the People’s Republic of China clearly defines hydrogen energy as a secondary energy source alongside electricity and heat. The ‘Medium- and Long-Term Plan for Hydrogen Industry Development (2021–2035)’ clarifies that hydrogen energy is an important component of China’s future energy system, with clear development goals and four major application directions. The 14th Five-Year Plan further emphasizes hydrogen energy’s role as a future industry for China.”

Lu Chenyu explained that the international landscape, especially the Russia-Ukraine conflict and recent US-Iran tensions, has profoundly impacted global energy supply. The Strait of Hormuz, a major maritime route for oil, LNG, and fertilizers, if blocked, could trigger chain effects on global energy supply, shipping costs, and food prices, highlighting the importance of energy independence and diversification. As a renewable energy source, hydrogen is expected to accelerate replacing traditional oil and gas, meeting energy security and energy-saving, carbon reduction needs. Additionally, the derived ammonia industry chain can provide new supply pathways for fertilizer production.

The Zero Carbon Research Institute notes that, from China’s hydrogen industry development path, policy has played a crucial role in early industry cultivation. The country continues to introduce policies at the national level to promote hydrogen energy, forming a relatively complete top-level design; meanwhile, most provinces have issued hydrogen industry plans, supporting industry park construction, technological R&D, infrastructure, and demonstration applications, creating a policy system of central and local coordination.

Zhang Yanfeng told the Zero Carbon Research Institute that it is normal for emerging industries to have policy-driven characteristics in their early stages. Hydrogen energy is not a single product but involves a complete industry chain of “production—storage—transport—use.” Large infrastructure investments, multiple technical routes, and complex industry coordination make spontaneous market formation difficult in early stages. Data shows that policy-driven efforts have indeed translated into industry expansion capacity. By the end of 2024, over 600 renewable energy electrolysis hydrogen projects are planned nationwide, with a capacity of about 125,000 tons/year, and around 28,000 fuel cell vehicles are in operation. By the end of 2025, China’s renewable energy-produced hydrogen capacity will exceed 250,000 tons, doubling from the previous year; fuel cell vehicles will number nearly 40,000. This rapid expansion demonstrates the early role of policies as “icebreakers.”

“Currently, the hydrogen industry is not simply ‘policy-driven’ but in a transitional phase of ‘policy-led, demonstration-verified, market gradually forming,’” Zhang Yanfeng said.

Although industry acceleration is expected, commercializing hydrogen energy may require more patience from the industry.

In Zhang Yanfeng’s view, large-scale commercialization of hydrogen energy will not happen simultaneously across all fields but will develop in phases. The next five years are critical for the industry to move from demonstration to initial commercialization, with two main scenarios likely to achieve scale first—industrial raw material substitution and transportation.

For larger-scale applications like shipping fuels, long-term energy storage, and distributed energy supply, it is expected to wait until after 2030. Zhang Yanfeng stated that for hydrogen to truly become a “bulk energy commodity” and a “power system regulation carrier,” this is not a matter of the next few years but a process spanning beyond 2030 into 2035.

Additionally, the establishment of the National Low-Carbon Transition Fund, mentioned in the government work report, is seen by many industry insiders as a policy tool to ease investment pressures.

Envision Energy told the Zero Carbon Research Institute that a core challenge in the hydrogen industry is its technological intensity, heavy assets, and long return cycles. The establishment of a national low-carbon transition fund means hydrogen energy will be incorporated into the country’s long-term strategic capital allocation system.

Zhang Guoqiang, a National People’s Congress deputy and chairman of Beijing Yihuatong Technology Co., Ltd., also said that the fund’s creation will provide more financial support for key technological breakthroughs like large-scale hydrogen production and high-power fuel cells.

Application Scenario Innovation Will Be Key to Industry Implementation

Zhang Yanfeng told the Zero Carbon Research Institute that there are indeed mismatches in the current hydrogen industry, such as some regions planning for larger scales than actual demand; upstream equipment expanding rapidly, but terminal applications still in development; resource-rich areas with strong hydrogen production capacity, but terminal consumption mainly in eastern regions. This indicates the industry is in a supply-side leading stage. However, what needs to be truly cautious of is not moderate over-anticipation but homogeneous layouts detached from resource endowments and application scenarios.

The Zero Carbon Research Institute learned from industry communications that low demand remains a major pain point. Achieving demand “opening” through scenario innovation is expected to promote the transition from technological demonstration to large-scale application.

For example, in Beijing, many industry insiders suggest expanding hydrogen applications beyond transportation into industrial decarbonization and energy storage and transportation.

Beijing is one of China’s most complete hydrogen industry chains and innovation hubs. During the 14th Five-Year Plan period, national hydrogen industry demonstration and promotion mainly focused on transportation. Beijing, as a demonstration city for fuel cell vehicles, has been continuously advancing vehicle promotion, infrastructure construction, and application scenarios, leading nationwide in industry scale and demonstration applications.

Meanwhile, Lu Chenyu pointed out that, facing the “14th Five-Year Plan” industry policy, the goal is to further expand into energy and industrial sectors based on achievements in transportation, innovating application scenarios, and ensuring real project implementation across the entire industry chain. This will drive the expansion and benefits of the future hydrogen industry, aligning with regional energy transformation and carbon neutrality goals, and promoting coordinated development with related industries.

Deputy Zhang Ronghua, chairman of Rongcheng Group, also submitted suggestions on hydrogen development, emphasizing leveraging the Beijing-Tianjin-Hebei regional synergy to accelerate high-quality industry growth and build demonstration clusters.

Zhang Ronghua told the Zero Carbon Research Institute that, amid the strategic opportunity of the “Western Hydrogen to Eastern Delivery” major project, the Beijing-Tianjin-Hebei hydrogen industry is at a critical stage from “single-point demonstration” to “regional coordination,” but still faces issues such as imprecise regional function positioning, insufficient scenario-led coordination, and unresolved factor market barriers.

He proposed adhering to the “Beijing-Tianjin-Hebei overall plan” concept, based on each city’s resource endowments and development foundation, clarifying differentiated core roles. Utilizing port advantages of Tianjin, Tangshan, and Huanghua, to develop hydrogen ports, industry, and city integration demonstration zones; encouraging ports to develop hydrogen heavy trucks and other equipment, promoting green port logistics; leveraging Tianjin Free Trade Zone’s financial innovation, establishing a Beijing-Tianjin-Hebei hydrogen, ammonia, and alcohol trading center, setting unified trading standards and accounting systems, linking with the national carbon market, and realizing integrated trading of hydrogen, ammonia, alcohol, and carbon reduction credits to monetize projects.

Lu Chenyu believes Beijing’s greatest advantage lies in its strong technological innovation capacity. During the “14th Five-Year Plan” hydrogen industry promotion, Beijing is adopting a higher strategic position and broader vision, implementing the spirit of General Secretary Xi Jinping’s important speech during his inspection of Beijing, and executing the “Modern Capital Metropolitan Area Spatial Coordination Plan” approved by the Party Central Committee and State Council. The goal is to create a high-quality growth pole for regional development and advance Chinese modernization. In building the hydrogen industry chain as part of the “Six Chains and Seven Clusters,” Beijing leverages its innovation platforms and corporate headquarters, deepens central-local cooperation, and fully utilizes Tianjin’s manufacturing and port resources, coordinating with Hebei’s renewable energy bases in Zhangjiakou and Chengde, and industrial applications in Tangshan and Cangzhou. Through layered industry chain collaboration, it explores hydrogen-based chemical, metallurgical, and green fuel applications, promoting the integration of hydrogen into energy and industrial sectors.

“An industry’s formation and growth depend not only on resource endowments but also on extensive and continuous application scenarios,” Lu Chenyu said. As a future industry outlined in national planning, government plays a vital role from initial technological innovation to application demonstration, requiring strong government support. The development of the “14th Five-Year Plan” hydrogen industry faces the challenge of enabling policies, rules, resource aggregation, capital effectiveness, and market-driven resource allocation, allowing leading enterprises to enter the expansion phase through market competition, transforming from tens to hundreds, and guiding the industry toward the future.

Beijing News Shell Finance Reporter Zhu Yueyi, Editor Chen Li, Proofreader Mu Xiangtong