The central government will reward five city clusters (as yet unselected) with up to CNY 1.6 billion (USD 232 million) each for reaching hydrogen targets like bringing down the price per kg to CNY 25.
The incentive is part of a four-year hydrogen pilot programme launched by three government ministries on 16 March.
Most hydrogen in China is used in oil refining, ammonia production and methanol, with transport accounting for only a minor share, according to the National Energy Administration.
While previous hydrogen policy focused on transport, the pilot programme reflects real demand by considering a broader range of applications. It invites city clusters to set out plans across transport (such as hydrogen fuel cells), industrial applications (like green ammonia and hydrogen-based steelmaking), as well as emerging areas (including shipping, aviation and mining).
China’s hydrogen sector is approaching a “tipping point” for large-scale deployment, but still struggles to scale commercially and needs national-level support, stated an official from the Ministry of Industry and Information Technology.
The country has already built the world’s largest hydrogen-vehicle system, with nearly 40,000 fuel-cell vehicles and 574 refuelling stations by the end of 2025, according to Xinhua News. The new programme sets a target of 100,000 fuel-cell vehicles by 2030.
However, the sector is heavily dependent on subsidies. In Foshan, Guangdong province, use of hydrogen buses was suspended after local subsidies expired, as refuelling costs were too high, Yicai reported earlier this year.
Lowering costs is a central goal of the new programme. It sets a target of cutting end-user hydrogen prices from CNY 35-50 (USD 4.80-6.90) per kg to below CNY 25 (USD 3.50) by 2030. In advantageous regions with high renewable energy potential, the target is CNY 15 (USD 2.10).
The programme also stresses the need for a genuinely low-carbon supply chain. It bans coal-based ammonia or methanol projects from being labelled “green” and encourages hydrogen production linked directly to renewable power, including off-grid wind and solar projects.
The programme echoes China’s 2026 government work report, released on 13 March, which identifies hydrogen and green fuels as future growth industries, alongside the imminent creation of a national low-carbon transition fund.
As well as decarbonisation, energy security is another key reason for the hydrogen push. The crisis around the Strait of Hormuz is affecting global energy supplies, shipping costs and food prices, highlighting the need for energy autonomy and supply diversification, Lu Chenyu, secretary general of the Zhongguancun Hydrogen Energy and Fuel Cell Technology Innovation Industry Alliance, told Beijing News.
“As a renewable energy source, hydrogen is expected to accelerate the replacement of traditional oil and gas to meet the needs of energy security and carbon reduction. Furthermore, its derivative ammonia industry chain can provide new supply routes for fertiliser production,” he said.
Read Dialogue Earth’s previous analysis on if China’s green ammonia can cope with the green hydrogen slowdown.