Analysis of hydrogen supply and demand in China's energy transition towards carbon neutrality

Abstract

The role of hydrogen in the transition to carbon-neutral energy systems will be influenced by key factors such as carbon neutrality pathways, hydrogen production technology costs, and hydrogen transportation costs. Existing studies have not comprehensively analyzed and compared the impact of these key factors on the development of hydrogen supply and demand under China's carbon neutrality pathways. This study uses the Global Change Assessment Model (GCAM) with an upgraded hydrogen module to evaluate the development potential of China's hydrogen industry, considering various carbon neutrality pathways as well as hydrogen production and transportation costs. The findings indicate that, by 2050, hydrogen could account for 8%–14% of final energy, averting 1.0–1.7 Bt of carbon emissions annually at an average mitigation cost of 85–183 USD t⁻¹CO₂. The total hydrogen production is projected to reach 75–135 Mt, with 34%–56% from renewable energy electrolysis and about 15%–29% from fossil fuel-based CCS. On a sectoral level, by 2050, the hydrogen demand in the industrial and transportation sectors is expected to reach 37–63 Mt and 30–42 Mt, with a potential reduction of about 0.6–0.9 BtCO₂ and 0.5–0.6 BtCO₂. The share of hydrogen in the final energy of the steel and chemical sectors is estimated to be 9%–19% and 17%–25%, collectively accounting for 36%–42% of total hydrogen demand and 46%–50% of total emission reduction potential. Realizing hydrogen's emission reduction potential relies on the rapid development of hydrogen production, transportation, and utilization technologies. Firstly, the development of on-site electrolysis for hydrogen production and early deployment of industrial hydrogen applications should be prioritized to stimulate overall growth of hydrogen industry and cost reduction. Secondly, vigorous development of renewable energy electrolysis and hydrogen end-use technologies like fuel cells should be pursued, along with the demonstration and promotion of hydrogen transportation technologies. Lastly, further advancement of carbon market mechanisms is essential to support the widespread adoption of hydrogen technologies.