China Bets Big on Green Hydrogen

China is rapidly expanding its green hydrogen industry, making it one of the world’s biggest bets on a fuel seen as important to the global energy transition. Since the end of 2024, China has more than tripled its annual operational green hydrogen capacity to nearly 250,000 tons. This is more than double the combined capacity of the rest of the world. 

Under its latest five-year plan, Beijing aims to raise production to about 2 million tons annually by 2030. China’s strategy is supported by two major advantages: its enormous industrial base and its growing supply of renewable electricity. 

Industries such as steel, cement and chemicals remain difficult to electrify directly and require cleaner alternatives. 

At the same time, China’s rapid expansion of wind and solar power has created periods of surplus electricity, particularly in renewable-rich regions such as Inner Mongolia. This excess power can be used to produce green hydrogen and, through products such as ammonia, store renewable energy for later use. 

A major example is the Envision Group facility in Chifeng, Inner Mongolia. The $2.6 billion plant, which began operations a few years back, is the world’s largest green hydrogen facility. It uses wind and solar power to run electrolyzers that split water into hydrogen and oxygen. 

Its location also highlights the potential of hydrogen to address renewable-energy curtailment caused by limited grid infrastructure and distance from major electricity-consuming areas. 

China’s push comes as green hydrogen projects elsewhere face rising costs and weak demand. Chinese electrolyzers are estimated to cost around one-quarter as much as European models, giving domestic producers a significant cost advantage. China also has established supply chains and a large potential customer base among energy-intensive industries. 

However, the industry still faces major obstacles. Green hydrogen remains more expensive than hydrogen produced from natural gas or coal, while existing government subsidies and carbon-credit incentives have not yet closed the cost gap. 

The biggest uncertainty is whether policies can generate enough real demand to justify the higher price of green hydrogen. 

China is therefore following a familiar approach used in its renewable-energy and electric-vehicle industries: build production capacity and infrastructure first, while expecting demand to develop alongside it. 

If this strategy succeeds, China could strengthen its position as a clean-technology leader and demonstrate that green hydrogen can decarbonize sectors where direct electrification is difficult. If demand fails to materialize, however, the industry could struggle to achieve commercial viability in the near term. 

As the world watches this push by China to produce green hydrogen through electrolysis, a North American entity, MAX Power Mining Corp. (CSE: MAXX) (OTC: MAXXF), is taking another approach in which natural hydrogen could soon be extracted from the Earth. This approach has the potential to make more affordable hydrogen available at scale. 

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