The Role of Hydrogen in Decarbonisation - An Analysis for China

Abstract

China, the world’s largest greenhouse gas emitter, has pledged to become carbon neutral by 2060. Reaching this goal requires major changes to how the country produces and uses energy. While improvements in efficiency and the rapid expansion of renewable energy and electrification will carry much of the load, they are not enough on their own. In sectors such as steelmaking, chemicals, and heavy transport, where electrification is technically challenging, hydrogen will be essential. This dissertation examines how hydrogen fits into China’s broader energy transition by analysing future decarbonisation pathways, potential hydrogen demand, and consumers’ willingness-to-pay in key sectors, cost reductions in renewable hydrogen production, and the influence of government policies. The findings show that hydrogen becomes increasingly important as emissions targets tighten, that strong policies such as carbon pricing are crucial for making hydrogen competitive, that China has significant potential to produce low-cost renewable hydrogen, and that tailored policy mixes are required to support both hydrogen market uptake and technological innovation. Overall, the research highlights that while hydrogen is not a standalone solution, it is a crucial component for decarbonising sectors that cannot be electrified, and a key pillar in China’s pathway to carbon neutrality.