CITIC Securities: Hydrogen Energy Industry Expected to Accelerate Industrialization During "15th Five-Year Plan" Period, Positive on Green Hydrogen Ammonia Methanol Project Operators

CITIC Securities released a research report stating that the Ministry of Industry and Information Technology and two other departments have launched a comprehensive hydrogen energy application pilot, while also releasing a nationwide subsidy policy for the hydrogen industry. Fiscal support will expand from fuel cell vehicles during the 14th Five-Year Plan to green hydrogen and its downstream industries. With substantial policy support, the hydrogen industry is expected to experience large-scale development and accelerated industrialization. Key areas to watch include: 1) operators of green hydrogen ammonia alcohol projects; 2) manufacturers of key equipment for green hydrogen production—electrolyzers; 3) the fuel cell vehicle industry chain.

Event: Three departments jointly issued a notice to initiate the hydrogen energy comprehensive application pilot.

On March 16, 2026, the Ministry of Industry and Information Technology, the Ministry of Finance, and the National Development and Reform Commission jointly issued the “Notice on Launching the Hydrogen Energy Comprehensive Application Pilot” (referred to as the “Notice”). The core idea of this policy is to “use urban clusters as the main focus, prioritize terminal consumption and real hydrogen usage, and promote commercialization in transportation, industry, and other scenarios through fiscal incentives.” The main points of the “Notice” are as follows:

1. Pilot approach: adhere to the principle of adapting to local conditions, with urban clusters as the main applicants. Leading cities will sign cooperation agreements with other cities, define overall and detailed goals, and submit plans to the three departments. Ultimately, five urban clusters will be selected.

2. Overall goals: by 2030, achieve large-scale hydrogen applications across multiple fields within urban clusters; reduce the terminal hydrogen price to below 25 yuan/kg (with some advantageous regions aiming for 15 yuan/kg); double the national fuel cell vehicle fleet compared to 2025, aiming for 100,000 vehicles.

3. Reward method: support through “awards instead of subsidies,” with a four-year pilot period per urban cluster and a maximum reward cap of 1.6 billion yuan. After approval, central government funds will be pre-allocated at a certain proportion, with annual acceptance and settlement. Urban clusters will earn points based on the promotion of fuel cell vehicles and the scale of green hydrogen application in various scenarios, with each point rewarded with 80,000 yuan.

4. Main scenarios: the pilot scenarios can be summarized as “1+N+X,” meaning one general fuel cell vehicle scenario, N industrial application scenarios—including green ammonia alcohol, hydrogen-based chemical raw material substitution, hydrogen metallurgy, hydrogen blending combustion—and X innovative application scenarios (such as hydrogen use in rail locomotives, ships, mining trucks, two-wheelers, combined heat and power, new energy storage, etc.). Pilot cities can choose to focus on fuel cell vehicles or industrial applications based on local conditions.

CITIC Securities’ main views are as follows:

Driving volume at the application end through point-based rewards, and promoting cost reduction via large-scale application.

The point-based reward mechanism is the core driver for implementing the “Notice.” Subsidies are mainly structured into two modes: 1) points rewards for fuel cell vehicle pilots (similar to previous reward mechanisms for demonstration city clusters, based on application promotion volume and mileage), and 2) points rewards for industrial scenarios based on green hydrogen application scale. The first mode, supporting fuel cell vehicles, offers maximum rewards of about 352,000 yuan per vehicle (based on trucks over 31 tons), plus additional incentives of 4.4/2.8 yuan per kg for green/gray hydrogen refueling. The second mode, focusing on green hydrogen application scale, marks the first nationwide green hydrogen subsidy policy, which is expected to quickly address current economic challenges and slow scaling issues.

In terms of reward intensity, the largest incentives are for green ammonia alcohol and hydrogen metallurgy scenarios. For example, in the first year, with a cap of 15,000 tons, these scenarios receive 5 points per 100 tons of green hydrogen, equivalent to 4 yuan/kg. Similarly, hydrogen-based chemical raw material substitution, hydrogen blending combustion, and innovative scenarios receive 4 points per 100 tons, or about 3.2 yuan/kg. Based on maximum subsidies, the unit costs for green ammonia synthesis and biomass gasification coupled with green hydrogen to produce green methanol could decrease by approximately 700 and 460 yuan per ton, respectively. The policy is expected to stimulate demand and accelerate supply-side scale development, creating a positive cycle of “cost reduction → demand release → scale expansion.”

Using technical requirements to push equipment upgrades, with hydrogen policies strengthening during the 14th Five-Year Plan.

The “Notice” sets high technical standards for pilot projects, including alkaline electrolyzer energy consumption ≤5 kWh/Nm3 and PEM electrolyzers ≤4.8 kWh/Nm3. Green ammonia alcohol systems are required to achieve load dynamic regulation of 30%-110% (green ammonia) and 60%-110% (green methanol). These requirements indicate that while scaling up, the policies also drive technological iteration and cost reduction in equipment. Recent policy developments—from the zero-carbon factory guidelines promoting green hydrogen ammonia alcohol projects, to the inclusion of green hydrogen in the 14th Five-Year Plan, and the nationwide urban cluster pilots with up to 1.6 billion yuan per cluster—form a diversified support system combining top-level design, decarbonization policies, and subsidies to improve economic viability. Green hydrogen and its downstream products like green ammonia alcohol are key to energy security, carbon reduction, and promoting non-electrical utilization and absorption of new energy, and are expected to accelerate industrialization with strong policy backing.

Risk factors:

• Policy details and implementation pace may fall short of expectations;
• Policy enforcement may be weaker than anticipated;
• Major technological changes in key hydrogen industry segments;
• Cost reduction may proceed more slowly than expected.