The green hydrogen sector has rapidly gained attention as a critical element in the clean energy transition. By 2025, China has emerged as a dominant player in green hydrogen production and electrolyser manufacturing. This shift raises important questions about global supply chains, technology leadership, and energy security.
China’s Leadership in Hydrogen Production
China became the world’s largest hydrogen producer by 2024, producing 36.5 million tonnes annually. Nearly half of the global green hydrogen output, about 120,000 tonnes, originated from China. This scale reflects China’s rapid industrial growth and strategic focus on clean energy technologies.
Electrolysers – The Heart of Green Hydrogen
Electrolysers split water into hydrogen and oxygen. Two main types are commercially used – Alkaline (ALK) and Proton Exchange Membrane (PEM). ALK electrolysers are mature and cheaper but less efficient with variable renewable energy. PEM electrolysers deliver higher efficiency and hydrogen purity but are costlier due to precious metal use.
China’s Manufacturing Strength in Electrolysers
China dominates 85% of global ALK electrolyser manufacturing capacity. Chinese ALK electrolysers are priced lower than overseas alternatives, offering up to 45% cost savings for projects in Europe. Prices have dropped further due to supply chain maturity and increased competition within China.
Raw Materials and Cost Dynamics
ALK electrolysers are made from abundant materials like nickel and steel, which China produces domestically. PEM electrolysers require iridium, platinum, and titanium, which China imports heavily. This limits cost reductions for PEM technology and challenges China’s full supply chain control.
System Integration and Market Challenges
Hydrogen production demands customised system integration based on required purity and end use. Price competition alone may not suffice. Exporters who provide fully integrated solutions have an edge. Chinese firms are expanding beyond manufacturing to develop complete hydrogen production facilities domestically and abroad.
International Expansion and Partnerships
Chinese companies like LONGi, Envision, and Guofu Hydrogen are entering the global green hydrogen market. They are building production plants and partnering with foreign firms, such as German companies, to develop electrolyser systems and large-scale hydrogen projects.
Emerging Competition and Regulatory Barriers
Although China is poised to dominate, the green hydrogen sector differs from solar due to strong national policies worldwide. Many countries prioritise local manufacturing and impose trade restrictions. Concerns over supply chain security and geopolitical tensions may limit China’s market access and growth.
Future Outlook and Strategic Implications
China’s green hydrogen leadership depends on technological advances and supply chain integration. Global players are likely to increase efforts to protect domestic industries. The evolving regulatory landscape will shape the competitive dynamics of this emerging clean energy market.
Questions for UPSC:
- Discuss the role of green hydrogen in India’s energy transition and its potential economic impact.
- Critically examine the challenges and opportunities in developing indigenous renewable energy supply chains in India.
- Explain the significance of rare earth and critical minerals in clean energy technologies. How can India secure its supply chains?
- With suitable examples, discuss the implications of global trade policies on the clean energy sector and international cooperation.
