Green hydrogen and ammonia alcohol industry, receives additional subsidies

According to the official website of the Yunnan Provincial Development and Reform Commission on February 28, recently, the Yunnan Provincial Development and Reform Commission, the Yunnan Provincial Department of Industry and Information Technology, and the Yunnan Energy Bureau issued the “Several Measures to Promote the Consumption of Green Electricity in Yunnan Province” (referred to as “Measures”). The Measures state that for integrated projects producing green hydrogen (ammonia) with an annual output of over 100 tons (including 100 tons) of new energy hydrogen production, a subsidy of up to 13 yuan per kilogram will be provided continuously for three years from the date of commissioning.

Driven by international shipping’s carbon reduction demands, new energy hydrogen production (ammonia) is becoming a new growth point in the green energy industry. Listed companies such as China Tianying, Shanghai Electric, and Goldwind Technology have all entered the market.

Yunnan clarifies support for the development of green hydrogen (ammonia) industry

Specifically, the Measures clarify the promotion of demonstration development in the green hydrogen (ammonia) industry. Support the integrated development of new energy and hydrogen production (ammonia). Under the premise of developing supporting management methods, clarifying responsibilities, and ensuring safety, renewable energy electrolysis for hydrogen production can be built outside chemical parks. Wind and solar-powered hydrogen projects should generally be planned with a 60:40 ratio, with the first year allowing no more than 40% of the available power to be fed into the grid, the second year no more than 30%, and the third year and beyond no more than 20%. For hydrogen (ammonia) projects supplied by the public grid, research will establish a benefit-sharing mechanism between power generation companies reducing curtailment and hydrogen production consumption. For integrated new energy hydrogen projects producing over 100 tons of green hydrogen annually, a subsidy of up to 13 yuan per kilogram will be provided for three consecutive years from the date of commissioning.

The Measures also mention scientifically planning application demonstration projects. Guide key regions such as Qujing, Zhaotong, Honghe, etc., to combine the carbon reduction needs of refining, chemical, and other industries, and to scientifically plan and layout industrial chain projects such as new energy hydrogen production, synthetic ammonia, methanol, and sustainable aviation fuels, launching a batch of green electricity-based hydrogen production demonstration projects annually before 2028. In wind and solar resource-rich areas like northwest Yunnan, explore the construction of dedicated hydrogen (ammonia) production lines for existing new energy projects, utilizing excess electricity for hydrogen production under the condition of meeting grid operation and dispatch requirements. Actively expand hydrogen fuel cell applications at large hydropower construction sites, large mines, and other projects. Explore hydrogen (low proportion) blending into urban gas pipelines from entry points to end users, and explore hydrogen and ammonia co-firing technology in new thermal power units.

The Measures also state to promote hydrogen infrastructure construction. Actively participate in the “Hydrogen Corridor” construction of the Western Land-Sea New Passage, building east-west branch lines connecting the main hydrogen corridor. Construct short-distance hydrogen logistics demonstration projects in industrial cities such as Kunming, Yuxi, Qujing, Chuxiong, and Honghe, with hydrogen refueling, gas filling, and charging stations planned and built along the route, along with hydrogen production infrastructure.

Multiple listed companies target the green hydrogen-ammonia track and sign orders

Producing green methanol and green ammonia from green hydrogen has become an important downstream application of hydrogen energy. According to analysis by the China International Capital Corporation (CICC) research team, there are many terminal application scenarios for hydrogen energy. On one hand, hydrogen fuel cells can generate electricity for use in fuel cell vehicles, rail transit, and stationary power generation; on the other hand, hydrogen can be directly applied in industries such as metallurgy and petroleum refining, or synthesized into methanol and ammonia as shipping fuels or chemical raw materials.

However, currently, green hydrogen produced from renewable energy still costs significantly more than gray hydrogen produced from fossil fuels. Subsidies are a way to offset the cost gap of green hydrogen and are a means to activate the industry’s initial development.

According to CICC research, the costs of hydrogen production via coal gasification, natural gas, and water electrolysis (alkaline electrolyzers) are approximately 9.3 yuan/kg, 17.8 yuan/kg, and 19.2 yuan/kg, respectively. Water electrolysis is about 9.9 yuan/kg more expensive than coal gasification.

Professor Zhang Libo from the School of Economics and Management at Nanjing University of Aeronautics and Astronautics, and Deputy Director of the Low-Carbon Development Research Institute, recently stated in media that the current mainstream AWE (alkaline water electrolysis) and PEM (proton exchange membrane electrolysis) hydrogen production costs in China are about 25 yuan/kg and 35 yuan/kg, respectively, which are 2 to 3 times higher than gray hydrogen, severely limiting the large-scale development of green hydrogen. The article suggests improving green hydrogen subsidy mechanisms and implementing “immediate production, immediate subsidy” policies linked to green hydrogen output. Globally, countries and regions such as Europe, the US, Japan, and South Korea have been continuously promoting standard-setting and increasing green hydrogen projects through strategic planning and subsidy policies.

“Currently, most cities developing hydrogen energy provide various subsidies for green hydrogen, with some reaching 20 yuan/kg,” said Zhao Qilin, Chairman of Xie Hydrogen New Energy, to Shanghai Securities News.

It appears that subsidies of 13 yuan/kg to 20 yuan/kg could play an important role in nurturing green hydrogen and its downstream industries.

Regarding listed companies, several enterprises are actively advancing green hydrogen-ammonia projects and signing orders with downstream clients.

China Tianying disclosed on the evening of February 26 that it is fully promoting the progress of two flagship integrated hydrogen energy projects in Liaoyuan, Jilin, and Anda, Heilongjiang. During the Spring Festival, the team worked overtime to push forward construction. The first phase aims to complete all construction by the end of June, with phased commissioning in July and August, and product debugging by the end of the third quarter. The underground construction of the hydrogen-ammonia chemical part of the Heilongjiang Anda project has been completed, with the plant’s upper structure beginning construction, and wind and solar power sections also entering the construction phase.

China Tianying has signed the world’s first order for electric methanol supply with a leading international energy company, marking its green methanol products officially entering the supply system of major global energy companies. The company is also in in-depth negotiations with multiple international energy and shipping companies regarding electric methanol supply.

CICC research team states that shipping giants are signing large-scale green methanol procurement agreements, which could accelerate capacity deployment after 2026. In July 2025, Shanghai Electric’s Saoyuan green methanol project will be put into operation, with an initial annual capacity of 50,000 tons, supplied to CMA CGM by Shanghai Port Group, making it China’s first large-scale commercial green methanol project. Currently, many green methanol producers such as Goldwind Technology have signed long-term procurement agreements with Maersk, Hapag-Lloyd, and other international shipping giants. These capacities are in trial operation or under construction, and the team expects rapid volume growth starting in 2026.