CITIC SECURITIES released a research report stating that the Ministry of Industry and Information Technology, the Ministry of Finance, and the National Development and Reform Commission jointly issued a notice on pilot work for comprehensive hydrogen energy applications. The initiative will utilize a "mission-oriented" mechanism to select city clusters with strong industrial foundations, diverse application scenarios, reliable hydrogen supply capabilities, and complete industrial chains to conduct pilot projects. These pilots aim to expand hydrogen application scenarios from fuel cell vehicles to diverse fields such as transportation and industry, enhance the supply capacity of clean, low-carbon hydrogen, overcome technical bottlenecks in hydrogen applications, break through industrial constraints, and ultimately establish replicable commercial application models. The goal is to build an efficient comprehensive hydrogen application system, promote integrated development across the entire "production-storage-transportation-utilization" industrial chain, improve the policy environment, and foster a high-quality industrial ecosystem.

Key viewpoints from CITIC SECURITIES are as follows: City clusters will prioritize suitable scenarios for hydrogen pilots, including fuel cell vehicles, green ammonia/methanol, hydrogen-based chemical feedstock substitution, hydrogen-based metallurgy, and hydrogen-blended combustion. They will actively explore innovative applications to construct a comprehensive hydrogen application ecosystem characterized by "1 universal fuel cell vehicle scenario + N industrial application scenarios + X innovative application scenarios." Specifically, the fuel cell vehicle scenario will focus on constructing hydrogen highways and corridors, prioritizing large-scale adoption of medium and heavy-duty commercial vehicles, while encouraging exploration in urban operational vehicles and passenger cars. The green ammonia/methanol scenario will center on improving techno-economic viability and expanding downstream consumption, promoting the large-scale development of green hydrogen production for green ammonia and methanol. The hydrogen-based chemical feedstock substitution scenario will target carbon reduction in industries like refining and coal chemical, using renewable energy-based hydrogen to replace fossil-fuel-based hydrogen, and encouraging supporting hydrogen storage and transportation infrastructure. The hydrogen metallurgy scenario will support the low-carbon transition of the steel industry, deploying low-carbon metallurgy facilities reliant on clean hydrogen sources and expanding downstream markets for low-carbon steel. The hydrogen-blended combustion scenario will focus on low-carbon heating, safely introducing hydrogen into natural gas pipelines, boilers, and furnaces, and gradually increasing the blending ratio. Innovative application scenarios will explore hydrogen use in rail transport, shipping, energy storage, backup power, and electronics/pharmaceuticals.

The total subsidy scale reaches 8 billion yuan, aimed at resolving bottlenecks in hydrogen application scenarios. Applications for this comprehensive hydrogen pilot program are submitted by city clusters. A lead city coordinates the preparation of a detailed pilot plan with clear tasks, defines roles with participating cities, and obtains commitment letters. After review and guidance from the provincial-level industry, finance, and development reform authorities, the plan must be submitted via the dedicated management service platform by April 15, 2026. A third-party agency will conduct evaluations, and applicants will revise their plans based on feedback before resubmission. Ultimately, five pilot city clusters will be selected, with implementation starting as each plan matures. Central government support will be provided through a "reward instead of subsidy" mechanism, with a maximum reward of 1.6 billion yuan per city cluster over the four-year pilot period. Reward funds must be exclusively used for comprehensive hydrogen applications, effectively reducing hydrogen costs and passing these savings to end-users.

Green hydrogen/ammonia/methanol projects emphasize electrolyzer electricity consumption and flexible load regulation capabilities. Requirements for these pilot projects include: 1) Alkaline water electrolysis hydrogen production systems (including power conversion, gas-liquid separation, and purification) must have an energy consumption of ≤5 kWh/Nm³, with an electrolyzer current ramp-up/ramp-down rate of ≥1%/s; Proton Exchange Membrane (PEM) water electrolysis systems (including power conversion, gas-liquid separation, and purification) must have an energy consumption of ≤4.8 kWh/Nm³, with a current ramp-up/ramp-down rate of ≥10%/s. 2) Green ammonia and green methanol production systems must achieve dynamic load regulation ranges of 30%-110% and 60%-110%, respectively. The pilot targets are: 1) Establish a complete industrial chain covering renewable energy hydrogen production, green ammonia, green methanol, and their downstream consumption, with an end-user hydrogen price not exceeding 25 yuan/kg. 2) Actual production of green ammonia and green methanol must reach at least 60% of design capacity, with stable downstream offtake channels established. The focus is on enhancing the techno-economic viability of green ammonia/methanol and expanding downstream consumption by innovatively applying advanced technologies like flexible intelligent control to promote large-scale production and application. Stable downstream offtake channels for products like green synthetic ammonia and green methanol must be established to explore sustainable business models. Integrated construction of renewable energy hydrogen production projects adaptable to the variable nature of wind and solar power is encouraged, promoting large-scale electrolyzer deployment and technological iteration, and implementing off-grid hydrogen production where suitable. Investment in large-scale hydrogen storage and transportation infrastructure, such as hydrogen pipelines, is also encouraged.

Investment strategy primarily recommends integrated wind power-hydrogen-ammonia/methanol operators. With the subsidy plan clarified, operators possessing large-scale production capabilities and excellent flexible production technologies are poised to benefit clearly, as per-ton production costs decrease and economic viability continues to improve. Risk factors include potential delays in policy subsidy disbursement, slower-than-expected industrial technology iteration, and changes in energy strategy roadmaps.