CITIC SEC released a research report stating that during the "16th Five-Year Plan" period, hydrogen energy is expected to gradually enter the industrialization stage, driven by policy support. With the construction of zero-carbon factories and zero-carbon parks, the market scale of green hydrogen and hydrogen-based green fuels is expected to gradually expand. New application scenarios will drive growth in the green hydrogen industry chain and demand for electrolyzer equipment. Investors who proactively invest in hydrogen-based green energy projects are also expected to benefit from product premiums in the early stages of industrial development. The report recommends focusing on two main themes, with particular emphasis on companies with a safety margin in their main business and growth potential in their hydrogen energy operations: 1) companies involved in the green hydrogen electrolyzer equipment segment; and 2) companies developing projects related to green fuels.
The catalyst for this analysis was the release of the "Guiding Opinions on Carrying out Zero-Carbon Factory Construction Work." On January 14, 2026, five government departments jointly issued this document, which represents China's first top-level design document for zero-carbon factory construction at the national level. Regarding primary objectives, the Guiding Opinions outline a phased, gradient path for building zero-carbon factories, transitioning from industries where energy consumption is primarily electricity to those with greater decarbonization challenges. The selection of benchmark factories will begin in 2026, followed by the cultivation of a batch of zero-carbon factories in sectors like automobiles, lithium batteries, photovoltaics, and computing facilities in 2027, expanding to traditional high-energy-consumption industries such as steel, petrochemicals, and building materials by 2030.
In terms of the construction path, the Guiding Opinions encourage factories to achieve zero-carbon supplies of electricity, heat, hydrogen, and fuel. It explicitly mentions "actively developing integrated projects for green hydrogen, ammonia, and methanol, and promoting the application of clean, low-carbon hydrogen from industrial by-product hydrogen and renewable energy sources." CITIC SEC's core views are as follows.
The transition from the power sector towards hard-to-abate sectors is progressing, and hydrogen energy is expected to become a core tool. According to research on China's carbon peak and neutrality timeline, industrial process emissions account for approximately 33% of the nation's total carbon emissions, making it the second-largest source after the power and heat sectors. For hard-to-abate industries such as steel, non-ferrous metals, petrochemicals, and building materials, even 100% usage of green electricity cannot resolve carbon emissions from raw materials and high-temperature processes. Hydrogen's dual attributes as both a clean energy carrier and an industrial raw material make it the optimal solution for deep decarbonization in the industrial sector.
Green hydrogen produced via water electrolysis using renewable energy, along with green methanol, can replace gray hydrogen and coal-based methanol as chemical feedstocks. Hydrogen-based direct reduced iron can substitute coke in steelmaking, and hydrogen-fueled boilers can provide high-temperature heat sources. The firm believes that the Guiding Opinions' emphasis on "actively developing integrated green hydrogen-ammonia-methanol projects" is core to advancing the industry chain: "renewable energy → green hydrogen → green ammonia/green methanol and other hydrogen-based green fuels." This addresses current hydrogen storage and transportation challenges while unlocking market potential on the demand side.
The construction of zero-carbon factories and parks is an essential pathway for addressing international carbon border taxes. The EU's Carbon Border Adjustment Mechanism entered its transitional phase in October 2023 and will begin levying tariffs on January 1, 2026, covering sectors including steel, aluminum, cement, fertilizers, hydrogen, and electricity. Products failing to meet carbon footprint standards face substantial tariff costs. The CBAM regulations emphasize that carbon emissions must be calculated and verifiable according to specified methods; failing credible data, default values are used, which are typically higher than actual emissions.
The Guiding Opinions explicitly require "improving the carbon emission accounting management system to achieve scientific carbon calculation." The core objective is to establish a carbon accounting-disclosure-certification system aligned with international rules, thereby accurately meeting CBAM compliance requirements and potentially those of other future carbon tariff systems. This aims to translate China's advantages in green power development into lower product carbon emissions, expanding manufacturing cost advantages to include carbon cost advantages, ultimately converting them into international market competitiveness under the influence of carbon tariffs.
CITIC SEC believes that under the dual forces of carbon tariff pressure and zero-carbon factory policy guidance, demand for green hydrogen in high-carbon, export-oriented industries may exhibit rigid growth.
Risk factors include: domestic policy details and local implementation pace falling short of expectations; policy enforcement strength being weaker than anticipated; and significant changes in the technological roadmap for the green hydrogen and hydrogen-based green fuel industry or a slower-than-expected pace of cost reduction.
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