The Zhitong Finance App learned that Ping An Securities released a research report stating that the hydrogen energy industry is in line with the direction of “large-scale equipment updates” and that “guide catalogue expansion” provides prerequisites for subsequent policy support, and that policy double clicks help accelerate hydrogen energy investment. “Large-scale equipment renewal” is intended to strongly promote investment and promote high-quality development, and is an important measure with far-reaching impact. Looking at the “volume” of equipment updates, the document suggests that the scale of equipment investment in key areas will increase by more than 25% compared to 2023; judging from the “quality” of updates, energy saving and emission reduction and digital intelligence are the main directions of equipment renewal. The total investment space brought about by equipment renewal is huge. Industries such as green hydrogen chemicals and green hydrogen transportation are expected to benefit from this round of equipment renewal as important support routes for industrial emission reduction. At the same time, the drastic expansion of fields covered by hydrogen energy in the “Guiding Catalogue for Green and Low-Carbon Transition Industries (2024 Edition)” means that the hydrogen energy industry that can be directly supported by national finance and government debt may increase dramatically, providing a prerequisite for supporting the expansion of hydrogen energy investment in various regions in the future.

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Item 1: The 2024 edition of the Green and Low-carbon Transformation Industry Guidance Catalogue was issued, and the hydrogen energy-related catalogue was expanded to the entire industry chain

Recently, ten ministries and commissions, including the National Development and Reform Commission and the Ministry of Industry and Information Technology, jointly issued the “Guiding Catalogue for Green and Low-Carbon Transition Industries (2024 Edition)”. Compared with the previous edition (2019 edition), hydrogen energy-related content has been greatly expanded.

In the 2019 “Guiding Catalogue”, the content related to hydrogen energy mainly focuses on the supporting facilities required for hydrogen fuel cell vehicles. In the 2019 edition of the Green and Low-Carbon Transition Industry Guidance Catalogue, hydrogen energy is mentioned in 3 places: 1. Manufacturing of “charging, power exchange and hydrogenation facilities” under the “New Energy Vehicle and Green Ship Manufacturing” section; 2. “Construction and operation of hydrogen energy utilization facilities” under the “Clean Energy Facility Construction and Operation” section; 3. “Construction and operation of charging, electricity exchange, hydrogenation and gas filling facilities” under the “Green Transportation” section. The topics covered in the catalogue focus on hydrogen storage and fuel cell side applications, and specifically include projects such as hydrogen fueling stations, hydrogen storage and transportation facilities, hydrogen fuel cell vehicles, and hydrogen fuel cell power generation.

In the 2024 new catalogue, hydrogen energy-related content will be extended to the entire hydrogen energy industry chain. In the 2024 catalogue, hydrogen energy is directly mentioned in 2 places: 1. “Hydrogen Energy 'Storage and Transportation' Full Chain Equipment Manufacturing” under the “New Energy and Clean Energy Equipment Manufacturing” section; 2. “Hydrogen Energy Infrastructure Construction and Operation” under the “Clean Energy Facility Construction and Operation” section. Furthermore, in the “Guiding Catalogue” explanatory documents, various fields such as carbon emission reduction in industry and transportation mention hydrogen energy-related applications: “Energy-saving kiln manufacturing” under the “High-efficiency and Energy-Efficient Equipment Manufacturing” section mentions hydrogen metallurgy kilns; “Green Ship Manufacturing” under the “Advanced Transportation Equipment Manufacturing” section mentions methanol, ammonia, and hydrogen-powered ships; “Reducing greenhouse gas emissions in industrial production processes” refers to reducing hydrogen emissions from hydrometallurgy; the resource recycling industry mentions hydrogen recovery from industrial by-products, etc.

With the expansion of the hydrogen energy guidance catalogue in 2024, Ping An Securities believes three points are worth paying attention to:

First, the guidance catalogue covers a wider range of topics. In the 2019 catalogue, content related to hydrogen energy focuses on downstream transportation applications and a small number of storage and transportation links; while the new catalogue includes “full-chain equipment manufacturing for hydrogen production, storage and transportation' of hydrogen from renewable energy”, covering various aspects such as renewable energy hydrogen production and green hydrogen chemicals, the coverage has expanded markedly.

Second, the positioning of the hydrogen energy industry has been upgraded. In the 2019 catalogue, hydrogen energy is in the “New Energy Vehicles/Green Transportation” section. Hydrogen energy is a branch route for green transportation applications; while the new catalogue elevates its positioning to “new energy/clean energy,” focusing on the role of hydrogen energy as a clean secondary energy source in the energy system. This reference also echoes the “upgrade” (from “construction of hydrogenation facilities” to “cutting-edge emerging hydrogen energy”) of hydrogen energy in the previous “2024 Report on the Work of the Government”.

Third, attention has been paid to the role of hydrogen energy in reducing emissions in the industrial and transportation sectors. In the catalogue, in addition to the two places where hydrogen energy is directly mentioned as the “protagonist,” hydrogen energy also appears under items such as energy-saving equipment and industrial/transportation emission reduction. According to the explanatory documents accompanying the catalogue, energy-saving equipment and industrial emission reduction projects mention “hydrogen metallurgy” related technology and equipment; advanced transportation equipment projects mention hydrogen and hydrogen-based fuel-powered ships. In addition to developing an emerging hydrogen energy storage, transportation and processing industry chain, hydrogen energy will also be further combined with traditional high-energy chemical, shipping and other industries to help fully decarbonize them.

Issue 2: The State Council issued the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-In”

On March 13, the State Council officially issued the “Action Plan to Promote Large-scale Equipment Renewal and Consumer Goods Trade-In”. The document proposes the implementation of four major actions: “equipment renewal, consumer goods trade-in, recycling, and standard upgrading”. (Hydrogen cloud chain, government website, 03/14)

In the “Action Plan”, Ping An Securities focuses on the “energy saving and carbon reduction” updates of equipment and content related to emission standards. In terms of equipment updates, the document suggests that by 2027, the energy efficiency of major energy equipment in key industries will basically reach the energy saving level, and the production capacity ratio of environmental protection performance reaching A level will increase dramatically. Some expressions directly related to hydrogen energy include: 1. Strengthening capacity building for the industrialization of green aviation equipment such as electric power and hydrogen energy; 2. Gradually expanding... the scope of application of new energy ships such as green methanol power. In terms of improving standards, the document proposes speeding up the improvement of energy consumption, emissions, and technical standards: benchmarking with international advanced standards, speeding up the preparation and revision of a number of mandatory national standards for energy consumption limits and energy efficiency of products and equipment,... speeding up raising energy efficiency indicators and market entry thresholds; revising and improving the cleaner production evaluation index system; and formulating and revising carbon emission accounting standards for enterprises in key industries.

The role of hydrogen energy in reducing industrial emissions cannot be ignored, and green hydrogen chemicals and green hydrogen transportation are expected to benefit. The document points out that the proportion of production capacity with environmental protection performance reaching grade A level in key industries has increased dramatically; mandatory standards such as energy consumption, emissions, and safety and equipment elimination catalogue requirements have been strictly implemented. According to hydrogen cloud chain analysis, hydrogen energy may play an important role in reducing emissions in key industries.

On the one hand, combining green hydrogen with traditional chemicals can be an important means of reducing emissions. For example, in the ammonia synthesis industry, the “Industrial Structure Adjustment Guidance Catalogue (2019 edition)” included “Synthesis of Ammonia Using Fixed-Layer Intermittent Gasification Technology” as a restricted process technology, and the subsequent 2020 revised “Technical Guidelines for Formulating Performance Classification and Emission Reduction Measures for Key Industries” clearly did not include companies using this route in the A grade selection. Before 2020, synthetic ammonia using this route in China accounted for more than one-third of the total production. Companies using the above technology at that time may face the risk of discontinuing production if they do not make additional environment-related investments. At this stage, under the requirements of equipment updates and strict emission control in key industries, there is a possibility that restrictions on traditional high-emission technology will be further tightened. At the same time, hydrogen energy is widely included in incentive process technology. In the future, it may be included in environmental performance evaluations. Green hydrogen chemical industries such as green hydrogen to green ammonia may usher in development opportunities.

On the other hand, hydrogen transportation can also help decarbonize key industries. Currently, the national environmental performance rating has not been updated, but some provinces have updated environmental performance grade A standards for local key industries and added content related to hydrogen energy. For example, according to environmental performance standards for key industries such as thermal power, steel, and cement issued by Hebei Province in 2023, the A grade standard is “the proportion of materials and products entering and leaving enterprises using clean transportation methods or pure electric or fuel cell heavy cargo vehicles is not less than 80%; all transport vehicles within the factory use pure electric or fuel cell heavy trucks.” The “Action Plan” puts forward stricter requirements for equipment renewal, energy saving and carbon reduction, etc., and green hydrogen chemicals and green hydrogen transportation may benefit.

Risk warning:

1. The risk that the implementation of the green hydrogen project will fall short of expectations. Domestic green hydrogen projects are planned on a large scale, but the development stage is early, and there is uncertainty about the progress of project implementation. If green electricity costs are reduced or technological progress falls short of expectations, it may affect the implementation of green hydrogen projects, which in turn affects all downstream processes.

2. Risk of increased competition on the equipment supply side. At the same time as demand for domestic electrolyzer bidding is hot, many companies have already entered the market. Currently, the domestic electrolyzer competition pattern is still unclear. If products fail to form barriers and fall within the low price, it is difficult for participants in the electrolyzer business to make effective performance contributions.

3. The risk that downstream application scenarios will fall short of expectations. The cost of green hydrogen chemical products is higher than that of fossil fuel products. There is uncertainty about cost guidance and demand release, and there is uncertainty about the return on investment of green hydrogen chemical projects. The operating costs of hydrogen fuel cell vehicles are affected by many aspects such as infrastructure construction progress, electric reactor cost reduction, and hydrogen supply, and there is uncertainty about the economy. Downstream hydrogen energy application scenarios present risks that fall short of expectations.