China Has The Tools – Will It Take Green To Scale?

Key Points

China has the tools to lead the renewable hydrogen/ammonia market: cheap electricity, massive economies of scale, and rising export potential. Western policy issues/uncertainty may help China’s growth more than harm it.
In 2024, China’s solar energy expansion relative to 2023 alone exceeded the total electricity use of Spain, with its absolute renewable energy footprint dwarfing the US and Europe, favoring its ability to scale green production.
We discuss the European and Japanese push for green hydrogen, its decarbonization policies, and the buildout of import capacity for hydrogen carriers, such as ammonia, which we think will attract Chinese low-cost production.
While recent Chinese policy benefits favor green hydrogen, the region is taking much more of a cost-driven view of its clean hydrogen/ammonia buildout relative to the West, which we think will benefit it in the long term.
Otherwise, we highlight Chinese renewable ammonia projects and renewable electricity growth, discuss global spot ammonia and methanol markets, and update our global project tracker & hydrogen fundamental models.

Exhibit 1: China’s transition from grey to green ammonia is in motion and could develop faster than most anticipate.