China Securities Co., Ltd.: The hydrogen energy industry has entered a phase of policy and application resonance. Green ethanol, green ammonia, and low-carbon transformation of coal power are the long-term incremental directions.

China Securities Co., Ltd. released a research report stating that at the current stage, the cost of green hydrogen is still higher than traditional coal-based hydrogen, and the industry development has not fully entered the market self-circulation stage. Policy subsidies, carbon trading, green fuel premiums, and local demonstration projects are still the core forces driving the industrial implementation. In the medium to long term, with the promotion of the comprehensive application pilot of hydrogen energy in the "15th Five-Year Plan", demand scenarios such as traditional chemical industry, low-carbon transformation of coal-fired power plants, and green fuel for shipping are gradually opening up, and green hydrogen, green ammonia, and green ethanol are expected to become important breakthroughs for the scale application of hydrogen energy. Investment opportunities in the industry chain will gradually shift from single equipment deployment to comprehensive enterprises with technological barriers, cost advantages, and scenario binding capabilities. The main views of China Securities Co., Ltd. are as follows: The hydrogen energy industry has entered a stage of resonance between policy and application, and in the short term, policy support is still needed to form a commercial closed-loop. Hydrogen energy, as a clean energy carrier, has the characteristics of cross-industry development in energy, chemicals, transportation, and equipment manufacturing. Currently, the average cost of green hydrogen production is still higher than the cost parity line of coal-based hydrogen, making it difficult to rely entirely on end-user demand for market promotion. Therefore, policy subsidies, carbon trading mechanisms, electricity price compensation, and the proportion of new non-electric energy consumption are key levers to promote project implementation in the short term. With the launch of the hydrogen energy comprehensive application pilot, the maximum reward limit for individual city clusters is expected to reach 1.6 billion yuan, which is expected to drive stages of fuel cell vehicles, green ammonia ethanol, chemicals, co-firing, and steel. Economic improvement is the core variable for the industrial scale-up of hydrogen energy, and the parity of green hydrogen depends on the joint decline of electricity prices, electrolyzer costs, and energy consumption. Currently, under typical green hydrogen production conditions, the cost of hydrogen production is still at a high level, with a certain gap from the parity range of 8-12 yuan/kg of coal-based hydrogen. Future cost reduction of green hydrogen mainly comes from three aspects: the decline in electricity prices brought by low-cost solar resources, continuous decrease in electrolyzer equipment prices, and optimization of system energy consumption and operating efficiency. Due to the significant differences in resource endowment, project scale, and absorption conditions in various regions, it is more suitable to conduct one-on-one calculations for hydrogen energy projects' feasibility, rather than simply applying uniform cost assumptions. On the demand side, the shift from traditional industrial substitution to green fuel is opening up opportunities for green ethanol, green ammonia, and low-carbon transformation of coal-fired power plants as the medium to long-term incremental directions. In the domestic traditional chemical industry is the clearest substitution scenario for green hydrogen currently. Industries such as synthetic ammonia, methanol, and petroleum refining all have high carbon emission reduction pressures, with significant demand elasticity in the petroleum refining sector. The low-carbon transformation of coal-fired power plants is expected to release demand for green hydrogen after 2025, and is expected to create a million-ton-level incremental space before 2030. On the overseas front, the EU's carbon-neutral policies for shipping continue to drive forward, and the demand for green methanol is expected to be gradually released alongside the delivery of dual-fuel methanol ships, with the export of green ethanol and the green fuel supply chain becoming important growth directions for domestic hydrogen energy companies. Risk warnings: On the cost side: the decline in the cost of renewable energy generation and the installation scale falling short of expectations. As the current cost of renewable electricity is a key factor constraining the further promotion of renewable energy hydrogen production, if the costs of renewable energy sources such as photovoltaic and wind power do not decrease as expected, it will be difficult to achieve cost parity for renewable energy hydrogen production, and a shortfall in the installation scale and electricity generation will not support the electricity demand of the hydrogen production industry. On the technological iteration side: the development of electrolyzer technology falls short of expectations. The reliability improvement and cost reduction of PEM electrolyzers requires technological iteration and scale promotion. Technological improvements such as PEM electrolysis catalysts are crucial for the industry's development. The iterative impact of AWE electrolyzer efficiency on green hydrogen cost reduction. On the market demand side: Market demand affects the realization of industry scale and subsequently affects the cost allocation of research and development and production on the manufacturing side. On the policy side: The hydrogen energy industry is still in the early stages of industrial scale development, and effective policy promotion plays a positive role in industry development. If policy support is lower than expected, it will affect the enthusiasm for industry development.