CITIC Securities: Green development is once again set by senior management, and the green hydrogen industry can be expected to accelerate

The Zhitong Finance App learned that CITIC Securities released a research report saying that four recent high-standard meetings and statements set the tone for China's green development goals in the coming year. China will adhere to the “double carbon” leadership, promote comprehensive green transformation, further promote energy saving and carbon reduction transformation in key industries, expand the application of green electricity, and cultivate new growth points such as hydrogen energy and green fuels. CITIC Securities believes that during the “15th Five-Year Plan” period, the focus of green power development will gradually shift from incremental construction to equal emphasis on increasing construction and expanding application scenarios. As a link between green electricity and energy saving and carbon reduction in key industries, green hydrogen and hydrogen-based green fuels are expected to usher in policy bias and accelerate development.

CITIC Securities's main views are as follows:

Event: The top-level plan sets the tone for China's green development goals for next year.

Since mid-December, four high-standard meetings have been held and department heads have spoken out intensively to clarify China's green development goals for the coming year.

1) From December 10 to December 11, 2025, the Central Economic Work Conference proposed that in 2026, China will adhere to the “double carbon” leadership, promote comprehensive green transformation, propose further promotion of energy saving and carbon reduction transformation in key industries, and propose directional arrangements such as “formulating an outline plan for building a strong energy country, speeding up the construction of a new energy system, and expanding the application of green electricity”.

2) From December 12 to 13, the National Development and Reform Work Conference deployed key tasks for 2026: actively and steadily promote carbon neutrality in 2026, and accelerate the overall green transformation with dual carbon as the lead. Steadily implement a dual control system for total carbon emissions and intensity, improve supporting systems, strengthen evaluation and assessment, and strictly control the addition of “two high” projects.

3) On December 13, Han Wenxiu, Deputy Director of the Central Finance Office and Director of the Central Agricultural Office, spoke out at the 2025-2026 China Economic Annual Conference: emphasizing the undertone of green development, reaffirming “formulating a plan outline for building a strong energy country and expanding the application of green electricity”; and clarified that “2026 is the first year of a comprehensive shift from dual control of energy consumption to dual control of carbon emissions”, and proposed strengthening the construction of a national carbon emissions trading market, cultivate new growth points such as hydrogen energy and green fuels, and build zero-carbon parks/factories.

4) On the 12th and 15th, the 2026 National Energy Work Conference proposed that key tasks in 2026 include “adding more than 200 million kilowatts of wind power and solar power generation throughout the year” and forward-looking layout of future energy industries such as hydrogen energy and nuclear energy.

With a firm direction and a gripper, green hydrogen and green fuel will usher in accelerated development.

We believe that the above matters further clarify the determination of top-level design to achieve the “dual carbon” goal. In terms of policy fundamentals, the Economic Work Conference and subsequent authoritative statements continuously emphasized the “Outline Plan for the Construction of an Energy Power Country,” which means that the target system, path arrangement, and policy tools for energy transformation are expected to be further systematized, and may enhance the predictability of local and central enterprises to promote the construction of new energy systems. In terms of specific implementation methods, by 2026, China will completely shift from “double control of energy consumption” to “double control of carbon emissions”. Carbon emission control and carbon asset management will become common issues faced by key industries in the future, and the expansion of the national carbon market will drive key industries to continue to promote energy saving and carbon reduction transformation. On the path to implementation, the authoritative statement clearly stated “expanding the application of green electricity and cultivating new growth points such as hydrogen energy and green fuels.”

We believe that the installed ratio of new energy power generation continues to expand, and the problems of strong intermittent and fluctuating output will become more and more prominent, while it is still difficult for key downstream industries such as steel, chemicals, and cement to completely reduce emissions through electrification. The production process of green hydrogen and its power generation utilization can improve the flexibility and adjustment capabilities of new power systems, while non-electric consumption and use of green hydrogen and its green derivatives can help industries that are difficult to reduce emissions in terms of both raw materials and fuel to achieve “carbon neutrality.” Senior officials proposed cultivating the hydrogen energy and green fuel industry at this time, once again confirming that hydrogen energy is an inevitable choice in China's process of achieving the “dual carbon” goal, and that the “15th Five-Year Plan” development of the industry can be expected to accelerate.

Policies continue to be introduced, and the development path for both sides of hydrogen energy supply and demand is gradually being clarified.

In recent years, hydrogen energy has continued to usher in policies.

On the supply side, the “Energy Law” officially lists hydrogen energy as an energy source. Locals have gradually liberalized restrictions on hydrogen production in chemical parks, opened up space restrictions on hydrogen energy production, “Document No. 650” and subsequent local policy documents have accelerated the development of green power direct connection projects, opening up some policy space for reducing the cost of green hydrogen projects. According to the National Energy Administration, the production capacity of green hydrogen currently built and put into operation in China is 220,000 tons/year, which is the highest in the world. Furthermore, as China's new energy power generation equipment continues to reduce costs, green hydrogen production costs are expected to continue to decline.

On the demand side, according to the Ministry of Ecology and Environment, the national carbon market has now been incorporated into the four major industries of electricity, steel, cement, and electrolytic aluminum, covering 60% of the country's carbon dioxide emissions, and will be tightened in 2027. The EU Carbon Border Regulation Mechanism (CBAM) will also be officially implemented in 2026. The carbon costs of products of enterprises in key industries cannot be ignored. Energy saving and carbon reduction have become a necessary condition for long-term development. Green hydrogen coupling provides an option for this.

We believe that with the continued promotion of policies, the development path of both the supply and demand sides of green hydrogen will gradually become clear. The hydrogen energy and green fuel industry chain is expected to gradually cultivate business models with replicable potential under the guidance of demonstration applications.

Risk factors:

The implementation process of carbon reduction policies in international shipping fell short of expectations; the pace of implementation of domestic policy rules and local implementation fell short of expectations; changes in carbon market prices and compliance rules led to uncertain return on investment; major changes in technology routes or cost reductions in the hydrogen-based green fuel industry fell short of expectations.

Investment Strategy:

We believe that during the “15th Five-Year Plan” period, hydrogen energy is expected to gradually enter the industrialization stage under policy impetus. The market size of green hydrogen and hydrogen-based green fuels is expected to gradually expand, and carbon reduction in the industrial sector or new application scenarios for green hydrogen will drive growth in the green hydrogen industry chain and demand for electrolyzer equipment. At the same time, investors who lay out hydrogen-based green energy projects in advance are also expected to benefit from product premiums in the early stages of industrial development. We recommend focusing on two main lines. Among them, we focus on recommending companies with safety margins and potential for growth in the hydrogen energy business: 1) companies involved in green hydrogen electrolyzer equipment; 2) companies that lay out green fuel-related projects.