Subsidizing Grid-Based Electrolytic Hydrogen Will Increase Greenhouse Gas Emissions in Coal Dominated Power Systems

Clean hydrogen has the potential to serve as an energy carrier and feedstock in decarbonizing energy systems, especially in “hard-to-abate” sectors. Although many countries have implemented policies to promote electrolytic hydrogen development, the impact of these measures on costs of production and greenhouse gas emissions remains unclear. Our study conducts an integrated analysis of provincial levelized costs and life cycle greenhouse gas emissions for all hydrogen production types in China. We find that subsidies are critical to accelerate low carbon electrolytic hydrogen development. Subsidies on renewable-based hydrogen provide cost-effective carbon dioxide equivalent (CO_2e) emission reductions. However, subsidies on grid-based hydrogen increase CO_2e emissions even compared with coal-based hydrogen because grid electricity in China still relies heavily on coal power and likely will beyond 2030. In fact, CO_2e emissions from grid-based hydrogen may increase further if China continues to approve new coal power plants. The levelized costs of renewable energy-based electrolytic hydrogen vary among provinces. Transporting renewable-based hydrogen through pipelines from low- to high-cost production regions reduces the national average levelized cost of renewables-based hydrogen but may increase the risk of hydrogen leakage and the resulting indirect warming effects. Our findings emphasize that policy and economic support for nonfossil electrolytic hydrogen is critical to avoid an increase in CO_2e emissions as hydrogen use rises during a clean energy transition.