China's commitment to carbon neutrality by 2060 presents a significant challenge, particularly given the substantial emissions from its heavy industries and heavy-duty transport sectors. Unlike developed nations where decarbonization focuses on light-duty vehicles, buildings, and electricity generation, China's unique economic structure necessitates a different approach. Heavy industry accounts for a much larger share of China's emissions (31%) compared to global (23%), US (14%), or EU (18%) averages. This disproportionate reliance on heavy industry, which heavily utilizes coal for industrial heat and coke production, creates a 'hard-to-abate' (HTA) bottleneck in achieving carbon neutrality. While some studies have explored decarbonization pathways for China's energy system, few have in-depth analyzed the role of clean hydrogen in HTA sectors. This study addresses this gap by assessing the potential of clean hydrogen as both an energy carrier and a feedstock in China's HTA sectors, evaluating its cost-effectiveness compared to other mitigation strategies. The key challenges are identifying effective decarbonization technologies for HTA sectors, assessing clean hydrogen's potential in these sectors, and determining if widespread hydrogen application is cost-effective.

Existing literature on clean hydrogen primarily focuses on production technologies and supply-side costs, often neglecting its demand-side potential and its application in developing countries with unique economic structures. Analyses of hydrogen demand tend to concentrate on the transportation sector in developed countries, particularly hydrogen fuel cell vehicles. The decarbonization of heavy industries has received less attention, reflecting the perceived difficulty of abatement without significant technological advancements. Studies have explored solutions like carbon capture, utilization, and storage (CCUS) and negative emission technologies (NETs), but often exclude clean hydrogen options despite their potential. This research gap emphasizes the need for a comprehensive study on the role of clean hydrogen in a developing nation's decarbonization strategy, accounting for the unique challenges and potential benefits within HTA sectors.

This study employs an integrated energy system optimization model, incorporating both supply and demand across various sectors. The model analyzes the cost-effectiveness of clean hydrogen in China's economy, focusing on HTA sectors (including cement, iron and steel, key chemicals, and heavy-duty transport). Four scenarios are defined: business as usual (BAU), achieving China's Nationally Determined Contributions (NDCs), net-zero emissions with no hydrogen (ZERO-NH), and net-zero emissions with clean hydrogen (ZERO-H). The model encompasses a wide range of mitigation technologies for each sector, including energy efficiency improvements, alternative fuels, CCUS, NETs, and the use of both green and blue hydrogen (produced through renewable energy and fossil fuels with CCUS, respectively). The model optimizes the energy system to minimize cost while meeting emissions targets. Specific technologies are evaluated for iron and steel production (including blast furnace-basic oxygen furnace (BF-BOF), electric arc furnace (EAF), and hydrogen-direct reduction of iron (hydrogen-DRI)), cement production (considering energy efficiency, alternative fuels, clinker-to-cement ratio reduction, and hydrogen use), and chemical production (ammonia and methanol). The model also assesses hydrogen's potential in heavy-duty transport (trucks, buses, and shipping), comparing hydrogen fuel cell vehicles with electric alternatives. The sensitivity analysis examines the influence of various factors such as GDP growth and hydrogen production costs on the overall results. The methodology uses the China-MAPLE model, based on the TIMES (The Integrated MARKAL-EFOM System) framework and the TIMES-VEDA tool. The model covers over 780 technological processes, with 579 in HTA sectors. It features a dynamic linear programming approach with a five-year time step, aligning with China's five-year planning system. The model includes detailed equations for hydrogen consumption across various sectors and hydrogen production from different technologies.

The analysis reveals that relying solely on energy efficiency improvements, CCUS, and NETs is insufficient for cost-effective decarbonization of China's HTA sectors, especially heavy industry. Widespread clean hydrogen application significantly enhances the cost-effectiveness of achieving carbon neutrality. In the ZERO-H scenario, clean hydrogen production reaches 65.7 Mt by 2060, avoiding US$1.72 trillion in investment compared to the ZERO-NH scenario. This includes substantial reduction of emissions in the iron and steel sector, where hydrogen-DRI becomes a significant production pathway (21% in 2060) supplementing the electric arc furnace (45%) and reducing reliance on the BF-BOF process (34%). In the cement sector, hydrogen, alongside CCUS, achieves near-zero CO2 emissions in 2060, reducing heating process emissions by 89-95%. Hydrogen is also shown to be vital in chemical production, reaching a 20% share in ammonia production and 21% in methanol production in 2060. Hydrogen penetration in heavy-duty transport is significant: 61% of fleet buses, 53% of light-duty trucks, and 66% of heavy-duty trucks. In shipping, 65% ammonia-fueled and 12% hydrogen-fueled ships are projected by 2060. Clean hydrogen accounts for 13% of total final energy consumption by 2060, with certain provinces exceeding this average. Green hydrogen is found to be more cost-competitive than blue hydrogen after 2030, reaching US$1.2/kg by 2050, driven by declining renewable energy costs and resource advantages. The sensitivity analysis demonstrates the robustness of the findings, even with variations in GDP growth and hydrogen production costs. A 50% increase in hydrogen production costs only modestly reduces hydrogen's share in total final energy consumption.

The findings directly address the research question by demonstrating the crucial role of clean hydrogen in cost-effectively decarbonizing China's HTA sectors. The significant cost savings associated with the ZERO-H scenario highlight the economic viability of this approach. The results are highly relevant to the field, providing valuable insights for China and other countries grappling with similar decarbonization challenges. The study's comprehensive approach, incorporating various sectors and technologies, enhances its generalizability. The results provide strong support for integrating clean hydrogen into national energy strategies and policy planning. The dominance of renewable energy sources and the significant role of clean hydrogen in a net-zero future align with the global push towards decarbonization. The potential for China to transition from a fossil fuel importer to a green hydrogen exporter further emphasizes the economic and geopolitical implications of this technology.

This study demonstrates the vital role of clean hydrogen in achieving cost-effective carbon neutrality in China by 2060, particularly within the challenging HTA sectors. Widespread clean hydrogen adoption offers substantial investment savings and significantly reduces reliance on costly CCUS and NETs. Green hydrogen emerges as the more favorable option due to declining renewable energy costs and geographic advantages. Effective policy implementation at national and sectoral levels is crucial for realizing the full potential of clean hydrogen. Future research could delve deeper into hydrogen transport and storage infrastructure, explore the societal impacts of widespread hydrogen adoption, and investigate the potential of emerging hydrogen technologies.

The model simplifies hydrogen transport and storage, assuming primarily road transport and tank storage, neglecting potential pipeline infrastructure impacts. It also doesn't fully account for potential indirect effects of hydrogen use on air quality and radiative forcing or short-term renewable power balancing complexities. The analysis excludes comprehensive consideration of the broader societal impacts of a clean hydrogen transition, such as employment and public acceptance.