A truck driver eased his 18-wheeler up to a blue-and-white pump, jumped out to connect its nozzle to the vehicle, and filled up his tank. There was no smell of diesel, because the fuel his truck runs on is odorless hydrogen.

This station, on the outskirts of Shanghai and built by state-owned oil-refining giant Sinopec, illustrates China’s blueprint for the next generation of clean transport. Official government documents show Beijing has granted multiple cities across the country a total of RMB 7.68 billion (USD 1.1 billion) in subsidies over the past four years to build supply chains for hydrogen fuel cell vehicles (FCVs).

FCVs typically have a longer travel range on a single charge compared with battery electric vehicles, and depending on the technology used, can charge faster than batteries. For heavy-duty vehicles like large trucks and buses, fuel cells weigh significantly less than EV packs, resulting in more payload capacity for long-haul routes.

The technology used to mix hydrogen and oxygen in fuel cells to generate power remains expensive, and development is a long way behind the global battery EV sector, dominated by China. But small-scale exports of Chinese fuel-cell buses and trucks have already begun to countries such as Malaysia, Australia and Israel, and China has installed nearly 60% of global manufacturing capacity of electrolyzers, the machines used to extract green hydrogen from water.

The US-Iran conflict and subsequent surge in the cost of importing oil from the Middle East have put fresh impetus on the value of securing alternative energy supplies, and not just in China. Also a prime mover on the nascent technology, Japan prides itself on being one of the first countries to come up with a national hydrogen strategy as long ago as 2017. It even enacted a law in 2024 to promote its use.

But deadlines to meet ambitious targets for the number of FCVs on the road and hydrogen filling stations have come and gone with goals still distant. Japan’s hydrogen lobby blames stubbornly high development costs and logistical difficulties, as well as a lack of investment by the country’s government.

“What we have tried to say (to the government) is that while the private sector will invest in hydrogen-related equipment and technologies, government investment is also essential,” Hiroshi Fukushima, director general of the Japan Hydrogen Association, known as JH2A, told Nikkei Asia. “Otherwise, there is a risk of becoming dependent on a specific country [for hydrogen and equipment].”

According to the International Energy Agency, the global market for low-emission hydrogen is projected to surge to more than USD 12 billion by 2030 from USD 1.4 billion in 2023, driven by the growing potential for using renewable energy sources in making the gas.

The cost of hydrogen has been one of the biggest inhibitors to widespread adoption in Japan, JH2A’s Fukushima said. It still costs around 10 times more than fossil fuels. His association met with Japanese Prime Minister Sanae Takaichi last month to lobby for hydrogen’s formal inclusion in the country’s upcoming economic growth strategy.

“I think there is now a growing level of understanding that both the public and private sectors need to work together on hydrogen,” he said.

Less than 5,000 FCVs have been sold in Japan since the start of 2021, far short of the 200,000 vehicles the country targeted to have on the road by 2025. There are only 142 hydrogen filling stations across Japan, with numbers gradually dropping in recent years, and several prefectures having none at all. The figure is less than half the original target of 320 by the end of fiscal 2025.

In contrast to the Japanese government’s slow pace in rolling out material support, decision-makers in Beijing have shifted into gear. In March, the Ministry of Industry and Information Technology (MIIT), the country’s top automotive regulator, pledged to more than double the number of FCVs to 100,000 by 2030 from 40,000 in 2025. Gaogong Industry Institute, a Shenzhen-based research firm, estimates there were 557 filling stations across China in April, more than double the number in 2021.

Analysts say the plan aligns with goals previously set out by Chinese President Xi Jinping for the world’s largest carbon emitter to cap emissions by 2030 and reach carbon neutrality by 2060.

“To achieve the targets, you need to transform the energy system,” said Xinyi Shen, an analyst with the Helsinki-based Centre for Research on Energy and Clean Air (CREA). “Beyond the existing elements such as wind, solar and energy storage, I also see hydrogen as a very important component.”

Just as China has successfully nurtured a wide range of green power initiatives, from solar panels and batteries to EVs, over the past two decades, government policy support and subsidies are expected to play a vital role in the development of hydrogen technology.

“Subsidies have been crucial to the success of China’s clean technologies. … They act like seed funding, providing the policy and economic signals needed to encourage industry growth,” CREA’s Shen said. “That’s how China’s system works: Once the central government sets a target, local authorities mobilize quickly to pursue it.”

In Shanghai’s suburban Qingpu district, the driver of a fuel-cell shuttle bus produced by SAIC Motor acknowledged that hydrogen was expensive. But he said he “doesn’t feel the pain” thanks to government subsidies, declining to be identified by name, citing privacy concerns.

Hydrogen currently costs RMB 58 (USD 8.6) per kilogram, with an energy content roughly equivalent to RMB 34 (USD 5) worth of gasoline, according to Nikkei Asia estimates.

Businesses in China will only be willing to adopt heavy-duty FCV trucks when the subsidized energy price falls to RMB 19–21 (USD 2.8–3.1) per kilogram, according to research by Munich-based consultancy Roland Berger. The MIIT set a goal of lowering the average hydrogen price to RMB 25 (USD 3.7) per kilogram and RMB 15 (USD 2.2) per kilogram in some “advantageous areas” by 2030.

Japan primarily uses gray hydrogen, which most of the time is cheaper than green hydrogen but costlier than fossil fuels because it is made by processing the hydrocarbons, adding extra processing expenses as well as greenhouse gas emissions.

“There is also the issue that hydrogen is difficult to transport,” Fukushima of the Japanese industry association said. “In theory, if production were scaled up, both the equipment and hydrogen itself should become cheaper. But mass production hasn’t been achieved, so costs remain high.”

With so few FCVs on Japan’s roads, many of the country’s hydrogen fueling stations are unprofitable and unable to recover their construction costs, which analysts say are being pushed up because of Japan’s fueling pressure standards.

“At hydrogen stations in Japan, the standard filling pressure is around 70 megapascals. China, by contrast, starts from about 35 MPa. As the pressure increases, the equipment itself becomes larger, which drives up costs,” said Yu Kato, a manager in the research and consulting division of the Japan Research Institute.

“At 70 MPa, the facilities need to be designed exclusively for hydrogen, which makes them significantly more expensive,” he said. “This is one of the reasons why costs tend to be higher in Japan’s hydrogen market.”

In China, hydrogen refueling facilities have been added to existing gasoline stations under government encouragement to state-owned oil enterprises. Sinopec’s station in Qingpu—whose canopy is marked by the company’s classic red-and-white logo alongside a splash of blue and an “H2” sign—is one of the oil behemoth’s 150 hydrogen stations nationwide.

Some analysts do not anticipate an FCV sector surge similar to the subsidy-driven EV boom. That’s because they see a widening gap between the technologies.

“Batteries have gotten bigger, more efficient and denser, [so] even long-distance trucking is probably going to decarbonize through EVs instead of hydrogen,” said David Fishman, a Shanghai-based energy analyst at consultancy The Lantau Group. Instead, he pointed to more niche scenarios such as fuel-cell forklifts in warehouses and logistics facilities.

“The first round of conventional clean tech is completed,” Fishman said. “No one even tries to compete with China in batteries or solar panels anymore. This right now is the start of the next cycle for green hydrogen, carbon capture and industrial electrification. China is throwing billions and billions of dollars at the next round.”

China’s policymakers may also regard green hydrogen as a strategic option to ensure national energy security. The Chinese Communist Party listed green hydrogen as one of the “emerging and future industries” to be fostered and strengthened in its latest five-year plan, running through 2030.

As part of the initiative, the green hydrogen industrial supply chain will be expanded into other non-fossil fuel projects, including green ammonia, methanol and sustainable aviation fuel, according to the policy document.

Shanghai-based Envision Energy, one of the world’s largest wind turbine manufacturers, is betting its next growth curve on green ammonia, produced by synthesizing green hydrogen with nitrogen, as a clean alternative to fossil fuels in power generation and shipping.

The company recently completed the world’s first commercial shipment of green ammonia from an RMB 8 billion (USD 1.2 billion) base in Inner Mongolia to Lotte’s chemical import terminal in South Korea.

“Envision is working to develop international shipping companies, as well as steel and chemical manufacturers, as new clients,” said Frank Yu, the senior vice president who leads Envision’s hydrogen division.

“Using green hydrogen, green ammonia, and other derivatives as strong supplements will certainly benefit the country’s energy security and low-carbon goals,” CREA analyst Shen said.

In Japan, the hydrogen industry has been unimpressed with government support efforts so far.

In early June, Koji Sato, vice chairman of Toyota Motor, the largest maker of FCVs in Japan, said at a Ministry of Economy, Trade and Industry (METI) event that even after the law to promote hydrogen was passed and “Japan clearly defined that it would seriously engage with hydrogen as an energy source, the business environment has remained extremely challenging.”

Toyota is the maker of the first commercially produced FCV, the Mirai sedan, first shown to the public in 2014. The basic starting price for a Mirai in Japan is JPY 7.4 million (USD 46,209.5). Prices for Toyota’s main battery EV, the bZ4X compact crossover SUV, begin at JPY 4.8 million (USD 29,973.7).

Japan’s government has at least registered the industry’s frustration, even if a rapid concrete response has yet to materialize. At the METI event in June, it launched a conference aimed at facilitating better coordination between the public and the private sectors.

At its core is JH2A’s “Hydrogen Artery” concept. This seeks to establish a transportation network using commercial FCVs connecting Fukushima prefecture in the country’s northeast to Fukuoka prefecture some 1,300 kilometers to the southwest, with the ministry pledging to provide deregulation and cost support.

The plan is to spread the use of hydrogen through the concept, bringing its cost down so that it can be adopted in other sectors.

The Iran war has breathed new life into the concept and the broader industry, insiders say..

“I think momentum is definitely building” for hydrogen,” the JH2A’s Fukushima said. “Even when talking to politicians or government officials, rather than framing it simply as a carbon neutrality issue, more and more people agree that hydrogen needs to be pursued from the perspective of energy security” as the gas can not only be used for fuel, but also to make petrochemical feedstocks.

Michiya Marui of Mitsubishi Research Institute said there also “appears to be a strong awareness within the government” that technologies related to fuel cells are “something Japan should not give up in terms of industrial competitiveness and technological capability.”

Back at the Sinopec station on the outskirts of Shanghai, there were few takers for the hydrogen pump, while a steady stream of vehicles filled up at neighboring gasoline and diesel pumps.

As the truck driver who did seek out the hydrogen pump settled his bill, another heavy-duty vehicle carrying long, white hydrogen tanks was making its way out of the facility after injecting the fuel into a compressor.

A logo printed on one of the tanks read: “Actively promote hydrogen energy and embrace green mountains and clear waters.”

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.

Note: JPY, RMB figures are converted to USD at rates of JPY 160.14 = USD 1 and RMB 6.77 = USD 1 based on estimates as of June 15, 2026, unless otherwise stated. USD conversions are presented for ease of reference and may not fully match prevailing exchange rates.