China is set to dominate the global market for green hydrogen as US developers dial back their ambitions, according to a recent S&P Global Commodity Insights report.

Commodity Insights analysts project China will produce 33.4 million metric tons of zero-emission electrolytic hydrogen in 2050, compared to 4.7 MMt in the US and 20 MMt in the European Union.

The analysts' "base case" market forecast, published annually, reflects a dramatic surge in Chinese electrolyzer development over the past year.

"While there have been recent policy delays from Europe and setbacks from the US, China has quickly become the driving force for the electrolysis market," Sam Ernest, senior analyst for hydrogen and renewable gas at Commodity Insights, wrote in the Aug. 26 report.

Twelve months ago, Commodity Insights analysts expected China to produce only 11.2 MMt of green hydrogen per year by midcentury, compared to 9.3 MMt per year in the US.

Since the analysts' last report, China's green hydrogen production capacity has grown to two gigawatts, or 70% of global electrolyzer installations, according to Commodity Insights. Chinese electrolyzer manufacturers have also been signing contracts with green hydrogen projects in Europe, the Middle East, Brazil, Namibia and the US, the Aug. 26 report said.

Meanwhile, Congress has shortened the deadline to claim Section 45V hydrogen production tax credits by five years. Under the recently passed budget bill, enacted on July 4, green hydrogen developers must start construction before 2028 to be eligible for the subsidy. The Trump administration has also delayed loans for clean hydrogen projects and canceled grants for industrial producers seeking to reduce their emissions.

As a result of the terminated tax credit, Commodity Insights said it has cut its estimate for US electrolyzer installations by more than 60% to about 2.5 GW by the end of this decade. If the US Treasury Department tightens the safe harbor requirements for subsidized projects, installed capacity may be even lower in 2030, the report said.

The US is still projected to lead in the production of hydrogen from fossil fuels with carbon capture technology, known as blue hydrogen. In 2050, Commodity Insights expects the US to produce 14.1 MMt of abated hydrogen from natural gas, compared to 4.3 MMt from both gas and coal in China.

Ernest said the US blue hydrogen outlook is mostly consistent with last year's due to Congress' enduring support for the Section 45Q carbon capture tax credit. Blue hydrogen developers have a choice between the Section 45V and Section 45Q credit.

US blue hydrogen and ammonia output is also supported by Japanese and South Korean import subsidies for clean fuels for power generation. While clean ammonia is unlikely to become cost-competitive with coal by midcentury, "alternative options to deeply decarbonize the power sector in the two markets are limited," the report said.