Jacobelli said it will take at least five to 10 years for green hydrogen to become economically competitive in China.

BloombergNEF analysis showed that largely reduced delivery costs for green hydrogen in China are achievable, making them eventually competitive with natural gas prices.

According to Mi, there are two main drivers for a dramatic drop in hydrogen prices－rapid declines in the cost of producing hydrogen from splitting water using renewable electricity in an electrolyzer and scaling-up the overall sector.

"Hydrogen production technology is expensive. But costs have fallen 40 percent in the past five years, and with costs of wind and solar continuing to fall, the question is whether the cost for electrolyzers and renewable hydrogen can follow," she said.

According to IHS Markit, green hydrogen production costs are down 40 percent since 2015 and are expected to fall by a further 40 percent through 2025.

"By 2030, IHS Markit expects that green hydrogen costs could drop below $2/kilogram. This cost is the Holy Grail for electrolysis as this is where green hydrogen starts becoming competitive with traditional hydrogen," said Soufien Taamallah, director of energy technologies and hydrogen at IHS Markit.

Many companies, domestic and foreign alike, are all actively laying out their hydrogen plans, believing the cleaner fuel will become a vital sector in the long run.

Asia's biggest refiner, China Petroleum and Chemical Corp (Sinopec), is speeding up the development of hydrogen applications, investing in hydrogen production, transportation and fuel cells and is building hydrogen vehicle refueling stations in cooperation with vehicle companies including Foton Motor Group.

State Power Investment Corp, one of China's top five power generators, will also provide 2,000 hydrogen-powered buses to serve athletes, coaches and spectators during the Beijing 2022 Winter Olympics.

Global energy giant Royal Dutch Shell is also betting big on China's hydrogen development while further involving itself in the country's hydrogen projects after it unveiled its first commercial hydrogen project in China in November, which includes a 20-megawatt electrolyzer that will produce hydrogen and supply refueling stations in Zhangjiakou, one of the co-hosts of the Beijing 2022 Winter Olympics.

According to Huibert Vigeveno, the company's downstream sector director, Shell sees more potential in the hydrogen industry in China and will support the country in developing hydrogen over the long term.

Only hydrogen can meet demand from heavy-haul transportation over the long run, although the midterm resolution is still LNG, Vigeveno said.

Wan Gang, vice-chairman of China's top political advisory body, recently said pure electric vehicles and fuel-cell powered automobiles are equally important in the country's new energy vehicle development strategy and will coexist going forward.

Vigeveno said Royal Dutch Shell has more than 50 hydrogen refueling stations worldwide in countries including Germany, the Netherlands and Great Britain, and could apply its experiences in China.

According to IHS Markit, annual global investment in green hydrogen production－or hydrogen production powered by renewable sources－is set to exceed $1 billion by 2023, which is due to falling costs and policy support from governments looking to shift toward low carbon economies.

"Investment in electrolysis is booming around the world," said Catherine Robinson, executive director of hydrogen and renewable gas at IHS Markit.

"The pipeline through 2030 is for over 23 gigawatts of capacity to be developed－more than 280 times the current capacity. The increasing interest has been driven by falling electrolysis and renewable power costs and by increasing government focus on green hydrogen," Robinson said. "Hydrogen production has the potential to become a whole new sector of electricity demand," said Frederick Ritter, senior research analyst for global gas at IHS Markit.

"Large scale development of renewable energy will be required to support it, particularly in regions with high quality renewable resources," Ritter said.