Analysis of Application Prospects for Natural Gas Cracking Technology in Q1 2026 and the CAS's Technological Breakthrough in Hydrogen-Carbon Co-Production

Based on the latest research, I will systematically analyze the application prospects of natural gas cracking technology in Q1 2026 and the latest progress of the CAS team in hydrogen-carbon co-production technology.

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The team led by Yu Qingkai, a researcher at the Shanghai Institute of Microsystem and Information Technology, Chinese Academy of Sciences, and Chairman of Shanghai Hydrogen Field New Materials Technology Co., Ltd., has achieved a major breakthrough in the field of natural gas cracking hydrogen-carbon co-production technology[1]. This technology has received support from the National Key R&D Program, becoming an important path for green hydrogen-carbon production[1].

• Current core task: Overcome the continuous operation issue of the cracking reactor
• Target parameter: Increase stable continuous operation time to one month[1]
• Technology status: The one-month stable continuous operation has not been achieved yet, and R&D is ongoing

Natural gas cracking hydrogen-carbon co-production technology can directly crack natural gas (methane) under nearly zero-pollution conditions, simultaneously producing high-purity hydrogen and graphite (high-purity carbon materials)[1].

Comparison Dimension	Traditional Hydrogen and Carbon Production Processes	Natural Gas Cracking Hydrogen-Carbon Co-Production Technology
Carbon Emissions	High pollution, accompanied by large CO₂ emissions	Nearly zero pollution, no greenhouse gas emissions
Product Value	Single product, low utilization rate	Dual high-value products: hydrogen + graphite
Scenario Applicability	Large-scale centralized scenarios	More advantageous in distributed scenarios such as chemical industry and hydrogen refueling stations
Resource Utilization	One-time utilization	Realizes green, high-value utilization of methane resources

was founded in 2021 by Researcher Yu Qingkai, aiming to promote the large-scale preparation of clean hydrogen and high-purity carbon materials[1]. Supported by the Shanghai Institute of Microsystem and Information Technology, CAS and Shanghai’s scientific and technological innovation platforms, the company has built a complete transformation chain from laboratory to industrialization.

Stage	Time Node	Specific Content
Technology R&D Phase	2024-2025	Overcome technical bottlenecks such as continuous system operation
Industrialization Phase	Next 6 months to 2 years	Promote the industrialization of the technology[1]
Demonstration Application Phase	2026	Implement demonstration application in Sichuan Province , which is rich in natural gas resources[1]

According to Researcher Yu Qingkai’s plan, the market layout will follow a dual-track strategy[1]:

1. Large-scale Production Layout:
   Conduct large-scale production in natural gas-producing areas
2. Distributed Hydrogen Production Network:
   Promote nationwide distributed hydrogen production in chemical industries and hydrogen refueling stations with high hydrogen demand

• The 15th Five-Year Plan Proposal clearly states the acceleration of the construction of a new energy system and the continuous increase in the proportion of new energy supply[2]
• The 2025 Edition of the Catalogue of Encouraged Foreign Investment Industries includes “hydrogen processing and manufacturing, hydrogen fuel cell manufacturing” as encouraged projects[3]
• The National Energy Administration released the first batch of national energy sector hydrogen energy pilot lists, and the “Hebei Zhang-Cheng-Tang Hydrogen Energy Regional Pilot” was successfully selected[4]

• China’s electrolytic green hydrogen industry will shift from policy-driven demonstration to market-led commercialization in 2026[2]
• It is estimated that new production capacity will exceed
  200,000 tons/year
  in 2026, and the cumulative national installed production capacity is expected to exceed
  500,000 tons/year
  [2]
• The International Energy Agency (IEA) predicts that by 2030, the global market size of water electrolysis hydrogen production equipment will reach tens of billions of US dollars, and low-emission hydrogen production is expected to reach
  37 million tons/year
  [2]

Application Field	Scenario Description	Technical Advantages
Chemical Industry	Hydrogenation of chemical raw materials, process reduction	Distributed deployment, low-cost hydrogen supply
Hydrogen Refueling Stations	Hydrogen refueling for hydrogen fuel cell vehicles	On-site hydrogen production, reduced transportation costs
Distributed Energy	Energy supply in industrial parks	Modular design, flexible deployment
Carbon Material Production	Graphene, special carbon materials	Co-produces high-purity graphite, high-value utilization of by-products

• Established a cross-regional collaborative pattern of “hydrogen production in Zhangjiakou-Chengde, application in Tangshan”[4]
• Core projects will enter the construction phase in 2026[4]
• A complete industrial ecosystem covering “production, storage, transportation, utilization, and R&D” will be fully formed by 2028[4]

• Kangbao to Caofeidian Hydrogen Long-Distance Pipeline: The pure hydrogen transmission pipeline with the largest designed diameter, strongest hydrogen transmission capacity, and highest steel grade[4]
• After full-load operation, the annual hydrogen transmission volume will reach
  1.55 million tons
  , which can replace 4.81 million tons of standard coal and reduce carbon dioxide emissions by 9.16 million tons[4]
• The total investment of the project is approximately
  13.5 billion yuan
  , which can drive related investments of over
  150 billion yuan
  [4]

Technical Route	Applicable Scenarios	Cost Advantages
Natural Gas Cracking	Natural gas-producing areas, distributed scenarios	Low raw material cost, no need for electricity
Water Electrolysis Hydrogen Production	Areas rich in green electricity, renewable energy consumption	Lower carbon footprint, high flexibility

1. Continuous Operation Stability
   • Challenge: High engineering technical difficulty in long-term continuous operation of the cracking reactor
   • Solution direction: Material optimization, reactor design, process parameter control

2. Product Separation and Purification
   • Challenge: Efficient separation of hydrogen and solid carbon
   • Solution direction: Design of continuous separation systems, online monitoring technology

3. Large-Scale Expansion
   • Challenge: Engineering scaling-up from laboratory to industrial level
   • Solution direction: Modular design, standardized production

• Capital Support:
  China’s innovative capital has balanced investment and vigorous development in the new materials and chemical industries[1]
• Talent Support:
  The construction of Shanghai International Science and Technology Innovation Center has brought together high-end talents[1]
• Platform Support:
  The overall advantages of the Yangtze River Delta and the hub function of Shanghai[1]

• Global installed capacity of water electrolysis hydrogen production reached
  2GW
  in 2024[2]
• As of July 2025, the global cumulative installed capacity is approximately
  3GW
  [2]
• China’s electrolyzer installed capacity accounts for about
  65%
  of the global total[2]

• The cost of green hydrogen production continues to decline, approaching the cost level of coal-based hydrogen production
• Strong market demand for high-purity carbon materials (graphite, graphene)
• Broad market space for distributed hydrogen production equipment

Industrial Chain Segment	Key Focus Areas	Investment Logic
Upstream	Natural gas cracking equipment, catalysts	Technological breakthroughs drive equipment demand
Midstream	Hydrogen purification, carbon material processing	Quality improvement brings premium space
Downstream	Chemical applications, hydrogen refueling stations	Scenario expansion drives scale growth

1. Technological Breakthrough:
   The CAS team has achieved a major breakthrough in natural gas cracking hydrogen-carbon co-production technology, reaching an internationally leading level
2. Imminent Commercialization:
   The technology is expected to be promoted for industrialization within the next six months to two years, and the 2026 demonstration application in Sichuan is of milestone significance
3. Broad Market Prospects:
   Against the background of the “Dual Carbon” strategy and rapid development of the hydrogen energy industry, this technology will play an important strategic role
4. Industrial Chain Collaboration:
   It complements water electrolysis hydrogen production, jointly building a diversified green hydrogen supply system

In Q1 2026, the application of natural gas cracking technology will show the following development trends:

• Technology:
  The continuous operation time of the cracking reactor is expected to achieve a breakthrough, with continuous improvement in stability
• Industry:
  Preparations for the demonstration project will accelerate, laying the foundation for the mid-year demonstration application in Sichuan
• Market:
  The construction of hydrogen energy infrastructure will accelerate, creating application scenarios for distributed hydrogen production technology
• Policy:
  More supporting policies are expected to be introduced to promote the commercialization of the technology

As an important path for green hydrogen-carbon production, the industrialization of natural gas cracking hydrogen-carbon co-production technology will have a profound impact on China’s energy structure transformation and the achievement of the “Dual Carbon” goals. The continuous R&D and innovative breakthroughs of the CAS team are driving this technology from the laboratory to industrial applications, laying a solid foundation for China to occupy a favorable position in global hydrogen energy competition.

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[1] China News Service Shanghai. Chinese Scientists Break Through Hydrogen-Carbon Co-Production Technology, Zero-Pollution Hydrogen Production Boosts Energy Transformation. January 18, 2026. (https://m.sohu.com/a/977307947_123753)

[2] Zhuansu Shijie. Catalysts: The Invisible Engine of Green Energy. January 16, 2026. (https://www.zhuansushijie.com/zixun/detail-dd093e94c41249958a5f33fa67f4b78f.html)

[3] Eastmoney.com. Catalogue of Encouraged Foreign Investment Industries (2025 Edition) Released. December 24, 2025. (https://finance.eastmoney.com/a/202512243600675957.html)

[4] Hebei Daily. A Thousand-Mile “Hydrogen Artery” Connects Green New Chains. January 9, 2026. (http://he.people.com.cn/n2/2026/0109/c192235-41467655.html)