EB Securities: Transition towards carbon emission dual control drives reevaluation of carbon costs, optimistic about non-electric applications of green energy.

EB SECURITIES releases a research report stating that as the global energy transition enters a deep water area, the theme of the past decade has been the growth of wind power installations under the logic of green electricity replacing thermal power. The core logic of the next decade will be the "non-electrification application" of green electricity - that is, through carriers such as green hydrogen, green ammonia, and green alcohols, unstable renewable energy will be converted into stable industrial raw materials and heat, solving the decarbonization dilemma in industries such as steel, chemicals, and shipping. Taking into account factors such as downstream premium payment capabilities and substitution economics, non-electric applications in the shipping fuel green alcohol, hydrogen storage solid carbon green ammonia, and hydrogen metallurgy fields are expected to benefit. EB SECURITIES stated that the shift in China from "energy consumption control" to "carbon emissions control" assessment mechanisms means that high energy consumption is no longer the red line for development, but high carbon emissions are; the substantial implementation of the EU Carbon Border Adjustment Mechanism (CBAM) forces Chinese export-oriented manufacturing companies to find decarbonization pathways beyond green electricity. This scissor effect will give rise to a huge "green electricity transformation" market. We judge that the period from 2026 to 2030 will be a key window for green hydrogen, ammonia, and alcohol to transition from engineering demonstrations to cost-effective commercialization. Environmental costs will be made explicit as carbon costs, embedded in industrial product pricing Assets with "negative carbon" or "low carbon" attributes (such as green aluminum, green hydrogen ammonia alcohols, zero carbon zones, etc.) will receive green premiums; while high carbon assets (such as outdated thermal power, steel, cement, aluminum smelting, etc.) will face erosion of profits. Green hydrogen is the core non-electric application of green electricity and is the beneficiary of the carbon emissions control policy shift In the steel (hydrogen metallurgy) and chemical (green ammonia, green methanol) industries, green hydrogen can replace coal or natural gas as a reducing agent or raw material. Green hydrogen can also serve as a storage method for green electricity, providing a large-scale solution for long-term storage, cross-regional transport, and non-electric applications. Under the policy framework of the "15th Five-Year Plan," which replaces energy consumption control with carbon emissions control, green electricity is not counted in energy consumption assessment, and companies with green hydrogen quotas or using green hydrogen do not consume carbon quota approval quotas. With a comprehensive consideration of downstream premium payment capabilities and substitution economics, non-electric applications in the shipping fuel green alcohol, hydrogen storage solid carbon green ammonia, and hydrogen metallurgy fields are expected to benefit Green hydrogen is the core of energy source reduction for downstream applications, and green ammonia is the ideal transportation carrier for green hydrogen, while green alcohol is the best carrier for green hydrogen in the shipping industry. With the decline in the cost of new energy electricity and the iteration of electrolysis technology, green hydrogen is approaching the cost parity point with gray hydrogen, thereby driving down the cost of green alcohols and green ammonia applications. At the current time, the strongest driving force for premium payments is in the shipping sector's global leading companies (e.g. Maersk), and in addition, high-end chemical giants (such as Basf) targeting the European market also have strong demand for green methanol, under the tightening of EU ETS policies and their own carbon neutral transformation commitments.