The European Commission is drafting stricter rules to ensure that EU funding for hydrogen projects advantages European firms, prompted by concerns over low-cost Chinese imports. This announcement came from the EU’s climate change policy head on Monday.
This month, the EU is set to initiate its latest funding round for green hydrogen projects as Brussels seeks to foster a local industry for producing the fuel. The move comes amidst the EU hardening its stance on other green technologies from China, such as imposing tariffs on Chinese electric vehicles perceived to benefit from excessive subsidies.
European manufacturers of electrolyzers, devices that use electricity to split water to generate hydrogen, have alerted Brussels to their inability to compete with cheaper Chinese products. These manufacturers are pushing for the EU to include criteria in its Hydrogen Bank funding scheme that would favor local companies, a demand that climate commissioner Wopke Hoekstra confirmed is being addressed.
“I will ensure that the next auction will be different. We will have explicit criteria to build European electrolyzer supply chains,” Hoekstra stated during a speech at the Eindhoven University of Technology in the Netherlands. He emphasized the need to guarantee European cybersecurity and safety, stating that companies that cannot ensure this would not receive support.
Future Rule Specifications
Hoekstra did not clarify if the new rules would prohibit projects using foreign equipment from receiving EU subsidies. An EU official indicated that the criteria are still under development.
In April, the EU allocated 720 million euros to seven hydrogen projects within the EU. Industry sources at the time noted that some successful projects appeared to have submitted low-priced bids, likely due to cheaper Chinese equipment. However, the Commission has not verified this.
A Commission document reviewed by Reuters revealed that about one-quarter of the projects bidding for funding planned to source their electrolyzers from outside the EU, while nearly another quarter intended to use a mix of EU and non-EU equipment.
Balancing Relations with China
Hoekstra articulated that the EU does not aim to sever ties with China but would act against perceived unfair competition. “Europe needs to counteract Chinese subsidies for electric cars that would otherwise overtake our European brands,” he stated.
