The European Union is taking steps to combat the potential threat posed by China in the hydrogen energy industry. After imposing punitive tariffs on Chinese electric vehicles and cracking down on subsidized exports supported by the Chinese government, the EU is now formulating stricter rules to prevent Chinese cheap goods from undermining European manufacturers in the hydrogen industry.
According to a report by Reuters, on Monday (September 2nd), EU Climate Action Commissioner Wopke Hoekstra stated during a speech at the Eindhoven University of Technology in the Netherlands, “I will make sure that the next (green hydrogen) auction will be different from the past. We will set clear standards to establish a European electrolyzer supply chain.”
During his speech, Hoekstra revealed that the EU will introduce “clear standards” to encourage green hydrogen projects to utilize European equipment and access subsidies through the EU Hydrogen Bank auction system.
This move appears to be a response to lobbying from European electrolyzer equipment manufacturers to ensure the market is not flooded again by massive amounts of Chinese exported electrolyzers.
Following concerns from local industries about the influx of cheap Chinese electrolyzer equipment exported to Europe, the European Commission is drafting stricter rules to ensure that EU funding for hydrogen projects benefits European businesses.
This concern stems from the collapse of the once-leading European photovoltaic manufacturing industry in the 2010s when China, driven by weak domestic demand, heavily subsidized cheap products for export, leading to global overcapacity. The influx of inexpensive Chinese photovoltaic panels into the European market resulted in severe losses for European manufacturers, bankruptcies, and job losses.
According to a document referenced by Reuters from the European Commission, around a quarter of the bidding projects plan to purchase electrolyzers from outside the EU, with nearly another quarter planning to mix EU and non-EU equipment.
The EU is set to launch the next round of funding for green hydrogen projects this month, aiming to kickstart the local hydrogen fuel production industry in Brussels through this measure.
Currently, Europe houses two-thirds of the global electrolyzer manufacturers required to produce hydrogen from water. EU officials are concerned that without prompt action, this position could be lost.
In an interview with Reuters and Politico, Hoekstra mentioned that although Europe possesses strong electrolyzer production capabilities, China is flooding the market with excess supply at lower prices.
While the exact criteria for hydrogen subsidies are still being finalized, Hoekstra hinted that the rules may entail requirements for work to be completed within the EU or limitations on project dependence on non-EU countries.
Hydrogen energy is seen as the future of clean energy. In early June, the EU collaborated with Japan, the first country to announce a green hydrogen strategy, to jointly establish high-standard regulations to ensure a globally fair competitive environment.