EU Enforces Stricter Hydrogen Funding Rules to Benefit Local Firms

The European Commission plans to reinforce regulations to ensure EU funding for hydrogen projects benefits local industries. The new criteria will aim to protect European manufacturers from cheaper Chinese imports. This move is part of the EU's broader strategy to support local green technologies and counteract unfair competition from China.

The European Commission is developing stricter guidelines to ensure that EU funding for hydrogen projects primarily benefits local businesses, following concerns from European industries about cheap Chinese imports. The head of climate change policy at the EU made this announcement on Monday.

This month, the EU will initiate a new round of funding for green hydrogen projects, aiming to foster a local industry for hydrogen production. Concurrently, the EU is becoming more assertive against Chinese green technologies, applying tariffs on electric vehicles it claims are heavily subsidized.

European manufacturers of electrolysers, machines that split water using electricity to produce hydrogen, have informed Brussels that they cannot compete with more affordable Chinese counterparts. As a result, they are pushing for EU protections under the Hydrogen Bank funding scheme. Climate Commissioner Wopke Hoekstra confirmed that the bloc's executive is working on implementing these recommendations.

Hoekstra assured that future funding rounds will incorporate explicit criteria to build European electrolyser supply chains. He emphasized the importance of ensuring European cybersecurity and safety, noting that companies would not receive support if such guarantees could not be made. While Europe holds a strong position in electrolyser manufacturing, China's lower-priced options are saturating the market.

It remains unclear whether the new rules will explicitly ban foreign equipment from receiving EU subsidies. An EU official mentioned that the final criteria are still in development. In April, the EU allocated 720 million euros to seven hydrogen projects, with industry insiders noting some bids involved cheaper Chinese equipment.

The Commission has not confirmed these details. Documents reviewed by Reuters indicate that about a quarter of the project bids plan to source their electrolysers from outside the EU, with nearly another quarter intending to use both EU and non-EU equipment.

Hoekstra added that the EU does not intend to sever economic ties with China but aims to act against perceived unfair competition. "Europe needs to counter Chinese subsidies for electric cars that could otherwise dominate our market," he stated.

(With inputs from agencies.)