EU tightens hydrogen subsidy regulations after China concerns

After local industries expressed concerns about cheap Chinese imports and the EU's climate change policy head, said Monday, that the European Commission is working to tighten rules so that EU funding for projects involving hydrogen benefits European companies.

This month, the EU will launch its second round of funding to support green hydrogen projects. Brussels is trying to jump-start an industry in order to produce this fuel locally.

The EU has also imposed tariffs on Chinese electric vehicles, which they claim are subsidized excessively.

European electrolysers manufacturers, who use electricity to split the water and produce hydrogen, warned Brussels that they could not compete with Chinese manufacturers.

Climate commissioner Wopke Hekstra stated that the EU was working to add criteria to the Hydrogen Bank financing scheme to give preference to local firms.

"I will make sure that the next auction is different." "We will have explicit criteria for building European electrolyser supplies chains," Hoekstra stated in an address at the Eindhoven Institute of Technology, Netherlands.

"If European cybersecurity, safety, and the data of our people, and our companies, cannot be ensured, then companies cannot receive support," Hoekstra stated. He added that China, while having a strong presence in the electrolyser market, is oversupplying it at lower prices.

Hoekstra didn't specify if the rules would prohibit projects that use foreign equipment from receiving EU subsidies. According to an EU official, the criteria is still being finalised.

In April, the EU allocated 720 millions euros to seven EU Hydrogen projects. Industry sources said that the low bids for some of the successful projects were indicative of the use cheaper Chinese equipment.

The Commission hasn't revealed if that is the case.

According to a document from the Commission, seen by., around a quarter (25%) of the projects who applied for funding intended to purchase their electrolysers outside the EU. A quarter of the projects that applied for funding planned to source their electrolysers from outside the EU.

Hoekstra stated that the EU did not intend to cut off ties with China but would take action if it felt there was unfair competition.

"Europe must counter Chinese subsidies for electric vehicles that would otherwise surpass our European brands." (Reporting and editing by Alexander Smith; Kate Abnett)

(source: Reuters)