EU takes steps to bolster its hydrogen technology markets against China

New rules will limit or even block tech such as electrolyzers made in China

The European Union is launching new steps to stand in the way of Chinese hydrogen technology such as electrolyzers as it rolls out a new auction targeting the production of H2 during the green energy transition of the bloc.

The auction will be worth approximately $1.34 billion (€1.2 billion) and will begin on December 3, according to a recently released statement by the European Commission, the executive arm of the European Union.

This new H2 tech contract process will include “resilience requirements”

The “resilience requirements” being implemented into the auction process are designed to help control competition from China in this early energy sector in the EU.  Projects with winning bids will be required to restrict their sourcing of hydrogen technology such as electrolyzer stacks that were made in China.  This restriction limits them to no more than 25 percent of total capacity being produced by Chinese tech.

The global green H2 production capacity held by tech made in China already represents over half of all production. This is much more than the growth in global demand, pointed out the European Commission upon their announcement.

The oversupply of hydrogen technology from China risks the EU market

“While the first auction showed that European electrolyzers have a good presence, China is now oversupplying them at ever-lower costs,” said EU climate commissioner Wopke Hoekstra, in September 2024.  “We will have explicit criteria to build European electrolyzer supply chains.”

Europe has been ramping up its clean energy tech sector protection in recent months in the face of hefty competition from China.  Chinese products already have a solid domination of the markets in batteries and solar panels, and now the region is facing competition in other areas of clean energy such as wind power and now H2 production.

The new strategies are part of a broader effort to bring in non-price criteria, which are factors such as cyber security and emissions reduction. These will be worked into the auction process in order to sway favor toward local production.

The Net Zero Industry Act

The new decision arrived on the heels of – and within the scope of – the Net Zero Industry Act, which took effect earlier this year.  Failure to comply with the hydrogen technology restrictions could mean that grant money risks being reduced or even terminated, according to the rules.