EU Tightens Rules for Hydrogen Subsidies Amid Concerns Over Chinese Competition
Brussels, September 4, 2024 – The European Union istightening its rules for hydrogen subsidies, aiming to ensure that funding benefits European companies amid concerns about competition from cheaper Chinese imports.
The move comes as the EUprepares to launch the next round of funding for green hydrogen projects this month, seeking to revitalize its domestic hydrogen fuel production industry. The European Commission, the EU’s executive arm, is facing pressure from European industry players who fear being undercut by Chinese imports.
We are committed to supporting the development of a thriving green hydrogen industry in Europe, said Frans Timmermans, the EU’sclimate change policy chief. However, we must ensure that our funding is used to benefit European companies and create jobs in Europe, not to subsidize imports from other countries.
The EU’s decision to tighten its hydrogen subsidy rules reflectsa broader trend of growing trade tensions between the EU and China. The bloc has already taken a tougher stance on Chinese green technologies, including imposing tariffs on Chinese-made electric vehicles, which it claims benefit from excessive government subsidies.
The EU’s concerns over Chinese competition in the hydrogen sector stem from China’s rapidadvancements in green hydrogen technology and its ambitious plans to become a global leader in the industry. China has already established a robust domestic hydrogen supply chain and is actively investing in international projects, posing a significant challenge to European companies.
The new EU rules are expected to focus on ensuring that hydrogen projects receiving subsidies meet certain criteria,such as using European-made equipment and employing European workers. The EU is also considering introducing a buy-European clause for hydrogen projects, which would require recipients of subsidies to prioritize sourcing hydrogen from European producers.
The move has been met with mixed reactions from industry stakeholders. Some European hydrogen producers have welcomed the stricterrules, arguing that they are necessary to level the playing field and protect European jobs. However, others have expressed concerns that the new rules could stifle innovation and hinder the development of the European hydrogen industry.
While we support the EU’s efforts to promote a green hydrogen industry in Europe, we believe that the newrules should be carefully crafted to avoid creating unnecessary barriers to investment and innovation, said a spokesperson for a European hydrogen industry association. We need to ensure that the EU remains a competitive and attractive destination for hydrogen investment.
The EU’s move to tighten its hydrogen subsidy rules highlights the growing challenges facing the bloc in itsefforts to achieve its ambitious climate goals. The EU is heavily reliant on imports for many key technologies, including renewable energy and batteries, making it vulnerable to competition from countries like China.
The EU’s decision to prioritize European companies in its hydrogen funding program could also have implications for international cooperation in the sector. The EUhas been working with other countries, including China, to develop global standards for hydrogen production and trade. However, the new rules could create tensions with China and other countries that are seeking to play a leading role in the global hydrogen market.
The EU’s decision to tighten its hydrogen subsidy rules is likely to be closelywatched by other countries around the world. It could set a precedent for other governments seeking to support their domestic hydrogen industries while navigating the challenges of global competition.
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