EU to tighten hydrogen subsidy rules after China concerns

The European Commission is working on tighter rules to ensure EU funding for hydrogen projects benefits European companies, after local industries raised concerns over cheap Chinese imports, the EU's head of climate change policy said on Monday.

The EU will this month launch its next round of funding for green hydrogen projects, as Brussels attempts to kick-start a local industry to produce the fuel.

Meanwhile, the EU is hardening its stance on other green technologies from China, imposing tariffs on electric vehicles which it says benefit from excessive subsidies.

European manufacturers of electrolysers, machines that use electricity to split water to produce hydrogen, have warned they cannot compete with cheaper Chinese producers.

hey want the EU to protect them by adding criteria that would favour local firms to its Hydrogen Bank funding scheme, something climate commissioner Wopke Hoekstra said the bloc's executive was now working on.

"The next auction will be different. We will have explicit criteria to build European electrolyser supply chains," Hoekstra said in a speech at the Eindhoven University of Technology in the Netherlands.

"If European cybersecurity and safety cannot be guaranteed, if the data of our people and our companies cannot be guaranteed, companies cannot get support," Hoekstra said, adding that while Europe has a good electrolyser manufacturing presence, China is oversupplying the market at lower prices.

Hoekstra said the planned hydrogen subsidy criteria, while not yet final, could include requirements for work to be done inside Europe, or setting a limit on projects' dependence on non-EU countries.

The cybersecurity rules would be geared at ensuring European data "do not end up in the hands of governments outside of the (European) Union," he added in a joint interview with Reuters and Politico.

The EU awarded 720 million euros to seven EU hydrogen projects in April. At the time, industry sources told Reuters the low-priced bids from some successful projects indicated that they would be using cheaper Chinese equipment.

The Commission has not disclosed if this is the case.

A Commission document, seen by Reuters, showed around a quarter of the projects that bid for the funding planned to source their electrolysers from outside the EU. Nearly another quarter planned to use a mix of EU and non-EU made equipment.

Hoekstra said the EU was not aiming to cut ties with China, but would take action where it deemed competition to be unfair. (Reuters)