(Bloomberg) -- The European Union will take steps to exclude Chinese manufactured hydrogen electrolyzers from an upcoming auction aimed at spurring the production of the fuel during the bloc’s green transition.
The European Commission, the bloc’s executive arm, will conduct a second wave €1.2 billion ($1.34 billion) auction through its hydrogen bank from Dec. 3, according to a statement Friday. The process will include new “resilience requirements” to help stave off Chinese competition in the nascent energy sector.
Winning projects will have to limit the sourcing of electrolyzer stacks from China to not more than 25% of total capacity, the new guidelines stipulate. Chinese production capacity is already more than half of global production, far surpassing the growth in global demand, they note.
“While the first auction showed that European electrolysers have a good presence, China is now oversupplying them at ever-lower costs,” Wopke Hoekstra, the EU’s climate commissioner, said at an event earlier this month. “We will have explicit criteria to build European electrolyzer supply chains.”
Europe has stepped up protection of its clean tech sector from Chinese competition, which already dominates the market in solar panels and batteries and is threatening the region’s lead in other sectors, like wind and hydrogen.
The new measures are part of an effort to introduce so-called non-price criteria — such as emissions and cyber security — to the auction process in a bid to favor local production. It comes after similar measures were adopted earlier this year under the Net Zero Industry Act. Failure to comply with the guidelines could mean a reduction of grant money or termination, the rules state.
The commission on Friday also opened a public consultation on a methodology defining low-carbon hydrogen.
The new criteria was lauded by Jorgo Chatzimarkakis, chief executive officer of industry association Hydrogen Europe, who said it marked a “pivotal moment” for the sector. European manufacturers, like Sunfire GmbH, said the move showed the EU was being less “naive.”
“We have recently seen a significant imbalance and unfair competition driven by state-backed subsidies outside Europe,” Sunfire CEO Nils Aldag said. “The message is clear: Europe will not allow dependencies on a single third country.”
--With assistance from Ewa Krukowska.
(Updates with Sunfire CEO comment in final two paragraphs)
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