By: Jacob Kim
The European Union has updated its auction rules for renewable hydrogen projects to limit reliance on Chinese-made parts. By December 2024, projects must ensure that Chinese components will not exceed 25% of production capacity. This move is aimed at protecting Europe’s renewable energy supply chain and reducing dependence on China, which currently dominates global markets for solar, electric vehicles, and electrolysers. These changes align with the Draghi report’s recommendations for stronger industrial policies and investment to maintain Europe’s competitive edge.
The new rules will impact the EU’s Hydrogen Bank, which plans to distribute €1.2 billion in grants at the upcoming auction. This is part of broader efforts to address energy security concerns and create resilient supply chains needed to achieve climate goals. According to Hydrogen Europe CEO Jorgo Chatzimarkakis, these reforms are vital to building a strong European supply chain and overcoming bureaucratic hurdles that have hindered green expansion.
However, the decision to limit Chinese-made components could strain EU-China relations. By capping Chinese parts in hydrogen plants at 25%, the EU seeks to reduce its reliance on China for renewable energy technologies, especially electrolysers, which are essential for green hydrogen production. While this fits into the EU’s broader strategy of building independent supply chains, it risks sparking trade disputes. China, which dominates the global renewable energy supply chain, may view the restrictions as protectionist, potentially leading to retaliatory actions or strained trade ties. As competition for leadership in green energy grows between the EU and China, this policy may further fuel strategic rivalry. Additionally, ongoing investigations into Chinese electric vehicles and potential tariffs could exacerbate tensions and complicate future cooperation in renewable energy sectors.
Source
Energy Outlook 
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