Made in Europe, Electrolyzer manufacturers working together
20 major electrolyser manufacturers, including Nel Hydrogen, Siemens Energy and Thyssenkrupp Nucera, are working together to support Europe’s hydrogen industry and curtail the influx of cheap Chinese imports.
As reported by the Financial Times (paywall) and Reuters, the manufacturers have together signed a letter calling on the European Commission President nominee Ursula Von der Leyen to ensure a level playing field and require more “made in Europe” standards for the industry.
“I don’t want to give up on Europe. If we don’t create demand for European technology in Europe, we squander the opportunity for European OEMs [original equipment manufacturers] to win,” says Nel Hydrogen CEO and President Håkon Volldal.
A key message in the letter is that Chinese subsidies for state-owned hydrogen companies create a skewed playing field that puts European manufacturers at a significant disadvantage. This is happening as the EU is getting tougher on trade with China.
The push for European resilience criteria is aimed at supporting the build up of a resilient value chain in Europe as well as Europe’s ambitions to become a leader in the production of renewable hydrogen. Renewable hydrogen is seen as a key way to reduce emissions from heavy industry and heavy duty transport. The EU wants to produce 10 million tonnes of renewable hydrogen and import another 10 million tonnes by 2030, as part of its plan to cut greenhouse gas emissions.
European manufacturers want important parts of the electrolyser production process (cell assembly, cell stacking and surface treatment) to be made in Europe for the next round of funding from the EU’s hydrogen bank later this year. The results of the EU hydrogen bank pilot auction reveal that less than half of the awarded projects plan to rely on European technology.
Nel Hydrogen and the other electrolyser manufacturers hope that their efforts will lead to new rules that support the development of European renewable hydrogen value chain and help European electrolyser manufacturers compete against Chinese imports.
President Von der Leyen
cc. Executive Vice President Sefcovic, Executive Vice-President Vestager, Commissioner Breton,
Commissioner Simson, Commissioner Hoekstra
Subject: Make “Made in Europe” a Reality for the Electrolyser Industry
In your role as European Commission President during the 2019-24 mandate you brought about the
birth of the European Green Deal, Europe’s “man on the moon” moment. After five years of rigorous
debates and interinstitutional negotiations, there is no doubting Europe’s ambition or your commitment
when it comes to driving global climate leadership. The new political cycle of the European Institutions
brings with it both new and old challenges that must be tackled with speed and decisiveness in an
increasingly fraught and unpredictable geostrategic landscape.
Europe is engaged in a fierce global competition for leadership in clean tech manufacturing. Having
reached €184bn in 2023 already, the global clean tech market is expected to triple by the end of this
decade. If Europe is to remain a credible leader in the combat against climate change, now more than
ever, Europe’s Green Deal must be upheld and complemented by a strong, effective and robust
Industrial Plan. To meet the objectives outlined in the Net Zero Industry Act, we need strong
policies that emphasise the creation of quality jobs in Europe with support for manufacturing
“Made in Europe” at its heart.
Europe has invested significant political and financial capital in promoting renewable hydrogen as a key
lever of the Green Deal. Besides the RePower EU Communication’s ambition to produce 10 million
metric tonnes of renewable hydrogen in the EU by 2030, EU legislation has set binding targets for 2030
for the consumption of renewable hydrogen across different sectors. Overall, the realisation of these
targets would require an installed electrolyser capacity of 90-100GW, meaning a 10-fold increase
in current European electrolyser manufacturing capacity.
To date, the EU has provided approximately €4bn in subsidies via the Clean H2 Partnership to create
important pilot projects for green hydrogen and its derivatives in Europe. This early commitment helped
bring about leaders in electrolysis technologies. Today, two thirds of globally leading manufacturers
are based in Europe but Europe’s share in global manufacturing capacity is increasingly dwarfed
by China which accounts for 40%, up from 10% in 2023.
Our challenge is to ensure that European electrolyser manufacturing remains in Europe, driving
decarbonization, boosting Europe’s strategic autonomy and bringing value to the European economy.
Once a technology or its supply chain is lost, it is impossible to bring it back. As several hundred
cleantech experts recently confirmed during a CINEA Conference on “Driving Sustainable Innovation”,
Electrolyser manufacturing holds the biggest potential of all clean technologies for Europe’s
industrial base.
But European leadership is under acute threat as other regions have identified the electrolysis
industry as part of a wider green industrial policy. This is both reflected in e.g., China’s 14th Five-Year
Plan and Made in China 2025 Strategy, India’s National Green Hydrogen Mission and in the U.S. Inflation
Reduction Act (IRA). China alone is looking to install more electrolysers than the rest of the world
combined by the end of this year, with around 2.5 gigawatts in capacity. On the demand side, the largest
state-owned hydrogen producer is investing about $4.6 billion in hydrogen over the next five years, by
far surpassing the entire budget currently allocated to the EU Hydrogen Bank.
Green hydrogen projects in China are generally carried out by state-owned entities allowing Chinese
companies to go through extended periods of operational loss and supporting capacity expansions via
zero interest government loans. This skewed playing-field creates unfair competition and puts
European electrolyser manufacturers at a significant disadvantage.
To us it is clear: Europe cannot afford to replace one dependency (energy imports) with another
(imported technology).
The threat is real: the results of the EU hydrogen bank pilot auction reveal that less than half of the
awarded projects plan to rely on European technology. By the time grant agreements are signed this
number could be even lower. Considering the early phase of development of the hydrogen market,
these numbers are a drastic warning signal. The threat of repeating the solar PV tragedy, where a
thriving industry that supported tens of thousands of jobs was entirely lost in the course of little
over two decades, could be repeated, potentially in an even shorter timeframe. The next 2-3 years
are critical.
Considering this threat, it is of utmost importance for the EU to implement strong resilience measures,
aimed at swiftly addressing the current market distortion caused by unsustainable state-backed price-
pressure. While we urge the EU to consider all the levers of action available, the introduction of
tough resilience criteria through the EU Hydrogen Bank would be a decisive step in the right
direction.
With the EU Hydrogen Bank, Europe has an EU-wide funding mechanism in place which can support
the green hydrogen market uptake via several billion EUR over the coming years. We believe that this
funding mechanism and EU money paid by European taxpayers’ must promote and support a
resilient European electrolyser industry, benefitting European citizens with quality jobs. As such
we welcome the Commission’s proposals to consider the introduction of non-price criteria in the 2nd
auction of the Hydrogen Bank but the current proposals on the table are not fit for purpose and
fall short.
The broader hydrogen industry submitted proposals to the European Commission on the draft terms
and conditions of the 2nd auction of the hydrogen bank to ringfence certain critical parts of the
production process of electrolyser stacks (see annexed proposal). This approach is not aimed at
limiting competition nor at creating serious distortions to international trade. On the contrary,
the proposal clearly reflects a willingness to maintain a level playing field allowing non-European
companies sufficient time to initiate critical production steps in Europe. Moreover, the industry
calls for temporary application of the measures until the market has reached a critical size.
Madame President, we call on you to implement the proposals made in the next round of the
Hydrogen Bank. The rules of the EU Hydrogen Bank for the 2nd auction round provide a leading
example! The time has come for a shift in European trade, competition and industrial policy. The
EU needs to be bold and swift in implementing an industrial policy that is robust and resilient
and supports the “Deal” in Green Deal. We strongly believe that Europe’s nascent renewable
hydrogen sector and the electrolyser industry specifically must serve as the starting point for
such an approach. It is now or never.
Signatories: