European Parliament Approves Law Requiring 40% of Hydrogen Technology in the EU to be Made in Europe

The European Union’s legislative branch took a significant step forward on Thursday by formally adopting a bill aimed at promoting the production and use of domestically-made net-zero technologies, including hydrogen equipment. This move brings the bill, known as the Net Zero Industrial Act (NZIA), closer to becoming European law. The European Parliament voted 361 to 121, with 45 abstentions, to approve the NZIA, leaving only the European Council’s approval standing between the bill and its enactment.

The NZIA aims to establish deployment targets for a variety of EU-manufactured net-zero equipment, such as electrolysers and fuel cells. The bill also includes provisions for granting regulatory benefits to net-zero equipment manufacturers to enhance manufacturing capacity, with a goal of ensuring that 40% of all electrolyser deployment in the EU is “Made In Europe.” Additionally, the NZIA sets a target for the EU to capture 15% of the global market for these technologies.

One key feature of the NZIA is the creation of “Net-Zero Acceleration Valleys,” which will allow projects looking to establish new manufacturing facilities to delegate certain environmental assessment responsibilities to host governments. Christian Ehler, the Member of the European Parliament leading the bill, emphasized the importance of this legislation in supporting European industry and achieving the region’s economic, climate, and energy objectives.

The adoption of the NZIA is seen as a response to the increasing dominance of Chinese manufacturers in the global net-zero technology market, with Europe currently ranking second in the electrolyser market behind China. Western electrolyser manufacturers have raised concerns about EU subsidy schemes that may benefit low-cost Chinese equipment over European-made products. By promoting the growth of domestic net-zero technology production, the NZIA aims to bolster Europe’s position in this expanding global market.