Legislation passed by European Parliament requires 40% of hydrogen technology to be domestically produced

The legislative branch of the EU has officially approved a bill aimed at promoting the production and use of domestically-made net-zero technologies, such as hydrogen equipment. The European Parliament (EP) voted in favor of the Net Zero Industrial Act (NZIA) with 361 votes for, 121 against, and 45 abstentions. The bill now only needs approval from the European Council to become European law.

The EP and Council reached a joint agreement on the NZIA in February, making it highly likely to pass through the Council as well. This bill will establish deployment targets for various EU-made net-zero equipment, including electrolysers, fuel cells, and other hydrogen technologies. It will also provide regulatory advantages to net-zero equipment manufacturers to enhance production capacity, with the goal of having 40% of total electrolyser deployment being “Made In Europe”.

The NZIA includes provisions for creating “Net-Zero Acceleration Valleys”, where projects seeking to build new manufacturing facilities can delegate some of the necessary environmental assessment tasks to host governments. Additionally, the bill sets a target for Europe to capture 15% of the global market for these technologies. Christian Ehler, a Member of the European Parliament leading the bill, stated that this vote is a positive development for European industry, aligning with the region’s economic, climate, and energy goals.

The purpose of the NZIA is also seen as a way to counter the increasing dominance of Chinese manufacturers in the global net-zero technology market. Currently, Chinese manufacturers hold 34% of the global electrolyser market, with Europe following closely behind at 27%. Some Western electrolyser manufacturers have expressed concerns that EU subsidy programs favoring the lowest production costs could inadvertently subsidize cheaper Chinese equipment.