The EU Embraces Domestic Manufacturing of Net-Zero Technologies: A Fight Against Chinese Dominance in the Global Market

Yesterday, the legislative branch of the EU formally adopted the Net Zero Industrial Act (NZIA) with the goal of boosting the manufacture and deployment of domestically-made net-zero technologies, including hydrogen equipment. The European Parliament (EP) passed the bill by a vote of 361 to 121, with 45 abstentions. The bill now awaits approval from the European Council, made up of member-state governments, before becoming European law.

The NZIA includes deployment targets for EU-made net-zero equipment such as electrolysers, fuel cells, and other H2 kit. It also grants streamlined permitting and regulatory perks to net-zero equipment makers to enhance manufacturing capacity. The goal is for 40% of total electrolyser deployment to be “Made In Europe.” The bill also sets a target for Europe to capture 15% of the global market of these technologies.

Key provisions of the NZIA include the creation of “Net-Zero Acceleration Valleys” where projects seeking to build new manufacturing facilities can delegate parts of the evidence collection necessary for environmental assessments to host governments. This bill is seen as vital for European industry and sets the stage for future economic, climate, and energy goals.

The increasing dominance of Chinese manufacturers in the global net-zero technology market has led to this legislation being introduced. Currently, Chinese manufacturers hold 34% of the global electrolyser market, with Europe following closely behind at 27%. European electrolyser manufacturers have expressed concerns that EU subsidy schemes favoring lower production costs could inadvertently subsidize cheap Chinese equipment. This legislation aims to ensure that European industry remains competitive in the growing net-zero market by providing support for domestic manufacturers while maintaining high standards for environmental protection.