Policy Context
The European Commission set up the EU Hydrogen Bank in 2023 to kickstart production of home-grown renewable hydrogen in Europe. The first auction, concluded in early 2024, made it clear that a large share of winning projects intended to source their electrolysers from outside the EU, and predominantly from China. Without a course correction, the Hydrogen Bank risked subsidising the displacement of Europe’s own electrolyser industry at the very moment that industry was scaling up.
Strategic Objective
I led the work for an early-mover electrolyser manufacturer that wanted the second auction to be designed differently. Our objective was specific and time-bound: a resilience criterion in the second auction’s terms and conditions that would limit the share of electrolyser components sourced from countries with state-subsidised, closed markets. With the second auction call expected later that year, we had a narrow window to act in.
Building the Case
The case rested on facts the Commission was well placed to recognise but had not yet operationalised in Hydrogen Bank rules. Chinese electrolyser manufacturers benefit from extensive state support and operate in a domestic market that is effectively closed to European suppliers, while Chinese production capacity already exceeds half of global supply. We anchored our argument in independent analysis, including the TNO and HCSS report on Europe’s dependence on China across the wind and broader clean energy supply chains, and translated those findings into concrete legislative language for the auction’s design.
Institutional Engagement
We then ran a deliberate sequencing of engagement. Early outreach to the highest levels of the European Commission helped escalate the issue and unlock access across the institution. Over the following months my team and I helped the client speak to around ten cabinets and Directorates-General, walking decision-makers through the evidence and the proposed design fix. We also worked with others in the renewable hydrogen value chain to make sure the proposals reached the Commission from multiple voices.
Outcome & Impact
The outcome was published on 25 September 2024 in the second auction’s Terms and Conditions. This second auction worth EUR 1.2 billion now required that projects “limit the sourcing of electrolyser stacks with surface treatment or cell unit production or stack assembly carried out in China to not more than 25% (in MWe),” on the explicit grounds that the EU faces “a significant risk of increased and irreversible dependency” on Chinese electrolyser imports that “may threaten the EU’s security of supply.”
For the first time, the Hydrogen Bank’s design now treats European electrolyser manufacturing capacity as a strategic asset to protect against unfair competition elsewhere, not just a cost to optimise. This non-price auction criterion shaped the outcome of more than a billion euros in auction revenues. It also set an important precedent: EU legislation is increasingly becoming more reciprocal to protect European cleantech industries against unfair competition.
