The EU’s proposed target of meeting 40% of its green hydrogen equipment needs with domestically-made products moved a step closer towards becoming a reality yesterday (Tuesday), with the news that two of its branches of government had reached agreement on the enabling legislation.

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The European Parliament (EP) and European Council (made up of ministers from the 27 member states) agreed a provisional deal on the Net Zero Industry Act (NZIA), first tabled by the European Commission (EC) in March last year, which lists green hydrogen production as a “strategic industry”.

This means suppliers for renewable H2 projects will be allowed access to streamlined permitting and other regulatory perks in order to boost manufacturing capability — with the end goal of 40% of total electrolyser (and other green H2 equipment) deployment being “Made In Europe”.

The legislation now needs formal approval from the EP and Council, as well as sign off from the third EU government branch, the European Commission, which rarely objects to agreements between the Parliament and Council.

The commission’s draft legislation suggested that the EU would need to deploy a cumulative 100GW of electrolysers by 2030 — implying that it would need enough manufacturing capacity for at least 40GW to have been supplied by European electrolyser manufacturers.

Europe's current goal of producing 10 million tonnes of green hydrogen by 2030 envisages a maximum of 25GW of annual electrolyser manufacturing capacity by 2025 — even though this 10-million-tonne target seems unlikely to be met, given the current rate of project development.

Trade body Hydrogen Europe estimates that Europe is on track to reach 21GW of electrolyser manufacturing capacity by 2025, but has derided the 40% manufacturing target as confusing and lacking in ambition.

An infographic produced by the EP today predicts that hydrogen could represent 20% of the EU’s energy mix by 2050, including 20-50% of energy demand in transport and 5-20% in industry.

The NZIA also streamlines permitting for strategic industries, meaning that manufacturers of electrolysers and other green hydrogen-related equipment should be able to get their projects signed off more quickly.

It also proposes measures to build skills in strategic industries, as well as measures to “ease market access” for such industries.

The European Parliament and Council agreed on the European Commission’s general approach but added measures to further streamline rules on permitting procedures, and also to introduce the concept of “Net Zero Industrial Valleys” — manufacturing hubs where several companies work on net-zero technologies.

The agreement also sought to regulate member states’ subsidy auctions for renewable energy technologies — without defining which technologies would be included in this definition — to ensure that subsidies were offered on the basis of environmental sustainability and system integration, as well as on price.

Public authorities purchasing goods from strategic industries must also ensure environmental sustainability, as well as considering “resilience criteria” (ie, whether the goods being procured could undermine Europe’s own manufacturers) if the goods in question come from an industry in which there is a “third-country dependence” of more than 50%.

“With the Net-Zero Industry Act we want to support our industry in its transition,” said Jo Brouns, minister for economy, innovation, work, social economy and agriculture in Flanders in Belgium. “The NZIA is an important step in creating the necessary ecosystem to boost the manufacturing of clean technologies. Europe launched a pathway towards a cleaner and sustainable future for the European industry. Now the time is ripe for Europe to take back the lead on the global scene for clean technologies and to build a competitive, green, and job-creating industrial sector.”