The European Parliament has adopted its position on the Net Zero Industry Act, a wide-ranging piece of legislation aiming to boost domestic production of climate technologies, including hydrogen fuel cells, electrolysers, and H2-derived fuels.

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The EU currently targets 10 million tonnes of domestic renewable hydrogen production by 2030, which would require the deployment of around 100GW of electrolysers.

But while Hydrogen Europe figures currently estimate that Europe has a 27% global market share for electrolysers, this is still second to China, the largest producer of this equipment with a 34% market share.

And Western manufacturers have warned that, as the EU gears up to award lucrative subsidies to bidders with the lowest possible cost of production, this could favour much cheaper Chinese equipment.

Beyond hydrogen, China’s dominance in solar PV and growing market share in wind turbine manufacturing has also presented concerns that Europe’s energy transition will depend on supply from this single country — presenting an energy security risk.

As such, the Net Zero Industry Act was introduced earlier this year with the goal of building out enough net zero technology manufacturing capacity to meet 40% of the EU’s deployment needs and a 25% global market share overall by the start of the decade, mainly by drastically speeding up the maximum time a factory has to wait for permitting before it can start construction.

For hydrogen, this would mean reaching 40GW of electrolyser manufacturing capacity by 2030, or deploying more than ten-times the current 3.9GW capacity.

The legislation, as approved by European Parliament in a 376-to-139 vote, also adds hydrogen-derived sustainable maritime and aviation fuels to the list of net-zero technologies. However, it is unclear whether this refers to manufacturing of technology to produce these fuels, or production, particularly since the latest draft supports measures to deploy infrastructure for CCS.

The latest draft also gives extra support for “net zero strategic projects”, although these have to apply for this designation from the relevant member state government.

Projects that meet the criteria — ie adding EU manufacturing capacity for products of which more than half is imported, or more than a quarter is exported — can bypass having to request strategic designation if they are already receiving subsidies from the Innovation Fund or the European Hydrogen Bank, designated an Important Project of Common European Interest, or located in “less developed and transition regions”.

The law would slash the permitting time for net zero manufacturing projects down to nine months for facilities with less than 1GW of annual production capacity, or 12 months if above this capacity. Net zero strategic project permitting is cut to six months if less than 1GW or nine months if above.

For both types of project, the timeline for permitting the expansions of existing capacity is set at half the time limit for approving a new facility, so a manufacturing project of less than on GW would require permitting within three months.

Hydrogen Insight has reached out for further clarification on how sustainable fuels will be supported by this legislation, and whether this could lead to a situation where the growth in electrolyser manufacturing capacity is cancelled out by equivalent — or even faster, depending on designation —permitting times for green hydrogen-based production.

However, this law is still at an early stage, with the Council of the EU yet to adopt its own position in order for talks on the final draft of the legislation to start.