The EU has warned of the growing threat to its domestic green hydrogen supply chain from China, which has breezed past its 2025 production targets and looks set to tighten its grip on the industry in 2026.

The EU’s main green hydrogen funding channel, the European Hydrogen Bank, already stipulates that projects bidding for subsidies must source 75% of electrolyser components from countries other than China. This is because of “a significant risk of increased and irreversible dependency of the EU on imports of electrolysers originating in China, which may threaten the EU’s security of supply”, the European Commission said on launching the second round of auctions in December 2024.

However, on launching the EHB’s third round of auctions in early December 2025, the Commission appeared to signal even greater concerns, additionally citing “the fact that Chinese production capacity is already more than 50% of global production and the projected hydrogen production in China surpasses by far its domestic 2025 target and foreseeable global demand”.

China is widely reported to have beaten a 2025 production capacity target of 100,000–200,000t/yr, a goal set out in the central government’s medium-and-long-term plan for 2021–35, as a growing number of large projects come online. Its rapid growth is expected to bring progress in lowering costs and refining electrolyser technology, making its components more competitive on the global market.

Global leader

Policy support has helped to propel China ahead of Europe and the US, the clean hydrogen industry’s early frontrunners.

Investment of about $33b has been committed to projects in China to 2030, according to industry group the Hydrogen Council. The US ranks second, with $23b, while Europe has slipped to third, with about $19b.

China accounts for 65% of global electrolyser capacity that has been installed or reached FID, according to the IEA. The average size of projects in China is rising more rapidly than elsewhere, implying it is focused firmly on commercial production, rather than pilot projects.

The EU continues to support the clean hydrogen sector with significant funding. The EHB’s third auction round has a budget of €1.3b ($1.5b), plus another €1.7b from EU member states, bringing the total to €3b. In addition, it has made available €2.9b from the EU Innovation Fund to support manufacturing of clean technologies and decarbonisation projects, for hydrogen projects are allowed to apply.

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Author: Stuart Penson