Chinese companies are stepping up green investments in Europe and this can hardly go unnoticed. This thesis is advocated by Euractiv Leon de Graaf, Dominika Florianova, Flora Wallace and Giorgia Andriola, sustainability specialists at #SustainablePublicAffairs.
Spain expects 400 million euros for Chery's EV factory, as well as 800 million euros from Envision Group and 2 billion euros from Hygreen Energy for investments in green hydrogen. Hungary will receive over €51 billion from Chinese companies, including a €7 billion investment in a battery manufacturing plant from China's CATL.
Chinese companies, and with them essentially the Chinese government, will achieve two things by doing so. First of all, they are able to avoid EU import tariffs on electric cars and potentially soon on other green products. Second, Chinese companies will be able to put pressure on the governments of the EU member states in which they invest to create a divide in the EU when it comes to attitudes towards China.
In fact, the move can be seen as a more effective version of China's Belt and Road initiative. It is therefore hardly a coincidence that it is the Hungarian and Spanish governments that are questioning and condemning EU import tariffs on Chinese electric vehicle imports.
Why should the EU be tough on China?
A recent TNO/HCSS study suggests that China
- produces electrolyzers of inferior quality in terms of environment, safety and performance;
- excessively subsidizes its own producers;
- keeps the market closed to EU producers.
The situation is similar in the wind energy supply chain. An EU investigation found that excessive subsidization applies particularly strongly to electric cars.
Therefore, the authors of the study suggest that Europe take reciprocal measures. But how can the EU do this? One of the solutions indicated in the analysis is to close the EU market to Chinese producers.
Mario Draghi in his report proposes, among other things, to introduce explicit minimum quotas for locally produced innovative and sustainable products and components in public procurement and contracts for various tenders.
The EU's green hydrogen industry has repeatedly called for the EU to impose ambitious non-price criteria in its public procurement and auctions, such as the EU Hydrogen Bank.
If Chinese products can beat European products fair and square, then that should be welcomed. But Europe must be vigilant and decisive if the competition is not fair. There is a real danger that the Chinese companies will displace the European ones from the market, then they will remain the only ones and the monopoly power will allow them to raise the prices again. This cannot be the basis of the EU's energy transition.
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