Brussels is to clamp down on imports of Chinese green technology, demote bidders for public contracts and make it harder for buyers to get subsidies.
The measures are expected to be unveiled by the European Commission on Thursday as part of a more aggressive drive to counter China’s dominance in the supply of products including solar panels and heat pumps.
Under a draft of the Net Zero Industry Act seen by the Financial Times, public procurement bids using products from a country with more than 65 percent EU market share would be downgraded. The same rules would apply to any government program subsidizing consumer purchases. “China is a prime example,” said a person familiar with the plans.
Ursula von der Leyen, the commission president, has called on the European Union to “de-risk” its engagement with China as Brussels seeks to reduce its reliance on the country’s manufactured goods and the US’s tougher stance on its communist regime.
China is responsible for more than 90 percent of some parts used in solar panels and is increasing its dominance in other supply chains, including wind turbine production and electric vehicles, the document says. This trend has prompted policymakers to accept that the European Union is replacing its dependence on Russian gas with China’s clean technology.
But the commission’s trade directorate is concerned that proposed changes to the public procurement rulebook could breach international rules, according to people familiar with the situation.
“It’s important that it’s consistent with our WTO obligations, our government procurement agreement obligations,” Eck said, referring to the World Trade Organization ban on discriminatory policies.
“An important element is to make sure that it doesn’t become some kind of green protectionism and that we don’t make the green transition more expensive for both private companies and taxpayers.”
The draft act is still subject to change after internal discussions between Commission departments before its publication.
The draft proposal describes the diversity of supply as a key component in the evaluation of bids. “Supply will . . . be considered insufficiently diversified where a third country supplies more than 65 percent of the demand for a particular net zero technology within the Union,” it says.
It will also assess the environmental sustainability of tenders, which can be counted against Chinese imports.
In sectors where EU industry is still strong, such as wind turbines and heat pumps, “our trade balance is deteriorating”, the draft warns, amid rising energy and input costs for European producers. Brussels wants to reverse this trend by intervening in the market with the aim of increasing EU production of green technology to 40 percent by 2030.
The Commission will also seek to promote new carbon capture technology by requiring major oil and gas extractors to commit to storing up to 50 million tonnes of CO₂ annually by 2030, with each company given an individual target. Eadbhard Pernot, policy manager at the NGO Clean Air Task Force, said such targets were “first of their kind”.
A separate proposal on critical raw materials on Thursday aims to facilitate domestic mining of lithium and other minerals used in green technology. Brussels intends to introduce stricter environmental measures to restrict imports, according to a draft version of the text that is still being finalised.
After the Commission publishes its proposals, the European Parliament and member states must agree before they become law, a process that can take up to two years.
China on Wednesday demanded that European countries implementing significant environmental trade measures submit written reports to the WTO so that its members can discuss their legal basis, impact on trade, compatibility with international rules and how those measures could affect developing countries, Geneva. A local trade official said. Beijing wants to start with the EU’s carbon border tax, which would force foreign importers to cover the cost of their CO₂ emissions by 2026.
