2 min

The European Commission plans to make it more difficult for Chinese companies to access green subsidies.

Brussels is aiming to impose curbs on imports of Chinese green technologies, according to a report in the Financial Times. The bloc plans to do this by demoting bidders for public contracts and making it harder for buyers to access subsidies for Chinese products.

The measures are expected to be unveiled by the European Commission this week as part of a “more aggressive drive” to tackle China’s role in supplying green tech products like 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 per cent EU market share would be downgraded. Similar rules would apply to any government programme subsidising consumer purchases. “China is a prime example,” a source told FT.

Goal: reduce dependence on both Russia and China

China is responsible for more than 90 per cent of some parts used in solar panels, the document says, and is increasing its dominance of other supply chains including wind turbine production and electric vehicles. This trend has forced policymakers to acknowledge that the EU is replacing a dependence on Russian gas for one on clean technology from China.

The challenge for the EC now is to ensure that the proposed changes to the public procurement guidelines do not breach international rules. “It’s important that it is consistent with our WTO (World Trade Organization) obligations, our government procurement agreement obligations,” said an FT source. “An important element is to ensure that it doesn’t end up being some kind of green protectionism and that we do not make the green transition more expensive both for private companies and for taxpayers”.

China demands enforcement of WTO rules

The draft proposal described the diversity of supply as a key component in the assessment of bids. “Supply shall . . . be deemed insufficiently diversified where a single third country supplies more than 65 per cent of the demand for a specific net zero technology within the union,” it says.

In what could be a pre-emptive response, China this week demanded that European countries implementing significant environmental trade measures submit a written report to the WTO so its members could discuss their legal basis, impact on trade, consistency with international rules and how those measures might impact developing countries, FT reported.