[SMM Analysis] EU's "Regulation on the Safety of Hydrogen Trade": How Will Carbon Tariff Exemptions for Imported Green Hydrogen Reshape the Global Green Hydrogen Competition Landscape?

I. Core Content of the Hydrogen Trade Security Regulation: A Dual-Track Mechanism for Green Hydrogen Certification and Carbon Tariff Exemption​​

Recently, the EU officially adopted the Hydrogen Trade Security Regulation, aiming to establish a unified framework covering the production, transportation, and certification of green hydrogen. Its core provisions include:

​​Green Hydrogen Definition and Certification Standards​​: Imported green hydrogen must meet a full life cycle carbon emission intensity of ≤3 kg CO₂e/kg H₂ (the power source for electrolyzers must be from renewable energy, and the carbon emission coefficient of the producing country's power grid must be lower than the EU average).

​​Carbon Tariff Exemption Mechanism​​: Importers of certified green hydrogen are exempt from carbon tariffs under the EU's Carbon Border Adjustment Mechanism (CBAM), with the exemption covering emissions from the entire production chain of green hydrogen (including the power input end).

​​Supply Chain Traceability Requirements​​: Importers must provide a complete data chain from the power source of electrolyzers to storage and transportation, ensuring no fossil energy is mixed in.

This regulation forms a policy synergy with the EU's Renewable Energy Directive (RED III), requiring member states to import no less than 10 million mt of green hydrogen by 2030, prioritizing its use for decarbonization in high-emission sectors such as chemicals and steel.

II. Why is the EU Promoting Green Hydrogen Trade Rules at This Time?​​

​​1. Internal Transition Pressures Necessitate Supply Chain Restructuring​​

​​Energy Security Concerns​​: Following the Russia-Ukraine conflict, the EU has accelerated its efforts to reduce dependence on Russian fossil fuels, positioning green hydrogen as a strategic energy carrier to replace natural gas. However, domestic electrolyzer capacity can only meet 30% of the demand by 2030, forcing the EU to turn to imports.

​​Green Industrial Competition​​: The US Inflation Reduction Act (IRA) provides a subsidy of $3/kg for domestic clean hydrogen, while electrolyzer costs in China are 40% lower than in Europe. The EU needs to establish rules to compete for a say in the green hydrogen industry.

​​2. Proactive Positioning in International Climate Negotiations​​

​​Weaponization of Carbon Tariffs​​: By exempting green hydrogen from tariffs, the EU is essentially extending its carbon pricing system into international trade rules. This move not only weakens the competitiveness of fossil fuel-based hydrogen production in developing countries but also compels other countries to accept the EU's carbon accounting standards.

​​Struggle for Standard-Setting Power​​: Currently, there are multiple sets of global green hydrogen certification standards (such as Germany's H2Global and the US DOE standards). The EU is attempting to bundle its "carbon border tax + green hydrogen certification" into a de facto standard through the CBAM linkage mechanism.

​​3. Historical Policy Continuity​​

The EU's green hydrogen policy has evolved through three stages:

​​2020-2022​​: The EU Hydrogen Strategy was released, establishing the principle of "prioritizing the development of green hydrogen".

​​2023​​: The "Hydrogen Bank" was launched, initiating the first batch of import tenders (such as a 100,000 mt/year green hydrogen agreement with Egypt).

​​2024​​: The adoption of the trade regulation marks a shift in policy focus from subsidies to the export of trade rules.

III. Dual Impact on Domestic Enterprises: Coexistence of Opportunities and Challenges

1. Raised Market Access Thresholds

Soaring Certification Costs: Domestic enterprises need to invest at least 2-5 million yuan to establish a full life cycle monitoring system and obtain certification from EU-designated institutions (such as TÜV and SGS). Preliminary estimates suggest that the certification costs for small and medium-sized electrolyzer enterprises may account for 8%-12% of their revenue.

Supply Chain Compliance Risks: If using electricity from high-carbon-intensity regions such as Xinjiang, even green hydrogen production may be classified as "gray hydrogen," facing market exclusion.

2. Redefinition of Cost Advantages

Tariff Exemption Value Calculation: Based on the current EU carbon price of 90 euros/mt, exporting 10,000 mt of green hydrogen can save approximately 900,000 euros in tariff costs (equivalent to 6.75 million yuan). However, after factoring in certification costs, the actual net benefit shrinks to 3-5 million yuan/10,000 mt.

Economies of Scale Hedging Pressure: For enterprises with annual exports exceeding 50,000 mt, the unit certification cost can be reduced to 150,000 yuan/10,000 mt, and cost advantages begin to emerge.

3. Divergence in Technological Route Selection

Pressure on Alkaline Electrolyzer Enterprises: The EU requires electrolyzer efficiency to be ≥70% (the current Chinese national standard is 65%), prompting some producers to upgrade electrode materials and system integration.

Benefits for PEM and Solid Oxide Routes: The EU prefers to support high current density and rapid response technologies, driving the transformation of domestic technological routes.

IV. Green Hydrogen International Certification: Transitioning from a Compliance Tool to a Value Symbol

1. The Essence of Certification: A New-Type Trade Infrastructure

Green hydrogen certification is not merely a simple inspection report but involves the construction of:

Digital Twin System: Real-time tracking of electrolyzer operational data and power grid carbon emission factors;

Blockchain Evidence Storage: Ensuring data immutability;

Third-Party Verification: Certificates issued by EU-recognized institutions (such as Accredia).

2. Fourfold Premiums Brought by Certification

Pricing Power Premium: Certified green hydrogen commands a 15-20% higher price in the European spot market compared to non-certified products;

Financial Leverage Effect: Eligible for green loans as collateral (with interest rates 1-1.5 percentage points lower than conventional loans);

Supply Chain Bargaining Power: Priority access to Europe's main hydrogen pipeline networks (such as H2Mobility);

Brand Reputation Accumulation: Inclusion in the EU's "Green Product Passport" system.

3. Certification Trends: From Regional Mutual Recognition to Global Competition

Short-Term (2025-2030): China and the EU may engage in negotiations on mutual recognition of certification standards, but the EU may set thresholds for "equivalent producing countries";

Medium-Term (2030-2040): The scope of certification may expand to include blue hydrogen (requiring carbon sequestration certification) and ammonia-based hydrogen (requiring purity ≥99.9%);

Long-Term: The competition for certification rights will evolve into a battle for digital sovereignty, with data sovereignty becoming the focal point.

V. Breakthrough Paths for Chinese Enterprises: Transitioning from Cost-Driven to Rule-Embedded Strategies

1. Technological Breakthrough: Building an "Certification-Friendly" Industry Chain

Customized Modification of Electrolyzers: Develop wide-power operation technologies tailored to the fluctuations of the EU power grid;

Green Electricity Binding Strategy: Invest in renewable energy projects in Europe (e.g., offshore wind power in Portugal) to achieve geographical coupling of "production-consumption."

2. Certification Economy: Transforming Compliance Costs into Competitive Advantages

Certification Service Export: Leveraging China's mature carbon market experience, provide certification consulting services to exporters in the Middle East and North Africa;

Certification Financial Innovation: Develop green hydrogen futures contracts to hedge against price fluctuation risks during the certification cycle.

3. Rule Participation: Competing for Standard-Setting Power

Regional Alliance Building: Collaborate with ASEAN and Middle Eastern countries to promote the "Global Green Hydrogen Passport" initiative;

Technical Route Countermeasures: Advocate for the inclusion of China's energy efficiency standards for alkaline electrolyzers in international standards by IEC/TC197.

VI. Future Outlook: Threefold Changes in Green Hydrogen Trade Rules

Reconfiguration of the Geo-Economic Landscape: North Africa (Morocco) and Australia (Western Australia) may become EU green hydrogen import hubs, squeezing China's direct export space;

Disintegration of the Industrial Value Chain: Electrolyzer manufacturing, green electricity investment, and certification services will form a separate layout, giving rise to specialized trade service providers;

Revolution in Carbon Accounting Systems: Green hydrogen trade may force the adoption of a globally unified methodology for product carbon footprint accounting, reshaping the ESG evaluation system.

Conclusion

The EU's "Hydrogen Trade Security Regulation" essentially weaponizes the climate agenda as a geo-economic tool. For China, short-term pain is inevitable, but in the long run, the adversarial development of the certification system may actually accelerate the transformation of the domestic green hydrogen industry from "subsidy dependence" to "rule creation." The key to future success lies in who can more quickly convert certification costs into technological iteration momentum and occupy critical "system access layer" nodes in the new hydrogen trade rules.