The Commission wants to reduce funding for technology from China - and is thereby causing serious concerns in the People's Republic. Companies are exploring how they can produce in Europe.
Several Chinese heat pump manufacturers are examining takeovers or investments in production capacities in Europe, report industry experts and association representatives.
The reason: The EU's “Industrial Accelerator Act” wants to tie state funding to the origin of products, so that climate-friendly devices such as heat pumps must preferably come from the EU.
Italy used the “Golden Power” rule to prevent a Chinese takeover of the heating company Riello; Germany and France have already introduced funding restrictions for non-EU products.
Beijing, Rome, Düsseldorf, Brussels. Several Chinese heat pump manufacturers are apparently planning to take over production capacities in Europe or to take a significant stake in them. This alarms the responsible representatives of the European Union (EU). Because for Europe it is about more than a single product. It is important to defend control over the next big key technology and preserve the sovereignty of the industry.
Nicholas Matten, industry consultant and former managing director of the manufacturer Stiebel Eltron, told the Handelsblatt: “At least three Chinese companies are currently trying to get hold of heat pump factories in the EU.” He was asked by companies in the People's Republic to advise on the European heat pump market.
Paul Kenny, Director General of the European Heat Pump Association EHPA, also said: “Chinese heat pump manufacturers are currently examining the possibility of producing themselves in Europe.” This could be done by purchasing European companies or European production facilities. “Some Chinese companies are already discussing this with companies in Europe,” said Kenny.
MEP Anna Cavazzini (Greens) warns of the consequences. “Europe has already lost its technological leadership in solar energy and batteries – and now we are dependent on the Chinese,” she said. “We have to prevent this from happening with heat pumps too.”
Will funding only be available for European heat pumps in the future?
The trigger is a planned EU industrial law: the “Industrial Accelerator Act” (IAA). In March, the EU Commission presented the draft law for this. Now the Parliament and the member states in the Council are working on the details. On Thursday and Friday of this week, the EU heads of state and government want to exchange ideas on the IAA at an EU summit.
The aim of the IAA is to strengthen the EU in strategic industrial sectors and to spend state money primarily on European technology. The EU is therefore planning to make government funding for climate-friendly technologies such as heat pumps dependent on whether the devices originate in the European Union.
In concrete terms, this means: If a private person wants to install a heat pump, the state would only provide the full amount of money if the heat pump comes from the EU. If it came from China, for example, the funding would either be canceled completely or it would be lower.
Actually, this regulation should only take effect three years after the law comes into force. And it should only apply if a state introduces new funding or revises an existing one. In addition, it is still unclear exactly which condition must be met for a heat pump to have its origin in the EU. EU customs rules state that this is the case if a product has undergone its final, significant processing in the EU - which also leaves a lot of room for interpretation.
But even if binding EU rules could take some time to come into force, individual EU states are already restricting Chinese products.
Italian government prevents Chinese takeover
From around 2027, Germany only wants to cover 15 instead of 30 percent of the costs for heat pumps that do not come from the EU. France has already introduced a regulation against non-EU products: since September 1st, only heat pumps that were produced in an EU country or the European Economic Area will be subsidized there. France clearly defines what these are on a list of eligible devices.
In Italy, on the other hand, the government has already fended off a concrete takeover attempt from China involving the Riello heating company. The Chinese companies Haier and Midea had tried to buy the Italian company from the American owner Carrier.
But the Italian government prevented a deal with the Chinese using the “Golden Power” rule. This legal instrument allows the Italian government to prohibit foreign takeovers of critical infrastructure and companies deemed strategic. Instead, the Italian heating company Ariston bought the company.
“Extreme concern among the Chinese”
And it is becoming apparent that there could soon be more advances like the one involving Riello from China. This was the impression that both heating industry consultant Nicholas Matten and association representative Paul Kenny gained when they traveled to the annual meeting of the Chinese heat pump industry in Wuhan in July.
The Chinese heat pump association had invited players from Europe - probably also to build connections and explore how the European sales market for Chinese heat pumps could be kept open.
Matten said: “The Industrial Accelerator Act is causing extreme anxiety among the Chinese.” It is not attractive for Chinese companies to set up their own production sites in Europe - simply because the approval processes typically take months.
“That’s why companies are looking for ways to produce a heat pump as quickly as possible in an existing production facility,” he said. It could be about cooperation with European companies, but also about buying up and repurposing factories for other products - and about corporate investments.
Kenny also said: “I believe we will feel the impact of the Industrial Accelerator Act and this could lead to further mergers and acquisitions between the Chinese and European heat pump sectors.”
The largest Chinese heat pump manufacturers remain silent on the issue. Haier and Midea reported back to Handelsblatt that they did not want to comment. The companies Gree and Phnix did not respond to a request at all.
Large investments of more than 300 million US dollars must be approved by the powerful Reform and Development Commission (NDRC) in Beijing, smaller amounts by the respective local authorities. The approval of foreign projects is often used by the government as a bargaining chip in political discussions, as consultants and industry representatives confirmed to the Handelsblatt.
The scope for this could be further restricted in the future. European Parliament representative Cavazzini, who is currently revising the Industrial Accelerator Act proposal, said: "We have nothing against Chinese investments in Europe in principle, but they must meet certain conditions. The intellectual property and control must remain with European companies." The clear goal is to prevent hostile takeovers.
While European leaders have some things to sort out later this week, politicians are working to ease tensions in more prominent sectors. It was only at the end of last week that EU Trade Commissioner Maros Sefcovic and his Chinese counterpart Wang Wentao agreed in Beijing that the People's Republic would export fewer hybrid vehicles - thus preventing a further escalation of the trade conflict for the time being.
