The European Union has launched a €15–20 billion Global Green Bond Initiative aimed at financing sustainable infrastructure projects in partner countries, but concerns are mounting in Brussels that a significant portion of the funding could end up supporting Chinese clean technology suppliers.

The programme, one of the EU’s largest external climate financing tools, is intended to mobilise investment for renewable energy, water treatment and transport projects across developing regions. Planned projects include solar farms in Algeria, wastewater systems in India and light rail infrastructure in the Dominican Republic, with the European Investment Bank (EIB) acting as a key anchor investor alongside other European development institutions.

However, EU officials warn that the structure of the initiative could unintentionally strengthen Chinese dominance in the global renewable technology market. A Commission official familiar with the matter said most of the allocated funds are likely to flow toward Chinese manufacturers, particularly in sectors such as solar energy components.

Of particular concern are high-risk power inverters used in solar installations. These devices, many of which are produced by Chinese companies including Huawei-linked suppliers, are increasingly being scrutinised by Brussels due to potential cybersecurity vulnerabilities. Officials fear they could allow remote interference with energy systems, posing risks to grid stability in third countries connected to European energy networks.

The European Commission recently issued guidance calling for the gradual removal of such high-risk inverters from EU-funded renewable projects. However, the directive applies primarily to projects outside the EU from 2027 onwards, leaving a gap between policy ambition and current investment frameworks.

The Green Bond Initiative, approved before the cybersecurity guidance was finalised, contains no requirement for partner countries to avoid Chinese suppliers. This absence of procurement conditions has raised concerns that EU-backed financing may indirectly reinforce dependency on Chinese technology at a time when Brussels is trying to diversify critical supply chains.

A second EU official said projects funded under the scheme risk increasing exposure to Chinese influence in regions such as North Africa, which is expected to receive a large share of early investments. The Mediterranean is considered strategically sensitive due to its proximity to European energy infrastructure.

Efforts by the Commission to push European development banks, including the EIB, to apply stricter exclusion rules have met resistance. Financial institutions argue that project viability and cost efficiency must remain central, while Brussels insists that geopolitical risk and cybersecurity concerns can no longer be ignored.

The debate has also exposed a broader policy gap between the EU’s economic security strategy and its external investment tools, many of which were designed before recent shifts in global trade and technology competition.

The Commission is expected to press fund managers, including Amundi, to reassess procurement frameworks. However, officials acknowledge that many projects were already structured without restrictions on suppliers, limiting room for immediate changes.

With no formal exclusion mechanism in place, disagreements between EU institutions are likely to continue as the initiative moves into implementation, highlighting the tension between climate investment goals and efforts to reduce strategic dependence on China.