The European Commission proposed the Net-Zero Industry Act (NZIA) on 16 March 2023.
NZIA will help strengthen the European manufacturing capacity of net-zero technologies and overcome barriers to scaling up the manufacturing capacity in Europe. The measures in the Regulation will increase the competitiveness of the net-zero technology industrial base and improve the EU’s energy resilience. This proposal shows Europe’s commitment to playing a leading role in the net-zero technology transition and helping to deliver on the Fit-for-55 and REPowerEU objectives.
Overview of the Net-Zero Industry Act
The Net-Zero Industry Act is part of the Green Deal Industrial Plan’s pillar for a predictable and simplified regulatory environment, which aims at promoting investments in the production capacity of products that are key in meeting the EU’s climate neutrality goals. The Net-Zero Industry Act will increase the competitiveness and resilience of the EU’s net-zero technology industrial base which will make up the backbone of an affordable, reliable, and sustainable clean energy system. By accelerating the development and production of net-zero technologies, the Act also aims to reduce the risk of replacing our reliance on Russian fossil fuels with other strategic dependencies that might hinder our access to key technologies and components for the green transition.
The Regulation encompasses products, components and equipment necessary for manufacturing net-zero technologies. It separates between net-zero technologies and strategic net-zero technologies, the latter of which making a significant contribution to decarbonisation by 2030 and are commercially available or soon to enter the market. Whilst all net-zero technologies benefit from the provisions in this regulation, strategic net-zero technologies enjoy additional benefits, such as benefitting from the resilience criterion in auctions and the possibility to become Net-Zero strategic projects. These projects may be granted priority status so they can benefit from shorter timelines. They are selected based on the three following criteria
1) technology readiness level
2) contribution to decarbonisation and competitiveness
3) resilience of the energy system
The list includes the following technologies.
- Solar photovoltaic and solar thermal technologies
- Onshore and offshore renewable technologies
- Battery/storage technologies
- Heat pumps and geothermal energy technologies
- Electrolysers and fuel cells
- Sustainable Biogas/Biomethane technologies
- Carbon Capture and Storage (CCS) technologies
- Grid technologies
The proposal sets a benchmark for the manufacturing capacity of strategic net-zero technologies to meet at least 40% of the EU’s annual deployment needs by 2030. The benchmark provides predictability, certainty and long-term signals to manufacturers and investors and allows them to track the progress. To facilitate and enable carbon capture and storage projects and increase the availability of CO2 storage sites the Act sets a target of 50 million tonnes of annual CO2 storage capacity by 2030.
Creating conditions for investment
NZIA creates the necessary conditions to facilitate investments in net-zero technology manufacturing projects and makes it easier for project promoters to build up net zero industrial manufacturing. It does so by addressing the core drivers of net-zero technology manufacturing investments through measures such as
- lowering the administrative burden for net-zero manufacturing projects by streamlining administrative requirements and facilitating permitting
- ensuring access to information
- facilitating access to markets in public procurement procedures and auctions, as well as schemes aimed at supporting private demand by consumers
- supporting innovation through regulatory sandboxes
To strengthen the manufacturing capacity of net-zero technologies a sizeable skilled workforce is key. NZIA will enhance skills for net-zero technologies by setting up dedicated training programmes through Net-Zero Academies and facilitating the portability of qualifications in regulated professions. The academies, each focussing on one net-zero industry technology, will aim to train 100.000 learners each within three years of establishment.
Net-Zero Europe Platform
A Net-Zero Europe Platform is established where the Commission and EU countries can discuss and exchange information as well as gather input from stakeholders with an interest in the net-zero industry sector. The platform can advise on financing for net-zero strategic projects. Net-Zero Industrial Partnerships covering net-zero technologies will facilitate in promoting the adoption of net-zero technologies globally and support the role of EU industrial capabilities in paving the way for the global clean energy transition.
Thanks to the variety of measures NZIA contributes to accelerating the transition to climate neutrality and establishing a competitive net-zero industrial base in the EU. The Act also provides a coordinated European roadmap to reduce Europe's high dependency on imports and single suppliers of net-zero technologies. The goal is to increase the resilience of Europe's clean energy supply chains to avoid disruption in global energy market supply chains. The legislative package to deliver on the European Green Deal aims to put the European economy firmly on track to climate neutrality.
President von der Leyen announced the European Green Deal Industrial Plan in January 2023. It sets out how the EU will continue to lead the path to climate neutrality by investing in clean technology. It responds to the European Council’s invitation for the Commission to apply all relevant national and EU tools and improve investment conditions to safeguard the EU's resilience and competitiveness. The Green Deal Industrial Plan is based on four pillars
- a predictable and simplified regulatory environment
- faster access to sufficient funding
- open trade for resilient supply chains
In response to the proposals outlined in the Green Deal Industry Plan, the Commission also proposed the Critical Raw Materials Act, which accompanies the Net Zero Industry Act, to ensure sufficient access to rare earths, which are vital for manufacturing key technologies, and the reform of the electricity market design, to make consumers benefit from the lower costs of renewables.