To increase the production of sustainable technology in the EU and ensure that the Union is prepared for the switch to renewable energy, the Commission proposed the Net-Zero Industry Act. President von der Leyen announced this program as a component of the Green Deal Industrial Plan.

The Act would increase the resiliency and competitiveness of net-zero technology products in the EU and improve the sustainability and security of our energy system. In order to achieve the Union’s overall strategic net-zero technologies manufacturing capacity approaching or reaching at least 40% of the Union’s deployment needs by 2030, it will improve the circumstances for the establishment of net-zero projects in Europe and attract investments. This will hasten the attainment of the EU’s 2030 energy and climate targets as well as the shift to carbon neutrality, while also enhancing the competitiveness of EU industry, producing high-quality jobs, and assisting the EU’s initiatives to achieve energy independence.

Ursula von der Leyen, the president of the European Commission, stated: “We need a regulatory environment that enables us to scale up the clean energy transition fast. That is what the Net-Zero Industry Act will achieve. The ideal conditions will be created for the industries that are essential for us to achieve net zero energy by the year 2050, including renewable hydrogen, CO2 storage, solar panels, heat pumps, and wind turbines. We are taking immediate action to ensure that we can meet more of the growing demand with European supply as it grows in Europe and around the world.

The Net-Zero Industry Act lays out a precise European framework to lessen the reliance of the EU on highly concentrated imports, along with the proposal for a European Essential Raw Materials Act and the reform of the electricity market architecture. It will assist in strengthening the resilience of Europe’s clean energy supply chains by building on the knowledge gained from the Covid-19 outbreak and the energy crisis caused by Russia’s invasion of Ukraine.

Technologies that will significantly aid in decarbonization are covered under the proposed legislation. These include advanced technologies to produce energy from nuclear processes with little waste from the fuel cycle, small modular reactors, related best-in-class fuels, solar photovoltaic and solar thermal, onshore wind and offshore renewable energy, batteries, and storage, heat pumps and geothermal energy, electrolyzers and fuel cells, biogas/biomethane, carbon capture, use, and storage, and grid technologies. The Strategic Net Zero technologies listed in the Regulation’s Annex will be given special consideration and must meet the 40% domestic manufacturing standard.

Key actions to drive net-zero technology manufacturing investments

The Net-Zero Industry Act is built on the following pillars:

Setting enabling conditions: the Act will improve conditions for investment in net-zero technologies by enhancing information, reducing the administrative burden to set up projects, and simplifying permit-granting processes. In addition, the Act proposes to give priority to Net-Zero Strategic Projects, which are deemed essential for reinforcing the resilience and competitiveness of the EU industry, including sites to safely store captured CO₂ emissions. They will be able to benefit from shorter permitting timelines and streamlined procedures.
Accelerating CO₂ capture: the Act sets an EU objective to reach an annual 50Mt injection capacity in strategic CO₂ storage sites in the EU by 2030, with proportional contributions from EU oil and gas producers. This will remove a major barrier to developing CO₂ capture and storage as an economically viable climate solution, in particular for hard-to-abate energy-intensive sectors.
Facilitating access to markets: to boost diversification of supply for net-zero technologies, the Act requires public authorities to consider sustainability and resilience criteria for net-zero technologies in public procurement or auctions.
Enhancing skills: the Act introduces new measures to ensure there is a skilled workforce supporting the production of net-zero technologies in the EU, including setting up Net-Zero Industry Academies, with the support and oversight by the Net-Zero Europe Platform. These will contribute to quality jobs in these essential sectors.
Fostering innovation: the Act makes it possible for Member States to set up regulatory sandboxes to test innovative net-zero technologies and stimulate innovation, under flexible regulatory conditions.
A Net-Zero Europe Platform will assist the Commission and Member States to coordinate action and exchanging information, including around Net-Zero Industrial Partnerships. The Commission and Member States will also work together to ensure the availability of data to monitor progress toward the objectives of the Net-Zero Industry Act. The Net-Zero Europe Platform will support investment by identifying financial needs, bottlenecks, and best practices for projects across the EU. It will also foster contacts across Europe’s net-zero sectors, making particular use of existing industrial alliances.

The Commission is also submitting its suggestions on the structure and duties of the European Hydrogen Bank today in order to further stimulate the use of renewable hydrogen within the EU as well as imports from outside partners. This makes it quite evident that Europe is the region for producing hydrogen.

The first pilot auctions on renewable hydrogen generation will begin under the Innovation Fund in the fall of 2023, as stated in the Green Deal Industrial Strategy. For a maximum of 10 years of operation, selected projects will receive funding in the form of a predetermined premium per kilogram of hydrogen generated. This will lower overall capital costs and make projects more bankable. The EU auction platform can also provide Member States with “auctions-as-a-service,” which will help with hydrogen generation throughout Europe. The European Hydrogen Bank’s foreign component is currently being designed by the Commission to encourage the import of renewable hydrogen. All components of the Hydrogen Bank ought to be operational by the end of the year.

Future Steps

Prior to approval and implementation, the proposed Regulation must now be examined and approved by the European Parliament and the Council of the European Union.

Background

The European Green Deal, which the Commission unveiled on December 11th, aims to make Europe the first continent to be climate neutral by 2050. The European Climate Law makes the EU’s commitment to achieving climate neutrality and the intermediate target of lowering net greenhouse gas emissions by at least 55% by 2030 in comparison to 1990 levels legally binding.

With the REPowerEU Plan quickening the transition away from imported Russian fossil fuels, the legislative package to implement the European Green Deal offers a strategy to put the European economy firmly on track to fulfill its climate aspirations. This establishes the framework for reforming the EU’s industry for the net-zero era in conjunction with the Circular Economy Action Plan.

The Green Deal Industry Strategy was unveiled on February 1 in order to support the net-zero industry and guarantee that the European Green Deal’s goals are met on schedule. The strategy outlines how the EU will increase its competitive edge through investments in clean technology and maintain its position as a global leader in the pursuit of climate neutrality. It responds to the European Council’s request that the Commission submit suggestions to mobilize all pertinent national and EU measures and enhance the investment environment in order to protect the EU’s competitiveness and resilience. Creating a stable and straightforward regulatory framework for net-zero industries is the first pillar of the Plan. In order to achieve this, in addition to the Net-Zero Industry Act, the Commission is proposing a European Critical Raw Materials Act to ensure a competitive and sustainable critical raw materials value chain in Europe. Additionally, the Commission has suggested changing the structure of the electricity market so that consumers can take advantage of the low production costs of renewable energy sources.