Net-Zero Industry Act: EU agrees deal to boost EU’s green industry

The Council and the European Parliament have reached a provisional deal on the regulation establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem, better known as the ‘net-zero industry act’ (NZIA). The regulation aims to foster the local manufacturing of equipment for solar and wind power, fuel cells, and other clean technologies to bolster Europe's industrial competitiveness against China and the United States.

Indeed, Europe's dependence on China for green tech has been growing, particularly considering China's anticipated 80% share of global manufacturing capacity in sectors like solar power. Moreover, Europe is apprehensive about the potential impact of the $369 billion earmarked for green subsidies in the U.S. Inflation Reduction Act (IRA), fearing it may lure European producers to relocate.

What’s in the Act?

The NZIA mandates that by 2030, a minimum of 40% of net-zero technologies deployed within the EU must originate domestically. Under the new Act, the approval process for EU net-zero manufacturing projects will be streamlined, ensuring that projects exceeding 1 GW receive permits within 18 months. Proposals for projects up to 1 GW will be granted permits within 12 months.

Furthermore, sustainability and resilience criteria will be integrated into procurement procedures and auctions. These criteria will need to be applied to at least 30% of the auctioned volume annually by each Member State. Public authorities buying clean tech products will have to base their choices not only on the price but also on environmental criteria and on whether more than 50% of the supply is from a single source.

What are stakeholders saying?

While the agreement has been broadly welcomed by stakeholders, some see some missed opportunities.?

WWF suggests that by broadening the initial list of net-zero technologies to technologies which are not yet commercially available and/or could take decades to become so, the European institutions have effectively dropped the main objective of the regulation, which ‘was’ to achieve the EU’s 2030 climate targets.?

Dries Acke of SolarPower Europe said that the public procurement parts of the Act are “a positive, measured, approach, which will help EU solar manufacturers finance project pipelines, knowing that there is reliable demand for their product”. However, he further states that the Act will not help solve the EU’s solar manufacturers crisis. According to Dries, manufacturers “have weeks left of survival, this emergency requires urgent action from EU and national authorities.”

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