The Net-Zero Industry Act explained
The Net-Zero Industry Act is an initiative stemming from the Green Deal Industrial Plan which aims to scale up the manufacturing of clean technologies in the EU. This means increasing the EU’s manufacturing capacity of technologies that support the clean energy transition and release extremely low, zero or negative greenhouse gas emissions when they operate.
This Act will attract investments and create better conditions and market access for clean tech in the EU. The aim is that the Union's overall strategic net-zero technologies manufacturing capacity approaches or reaches at least 40% of annual deployment needs by 2030. This will accelerate the progress towards the EU's 2030 climate and energy targets and the transition to climate neutrality by 2050. It will also boost the competitiveness of EU industry, create quality jobs, and support the EU's efforts to become energy independent.
The Act also simplifies the regulatory framework for the manufacturing of these technologies. This will help increase the competitiveness of the net-zero technology industry in Europe and also accelerate the capacity to store CO2 emissions.
The Act addresses technologies that will make a significant contribution to decarbonisation. It supports, in particular, strategic net-zero technologies that are commercially available and have a good potential for rapid-scale up. Such technologies strengthen the EU’s industrial competitiveness and energy system's resilience while allowing the clean energy transition.
On 6 February 2024, the European Parliament and the Council reached a political agreement on the Net-Zero Industry Act. Once formally adopted, the Act will enter into force.
Other net zero technologies are also supported by the measures in the act, including sustainable alternative fuels technologies, advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle, small modular reactors, and related best-in class fuels.
To stimulate investment into net-zero technologies, the Act proposes:
- Net-zero Strategic Projects: identifying priority projects essential for reinforcing the resilience and competitiveness of the EU net-zero industry
- Cutting red tape and accelerated permitting: lowering administrative burden for developing net-zero manufacturing projects and simpler and faster permitting procedures. This is particularly for strategic projects which will benefit from even faster permitting, to increase planning and investment certainty.
- CO2 injection capacity: supporting carbon capture and storage projects, notably by enhancing the availability of CO2 storage sites
- Attracting investment: attracting investment through the Net-Zero Europe Platform and the European Hydrogen Bank
- Facilitating access to markets: boosting demand for renewables by implementing sustainability and resilience criteria in procurement procedures and auctions
- Innovation: establishing regulatory sandboxes to help develop and test innovative net-zero technologies and create a level-playing field for innovation
- Enhancing skills: setting up Net-Zero Industry Academies, with the support and oversight by the Net-Zero Europe Platform. These will provide training and education on net-zero technologies, and lead to quality jobs creation.
The Net-Zero Europe Platform
The Net-Zero Europe Platform will help oversee all the measures under the Act. It will bring together the European Commission and Member States, to coordinate and discuss the proposed actions. Industry representatives and other experts can be invited to the Platform.
European Hydrogen Bank
Hydrogen is one of the key technologies of Europe’s Net-Zero Industry Act. It is indispensable to decarbonise European industry and reach the EU’s 2030 climate targets and 2050 climate neutrality. By scaling up its production, we will reduce the use of fossil fuels in European industries and serve the needs of hard-to-electrify sectors.
The European Hydrogen Bank will support the uptake of renewable hydrogen within the EU as well as imports from international partners. It aims to unlock private investments in hydrogen value chains by efficiently connecting renewable energy supply to demand and addressing the initial investment challenges.
The Bank will create an emerging European hydrogen market, offer new growth opportunities and quality job creation and help reach the EU’s hydrogen goals, in line with REPowerEU and the path to climate neutrality.
The first pilot auctions will be launched under the Innovation Fund in the autumn of 2023 supporting renewable hydrogen production. This sends a clear signal that Europe is the place for hydrogen production.
Background
The EU has committed to achieve climate neutrality by 2050, but it is currently a net importer of several net-zero technologies and components that are key to achieve this objective. The Commission has therefore proposed the Net-Zero Industry Act as part of the Green Deal Industrial Plan to ensure that the green transition is not put at risk by strategic dependencies. By setting an aggregate manufacturing capacity objective for 2030 and simplifying the regulatory framework for net-zero technologies, the Act will allow the EU to become an industrial leader in this market. Learning from the lessons of the Covid-19 pandemic and the energy crisis, the Act will make sure that supplies chains will no longer face disruptions and that the clean-energy transition will be underpinned by the domestic manufacturing capacity that's needed.