Net-Zero Industry Act

Last week, the European Commission proposed the Net-Zero Industry Act to advance the manufacturing capacity of strategic net-zero technologies in the European Union (EU). The Net Zero Act is part of the EU’s Green Deal Industrial Plan to enhance the competitiveness of Europe’s clean tech industry and support the fast transition to climate neutrality. This is positive momentum for climate change regulations after the largest federal legislation on climate change in the United States, the Inflation Reduction Act, was signed into law in August last year.

The Net-Zero Industry Act in brief 
The Net-Zero Industry Act aims to ensure that, by 2030, the manufacturing capacity of strategic net-zero technologies in the European Union reaches a benchmark of at least 40% of the EU’s domestic annual deployment needs for corresponding technologies. This increased capacity is necessary to achieve the climate and energy targets, including of being a climate-neutral continent by 2050.

The Act outlined several pillars to achieve its 2030 target:

  1. Facilitating Investments – Streamlining the permitting processes for net-zero technology manufacturing projects where strategic net-zero projects will be granted priority status, with a maximum permit-granting time limit of not exceeding 12 or 18 months depending on the yearly manufacturing capacity of the project;
  2. Increasing CO2 Injection Capacity – Achieve an annual injection in CO2 storage of 50Mt Co2 by 2030;
  3. Facilitating Access to Market – Integrating sustainability and resilience criteria into public procurement bids to create stable public demand for net-zero technologies to generate an economic incentive for businesses to scale up production;
  4. Enhancing Skills for Quality Job Creation in Net-Zero Technologies – Ensuring the availability of a skilled workforce where specialised European Skills Academies focussing on a net-zero technology will provide courses to reskill and upskill workers;
  5. Encouraging Innovation – Providing a testing ground for innovative net-zero technologies in a controlled environment through regulatory sandboxes, with priority access for small and medium enterprises

The Act also proposed setting up the Net-Zero Europe Platform to allow the Commission to coordinate the above actions jointly with Member States. The Net-Zero Europe Platform will work closely with the relevant industry alliances to support with financing, reducing bottlenecks, and developing best practices for net-zero projects.

Net-Zero technologies covered under the proposed legislation are:

  • Solar photovoltaic and solar thermal technologies
  • Onshore wind 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 Net-Zero Industry Act covers net-zero technologies that are first of its kind and are ready for commercial demonstration and deployment, and also include the main upstream components that are a central part of the respective technologies (eg. solar cells for solar modules).

Next Steps 
The Net-Zero Industry Act needs to be agreed upon by the European Parliament and the Council of the European union before its adoption and entry into force.