The Council and well as the European Parliament on February 5 went on to reach a provisional deal pertaining to the regulation that establishes a framework of measures so as to strengthen Europe’s net-zero technology products manufacturing ecosystem, which is better known as the Net-Zero Industry Act- NZIA. The regulation looks to boost the industrial rollout of net-zero techs that are required to achieve the EU’s climate objectives by way of using the strength of the single market so as to reinforce Europe’s leadership in industrial green technologies.
As per today’s agreement, there is going to be a single list of net-zero technologies, with criteria for selecting strategic projects within those technologies that will go on to contribute better when it comes to decarbonization.
The industrial contribution when it comes to climate neutrality
The net-zero industry act looks to ease conditions in terms of investing in green technologies, by way of simplifying permit-granting procedures as well as supporting strategic projects. It also goes on to propose to ease market access when it comes to strategic technology products, elevate the skills of the European workforce in such sectors, notably by way of the launch of net-zero industry academies, as well as create a platform so as to coordinate EU action within this area.
To push further innovation, the net-zero industry act goes on to propose favorable regulatory frameworks that need to be created for developing, testing, as well as validating innovative technologies, known as regulatory sandboxes.
Progress when it comes to these objectives of the net-zero industry act will go on to be rated by two indicative benchmarks: first, touching 40% of the production required to cover the EU’s requirements in strategic technology products, as well as their evolution in comparison to world production for products like solar wind turbines, photovoltaic panels, batteries, and heat pumps. The proposal also sets a specific objective for CO2 carbon capture along with its storage, with a yearly injection capacity of a minimum of 50 million tonnes to be reached by 2030.
Main elements within the agreement
The provisional agreement goes on to support the main objectives of the net-zero industry act that happened to be proposed by the Commission less than one year ago, while at the same time introducing various improvements like streamlined rules on construction permit processes, the development of net-zero industrial valleys, as well as more clarity on the criteria for public procurement as well as auctioning.
Scope and list of techs
The new regulation happens to be intended to offer easier conditions along with certainty to investors as well as promoters of net-zero technology manufacturing projects. The projects that are identified as having a bigger potential for decarbonization will go on to benefit from fast-track permit procedures when it comes to construction or expansion, as well as guidance in accessing finance.
Given that the member states happen to have the right to choose in terms of different energy sources, they shall not be obliged to recognize as being strategic projects that are related to a technology that doesn’t get accepted as part of their energy mix.
Fast permit-granting processes
The time limit when it comes to delivering a permit pertaining to constructing or expanding large net-zero technology manufacturing projects that are more than 1 gigawatt, as well as those that are not measured in gigawatts, will be a maximum of 18 months. When it comes to smaller projects that are less than 1 gigawatt, the time limit pertaining to delivering the permit will be 12 months. Apparently, short deadlines are going to be set for strategic projects. Apart from this, and independently, when it comes to time limits, the procedure will make sure that such projects happen to be safe, secure, as well as environmentally sustainable, and that they go on to comply with environmental, social, as well as safety requirements.
Industrial valleys
The future regulation will go on to promote development when it comes to net-zero acceleration valleys, such as territories that focus on several companies that are involved with a certain technology. The idea of valleys like these is to create clusters of net-zero industrial activity so as to surge the attractiveness of the EU as a destination for manufacturing activities as well as to further streamline the administrative part when it comes to setting up net-zero manufacturing capacity. They will go on to contribute to the reindustrialization of the regions.
Public procurement
The rules that happen to be governing the way public authorities go on to purchase goods, works, and services that are related to strategic net-zero technologies happen to be designed to better make sure that needs happen to be transparent, executable, and harmonised, and that the supply of such technologies to the EU happens to be diversified, while at the same time safeguarding sufficient flexibility in terms of contracting authorities.
The act that has been agreed upon goes on to regulate the usage of schemes that incentivize the purchase of net-zero tech products and, at the same time, defines sustainability as well as resilience contributions within the public procurement procedures. The environmental sustainability contribution is going to be a mandatory minimum need, while when it comes to resilience contribution, it will be applied if there happens to be a third-country dependence of over 50% for a specific strategic net-zero technology or for its elements. This criteria will only be taken into account if the Commission has first evaluated the level of dependence when it comes to each technology from a specific third country.
It is well to be noted that if the application of the resilience as well as sustainability contribution goes on to result in a disproportionate cost difference or if there are no suitable tenders or requests that have been submitted, contracting authorities may go on to decide not to apply to these criteria.
Auctions so as to deploy renewable energy sources
The provisional agreement goes on to establish that when a member state designs an auction for the rollout of renewable energy technologies, they shall be able to apply for both pre-qualification as well as award criteria that do not happen to be price-related, like environmental sustainability and contribution when it comes to innovation or integration of energy systems. The fact is that such criteria will have to apply to a minimum of 30% of the volume auctioned each year per member state.
The Commission will go on to define the criteria when it comes to procurement as well as auctioning and will revise the volume auctioned in light of an evaluation of the functioning of the system.
Next steps
The provisional agreement that reached with European Parliament thereby needs to be endorsed and, at the same time, also be officially embraced by both institutions.
The Background
The net-zero industry act happens to be one of the three key legislative initiatives when it comes to the Green Deal Industrial Plan, along with the Critical Raw Materials Act as well as the electricity market design reform, to elevate the competitiveness when it comes to Europe’s net-zero industry as well as guide a fast transition to climate neutrality.
In the conclusions of October 26 and 27, 2023, heads of state or government went on to call on the Council as well as the European Parliament to reach a rapid agreement when it comes to the net-zero industry act, by way of finalizing fresh bill before end of present legislative cycle.
It is worth noting that the Commission tabled its proposal in March last year and the European Parliament adopted its position in November of the same year, whereas the Council adopted its general approach in December 2023.
