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The EU net-zero industry’s legislation is aimed at making European continent the focal point of world-wide clean technologies manufacturing and green jobs; it is identifying goals for net-zero industrial capacity and provide a regulatory framework suited for its quick deployment. However, the process is more complicated and includes several other aspects of the EU’s priorities.
Background
A clean-tech race is in full swing world-wide: the largest economies in the world – from the United States to India, from China to Japan – have all started to invest massively in green innovation. While this can only be good planetary news, it is of course a lot of pressure on the EU’s own clean transition. In order to achieve the EU’s clean transition, we need both a global and a European level playing field. This means getting better at nurturing our own industry – from hydrogen to chemicals, from biotech to nanotech. And it is to achieve this goal that the Green Deal Industrial Plan for Europe has been launched.
Specific EU-wide “Net-Zero Industry Act”*) is an initiative stemming from the Green Deal Industrial Plan, GDIP**); it 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.
The “industrial governance” is aimed at attracting sustainable investments in modern industrial sectors, as well as creating better conditions and market access for clean tech in the EU.
Notes: *) Reference to: https://single-market-economy.ec.europa.eu/publications/net-zero-industry-act_en; **) On GDIP in: https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/green-deal-industrial-plan_en
European “green deal” in industrial transition
The Green Deal Industrial Plan is covering four key directions:
= Predictable and simplified regulatory environment: this means creating a simpler, faster and more predictable framework, securing the volumes needed for raw materials, and ensuring users are able to benefit from the low costs of renewables. There are three legislative initiatives to support this work: net-zero, critical raw materials and the reform of EU electricity market.
= Faster access to funding. Under competition policy, the Commission aims to guarantee a level playing field within the Single Market while making it easier for the EU states to grant necessary aid to fast-track the green transition. To that end and in order to speed up and simplify aid granting, the Commission: a) consulted the member states and amended the Temporary State Aid Crisis and Transition Framework; and b) revised the General Block Exemption Regulation in light of the Green Deal.
The Commission will also facilitate the use of existing EU funds for financing clean tech innovation, manufacturing and deployment, with a focus on REPowerEU, InvestEU and the Innovation Fund. The Commission will also look to set up the European Sovereignty Fund, as a mid-term structural answer for the investment needs.
= Enhancing skills: following accelerated growth in new technologies, the EU member states need an exponential growth in new skills and skilled workers in this sector. To develop the skills needed to make the green transition happen, the Commission will: = propose to establish Net-Zero Industry Academies that will help roll out up-skilling and re-skilling programmes in strategic industries; = consider most optimal ways to combine a ‘skills-first’ approach to recognize actual skills, with existing approaches based on qualifications; = explore the means to facilitate access of third country nationals to EU labour markets in priority sectors/ and = look at measures to foster and align public and private funding for skills development.
= Open trade for resilient supply chains. This direction is about global cooperation and making trade work for the green transition, under the principles of fair competition and open trade, building on the engagements with the EU’s partners and the work of the World Trade Organization, WTO. To that end, the Commission will continue to develop the EU’s network of Free Trade Agreements and other forms of cooperation with partners to support the green transition. It will also keep defending the Single Market from unfair trade practices.
Source – “Green Deal Industrial Plan for the Net-Zero Age” in: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52023DC0062
The aim of European net-zero industrial strategy is to facilitate development of the EU-wide net-zero technologies manufacturing capacity, which is expected to 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 net-zero legislation also simplifies the regulatory framework for the manufacturing of these technologies: i.e. it will help to increase the competitiveness of the net-zero technology industry in Europe and also accelerate the capacity to store CO2 emissions.
The sectoral legislation is addressing 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.
In 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.
See: https://single-market-economy.ec.europa.eu/single-market_en
Key net-zero technologies
European Commission has identified several breakthrough innovation ideas to streamline net-zero industrial transition, including the following: = Solar photovoltaic and solar thermal; = Electrolysers and fuel cells; = Onshore wind and offshore renewables; = Sustainable biogas/biomethane use/production; = Batteries and storage; = Carbon capture and storage; = Heat pumps and geothermal energy; and = Grid technologies.
Other net zero technologies are also supported by the EU-wide regulatory measures, such as e.g. sustainable alternative fuels technologies, advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle, small modular reactors, and related to production of the best-in class fuels.
It would be feasible of course to cope these initiatives with the widely spread recently ESG approaches.
More in: https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal/green-deal-industrial-plan/net-zero-industry-act_en
New EU priorities
Among numerous new, there are the European Green Deal, trends to decarbonise the member states’ economies and bring down energy prices, just to name a few. Some other initiative shall be mentioned too: e.g. already mentioned Clean Industrial Deal, that would make industries competitive while creating quality jobs; a proposal to set out a 90% emission-reduction target for 2040 in the European Climate Law; supporting industries and companies through the transition by launching an Industrial Decarbonisation Accelerator Act, helping to speed up related planning, tendering and permitting; reducing energy costs for households and businesses by completing the Energy Union; investing in clean energy infrastructure and technologies; activating and extending the EU-wide energy technologies beyond gas to include hydrogen and critical raw materials.
More in: https://commission.europa.eu/priorities-2024-2029/competitiveness_en
Critical raw materials
As to the Critical Raw Materials Act*), it is a valuable governance mechanism for competitive EU-wide economy based on a set of new and necessary technologies for strategic sectors such as renewable energy, digital, aerospace and defence. The Critical Raw Materials Act (CRM Act), in action from mid-2024, will ensure EU access to a secure and sustainable supply of critical raw materials, enabling Europe to meet its 2030 climate goals.
*) Source: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=OJ:L_202401252
Critical raw materials are of high economic importance for Europe while being also highly vulnerable to supply disruptions; these materials are confronted with a growing global demand, driven by the decarbonisation of economies. For instance, EU demand for rare earth metals is expected to increase six-fold by 2030 and seven-fold by 2050, for lithium, EU demand is expected to increase twelve-fold by 2030 and twenty-one-fold by 2050.
Presently, the EU-27 heavily relies on imports, often from a single third country, and recent crises have underlined EU strategic dependencies. Without joint and timely action, a well-functioning single market, resiliency and competitiveness, European industries and
EU efforts to meet its climate and digital objectives are at risk. Thus, ensuring sufficient access to those materials, like rare earths, are vital for manufacturing key technologies.
More in: https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials/critical-raw-materials-act_en
In line with the Green Deal Industrial Plan, the Critical Raw Materials Act comes out alongside the Commission’s Net Zero Industry Act, which aims to scale up the manufacture of key carbon-neutral technologies for clean energy supply chains.