Net-Zero Industry Act: European Commission unveils new vision for clean energy revolution

The Act set out new targets of at least 40% of clean energy technologies to be manufactured in the EU by 2030

The Commission has today (16 March) introduced its proposals for a Net-Zero Industry Act aimed at scaling clean technology deployment across the bloc in order to achieve the ambitions of the Green Deal Industrial Plan.

Early drafts of the Net Zero Industry Act set out new targets of at least 40% of clean energy technologies to be manufactured in the EU by 2030, which has been adopted in the current proposals.

President of the European Commission, Ursula von der Leyen, said: “We need a regulatory environment that allows us to scale up the clean energy transition quickly. The Net-Zero Industry Act will do just that.

“It will create the best conditions for those sectors that are crucial for us to reach net-zero by 2050: technologies like wind turbines, heat pumps, solar panels, renewable hydrogen as well as CO₂ storage. Demand is growing in Europe and globally, and we are acting now to make sure we can meet more of this demand with European supply.”

As explained in an edie blog post from the Cambridge Institute for Sustainability Leadership (CISL), von der Leyen launched the Green Deal Industrial Plan hoping it could “make Europe the home of cleantech and industrial innovation on the road to net-zero”. However, the Net-Zero Industry Act has been required, in part to respond to the US’s Inflation Reduction Act (IRA). The IRA allocates a total of $369bn to climate action. It is hoped that the changes resulting from the Act will enable the US to reduce its annual domestic emissions by at least 40% by 2030, against a 2005 baseline.

The Net-Zero Industry Act sets an objective for the EU to deliver an annual capacity addition of 50Mt for carbon storage sites across the bloc by 2030. This includes “proportional contributions” from EU oil and gas producers.

The Act also proposes new measures to deliver and upskill a clean energy workforce, including the creation of various Net-Zero Industry Academies. Additionally, a Net-Zero Europe Platform will be set up to help Member States establish new industrial partnerships focused on decarbonisation.

The Act defines what technologies are applicable for net-zero support. These include: solar photovoltaic and solar thermal, onshore wind and offshore renewable energy, batteries and storage, heat pumps and geothermal energy, electrolysers and fuel cells, biogas/biomethane, carbon capture, utilisation and storage, and grid technologies and sustainable alternative fuels technologies.

Unlike the UK, which has recently classed nuclear as “environmentally sustainable” as part of an update to its green taxonomy, the EU’s Act does not list nuclear as a “strategic net-zero technology” in the annex of the legal text. However, “advanced technologies to produce energy from nuclear processes” and “small modular reactors” are included elsewhere in the text.

Alongside the Act, the Commission has proposed a new European Critical Raw Materials Act and the reform of the electricity market design, both of which are designed to reduce high-value imports and create an indigenous market for those sectors. The Commission has also proposed that a “European Hydrogen Bank” is set up to boost green hydrogen production and imports across the bloc.

The proposed Acts will be discussed and agreed upon by the European Parliament and the Council of the European Union before their adoption and entry into force.

Industry reaction

Commenting on the Act Ursula Woodburn, director, CLG Europe said: “Through setting net zero industry manufacturing targets, mobilising funds, building enabling conditions, creating Europe-wide academies to accelerate upskilling and reskilling and establishing a platform to coordinate efforts of Member States, the Net Zero Industry Act can put in place a strong framework for decarbonisation of European industry.

“This Act could serve as a springboard for European companies, who are racing against time and their global competitors towards net zero, to lead the energy transition and increase their competitiveness. Now is the time for the European Parliament and the Council to strengthen and ensure the coherence of the Net Zero Industry Act and other legislative proposals under the Green Deal Industrial Plan, to accelerate the pace and scale of the EU’s transition to a climate neutral economy and to align the EU’s energy transition, climate and nature goals.”

Accenture Europe’s chief executive Jean-Marc Ollagnier added: “Amid global economic and geopolitical challenges, half of European corporates have publicly committed to reaching net zero goals by 2050; more than ever before. While this heightened ambition is encouraging, it is also clear that a steep acceleration of execution is required, as most will fail to achieve their goals if they don’t at least double the pace of emissions reduction by 2030.

“Digital technologies and certain renewable energies are already available to help significantly accelerate decarbonization of many industries. However, some industries will need breakthrough solutions in key areas such clean hydrogen, sustainable aviation fuel and carbon capture. Significant investments and further collaboration between public and private sectors, large companies and startups, and across industries, are critical to make these breakthrough technologies economically viable and accelerate deployment.”

The Energy and Climate Intelligence Unit’s (ECIU) head of international programmes Gareth Redmond-King said: “The EU Commission’s proposals, in response to US billions in green subsidies, represent something of a race to the top. The economic, health, and climate benefits of the clean transition appear to be driving two of the biggest economies in the world to compete on who can invest most and move fastest.

“British businesses, politicians and investors have warned with increasing urgency that the UK risks being left behind in this global gallop for green growth. As the IMF forecasts a shrinking UK economy, and even BP acknowledge energy security means faster transition to renewables, will the UK Government heed these warnings? As it stands, this week’s budget contains little to nurture – far less grow – the £71bn and 840,000 jobs that net zero is worth to the British economy.”