On 25th April 2024, the European Parliament formally adopted the Net-Zero Industry Act, establishing a framework of measures intended to strengthen Europe's net-zero technology products manufacturing ecosystem.

Background

The European Green Deal aims to achieve the milestone of Europe becoming the first climate-neutral continent by 2050. In that regard, EU Climate Law enshrines, in legislation, the EU's commitment to such climate neutrality and its intermediate target of reducing greenhouse gas emissions by at least 55% by 2030 (compared to levels in 1990).

The Green Deal Industrial Plan seeks to establish a regulatory framework which facilitates the expansion of net-zero industrial initiatives and is based on four pillars:

  1. A predictable, coherent and simplified regulatory environment, which supports the quick deployment of net-zero manufacturing capacities;
  2. Faster access to sufficient funding, by boosting investments while avoiding the fragmentation of the Single Market;
  3. Skills, by ensuring that the European workforce is skilled in the technologies required by the green transition; and
  4. Open trade for resilient supply chains, based on cooperation with the EU's partners to ensure diversified and reliable supplies and fair international competition.

Net Zero Industry Act

The proposal for a Net Zero Industry Act ("NZIA") is one of the initiatives that was announced in the Green Deal Industrial Plan under the first pillar. It aims to scale up the manufacturing of technologies that are key to achieving climate-neutrality, including: (i) solar photovoltaic and solar thermal technologies; (ii) onshore wind and offshore renewable energy; (iii) batteries and storage; (iv) heat pumps and geothermal energy; (v) electrolysers and fuel cells; (vi) biogas/biomethane; (vii) carbon capture and storage (CCS); and (viii) grid technologies.

The NZIA aims to "support industrial manufacturing capacity and strategic and multi-country projects in net zero products by faster permitting and developing European standards".

It is anticipated that the NZIA will simplify the regulatory framework for the manufacturing of the aforementioned technologies, with a view to increasing the competitiveness of the net-zero technology industry in Europe. In that regard, the European Council has highlighted that the NIZA foresees a variety of actions and instruments, including:

  • Settling enabling conditions, by streamlining permitting processes for net-zero technology manufacturing projects, together with setting up single points of contact in the Member States;
  • Accelerating CO2 capture and storage, introducing requirements for the EU's oil and gas producers to contribute to this goal;
  • Facilitating access to markets, by boosting diversification for net zero technologies by introducing sustainability and resilience criteria in public procurement and auctions, as well as actions to support private demand;
  • Enhancing skills, by ensuring the availability of skilled workforce for the clean energy transition by supporting the setting up of specialised European Academies;
  • Fostering innovation, by proposing to set up regulatory sandboxes to test innovative net-zero technologies in a controlled way for a limited time period;
  • Building Industrial Partnerships, by foreseeing that the EU may collaborate with like-minded countries globally and engage in Net-Zero Industrial partnerships which will help to diversify trade and investments in net-zero technologies.

Progress

The timeline of the NZIA thus far has been as follows:

  • The European Commission adopted a proposal for the NZIA on 16th March 2023.
  • On 6th February 2024, the European Parliament and the European Council reached a provisional agreement on the new regulation.
  • On 16th February 2024, the Committee of the Permanent Representatives of the Governments of the Member States to the European Union ("COREPER") endorsed the final compromise text and sent a letter address to the European Parliament's Committee on Industry, Research and Energy ("ITRE").
  • On 25th April 2024, the European Parliament formally adopted the regulation at the first reading.
  • On 17th May 2024, following the European Parliament's adoption of the regulation, a consolidated text was published in the Council Register which can be found here.

As the proposal will be adopted under the ordinary legislative procedure, the European Parliament and Council (as co-legislators) require to formally adopt the same final text prior to it being published in the Official Journal of the European Union ("Official Journal") and entering into force.

It is anticipated that the Council will adopt the regulation, without any further amendments, at the Agriculture and Fisheries Council which is due to take place on 27th May 2024. Should this be the case, it will be published in the Official Journal.

We will provide further updates on the NZIA when they become available.

Contributors

Stefanie Hendry

Senior Solicitor

Laura Petrie

Partner