The Council today adopted its position (‘general approach’) on a draft regulation establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem, better known as the ‘Net-zero Industry Act’.
The main aim of this proposal is accelerating the industrial deployment of critical technologies needed to support the transition to climate neutrality, using the strength of the single market to reinforce Europe’s economic resilience and competitiveness.
Paving the way to net-zero technologies
The Act proposes to facilitate the conditions for investment based on a list of key technologies, by simplifying the permit granting procedures and prioritizing strategic projects. It also proposes to facilitate the market access of strategic technology products, enhance the skills of the European work force in these promising sectors (notably through the launch of net-zero industry academies) and create a platform to coordinate the EU action in this area. To foster innovation, the net-zero industry act proposes the creation of specific regulatory frameworks for the development, testing and validation of innovative technologies (known as regulatory sandboxes).
The Net-Zero Industry Act sets out the indicative benchmark of reaching 40% of production to cover EU’s needs in strategic technology products, like solar photovoltaic panels, wind turbines, batteries and heat pumps. The proposal also sets out a specific target for CO2 carbon capture and storage, with an annual injection capacity of at least 50 million tonnes of CO2 to be achieved by 2030.
The Council position supports the main objectives of the Net-Zero Industry Act, but introduces several improvements, like enlarging the scope of application, clarifying the rules for permit-granting procedures, access to market and public procurement and promoting skills, research and innovation.
Scope and lists of technologies
As compared to the Commission proposal, the Council position increases the list of strategic net-zero technologies from 8 to 10, by including nuclear and sustainable alternative fuels. It also makes clear that this should not affect neither Member State’s right to determine their energy mix nor the allocation of EU funds during the current multiannual budget.
The mandate also enlarges the list of non-strategic net-zero technologies to biotech climate and energy solutions, other nuclear technologies and transformative industrial technologies for energy-intensive industries. Moreover, the Council position includes an Annex with a non-exhaustive list of products and components primarily used for the manufacturing of net-zero technologies. In addition, the mandate foresees a regular evaluation of the regulation in relation to the objectives set, which opens the door to include other relevant technologies in the future.
Under the Council position, strategic net-zero technologies will benefit from streamlined and realistic permitting procedures and from additional support to crowd-in investments while still meeting EU and international obligations. In addition, the general approach includes the concept of net-zero acceleration areas that will help member states to identify synergies during the permit-granting processes projects.
CO2 injection capacity
The Council mandate includes CO2 transport and infrastructure in the scope of the provisions for CO2 injection capacity, thus enlarging the value chain for this sector. On the other hand, it excludes small oil and gas producers from their individual contribution to the Union-wide target for available CO2 injection capacity.
Public procurement and auctions
The general approach clarifies public procurement procedures to ensure secure, transparent, implementable and harmonised requirements for net-zero technologies as well as a diversification in the supply of strategic technologies to the EU, while safeguarding sufficient flexibility for contracting authorities. It clarifies, for instance, in which conditions public authorities can choose a provider that is not the cheapest one if it has a higher contribution to environmental sustainability and resilience of the Member state.
As regards auctions, the Council proposal allows Member States to apply both pre-qualification and award criteria. The Commission will define these criteria in an implementing act and will revise the volume auctioned based on an assessment on the functioning of the system.
While recalling that education is a national competence, the Council position supports the broad objectives for European Net-zero Industry Academies to replicate the successful model of the “European batteries academy” in the development and provision of training content adapted to the net-zero industry’s skills needs.
The Council general approach keeps the possibility for member states to establish, at their own initiative, regulatory sandboxes. Start-ups should also benefit from the especial measures foreseen for the participation of small and medium-sized enterprises in the sandboxes.
The Net-Zero Industry Act is one of the three key legislative initiatives of the Green Deal Industrial Plan, together with the Critical Raw Material Act and the reform of the electricity market design, to enhance the competitiveness of Europe’s net-zero industry and support the fast transition to climate neutrality
In its conclusions of 26 and 27 October 2023, the heads of state and governments called on the Council and the European Parliament to reach a prompt agreement on the Net-Zero Industry Act, with a view to finalising the new bill before the end of the current legislative cycle.
The general approach agreed today formalises the Council’s negotiating position. It provides the Council presidency with a mandate for negotiations with the European Parliament, which adopted its own position on 21 November 2023.