In a landmark decision, the Council and the European Parliament have reached an interim agreement on regulations designed to bolster Europe's net-zero technology manufacturing sector. The 'Net-Zero Industry Act' (NZIA), aims to boost the deployment of net-zero technologies crucial for meeting the EU's climate objectives. Leveraging the power of the single market, the legislation seeks to fortify Europe's position as a global leader in green industrial technologies.

Under the terms of the agreement, a unified list of net-zero technologies will be established, alongside criteria for identifying key projects in these technologies that will significantly contribute to decarbonization efforts.

The net-zero industry act aims to ease conditions for investing in green technologies, by simplifying permit-granting procedures and supporting strategic projects. It also proposes to ease market access for strategic technology products, enhance the skills of the European workforce in these sectors (notably through the launching of net-zero industry academies) and create a platform to coordinate EU action in this area.

To foster innovation, the net-zero industry act proposes favourable regulatory frameworks to be created for developing, testing and validating innovative technologies (known as regulatory sandboxes).

Progress towards the objectives of the net-zero industry act will be measured by two indicative benchmarks: reaching 40% of the production required to cover EU’s needs in strategic technology products, and their evolution in comparison to world production for products such as solar photovoltaic panels, wind turbines, batteries and heat pumps. The proposal also sets a specific target for CO2 carbon capture and storage, with an annual injection capacity of at least 50 million tonnes to be achieved by 2030.

The provisional agreement supports the main objectives of the net-zero industry act that were proposed by the Commission less than a year ago, while introducing several improvements, such as streamlined rules on construction permit procedures, creation of net-zero industrial valleys, and more clarity on criteria for public procurement and auctioning.

Scope and list of technologies

The new regulation is intended to provide easier conditions and certainty to investors and promoters of net-zero technology manufacturing projects. The projects identified as having a greater potential for decarbonisation will benefit from fast-track permit procedures for construction or expansion and guidance in accessing finance.

Given that member states have the right to choose between different energy sources, they will not be obliged to recognise as strategic projects those related to a technology that is not accepted as part of their energy mix.

Fast permit-granting processes

The time limit for delivering a permit for constructing or expanding large net-zero technology manufacturing projects (more than 1 gigawatt), as well as those not measured in gigawatts, will be a maximum of 18 months. For smaller projects (less than 1 gigawatt), the time limit for delivering the permit will be 12 months. Shorter deadlines will be set for strategic projects. In addition, and independently of the time limits, the procedure will ensure that such projects are safe, secure and environmentally sustainable and that they comply with environmental, social and safety requirements.

Industrial valleys

The future regulation will promote the development of net-zero acceleration ‘valleys’ (territories that concentrate several companies involved with a certain technology). The objectives of those valleys are to create clusters of net-zero industrial activity so as to increase the attractiveness of the EU as a location for manufacturing activities and to further streamline the administrative procedures for setting up net-zero manufacturing capacity. They will contribute to the reindustrialisation of regions.

Public procurement

The rules governing the way public authorities will purchase goods, works and services related to strategic net-zero technologies are designed to better ensure that requirements are transparent, implementable, and harmonised and that the supply of those technologies to the EU is diversified, while safeguarding sufficient flexibility for contracting authorities.

The act agreed on today regulates the use of schemes incentivising the purchase of net-zero technology products and defines sustainability and resilience contributions in public procurement procedures. The environmental sustainability contribution will be a mandatory minimum requirement, while the resilience contribution will be applied if there is a third-country dependence of more than 50% for a specific strategic net-zero technology (or for its components). This criterion will only be considered if the Commission has first assessed the level of dependence of each technology from a particular third country.

If the application of the resilience and sustainability contribution results in a disproportionate cost difference or if no suitable tenders or requests have been submitted, contracting authorities may decide to not apply these criteria.

Auctions to deploy renewable energy sources

The provisional agreement establishes that when a member state designs an auction for the deployment of renewable energy technologies, they will be able to apply both pre-qualification and award criteria which are not price-related, such as environmental sustainability, contribution to innovation or integration of energy systems. These criteria will have to apply to at least 30% of the volume auctioned every year per member state.

The Commission will define the criteria for procurement and auctioning and will revise the volume auctioned in the light of an assessment of the functioning of the system.

The provisional agreement reached with the European Parliament now needs to be endorsed and formally adopted by both institutions.

What does the industry respond?

According to Dries Acke, Policy Director at SolarPower Europe, "landing the Net-Zero Industry Act is a crucial landmark in Europe’s clean industry story. It’s an essential piece of the industrial strategy puzzle, which will substantially improve off-take visibility for EU solar manufacturers at this critical time. In public procurement and parts of energy auctions, EU countries now have the possibility to reward project bidders based on non-price criteria, like sustainability or resilience".

For Ake, the criteria that will apply to a minimum of 30% of auctions initially is a positive, measured, approach, which will help EU solar manufacturers finance project pipelines, knowing that there is reliable demand for their product. "This also means the rest of the auction market should remain unaffected, maintaining the necessary pace of solar deployment. To guarantee this win-win, we encourage member states to act swiftly while respecting the 30% threshold," he said. 

The Policy Director explained that it is good news that this Act will be revised in coming years, via ordinary legislative procedure, to map out the trajectory towards 2030 and beyond.

"This is a sensible ‘walk before we run’ approach. For clear and consistent implementation of procurement and auctions rules across the EU, we’re asking the European Commission to swiftly adopt the Implementing Act that will clarify the rules at a technical level," Acke added. "But let us be very clear: while landing the NZIA sends a strong signal to EU solar manufacturers, it doesn’t negate the need for emergency support. Manufacturers have weeks left of survival, this emergency requires urgent action from EU and national authorities.”