The European Commission’s proposal for a Net-Zero Industry Act (NZIA) received broad support from EU ministers in charge of competitiveness on Monday (22 May), but unresolved conflicts on nuclear power and EU-level financing could make the upcoming negotiations difficult.
The draft law, which was presented in March by the European Commission and now has to be negotiated within the European Parliament and between EU countries, aims for Europe to produce 40% of the ‘clean tech’ needed for the green transition by itself.
The technologies considered of strategic importance are solar panels, wind turbines, batteries and other energy storage, heat pumps and geothermal energy, electrolysers and fuel cells, biogas technologies, carbon capture and storage, as well as electric grids.
This comes as concerns have grown in recent months that the building of new production capacities for such technologies could take place in other parts of the world, where large subsidy schemes incentivise business, such as in the US or China.
Nevertheless, the Commission does not want the law to be understood as being opposed to the scale-up of such production sites across the world.
“In fighting climate change, there will be enough clean industries for everyone,” Commission Vice President Margrethe Vestager told EU ministers on Monday. “The US, India, Europe, the African continent, China – there need to be clean industries everywhere,” she said.
With the proposal, the Commission wants to see an “acceleration” of the build-up of clean tech production sites in Europe, in the hope that easier and faster permitting procedures will make Europe an attractive location.
EU’s Net-Zero Industry Act aims to bring home clean tech production
The European Commission tabled its net-zero industry act on Thursday (16 March), setting a goal for the EU to domestically produce at least 40% of the technology it needs to achieve its climate and energy targets by 2030.
Nuclear in or out?
During the discussion, several ministers voiced their support to also include nuclear power in the scope of the proposal, among them France, Finland, Slovenia, Croatia, Hungary, Bulgaria, Romania and Czechia, all of which are members of a “nuclear alliance” founded by France, ministers of which met in Paris last week.
Meanwhile, Germany, Luxembourg and Austria spoke out against the inclusion of nuclear.
So far, nuclear energy is mentioned in the text, but not as a “strategic net-zero technology”, meaning that it will not be subject to the 40% domestic production target.
After the debate of member states, Vestager said that it will “not be easy to manage” the different views.
“The sectors that are in the Net Zero Industry Act, they are chosen because of the risk of relocation,” Vestager said, adding that she expected a debate “about what is the purpose of the proposal in order for it not to be just basically any industry that can add a lot – or maybe not so much – to our fight against climate change”.
At its core, the legislative proposal aims at making it easier to build production sites, for instance by obliging member states to establish single points of contact for all permits required to build a factory and setting deadlines on how long permitting procedures can take in maximum.
However, this might overburden some member states, Lithuanian Deputy Economy Minister Ieva Valeskaite said, calling for “a certain level of flexibility in the implementation process”.
Similarly, Irish Employment Minister Dara Calleary called the proposal “challenging”, pointing to the country’s “common law” system.
“The proposed deadlines for permitting would be extremely difficult to deliver, and we strongly support revision of the proposal to allow for greater flexibility to reflect that,” Calleary said.
Financing still unclear
Moreover, the proposal does not yet include any subsidy scheme additional to what has already been implemented.
Instead, it only sets up a new working group, called “Net-Zero Europe Platform”, to “discuss and advise” on existing financing options, such as through the European Investment Bank or national subsidy schemes.
The latter was also made easier as the Commission has temporarily relaxed state-aid rules which normally strictly limit the amount of subsidies that can be granted by EU countries.
This was criticised by several member states, with Poland’s representative Kamila Król urging that “member states should be treated equally”.
“New Instruments cannot lead to deepened differences between them,” she warned, adding that “financing relying on the TCTF [Temporary Crisis and Transition Framework] is not a good solution”.
Vestager, for her part, stressed that work on a “European Sovereignty Fund” was still ongoing, which would be “a mechanism to address some of the structural investment needs”.