New legislation aims to strengthen the business case for decarbonisation in Europe

The Act supports manufacturing of the key technologies needed to achieve EU's decarbonisation objectives

MEPs propose faster authorisation procedures and net-zero industry clusters

The legislation voted on by the Industry Committee on Wednesday is intended to bolster Europe's manufacturing output in technologies needed for decarbonisation.

The "Net-Zero industry act" sets a target for Europe to produce 40% of net-zero technologies based on National Energy and Climate Plans (NECPs) and to capture 25% of the global market value for these technologies. It also intends to deal with the challenges in scaling up manufacturing capacities in these technologies.

In their amendments, MEPs broadened the scope of the draft legislation to encompass the entire supply chain, including components, materials, and machinery for producing net-zero technologies. They propose a wider, more comprehensive list of technologies to be covered, to be updated periodically. Notably, MEPs included nuclear fission and fusion technologies, sustainable aviation fuels (SAFs), and specific industrial technologies.

Net-zero industry valleys

The law retains two project classifications: net-zero technology manufacturing projects and net-zero strategic projects. It also aims to streamline the permitting process, setting a timeline of 9 to 12 months for regular projects and 6 to 9 months for strategic projects. MEPs propose the creation of "Net-Zero Industry Valleys" initiatives, speeding up the permitting process by delegating parts of the environmental assessment evidence collection to member states.

The Act incorporates the innovation principle and introduces an annual competitiveness review by the Net-Zero Europe Platform. A Scientific Advisory Board will be established to assess regulatory burdens. Other measures are targeted at ensuring active industry and research sector participation in shaping research agendas.

The legislation would earmark funding from national Emission Trading System (ETS) revenues and for most strategic projects through the Strategic Technologies for Europe Platform (STEP), a « step » towards a European Sovereignty fund, MEPs say.

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"With the adoption of this proposal, MEPs are showing they are serious about making Europe fit for industrial manufacturing. Without these steps to lower the administrative burden, speed up processes, and increased public investment in our industry and innovation, Europe would face decarbonisation by deindustrialisation. This proposal shows we can prevent this" said lead MEP Christian Ehler (EPP, DE).

Next steps

The legislation was adopted in the Industry, Research and Energy committee with 43 votes to 12, with 3 abstentions. It will be put to a vote by the full House during the 20-23 November plenary session in Strasbourg. Once both Parliament and Council have adopted their positions, talks on the final shape of the law can start.

Background

The required deployment of clean energy technologies to support reaching Europe's 2030 and 2050 climate targets is considerable. Europe largely imports these technologies, and many third countries have stepped up their efforts to expand their clean energy manufacturing capacity. The proposed regulation would aim to ensure that, by 2030, the manufacturing capacity in the EU for these strategic net-zero technologies reaches an overall benchmark of at least 40 % of the EU's annual deployment needs. It would also set an EU level target for annual CO2 injection capacity by 2030 (50 million tonnes).