Net Zero Industry Act

The Net Zero Industry Act is a regulation establishing an EU framework to strengthen the manufacturing ecosystem for net zero technologies, in order to support the Union’s targets of reducing net greenhouse gas emissions and reinforce Europe’s leadership in industrial green technologies. 

The objectives of the regulation are to provide investment certainty, lower administrative burden through facilitated permitting and access to information, and facilitate market access through public procurement, auctions, and schemes to support private demand by consumers. Additionally, the development of skills for quality job creation in these sectors is also addressed.

The main building blocks of the NZIA are:

• An indicative target of manufacturing capacity of 40% of the Union annual deployment needs by 2030, which applies to a number of net zero technologies, that are of strategic importance;
• The speeding up of permitting through the establishment of a time limit of max 18 months for construction or enlargement of net-zero technology projects (over 1 GW). For smaller projects (below 1 GW) a 12-month deadline will be applicable with even shorter timelines for strategic projects;
• Streamlining public procurement schemes to incentivise the purchase of net-zero technology products by i.a. sustainability criteria as minimum requirement and resilience contribution (i.e. in case there is a +50% third-country dependence for the specific strategic net-zero technology). 
• The development of net-zero acceleration valleys, to create clusters of net-zero industrial activity to increase the attractiveness of the EU as a location for manufacturing and development activities and further streamline administrative processes;
• In case of Member State auctions for the deployment of renewable energy technologies, non-price pre-qualification and award criteria will have to be implemented. These criteria have to apply to minimum 30% of the volume auctioned every year per Member State, or at least 6GW.

Furthermore, the regulation would allow Member-states the possibility to set up regulatory sandboxes to test innovative net-zero technologies in a controlled environment and for a limited amount of time. Additional provisions include also monitoring activities on the supply chains to track the regulation’s application. 

 

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What’s in it for hydrogen?

The Net-Zero Industry Act, jointly with the Critical Raw Materials Act, are complementary pieces of legislation for the ramp up of hydrogen technology under the Green Deal Industrial Plan. The NZIA alone will set the basis for permitting procedures and manufacturing ambitions for clean tech in Europe by 2030 and hydrogen is expected to play a pivotal role.

Under the NZIA, electrolysers, fuel cells and other hydrogen technologies, energy storage, RFNBO technologies are all in the scope of the regulation, making them strategic technologies. Upstream components of these technologies are also included. The granting of Net-Zero Strategic Project status can be awarded to those projects that contribute to an increase of production capacity of components or parts related to strategic technologies for which the EU heavily depends on imports, or to projects that provide a systemic benefit towards EU competitiveness, with spill-over effects on manufacturing capacities, sustainability performances, skilling and reskilling. Clean manufacturing projects in Europe’s less developed and transition regions and Just Transition Fund Territories can be considered of strategic importance, upon request from project promoters; the same status can be granted to projects awarded by EU ETS Innovation Fund, Important Projects of Common European Interest (IPCEIs), Hydrogen Valleys and Hydrogen Bank.

Under the proposed streamlined permitting processes for clean tech manufacturing projects, permitting procedures cannot exceed 12 or 18 months, respectively when manufacture output is below or beyond 1GW. In the case of Net-Zero Strategic Projects, they will benefit of even quicker procedures, but not exceeding 9 or 12 months respectively, according to their output (as above). For projects with no GW capacity, permitting process shall not exceed 12 or 18 months, irrespective of status. 

In the final legislation, no specific funding envelope was dedicated to the development of strategic hydrogen technologies, but the co-legislators opened the doors to an easier access to public and private funding.

For the procurement of hydrogen technologies, the introduced procedures will apply sustainability and resilience criteria in national procurement calls, and to be checked by member states and Commission upon granting of public money to projects. 

When it comes to auctions, the resilience and sustainability criteria will not for the moment hit the hydrogen competitive mechanisms, as they are falling outside the scope of the article. 

The European Commission, within 9 months after the entry into force of the regulation, will have to publish a list (even though not exhaustive) of clean technologies and their components, in order to set a line to which parts and sectors of European value chains should be safeguarded from international competition, both from a price and strategic perspectives.

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Links to the original document and additional information:

Press release: Making the EU the home of clean technologies manufacturing and green jobs

Net Zero Industry Act Proposal

Net Zero Industry Act – Compromise between the co-legislators

Q&A on the Net-Zero Industry Act and the European Hydrogen Bank