25 Jul Net Zero Industry Act: monitoring implementation is crucial
In the wake of the United States’ Inflation Reduction Act (IRA) in August 2022, the European Commission responded with its strategic move – the Net-Zero Industry Act (NZIA).
The IRA, legislation allocating over $369 billion to domestic clean energy production, marked a historic investment in the U.S. clean energy transition. Notably, the IRA’s focus on green projects is anticipated to significantly cut carbon emissions in the U.S. by 2030.
In response, the NZIA seeks to
- streamline permitting procedures,
- support strategic projects,
- incentivise public procurement of cleantech,
- foster innovation, and
- ensure a skilled workforce.
With an estimated investment need of EUR 92 billion from 2023 to 2030, the NZIA introduces Net-Zero Strategic Technologies, a list encompassing critical elements such as batteries, heat pumps and geothermal energy technologies, hydrogen technologies, sustainable biogas and biomethane technologies, carbon capture and storage technologies, CO2 transport and utilisation and energy storage.
Setting ambitious targets, the NZIA aims for at least 40% of strategic clean technologies to be domestically manufactured by 2030. Addressing bureaucratic hurdles, the NZIA requires Member States to establish single points of contact for permitting. Besides, provisions on sustainability and resilience in public procurement procedures aim to diversify the EU’s supply of clean technology. At the same time, the introduction of European Net-Zero Industry Academies has the potential to address labour shortages in the energy industry; while encouraging regulatory sandboxes for start-ups and SMEs can be crucial for emerging net-zero technologies.
The NZIA is a significant step forward for Europe in the cleantech race, but careful attention must be paid to the implementation specifics to ensure its success in driving clean technology manufacturing and deployment.
While the NZIA streamlines procedures and facilitates access to existing instruments, its lack of ambition in addressing lengthy application processes and absence of additional financing have drawn criticism. Besides, details surrounding the functioning of many mechanisms listed above lack specificity.