EU agrees NZIA law in green tech manufacturing to beat Chinese،U.S. rivals

EU policymakers have agreed law and new rules، called  Net Zero Industry Act (NZIA)، which is likely to enter force this year، in green tech manufacturing، which is part of the EU's push to ensure it is not only a global leader in cutting greenhouse gas emissions، but also in manufacturing the equipment required to promote local production of clean technology equipment such as solar panels and fuel cells to try to help European Union industry compete with Chinese and U.S. rivals.

EU Commission whose headquarters in Brussels، Belgium،  proposed alongside the Critical Raw Material Act، the NZIA in green tech manufacturing to beat Chinese، U.S. rivals، as a part of the European Union 's response to the $369 billion of green subsidies offered in the U.S. Inflation Reduction Act.

NZIA sets a benchmark for European green manufacturers

EU policymakers have agreed new rules، Net-Zero Industry Act (NZIA)، which sets a benchmark for European green manufacturers to produce 40% of the EU's annual needs of green tech products by 2030 and sets it on course to be the first climate neutral continent by 2050.

EU policymakers revealed that the target of leading green tech manufacturing applies to equipment needed for eight  strategic technologies، solar power، wind power، batteries، heat pumps، electrolysers and fuel cells، biogas، carbon capture and storage، as well as electricity grids.

Reaching 50 million metric tons of annual storage capacity of carbon dioxide by 2030

The EU Commission Net-Zero Industry Act (NZIA)، also sets a target for European Union member states of reaching 50 million metric tons of annual storage capacity of carbon dioxide by 2030 as part of efforts to confront climate change harms.

The EU policymakers in the European Commission، which proposed the act، highlight that the EU currently depends on imports، notably from China، which provides over 90% of the EU's photovoltaic wafers and accounts for 90% of global investment in green tech manufacturing.

The target in green tech production will be tough

The EU policymakers affirmed that hitting the target in green tech production will be particularly tough in solar، given domestic manufacturers supply less than 3% of EU panel deployments and are fighting for survival، while the EU wind energy sector is far stronger، although Chinese companies are starting to gain a foothold.

The EU Commission Net-Zero Industry Act (NZIA) deals with one of the issues that business say holds back investments due to the length of time it takes to secure permits، while the act sets limits of between nine and 18 months for permits to be granted for projects that would boost green tech manufacturing.

Permits and prioritise projects of green tech manufacturing

The EU Commission Net-Zero Industry Act (NZIA)  also mandates European Union countries to set up single points of contact for those seeking permits and prioritise projects of green tech manufacturing that help the EU reduce its reliance on imports from a single country or boost the competitiveness of the EU's clean tech supply chain.

The EU policymakers stated that public authorities issuing tenders or holding auctions to buy clean tech، such as for solar or wind parks، would have to select based not only on the price، but also on green tech manufacturing sustainability criteria and the EU's push to ensure that no more than 65% of supply is from a single source.

The EU Commission NZIA does not involve new money

The EU Commission proposal suggested these two factors should be given a 15% to 30% weighting in determining the winning bid in green tech manufacturing، although they could be ignored if this bid is more than 10% higher than others.

The EU Commission Net-Zero Industry Act (NZIA)، unlike the U.S. Inflation Reduction Act،  does not involve new money، but seeks to coordinate existing financing، including the European Investment Bank، guarantees offered under the Invest EU programmes and the 723 billion euro post-COVID recovery fund.

The Commission will also give EU countries greater leeway to support the roll-out of manufacturing projects in green tech production، given that EU members 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. 

The EU Council and the European Parliament reached a provisional deal

The EU Council and the European Parliament reached a provisional deal on the regulation establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem، better known as the  net-zero industry act  (NZIA) which aims at boosting the industrial deployment of net-zero technologies needed to achieve EU’s climate goals، using the strength of the single market to reinforce Europe’s leadership in industrial green technologies.

EU policymakers  net-zero industry act  (NZIA) offers a single list of net-zero technologies، with criteria for selecting strategic projects in green technologies to support the industry in its transition، that will contribute better to decarbonisation to achieve cimate change aims.

The main objectives of the net zero industry act introduce several improvements

The main objectives of the net zero industry act introduce 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، while the new regulation is intended to provide easier conditions and certainty to investors and promoters of green tech manufacturing projects which are identified as having a greater potential for decarbonisation that will benefit from fast-track permit procedures for construction or expansion and guidance in accessing finance.

The net zero industry act aims to ease conditions for investing in green technologies، by simplifying permit granting procedures and supporting strategic projects as well as facilatating market access for strategic technology products، enhancing the skills of the European workforce in these sectors، notably through the launching of net zero industry academies، and creating a platform to coordinate EU action in this area.

Favourable regulatory frameworks to be created for green technologies

EU policymakers  affirmed that the net-zero industry act proposes favourable regulatory frameworks to be created for developing، testing and validating innovative technologies to foster innovation as progress towards the objectives of this act will be measured by two indicative benchmarks: reaching 40% of the production required to cover EU’s needs in strategic green technology products، and their evolution in comparison to world production for products such as solar photovoltaic panels، wind turbines، batteries and heat pumps with setting 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.

EU policymakers  concluded that the Net-Zero Industry Act، NZIA، is an important step in creating the necessary ecosystem to boost the manufacturing of green technologies as European Union countries have launched a pathway towards a cleaner and sustainable future for the European industry، while it it is now the time for Europe to take back the lead on the global scene for green technologies and to build a competitive، renewable، green، clean and job creating industrial sector towards climate neutrality for the manufacturing capacity of strategic net zero green technology products.