Covered in this week’s Green Mobility Policy Brief: Council and Parliament Agree on Net Zero Industry Act; Council and Parliament Reach Accord on ESG Ratings Regulation to Enhance Sustainability Investment; and EU Commission Proposes Ambitious 2040 Emissions Reduction Target.
Council and Parliament Agree on Net Zero Industry Act.
The European Union is poised to take a significant stride forward in its commitment to combat climate change with the provisional agreement on the Net-Zero Industry Act (NZIA) between the Council and the European Parliament. This groundbreaking regulation sets out a comprehensive framework to bolster Europe’s net-zero technology manufacturing sector, thus propelling the region towards its ambitious climate goals. At the heart of the NZIA is the consolidation of net-zero technologies into a single list, facilitating the selection of strategic projects crucial for decarbonisation efforts. By streamlining permit-granting procedures and supporting critical initiatives, such as establishing net-zero industry academies and regulatory sandboxes for innovation, the Act aims to stimulate investment in green technologies and enhance the skills of the European workforce. Crucially, the NZIA introduces clear benchmarks for measuring progress, including targets for producing strategic technology products and annual CO2 carbon capture and storage capacities. Moreover, it emphasises the importance of public procurement in driving sustainability, mandating transparent and diversified procurement processes for net-zero technology products. Notably, the agreement also paves the way for creating net-zero industrial valleys, fostering clusters of innovation and manufacturing activity to revitalise regional economies. Looking ahead, the provisional agreement must be formally endorsed and adopted by the Council and the European Parliament. If ratified, the NZIA stands to revolutionise Europe’s industrial landscape, positioning the continent as a global leader in green technology innovation and sustainable manufacturing practices.
No Clearance Yet for the EU’s Promising Green Jet Fuel Industry- An op-ed by Camille Mutrelle, Transport & Environment.
European aviation industry welcomes the inclusion of SAF on the list of net zero technologies in the EU’s Net Zero Industry Act (NZIA).
The European aviation industry has applauded the recent inclusion of Sustainable Aviation Fuel (SAF) as a strategic decarbonisation project in the EU’s Net Zero Industry Act (NZIA). This move marks a crucial step towards developing a strong, globally competitive SAF market within Europe, essential for meeting the updated EU 2040 climate ambitions. In a joint statement, five leading European aviation associations emphasised the significance of this milestone. They underscored the necessity for further action by policymakers to ensure the establishment of a world-leading SAF industry. This industry is pivotal for European aviation to achieve net-zero carbon emissions by 2050, aligning with the EU’s ambitious climate goals. The timing of SAF’s inclusion in the NZIA coincides with the EU’s recommendation to update its 2040 climate targets. The European Commission’s communication explicitly acknowledges the barriers hindering SAF deployment at scale. Priority access to feedstocks for the aviation sector and bridging the price gap between SAF and conventional kerosene are crucial measures. SAFs are identified as a cornerstone for accelerating the decarbonisation of European aviation, in complete alignment with the bloc’s climate agenda. The race to become a leader in SAF production has begun internationally, necessitating further policy incentives to scale up production and uptake within Europe. Key recommendations include extending the SAF flexibility mechanism, increasing financial support for SAF development, and simplifying administrative procedures for accessing funds. These measures are imperative for Europe to assert itself as a frontrunner in the global competition for SAF.
Council and Parliament Reach Accord on ESG Ratings Regulation to Enhance Sustainability Investment
In a landmark move toward fortifying investor confidence in sustainable products, the Council and the European Parliament have reached a provisional agreement on a regulation governing environmental, social, and governance (ESG) rating activities. ESG ratings play a pivotal role in evaluating the sustainability footprint of companies and financial instruments, gauging their exposure to environmental, social, and governance risks. The agreement aims to bolster the reliability and comparability of these ratings by enhancing transparency and integrity within the operations of ESG rating providers while mitigating potential conflicts of interest. Under the new regulatory framework, ESG rating providers must obtain authorisation and oversight from the European Securities and Markets Authority (ESMA), ensuring adherence to stringent transparency standards, notably concerning methodology and data sources. Key components of the agreement include elucidating the criteria for ESG rating applicability and territorial scope and emphasising the necessity for clear disclosures regarding rating methodologies. The accord distinguishes between environmental, social, and governance factors within ESG ratings, offering the flexibility for separate or combined ratings with explicit factor weighting. Furthermore, a temporary registration regime has been introduced, providing relief for smaller ESG rating entities with proportionate supervisory fees and streamlined compliance measures. The agreement’s principles advocate separating business activities, allowing flexibility while mitigating conflict of interest. However, certain activities, such as consulting and audit services, remain subject to stringent regulatory requirements. The agreement awaits formal ratification by the Council and the Parliament, with the regulation expected to take effect 18 months after its adoption, marking a significant stride in promoting sustainable investment practices within the European Union.
EU Commission Proposes Ambitious 2040 Emissions Reduction Target.
The European Commission has unveiled a bold recommendation to slash greenhouse gas emissions by 90% by 2040, aligning with the EU’s commitment to achieve climate neutrality by 2050 under the Paris Agreement. Supported by a comprehensive impact assessment, this proposal underscores the critical need for urgent action in combating climate change. Central to achieving this ambitious target is fully implementing existing frameworks and policies, ensuring a fair transition for all stakeholders. Providing predictability and sustainability, the recommendation aims to empower businesses and governments to invest confidently in a low-carbon future. The economic rationale for climate action is compelling, with the costs of inaction significantly outweighing the investments required for decarbonisation. Key sectors like energy, transport, and agriculture will play pivotal roles in driving emissions reductions through technological advancements and policy interventions. Open dialogue with stakeholders will be essential for a seamless transition, ensuring that climate policies deliver equitable benefits across society. As the EU takes decisive strides towards its climate objectives, it reaffirms its global leadership in addressing the climate change challenge.