European Parliament Endorses Net-Zero Industry Act to Propel EU Towards Decarbonization Goals

In a significant legislative move to propel Europe towards its decarbonization goals, the European Parliament has endorsed the pioneering “Net-Zero Industry Act” (NZIA). This legislation, which garners a strategic position in the EU’s broader climate agenda, was ratified on Thursday with a notable majority, signalling a robust commitment to enhancing the continent’s self-sufficiency in net-zero technologies and asserting its competitiveness on the global stage.

At the heart of the NZIA is the ambitious target for the EU to domestically produce at least 40% of its net-zero technology needs annually by 2030. This objective is intricately aligned with member states’ National Energy and Climate Plans (NECPs), which also aim to secure a 15% share of the global market value in these technologies. The scope of technologies under the act is comprehensive, encompassing renewable energy sources, nuclear energy, industrial decarbonisation technologies, grid and energy storage solutions, and biotech innovations.

The act introduces a significant procedural reform that simplifies the permitting process for relevant projects. The new legislation mandates maximum timelines for project authorization, varying according to the project’s scale and output, facilitating a more streamlined and efficient approval process.

The NZIA also envisages the establishment of “Net-Zero Acceleration Valleys.” These initiatives are designed to expedite the permitting process further by allowing member states to undertake parts of the evidence gathering for environmental assessments, thereby reducing administrative bottlenecks and accelerating project deployment.

In a move to ensure the sustainable and resilient deployment of net-zero technologies, the legislation stipulates that national support schemes, particularly those aimed at encouraging household and consumer adoption of technologies like solar panels and heat pumps, must incorporate sustainability and resilience criteria. This extends to public procurement procedures and renewable energy source auctions, which are to adhere to these criteria for at least 30% of the volume auctioned annually in each member state or up to a maximum of six Gigawatts per year per country.

Financially, the act encourages leveraging national Emissions Trading System (ETS) revenues and strategic project funding through the Strategic Technologies for Europe Platform (STEP), laying the groundwork for a potential European Sovereignty fund.

Lead MEP Christian Ehler (EPP, DE) highlighted the legislation’s significance, stating, “This vote is good news for European industry and sets the tone for the next term. To achieve all our economic, climate, and energy ambitions, we need industry in Europe. This Act is the first step to making our market fit for this purpose.”

The transport sector stands to be directly impacted by the NZIA, with provisions for the support of more than 19 net-zero technologies crucial for the industry’s transition to sustainability. These include sustainable alternative fuels, hydrogen, e-fuels RFNBO, and carbon capture and storage (CCS) technologies. Industry representatives, such as Laurent Donceel, Deputy Director of Airlines for Europe, and Sotiris Raptis, Secretary General of ECSA, have expressed support for the legislation, emphasising its potential to align European fuel production capacity with maritime and aviation sector targets for sustainable fuel use. However, Donceel also called for a “pipeline of investment for SAF funding” and incentives for “in new tech and its deployment, both in the interest of EU strategic independence and to give Europe a competitive advantage in the race to net zero.”

Following its adoption in the Parliament with 361 votes in favour, 121 against, and 45 abstentions, the NZIA now awaits formal ratification by the Council before it becomes law. This legislative milestone represents a crucial step forward in Europe’s journey towards a net-zero future, underpinning the continent’s commitment to environmental sustainability, technological innovation, and economic resilience in the face of climate challenges.