ARKANSAS, February 7 (Future Headlines)- European Union policymakers have taken significant strides towards promoting local production of clean tech equipment to enhance the competitiveness of EU industries against their Chinese and U.S. counterparts. The Net-Zero Industry Act (NZIA), expected to come into force this year, marks a pivotal initiative in the EU’s efforts to assert leadership in reducing greenhouse gas emissions while fostering domestic manufacturing capabilities.
At the heart of the NZIA is a bold target for European manufacturers to meet 40% of the EU’s annual demand for cleantech products by 2030, paving the way for the continent to achieve climate neutrality by 2050. This ambitious goal encompasses eight strategic technologies crucial for decarbonization, including solar power, wind power, batteries, heat pumps, electrolyzers, fuel cells, biogas, carbon capture and storage, and electricity grids. Additionally, the act aims to establish a storage capacity of 50 million metric tons of carbon dioxide annually by 2030.
The EU’s heavy reliance on imports, particularly from China, poses a significant challenge to achieving the NZIA targets. Currently, China dominates the global market, supplying over 90% of the EU’s photovoltaic wafers and accounting for the majority of global investment in clean tech manufacturing. Domestic manufacturers in the EU face an uphill battle, especially in the solar sector, where they supply less than 3% of EU panel deployments. However, the wind energy sector presents a more promising landscape, albeit with emerging competition from Chinese companies.
Addressing key barriers to investment, such as lengthy permit acquisition processes, is a crucial aspect of the NZIA. The act mandates stricter timelines of nine to 18 months for permit approvals, streamlining the path to project implementation. Moreover, EU member states are tasked with establishing single points of contact for permit applications and prioritizing projects that reduce reliance on imports from single countries and enhance the competitiveness of the EU’s clean tech supply chain.
In a bid to incentivize sustainable practices and diversify clean tech supply chains, the NZIA introduces sustainability criteria for public tenders and auctions. Public authorities procuring clean tech products, such as solar or wind parks, must consider sustainability factors alongside price competitiveness. These criteria include adherence to environmental standards and the EU’s objective of limiting reliance on a single source to no more than 65% of supply. While price remains a significant determinant, sustainability considerations are allocated weighted importance of 15% to 30% in bid evaluation, incentivizing eco-friendly solutions.
Unlike its U.S. counterpart, the NZIA does not entail additional funding but focuses on coordinating existing financial resources to support clean tech manufacturing projects. Leveraging financing avenues such as the European Investment Bank, InvestEU programs, and the post-COVID recovery fund totaling 723 billion euros, the Commission aims to provide a conducive environment for manufacturing investments across the EU. Additionally, EU countries will be granted greater flexibility to facilitate the rollout of manufacturing projects, aligning with the overarching objectives of the NZIA.
Reporting by Kevin Wood; Editing by Sarah White