EU Net-Zero Industry Act

KEY POINTS

Scope

The regulation:

• applies to:
  • 19 key net-zero technologies, ranging from solar and wind power to batteries, heat pumps and hydropower,
  • energy-intensive industry decarbonisation projects that are part of a net-zero technology supply chain and significantly reduce CO₂ emission rates;
• does not apply to critical raw materials that are covered by separate legislation (Regulation (EU) 2024/1252 – see summary).

Objectives

To reduce the external dependencies in the EU of net-zero technologies and their supply chains, the Net-Zero Industry Act sets out the objectives of reaching a manufacturing capacity of at least:

• 40 % of the EU’s annual deployment needs for net-zero technologies by 2030; and
• 15 % of world production of net-zero technologies by 2040.

Creating a favourable environment

The legislation sets out measures to encourage the production, development and use of net-zero technologies, mainly through:

• the creation of single contact points in each EU Member State to help businesses and investors develop their net-zero technology projects; and
• the reduction of permit-granting processes for net-zero technology manufacturing projects.

It also lays down criteria for recognising as ‘strategic projects’ those net-zero projects that will significantly contribute to:

• increasing the EU’s manufacturing capacity of net-zero technology components in the supply chain;
• providing EU net-zero industries with the best available clean technologies or products;
• reducing or eliminating CO₂ emissions.

CO₂ injection capacity

The regulation:

• sets a target of injecting at least 50 million tonnes of CO₂ into storage sites, such as former oil and gas fields, by 2030;
• states the sites must be operational for at least five years and provide free and fair access.

It also requires:

• the European Commission to report every two years, from 30 June 2027, on the progress being made;
• Member States to:
  • produce, in the interests of transparency, annual public reports on CO₂ capture, storage and transport projects, support measures, national strategies and cross-border schemes,
  • develop the necessary CO₂ transport infrastructure;
• oil and gas companies to make individual contributions, based on their share of total EU production, towards the 50 million tonne target.

Industrial valleys

The regulation promotes the development of net-zero acceleration ‘valleys’ (territories that concentrate several companies of a certain technology). The objectives of these valleys are to create clusters of net-zero industrial activity to increase the attractiveness of the EU as a location for manufacturing activities and to further streamline the administrative procedures for setting up net-zero manufacturing capacity. They will also contribute to the reindustrialisation of regions.

Market access

The regulation, as a way of encouraging the use of net-zero technologies, instructs national authorities to:

• apply minimum environmental sustainability standards in public procurement and works contracts;
• require that the contract include at least one of the following: a social or employment component, cybersecurity features or a financial penalty for non-delivery of the promised product;
• include pre-qualification criteria, such as responsible business conduct and data security, when preparing auctions for the use of renewable energy;
• develop financial and other incentives to encourage households, companies and the wider public to buy net-zero technology products.

Skills, quality jobs and innovation

The regulation:

• launches European net-zero industry academies to develop training programmes and qualifications for the many skills required in the development and use of the new technologies;
• encourages national authorities to consider whether diplomas from the academies meet the standards required to enter a regulated profession;
• requires Member States to:
  • designate a single contact point to handle all requests to test net-zero technologies in a regulatory sandbox²,
  • provide small and medium-sized enterprises with priority access to a regulatory sandbox’s testing facilities;
• establishes:
  • a Net-Zero Europe Platform to support the Commission and Member States with the development and use of net-zero technologies,
  • a Strategic Energy Technology Plan Steering Group to provide support for the development of clean energy technologies through collaboration in clean energy research and innovation;
  • a Net-Zero Regulatory Burden Scientific Advisory Group to assess the impact of regulation on industrial development.

The Commission:

• monitors the EU’s progress towards its targets, producing an evaluation report by 30 June 2028 and every three years thereafter;
• has delegated powers to update technical elements of the regulation.

The regulation amends Regulation (EU) 2018/1724 (see summary).