On March 16th, the European Commission proposed the Net-Zero Industry Act to scale up manufacturing of clean technologies in the EU and make sure the Union is well-equipped for the clean-energy transition. This initiative was announced by President von der Leyen as a part of the Green Deal Industrial Plan.
The Net-Zero Industry Act is part of the actions announced, aiming at simplifying the regulatory framework, and improving the investment environment for the Union’s manufacturing capacity of technologies that are key to meet the Union’s climate neutrality goals and ensure that the decarbonized energy system is resilient whilst contributing to reducing pollution, to the benefit of public health and planetary environmental wellbeing.
Together with the proposal for a European Critical Raw Materials Act and the reform of the electricity market design, the Net-Zero Industry Act sets out a clear European framework to reduce the EU’s reliance on highly concentrated imports. By drawing on the lessons learnt from the Covid-19 pandemic and the energy crisis sparked by Russia’s invasion of Ukraine, it will help increase the resilience of Europe’s clean energy supply chains.
Technologies
The proposed legislation addresses technologes that will make a significant contribution to decarbonisation. These include: solar photovoltaic and solar thermal, onshore wind and offshore renewable energy, batteries and storage, heat pumps and geothermal energy, electrolysers and fuel cells, biogas/biomethane, carbon capture, utilisation and storage, and grid technologies, sustainable alternative fuels technologies, advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle, small modular reactors, and related best-in-class fuels. The Strategic Net Zero technologies identified in the Annex to the Regulation will receive particular support and are subject to the 40% domestic production benchmark.
The Net-Zero Industry Act is built on the following pillars:
European Hydrogen Bank
To further support the uptake of renewable hydrogen within the EU as well as imports from international partners, today the Commission is also presenting its ideas on the design and functions of the European Hydrogen Bank. This sends a clear signal that Europe is the place for hydrogen production.
The European Hydrogen Bank will:
- support the uptake of renewable hydrogen within the EU
- imports from international partners.
- aim to unlock private investments in hydrogen value chains by efficiently connecting renewable energy supply to demand and addressing the initial investment challenges.
- create an emerging European hydrogen market, offer new growth opportunities and quality job creation
- help reach the EU’s hydrogen goals, in line with REPowerEU and the path to climate neutrality
The Commission is currently designing the first pilot auctions on renewable hydrogen production. The auctions will be launched under the Innovation Fund in the autumn of 2023.
To reduce the cost gap in the EU between renewable and fossil hydrogen and bring capital costs down, the auction will award a subsidy to hydrogen producers in the form of a fixed premium per kg of hydrogen produced for a maximum of 10 years of operation.
The Commission also proposes to extend the Innovation Fund auctions and to create an EU auction platform through the Hydrogen Bank, offering “auctions-as-a-service” for Member States, using both the Innovation Fund and Member State resources to fund potential renewable hydrogen projects, without prejudice to EU State aid rules. 800 million euros are are dedicated to
the first Hydrogen Bank auction
Green Deal Industrial Plan
As announced in the Green Deal Industrial Plan, the first pilot auctions on renewable hydrogen production will be launched under the Innovation Fund in Autumn 2023. Selected projects will be awarded a subsidy in the form of a fixed premium per kg of hydrogen produced for a maximum of 10 years of operation. This will increase the bankability of projects and bring overall capital costs down.
The EU auction platform can also offer “auctions-as-a-service” for Member States, which will also facilitate the production of hydrogen in Europe. The Commission is further exploring how to design the international dimension of the European Hydrogen Bank to incentivise renewable hydrogen imports. Before the end of the year, all elements of the Hydrogen Bank should be operational.
Next Steps
The proposed Regulation now needs to be discussed and agreed by the European Parliament and the Council of the European Union before its adoption and entry into force.
Background
The European Green Deal, presented by the Commission on 11 December 2019, sets the goal of making Europe the first climate-neutral continent by 2050. The EU’s commitment to climate neutrality and the intermediate goal of reducing net greenhouse gas emissions by at least 55% by 2030, relative to 1990 levels, are made legally binding by the European Climate Law.
The legislative package to deliver on the European Green Deal provides a plan to put the European economy firmly on track to achieve its climate ambitions, with the REPowerEU Plan accelerating the move away from imported Russian fossil fuels. Alongside the Circular Economy Action Plan, this sets the framework for transforming the EU’s industry for the net-zero age.
The Green Deal Industrial Plan was presented on 1 February to boost net-zero industry and ensure the objectives of the European Green Deal are delivered on time. The plan sets out how the EU will sharpen its competitive edge through clean-tech investment, and continue leading on the path to climate neutrality. It responds to the invitation by the European Council for the Commission to make proposals to mobilise all relevant national and EU tools and improve framework conditions for investment, with a view to safeguarding the EU’s resilience and competitiveness. The first pillar of the Plan aims to create a predictable and simplified regulatory environment for net-zero industries.
To this end, in addition to the Net-Zero Industry Act, the Commission is presenting a European Critical Raw Materials Act, to secure a sustainable and competitive critical raw materials value chain in Europe, and has proposed a reform of the electricity market design that will allow consumers to benefit from the low production costs of renewables.
FULL NET ZERO INDUSTRY ACT
FULL NET ZERO HYDROGEN BANK
QUESTIONS AND ANSWERS ON THE PROJECTS
