In early December, the Council solidified its stance on the draft regulation for the 'Net-zero Industry Act', a cornerstone in bolstering Europe's net-zero technology product manufacturing ecosystem. This article offers a succinct analysis of the upcoming legislation and the Council's current position, based on the latest developments.

This article was written by David Boekel ([email protected]) and Ruben Harding ([email protected]). Both David and Ruben have a strong focus on ESG Strategies where they enable businesses to develop and implement effective ESG strategies that drive sustainable growth and positive impact.

Decoding The 'Net-zero Industry Act'

Background

The Net-Zero Industry Act is a key component of the Green Deal Industrial Plan, aligning with the Critical Raw Material Act and the electricity market design reform. Its primary goal is to expedite the industrial adoption of critical technologies vital for transitioning to climate neutrality, leveraging the single market to bolster Europe's economic resilience and competitiveness.

The Act aims to simplify investment conditions in key technologies, streamline permit procedures, prioritize strategic projects, and enhance market access for strategic technology products. It also focuses on upgrading the European workforce's skills through net-zero industry academies and establishing a platform for EU coordination in this field. Innovatively, it suggests creating regulatory sandboxes for developing, testing, and validating new technologies.

The Act sets a benchmark of covering 40% of the EU's needs in strategic technology products like solar panels, wind turbines, batteries, and heat pumps. It also targets an annual CO2 carbon capture and storage capacity of 50 million tonnes by 2030.

Council's Position

The Council's approach expands the list of strategic net-zero technologies and includes an extensive list of products used in manufacturing these technologies. It proposes regular evaluations to potentially include more technologies in the future.

Strategic technologies will benefit from more efficient permitting processes and investment support, aligning with EU and international obligations. The mandate also introduces net-zero acceleration areas to aid member states during permit-granting processes.

For CO2 injection capacity, the Council's stance broadens the scope to include CO2 transport and infrastructure, enhancing the sector's value chain. However, it exempts small oil and gas producers from contributing individually to the Union-wide CO2 injection target.

In public procurement and auctions, the Council clarifies procedures to ensure secure and transparent requirements for net-zero technologies, allowing for environmental sustainability and resilience considerations in provider selection.

Member States are permitted to apply pre-qualification and award criteria in auctions, with the Commission defining these criteria.

Timeline 

The position agreed in December formalises the Council's negotiating position. It provides the Council presidency with a mandate for negotiations with the European Parliament, which adopted its own position on 21 November 2023. As a result of the formalisation of the Council's negotiating position, the Council presidency, has now a mandate to engage in interinstitutional negotiations with the European Parliament and the European Commission, so called “trialogue”. These discussions are crucial for alignment before the European elections in June 2024.

How RSM Can Assist You

In today's globalized world, acknowledging and embracing the differences in ESG approaches across regions is not only a strategic advantage but also a moral imperative. By emphasizing these distinctions, countries and organizations can better adapt their ESG strategies to align with local needs and expectations.

At RSM, we are part of an international network that thrives on collaboration and knowledge sharing. Our Sustainability consultants frequently collaborate across borders to assist our clients, exchange ideas, and gain insights into the diverse landscapes our clients operate in. We cater specifically to medium-sized enterprises and family businesses, recognizing the unique needs and regulatory landscapes of each client, both domestically and internationally.