BRUSSELS, Feb 6 (Reuters) – European Union policymakers have agreed new rules to promote local production of clean tech equipment such as solar panels and fuel cells to try to help EU industry compete with Chinese and U.S. rivals.
The Net-Zero Industry Act (NZIA), which is likely to enter force this year, is part of the EU’s push to ensure it is not only a global leader in cutting greenhouse gas emissions, but also in manufacturing the equipment required.
This is what it entails.
TARGETS
The NZIA sets a benchmark for European manufacturers to produce 40% of the EU’s annual needs of clean tech products by 2030 and sets it on course to be the first climate-neutral continent by 2050.
The target applies to equipment needed for eight “strategic technologies” – solar power, wind power, batteries, heat pumps, electrolysers and fuel cells, biogas, carbon capture and storage, and electricity grids.
The act also sets a target of reaching 50 million metric tons of annual storage capacity of carbon dioxide by 2030.
The European Commission, which proposed the act, highlights that the EU currently depends on imports, notably from China, which provides over 90% of the EU’s photovoltaic wafers and accounts for 90% of global investment in clean tech manufacturing.
SPEEDIER PERMITS
The NZIA addresses one of the issues that business say holds back investments – the length of time it takes to secure permits.
The act sets limits of between nine and 18 months for permits to be granted for projects that would boost clean tech manufacturing.
It also mandates EU countries to set up single points of contact for those seeking permits and prioritise projects that help the EU reduce its reliance on imports from a single country or boost the competitiveness of the EU’s clean tech supply chain.
PUBLIC TENDERS
Public authorities issuing tenders or holding auctions to buy clean tech, such as for solar or wind parks, would have to select based not only on the price, but also on sustainability criteria and the EU’s push to ensure that no more than 65% of supply is from a single source.
The Commission proposal suggested these two factors should be given a 15% to 30% weighting in determining the winning bid, although they could be ignored if this bid is more than 10% higher than others.
FUNDS
Unlike the U.S. Inflation Reduction Act, the NZIA does not involve new money, but seeks to coordinate existing financing, including the European Investment Bank, guarantees offered under the InvestEU programmes and the 723 billion euro post-COVID recovery fund.
The Commission will also give EU countries greater leeway to support the roll-out of manufacturing projects.
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Reporting by Philip Blenkinsop
Editing by Mark Potter
Our Standards: The Thomson Reuters Trust Principles.