The European Commission unveiled a critical regulation on March 16th, 2023 that will aim to scale up manufacturing of green technologies in the bloc. The Commission proposed the Net-Zero Industry Act which is part of the Green Deal Industrial Plan that sets out new targets for green technology production – at least 40% of clean energy technologies needed for the green transition will be manufactured in the EU by 2030.
The commision’s announcement also focused on increasing the capacity for carbon capture and storage: “The Act sets an EU objective to reach an annual 50Mt injection capacity in strategic CO2 storage sites in the EU by 2030, with proportional contributions from EU oil and gas producers. This will remove a major barrier to developing CO2 capture and storage as an economically viable climate solution, in particular for hard to abate energy-intensive sectors.”
This CO2 storage target will most likely force the largest emitters, like oil and gas companies, to contribute substantially to these efforts. Not doing so will lead to expenses for emitting the carbon dioxide, which currently stand at €100 ($108) per ton.
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The green technologies that are outlined in the proposal will receive particular support and will be subject to a 40% domestic production benchmark.
The technologies listed are solar photovoltaic and solar thermal, onshore wind and offshore renewable energy, batteries and storage, heat pumps and geothermal energy, electrolyzers and fuel cells, carbon capture, utilization and storage, biogas/biomethane, grid technologies, advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle, small modular reactors, and sustainable alternative fuels technologies.
The President of the European Commission, Ursula von der Leyen, presented the proposal saying: “We need a regulatory environment that allows us to scale up the clean energy transition quickly. The Net-Zero Industry Act will do just that. It will create the best conditions for those sectors that are crucial for us to reach net-zero by 2050: technologies like wind turbines, heat pumps, solar panels, renewable hydrogen as well as CO2 storage. Demand is growing in Europe and globally, and we are acting now to make sure we can meet more of this demand with European supply.”
The Net-Zero Industry Act was proposed together with a European Critical Raw Materials Act and a reform of the electricity market design. They create a regulatory framework in the EU to reduce its reliance on highly concentrated imports.
The Critical Raw Materials Act proposal aims to strengthen the bloc’s supply of the critical minerals needed to build green technologies to fulfill the Green Deal Industrial Plan. The Commission is also exploring how to design the international dimension of the European Hydrogen Bank to incentivize renewable hydrogen imports.
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The EU presented ideas on the design and functions of the European Hydrogen Bank that should make Europe a place for hydrogen production. According to the Green Deal Industrial Plan, the first pilot auctions on renewable hydrogen production will be launched under the Innovation Fund in the Autumn of 2023.
Selected projects will receive a subsidy in the form of a fixed premium per kg of hydrogen produced for a maximum of 10 years of operation. This will aim to increase the bankability of projects and bring overall capital costs down.