TL/DR –
The European Union has approved the Net Zero Industry Act (NZIA), a law designed to ensure that 40% of its clean tech equipment, including solar panels and wind turbines, is produced within the bloc. The move is aimed at helping European industry to compete with its U.S. and Chinese counterparts. The NZIA, set to be enforced from next month or early July, will streamline permit issuance for EU manufacturing projects and mandates a 30% sustainability and resilience weighting in public authorities’ clean tech purchases.
EU Approves Law to Boost Local Clean Tech Production
The European Union (EU) governments have approved a new law, the Net Zero Industry Act (NZIA), aimed at ensuring that the bloc produces 40% of its clean tech equipment, including solar panels and wind turbines. This move is aimed at improving competitiveness with U.S. and Chinese industries.
The NZIA is significant as it forms an integral part of the EU’s strategy to not only reduce greenhouse gas emissions but also lead in manufacturing the necessary technology.
As it stands, Europe heavily relies on China, projected to hold 80% of global solar power manufacturing capacity. Additionally, the EU faces challenges from the $369 billion in green subsidies offered by the U.S. Inflation Reduction Act, potentially causing European producers to relocate.
Looking at the Future
By 2030, the EU aims to manufacture 40% of the products required to reduce greenhouse gas emissions, encompassing renewable energy, nuclear power, heat pumps, electrolysers, as well as other decarbonising technologies like carbon capture.
With the new NZIA, the EU further plans to expedite the granting of permits for projects that boost EU manufacturing, with most expected to be issued within six to nine months.
The law also requires public authorities purchasing clean tech products to consider not just the price but also the sustainability and resilience of the offer, assigning a 30% weighting to the degree to which the EU relies on supplies from a single third country.
Reaching this target will be challenging, especially in the solar sector. Current EU manufacturers supply less than 3% of EU panel deployments. The EU wind energy sector, while stronger, also sees increasing competition from Chinese companies.
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