Net Zero Industry Act - a firm step towards greener Europe
The European Commission has announced the objectives of a new Regulation, the Net Zero Industry Act, which is intended to form part of the European Green Deal. Its goal is for 40% of deployed zero-emission technologies to be produced within the European Union by 2030.
The Regulation’s primary objective is to create a simpler and more predictable regulatory framework for zero-emission industries within the European Union. With this aim in mind, it is intended to introduce a category of net-zero strategic projects. These would include primarily:
- solar photovoltaic and solar thermal technologies;
- onshore wind installations;
- offshore renewable energy projects;
- batteries, energy storage;
- heat pumps;
- geothermal energy technologies;
- CO2 capture and storage (CCS);
- grid technologies.
Certain simplifications are also envisioned for nuclear power and alternative fuel plants; however, these would not be recognized as strategic projects of the net-zero industry.
Streamlined investment process
Significant facilitations are planned regarding the implementation of projects in the above categories, provided that they comply with the conditions indicated in the Regulation (e.g. implementing low-carbon and closed-circuit solutions). Such projects would benefit from reduced administrative burdens, simplified procedures and shorter timeframes for permit-granting procedures.
Investment decisions would be issued within a maximum period of 9 months (for projects with an annual production capacity of less than 1 GW) or 12 months (for those with a greater capacity). Net zero projects which do not meet the additional criteria would also benefit from a shortened investment procedure – albeit of up to 12 or 18 months, respectively. Appeals, court and judicial-administrative proceedings would be treated as urgent.
Following the measure adopted last December in Council Regulation (EU) 2022/2577 concerning simplifications for RES projects, the draft also stipulates that zero-emission industry projects shall be deemed to be investments of overriding public interest. Such a provision would enable an easing of the procedure for balancing private and public interests, in favour of investors – especially in proceedings involving environmental impact assessments.
New obligations for the oil & gas sector
The proposed Regulation seeks to achieve an annual CO2 injection capacity of at least 50 Mt in storage sites located in the European Union by 2030. All entrepreneurs holding concessions for exploring and prospecting or extracting hydrocarbons would be required to participate in achieving this threshold, to the extent proportionally corresponding to their share of EU oil and gas production.
This would involve imposing an obligation on mining companies to submit to the European Commission a plan for implementing their contribution to the EU target within 12 months after the Regulation enters into force. Measures which the European authorities would find acceptable for implementing the contribution would include developing individual or joint CO2 storage projects or entering into storage contracts with third parties. Entrepreneurs would then have to report annually to the Commission on the performance of the plan.
Moreover, member states would be required to publicise all geological data on exploited mining areas, in order to facilitate investments in underground CO2 storage.
The draft also lays down an obligation for member states to establish a one-stop shop national body to coordinate the implementation of facilitations for strategic projects. Simplifications for zero-emission industries would also be taken into account at the planning and zoning stages.
Notably, the Regulation’s entry into force in its current form would also affect public procurement law and the conduct of auctions – by making it mandatory to include sustainability considerations as one of the criteria in such proceedings.
It is also important to mention the planned introduction of a so-called legislative sandbox, which would allow member states to adopt experimental legislation enabling the development of innovative zero-emission technologies in a controlled environment, prior to introducing them onto the market. Access to sandboxes would be prioritized for small and medium-sized entrepreneurs.
It is worth noting that, unlike the aforementioned temporary Regulation for RES, the present project is intended to be a permanent feature of the European Union’s legal system. Accordingly, the proposed NZIA Regulation represents a much more decisive step towards making the European Green Deal a reality. Of course, its entry into force depends upon whether it will be approved by the European Parliament.