A Green deal industrial plan for the net-zero age
This decade will be decisive for the world to limit the rise in global temperatures and to take the necessary steps towards net-zero. The stakes are high and the challenges complex – but there is a once in a generation opportunity to use this imperative to act as a catalyst to invest in the clean energy economy and industry of the net-zero age.
The Green Deal Industrial Plan, published on 1 February by the European Commission, promotes a more supportive environment for the deployment of clean-tech manufacturing capacity to meet Europe’s ambitious green targets.
It outlines the actions that the Commission intends to take to stimulate investment in the "net-zero industry" within the EU and is a response to recent increases in state support outside the EU, most notably the United States Inflation Reduction Act, which provides tax incentives for energy and climate.
In fact, the EU is committed with the roll-out of renewables, the transformation of energy and transport infrastructures such as grids, the massive switch to fossil-free hydrogen as a storage medium, fuel and feedstock.
Most notably, it is, in fact, to retain the following:
- Reform the electricity market: the Commission will present a reform of the electricity market design, including long-term price contracts that could play an important role to enable all electricity users to benefit from more predictable and lower costs of renewable power;
- European Sovereignty Fund: the Commission intends to give a structural answer to the investment needs, by proposing a European Sovereignty Fund in the context of the review of the Multi-annual financial framework before summer 2023. The aim is preserving a European edge on critical and emerging technologies relevant to the green and digital transitions, from computing-related technologies, including microelectronics, quantum computing, and artificial intelligence, to biotechnology and biomanufacturing and net-zero technologies;
- Net-Zero Industry Act: legislation that is intended to introduce a simplified regulatory framework (including simplifying and speeding up the permitting process) for production capacity of a number of "net-zero" products such as batteries, windmills, heat pumps, solar, electrolysers, and carbon capture and storage technologies;
- Infrastructure: full coverage of the TEN-T networks with charging and refueling infrastructure and development and strengthening of a European hydrogen backbone and the extension and strengthening of smart electricity grids to accommodate large quantities of renewables on the TEN-E network require large investment but also a strengthening of the regulatory framework. The Commission urges co-legislators to adopt the Alternative Fuels Infrastructure Regulation (AFIR) as soon as possible, to help create a future-proof charging and refueling network. To develop and strengthen hydrogen and electricity infrastructure the Commission will further examine the resource needs of the Connecting Europe Facility and will use the full scope of the revised TEN-E Regulation to accelerate the planning, financing and deployment of crucial (cross-border) infrastructure. The Commission will also consider further ways, including possible legislative action, to make sure that Member States deliver cross-border energy infrastructure, so that there are no undue delays to the rollout of the strategic infrastructure;
- Simplification of aid for renewable energy deployments: the Temporary Crisis and Transition Framework for State aid would go further by extending the provisions to all renewable technologies (under RED II) and to renewable hydrogen and biofuel storage;
- Simplification of aid for decarbonising industrial processes: allowing aid by reference to standard percentages of investment costs, based on case experience – for hydrogen use, energy efficiency and electrification;
- Innovation Fund: the Commission considers extending the new competitive bidding mechanism for scaling up manufacturing of components for solar and wind energy, batteries and electrolysers, based on an analysis of EU net-zero sector needs, market sizing, and potential project pipeline. Also here, the Innovation Fund support would take the form of a production subsidy, instead of the 60% share of relevant cost that is the current practice of the Fund
- Renewable hydrogen auction: the Commission will launch in autumn 2023 a first auction – or competitive bid - for supporting the production of renewable hydrogen. Winners of this auction will receive a fixed premium for each kg of renewable hydrogen produced over a period of 10 years. Terms and conditions for this first pilot auction, with an indicative budget of EUR 800 million, will be announced in June 2023;
- H2 cooperation: the EU will further develop its policy dialogue and concrete actions on research and innovation with the Union for the Mediterranean and the African Union to promote co-operation on renewable energies and green hydrogen;
- Simplification of the process of authorisation/certification for placing products in the market: to foster innovation, the Commission will assess the possibility to establish regulatory sandboxes to allow for rapid experimentation and disruptive innovation to test new technologies. Such regulatory sandboxes may also pave the way for simplification of the process of authorisation/certification for placing products in the market. These procedures can now be lengthy, slowing the introduction of innovative products and representing a significant burden especially for SMEs and start-ups. The Commission will continue funding testing facilities as one important step to bring technology to market;
- Critical Raw Materials Act: the Commission will propose a Critical Raw Materials Act. The manufacturing of EU net-zero technologies is only possible if access to relevant critical raw materials is ensured, including by diversifying sourcing and by recycling raw materials to lower the EU’s dependence on highly concentrated supplies from third countries and boost quality jobs and growth in the circular economy.
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