EU Passes Law To Boost Domestic Production Of Green Tech Equipment
The European Union governments formally approved a new law on Monday aimed at ensuring the bloc produces 40% of its solar
EU Passes Law To Boost Domestic Production Of Green Tech Equipment
The European Union governments formally approved a new law on Monday aimed at ensuring the bloc produces 40% of its solar panels, wind turbines, heat pumps, and other clean tech equipment. The Net Zero Industry Act (NZIA) is set to come into effect next month or early July, following signatures from the presidents of the European Parliament and the Council and its publication in the EU's official journal.
The legislation is a cornerstone of the EU's efforts to not only lead globally in reducing greenhouse gas emissions but also in manufacturing the necessary technology.
Europe's dependency on China is growing, with forecasts indicating that China will control 80% of global manufacturing capacity in solar power. Additionally, the European Union (EU) is wary of the potential impact of the $369 billion in green subsidies outlined in the U.S. Inflation Reduction Act, fearing it may lure European producers to relocate.
In response, the EU has set a target to produce 40% of the necessary products to reduce greenhouse gas emissions by 2030. This includes renewable energy, nuclear power, heat pumps, electrolysers, and other decarbonizing technologies, such as carbon capture. Furthermore, the EU aims to achieve 15% of global production of these technologies by 2040.
The NZIA aims to simplify the permit-granting process for projects that enhance EU manufacturing, with the majority of permits expected to be issued within six to nine months.
Furthermore, public authorities procuring clean tech products will be required to consider sustainability and resilience in addition to price, with sustainability carrying a 30% weight. Resilience refers to the extent of the EU's reliance on supply from a single third country.
Meeting the target will pose significant challenges, particularly in the solar sector, where EU manufacturers currently account for less than 3% of EU panel deployments and face existential threats. In contrast, the EU wind energy sector is more robust, although Chinese companies are increasingly establishing a presence.