EU agrees Net-Zero Industry Act to fight Chinese competition

European Union (EU) lawmakers on Tuesday reached a provisional agreement to tackle the crisis in the bloc’s solar manufacturing sector by adopting new rules to promote local clean tech production and thus countervail Chinese competition.

The agreed provisions of the Net-Zero Industry Act (NZIA) envisage setting a 2030 target that will require at least 40% of the net-zero technologies deployed in the EU to be produced domestically. The target is seen to create favourable regulatory conditions to build more manufacturing facilities of net-zero technologies in a faster manner and support the EU's efforts to become a carbon-neutral economy by 2050.

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The agreement lists strategic technologies that could contribute to the reduction of greenhouse gas emissions. Those are solar photovoltaic (PV) onshore and offshore wind, fuel cells, electrolysers, batteries, grid technologies and sustainable alternative fuels, among others.

Under the new plan, the permitting process for EU net-zero manufacturing projects is set to be streamlined, ensuring that approvals for projects larger than 1 GW are issued within 18 months. The permits for up-to-1-GW proposals will be awarded within 12 months.

Additionally, there will be sustainability and resilience criteria in procurement procedures and auctions. These criteria will have to apply to at least 30% of the volume auctioned every year by a Member State.

“Today’s political agreement on the Net-Zero Industry Act gives the EU the necessary framework to ensure that our net-zero supply chains are resilient and competitive at home and beyond," said Kadri Simson, Commissioner for Energy.

Industry body SolarPower Europe welcomed the agreement. "Landing the Net-Zero Industry Act is a crucial landmark in Europe’s clean industry story. It’s an essential piece of the industrial strategy puzzle, which will substantially improve off-take visibility for EU solar manufacturers at this critical time," said policy director Dries Acke.

"But let us be very clear: while landing the NZIA sends a strong signal to EU solar manufacturers, it doesn’t negate the need for emergency support. Manufacturers have weeks left of survival, this emergency requires urgent action from EU and national authorities,” Acke noted.

China currently dominates the global solar manufacturing market and European PV product makers and industry organisations have repeatedly called for support measures after the European market was flooded by lower-cost Chinese equipment. European manufacturers are now going bankrupt as a result of that situation.

The draft deal will be subject to approval by the European Council and Parliament.

The EC first announced legislative proposals for scaling up the production of clean technologies in the EU through NZIA last year. They were put forward along with the Critical Raw Materials Act (CRMA) that was adopted last November to secure access to competitive critical raw materials across the European value chain.