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The EU’s Net Zero Industry Act was finally unveiled last week, the single market’s belated response to the United State’s Inflation Reduction Act (IRA).
The main goal of the awkwardly-acronymed NZIA (which, to its credit, at least doesn’t bring a violent paramilitary group to mind unlike its American counterpart) is to give a boost to Europe’s clean technology industries, helping to make Europe an economic hub of the clean transition.
The EU historically dragged its heels when it came to building clean tech industries such as solar panels and batteries, allowing China to emerge as the global leader.
The NZIA is partly aimed at ensuring Europe doesn’t sleepwalk into another missed economic opportunity, sitting idly as Asia and North America reap the cash rewards of Europe’s need to produce technologies that don’t belch carbon into the atmosphere.
Under the NZIA, processes will be simplified and investment encouraged. Activities given the status of net-zero strategic projects, for example, will be able to benefit from shorter permitting procedures, with a reduction from the usual 12-18 months to 9-12 months.
It is hoped that through the NZIA, Europe will retain companies that may otherwise be lured to other nations, making the continent more self-sufficient.
“Our dependency on Russian gas has taught us a number of lessons. Let’s not replace that dependency with a reliance on others to produce solar panels and other technologies we rely on,” said Internal Market Commissioner Thierry Breton, outlining the rationale behind the proposed law.
For all of Europe’s efforts to ape their cousins across the Atlantic, the truth is that Europe is not particularly good at this. That svelte, streamlined regulatory framework that industry craves is not in the DNA of the bureaucratic behemoth of the EU.
We tend to be sceptical of making things too easy. Complexity, to the European mind, is a sign of intellectual rigour.
In reacting to the NZIA, transport industry players emphasised as much.
“Unfortunately, Brussels is once again choosing a very bureaucratic approach with a wealth of complex regulations for the planned implementation,” said Hildegard Müller, president of German automotive industry association VDA.
“In order to keep up with international competition, or even better to lead the way, a more pragmatic approach is needed that makes it easier for companies to accelerate the transformation,” she added.
The automotive suppliers’ group CLEPA called for the EU to “match [the] policies of other trade blocks to avoid investments being redirected”.
“Industrial strategic objectives risk being undermined by incoherent regulations, bureaucratic requirements and a focus on technologies instead of objectives,” CLEPA Secretary General Benjamin Krieger warned.
The aviation industry was similarly unimpressed with the EU’s offering, criticising not what is in the draft law, but what was left out.
“The EU talks the talk about achieving a net zero Europe but when it comes to walking the walk and supporting sustainable aviation fuel (SAF) production, it seems the EU is more focused on window dressing and letting the United States eat it for breakfast,” the European airline trade association A4E fumed.
“The US is currently throwing its full weight behind SAF production through the Inflation Reduction Act and the passing mention of sustainable fuels in the Net Zero Industry Act is not enough to create a strong European SAF industry.”
IATA, a trade association representing global airlines, was also critical of what they see as Europe overlooking green jet fuel.
“Europe’s Net Zero Industry Act stops short of the mark,” said IATA Deputy Director General Conrad Clifford. “Sustainable Aviation Fuel will make the greatest contribution to achieving net zero emissions, but neither the draft Regulation, nor the list of supported technology in the Annex, explicitly support existing pathways to SAF.”
The NZIA will now move to the Council and Parliament for scrutiny.
It appears Europe’s businesses are dreaming of American-style capitalism, with its more lax regulatory system and emphasis on carrot over stick for companies.
Industry, in thrall to the spirit of the New World, will no doubt hope lawmakers will shift the text closer to the thinking of Boston than Berlin.
– Sean Goulding Carroll
It’s the unofficial ‘European Week of Fuels’
It’s a decisive week for the question of which fuels will be used in Europe in the future.
While currently most of what’s going into European car, ship or plane tanks is based on crude oil, this mix could change as key laws prescribe a ramp-up of climate-friendly alternatives.
Three major files are being discussed in Brussels this week. The ‘European Week of Fuels’ – if you can call it that – starts with today’s inter-institutional trilogue negotiations for the Renewable Energy Directive.
Here, it is mostly biofuels that grab the attention, as negotiators today might strike a deal on whether to permit a change that would see the phase-out of biofuels from soy.
EURACTIV understands that also on the agenda are the greenhouse-gas quota for the transport sector, multipliers that incentivise different types of fuels, issues on maritime transport, and the infamous indirect land use change (ILUC) threshold that would determine whether soy is in or out.
One sticking point also affects the provision of e-fuels, which are part of the sub-target for so-called “renewable fuels of non-biological origin” (RFNBOs), a topic that has sparked controversy among stakeholders.
E-fuels are high on the agenda tomorrow as well, when the FuelEU Maritime file may be finalised.
Here, too, some are calling for higher sub-quotas for synthetic fuels – which are more expensive than their alternatives, but are considered less problematic in environmental terms, according to NGOs.
Finally, the summit of EU heads and governments could see the long-awaited conclusion of the feud around the future of the internal combustion engine, which the German government has tied to a provision that would allow new combustion cars to still be registered after 2035 if they run “exclusively” on carbon-neutral fuels.
So far, this is not an agenda item for the EU summit in any way or form – but expect it to be one of the main issues discussed in the corridors.
– Jonathan Packroff
Humanity’s last chance
In 1940, trying to sum up the situation on a foreign battlefield to his compatriots, British Prime Minister Winston Churchill began simply but powerfully: “The news from France is very bad.”
With the release of the Intergovernmental Panel on Climate Change (IPCC) report Monday (20 March), the same phrase comes to mind: The news on climate change is very bad.
The final installment of the sixth assessment report of the IPCC, compiled by hundreds of scientists over eight years, sends a stark message.
It is “now or never” to take action to avoid climate disaster, it warns. This means radically shifting to low-carbon lifestyles across the world, and investing heavily in cleaner technologies.
However, despite the daunting nature of the crisis, hope remains.
“This synthesis report underscores the urgency of taking more ambitious action and shows that, if we act now, we can still secure a livable sustainable future for all,” said Hoesung Lee, the chair of the IPCC.
In the report’s summary for policymakers, measures to rein in emissions are outlined. When it comes to transport, the advice will be familiar to many.
“In transport, sustainable biofuels, low-emissions hydrogen, and derivatives (including ammonia and synthetic fuels) can support mitigation of CO2 emissions from shipping, aviation, and heavy-duty land transport but require production process improvements and cost reductions,” the summary states, with a rating of “medium confidence,” the report says.
The summary goes on to say that electric vehicles powered by green electricity have “large potential to reduce land-based transport GHG emissions, on a life cycle basis”.
A ramp-up in low-carbon fuels and a switch to electric powertrains aren’t the only advice: Walking, cycling and public transport are also listed as ways to enhance air quality and avoid emissions.
The summary additionally states that hard-to-abate sectors, such as aviation and shipping, will need to be “counterbalanced by deployment of carbon dioxide removal (CDR) methods” if the globe is to prevent climate catastrophe.
Read the full summary report here.
– Sean Goulding Carroll
EU drafts plan to allow e-fuel combustion engine cars – document
The European Commission has drafted a plan allowing sales of new cars with internal combustion engines that run only on climate neutral e-fuels, in an attempt to resolve a spat with Germany over the EU’s phasing out of combustion engine cars from 2035.
Seven countries reject nuclear-derived hydrogen from EU renewables law
A group of seven EU countries led by Germany have rejected calls to incorporate nuclear-made hydrogen into the bloc’s green transport targets, reigniting a dispute with France that has held back an agreement on the bloc’s renewable energy directive.
Stricter EU truck rules will drive investment in combustion engine, warns Volvo
EU rules setting stricter pollution standards for trucks will pull resources from the production of zero-emission vehicles, slowing the shift to electrification, the vice president of Volvo group has said.
Brussels accused of backsliding on soy ban for biofuels
Environmental campaigners have accused the European Commission of trying to reverse the European Parliament’s decision to ban soy for biofuel production over fears that it could expose the EU to legal challenges at the WTO.
The real cost of Germany blocking the combustion engine ban
Germany’s last-minute refusal to support the EU’s combustion engine ban hurts Europe’s economic interests but also the EU’s ability to regulate its market. Unless Germany backs down, its intervention will cast doubt over the process of EU lawmaking, writes Julia Poliscanova of T&E.
Climate-neutral mobility: The case for technology openness
In the debate on banning the sale of internal combustion engines from 2035, looking at energy efficiency alone is insufficient as economic efficiency is a broader concept that includes consumer preferences, writes Jan Schnellenbach, a professor of economics at the Brandenburg University of Technology.
[Edited by Nathalie Weatherald]
