The EU approves rules to boost domestic production of green technologies

BRUSSELS (Reuters) – European Union governments on Monday formally approved a new law aimed at ensuring the bloc produces 40% of solar panels, wind turbines, heat pumps and other equipment using clean technologies, and helping European industries compete with U.S. and Chinese rivals.

The Net Zero Industry Act (NZIA) will enter into force next month or early July, once signed by the Presidents of the European Parliament and the Council and published in the EU’s official journal.

WHY IT’S IMPORTANT

This act is at the heart of the EU’s efforts to ensure that it is not only a global leader in reducing greenhouse gas emissions, but also in producing the required technologies.

Europe is increasingly relying on China, which is forecast to have 80% of the world’s solar production capacity. The EU also worries that $369 billion in green subsidies under the US Inflation Control Act will encourage European producers to relocate.

CONTEXT

The bloc has set a 2030 target to produce 40% of the products needed to reduce greenhouse gas emissions. These will include renewable energy, nuclear energy, heat pumps, electrolysers and other decarbonization technologies, including carbon capture.

The EU also aims to achieve 15% of global production of these technologies by 2040.

NZIA proposes to streamline permitting for projects to stimulate production in the EU, ensuring most permits are issued within six to nine months.

Public authorities purchasing clean technology products will have to base their choices not only on price, but with a 30% emphasis on the sustainability and resilience of the offer, i.e. the degree to which the EU is dependent on supplies from a single third country.

Reaching the target will be particularly difficult for solar, given that EU manufacturers supply less than 3% of EU panel deployments and are struggling to survive. The EU’s wind energy sector is much stronger, although Chinese companies are gaining a foothold in it.

(Reporting by Philip Blenkinsop; Editing by Mark Potter)