During last week’s trilogue negotiations, the EU Commission, the EU Parliament, and the EU Council reached a provisional agreement on the Net Zero Industrial Act (NZIA). This Regulation will form the backbone of the EU’s strategy to boost domestic green tech production, known as the Green Deal Industrial Plan. This initiative responds to the global green subsidy war that escalated following the adoption of the Inflation Reduction Act in the US and a surge of public funding into Chinese green tech manufacturing.
The NZIA in a Nutshell
The goal of the NZIA is to achieve (at least) 40% of the production capacity required to cover the EU’s needs for green tech products. To reach this goal, the NZIA relies on several measures, including:
- the acceleration of permit-granting procedures;
- the development of ‘net-zero acceleration valleys’ (i.e. industrial clusters);
- a specific framework for green-tech procurement;
- new rules for public auctions of renewable energy projects.
These measures will be supported by the mobilisation of existing and newly created public funds, aiming to support investments in so-called “net-zero strategic projects”.
Technologies under Scope
In a significant development, trilogue negotiators have agreed to substantially extend the list of technologies that can be deemed as “strategic net-zero projects”, thereby benefiting from the provisions of the NZIA. Specific attention should be given to the last-minute inclusion of nuclear energy, as well as technologies aimed at reducing the carbon footprint of traditional heavy industries such as aluminum, steel, cement, and chemicals.
Additionally, the compromise extends the initial scope of the EC proposal to encompass not only the final products but also their supply chain. A variety of components and specific machinery detailed in an Annex to the NZIA will be eligible to be deemed as “strategic net-zero technologies” (1).
Connection with the Strategic Technologies for Europe Platform (STEP)
Projects that gain the ‘strategic net-zero’ status under the NZIA will enjoy numerous benefits, among others facilitated access to funding. Notably, this includes support from the Strategic Technologies for Europe Platform (STEP), which was launched by the European Commision (EC) last June 2023. The aim of STEP is to streamline funding access for companies in deep and digital technologies, biotechnologies, and net-zero technologies. STEP is set to leverage existing funding programmes such as InvestEU, Innovation Fund, Horizon Europe, Recovery and Resilience Facility, and Cohesion policy funds. Additionally, negotiations are ongoing to provide fresh money to the programme. The EC estimates that the combined efforts under STEP may mobilize new investments up to €160 billion (2). Some of the key aspects of STEP include a:
Sovereignty Portal: A streamlined one-stop-shop to assist companies and project promoters in finding and applying for STEP-related funding, enhancing the efficiency of investment processes (3).
Sovereignty Seal: Awarded to projects aligning with STEP objectives and meeting quality criteria under major EU programs, this seal signifies excellence and strategic alignment with technological advancements (4).
Next Steps
Further details on the text agreed upon during the trilogue negotiations will only be available once the EU publishes the official draft for parliamentary discussion. Nevertheless, it is expected that the Net Zero Industry Act will be translated into actual financing opportunities, thanks to the concurrent deployment of the Strategic Technologies for Europe Platform (STEP). These are undoubtedly interesting times, presenting significant opportunities for companies eager to invest and innovate in the net-zero sectors.
If you want to get more insights in this developing regulatory framework, and by extension the possible grants and incentives opportunities for your investment projects, please reach out to Alexis De Méyère (alexis.de.meyere@pwc.com), Tom Wallyn (tom.wallyn@pwc.com), or Bart Wyns (bart.wyns@pwc.com). We are happy to support you every step of the way!
- The agreed list of eligible net-zero technologies will be accessible once the final compromise text is published by the EU. Please see https://single-market-economy.ec.europa.eu/industry/sustainability/net-zero-industry-act_en for more information on these components and machinery.
- https://ec.europa.eu/commission/presscorner/detail/en/ip_23_3364
- https://commission.europa.eu/strategy-and-policy/eu-budget/strategic-technologies-europe-platform/sovereignty-portal_en
- https://commission.europa.eu/strategy-and-policy/eu-budget/strategic-technologies-europe-platform/sovereignty-seal_en
