EU unveils Net-Zero Industry Act in response to IRA


EU unveils Net-Zero Industry Act in response to IRA


The European Union has introduced a range of fresh initiatives to foster green technology and secure raw materials, in an effort to maintain its competitive edge against the U.S. and China amid growing global protectionism.

The European Commission presented goals to ramp up the processing of key metals in Europe, measures to make green-energy investments easier, and incentives for renewables and carbon-capture.

The EU’s Net Zero Industry Act seeks to retain clean-tech manufacturing within the region, with a goal of reaching a 40% threshold for critical sectors such as solar panels and batteries by the end of the decade.

The response to the European Union's new measures has been mixed, with some industries supporting the effort while others feel it falls short of competing with the simpler measures set out by U.S. President Joe Biden last year. The Brussels-based think tank Bruegel called the bloc's response as "unapologetically protectionist."

The EU, consisting of 27 member states, aims to regain its former dominance in industries like solar, which it lost to China. The EU is also focusing on emerging sectors like heat pumps, electrolyzers, and carbon capture and storage, which are essential in achieving its goal of climate neutrality by the middle of the decade.

The plans still require approval from parliament and member states, and they may be amended before implementation.

Some industry groups and observers have expressed mixed reactions to the EU's new measures. While some welcomed the actions, others raised concerns about the details of the plan.

Maximo Miccinilli, head of energy and climate at consulting firm FleishmanHillard EU, said that despite the EU's efforts, Europe still lags behind the U.S., saying that the EU’s problem remains that the US approach and way of contributing is much easier to apply and obtain funding.

Germany's largest association of carmakers and auto-parts suppliers criticized the policies for falling short of what is needed. Although the VDA acknowledged the efforts to identify strategically critical raw materials, it warned that the absence of EU-level tax credits or subsidies could result in "misplaced" competition among member countries trying to attract investment.

EU officials initially harshly criticized Biden's Inflation Reduction Act, but their position has since shifted to emphasize the strength of the bloc's single market and the size of its own financial incentives for businesses. There are also ongoing efforts for the U.S. and EU to find common ground in some areas.

Currently, the EU only produces about 10% of the solar panels it installs, while China dominates the global supply for two-thirds of the critical raw materials identified by the EU in 2020.

Another area where the EU still lags far behind is the price it pays for its energy. Russia-Ukraine war caused electricity and gas prices to soar, but they have since receded due to emergency measures and a mild winter.

A reform of the common EU electricity market this week offered measures aimed at calming volatility, but fell short of a radical overhaul.













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