Considerations on COM(2023)161 - Establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem (Net Zero Industry Act)

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dossier COM(2023)161 - Establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem (Net ...
document COM(2023)161
date March 16, 2023
 
(1) The Union has committed to the accelerated decarbonisation of its economy and ambitious deployment of renewable energy sources to achieve climate neutrality or net zero emissions (emissions after deduction of removals) by 2050. That objective is at the heart of the European Green Deal, the updated EU Industrial Strategy, and in line with the Union’s commitment to global climate action under the Paris Agreement31. To reach the climate neutrality goal, Regulation (EU) 2021/1119 of the European Parliament and of the Council32 sets a binding Union climate target to reduce net greenhouse gas emissions by at least 55% by 2030 compared to 1990. The proposed “Fit for 55”33 package aims to deliver on the Union’s 2030 climate target and revises and updates Union legislation in this respect.

(2) The Single Market provides the appropriate environment for enabling access at the necessary scale and pace to the technologies required to achieve the Union’s climate ambition. Given the complexity and the transnational character of net-zero technologies, uncoordinated national measures to ensure access to those technologies would have a high potential of distorting competition and fragmenting the Single market. Therefore, to safeguard the functioning of the Single market it is necessary to create a common Union legal framework to collectively address this central challenge by increasing the Union’s resilience and security of supply in the field of net-zero technologies.

(3) Regarding external aspects, in particular regarding emerging markets and developing economies, the EU will seek win-win partnerships in the framework of its Global Gateway strategy, which contribute to the diversification of its raw materials supply chain as well as to partner countries’ efforts to pursue twin transition and develop local value addition.

(4) To fulfil those commitments, the Union must accelerate its pace of transition to clean energy, notably by increasing energy efficiency and the share of renewable energy sources. This will contribute to achieving the EU targets of the European Pillar of Social Rights Action Plan for 2030 of an employment rate of at least 78% and participation in training of at least 60% of adults. It will also contribute to ensuring that the green transition is fair and equitable34.

(5) The higher energy prices after the unjustified and unlawful military aggression by the Russian Federation against Ukraine, gave a strong impetus to accelerate the implementation of the European Green Deal and reinforce the resilience of the Energy Union by speeding up the clean energy transition and ending any dependence on fossil fuels exported from the Russian Federation. The REPowerEU plan35 plays a key role in responding to the hardships and global energy market disruption caused by the invasion of Ukraine by the Russian Federation. That plan aims to accelerate the energy transition in the European Union, in order to reduce the Union’s gas and electricity consumption and to boost investments in the deployment of energy efficient and low carbon solutions. That plan sets inter alia the targets to double solar photovoltaic capacity by 2025 and to install 600 GW of solar photovoltaic capacity by 2030; to double the rate of deployment of heat pumps; to produce 10 million tonnes of domestic renewable hydrogen by 2030; and to substantially increase production of biomethane. The plan also sets out that achieving the REPowerEU goals will require diversifying the supply of low carbon energy equipment and of critical raw materials, reducing sectoral dependencies, overcoming supply chain bottlenecks and expanding the Union’s clean energy technology manufacturing capacity. As part of its efforts to increase the share of renewable energy in power generation, industry, buildings and transport, the Commission proposes to increase the target in the Renewable Energy Directive to 45% by 2030 and to increase the target in the Energy Efficiency Directive to 13%. This would bring the total renewable energy generation capacities to 1236 GW by 2030, in comparison to 1067 GW by 2030 envisaged under the 2021 proposal and will see increased needs for storage through batteries to deal with intermittency in the electricity grid. Similarly, policies related to the decarbonisation of the road sector, such as Regulation (EU) 2019/631 and Regulation (EU) 2019/1242 will be strong drivers for a further electrification of the road transport sector and thus increasing demand for batteries.

(6) The net-zero transformation is already causing huge industrial, economic, and geopolitical shifts across the globe, which will become ever more pronounced as the world advances in its decarbonisation efforts. The road to net zero translates into strong opportunities for the expansion of Union’s net-zero industry, making use of the strength of the Single Market, by promoting investment in technologies in the field of renewable energy technologies , electricity and heat storage technologies, heat pumps, grid technologies, renewable fuels of non-biological origin technologies, electrolysers and fuel cells, fusion, small modular reactors and related best-in-class fuels, carbon capture, utilisation, and storage technologies, and energy-system related energy efficiency technologies and their supply chains, allowing for the decarbonisation of our economic sectors, from energy supply to transport, buildings, and industry. A strong net zero industry within the European Union can help significantly in reaching the Union’s climate and energy targets effectively, as well as in supporting other Green Deal objectives, while creating jobs and growth.

(7) To meet the 2030 climate and energy targets, energy efficiency needs to be prioritised. Saving energy is the cheapest, safest and cleanest way to meet those targets. ‘Energy efficiency first’ is an overall principle of EU energy policy and is important in both its practical applications in policy and investment decisions. Therefore, it is essential to expand the Union’s manufacturing capacity for energy efficient technologies, such as heat pumps and smart grid technologies, that help the EU reduce and control its energy consumption.

(8) The Union’s decarbonisation objectives, security of energy supply, digitalisation of the energy system and electrification of demand, for example in mobility and the need for fast recharging points, require an enormous expansion of electricity grids in the European Union, both at transmission level and at distribution level. At transmission level, high-voltage direct current (HVDC) systems are needed to connect offshore renewable energies; while at distribution level, connecting electricity providers and managing demand-side flexibility builds on investments in innovative grid technologies, such as electric vehicles smart charging (EVSC), energy efficiency building and industry automation and smart controls, advanced meter infrastructure (AMI) and home energy management systems (HEMS). The electricity grid needs to interact with many actors or devices based on a detailed level of observability, and hence availability of data, to enable flexibility, smart charging and smart buildings with smart electricity grids enabling demand side response from consumers and the uptake of renewables. Connecting the net-zero technologies to the network of the European Union requires the substantial expansion of manufacturing capabilities for electricity grids in areas such as offshore and onshore cables, substations and transformers.

(9) Additional policy effort is necessary to support those technologies that are commercially available and have a good potential for rapid scale up to support the Union’s 2030 climate targets, improve the security of supply for net-zero technologies and their supply chains, and safeguard or strengthen the overall resilience and competitiveness of the Union’s energy system. It includes access to a safe and sustainable source of best in class fuels, as described in recital 8 of Commission Delegated Regulation (EU) 2022/1214.

(10) To achieve the 2030 objectives a particular focus is needed on some of the net-zero technologies, also in view their significant contribution towards the path to net zero by 2050. These technologies include solar photovoltaic and solar thermal technologies, onshore and offshore renewable technologies, battery/storage technologies, heat pumps and geothermal energy technologies, electrolysers and fuel cells, sustainable biogas/biomethane, carbon capture and storage technologies and grid technologies. These technologies play a key role in the Union’s open strategic autonomy, ensuring that citizens have access to clean, affordable, secure energy. Given their role, these technologies should benefit from even faster permitting procedures, obtain the status of the highest national significance possible under national law and benefit from additional support to crowd-in investments.

(11) In order to ensure that the Union’s future energy system is resilient this scaling-up should be carried out across the whole supply chain of the technologies in question, in full complementarity with the Critical Raw Materials Act.

(12) In 2020 the European Commission adopted an EU strategy for energy system integration. It set out a vision on how to accelerate the transition towards a more integrated energy system, one that supports a climate neutral economy at the least cost across sectors. It encompasses three complementary and mutually reinforcing concepts: first, a more ‘circular’ energy system, with energy efficiency at its core; second, a greater direct electrification of end-use sectors; third, the use of renewable and low-carbon fuels, including hydrogen, for end-use applications where direct heating or electrification are not feasible, not efficient or have higher costs. Considerations related to energy system integration refer to solutions for fully integrating all the electricity generated by renewable energy installations into the wider energy system. This means, for instance, adopting technical solutions that allow for the integration of surplus electricity generated by renewable electricity installations, including through storage in its various forms and demand-side management.

(13) The development of carbon capture and storage solutions for industry is confronted with a coordination failure. On the one hand, despite the growing CO2 price incentive provided by the EU Emissions Trading System, for industry to invest into capturing CO2 emissions making such investments economically viable, they face a significant risk of not being able to access a permitted geological storage site. On the other hand, investors into first CO2 storage sites face upfront costs to identify develop and appraise them even before they can apply for a regulatory storage permit. Transparency about potential CO2 storage capacity in terms of the geological suitability of relevant areas and existing geological data, in particular from the exploration of hydrocarbon production sites, can support market operators to plan their investments. Member State should make such data publicly available and report regularly in a forward-looking perspective about progress in developing CO2 storage sites and the corresponding needs for injection and storage capacities above, in order to collectively reach the Union-wide target for CO2 injection capacity.

(14) A key bottleneck for carbon capture investments that are today increasingly economically viable is the availability of operating CO2 storage sites in Europe, which underpin the incentives from Directive 2003/87/EC. To scale up the technology and expand its leading manufacturing capacities, the EU needs to develop a forward-looking supply of permanent geological CO2 storage sites permitted in accordance with Directive 2009/31/EU36. By defining a Union target of 50 million tonnes of annual operational CO2 injection capacity by 2030, in line with the expected capacities needed in 2030, the relevant sectors can coordinate their investments towards a European Net-Zero CO2 transport and storage value chain that industries can use to decarbonise their operations. This initial deployment will also support further CO2 storage in a 2050 perspective. According to the Commission’s estimates, the Union could need to capture up to 550 million tonnes of CO2 annually by 2050 to meet the net zero objective37, including for carbon removals. Such a first industrial-scale storage capacity will de-risk investments into the capturing of CO2 emissions as important tool to reach climate neutrality. When this regulation is incorporated into the EEA Agreement, the Union target of 50 million tonnes of annual operational CO2 injection capacity by 2030 will be adjusted accordingly.

(15) By defining CO2 storage sites that contribute to the Union’s 2030 target as net-zero strategic projects, the development of CO2 storage sites can be accelerated and facilitated, and the increasing industrial demand for storage sites can be channelled towards the most-cost-effective storage sites. An increasing volume of depleting gas and oil fields that could be converted in safe CO2 storage sites are at the end of their useful production lifetime. In addition, the oil and gas industry has affirmed its determination to embark on an energy transition and possesses the assets, skills and knowledge needed to explore and develop additional storage sites. To reach the Union’s target of 50 million tonnes of annual operational CO2 injection capacity by 2030, the sector needs to pool its contributions to ensure that carbon capture and storage as a climate solution is available ahead of demand. In order to ensure a timely, Union-wide and cost-effective development of CO2 storage sites in line with the EU objective for injection capacity, licensees of oil and gas production in the EU should contribute to this target pro rata of their oil and gas manufacturing capacity, while providing flexibilities to cooperate and take into account other contributions of third parties.

(16) The Union has helped build a global economic system based on open and rules-based trade, pushed for respecting and advancing social and environmental sustainability standards, and is fully committed to those values.

(17) To address security of supply issues and contribute to supporting the resilience of Union’s energy system and decarbonisation and modernisation efforts, the net-zero technology manufacturing capacity in the Union needs to expand. Union manufacturers of solar photovoltaic (PV) technologies need to increase their competitive edge and improve security of supply perspectives, by aiming to reach at least 30 gigawatt of operational solar PV manufacturing capacity by 2030 across the full PV value chain, in line with the goals set out in the European Solar Photovoltaic Industry Alliance, which is supported under the Union’s Solar Energy Strategy.38 Union manufacturers of wind and heat pump technologies need to consolidate their competitive edge and maintain or expand their current market shares throughout this decade, in line with the Union’s technology deployment projections that meet its 2030 energy and climate targets.39 This translates into a Union manufacturing capacity for wind of at least 36 GW and, respectively, for heat pumps of at least 31 GW in 2030. Union manufacturers of batteries and electrolysers need to consolidate their technology leadership and actively contribute to shaping these markets. For battery technologies this would mean contributing to the objectives of the European Battery Alliance and aim at almost 90% of the Union’s battery annual demand being met by the Union’s battery manufacturers, translating into a Union manufacturing capacity of at least 550 GWh in 2030. For EU electrolyser manufacturers, the REPowerEU plan projects 10 million tonnes of domestic renewable hydrogen production and a further up to 10 million tonnes of renewable hydrogen imports by 2030. To ensure EU’s technological leadership translates into commercial leadership, as supported under the Electrolyser Joint Declaration of the Commission and the European Clean Hydrogen Alliance, EU electrolyser manufacturers should further boost their capacity, such that the overall installed electrolyser capacity being deployed reaches at least 100 GW hydrogen by 2030.

(18) Considering these objectives together, while also taking into account that for certain elements of the supply chain (such as inverters, as well as solar cells, wafers, and ingots for solar PV or cathodes and anodes for batteries) the Union manufacturing capacity is low, the Union net-zero technologies annual capacity should aim at approaching or reaching an overall annual manufacturing benchmark of at least 40% of annual deployment needs by 2030 for the technologies listed in the Annex .

(19) Increasing the manufacturing capacity of net-zero technologies in the European Union will also facilitate the global supply of net-zero technologies and the transition towards clean energy sources globally.

(20) At the same time, net-zero technology products will contribute to the Union’s resilience and security of supply of clean energy. A secure supply of clean energy is a prerequisite for economic development, as well as for public order and security. Net-zero technology products will also yield benefits to other strategically important economic sectors, such as farming and food production by securing access to clean energy and machinery at competitive prices, thus contributing sustainably to EU food security and to providing an increasing outlet for bio-based alternatives through circular economy. In the same way, the fulfilment of the Union’s climate ambitions will translate both into economic growth and social well-being.

(21) In order to maintain competitiveness and reduce current strategic import dependencies in key net-zero technology products and their supply chains, while avoiding the formation of new ones, the Union needs to continue strengthening its net zero industrial base and become more competitive and innovation friendly. The Union needs to enable the development of manufacturing capacity faster, simpler and in a more predictable way.

(22) Member States should submit updated drafts of their 2021-2030 National Energy and Climate Plans (NECPs) in June 202340. As emphasised in the Commission’s Guidance to Member States for the update of the 2021-2030 national energy and climate plans41, the updated plans should describe Member States’ objectives and policies to facilitate the scale-up of manufacturing projects of commercially available energy efficient and low-carbon technologies, equipment and key components within their territory. Those plans should also describe Member States’ objectives and policies to achieve such scale-up through diversification efforts in third countries, and to enable their industries to capture and store CO2 emissions permanently in geological storage sites.

(23) In addition, the Communication on the Green Deal Industrial Plan for the Net-Zero Age42 sets out a comprehensive approach to support a clean energy technology scale up based on four pillars. The first pillar aims at creating a regulatory environment that simplifies and fast-tracks permitting for new net-zero technology manufacturing and assembly sites and facilitates the scaling up of the net-zero industry of the Union. The second pillar of the plan is to boost investment in and financing of net-zero technology production, through the revised Temporary Crisis and Transition Framework adopted in March 2023 and the creation of a European Sovereignty fund to preserve the European edge on critical and emerging technologies relevant to the green and digital transitions. The third pillar relates to developing the skills needed to make the transition happen and increase the number of skilled workers in the clean energy technology sector. The fourth pillar focuses on trade and the diversification of the supply chain of critical raw materials. That includes creating a critical raw materials club, working with like-minded partners to collectively strengthen supply chains and diversifying away from single suppliers for critical input.

(24) Under the first pillar, the Union should develop and maintain an industrial basis for the provision of net-zero technology solutions to secure its energy supply, while also living up to its ambitions on climate neutrality. To support that goal and to avoid dependencies for the supply of net-zero technologies that would delay the Union’s greenhouse gas emission reductions efforts or put at risk the security of supply of energy, this Regulation shall set out provisions to encourage demand for sustainable and resilient net-zero technologies.

(25) Directives 2014/23/EU, 2014/24/EU and 2014/25/EU already allow contracting authorities and entities awarding contracts through public procurement procedures to rely, in addition to price or cost, on additional criteria for identifying the most economically advantageous tender. Such criteria concern for instance the quality of the tender including social, environmental and innovative characteristics. When awarding contracts for net-zero technology through public procurement, contracting authorities and contracting entities should duly assess the tenders’ contribution to sustainability and resilience in relation to a series of criteria relating to the tender’s environmental sustainability, innovation, system integration and to resilience.

(26) Social sustainability criteria can already be applied under existing legislation and can include working conditions and collective bargaining in line with the European Pillar of Social Rights in line with Articles, 30 (3) of Directive 2014/23/EU, 18 (2) of Directive 2014/24/EU and 36 (2) of Directive 2014/25/EU. Contracting authorities should contribute to social sustainability by taking the appropriate measures to ensure that in the performance of public contracts economic operators comply with applicable obligations in the fields of social and labour law established by Union law, national law, collective agreements or by the international environmental, social and labour law provisions listed in Annex X of Directive 2014/23/EU, Annex X of Directive 2014/24/EU and Annex XIV of Directive 2014/25/EU43.

(27) Without prejudice to Union legislation applicable to a specific technology, including under the Proposal for a Regulation of the European Parliament and of the Council establishing a framework for setting ecodesign requirements for sustainable products44 and the Proposal for a Regulation of the European Parliament and of the Council concerning batteries and waste batteries45, and unless otherwise indicated therein, when evaluating the environmental sustainability of the net-zero solutions procured on the basis of this Regulation, contracting authorities and contracting entities may take into account various elements with an impact on the climate and the environment. These may include, for instance, the durability and reliability of the solution; the ease of repair and maintenance; the ease of upgrading and refurbishment; the ease and quality of recycling; the use of substances; the consumption of energy, water and other resources in one or more life cycle stages of the product; the weight and volume of the product and its packaging; the incorporation of used components; the quantity, characteristics and availability of consumables needed for proper use and maintenance; the environmental footprint of the product and its life cycle environmental impacts; the carbon footprint of the product; the microplastic release; emissions to air, water or soil released in one or more life cycle stages of the product; the amounts of waste generated; the conditions for use.

(28) For the purposes of taking into account within a public procurement procedure of the need to diversify sources of supply of net-zero technologies away from single sources of supply within the meaning of Article 19 (2), and without prejudice to the Union’s international commitments, the supply should at least be deemed insufficiently diversified where a single source supplies for more than 65% of the demand for a specific net-zero technology within the Union.

(29) For the purposes of setting up schemes benefitting households or consumers which incentivise the purchase of net-zero technology final products, and without prejudice to the Union’s international commitments, the supply should be deemed insufficiently diversified where a single source supplies more than 65% of the total demand for a specific net-zero technology within the Union. To ensure a consistent application, the Commission should publish a yearly list starting on the date of application of this Regulation, of the distribution of the origin of net zero technology final products which fall under this category, broken down by the share of Union supply originating in different sources in the last year for which data is available.

(30) Council Decision 2014/115/EU approved in particular the amendment to the World Trade Organisation Agreement on Government Procurement (the ‘GPA’)46. The aim of the GPA is to establish a multilateral framework of balanced rights and obligations relating to public contracts with a view to achieving the liberalisation and expansion of world trade. For contracts covered by the European Union’s Appendix I to the GPA, as well as by other relevant international agreements by which the Union is bound, including free trade agreements and the Article III:8(a) of the General Agreement on Tariffs and Trade of 1994 for procurement by governmental agencies of products purchased with a view to commercial resale or with a view to use in the production of goods for commercial sale, contracting authorities and contracting entities should not apply the requirements of Article 19 (1) point (d) to economic operators of sources of supply that are signatories to the agreements.

(31) The application of the provisions on resilience in public procurement procedures set out in Article 19 should be without prejudice to the application of Article 25 of Directive 2014/24/EU of the European Parliament and of the Council47, and Articles 43 and 85 of Directive 2014/25/EU of the European Parliament and of the Council48, as according with the Commission’s guidance of 201949. The same way, public procurement provisions should continue to apply to works, supplies and services subject to Article 19, including article 67 (4) of Directive 2014/24/EU and any implementing measures resulting from the Proposal for a Regulation establishing a framework for setting ecodesign requirements for sustainable products.

(32) The weighting of criteria on the sustainability and resilience contribution of the tender in relation to public procurement procedures is without prejudice to the possibility for contracting authorities and contracting entities to set a higher threshold for the criteria relating to environmental sustainability and innovation, in line with Article 41 (3) and Recital 64 of Directive 2014/23/EU of the European Parliament and of the Council50, Article 67 (5) of Directive 2014/24/EU and Article 82 (5) of Directive 2014/25/EU.

(33) In order to limit administrative burden resulting from the need to take into account criteria relating to the sustainability and resilience contribution of the tender, in particular for smaller public buyers and for contracts of lower value which do not have an important impact on the market, the application of the relevant provisions of this Regulation should be deferred for two years for public buyers which are not central purchasing bodies and for contracts of a value below EUR 25 million.

(34) For the purposes of the application of the provisions on public procurement according to Article 19, where a product is covered by a delegated act adopted under Regulation (EU) 2017/1369 of the European Parliament and of the Council51, contracting authorities or contracting entities should purchase only the products that comply with the obligation laid down in Article 7 (2) of that Regulation.

(35) Households and final consumers are an essential part of the Union’s demand for net-zero technologies final products and public support schemes to incentivize the purchase of such product by households, in particular for vulnerable low- and lower middle-class income households and consumers, are important tools to accelerate the green transition. Under the solar rooftop initiative announced in the EU solar strategy52, Member States should for instance set-up national programmes to support the massive deployment of rooftop solar energy. In the REPowerEU plan, the Commission called Member States to make full use of supporting measures which encourage switching to heat pumps. Such support schemes set up nationally by Member States or locally by local or regional authorities should also contribute to improving the sustainability and resilience of the EU net-zero technologies. Public authorities should for instance provide higher financial compensation to beneficiaries for the purchase of net-zero technology final products that will make a higher contribution to resilience in the Union. Public authorities should ensure that their schemes are open, transparent and non-discriminatory, so that they contribute to increase demand for net-zero technology products in the Union. Public authorities should also limit the additional financial compensation for such products so as not to slow down the deployment of the net-zero technologies in the Union. To increase the efficiency of such schemes Member States should ensure that information is easily accessible both for consumers and for net-zero technology manufacturers on a free website. The use by public authorities of the sustainability and resilience contribution in schemes targeted at consumers or households should be without prejudice to State aid rules and to WTO rules on Subsidies.

(36) When designing schemes benefitting households or consumers which incentivise the purchase of net-zero technology final products listed in the Annex, Member States, regional or local authorities, bodies governed by public law or associations formed by one or more such authorities or one or more such bodies governed by public law, should ensure the respect of the Union’s international commitments, including by ensuring that schemes do not reach a magnitude that causes serious prejudice to the interest of WTO members.

(37) The Commission should also assist Member States in the design of schemes targeted at households and consumers to build synergies and exchange best practices. The Net-Zero Europe Platform should also play an important role in accelerating the implementation of the sustainability and resilience contribution by Member States and public authorities in their public procurement and auctioning practices. It should issue guidance and identify best practices on how to define the contribution and use it, providing concrete and specific examples.

(38) To enable the industry to adjust its production on time, contracting authorities and contracting entities should inform the market in advance of their estimated procurement needs for net-zero technology products.

(39) As indicated in the Communication on the Green Deal Industrial Plan for the Net-Zero Age, published on 1 February 2023, the Union’s industry’s market shares are under strong pressure, due to subsidies in third countries which undermine a level playing field. This translates in a need for a rapid and ambitious reaction from the Union in modernising its legal framework.

(40) Access to finance is key for ensuring the Union’s open strategic autonomy and for establishing a solid manufacturing base for net-zero technologies and their supply chains across the Union. The majority of investments necessary to reach the Green Deal objectives will come from private capital53 attracted by the growth potential of the net-zero ecosystem. Well-functioning, deep and integrated capital markets will therefore be essential to raise and channel the funds needed for the green transition and net-zero manufacturing projects. Swift progress towards the Capital Markets Union is thus necessary for the EU to deliver on its net-zero objectives. The sustainable finance agenda (and blended finance) also plays a crucial role in scaling up investments into the net-zero technologies, while guaranteeing the competitiveness of the sector.

(41) Where private investment alone is not sufficient, the effective roll-out of net-zero manufacturing projects may require public support in the form of State aid. Such aid must have an incentive effect and be necessary, appropriate and proportionate. The existing State aid guidelines that have recently undergone an in-depth revision in line with the twin transition objectives provide ample possibilities to support investments for projects in the scope of this Regulation subject to certain conditions. Member States can have an important role in easing access to finance for net-zero technologies manufacturing projects by addressing market failures through targeted State aid support. The Temporary Crisis and Transition Framework (TCTF) adopted on 9 March 2023 aims at ensuring a level playing field within the internal market, targeted to those sectors where a third-country delocalisation risk has been identified, and proportionate in terms of aid amounts. It would enable Member States to put in place measures to support new investments in production facilities in defined, strategic net-zero sectors, including via tax benefits. The permitted aid amount can be modulated with higher aid intensities and aid amount ceilings if the investment is located in assisted areas, in order to contribute to the goal of convergence between Member States and regions. Appropriate conditions are required to verify the concrete risks of diversion of the investment outside the European Economic Area (EEA) and that there is no risk of relocation within the EEA. To mobilise national resources for that purpose, Member States may use a share of the ETS revenues that Member States have to allocate for climate-related purposes.

(42) Several Union funding programmes, such as the Recovery and Resilience Facility, InvestEU, cohesion policy programmes or the Innovation Fund are also available to fund investments in net-zero technology manufacturing projects.

(43) The amended Recovery and Resilience Facility Regulation54 made available an additional EUR 20 billion of non-repayable support to Member States in order to promote energy efficiency and replace fossil fuels, amongst others through EU net-zero industry projects. As pointed out in the Commission Guidance on the REPowerEU chapters55, Member States are encouraged to include in the REPowerEU chapter of their recovery and resilience plans, measures supporting investments in net-zero technologies manufacturing and industrial innovation, in accordance with Regulation (EU) 2021/241 of the European Parliament and of the Council56.

(44) InvestEU is the EU flagship programme to boost investment, especially the green and digital transition, by providing financing and technical assistance, for instance through blending mechanisms. Such approach contributes to crowd in additional public and private capital. In addition, Member States are encouraged to contribute to the InvestEU Member State compartment to support financial products available to net-zero technology manufacturing, without prejudice to applicable State aid rules.

(45) Member States can provide support from cohesion policy programmes in line with applicable rules under Regulation (EU) 2021/1060 of the European Parliament and of the Council57 to encourage the take up of net-zero strategic projects in less developed and transition regions through investment packages of infrastructure, productive investment in innovation, manufacturing capacity in SMEs, services, training and upskilling measure, including support to capacity building of the public authorities and promoters. The applicable co-financing rates set in programmes may be up to 85% for less developed regions and up to 60% or 70% for transition regions depending on the fund concerned and the status of the region but Member States may exceed these ceilings at the level of the project concerned, where feasible under State aid rules. The Technical Support Instrument can help Member States and regions in preparing net-zero growth strategies, improve the business environment, reducing red tape and accelerating permitting. Member States should be encouraged to promote the sustainability of net-zero strategic projects by embedding these investments in European value chains, building notably on interregional and cross border cooperation networks.

(46) The Innovation Fund also provides a very promising and cost efficient avenue to support the scaling up of manufacturing and deployment of renewable hydrogen and other strategic net zero technologies in Europe, thus reinforcing Europe’s sovereignty in key technologies for climate action and energy security.

(47) A European Sovereignty Fund would provide a structural answer to the investment needs. It will help preserving a European edge on critical and emerging technologies relevant to the green and digital transitions, including net-zero technologies. This structural instrument will build on experience of coordinated multi-country projects under the IPCEIs and seek to enhance all Member States’ access to such projects, thereby safeguarding cohesion and the Single Market against risks caused by unequal availability of State Aids.

(48) To overcome the limitations of the current fragmented public and private investments efforts, facilitate integration and return on investment, the Commission, and Member States should better coordinate and create synergies between the existing funding programmes at Union and national level as well as ensure better coordination and collaboration with industry and key private sector stakeholders. The Net-Zero Europe Platform has a key role to play to build a comprehensive view of available and relevant funding opportunities and to discuss the individual financing needs of net-zero strategic projects.

(49) In order for net-zero technology manufacturing projects to be deployed or expanded as quickly as possible to ensure the Union’s security of supply for net-zero technologies, it is important to create planning and investment certainty by keeping the administrative burden on project promoters to a minimum. For that reason, permit-granting processes of the Member States for net zero technology manufacturing projects should be streamlined, whilst at the same time ensuring that such projects are safe, secure, environmentally performant, and comply with environmental, social and safety requirements. Union environmental legislation sets common conditions for the process and content of national permit-granting processes, thereby ensuring a high level of environmental protection. Being granted the status of Net-Zero Strategic Project should be without prejudice to any applicable permitting conditions for the relevant projects, including those set out in Directive 2011/92/EU of the European Parliament and of the Council58, Council Directive 92/43/EEC59, Directive 2000/60/EC of the European Parliament and of the Council60, Directive 2004/35/EC of the European Parliament and of the Council61, and Directive (EU) 2010/75 of the European Parliament and of the Council62.

(50) At the same time, the unpredictability, complexity and at times, excessive length of national permit-granting processes undermines the investment security needed for the effective development of net-zero technologies manufacturing projects. Therefore, in order to ensure and speed up their effective implementation, Member States should apply streamlined and predictable permitting procedures. In addition, Net-Zero Strategic Projects should be given priority status at national level to ensure rapid administrative treatment and urgent treatment in all judicial and dispute resolution procedures relating to them, without preventing competent authorities to streamline permitting for other net-zero technologies manufacturing projects that are not Net-Zero Strategic Projects or more generally.

(51) Given their role in ensuring the Union’s security of supply for net-zero technologies, and their contribution to the Union’s open strategic autonomy and the green and digital transition, responsible permitting authorities should consider Net-Zero Strategic Projects to be in the public interest. Based on its case-by-case assessment, a responsible permitting authority may conclude that the public interest served by the project overrides the public interests related to nature and environmental protection and that consequently the project may be authorised, provided that all relevant conditions set out in Directive 2000/60/EC, Directive 92/43/EEC and Directive 2009/147/EC63 are met. 

(52) In order to reduce complexity and increase efficiency and transparency, project promoters of net-zero technologies manufacturing projects should be able to interact with a single national authority responsible for coordinating the entire permit granting process and issuing a comprehensive decision within the applicable time limit. To that end, Member States should designate a single national competent authority. Depending on a Member State’s internal organisation, it should be possible for the tasks of the national competent authority s to be delegated to a different authority, subject to the same conditions. To ensure the effective implementation of their responsibilities, Member States should provide their national competent authority, or any authority acting on their behalf, with sufficient personnel and resources.

(53) In order to ensure clarity about the permitting status of Net-Zero Strategic Projects and to limit the effectiveness of potential abusive litigation, while not undermining effective judicial review, Member States should ensure that any dispute concerning permit granting process is resolved in a timely manner. To that end, national competent authorities should ensure that applicants and project promoters have access to a simple dispute settlement procedure and that Net-Zero Strategic Projects are granted urgent treatment in all judicial and dispute resolution procedures relating to them while ensuring respect for the rights of defence. 

(54) In order to allow businesses and project promoters, including for cross-border projects, to directly enjoy the benefits of the internal market without incurring an unnecessary additional administrative burden, Regulation (EU) 2018/1724 of the European Parliament and the Council64 provides for general rules for the online provision of procedures relevant for the functioning of the internal market. The information that needs to be submitted to national competent authorities as part of the permit-granting processes covered by this Regulation are to be covered in Annex I of Regulation (EU) 2018/1724 following its amendment by this Regulation, and the related procedures are included in its Annex II so as to ensure that project promoters can benefit from fully online procedures and the Once-Only Technical System. National competent authorities acting as one stop shop pursuant to this Regulation are included in the list of assistance and problem-solving services in Annex III of Regulation (EU) 2018/1724.

(55) Net-zero technology manufacturing projects undergo lengthy and complex permitting procedures of 2-7 years, depending on the Member State, technology and value chain segment. Considering the size of required investments – in particular for gigafactory-size projects which are needed to reach the expected economies of scale – inadequate permitting creates an additional and often detrimental barrier to increase net-zero technology manufacturing capacity in the Union. In order to provide project promoters and other investors with the security and clarity needed to increase development of net-zero technologies manufacturing projects, Member States should ensure that the permit-granting process related to such projects does not exceed pre-set time limits. For Net Zero Strategic Projects the length of the permit-granting process should not exceed twelve months for facilities with a yearly production output of more than 1 GW, and 9 months for those with a yearly production output of less than 1 GW. For all other net-zero technology manufacturing projects, the length of the permit-granting process should not exceed eighteen months for facilities with a yearly production output of more than 1 GW, and twelve months for those with a yearly production output of less than 1 GW. For net-zero technologies for which the GW metric is not relevant, such as grids and carbon capture and storage (CCS) or carbon capture and usage (CCU) technologies, the upper limits of the aforementioned deadlines should apply. For the expansion of existing production lines, each of the aforementioned time limits should be halved.

(56) In addition, given the importance of Net Zero Strategic Projects for the Union’s energy supply certain administrative restrictions should be partly lifted or simplified to speed up their implementation.

(57) The environmental assessments and authorisations required under Union law, including in relation to water, air, ecosystems, habitats, biodiversity and birds, are an integral part of the permit granting procedure for a net zero technologies manufacturing project and an essential safeguard to ensure negative environmental impacts are prevented or minimised. However, to ensure that permit granting procedures for net zero technologies manufacturing projects are predictable and timely, any potential to streamline the required assessments and authorisations while not lowering the level of environmental protection should be realised. In that regard, it should be ensured that the necessary assessments are bundled to prevent unnecessary overlap and it should be ensured that project promoters and responsible authorities explicitly agree on the scope of the bundled assessment before the assessment is carried out to prevent unnecessary follow-up.

(58) Land use conflicts can create barriers to the deployment of net zero technologies manufacturing projects. Well-designed plans, including spatial plans and zoning, that take into account the potential for implementing net-zero technologies manufacturing projects and whose potential environmental impacts are assessed, have the potential to help balance public goods and interests, decreasing the potential for conflict and accelerating the sustainable deployment of net-zero technologies manufacturing projects in the Union. Responsible national, regional and local authorities should therefore consider the inclusion of provisions for net-zero technologies manufacturing projects when developing relevant plans.

(59) Space data and services derived from EU Space Programme, and in particular Copernicus, shall be used to the extent possible to provide information on the geology, biology, ecology, socio-economic development, and resource availability for the environmental assessments and authorisations; such data and services and in particular the Copernicus anthropogenic CO2 emission monitoring and verification capacity are most relevant to assess the impact of industry projects and the impact of anthropogenic CO2 sinks on the global greenhouse gas concentrations and fluxes.

(60) The Commission should, as provided in Article 10(1) of Regulation (EU) No 1025/2012, request one or more European standardisation organisation to draft European standards in support of the objectives of this Regulation.

(61) Hydrogen Valleys with industrial end-use applications play an important role in decarbonising the energy-intensive industries. REPowerEU set the objective of doubling the number of Hydrogen Valleys in the Union. In order to achieve this objective, Member States should accelerate permitting and consider regulatory sandboxes and prioritise access to funding. To strengthen the net zero resilience, Member States should ensure the interconnection of Hydrogen Valleys across the Union’s borders. Industrial installations which produce their own energy, and which can provide a positive contribution to the production of electricity, should be encouraged to contribute to the smart electricity grid as energy producers by simplifying regulatory requirements.

(62) Net-zero regulatory sandboxes can be an important tool to promote innovation in the field of net-zero technologies and regulatory learning. Innovation needs to be enabled through experimentation spaces as scientific outcomes need to be tested in a controlled real-word environment. Regulatory sandboxes should be introduced to test innovative net-zero technologies in a controlled environment for a limited amount of time It is appropriate to strike a balance between legal certainty for participants in the Net-Zero regulatory sandboxes and the achievement of the objectives of Union law. As Net-Zero regulatory sandboxes must in any case comply with the essential requirements on Net-Zero technology laid out in Union and national law, it is appropriate to provide that participants , who comply with the eligibility requirements for Net-Zero regulatory sandboxes and who follow, in good faith, the guidance provided by the competent authorities and the terms and conditions of the plan agreed with those authorities, are not subject to any administrative fines or penalties. This is justified as the safeguards in place will, in principle, ensure effective compliance with Union or Member State law on the Net-Zero technology supervised in the regulatory sandboxes. The Commission will publish a Guidance for Sandboxes document in 2023 as announced in the New European Innovation Agenda to support Member States in preparing the net zero technology sandboxes. Those innovative technologies could eventually be essential to achieve the Union’s climate neutrality objective, ensure the security of supply and resilience of the Union’s energy system, and consequently enter the scope of strategic net-zero technologies.

(63) An overall benchmark and indicative objectives for the manufacturing of key net-zero technology products in the European Union are put forward in order to help tackle import dependency and vulnerability concerns and ensure the Union’s climate and energy targets are met.

(64) The scaling up of European net-zero technology industries requires significant additional skilled workers which implies important investment needs in re-skilling and upskilling, including in the field of vocational education and training. This should contribute to the creation of quality jobs in line with the targets for employment and training of the European Pillar of Social Rights. The energy transition will require a significant increase in the number of skilled workers in a range of sectors, including renewable energy and energy storage, and has a great potential for quality job creation. The skill needs for the fuel cell hydrogen sub-sector in manufacturing alone are estimated at 180.000 trained workers, technicians and engineers by the year 2030, according to the Commission’s European Strategic Energy Technology Plan65. In the photo-voltaic solar energy sector, up to 66.000 jobs would be needed in manufacturing alone. The European network of employment services (EURES) is providing information, advice and recruitment or placement for the benefit of workers and employers, including across internal market borders.

(65) Since strengthening the manufacturing capacity of key net-zero technologies in the Union will not be possible without a sizeable skilled workforce, it is necessary to introduce measures to boost the activation of more people to the labour market, notably women and young people not in employment, education or training (NEETs), including via skills first approaches as a complement to qualifications-based recruitment. In addition, in line with the objectives of the Council Recommendation on ensuring a fair transition towards climate-neutrality, specific support for job-to-job transition for workers in redundant and declining sectors are important. This means investing in skills and in quality job creation required for net-zero technologies in the Union. Building on and fully taking into account existing initiatives such as the EU Pact for Skills, EU level activities on skills intelligence and forecasting, such as by the European Centre for the Development of Vocational Training (Cedefop) and the European Labour Authority, and the Blueprints for sectoral cooperation on skills, the objective is to mobilise all actors: Member States authorities, including at regional and local levels, education and training providers, social partners and industry, in particular SMEs, to identify skills needs, develop education and training programmes and deploy these at large scale in a fast and operational manner. Net-zero strategic projects have a key role to play in this regard. Member States and the Commission may ensure financial support including by leveraging the possibilities of the Union budget through instruments such as the European Social Fund Plus, Just Transition Fund, European Regional Development Funds, the Recovery and Resilience Facility, the Modernisation Fund, REPowerEU and the Single Market Programme.

(66) Building on previous experiences, such as the EU Pact for Skills and the European Battery Alliance, European Net-Zero Industry Academies should develop and deploy education and training content to upskill and reskill workers required for key net-zero technology value chains, such as solar photovoltaic and solar thermal technologies, renewable hydrogen technologies and raw materials. The academies would aim to enable the training and education of 100.000 learners each, within three years of their establishment, to contribute to the availability of skills required for the net-zero technologies, including in small and medium-sized enterprises. That content should be developed and deployed with education and training providers in Member States, relevant Member States authorities and social partners. Education and training providers, industry and other actors involved in up- and reskilling in the Member States, such as Public Employment Services, should deliver the content produced by the academies. To ensure skills transparency and portability and the mobility of workers, the European Net-Zero Industry Academies will develop and deploy credentials, including micro-credentials, covering learning achievements. They should be issued in the format of European credentials for learning and could be integrated in EUROPASS and, where relevant, included in National Qualifications Frameworks. Member States are encouraged to support the continuous reskilling and upskilling offered via the academies and the relevant education and training providers in their territories through national programmes and Union funding, including from the European Social Fund Plus, the Recovery and Resilience Facility, the European Regional Development Fund, the Just Transition Mechanism, the Modernisation Fund and the Technical Support Instrument. The Net-Zero Europe Platform should assist in guiding the work of the Academies and providing oversight.

(67) While in the absence of specific provisions introducing minimum training requirements for the access to a regulated profession or the pursuit thereof laid down in the Union law, it is a Member State’s competence to decide whether and how to regulate a profession, national rules organizing access to regulated professions must not constitute an unjustified or disproportionate obstacle to the exercise of those fundamental rights. The competence to regulate access to a profession must be exercised within the limits of the principles of non-discrimination and proportionality, in accordance with Directive (EU) 2018/958 of the European Parliament and of the Council of 28 June 2018 on a proportionality test before adoption of new regulation of professions. In their assessment Member States should take into account any detrimental effects that regulation or professions may have on the availability of skills in the Net-Zero Industry and seek to limit the regulation in these fields to the maximum extent possible. 

(68) Where the learning programmes developed by the European net-zero industry academies lead to credentials that would be of assistance to persons seeking access to a profession that is regulated, Member States should, in order to facilitate the mobility in strategic net-zero industry professions, accept these credentials as sufficient proof of the knowledge, skills and competences to which they attest.

(69) At Union level, a Net-Zero Europe Platform, should be established, composed of the Member States and chaired by the Commission. The Net-Zero Europe Platform may advise and assist the Commission and Member States on specific questions and provide a reference body, in which the Commission and Member States coordinate their action and facilitate the exchange of information on issues relating to this Regulation. The Net-Zero Europe Platform should further perform the tasks outlined in the different Articles of this Regulation, notably in relation to permitting, including one-stop shops, Net-Zero Strategic Projects, coordination of financing, access to markets and skills as well as innovative net-zero technologies regulatory sandboxes. Where necessary, the Platform may establish standing or temporary subgroups and invite third parties, such as experts or representatives from net-zero industries.

(70) As part of the Green Deal Industrial Plan the Commission announced its intention to conclude Net-Zero Industrial Partnerships covering net-zero technologies, to adopt net-zero technologies globally and to support the role of EU industrial capabilities in paving the way for the global clean energy transition. The Commission and Member States may coordinate within the Platform the Partnerships, discussing existing relevant partnerships and processes, such as green partnerships, energy dialogues and other forms of existing bilateral contractual arrangements, as well as potential synergies with relevant Member States’ bilateral agreements with third countries.

(71) The Union should aim to diversify international trade and investments in net-zero technologies and to promote globally high social and environmental standards should be done in close cooperation and partnership with like-minded countries. Similarly, stronger research and innovation efforts to develop and deploy net-zero technologies should be pursued in close cooperation with partner countries in an open but assertive approach.

(72) Where the power to adopt acts in accordance with Article 290 of the Treaty is delegated to the Commission under this Regulation, it is of particular importance that the Commission carries out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Inter-institutional Agreement on Better Law-Making of 13 April 2016. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(73) To the extent that any of the measures envisaged by the present Regulation constitute State aid, the provisions concerning such measures are without prejudice to the application of Articles 107 and 108 of the Treaty.

(74) Since the objective of this Regulation cannot be sufficiently achieved by the Member States and can rather, by reason of the scale or effects of the action, be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective.