May 29, 2024

EU Council Approves Net-Zero Industry Act, Effective June

The European Council has adopted the EU's Net-Zero Industry Act (NZIA), which mandates that European manufacturers meet 40% of the EU's annual renewable energy needs by 2030. The act also includes the creation of 'Net-Zero Industry Academies' to train 100,000 workers and "regulatory sandboxes" to encourage technological innovation.

The EU's Net-Zero Industry Act (NZIA)

Following a year of debate, the European Council approved the EU's Net-Zero Industry Act (NZIA), which aims to stimulate the renewable energy manufacturing sector. The act requires European manufacturers to meet at least 40% of the EU's yearly renewable energy needs by 2030, and it will take effect the day after its expected publication in late June.

In addition, the NZIA will build 'Net-Zero Industry Academies' to teach 100,000 workers in three years and "regulatory sandboxes" to stimulate investment and innovation through flexible laws.

European Commission president Ursula von der Leyen stated that the act provides optimal conditions for key sectors necessary to achieve net-zero emissions by 2050, highlighting the increasing demand both in Europe and worldwide, which can now be met more effectively by European suppliers.

Saving the European PV Manufacturing Industry

Initially proposed by von der Leyen in February 2023, the regulations were approved by the EU Parliament last month. The new initiative seeks to rectify a growing disparity in the European renewables manufacturing sector, notably affecting the solar industry.

According to EUPD research, Europe imported 87GW of PV modules from China in 2023, with EU member states buying 8.3 million items worth US$612.4 million in December alone. This situation has made European manufacturing nearly financially unviable, leading Swiss company Meyer Burger to announce the closure of a module manufacturing plant in Germany due to the unfavourable economics of upstream production in Europe.

Furthermore, rising tensions between China and the United States over solar product imports have placed Europe in a difficult position, sandwiched between the two key players in the solar manufacturing business.

Earlier this year, Johan Lindahl, secretary general of the European Solar Manufacturing Council (ESMC), warned that the European PV manufacturing industry was on the brink of collapse.

No Price or Pre-qualification Requirements for First Purchases

In response, those within the European solar manufacturing sector have welcomed the European Council's vote as a critical measure to reverse this decline.

“ESMC and our member firms anticipate rapid action, as the EU PV manufacturing industry urgently requires the first purchases and auctions with NZIA non-price and pre-qualification requirements in place,” Lindahl added.

This requirement, agreed upon by the European Parliament and EU Council, mandates that 30% of the clean energy auctioned annually in the EU must meet criteria beyond just financial capital availability.

Anett Ludwig, head of supply chains at SolarPower Europe, emphasized that the upcoming Implementation Act of the NZIA must consistently and sensibly apply the new 'non-price criteria' across the EU. These criteria should be specific to each technology, introduced gradually, and used as award criteria rather than pre-qualification. This approach is crucial to prevent delays or under-subscription in public auctions, which could hinder the EU’s energy transition.

23 EU States Endorsed the Charter

The ESMC and SolarPower Europe have already taken steps to strengthen the European solar sector, including signing the European Solar Charter in April. Representatives from 23 EU states endorsed the charter, which includes an ESMC recommendation to set quantitative targets for new solar installations and specify the proportion of these projects using European-made products to ensure a sustainable supply of high-quality solar PV products in Europe.

However, Ludwig highlighted that the EU solar sector still requires "emergency support" and a "structural EU fund" to scale up European solar manufacturing in the short term. She stressed that some manufacturers are on the brink of collapse, needing urgent action from EU and national authorities. SolarPower Europe has called for an additional EU financing tool, such as a Solar Manufacturing Facility under the Innovation Fund.

The EU's Net-Zero Industry Act (NZIA) requires European manufacturers to meet 40% of the EU's annual renewable energy needs by 2030. It includes training for 100,000 workers and innovation support to sustain and enhance European solar manufacturing amid challenges from Chinese imports and industry instability.

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