🗳️ The full European Parliament has now adopted the Net Zero Industry Act (NZIA) in today’s plenary session with 361 Yes and 121 No votes (45 abstentions).
👇 A provisional agreement on this act was reached by the European Parliament, the Council, and the Commission in February 2024 and has now officially been adopted. Read on to find out what The NZIA means, how it falls short of some of its promises, and what lies ahead.
🏛️ For those of you not familiar, the NZIA is supposed to be the EU’s answer to the U.S.’ Inflation Reduction Act (IRA) - the largest investment in the green transition in American history. It aims to consolidate European industrial policy to support the EU's 2030 climate target of reducing greenhouse gas (GHG) emissions by 55% and achieving net-zero by 2050.
STRENGTHS OF THE NZIA
🎯 It sets a CO2 injection capacity target of 50 million tonnes by 2030 and mandates domestic oil and gas (O&G) producers contribute based on their production levels from 2020-2023 with penalties if they fail to do so.
⏩ It is expediting the deployment of net-zero technologies by reducing bureaucratic delay by limiting permitting times for these projects to 6-18 months in judicial and planning procedures.
📋 It introduces criteria beyond mere cost considerations, such as environmental standards in public procurement and support schemes for net-zero technologies.
WEAKNESSES OF THE NZIA
😶🌫️ It appears to lack effective regulatory mechanisms and has also been criticised for its strategic vagueness in identifying key technologies crucial for the EU's industrial policy.
🫰 It doesn't introduce new funding, but relies on pre-existing financial mechanisms like the Innovation Fund and Horizon Europe, falling way short of $390 billion of funding through the IRA.
😱 While the name itself kind of mandates it, the NZIA excluded carbon dioxide removal (CDR) technologies from the list of prioritised net-zero technologies. Given the EU's ambitious climate targets, integrating advanced CDR methods within the NZIA could have been crucial.
LOOKING AHEAD POST-2024 ELECTIONS
🔭 After June’s election, the next Commission will inherit a critical task: to refine and potentially expand the NZIA which can be done after four years.
Key areas of focus should include:
1️⃣ Establishing more explicit criteria and objectives for selecting key technologies
2️⃣ Amend the NZIA to include a wider range of CDR technologies
3️⃣ Introducing new funding or increasing allocations to existing programmes to ensure adequate support for a range of technologies
🚧 So while the sentiment is there, there's still a way to go for the NZIA to fully drive the EU's industrial decarbonization efforts forward and shape its transition to a sustainable, net-zero future. My concern is that four years is a long way to wait for that. What do you think?
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