NZIA as part of the European Industrial Plan 

The NZIA is a (first) component of an industrial plan announced by the European Commission (COM). This industrial plan aims to enable Europe  to lead the way in the climate-neutral industrial age worldwide. The industrial plan builds on previous initiatives and aims to support the EU's ongoing efforts under the European Green Deal and the REPowerEU-programme. 

Overall, the European Commission's plan is based on four pillars: 

A predictable and simplified regulatory environment through reliable and simpler regulations. This first pillar is intended to implement three initiatives in particular. These include the NZIA, the Critical Raw Materials Act and the electricity market reform. The Critical Raw Materials Act is intended to ensure access to critical raw materials (e.g. rare earths) that are important for the production of CO2-neutral technologies. The electricity market reform aims to counteract price fluctuations, while at the same time ensuring security of supply and making the advantages of renewable electricity generation available to electricity customers. “Real-world laboratories” are also to be promoted.  

The second pillar aims to accelerate investment and financing in the European cleantech sector by accelerating access to finance. This concerns, among other things, the simplification of subsidies for the use of renewable energy and for the decarbonisation of industrial processes, an investment promotion programme in favour of the production of CO2-neutral technologies and more targeted aid to strengthen CO2-neutral value chains. 

In view of the boom in new technologies, the COM wants to use the third pillar to promote the expansion of skills and the qualifications of skilled workers and to build up and expand their skills through various support measures. 

The fourth pillar concerns the promotion of open trade "for tear-resistant and resilient supply chains". The aim is to promote global cooperation and strengthen the role of trade in the green transition. According to the European Commission, this is about fair competition and compliance with the obligations between EU partners and the WTO. The internal market should continue to be protected from unfair trading practices. 

The role of the NZIA as a driver of green technologies in Europe at a glance 

From a legal point of view, the NZIA is directly applicable as a European regulation and came into force on 29 June 2024. According to the German Federal Ministry of Economics and Climate Protection (Bundesministerium für Wirtschaft und Klimaschutz; “BMWK”), the German government is currently preparing the national implementation of the NZIA.

In principle, the NZIA applies to all climate-neutral technologies that can make a significant contribution to the decarbonisation of industry. Essentially, the NZIA wants to create a legal framework for investments in climate-neutral technologies and their promotion or financing in the context of auctions. The NZIA is intended to accelerate the reduction of bureaucracy and ensure more investment. The NZIA is thus in the context of a global subsidy race, especially compared to the initiatives of other leading economic powers such as the USA and China. While the U.S. subsidizes the expansion of so-called "clean-tech" companies with the Inflation Reduction Act ("IRA"), China is making massive investments in green technologies, consolidating its position as the world leader in this area. 

The NZIA's rules aim to promote net-zero emissions manufacturing in the EU and ensure that strategic climate-neutral technologies reach at least 40% of the EU's annual demand by 2030. About 90% of the batteries are said to come from European production. The NZIA distinguishes between climate-neutral technologies and strategic climate-neutral technologies, such as photovoltaics and solar thermal energy, electrolysers and fuel cells, onshore wind energy as well as renewable offshore energy and battery or storage technologies, heat pumps and geothermal energy, biogas and biomethane, carbon capture, use and storage. 

Compared to climate-neutral technologies, strategic climate-neutral technologies are being promoted more strongly. This can be done, for example, by applying sustainability and resilience criteria in the auctions (weighted award criteria that are not price-related), by shortening approval¬procedures or by providing financial advice within the framework of the "Net-Zero Europe" platform.

In terms of content, the NZIA deals in particular with the following measures:

• Creation of a simplified and accelerated approval procedure for projects for the production of climate-neutral technologies
• Establishment of criteria for the selection and implementation of strategic projects
• Implementation of measures to achieve the goal of generating an annual injection capacity of at least 50 million tonnes of CO2 on EU territory by 2030 (CO2 capture and storage)
• Accelerating and facilitating market development and market access for climate-neutral technologies
• Improving skills for the creation of high-quality jobs in climate-neutral technologies, in particular through the establishment of European Net Zero Industry Academies
• Promoting innovation, including through real-world laboratories 
• Establishment of a "Net-Zero Europe" platform for the coordination and monitoring of actions

Conclusion: There is room for improvements 

In order to consolidate the European production location and make it competitive, a European response has been awaited for a long time. The NZIA is intended to create a favourable legal framework for the so-called "cleantech" sector, which strengthens the competitiveness of European industry and facilitates the investment opportunity in green technologies and makes the EU more attractive as a production location. Overall, the NZIA, as part of a European industrial plan, appears to be a first step towards strengthening the competitiveness of European companies. However, since the individual measures are still not very tangible at present, it remains to be seen what the actual impact of the NZIA will be. Above all, the competitiveness of industry would be strengthened by simplifying regulatory constraints. The NZIA (still) has not answered how the conflict of goals between the promotion of industry and the achievement of the expansion targets for renewable energy can be resolved. Practical examples show that this does not have to be a contradiction. But in the overall view, the compatibility of low prices, security of supply and environmental compatibility still appears to be an unresolved "wide field". In addition, the NZIA "only" uses existing EU funding pots for the planned funding, so that it cannot provide a sufficient answer in this respect compared to the newly created funding of the US IRA. 

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