What’s in the Net Zero Industry and Critical Raw Materials Acts?

Doubling down on competitive regulation, the European Commission has proposed another set of policies in its efforts to lead on global energy policy.

Following its proposed revision of Europe’s electricity market design, the European Commission has proposed two further sets of legislation, the Critical Raw Minerals Act and the Net Zero Industry Act, both under the banner of the Green Deal Industrial Plan.

Proposed to enhance Europe's competitive edge against other global players in the industry such as the US and China, the two acts are hoped to strengthen the continent’s position reducing reliance on highly concentrated imports, of critical raw minerals and clean energy technologies respectively.

Critical Raw Materials

While demand for critical raw materials is projected to increase drastically, Europe heavily relies on imports, often from quasi-monopolistic third country suppliers.

The Act would aim to leverage the strengths of the Single Market and the EU's external partnerships to thus diversify and enhance the resilience of EU critical raw material supply chains.

President of the European Commission, Ursula von der Leyen, said: “This Act will bring us closer to our climate ambitions. It will significantly improve the refining, processing and recycling of critical raw materials here in Europe.

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“And we're strengthening our cooperation with reliable trading partners globally to reduce the EU's current dependencies on just one or a few countries.

"It's in our mutual interest to ramp up production in a sustainable manner and at the same time ensure the highest level of diversification of supply chains for our European businesses.”

The Act will equip the EU with the tools to ensure EU's access to a secure and sustainable supply of critical raw materials, mainly through:

• Setting clear priorities for action: The Regulation embeds critical and strategic raw materials lists in EU law and sets clear benchmarks for domestic capacities along the strategic raw material supply chain and to diversify EU supply:
  • At least 10% of the EU's annual consumption for extraction,
  • At least 40% of the EU's annual consumption for processing,
  • At least 15% of the EU's annual consumption for recycling,
  • Not more than 65% of the Union's annual consumption of each strategic raw material at any relevant stage of processing from a single third country.
• Creating secure and resilient EU critical raw materials supply chains: The Act will reduce administrative burden and simplify permitting procedures for critical raw materials projects in the EU.
• Ensuring that the EU can mitigate supply risks: To ensure resilience of the supply chains, the Act provides for the monitoring of critical raw materials supply chains and the coordination of strategic raw materials stocks among Member States.
• Investing in research, innovation and skills:  Alongside establishing the Raw Materials Academy, the Commission will strengthen the uptake and deployment of breakthrough technologies in critical raw materials.
• Circularity: Member States will need to adopt and implement national measures to improve the collection of critical raw materials rich waste and ensure its recycling into secondary critical raw materials.
• Trade actions: Trade actions will be set up, such as by establishing a Critical Raw Materials Club for countries willing to strengthen global supply chains, strengthening the World Trade Organization and expanding its network of Sustainable Investment Facilitation Agreements and Free Trade Agreements.

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Net-Zero Industry

The Net-Zero Industry Act has been proposed to scale up manufacturing of clean technologies in the EU and ensure the Union is well-equipped for the clean-energy transition.

The Act hopes to strengthen resilience and competitiveness of net-zero technologies manufacturing in the EU, attract investments and create better conditions to set up net-zero projects across the continent.

Von der Leyen said: “We need a regulatory environment that allows us to scale up the clean energy transition quickly. The Net-Zero Industry Act will do just that.

"It will create the best conditions for those sectors that are crucial for us to reach net-zero by 2050…Demand is growing in Europe and globally, and we are acting now to make sure we can meet more of this demand with European supply."

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The Act is built on the following pillars:

Setting enabling conditions: Improving conditions for investment in net-zero technologies by enhancing information, reducing the administrative burden to set up projects and simplifying permit-granting processes. The Act proposes to give priority to Net-Zero Strategic Projects essential for reinforcing the resilience and competitiveness of the EU industry, including sites to safely store captured CO2 emissions. They will be able to benefit from shorter permitting timelines and streamlined procedures.

Accelerating CO2 capture: the Act sets an EU objective to reach an annual 50Mt injection capacity in strategic CO2 storage sites in the EU by 2030, with proportional contributions from EU oil and gas producers.

Facilitating access to markets:  The Act requires public authorities to consider sustainability and resilience criteria for net-zero technologies in public procurement or auctions.

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Enhancing skills: The Act introduces new measures to ensure there is a skilled workforce supporting the production of net-zero technologies in the EU, including setting up Net-Zero Industry Academies, with the support and oversight by the Net-Zero Europe Platform.

Fostering innovation: the Act makes it possible for Member States to set up regulatory sandboxes to test innovative net-zero technologies and stimulate innovation, under flexible regulatory conditions.

A Net-Zero Europe Platform will assist the Commission and Member States to coordinate action and exchange information, including around Net-Zero Industrial Partnerships. It will also support investment by identifying financial needs, bottlenecks and best practices for projects across the EU.

Both proposed regulations now needs to be discussed and agreed by the European Parliament and the Council of the European Union before its adoption and entry into force. A timeline for discussion and debate has not yet been announced.