The European Union has unveiled two key initiatives to make the transition to clean energy and ensure it has access to critical raw materials to make the switch. The measures are expected to enable the bloc to counter the competition from the United States and China on the clean energy front.

The first of these initiatives announced by European Commission President von der Leyen as part of the Green Deal Industrial Plan is the proposed Net-Zero Industry Act that promotes the scaling up of clean technology manufacturing.

The EU hopes the legislation will strengthen the competitiveness of net-zero technologies manufacturing and create better conditions to set up net-zero projects in Europe and attract investments.

The Act aims to ensure that the EU’s overall strategic net-zero technologies manufacturing capacity reaches at least 40% of its deployment needs by 2030.

The Net-Zero Industry Act addresses technologies that will significantly contribute to decarbonization. These include solar photovoltaic and solar thermal, onshore wind and offshore renewable energy, batteries and storage, heat pumps and geothermal energy, electrolyzers and fuel cells, biogas/biomethane, carbon capture, utilization and storage, and grid technologies.

To further support the uptake of renewable hydrogen within the EU and imports from international partners, the Commission is also presenting its ideas on the design and functions of the European Hydrogen Bank.

Critical Raw Materials Act

The second initiative is the European Critical Raw Materials Act proposal, which identifies a list of strategic raw materials crucial to Europe’s green ambitions. The regulation sets the following benchmarks for domestic capacities along the strategic raw materials supply chain and to diversify EU supply by 2030:

• 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

The Act will simplify permitting procedures for critical raw materials projects in the EU. Selected strategic projects will benefit from access to finance and shorter permitting timeframes (24 months for extraction permits and 12 months for processing and recycling permits).

Both pieces of legislation need to be discussed and agreed upon by the European Parliament and the Council of the European Union before their adoption and entry into force.

European Commission President 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: technologies like wind turbines, heat pumps, solar panels, renewable hydrogen, as well as CO₂ storage. Demand is growing in Europe and globally, and we are acting now to ensure we can meet more of this demand with European supply.”

Recently, the Commission also proposed a major reform of the EU’s electricity market design to accelerate the adoption of renewable energy and phase out gas. The reform measures aim to incentivize longer-term contracts with non-fossil power production and bring more clean, flexible solutions such as demand response and storage.