The European Commission’s Net Zero Industry Act (NZIA) entered into force on 30 June 2024, opening a new path for climate innovation and industrial decarbonization across the European Union. As a regulation, the NZIA automatically applies to all 27 EU Member States without the need for national transposition, ensuring immediate and uniform implementation across the EU.
Objectives of NZIA
The NZIA aims to achieve two key objectives:
- EU annual deployment needs: ensure that at least 40% of EU annual deployment needs for net-zero technologies are met domestically by 2030.
- Global production share: increase the EU share of global production of these technologies to 15% by 2040.
Scope and coverage
The NZIA addresses facilities involved in 19 net-zero technologies across the full supply chain, with a focus on final products and the specific components primarily used for these technologies. Energy-intensive industry decarbonization projects and Carbon Capture and Storage (CCS) sites are also included. Projects not explicitly listed can still qualify if promoters provide proof of their primary use for net-zero technologies.
Strategic project status
The NZIA offers net-zero technology manufacturing projects the opportunity to apply for strategic project status (Articles 13-16). This status grants priority at the national level, streamlines permitting processes (reducing timelines to 9-12 months), and simplifies access to funding sources such as the Cohesion Fund, Innovation Fund, or Important Projects of Common European Interest (IPCEI). Member States will assess applications for strategic project status within one month after submission. The European Commission is expected to publish guidelines on strategic projects shortly.
Implementation and coordination
The Net Zero Europe Platform supports the NZIA’s implementation, fostering harmonization through the sharing of best practices, providing advice on regulation’s provisions, and coordinating activities. This Platform includes representatives from the European Commission (DG GROW, DG ENER), Member States, and subgroups focusing on specific topics like Academies and Industry Groups.
Funding instruments:
No new fund was created to support the implementation of the NZIA. However, it will leverage a variety of existing EU and national funding instruments to support its objectives:
=> Managed at EU level:
- Innovation Fund
- InvestEU
- Horizon Europe
=> Managed at Member States’ level:
- Recovery and Resilience Facility (RRF)
- European Regional Development Fund (ERDF)
- Temporary Crisis and Transition Framework
- IPCEI and Mini IPCEI (under General Block Exemption Regulation / no notification)
Creating lead markets
To stimulate demand for net-zero technologies, the NZIA refers to three key instruments:
- Public procurement: new rules will mandate that authorities consider environmental sustainability and resilience (when a specific net-zero technology or its components depend more than 50% on a third country for imports) when procuring goods, works, and services related to net-zero technologies. These rules will apply to all contracts from April 2026 onward. If a disproportionate cost difference appears, authorities may not apply these criteria.
- Auctions: starting January 2026, Member States designing auctions for renewable energy technologies must apply non-price pre-qualification and award criteria such as environmental sustainability, innovation, energy system integration, and resilience. These criteria must apply to at least 30% of the volume auctioned annually, with flexibility if cost differences are too high. A delegated act will be published within 9 months after the NZIA enters into force.
- Other support schemes: Member States are encouraged to design support schemes that promote the purchase of high sustainability and resilience net-zero products through additional financial incentives for households, companies, or customers.
Permitting and Net Zero Acceleration Valleys
A key feature of the NZIA is the simplification of permitting processes. By January 2025, each Member State must establish a single point of contact to coordinate the entire permitting process, reducing the current timeline from 2-3 years to 9-12 months.
Additionally, the NZIA introduces the concept of Net Zero Acceleration Valleys, which are geographical areas designated by Member States aimed at fostering net-zero industry clusters and streamlining administrative procedures. Public investments in these areas may receive maximum co-financing rates under various EU funds (ERDF, Cohesion Funds, Just Transition Fund, and ESF+).
Member States must first set out a plan with national measures on how to trigger private investments in energy, digital, and transport infrastructure, and how to reduce operational expenditure for industry (Contracts for Difference). 151 regions have already been selected. To simplify permitting, the whole area will go through an ex-ante environmental assessment and will have a single point of contact (especially to attract new projects).
Next steps:
The European Commission is preparing several guidelines and acts to ensure the effective implementation of the NZIA, including:
- Guidance on strategic projects
- Delegated and implementing acts on components (will be published end of June)
- Implementing act on selection criteria for strategic projects
- Implementing acts on criteria in public procurement and auctions
- Regulatory sandboxes and monitoring will come later (EC is mapping supply chains for the moment)
FCA’s conclusions and points for attention
The NZIA represents a significant step towards achieving the EU’s climate goals and strengthening its sustainable industrial base. By fostering innovation and supporting the deployment of net-zero technologies, the Act sends signals to innovators and the market. It aims to position the EU as a global leader in the green transition while expecting high environmental standards.
However, a few points for attention remain and must be monitored regularly:
- The inclusion of 19 net-zero technologies, a significant expansion from the initially considered list: it recognizes the diversity of technological pathways necessary to achieve the EU’s ambitious climate targets. However, it also may dilute focus and EU scarce resources.
- The reliance on Member States to assess and prioritize strategic projects within one month could lead to disparities in implementation across different regions.
- This will also require strong support to local and regional governments, which will need additional human and financial capacities to implement such regulation properly, driving technological innovation and promoting sustainable economic growth.
- Achieving the 15% target of global production will require substantial investments in technology and infrastructure, which may face funding and coordination challenges.
- The link with the critical raw material regulation will be essential, given that raw material availability and sustainability are fundamental to the production of net-zero technologies.
For more detailed insights: The Net-Zero Industry Act (europa.eu), ID-E Webinar Series #6: Net-Zero Industry Act (7 June 2024) – YouTube.