Net Zero Industry Act

As one pillar of a larger Green Deal Industrial Plan, the NZIA is meant to strengthen and support the EU’s capacity to reach its climate goals and ensure Europe seizes the potential to be a world leader in the global net zero industry, in the context of strong support for net zero technologies coming from different parts of the world, such as the US IRA.

(Strategic) net zero technologies

The NZIA proposes key developments for net zero technologies. Two main aspects of the definition are particularly relevant: (1) the definition is not technology-neutral, it identifies key areas to be addressed, and further lists a family of eight strategic net zero technologies, which benefit from even faster permitting, priority status, and in some circumstance of overriding public interest; and (2) net zero technologies must be at least TRL 8. CDR is not explicitly listed as a (strategic) net zero technology, and the TRL 8 requirement would exclude most CDR methods (although if based on TRL only, some could fall under the definition of ‘innovative net zero technologies’, e.g., some forms of direct air capture are considered TRL 7).

CO2 injection capacity target to incentivise CO2 storage infrastructure

The NZIA proposes a 50 million tonnes per year of CO₂ injection capacity in the EU by 2030. The Act identifies the lack of storage capacity as one of the largest bottlenecks for CO₂ capture investments. One of the key aspects of the Act is the transparency of CO₂ storage capacity, including the obligation for Member States to make publicly-available data on sites that can be permitted on their territory, as well as reporting on CO₂ capture projects in progress, and their needs for injection and storage capacity. The NZIA clarifies that CO₂ injection capacity will also be available to accommodate CDR, but provisions are not proposed to ensure the shared CO₂ infrastructure can efficiently be used to accommodate both CCS and CDR methods. A comprehensive and coordinated approach to carbon management that considers both CCS and CDR would be needed to ensure that limited CO₂ storage capacity is used effectively to reach the EU’s climate neutrality targets.

Oil and gas producers contribution has the potential to be a world-leading initiative

The NZIA obliges oil and gas producers to take responsibility for storing CO₂ subject to the EU’s injection capacity target. This obligation is a form of “Extended Producer Responsibility”, holding hydrocarbon producers responsible for storing the carbon back in its original source. This stipulation also presents opportunities to develop open carbon storage sources by mapping and hosting transparent, open data on carbon storage resources, much of which is held today by private companies. The obligation, however, does not cover the suppliers of fossil fuels; without covering the entirety of the fossil fuel supply, such an obligation may inadvertently incentivise imports over domestic production – without having a real impact on fossil fuel use overall.

Fresh funding is needed

The Proposal establishes new initiatives, such as the “Net Zero Europe Platform”, that will discuss the financial needs of the net zero strategic projects and could be key in advising how the financing of these projects can be achieved. Beyond this, the NZIA is anchored in already existing funding mechanisms (e.g. the Innovation Fund, InvestEU, Horizon Europe, and Important projects of Common European Interest (IPCEI), the Recovery and Resilience Facility, and Cohesion Policy programmes). Clarity on new and additional funding will be key, as bigger goals will require bigger means. The announced European Sovereignty Fund (Summer 2023) is mentioned to address the mid-term funding needs, but the strength of this Fund will depend on the capacity to ensure each net zero technology is entitled to sufficient resources.