The European Commission wants to counter the American billion-euro funding package for green technologies with ambitious expansion targets: By 2030, the EU is to produce two-fifths of the green key technologies required annually for its climate targets. 85 percent of wind turbines, 85 percent of batteries, 60 percent of heat pumps, 40 percent of solar panels and enough electrolysers to produce half of the green hydrogen will then come from domestic production. This emerges from a draft for a Net Zero Industry Act, which the Commission intends to present next week. The draft is available to the F.A.Z.
Economic correspondent in Brussels.
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The law is intended to be a central component of the European response to the Inflation Reduction Act (IRA), with which the US government invests 369 billion dollars in green technologies. The IRA has raised concerns in Europe that companies are shifting their investments in key green technologies to the US – especially since their promotion is largely linked to local content. As a first step, the Commission had responded to the IRA by greatly relaxing the State aid rules. Commission President Ursula von der Leyen has also announced a proposal for a "European Sovereignty Fund" for the summer.
The heads of state and government are to discuss the law on the promotion of green technologies at their summit at the end of March. The now leaked draft comes from an early stage. It is dated February 23. The final version could therefore differ. However, the basic line is unlikely to change. It still has to be decided by the European Parliament and the Council of Ministers.
French success: nuclear fission is explicitly mentioned
With the law, the Commission defines which green technologies are considered strategically important. This also includes the production of biomethane, energy networks, the capture, use or storage of CO2 (CCUS) and – this can be considered a French success – nuclear energy. Nuclear fission is explicitly mentioned. The two-fifths target is to be mandatory as a minimum target for all technologies. However, the sub-targets for the individual technology branches such as heat pumps and solar panels are intended as a benchmark.
The Commission also justifies the requirements with the high dependence on imports from certain countries, above all China. It is therefore not only concerned with a response to the IRA, but also, as with the Chips Act presented a year ago, with security of supply. The EU Commission mentions in particular the dependence on Chinese imports for solar systems, which amounts to more than 90 percent for some central elements. Even with heat pumps and wind farms, where the position of the EU is better, it loses competitiveness, according to the draft law. Moreover, of the nuclear reactors planned or under construction in Europe and the rest of the world, only one comes from the EU.
In order to achieve these objectives, the Commission relies on state aid. To this end, the Commission and the Member States should assume the main risk of projects, as in the case of the so-called Juncker Fund, in order to attract private investors. The Commission wants to use money from the innovation fund, which is fed by emissions trading revenues. In addition, the states should use part of the revenues from emissions trading to which they are entitled to make the EU less dependent on imports from third countries. How high the percentage should be, is still left open in the draft.
Furthermore, Member States should take into account the issue of the EU's security of supply, both in public tenders and in support programmes for private households. In the case of public contracts, this aspect should account for between 15 and 40 percent of the evaluation of an offer. In doing so, they should not least take into account whether a third country restricts trade in green technologies or otherwise distorts competition. This passage could be used against China as well as the US rules on "local content". In a way, the requirements are a slightly slimmed-down version of the French demand for a "Buy European" regulation, i.e. a targeted preference for European products.
The acceleration of approval procedures plays an important role in the EU draft law. All technologies covered by the law, including nuclear power plants and the equally controversial projects for capturing and storing CO2, are to be classified as of "overriding public interest", which makes it difficult for environmentalists to appeal. The environmental assessment should be completed within 30 days at the latest. The entire approval process for new buildings or the extension of existing projects should take a maximum of one and a half years. Shorter approval periods are foreseen for smaller projects and factories. The EU states should also designate "Net-Zero Industry Valleys", in which the permits are to be granted six months faster.