A Net Zero Industry Act starts its parliamentary course

Legal - June 6, 2023

On 16 March 2023, the European Commission proposed a new regulation on establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem (the so called “Net Zero Industry Act”).

The first rather striking item in the proposal is highly complicated name.  It could simply be entitled a framework of measures for strengthening Europe’s technology; in other words, a European Union Industry Reinforcement Act.

Of course, in that case the proposed title would also show that the radical environmentalist ideology behind the proposal is not in focus anymore; but rather the invigoration of industry in Member States, so that they have the necessary autonomy to produce key components and technologies in our single common economic area.

According to the Commission’s estimates, the global market for key technologies is set to triple by 2030 with an annual worth of around EUR 600 billion.  What we are missing is an objective fixed by the Commission on the EU achieving a relevant share of the pie.  Today, Mrs. Von der Leyen’s team weakly recognises that China accounts for 90% of investments in manufacturing facilities. The draft regulation does quantify an overall headline benchmark aim at ensuring that by 2030, the manufacturing capacity in the Union of the strategic net-zero technologies “approaches or reaches” at least 40% of the Union’s annual deployment needs – thus leaving the vast majority again to other global actors such as China, Russia or the United States.

The proposal is not accompanied by an impact assessment, a “formal” impact assessment if we use the literal term employed by the Commission, as if that were only a pure formality. In fact, this entails another example of bad regulation.  The authors justify their failure considering “the urgency to act”, but that only confirms improvisation from such a big structure as the Commission itself. Apparently, the analysis and all supporting evidence for the proposal will be set out in a staff working document to be published at the latest within three months of the proposal’s publication.  More than two months have already passed, with no publication so far.  But we can of course show our kind patience and consequently look forward to such staff working document for still a couple of weeks to come.

The explanatory statement warns that some measures needed to address serious disruptions of the technologies supply in the Union may temporarily limit the freedom to conduct a business.  This is quite surprising and worrying, as one would rather suppose that reinforcing industry technology boosts freedom to conduct a business, and not the contrary.

Incredibly enough, the Commission would only evaluate the output, results and impact of the proposal three years after the date on which it becomes applicable.  If the proposal is indeed so urgent, evaluation should take place from year one of its application.

The proposal introduces regulatory “sandboxes” to test innovative net-zero technologies in a controlled environment for a limited amount of time.  Sandboxes sounds like a rather kitsch synonym for “project”, a more consolidated term; but it conveys a connotation for a childish approach to the very same products that other global actors take seriously and where they have attained a solid level of maturity.

The file will now be discussed in the European Parliament’s committees, including ITRE (Industry, Research and Energy) and EMPL (Employment and Social Affairs).  The latter will focus on efforts to ensure the availability of a skilled workforce.  Hopefully, its work will not be too contaminated by ideology, a sad trend under the domination of leftwing groups, where a decisive position of the Renew group normally determines the outcome.

Finally, designing and deploying necessary skills, in accordance with the draft proposal, would be implemented through a set of specialised “European skills Academies”, each focussing on a net-zero technology and working together with Member States, industry, social partners, and education and training providers.  However, it should be reminded that education fundamentally remains a competence of the Member States.