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Achieving the benefits of NZIA objectives require improving Europe’s deployment of clean energy infrastructure

May 24, 2023

The Net Zero Industry Act (NZIA) recently proposed by the European Commission offers a strengthened industrial vision for the European Union that could bolster energy security, accelerate emissions reductions, and increase economic activity.  

The Act focuses on increasing the scale and proficiency of the EU’s manufacturing capabilities for technologies like renewables, battery storage, electrolysers, fuel cells, heat pumps, biomethane, and carbon capture and storage. The breadth of these priority technologies — and especially the inclusion of carbon capture and storage — highlights the Commission’s increasing recognition of the value of an options-based energy strategy.  

But industrial facilities and manufacturing centres for net-zero technologies do not exist as individual, disconnected points on a map. To bring about a true industrial transformation through mechanisms like the NZIA, the Commission will need to apply a similarly bold vision to build the enabling clean energy infrastructure required to provide clean electricity, deliver clean fuels, and remove carbon pollution. Should the NZIA measures prove successful in expediting the expansion of clean technology manufacturing capacity — and we certainly hope they do — the region’s slow pace of infrastructure deployment could prove to be a fatal bottleneck to achieving the Act’s full potential.  

Infrastructure like power lines for transmitting clean electricity, pipelines for moving clean fuels and carbon dioxide, renewable energy power plants, battery facilities, and more are critical enablers of the twenty-first century economy. And all face an abundance of red tape and political headwinds. 

The NZIA proposes several innovative policy frameworks to better identify, prioritise, permit, and build net-zero industrial facilities. Some of the same innovative policy proposals included in the NZIA can and should be applied to clean energy infrastructure. Adapting these policy frameworks to infrastructure deployment would not only speed the clean transformation of the industrial sector, but also keep economywide decarbonisation on track to achieve Europe’s climate and energy security goals and provide more clarity on the path to widescale infrastructure deployment. 

As the NZIA moves forward through the European legislative process, here are three opportunities to apply learnings from this proposal to simultaneously address Europe’s infrastructure challenge. 

1. Incorporate clean energy infrastructure into regional, national, and local mapping and planning 

Industrial facilities, solar panels and wind farms, wires, pipelines, and other infrastructure needed for the energy transition all must be placed somewhere. But land in Europe is some of the most intensively used and limited in the world, posing a barrier to building and connecting infrastructure. Spatial planning to understand existing resources and visualise where new assets fit best is critical to efficient industrial and infrastructure placement that minimises land use and environmental impacts.  

The NZIA proposes that zoning, spatial, and land use plans at regional, national, and local levels include provisions for the development of net-zero technology manufacturing projects, ensuring planners, policymakers, and communities proactively consider where these projects go and how they will integrate with existing infrastructure. To limit development in areas already in use or in environmentally sensitive areas, the NZIA further recommends planners prioritise brownfields and formerly developed sites for net-zero industrial facilities.  

The Commission and Member States can mimic this approach in planning for all clean energy infrastructure. To aid quicker and more efficient planning across the economy, the European Commission should update its digital mapping tools, resolve data limitations, and encourage Member States to select clean technology “go-to areas” that extend beyond manufacturing and renewables to include nuclear, carbon capture infrastructure, and hydrogen infrastructure. Identifying areas best suited for each part of the net-zero technology value chain can also facilitate identification of collaboration opportunities and the establishment of strategic infrastructure partnerships. 

2. Speed permitting timelines for non-renewable, net-zero energy technologies to support net-zero industry while promoting energy security and resilience

Among all the factories, assembly plants, shipping hubs, and other industrial projects needed to accelerate the EU’s net-zero industrial activity, some are essential to reinforcing the resilience and competitiveness of the bloc’s industry. Projects providing broad, diverse, and catalytic benefits for net-zero industry warrant special and focused consideration from government, investors, and the public. Delaying such projects unnecessarily could have knock-on effects in other industries and put decarbonisation goals at risk. To quickly facilitate delivery of these critical facilities, the NZIA calls upon Member States to recognize them as “net-zero strategic projects.” Each Member State is encouraged to grant these projects the highest possible national significance and permit them rapidly (with upper limits on permitting timelines).  

Via this provision in the NZIA, the EU acknowledges that permitting delays can preclude building key net-zero industrial facilities on time and at scale. Fortunately, the EU has also recognised similar delays standing in the way of deploying renewable energy resources needed to support the industrial transition and meet climate goals. As of 2022, the EU had four times more wind capacity in permitting than under construction, with projects taking an average of five years to come online in countries like France and Italy. Solar permitting times range from one to four years across Member States, with only three countries averaging less than two years. To address this backlog, the EU called upon Member States to speed renewable energy permit approvals. Building on REPowerEU, the Renewable Energy Directive revision and other emergency responses fast-track renewable permitting by including temporary rules that set maximum deadlines for granting permits. 

EU action to date to expedite permitting for both critical net-zero industrial facilities and renewable energy resources can be adopted and expanded to other clean energy infrastructure that reinforces the resilience and security of energy infrastructure and promotes faster decarbonisation of Europe’s industry. The EU should implement upper limits on permitting for other net-zero energy technologies beyond renewables, such as advanced nuclear. Permitting these technologies faster would give Member States more optionality in deciding how to reduce carbon emissions economywide, could spur investment in non-fossil, baseload power sources to replace fossil fuels in industrial processes, and reduce reliance on other countries and regions for industrial fuel inputs. This approach would support technology innovation and maximise the number of decarbonisation pathways and solutions available.  

3. Adapt the NZIA’s “one-stop shop” concept to reduce administrative burden for net-zero energy infrastructure

The NZIA identifies reduced administrative burden as a “core driver” of developing net-zero manufacturing projects. Indeed, burdensome administrative processes surrounding siting and permitting are key barriers to industrial projects and clean energy infrastructure alike, within and across Member States. According to the RES Policy Monitoring Database, administrative process issues, including process complexity, is the primary barrier to the deployment of renewable energy across all Member States. 

To reduce administrative blockers to project success, the NZIA proposes the “one-stop shop,” or a single agency in each Member State responsible for managing permitting requests for net-zero manufacturing technology projects. One point of contact for permit applications would streamline a process that typically involves multiple agencies, reducing uncertainty and redundancies for both project developers and government workers, and could thereby significantly reduce the time it takes to permit and build net-zero industrial facilities. 

To speed the deployment of zero-carbon generation resources and accompanying pipelines and wires that deliver cleaner inputs to net-zero industrial processes and manufacturing sites, EU Member States should consider applying a similar “one-stop shop” concept to streamline permitting for net-zero infrastructure. A singular point of contact for infrastructure permitting matters could help the bloc align easily with Member States on permitting regulations, hold countries accountable for implementing accelerated renewables permitting timelines, and hasten Europe’s energy independence and decarbonisation timelines. Europe and its Member States can look to countries like Denmark already implementing the clean energy infrastructure “one stop shop” for best practices. 

At the EU level, the “one-stop shop” idea applied to regional net-zero energy infrastructure could also streamline the buildout of cross-border electricity transmission and pipeline infrastructure critical to the net-zero industrial transition, as well as integrate new hubs and industrial facilities onto that infrastructure. 

The road ahead 

The Net Zero Industry Act is a laudable effort to merge climate action with the re-emergence of the EU domestic industrial sector, the skilling up of the domestic industrial, construction, administrative, and manufacturing workforce, and increased capital flows into Europe’s economy. But without a plan to build enabling clean energy infrastructure, supported by more streamlined and tailored funding for technology commercialisation and deployment and a strategic approach to technology optionality, increased domestic manufacturing of climate technologies will not achieve deep decarbonisation.  

As the European Commission implements new, innovative approaches to net-zero industrial sites, it should consider how those approaches could be applied in the infrastructure space to support and enable Europe’s industrial transformation. A single piece of legislation isn’t going to solve all these issues, but these concepts should be a leitmotif running through future proposals coming out of the Commission in order to maximize the potential benefits of NZIA

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