European Union governments have formally approved a landmark law aimed at bolstering the bloc’s clean technology manufacturing capabilities. The Net Zero Industry Act (NZIA), cleared on Monday, sets an ambitious goal for the EU to produce 40% of its solar panels, wind turbines, heat pumps, and other clean tech equipment domestically by 2030. This move is intended to help European industries compete more effectively with their U.S. and Chinese counterparts.

The NZIA is a pivotal component of the EU’s strategy to maintain its leadership in reducing greenhouse gas emissions and manufacturing the necessary technologies to support this transition. Europe is currently highly dependent on China, which is projected to control 80% of global solar power manufacturing capacity. Additionally, the EU faces the challenge of the $369 billion in green subsidies from the U.S. Inflation Reduction Act, which could lure European producers to relocate across the Atlantic.

The new legislation will come into effect next month or by early July, following the formal signing by the presidents of the European Parliament and the Council and its publication in the EU’s official journal. This act reflects the EU’s determination not only to cut emissions but also to secure its place in the global clean technology market.

To meet its goals, the EU has set a target to produce 40% of the products necessary for reducing greenhouse gas emissions by 2030. This encompasses a wide range of technologies, including renewable energy sources, nuclear power, heat pumps, electrolysers, and carbon capture and storage systems. Furthermore, the bloc aims to achieve 15% of the global production of these technologies by 2040.

The NZIA also includes provisions to streamline the permitting process for projects that enhance EU manufacturing capabilities. Under the new law, most permits will need to be issued within six to nine months, expediting the development and deployment of clean tech projects.

Source: Reuters