By global challenges and a drive towards climate neutrality, the EU member states will need a massive scale-up of clean technology (clean-tech, in short) in numerous manufacturing sectors in renewables: batteries, solar panels, heat pumps, electrolysers, wind turbines, etc. Main European regulatory measures include the net-zero industry act and hydrogen option. These initiatives need financial support: can member states manage that?
It has been obvious during the last decade, that the 4th industrial revolution’s challenges and a European plea for climate neutrality by 2050 would need a complete re-making of national political economies, including research and education.
Present EU initiatives (besides the European response to the American’s IRA) are aimed –above all – at strengthening the member states’ industrial base and creating new workforce with stable and quality jobs. These EU- wide initiatives are a timely reaction to both new geopolitical realities and the need to accommodate national industrial policies to modern challenges. Several legal instruments have been announced in this regard already: e.g. the Chips Act, the Critical Raw Materials Act and the Net Zero Industry Act, to name a few.
Guidelines in the new initiatives
For example, with the Net Zero Industry Act the Commission aims to manufacture at least 40% of European deployment needs; however, the EU member states will continue to trade with external partners, but more should be made in Europe, as it is impossible to produce everything by the member states. The Act creates the regulatory conditions to help make this happen: first of all it enables faster permitting procedures with shorter deadlines and an easy one-stop-shop facility. For a set of crucial technologies – like wind, solar, and batteries – the EU states may choose to grant projects priority status, as ‘Net Zero Strategic Projects’. These projects could then be considered of ‘overriding public interest’ and benefit from even shorter permitting deadlines: 9 to 12 months compared to 12 to 18 months without such a designation.
Besides, sustainability and resilience have to become an integral part of public procurement for clean tech, of renewables auctions and of incentive schemes for households and consumers.
Addressing the lack of carbon storage capacity in Europe is also vital: carbon storage is one of the solutions needed to help decarbonise industrial development. The Commission is setting an EU-wide target of 50 million tons of injection capacity by 2030: it will be coupled with obligations for the hydrocarbon industry to provide for storage sites (to eliminate existing main bottlenecks). Scientists say that they can elaborate carbon storage technology, but they have to know where to store the carbon once the carbon is captured.
Then comes the hydrogen issue: it is an industry where the EU is well ahead of global competition: i.e. over 50% of installed electrolysis-capacity and over 50% of electrolyzed manufacturing capacity is presently in the EU. The problem is to maintain that leading position as the technology moves to mass production both in Europe and around the world.
Presently, only 10% of hydrogen projects in the EU states have reached a final investment decision. The reason is that potential users of renewable hydrogen are waiting with their investments because they don’t know when they will have hydrogen by the time they need it. Besides, producers are waiting to be sure that they have reasonable profit on investment.
In order to mitigate the risks and help to bridge the gaps, the Commission is creating “Hydrogen Bank” to solve domestic and an international questions. Thus, for renewable hydrogen produced in the EU, the bank will cover the green premium as the difference between the cost of producing renewable hydrogen and the market price; the exact amount of the premium will result from a competitive bidding process. Therefore, the renewable hydrogen producers who require the lowest amount of support in terms of euros per kilo of hydrogen produced will win the auction. A first auction worth €800 million will be funded through the Innovation Fund and will be launched in autumn 2023. Besides, the EU needs a solid hydrogen value chains to close the investment gap.
A separate process will be created for renewable hydrogen imported from outside the EU; the supporting issues will be decided at a later stage on how together with the EU member states.
And, of course, main attention shall be on necessary investments from private and public sources and adequate financial resources; in order to boost clean tech in Europe, new joint funding will be needed…
The net-zero industrial development has already become an integral part of the EU “green deal” goals and decoupling from Russian energy sources: the price is about € 450 billion.
Huge investment is needed in net-zero production and clean tech technologies. As Commissioner Th. Breton mentioned recently, mostly in strategic raw resources and materials the EU states will need more than € 20 billion by 2030 just to supply the battery industry; besides, around € 90 billion will be needed for renewables, i.e. solar, wind and other alternative fuels or energy efficiency technologies. About € 600 billion of investments is needed by 2030 globally, more than three times the current levels, Calculated the Commission.
More in: https://ec.europa.eu/commission/presscorner/detail/en/SPEECH_23_1702