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European Commission new regulation proposals: Net-Zero Industry and Critical Raw Materials Acts


The European Commission has unveiled two new legislative proposals: the Net-Zero Industry and Critical Raw Materials Acts. These Acts aim to achieve net-zero greenhouse gas emissions by 2050, enhance the sustainability of the EU's industry, and ensure the supply of essential raw materials for the transition to a decarbonized economy.

The European Commission tabled its net-zero industry act on 16th March, setting a goal for the EU to domestically produce at least 40% of the technology it needs to achieve its climate and energy targets by 2030. The proposed law aims at speeding up permitting and increasing access to finance for a list of “strategic net-zero technologies” — detailed in an annex to the legal text. These strategic net-zero technologies include solar, wind, batteries and storage, heat pumps and geothermal energy, electrolysers and fuel cells, biogas/biomethane, carbon capture, utilisation and storage, and grid technologies. Under the proposed law, each of these technologies should aim to have 40% of their production in the EU by 2030, although this won’t be a legal obligation.

In addition, these technologies, like wind, solar and batteries, can be designated by Member States as net-zero strategic projects and benefit from shorter permitting according to the Commission the deadlines of 9 to 12 months, compared to 12 to 18 months without such a designation.

The proposal also states that EU countries can use revenues from the EU carbon market allocated for climate-related purposes alongside money from EU funding programmes, like the recovery fund and the Innovation Fund. EU countries are also invited by the proposed act to accelerate and crowd-in private investments in net-zero strategic projects to speed up their implementation.

Together with the net zero act the Commission presented the Critical Raw Materials Act that sets targets for the production, refining and recycling of key raw materials needed for the green and digital transitions. Critical raw materials are indispensable for a wide set of strategic sectors including the net zero industry, the digital industry, aerospace, and defence sectors.

For example, according to Commission estimates the demand for rare earth metals for wind turbines is expected to increase 4.5-fold by 2030. Lithium, a key element of batteries in electric vehicles and devices, shall see its demand increase 11-fold by 2030, and 57-fold by 2050, yet only a small proportion comes from EU mines.

The Act set a target of mining at least 10 percent of the EU’s annual consumption of a select number of critical raw materials and processing at least 40 percent of that consumption by 2030. The Commission proposed a similar approach to quick permitting net-zero strategic projects in its critical raw materials proposal, with strategic projects benefiting from quick permitting: two years for mining projects, and one year for processing and recycling facilities. That would apply to projects within and outside of the bloc. However, this speed permitting for mining and energy is raising concerns that these projects might override the EU's nature protection and biodiversity legislation.

Together with the proposal for a European Critical Raw Materials Act and the Net-Zero Industry Act these set out a clear European aim to reduce the EU's reliance on strategic imports.

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