In 2024, the European Union (EU) took a significant step toward achieving its climate and industrial ambitions with the formal enactment of the Net-Zero Industry Act (NZIA) and the Critical Raw Materials Act (CRMA). These two legislative frameworks are key pillars in the EU’s strategy to strengthen its clean technology manufacturing sector, reduce dependency on external supply chains, and support the transition to a sustainable, carbon-neutral economy.
The Net-Zero Industry Act (NZIA): Boosting Clean Tech Manufacturing
The Net-Zero Industry Act (NZIA) was first proposed by the European Commission on 16 March 2023 and officially came into force in 2024. It is designed to scale up clean technology production across the EU, ensuring that at least 40% of the EU’s annual clean energy deployment needs are met by domestic manufacturers by 2030. This law identifies key net-zero technologies, including solar panels, batteries, wind turbines, heat pumps, and hydrogen electrolyzers, and positions them as strategic priorities for investment and development.
To accelerate growth, the NZIA introduces a set of regulatory and financial measures:
- Net-Zero Strategic Projects: Member states are required to establish national projects that facilitate rapid permitting and development of clean energy infrastructure.
- Faster Permitting: The law significantly reduces bureaucratic barriers, setting clear deadlines for approving net-zero technology projects.
- Financial Incentives: The EU will offer subsidies, tax breaks, and financing tools to attract private investments into the clean energy sector.
- Public Procurement Support: Governments will be encouraged to prioritize EU-made clean technologies in public tenders to stimulate local production.
This initiative aligns with the EU’s broader Green Deal Industrial Plan, aiming to boost energy security, create high-quality jobs, and reduce reliance on imported clean technologies, particularly from Asia.
European Commission President Ursula von der Leyen praised the agreement, stating:
“The political agreement on the Net-Zero Industry Act is a significant stride towards realizing our ambitious climate and economic objectives. It demonstrates our collective commitment to build a more sustainable, resilient, and competitive industrial sector in Europe. Together, we are making the EU a global frontrunner in the clean energy transition.”
The Critical Raw Materials Act (CRMA): Securing Europe’s Supply Chain
The Critical Raw Materials Act (CRMA) was presented alongside the NZIA on 16 March 2023, and the European Parliament and the Council reached a political agreement on 13 November 2023. Like the NZIA, it officially took effect in 2024. Recognizing that the energy transition depends on a stable supply of essential raw materials, the CRMA establishes a framework to secure and diversify access to key resources like lithium, cobalt, rare earth elements, and nickel, which are crucial for batteries, solar panels, and wind turbines.
The CRMA sets ambitious targets to:
- Ensure at least 10% of the EU’s demand for strategic raw materials is extracted domestically.
- Require that 40% of critical raw materials be processed within the EU.
- Ensure that 15% of the EU’s annual consumption of these materials comes from recycling.
- Reduce dependence on any single non-EU country for more than 65% of a strategic material’s supply.
To achieve these goals, the CRMA introduces:
- Strategic Raw Materials Projects: EU funding and fast-track permitting for mining, refining, and recycling projects.
- Supply Chain Diversification: Increased trade agreements with alternative partners to reduce over-reliance on China.
- Circular Economy Initiatives: Stronger incentives for battery recycling and material recovery to minimize waste and reliance on virgin raw materials.
Implications for the Energy Sector and Businesses
The combined impact of the NZIA and CRMA is set to transform Europe’s clean energy landscape. By fostering local production of renewables and securing critical materials, the EU aims to strengthen its industrial resilience and competitiveness.
For companies operating in the solar, battery, and wind energy sectors, these laws present new opportunities for funding, market access, and strategic partnerships. Businesses that invest in EU-based manufacturing, recycling, or processing facilities stand to benefit from subsidies, streamlined regulations, and growing demand for locally sourced materials and technologies.
Conclusion
The Net-Zero Industry Act and Critical Raw Materials Act mark a pivotal moment in the EU’s commitment to a sustainable, self-sufficient clean energy future. By aligning industrial policy with climate goals, these regulations not only support Europe’s carbon neutrality objectives but also strengthen its position as a global leader in renewable energy and green technology innovation.
