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EU Policy. Net Zero Industry Act sign-off heralds carbon capture deployment

EU internal market commissioner Thierry Breton presents EUrope's anser to Biden's Inflation Reduction Act in March 2023
EU internal market commissioner Thierry Breton presents EUrope's anser to Biden's Inflation Reduction Act in March 2023 Copyright Claudio Centonze/ EU/Claudio Centonze
Copyright Claudio Centonze/ EU/Claudio Centonze
By Robert Hodgson
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Legislation designed to protect European firms from US and Chinese competition during the transition from fossil fuels to clean energy also forces big oil to help keep carbon dioxide out of the atmosphere.

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Governments have signed off on new legislation they hope will prevent the EU from falling behind the US and China in the race to corner the market for clean energy technology, and finally see carbon capture and storage (CCS) deployed at scale after decades of false starts.

The Net Zero Industry Act (NZIA), formally adopted today (27 May) at a summit of agriculture ministers in Brussels, redirects EU funding, eases permitting delays, and dovetails with the new Critical Raw Materials Act intended to secure access to elements like lithium and rare earths.

The law is a response to fears of investment in renewable energy infrastructure, electric cars and other clean tech heading west for multi-billion dollar subsidies under the Biden administration’s Inflation Reduction Act, and the threat of undercutting by state support and low wages in the east.

Under the law, manufacturing capacity of designated ‘net-zero’ technologies should reach 40% of domestic demand by 2030, with batteries and solar photovoltaic panels which are almost all imported from the far east at present, a fate the EU is trying to avoid for its wind turbine and heat pump industries.

The NZIA further requires governments and the European Commission to ensure a global market share in all key low-carbon technologies of at least 15% by 2040.

It also requires petroleum producers to kick start the deployment of carbon capture and storage (CCS) infrastructure by develop facilities for the permanent storage of a combined 50 million tonnes a year of CO2 captured from industrial processes, typically in depleted oil and gas fields.

Carbon storage onus on industry

“Assigning responsibility to EU oil and gas producers based on their production share is a crucial and first-of-a-kind step to force the industry to act after years of talk,” said Hanna Biro of the Oslo-based, pro-CCS environmental NGO Bellona.

“These leading contributors to climate change will now bear more of the storage development costs and risks, easing the financial burden on taxpayers in Member States aiming to decarbonise key hard-to-abate industries,” Biro said.

To give a sense of scale to the EU’s new carbon storage target: the largest project currently under development in Europe is non-EU petroleum giant Norway’s state-supported Northern Lights project, which has been in development since 2016 and aims to go online this year with an injection capacity of 1.5m tonnes of CO2 a year.

Commission president Ursula von der Leyen welcomed the adoption of the anti-offshoring law, saying it created a regulatory environment conducive to the rapid scale-up of domestic production.

“The Act creates the best conditions for those sectors that are crucial for us to reach net-zero by 2050,” said von der Leyen, who is running for a second turn as the EU executive's senior politician. “Demand is growing in Europe and globally, and we are now equipped to meet more of this demand with European supply.”

A spokesperson for the Commission told reporters at a daily press briefing that the law would create a “unified and predictable” environment for investors, increasing the competitiveness and resilience of Europe’s industrial base and help create “important, quality jobs” while increasing energy security.

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