Net-Zero Industry Act and Critical Raw Materials Act: proposals welcomed but questions remain

ACEA broadly welcomes the European Commission's proposals for a Net-Zero Industry Act and a Critical Raw Materials Act, which set out a legal framework for how Europe can best protect and support its green tech industry.

However, many questions remain, particularly regarding the potential effectiveness of these acts and their overall coherence with Europe's Green Deal plans.

ACEA welcomes the identification of batteries as a priority sector of the Net-Zero Industry Act (NZIA). The setting of enabling factors to improve conditions for investment in net-zero technologies and the priority given to Net-Zero Strategic Projects will be helpful for the development of that sector. We also welcome the focus that the NZIA puts on the skills and human resources gaps that are currently slowing this transition down.

Where significant uncertainty still lies, however, is in how well the many different elements of the proposal will actually translate into effective action. In particular, how well and how quickly the sectors identified in the NZIA will be able to access the essential financing that in principle should be available under the repurposed REPowerEU and other schemes.

The Critical Raw Materials Act(CRMA) can strengthen Europe's material supply chain and support the development of diversified sourcing opportunities for the electromobility industry. However, the reduction in burden in permitting procedures at one end of the chain might be offset by burdensome reporting and assessment procedures at the other end. The proposal also presents a number of binding targets for increasing domestic capacities, which are welcome in principle but risk being watered down in the legislative process.

The international element of the CRMA is a reminder of how important third country sources of critical and strategic raw materials are. It is clear that more work needs to be done on the concept of establishing a Raw Materials Club. ACEA would welcome progress with the United States on bringing this concept to reality.

Ultimately these measures will be judged by how well they can offset the massive financial leverage and threat of investment leakage posed by the US Inflation Reduction Act (IRA).