EU Council and Parliament Embrace Net-Zero Industry Act, Paving the Way for Resilience Auctions
2024-02-15 15:49

After rigorous negotiations, the European Council and Parliament reached a provisional agreement on February 6, successfully concluding the trilogue discussions on the Net-Zero Industry Act. A pivotal focus of these negotiations was Article 20 Market Access, defining rules for resilience auctions.
Anticipating a transformative change, resilience auctions are set to be integrated into the European Union's landscape. In the forthcoming era, a substantial 30% of projects awarded in public tenders will be mandated to adhere to resilience criteria. Notably, there will be a temporary absence of tariffs or trade barriers. This provisional outcome reflects the collaborative efforts of the EU Commission, Council, and Parliament during the trilogue negotiations on the Net-Zero Industry Act. Envisioned as a catalyst for manufacturers in energy-relevant industries, including module production, the act aims to enhance competitiveness and foster supply chain diversification within the energy sector.
Amidst the exorbitant energy prices gripping Europe in 2022, the Commission took action by introducing the Net-Zero Industry Act proposal in 2023. The proposal emphasized the need for the European Union to foster energy independence, steering away from reliance on a single country for its energy supply and advocating for the development of domestic production. Addressing the European Parliament on February 5, EU Finance Commissioner Mairead McGuinness underscored a concerning statistic: a staggering 97% of globally installed solar modules annually originate from non-EU countries, predominantly China. The primary driving force behind this imbalance is cost, as European manufacturers struggle to compete with their foreign counterparts. In response to this challenge, the Council and Parliament collaborated to establish new regulations for public tenders, aiming to bolster market access for domestic manufacturers and promote a more self-reliant energy landscape within the European Union.
Since March 2023, the European Council of Ministers and the European Parliament engaged in intensive discussions regarding the intricacies of the Net-Zero Industry Act. The focal points of contention centered on Article 20, which pertains to market access, and the Annex's definition of net-zero technologies, notably nuclear energy.

In a recent development, the two EU institutions reached a consensus. They have determined that each member state with a tender volume exceeding 6 GW of renewable energy annually is mandated to allocate 30% of the tendered volumes based on resilience criteria. This decision reflects a significant step toward shaping the market access landscape for wind and solar energy within the European Union.
Technology suppliers will now undergo assessments based on a comprehensive responsible business code of conduct, encompassing cyber and data security, as well as delivery capability. Evaluations will extend to a supplier's sustainability and resilience credentials. Notably, member states are now restricted to importing only 50% of modules from a single country per year in auctions, promoting diversification. Moreover, production standards are elevated, requiring environmentally friendly practices surpassing the minimum international standards. The criteria will also reward the adoption of particularly innovative technologies and those facilitating grid integration. Each member state has the flexibility to prioritize aspects of the criteria, allowing for customization based on individual market needs. For instance, a country may prioritize environmental protection in production over innovation or grid usefulness, and vice versa. In practical terms, this is anticipated to result in auctions differentiating between "resilient" and "non-resilient" modules, providing a nuanced approach to technology procurement and emphasizing the importance of responsible and sustainable practices in the industry.
The commencement date of the new regulations has been a subject of controversy, with the Council's initial proposal from December 2023 lacking differentiation between wind and solar energy.
The proposed criteria were set to be applicable to both forms of energy generation nine months after the enactment of the Net-Zero Industry Act. Criticism arose from the solar industry, citing the disparity between the capabilities of European manufacturers in the wind sector, which can meet continental demand, and the challenges faced by the photovoltaic (PV) manufacturing sector. At the time of publication, the final agreement's precise wording was not available, leaving uncertainty about whether the Council and Parliament had distinguished between the implementation timelines for wind power and photovoltaics.
Nuclear energy added another layer of contention, as it was not initially listed as a net-zero technology in the Commission's proposal but was included in the Council of Ministers' proposal from December 2023. In the current version, nuclear energy is now categorized as a net-zero technology in the legal act. The next procedural step involves the formal adoption of the provisional outcome of the negotiations by the Council and Parliament. 

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