European Parliament seeks subsidies for nuclear energy within industry decarbonization package

In the process of preparing the Net Zero Industry Act, aimed at supporting decarbonization technologies, the European Parliament adopted its position for negotiations with the Council of the European Union and the European Commission. All items are now on a joint list despite attempts to declare some of them including nuclear energy to be of secondary importance. The proposed legislative package is the response to the US Inflation Reduction Act.

The European Parliament agreed with 376 votes in favor against 139, and with 116 abstentions on a position on legislation intended to bolster manufacturing output in technologies needed for decarbonization. The Net Zero Industry Act package is envisaged as a response to the Inflation Reduction Act adopted in the United States last year with massive subsidy programs.

The International Energy Agency’s Executive Director Fatih Birol recently said climate change is indifferent to geopolitical rivalries. Still, the US and EU are racing to lure investments and take the lead in the development of new technologies for the global market. The keyword is reindustrialization as Europe largely relies on imports in the sector.

The Net Zero Industry Act sets a target for Europe to produce 40% of its annual deployment needs in net zero technologies by 2030, based on national energy and climate plans (NECPs), and to capture 25% of the global market value. It also intends to deal with the challenges in scaling up manufacturing capacities using the technologies.

Net zero industry valleys

In their amendments, members of the European Parliament broadened the scope of the draft legislation to encompass the entire supply chain, including components, materials, and machinery for producing net zero technologies. They propose a wider, more comprehensive list of technologies, to be updated periodically. Notably, MEPs included nuclear fission and fusion technologies, sustainable aviation fuels (SAFs) and specific industrial technologies.

The law retains two project classifications: net zero technology manufacturing projects and net zero strategic projects. It also aims to streamline the permitting process, setting a timeline of nine to 12 months for regular projects and six to nine months for strategic projects to be authorized. MEPs propose the creation of so-called net zero industry valleys initiatives.

EU lawmakers are proposing to streamline the permitting process for net zero technology manufacturing and net zero strategic projects

The legislation would earmark revenues from the Emissions Trading System (EU ETS) and for most strategic projects through the Strategic Technologies for Europe Platform (STEP), a step towards a European sovereignty fund, MEPs say.

“With the adoption of this proposal, MEPs are showing they are serious about making Europe fit for industrial manufacturing. Without these steps to reduce the administrative burden, speed up processes, and increased public investment in our industry and innovation, Europe would face decarbonisation by deindustrialisation. This proposal shows we can prevent this”, said lead MEP Christian Ehler.

Disputes remain on nuclear power plants, CCS

The technology list comprises renewable energy (wind and solar), nuclear energy including fusion and small modular reactors (SMRs), energy storage, the capture, transport, injection, storage and use of carbon dioxide (CCS, CCUS) as well as methane (CH4) and nitrous oxide (N2O), electric charging for transportation, hydrogen, sustainable alternative fuels, biomethane, heat pumps, energy efficiency, thermal energy distribution and electric grid technologies, high-efficiency industrial process and electrification for energy and carbon-intensive industries, biomaterials production, and recycling.

The long list could still be revised during the negotiations with the Council of the EU and European Commission

Initially, the European Commission proposed one list for strategic technologies and another one, including nuclear energy, which would be secondary, Euractiv noted. The news outlet reported that there could be revisions during the talks. Namely, a group of member states led by Germany may continue to push back against promoting nuclear power plants.

In addition, there is opposition among environmentalists to supporting CCS and CCUS projects with public funds. The European Parliament proposed to set the annual CO2 injection capacity target for 2030 at 50 million tons.

EU lawmakers are hoping an agreement will be reached by January as European elections are due in June.

In its reaction to the adoption of the document, SolarPower Europe flagged the prequalification criteria on local content, saying that technologies that are partially produced outside Europe would not even be allowed to bid into public auctions.