The European Green Deal rubric: A predictable and streamlined regulatory environment

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The main elements of the industrial plan for the Green transition

The Green Deal Industrial Plan increases the competitiveness of Europe’s net-zero emissions industry and accelerates the transition to climate neutrality. This is done by creating more favorable conditions for expanding the EU’s production capacity for net-zero technologies and products needed to meet Europe’s ambitious climate goals.

The four pillars of the plan:

To ensure Europe’s place as the home of industrial innovation and clean technologies, the Green Deal’s industrial plan will cover four main pillars:

  1. A predictable and simplified regulatory environment.
  2. Faster access to funding.
  3. Skill Enhancement.
  4. Open trade for sustainable supply chains.

In the next few articles, we will introduce you to each of the four pillars separately.

We will first pay attention to the first pillar, namely:

A predictable and streamlined regulatory environment

A simplified regulatory environment means creating a simpler, faster and more predictable framework, securing the necessary quantities of raw materials and enabling consumers to benefit from the low costs of renewable energy sources. There are three initiatives to support this activity:

  • Legislative act for industry with zero net emissions;
  • Legislative act on raw materials of extreme importance and
  • Reform of the electricity market structure.

Today we will pay special attention to the first of them:

European Commission’s Net Zero Industry Act – highlights

The regulation applies to all manufacturers of technological products operating in the European Union (EU) and the European Economic Area (EEA). This includes manufacturers of electronic devices, telecommunications equipment and IT equipment, among others.

The proposed regulation aims to ensure that the production of technological products in Europe is more sustainable and competitive. To achieve this, the proposal includes measures to encourage investment in the production of sustainable technological products. This includes financial incentives for companies to invest in sustainable production methods and technologies.

The regulation also aims to create a level playing field for companies operating in the technology product manufacturing sector. This includes ensuring that companies operating outside Europe meet the same sustainability standards as those operating in Europe.

The proposed regulation is part of a wider EU strategy to achieve net zero greenhouse gas emissions by 2050. The EU has set ambitious targets to reduce emissions in various sectors, including the technology manufacturing sector.

Overall, the proposed Zero Industry Act represents a significant step towards a more sustainable and competitive technology manufacturing industry in Europe.

A more detailed description of the measures included in the proposed Net Zero Industry Act:

  • Increasing the use of renewable energy in production: This can be achieved through financial incentives for companies to invest in renewable energy systems on production sites and by supporting the development of renewable energy infrastructure. This includes:
    – “installation of renewable energy systems at or near production sites” (Article 9.1)
    – “use of renewable energy in the production of components and materials” (Article 9.1)
  • Promoting the circular economy: The proposed regulation aims to promote the circular economy by promoting the design of products with a longer life, promoting repair and renovation and supporting the use of recycled materials in production. This can be achieved through financial incentives for companies that design sustainable products and the establishment of standards and certification schemes for sustainable products. This includes:
    – “designing products to be more durable and easy to repair” (Article 10.1)
    – “promoting the reuse and recycling of components and materials” (Article 10.1)
    – “reducing the use of hazardous substances in products” (Article 10.2)
  • Supporting research and the development of new technologies: The proposed regulation aims to support research and the development of new technologies that can help reduce emissions in the manufacturing sector of technological products. This can be achieved by funding research and innovation and creating innovation clusters to bring together industry, academia and research institutions. This includes:
    – “promoting scientific research and innovation in new sustainable technologies” (Article 8.1);
    – “providing funding for research and innovation” (Article 8.1);
    – “creating innovation clusters to bring together industry, academia and research institutions” (Article 8.2)
  • Establishing a certification scheme for sustainable products: This can be achieved by developing a set of standards and criteria that products must meet in order to be certified as sustainable, and by establishing a certification body to oversee the process of certification. The measures are as follows:
    – “establishing criteria for certification of sustainable technological products” (Article 11.1)
    – “establishment of a certification scheme for sustainable technological products” (Article 11.1)
    – “creation of a label for certified sustainable technological products” (Article 11.2)
  • Outlining accountability requirements for companies: This includes reporting on their emissions, energy consumption and progress towards sustainability targets. The aim of these reporting requirements is to increase transparency and accountability in the sector and to encourage companies to take action to reduce their environmental impact.
  • Promoting energy efficiency: This can be achieved by setting energy efficiency targets for companies and providing financial incentives to companies that invest in energy efficient technologies and processes. The goals are:
    – “establishing minimum energy efficiency standards for technological products” (Article 7.1)
    – “encouraging the use of energy-efficient technologies in production” (Article 9.2)
  • Development of supply chain sustainability standards: The proposed regulation aims to develop supply chain sustainability standards that cover the entire life cycle of technological products, from the extraction of raw materials to their end-of-life disposal. This can be achieved by establishing a set of standards and criteria that companies must meet to ensure that their supply chains are sustainable. The following standards and criteria are provided for in the Regulation:
    – “establishing sustainability criteria for suppliers of technology product manufacturers” (Article 5.1)
    – “creating a framework for monitoring and assessing the sustainability of the supply chain of technological products” (Article 6.1)
  • Encouraging the use of low-carbon transport in the technology manufacturing sector: This can be achieved through financial incentives for companies that switch to low-carbon transport options, such as electric vehicles, and by supporting the development of low-carbon transport infrastructure.
  • Increasing transparency and traceability: This can be achieved by requiring companies to disclose information about their supply chains, including the origin of raw materials and the carbon footprint of their products, as follows:
    – “creating a system to track and trace the environmental and social impact of technological products throughout their life cycle” (Article 4.1)
    – “promoting the disclosure of sustainability information by manufacturers and suppliers of technological products” (Article 12.2)
    – “creation of a public database with information on the sustainability of technological products” (Article 12.3)
  • Support the training and retraining of workers in the technology manufacturing sector: This can be achieved by providing funding for training programs that teach workers new skills and help them transition to jobs in the manufacturing of sustainable technology products. This includes:
    – “encouraging the development of skills and training programs for workers in the manufacturing sector of technological products” (Article 13.1)
    – “promoting the transfer of knowledge and skills between generations of workers in the manufacturing sector of technological products” (Article 13.2)

All these measures are designed to help promote sustainability and reduce greenhouse gas emissions in the technology manufacturing sector.

The proposed “Net Zero Industry Act” is a comprehensive set of measures that aim to promote sustainability and innovation in the technology manufacturing sector in Europe. If adopted, the proposed regulation has the potential to significantly reduce the sector’s greenhouse gas emissions and contribute to the EU’s wider goals of achieving net zero emissions by 2050. It can be summarized that:

  1. The proposed regulation aims to strengthen Europe’s net-zero technology manufacturing ecosystem: The Net-Zero Industry Act is a key component of the European Green Deal, which aims to make Europe climate neutral by 2050 d. The proposed regulation sets out a framework of measures to strengthen the European ecosystem for the production of technological products with zero emissions, including the development of sustainable supply chains and the promotion of energy efficiency.
  2. The proposed measures will have significant consequences for companies operating in the technological product manufacturing sector. Companies will need to invest in sustainable technologies and processes, develop sustainable supply chains and reduce their carbon footprint to comply with the proposed measures.
  3. The proposed measures will require significant investment from companies, governments and other stakeholders. Companies will need to invest in new technologies and processes, and governments will need to provide financial support to develop supporting infrastructure and promote training and retraining of workers.
  4. The proposed measures will create new business opportunities for companies that are able to develop sustainable products and technologies. Companies that are able to meet the sustainability criteria set out in the proposed regulation will be well positioned to take advantage of these new business opportunities.
  5. Creation of a Zero Innovation Fund: by 1 January 2027 Based on the information available in the proposal for a regulation, the Zero Innovation Fund will be a fund established at EU level to support research and innovation in the manufacturing sector of technological products with an emphasis on sustainable products and processes. The text of the proposal does not specify that this fund will be allocated to individual countries, so it seems that the intention is to use the fund at EU level to support research and innovation in the manufacturing sector across the EU. It remains to be seen whether the proposal will be subject to changes as it moves through the legislative process.

 

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