Brussels back in business: IRA's one-year anniversary, developments on NZIA, Critical Raw Materials and more - Our Monthly Policy Update

Looking to stay up-to-speed on the world of EU politics? This monthly newsletter is your one-stop-shop for all things cleantech policy! We compile news from across policy sectors and break down their potential impact on cleantech.

This month, we dive into:

  1. One year since the adoption of the Inflation Reduction Act
  2. Net Zero Industry Act state of play
  3. The launch of the pilot auction of the European Hydrogen Bank
  4. The European Commission’s consultation on overhauling its sustainable finance disclosure roles
  5. Cleantech for Europe report on Critical Raw Materials

What we have been reading:

  1. Agora Energiewende report on the role of EU clean-tech manufacturing
  2. Breakthrough Agenda


One year since the Inflation Reduction Act

Passed by the US Congress last year, the Inflation Reduction Act (IRA) entered into force on August 16, 2022. It permanently raised the bar for cleantech funding, offering speedy and radically simple access to public money. The IRA mobilises $369 billion of taxpayer dollars over the next decade, with experts predicting the ability to leverage trillions of private dollars.

Since its passage, more than a hundred clean energy projects have been announced. The dollars are pouring in by the billions, and the Act kicked off a global cleantech race in the quest to woo future industrial giants. At the same time, the US’s insufficient energy grid and the difficulty to reform permitting rules holds the IRA back from achieving its full potential.

Half a year later, the European Commission adopted the Net Zero Industry Act (NZIA) in response. NZIA does not mobilise any funding for cleantech companies, opting instead to streamline permitting and set domestic production targets for a set of strategic sectors.

On the funding side, the EU has loosened State Aid rules, and announced a €10 billion package known as the Strategic Technologies for Europe Platform (STEP), which will offer funding split between biotech, deep and digital tech, as well as clean technologies.

On September 13, European Commission President Ursula von der Leyen gave her fifth annual State of the European Union (SOTEU) speech – the last one of her mandate. The speech offered cleantech policy a prominent spot, as she commented:

"From wind to steel, from batteries to electric vehicles, our ambition is crystal clear: The future of our cleantech industry has to be made in Europe."

The speech went on to highlight the Commission’s dedication to keep supporting industry through the green transition, and touched on decarbonising heavy industry, launching a European Wind Power Package, and ensuring fair competition for Electric Vehicles produced in Europe. Furthermore, President von der Leyen announced that the Commission will host a series of “Clean Transition Dialogues.”

Impact on cleantech:

The cleantech race is in full swing. Recent news has included massive multi-billion investments going into EU cleantech deployment as well in the shape of Verkor and H2GreenSteel. Norwegian battery manufacturer FREYR is moving its corporate HQ to the US to tap IRA dollars for a gigafactory in the US.

The Clean Transition Dialogues could be a useful forum for public-private discussions about EU competitiveness, provided cleantech innovators are invited to join alongside incumbent players.

Read more:


Net Zero Industry Act state of play

On March 16, the European Commission unveiled the Net-Zero Industry Act (NZ designed to set the regulatory and investment foundations for the wide deployment of a list of strategic net zero technologies (solar, wind, batteries and storage, heat pumps and geothermal energy, electrolyzers and fuel cells, biogas/biomethane, carbon capture, utilization and storage, and grid technologies, as well as their corresponding main upstream components). The NZIA’s aim is having the EU’s net-zero technologies manufacturing capacity reach at least 40% of the EU’s overall needs by 2030.

The NZIA proposal is currently being mulled over by the European Parliament’s Committees in charge of industry and energy (ITRE) and Environment (ENVI), and the governments of EU Member States. Below, we dive into their current respective positions.


ITRE, the lead committee on negotiating NZIA on behalf of the European Parliament, is still in the process of formulating its position. Key points of contention include whether the scope should be enlarged, the level of ambition regarding permitting reform, the deployment target and public procurement.


ENVI is only providing its recommendations regarding NZIA only in an advisory capacity. These recommendations are not binding for ITRE. ENVI adopted its recommendations on NZIA on September 20.

A key ENVI recommendation concerns prioritizing carbon capture and storage for sectors with unavoidable emissions. ENVI does not define which these sectors are, but calls for a clear methodology to develop a list. This list would take into account scientific evidence, the current state-of the-art of relevant technologies and appropriate demand-side emissions reduction measures.

Member States

While their official position has not yet been published, current word is that Member States are looking to expand the list of net-zero technologies covered by NZIA, while keeping the accelerated timeline of permitting proposed by the European Commission.

Next Steps

ITRE will be voting on NZIA recommendations on October 25. Then, it goes to the European Parliament plenary vote, which is currently expected in November. Once the European Parliament as a whole and Member States have adopted their respective positions on how NZIA should look like, they will be entering into negotiations on the final shape of the legislative proposal.

Read more:

Impact on cleantech:

An NZIA which prioritises key strategic decarbonization sectors, fast-tracks permitting processes and helps all Member States compete on an equal footing will be key for Europe to stop being a net importer of net-zero technologies, with most imports coming from China. Even in sectors where the EU’s industrial presence is robust, like wind turbines and heat pumps, the trade balance is deteriorating, as European manufacturers grapple with increasing energy and input expenses.


The launch of the pilot auction of the European Hydrogen Bank

On August 29, the European Commission unveiled the Terms and Conditions for the first €800 million pilot auction under the European Hydrogen Bank. The Terms and Conditions cover: general auction design elements; qualification requirements; auction procedure; rights and obligations; the auction framework conditions.

The auction will grant a subsidy to hydrogen projects located in the European Economic Area of a fixed premium in €/kg of renewable hydrogen produced over 10 years. There will be no reference price. The maximum amount of grant requested by each project application cannot exceed 1/3 of the total available budget for the auction. A reference to additional calls and additional call structures is included in the Terms and Conditions, with an understanding that the need for these and for setting up broader “Auctions-as-a-Service” with additional national contributions will be considered, also depending on the number of applications received for this call.

The European Climate, Infrastructure and Environment Executive Agency (CINEA), which is the granting authority, will open the auction on November 23.

Read more:

Impact on Cleantech:

The auction of the European Hydrogen Bank will help scale up Europe’s renewable hydrogen industry by reducing the cost gap between renewable and fossil fuel hydrogen production. However, the funding available via the European Hydrogen Bank is not enough for EU renewable hydrogen producers to compete globally. In the US, the Inflation Reduction Act offers a tax credit of up to USD $3 per kilogramme of clean hydrogen produced by a qualified green hydrogen facility. On top of the tax credits, the Bipartisan Infrastructure Act offers USD $9.5 billion in funding for clean hydrogen initiatives.


European Commission seeks input to review rules on sustainable finance disclosures

On September 14, the European Commission published two consultations seeking views on reviewing the EU Sustainable Finance Disclosure Regulation (SFDR). A public consultation for a broad range of stakeholders, and a targeted consultation, which will gather input from stakeholders more familiar with SFDR (investors, asset managers etc.).

In the target consultation, the European Commission is asking stakeholder input on a broad range of areas including:

  • Product labels: The consultation asks whether Article 6 (funds without a sustainability scope), Article 8 (light green funds) and Article 9 (dark green) products should disappear altogether and be replaced with a more effective product labeling system. The new system would categorize products based on the type of investment strategy the products pursue.
  • Principal adverse impacts (PAIs) indicators (i.e., any impact of investment decisions or advice that results in a negative effect on sustainability factors): The consultation asks whether PAIs should be maintained as is.
  • Uniform product-level disclosures: The consultation asks whether uniform disclosure requirements for all financial products should be imposed, regardless of said products sustainability-related claims.
  • Website disclosures: The consultation asks whether the website disclosures should be made public or not.

The deadline to respond is December 15, 2023. On October 10, the European Commission will be organizing an online event to discuss on the current challenges of the SFDR and how to address its shortcomings. As for next steps, following the input received in the consultation, the European Commission will develop a legislative proposal to revise the SFDR, most likely in Q2 2024.

Read more:

Impact on cleantech:

In its current form, SFDR has made raising cleantech funds in the EU challenging due to burdensome reporting requirements. This has led many cleantech funds to downgrade their de facto Article 9 status to Article 8 status to be able to comply adequately with reporting requirements. While the proposals in the consultation seem to focus on simplifying SFDR with the introduction of a new labelling regime, cleantech investors should be aware that any fundamental changes to the SFDR will take significant time before entering into force.


Cleantech for Europe report on Critical Raw Materials

On March 16, the European Commission unveiled the Critical Raw Materials Act (CRMA). The CRMA lays a regulatory framework for selecting and implementing strategic raw materials projects in the EU, diversifying the EU's imports to reduce dependencies, and improving the EU’s capacity to monitor and mitigate risks of disruptions to the supply of critical raw materials.

With the global cleantech race ramping up, the critical raw materials (CRM) sector is booming globally: unprecedented amounts of venture capital is flowing into innovative solutions. That said, comparing EU venture investment into CRM technologies to that in the US reveals a stark difference: Europe is falling behind.

The EU consistently underperforms the US in number of deals & amounts invested. CRM venture deals were on average 3.5x larger in the US (€49 million) than in the EU (€14 million) in the first half of 2023. An improvement from 2022, when average US deal size was almost 10x larger.

Data source: Cleantech for Europe

Our new report explores in-depth, how to leverage the power of innovation at every step of the CRM value chain.

Read more:
A European Critial Raw Materials Strategy fit for Cleantech Competitiveness

Impact on cleantech:

The cleantech transition relies heavily on CRMs like cobalt, lithium, nickel, cadmium and rare earth metals. As metals and mining is a capital-intensive sector, soaring prices and bottlenecks are unavoidable as demand outstrips supply. Additionally, the extraction and/or processing of many CRMs is highly concentrated in authoritarian countries, meaning the EU is at risk of supply disruption. For this reason, if Europe gives priority to innovative ways of overcoming current barriers, increasing efficiency of material use at all stages of the value chain so that “less” becomes “more,” it can secure its long-term competitiveness and security of supply for the foreseeable future.


What we have been reading

Agora Energiewende report on the role of EU clean-tech manufacturing

Agora Energiewende recently published a report on the role of EU cleantech manufacturing. The report analysed important cleantech value chains – Solar PV, wind (on-and offshore), electrolysers, heat pumps and batteries – to identify weak spots by way of raw material, refining and subcomponent. The report breaks down the estimated costs of deploying these technologies under different policy scenarios.

Breakthrough Agenda Report 2023

The International Energy Agency , the International Renewable Energy Agency, and the United Nations Climate Change High-Level Champions, jointly published the Breakthrough Agenda. The Breakthrough Agenda brings together 48 countries representing 80% of the global economy to collaborate in the decarbonisation of the most critical sectors and takes stock of the action countries have taken to this effect. The report indicates that while investments in clean energy technologies are rising, sectors such as steel, hydrogen and agriculture have not made sufficient progress to transition. Countries have, among other things, launched a series of new public and private finance commitments, developed innovative financial instruments and set clear priorities and roadmaps for regional grid initiatives. Less progress has been made on adopting higher minimum energy performance standards.

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