CCS, nuclear come under fire as EU sets 2040 climate goals, broadens scope of Net-Zero Industry Act

The European Council and Parliament reached a provision deal on Tuesday, February 6, on the ‘net-zero industry act’ (NZIA), a regulation that establishes a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem.

The regulation aims at boosting the industrial deployment of net-zero technologies needed to achieve EU’s climate goals, by easing conditions for investing in green technologies.

The EU wants to simplify permit-granting procedures and bring more clarity for public procurement and auctioning, as well as supporting strategic projects and creating net-zero industrial valleys.

The valleys are expected to create clusters of net-zero industrial activity to increase the attractiveness of the EU as a location for manufacturing activities.

The act also proposes favorable regulatory frameworks to be created for developing, testing, and validating innovative technologies (known as regulatory sandboxes).

Under the agreement, there will be a single list of net-zero technologies, with criteria for selecting strategic projects in those technologies that will contribute better to decarbonization.

Progress towards the objectives of the net-zero industry act will be measured by two indicative benchmarks: reaching 40% of the production required to cover EU’s needs in strategic technology products, and their evolution in comparison to world production for products such as solar photovoltaic panels, wind turbines, batteries and heat pumps.

The proposal also sets a specific target for CO2 carbon capture and storage, with an annual injection capacity of at least 50 million tonnes to be achieved by 2030, which is to be increased to 280 million tons by 2040.

“With the Net-Zero Industry Act we want to support our industry in its transition. The NZIA is an important step in creating the necessary ecosystem to boost the manufacturing of clean technologies. Europe launched a pathway towards a cleaner and sustainable future for the European industry. Now the time is ripe for Europe to take back the lead on the global scene for clean technologies and to build a competitive, green, and job-creating industrial sector,” Jo Brouns, Flemish Minister for Economy, Innovation, Work, Social Economy and Agriculture, said.

The provisional agreement reached with the European Parliament now needs to be endorsed and formally adopted by both institutions.

Commenting on the Net Zero Act World Wildlife Fund (WWF) NGO said that by broadening the initial list of net-zero technologies to technologies that are not yet commercially available and/or could take decades to become so, the European institutions dropped the main objective of the regulation, which ‘was’ to achieve the EU’s 2030 climate targets.

WWF said that this means that technologies with a proven track record for quick decarbonization, such as solar and wind, are placed on the same footing as unproven and expensive ones, such as nuclear fission and Carbon Capture and Storage (CCS). 

“WWF regrets this decision and fears the EU is shooting itself in the foot,” the organization said.

“It also sends the wrong message to European manufacturers and investors, as focusing on scaling up the right green technologies is what will provide an opportunity for the future of EU industry. Achieving the EU 2030 climate targets and supporting the decarbonization of European industry while boosting its competitiveness is possible, but will now require Member States to ‘pick’ the right green technologies from this terribly long list,” Camille Maury, Senior Policy Officer on the Decarbonisation of Industry at WWF European Policy Office, said.

WWF criticized the failure to limit the deployment of CCS technologies to unavoidable emissions in targeted sectors, adding that CCS is being used as an excuse for continued fossil fuel use.

Coinciding with the NZIA, the European Commission published a Communication that starts the process of preparing the 2040 target under its Climate Law, which paves the way for Europe to become a climate-neutral continent by 2050.

The Commission recommended a 90% reduction in net GHG emissions by 2040. 

“We need to harness all zero and low carbon solutions to decarbonize the energy system by 2040 including renewables, nuclear and bio-energy, energy efficiency and storage, carbon capture utilization and storage (CCU and CCS), carbon removals, geothermal, hydro-energy and all other current and future net-zero energy technologies. There has been a lot of progress on renewables, including flanking measures with recent action plans on wind and grids. This is set to rise whereas the consumption of fossil fuels for energy by 2040 is expected to reduce by approximately 80% compared to 2021 and coal will be phased out,” the commission said.

The recommended 2040 target also entails an earlier deployment of carbon capture, which will generate industrial carbon removals, complementing land-based removals sequestering carbon in biomass and soils, and natural carbon removals. The Commission is also launching an Industrial Alliance to facilitate stakeholder’s cooperation at EU level to accelerate the deployment of Small Modular Reactors (SMRs).  

Danish Shipping, the Danish trade and employer association, said that the new CCS strategy outlined by the European Commission highlights Denmark as a pioneer in the field, and predicts that Denmark could play a central role.

The strategy, named the “Industrial Carbon Management Strategy,” sets the framework for the ambition to build an internal market for CO2.

“CCS is highlighted as a crucial technology for achieving both Danish and European climate goals. Denmark also plays a crucial role here because we have the potential to become a European CO2-hub. The strategy emphasizes that a key building block is a common European infrastructure, including the establishment of CO2-pipelines. We fully support this,” said Martin Rune Pedersen, Country Manager and Head of CCS at TotalEnergies Denmark.

“The storage potential for CO2 in Denmark’s subsurface is much larger than what we can capture and store ourselves. It must be utilized in­ter­na­tio­nal­ly to support the EU’s objectives. With the storage of CO2 in the subsurface of the North Sea, Project Greensand has underscored that the technology behind CO2 capture and storage works in practice. CCS is not just lines on a piece of paper or words in a report. The technology is ready, the infrastructure is there, and now there needs to be further push in development, as CCS can play an important role in reducing emissions in Denmark and the rest of Europe,” said Mads Gade, CEO of INEOS Energy Denmark.

“Denmark is a pioneer in the CCUS field. It is very positive that the EU is now taking significant steps towards establishing an internal market for capturing, transporting, utilizing, and storing CO2. Now there is a need to establish the necessary international agreements and frameworks so the scale can be increased, and companies can confidently make the necessary investments, for example, in ships capable of transporting CO2. It has the potential to become a new Danish business adventure,” said Jacob K. Clasen, Deputy CEO of Danish Shipping.

The Commission said that the transport sector will decarbonize through a combination of technological solutions and carbon pricing, as well as an efficient and interconnected multimodal transport system. As such, transport emissions are projected to decrease by close to 80% by 2040.

The EU’s plan was taken with a grain of salt by Transport & Environment NGO, saying that the plan doesn’t mention a phase-out of oil and gas, even though this is imperative to meet the target.

The Commission’s new communication still projects 46 million tonnes of oil equivalent (Mtoe) of unabated oil and gas generation, which it says will mostly be used for long distance transport in 2050. That would be enough to continue powering 900,000 transatlantic flights, adding a needless 140 million tonnes of CO₂ in the atmosphere, the organization pointed out.

“Today, the EU showed the world how you can turn real climate ambition into powerful industrial policy. Industry players at home and outside of Europe can turn to the EU for production and sales of green tech, as they can be assured of a growing market and predictable demand. But this headline goal will fall flat if it doesn’t come hand in hand with a phase-out of fossil fuels and new laws cracking down on the oil majors. Europe will desperately try to meet a 2040 goal whilst still feeding on fossil fuels. But you simply can’t outrun a bad diet”, Sofie Defour, climate director at T&E, explains.

In January 2024, the EU’s Emissions Trading System (EU ETS) was extended to cover CO2 emissions from all large ships (of 5,000 gross tonnage and above) entering EU ports, regardless of the flag they fly.

The system covers:

• 50% of emissions from voyages starting or ending outside of the EU (allowing the third country to decide on appropriate action for the remaining share of emissions);
• 100% of emissions that occur between two EU ports and when ships are within EU ports.

The EU ETS covers CO₂ (carbon dioxide), CH₄ (methane) and N₂O (nitrous oxide) emissions, but the two latter only as from 2026.

“As required by the EU Climate Law, the inclusion of international shipping emissions in the scope of the target is a welcome step forward for a sector too often ignored in climate legislation. This comes nine years after the Paris Climate Agreement said countries were responsible for their share of shipping and aviation emissions. While it is also encouraging to see the Commission’s recommendation to regulate emissions from small vessels, it is essential that the next Commission follows up with policies to ensure their decarbonization,” T&E adds.

“The Commission projects that 60% of cars will be electrified by 2040. This is a huge step in the right direction, but meeting this target will require new policies on top of the existing car CO₂ standards.”

T&E says that the required CO₂ emissions cuts can be reached by accelerating the electrification of new cars instead of feeding the legacy fleet with inefficient and more expensive e-fuels or biofuels. These fuels should be prioritized for the aviation and maritime sector.

EU 2040 climate targets point to the importance of providing renewable marine fuels for maritime sector decarbonization, the World Shipping Council said.

WCS believes that meeting 2040 goals must lead to new energy production facilities to supply the maritime sector with zero-GHG fuels, which will demand substantial financial investment. Additionally, the rollout of infrastructure to support the adoption and distribution of these alternative fuels across the sector is crucial.

“EU policymakers need to translate these regional goals into increased national commitments to produce the fuels required by EU regulations like FuelEU Maritime,” says James Corbett, WSC Environmental Director, Europe.

“The liner sector is already investing in the vessel technologies to use renewable marine fuels, and global decarbonization for all of shipping depends upon EU leadership in reaching international agreement at the IMO MEPC.”

The council insists that reaching an agreement on a Global Fuel Standard and the establishment of a GHG pricing mechanism at the IMO level requires European leadership beyond regional 2040 climate targets. Such measures are critical for creating a consistent and fair framework for the global shipping industry to innovate and invest in zero-emission solutions.

“WSC urges the European Commission and international partners to develop the targets into a clear plan for the scale of investment and regulatory support needed to facilitate this transition. Only through coordinated global action and the establishment of conducive policy frameworks can we ensure the maritime industry’s successful move towards a zero-GHG future, in alignment with our shared climate objectives,” the council noted.