EU Adopts New Framework to Transition Towards Net-Zero Economy
The framework expands possibilities of deployment of all renewable sources
The European Commission has adopted a new Temporary Crisis and Transition Framework to support measures in sectors that are key for the transition to a net-zero economy in line with the Green Deal Industrial Plan.
The Commission in February presented the Green Deal Industrial Plan to enhance the competitiveness of Europe’s net-zero industry and support the fast transition to climate neutrality.
The Green Deal Industrial Plan is seen as a counter to the United States Inflation Reduction Act, which has proposed a $369 billion spending for clean energy.
The new framework amends and prolongs in part the “Temporary Crisis Framework,” adopted last March, to enable member states to support the economy in the context of the Russia-Ukraine war.
The framework is expected to help speed up investment and financing for clean tech production in Europe.
Highlights of the Framework
- Prolongs the possibility for member states to support measures needed for the transition towards a net-zero industry. This concerns programs for accelerating the rollout of renewable energy and storage and schemes for the decarbonization of industrial production processes.
- Simplifies the conditions for the granting of aid to small projects and less mature technologies, such as renewable hydrogen, by lifting the need for a competitive bidding process
- Expands the possibilities of support for the deployment of all types of renewable energy sources, including hydrogen-derived fuels, and for providing higher aid ceilings and simplified aid calculations.
- Introduces new measures, applicable until December 31, 2025, to further accelerate investments in key sectors for the transition, enabling investment support for the manufacturing of strategic equipment.
Additionally, member states may design simple and effective programs to provide support capped at a certain percentage of the investment costs and nominal amounts, depending on the location of the investment and the size of the beneficiary.
Other remaining provisions of the Temporary Crisis Framework include limited amounts of aid, liquidity support in form of state guarantees and subsidized loans, aid to compensate for high energy prices, and measures aimed at supporting electricity demand reduction, all of which are more linked to the immediate crisis. These remain applicable until December 31, 2023.