The Industrial Decarbonisation Accelerator Act will develop a voluntary label on the carbon intensity of industrial products, the European Commission confirmed today.
The announcement, coinciding with the release of the comprehensive Clean Industrial Deal and Affordable Energy Action Plan, aims to avoid duplication and will be based on a simple methodology with ETS data and CBAM methodology, and a detailed CBAM review report will be issued in in the second half of the year. In the interests of speed, the Commission will start with steel in 2025.
A label for cement will be created under the Construction Products Regulation and a standardisation request will be lodged shortly.
Such labels will allow industrial producers to distinguish the carbon intensity of their industrial production and to benefit from targeted incentives (eg clean steel). They could also be used by Member States to design tax incentives and other support schemes in line with State aid rules.
The Commission will continue working on developing lifecycle assessments and is striving to simplify and harmonise carbon accounting, reporting priority areas by the fourth quarter, and has pledged to ‘speed up’ permitting for industrial access to energy and industrial decarbonisation from the fourth quarter.
Corporate PPA investment
Together with the European Investment Bank (EIB), the Commission is launching a €500m pilot programme for corporate power purchase agreements (PPAs) whereby the EIB will counter-guarantee part of the PPAs taken out by companies (preferably SMEs and mid-caps as well as energy intensive industries) for the long-term purchase of electricity generation.
The EIB will also introduce a ‘Grids manufacturing package’ for the European supply chain to provide counter-guarantees to manufacturers of grid components.
As natural gas is expected to remain the main price setter for electricity in the coming years, the Commission will continue to support Member states through State Aid.
Fostering low-carbon hydrogen roll out
The Clean Industrial Deal has introduced key hydrogen measures to break through regulatory, financing and scaling challenges facing the industry.
The European Commission will adopt the Delegated act on low carbon hydrogen in the first quarter of 2025 to clarify rules and boost investor confidence.
The launch of the Hydrogen Mechanism under the European Hydrogen Bank in the second quarter aims to mobilise and connect offtakers and suppliers to facilitate offtake demand for hydrogen and hydrogen-derived fuels, and to de-risk and accelerate the uptake of hydrogen production in the EU, the Commission will launch a third call under the bank in the third quarter with a budget of up to €1bn.
The EU needs to increase its annual investments in energy, industrial innovation and transport by around €480bn compared with the previous decade. To provide short-term relief, the Commission has announced €100bn funding through the deal to improve the business case for EU-made clean manufacturing.
On the key issue of renewable fuels of non-biological origin (RFNBO), the Commission said it would launch a study to assess the effectiveness of the hydrogen framework and identify barriers to scaling green hydrogen.
Ursula von der Leyen, President of the European Commission, said the Clean Industrial Deal is all about supporting energy-intensive industries and smart start-ups so that they can be more successful with their breakthrough innovations.
“Of course, it’s also about reducing energy costs – we’re working hard to increase low-carbon energy because it’s homegrown. We will have a long-time baseload of nuclear or gas, and renewable energy, because that’s creating good jobs and gives us energy security, lower prices, and makes us independent from Russian fossil fuels,” she said.
“We know that too many obstacles still stand in the way of our European companies from high energy prices to excessive regulatory burden. The Clean Industrial Deal is to cut the ties that still hold our companies back and make a clear business case for Europe.”
Transitioning from a carbon-intensive hydrogen production today to making hydrogen a practicable climate solution, requires a fundamental change of approach, according to Alessia Virone, Government Affairs Director, Europe, at Clean Air Task Force.
“A rethink of the EU’s 2020 Hydrogen Strategy that is not delivering results is in order, focusing on technological inclusivity, high-impact end uses, and centralised production-consumption hubs,” she said.
“While not perfect, the Clean Industrial Deal and the Affordable Energy Action Plan include a plethora of measures that could support the competitiveness and decarbonisation of the EU economy. The devil will, however, be in the details and will depend on the tangible measures adopted to implement the vision outlined today.”
Energy and industrial policy ‘inextricably linked’
Kim Fausing, President and CEO, Danfoss, said it is clear the EU recognises that energy and industrial policy are inextricably linked and crucial to the EU’s future, especially in light of geopolitical instability.
“At first glance, there are many positive elements in both the Clean Industrial Deal and the Affordable Energy Action Plan. I am pleased that energy efficiency, electrification, flexibility, and sector coupling are highlighted as key tools to lower energy prices, ensure energy independence, and strengthen competitiveness.”
“I am rather optimistic because we need practical and accessible solutions that help businesses reduce energy costs, freeing up resources for research and innovation. Now, it is crucial that European leaders act with determination to restore competitiveness.”
But he picked up on one key point, the ambition to electrify 32% of the EU’s energy consumption by 2030.
“We have entered the Age of Electrification, and it is of immense importance that we invest in the electrification of transport, industry, and heating. Looking at industry in the EU, only one-third of energy consumption is currently electricity, but we have the technologies to electrify 78%. The technologies already exist, but we must make their implementation more attractive to accelerate the process,” he said.
Brandon Spencer, President of ABB Motion, said he wanted to see Europe accelerate electrification, leverage energy efficiency to decarbonise and more investment incentives and welcomed the commitment to address these priorities as part of the European Clean Industrial Deal.
“The Decarbonisation Investment Bank is a promising step towards redirecting funds to support electrification and industrial decarbonisation technologies. Access to funding can positively impact the entire clean technology value chain, benefiting manufacturers and customers alike,” he said, and echoing Fausing, said many of these technologies are already available today.
Domien Vangenechten, Programme Lead on EU Industry at E3G, said industries are on a ‘knife-edge’ and accelerating their decarbonisation presents the best bet to future security.
“The Clean Industrial Deal will need to balance short-term relief with long-term clarity and support, provide demand signals to create lead markets and set out a true European industrial policy. This will mean also taking bold political decisions on which parts of industrial supply chains really have a future in Europe,” he said.
