Earlier this week, the European Council approved two important legislative acts for Europe’s green future: the Methanol Reduction in the Energy Sector and the Net-Zero Industry Act. These are the final regulatory acts ahead of the European elections and the last big push towards the green deal before everything might turn on a dime in just 10 days.
Methanol reduction in the Energy Sector: an overview.
The European Council approved on Tuesday a regulation on tracking and reducing methanol emissions in the energy sector as a part of the Fit For 55 package. The act seeks to align the EU’s policies with its ambitious goal to reduce greenhouse gas emissions by 55% by 2030 compared to 1990 levels.
At the heart of this new legislative act is the introduction of rigorous requirements for the energy sector to measure, report, and verify methane emissions. Methane is a potent greenhouse gas, and its reduction is crucial for mitigating climate change impact.
The new rules will require operators and companies using methanol in the energy production process to measure emissions and submit detailed reports. These reports will be subject to verification by independent entities to ensure transparency and accountability.
The regulation also mandates specific mitigation measures. For instance, energy companies must detect and promptly repair methane leaks. This is a significant move, as they are a major energy sector emissions source. Additionally, venting and flaring methane will be strictly limited, with a complete ban for most activities by 2025 and 2027, respectively.
The Regulation alludes to profound implications for the industry. Energy companies must invest in new technologies and processes to comply with stringent requirements, which will probably spur innovation, particularly in developing more effective leak detection and repair technologies. Moreover, the legislative act may influence market dynamics, potentially favouring energy sources and suppliers that can demonstrate lower methane emissions.
The following steps following the European Council’s approval are critical. The regulation will come into force in June 2024, and its implementation will be closely watched. The energy sector must prepare for the changes, which will likely include significant investments in monitoring technologies, workforce training and compliance checks. The EU may also seek to foster international collaboration to ensure that methane emission standards are aligned globally, especially given the EU’s reliance on imported fossil fuels.
The Net-Zero Industry Act
The other recently approved legislative act by the European Council is the Net-Zero Industry Act, which, in the eyes of the European Commission, is a response to the American tax credit. It has been in the pipeline since Biden’s administration approved the Inflation Reduction Act.
The Net-Zero Industry Act is a significant initiative under the European Green Deal Industrial Plan aimed at scaling up the manufacturing of clean technologies within the EU. It focuses on increasing the EU’s manufacturing capacity for technologies that support the clean energy transition and produce extremely low, zero, or negative greenhouse gas emissions during operation.
The Act is designed to attract investments, create better conditions and market access for cleantech in the EU, and aims for the Union’s strategic net-zero technologies manufacturing capacity to approach or reach at least 40% of annual deployment needs by 2030. Additionally, it simplifies the regulatory framework for manufacturing these technologies, enhancing the competitiveness of Europe’s net-zero technology industry and accelerating the capacity to store CO2 emissions. It supports a range of technologies, including solar photovoltaic and thermal electrolyses, fuel cells, onshore and offshore renewables, sustainable biogas/biomethane, batteries and storage, carbon capture and storage, heat pumps, geothermal energy, and grid technologies.
As for the next steps following the Council’s adoption, the Act is set to come into force in June 2024. This final approval by European Countries is the culmination of the decision-making process.
The Act also proposes to foster innovation through ‘regulatory sandboxes’ for developing, testing, and validating innovative technologies.
Two indicative benchmarks will measure progress towards the objectives of the Net-Zero Industry Act: the manufacturing capacity of net-zero technologies reaching 40% of the EU’s deployment needs and a specific target for an increased Union share for these technologies to get 15% of world production by 2040.
Also, the Act is expected to establish an annual injection capacity of at least 50 million tons of CO2 in geological storage sites in the Union by 2030.
The drawback of this legislation is the timing, as we don’t know how the wind will blow after the elections.
Will the European elections change the course of implementation of these acts? What will be the guidelines for the next European Commission? Will it continue with a strong push over green energy, as advocated by the centre-left parties, or will it follow a more balanced approach, as proposed by the centre-right?
