Net-Zero Industry Act: Solar sector warns against anti-China clauses

As EU ministers gather to discuss the proposed ‘Net-Zero Industry Act’ on Thursday (7 December), representatives of the European solar industry have warned against the European Parliament’s demand to exclude Chinese solar panels from solar auctions.

On Thursday, ministers in charge of industrial policy from the 27 EU countries will discuss the European Commission’s proposal for a ‘Net-Zero Industry Act’, and hope to find a common position.

Ahead of the meeting, representatives of the solar industry have warned that the version of the law as adopted in the European Parliament could undermine the EU’s renewable energy targets, as it would largely exclude Chinese-made solar panels, which account for 78% of global production.

“By imposing strict local content requirements in the Net Zero Industry Act (NZIA), Europe would torpedo the Green Deal and massively undermine its own credibility in terms of climate protection,” Carsten Pfeiffer, head of policy at German renewables’ association Bundesverband Neue Energiewirtschaft (BNE), told Euractiv.

“Cheap and mass-produced PV modules from China would be largely excluded from European tenders overnight,” he explained, referring to criteria included by the European Parliament which would set a limit of maximum 50% for China-made ‘Net-Zero’ technologies in auctions for renewable energy.

In a letter sent to German Chancellor Olaf Scholz (SPD/S&D) and Vice-Chancellor Robert Habeck (Greens) ahead of the meeting, BNE stressed that over 90% of jobs in the solar sector are connected to planning and installation while manufacturing only accounts for a tiny share of jobs after solar manufacturing has largely left Europe in the 2010s.

“These jobs should not be jeopardised lightly,” the association warned, calling on Habeck to reject the parliament’s “fierce protectionism”.

Similar statements were made by SolarPower Europe, which represents both manufacturers and installers of solar panels.

The proposed prequalification criteria for public auctions would be “a red flag for the solar sector and for those committed to the EU’s energy security and climate goals,” Dries Acke, policy director at SolarPower Europe, said in a statement.

“Two things can be true; We must work harder to support European solar manufacturing and Europe needs to be part of a globalised solar supply chain to meet climate and energy targets,” he added.

Exclusion from renewables’ auctions

The criteria proposed by the European Parliament would not apply to solar panels installed on rooftops by house owners. They would, however, see Chinese products excluded from auctions for large renewable energy projects, such as ground-mounted solar parks, which account for the majority of the expected expansion.

The proposal goes back to the French government party Renaissance, which had called for the ‘Net-Zero Industry Act’ to be turned into a ‘Buy European’ act.

While the German Ministry for Economy and Climate Protection could not be reached for comment, French Economy Minister Bruno Le Maire (Renaissance/Renew Europe) signalled support for the proposal ahead of the ministerial meeting.

“If we’re not able to defend the very principle of ‘European content’ clauses, then we will have worked for nothing, and our companies will close down,” Le Maire told the ‘Growth and Climate’ conference in Paris on Tuesday (5 December).

He said he was ready to call for 60% European content requirements in the solar industry, public procurement contracts, offshore windfarm developments, and auto manufacturing, “without which state aid just isn’t possible”.

Le Maire’s top team, contacted by Euractiv, explained that this 60% benchmark was “a political goal,” but it was not clear whether it was France’s official negotiation line on the NZIA.

Solar sector hopes for technology-specific rules

In the initial proposal for the ‘Net-Zero Industry Act’, the European Commission had proposed a political target of 40% of green technologies to be produced in Europe by 2030, without however making this a precondition for subsidy programmes.

While the proposal so far does not differentiate between the multiple technologies included, the representatives of the solar sector would like to see a consideration of their sector’s specific conditions.

“European cell production could cover demand in Germany for just one month, and module production could cover around 10 per cent of new EU installation – and that with predominantly Chinese solar cells,” Pfeiffer said, referring to recent statistics by the European Commission’s Joint Research Center.

“We very much hope that the Council members will ensure more market reality,” he said, adding that “the solution is a technology-specific approach to setting and phasing in pre-qualification criteria in public PV auctions.”

After the adoption of a joint position of the EU’s member states, the Council and Parliament will have to agree on a final version of the law in the so-called ‘trilogue’ negotiations.

[Edited by János Allenbach-Ammann/Zoran Radosavljevic]

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