NZIA and Low Carbon Hydrogen: Battles in Brussels over Nuclear Energy

While the European Union needs to make rapid progress on several texts concerning industrial competitiveness and the decarbonization of the economy, systematic opposition to the contribution of nuclear power is slowing down the necessary progress. The case of the discussions on the Net Zero Industry Act and low-carbon hydrogen, currently under debate in Brussels, is symptomatic.

The European Union did recognize last September[1] that nuclear energy was “green” energy as recommended by its research center (Joint Research Centre). Consequently, the atom was logically included in the taxonomy. However, the question of its inclusion in many European decarbonization schemes continues to generate complex negotiations, leading to a lack of continuity and coherence from one text to another. As a result, the EU is losing time to the Americans and leaving its industry uncertain.

Net Zero Industry Act (NZIA): in the right direction, but still unclear

On Friday, 17 March, the Commission proposed its first draft of the Net Zero Industry Act (NZIA). This text is presented as a new industrial “Green Deal” to improve the competitiveness of European industry. It is supposed to respond to the American Inflation Reduction Act (IRA), which is very protectionist for its companies and industries. It should also support the rapid transition to climate neutrality.

According to Commission President Ursula von der Leyen, the NZIA will allow the industrial sectors concerned to benefit from simplified regulatory procedures (simplified and accelerated delivery of permits), accelerated access to financing (temporary crisis framework for state aid), training programs, and trade agreements. This text is a strong symbolic step for the future of European industry and its decarbonization.

According to Euractiv[2], discussions continued right up to the last minute between the Commissioners on whether or not nuclear energy would be included in the list of beneficiary technologies. France, via Economy Minister Bruno Le Maire, had declared that it would go “all the way” to ensure the inclusion of nuclear energy. The Commission’s internal debates are all the more out of step with the fact that the IRA gives pride of place to nuclear power[3]:

  • Tax credits for existing plants
  • Support for the development of advanced reactors
  • Subsidies for fuel cycle plants

The text presented on Friday, 17 March, finally includes nuclear power, but in a relatively vague manner. It is listed among the technologies defined as “net zero” (Article 3) but, strangely, is not included in the so-called “strategic” technologies. This is relatively incomprehensible, given that nuclear power, with 25% of the electricity produced in the EU, is Europe’s leading source of low-carbon production. And it meets all the criteria for being considered “strategic” in terms of its technological maturity and contributions to decarbonization, competitiveness, and security of supply. However, the text needs to be more specific on the tangible impact of this distinction.

Also, the text limits the definition of “net zero” applied to nuclear power in a restrictive way to “advanced technologies to produce energy from nuclear processes with minimal waste from the fuel cycle, small modular reactors, and related best-in-class fuels; carbon capture, utilization, and storage technologies.” No one knows today what “advanced technologies” means or what “best-associated fuels” means. It will only be comprehensible if it includes the European nuclear fleet and the cycle plants, even though both are the subject of special IRA support in the United States.

The European Parliament and the Council of the European Union must now examine this first Commission proposal.

Low-carbon hydrogen: negotiations are still complex and difficult

The equal treatment of renewable and low-carbon hydrogen, which includes nuclear, in European regulations, continues to block negotiations on two key issues: the revision of the Renewable Energy Directive (RED III) and the Gas and Hydrogen Market Directive.

In a letter[4] sent to European legislators on 10 March, some 50 organizations from the European steel, fertilizer, chemical, and nuclear industries – including Sfen and nucleareurope – called for a compromise in favor of low-carbon hydrogen in RED III. The signatories call for low-carbon hydrogen (i.e., produced from nuclear energy) to be included in the mandatory hydrogen consumption quotas for industry and transport, reserved for renewable hydrogen only.

“Limiting these targets to renewable hydrogen without taking into account the potential of low-carbon hydrogen would slow down the decarbonization process in heavy industry and transport,” warn the signatories, who call on European legislators to “design a pragmatic framework for hydrogen” based on the decarbonized nature of its production. The trialogues are scheduled to continue for at least until 29 March.

In parallel, discussions continued last week in the Permanent Representatives Committee (Coreper) on the gas and hydrogen markets directive. On most of the measures in the hydrogen market rules directive, Member States managed to converge their positions, except for the role of low-carbon hydrogen. It continues to be opposed by a handful of countries through Article 8a (on hydrogen and low-carbon fuels) proposed by France and seven other countries. The Swedish presidency aims to reach a final agreement between Member States at the Council of Energy Ministers scheduled for 28 March.

Illustrating these divisions, in a letter[5] dated 16 March, seven states (Austria, Denmark, Germany, Ireland, Luxembourg, Portugal, and Spain) categorically rejected any attempt to find a compromise to recognize the role of low-carbon hydrogen, both in RED III and in Article 8a. They acknowledge that low-carbon hydrogen “could play a role in some member states” and that “a clear regulatory framework is needed. But they suggest a solution directly in the hydrogen and gas directive without supporting the French proposal. ■