Elevating CCU and Nuclear in the Net-Zero Industry Act

The Net-Zero Industry Act (NZIA), published by the European Commission on March 16^th, doesn’t include Carbon Capture and Utilization (CCU) nor nuclear as part of the Strategic Net-Zero technologies. This decision comes as a surprise. These energy technologies are increasingly important in the long term, as the EU is transitioning away from fossil fuels while maximizing its clean energy manufacturing.

As part of the Green Deal Industrial Plan, the NZIA is envisioned as a regulatory framework to drive industrial decarbonization in the EU, to serve two main objectives: reach the EU’s 2030 and 2050 targets and strengthen the EU’s domestic supply chain of net- zero technologies¹. The Act, identifies Strategic Net-Zero technologies that will benefit from special treatment in terms of permitting process, prioritized judicial status and access to funding. To be considered as such, these technologies need to be compliant with 3 criteria²:

1. the technology readiness level of strategic technologies needs to fall under technology readiness level (TRL) 8. This criterion is the same required by article 3 which identifies the net-zero technologies (i.e. also CCU and nuclear);
2. they need to contribute to decarbonization and competitiveness, which includes those net-zero technologies that will deliver a significant contribution of reducing GHG by at least 55% relative to 1990 levels; and
3. they need to increase the manufacturing capacity and supply chain resiliency, which is intended to identify those technologies that will strengthen the security of supply chains.

As per the Annex of the Act³, neither CCU nor nuclear made it in the final text, and are therefore not considered Strategic. The Commission does however recognize that CCU and nuclear are compliant with the first criteria. Art. 3 specifically mentions SMRs, advanced reactors and CCU as net-zero technologies, having reached a TRL of at least 8⁴. So, out of the three criteria required to be identified as Strategic, the Commission recognized that CCU and nuclear are compliant with only one. However, CCU and nuclear are compliant with all three criteria and should therefore be include in the Annex.

It is fundamental that the EU is not overly dependent on the imports of clean technologies – especially from one single country or unreliable partners. The NZIA should therefore, be designed and implemented in a way that strengthens the EU strategic autonomy through a holistic energy technology and supply chain approach, without neglecting the fundamental role that cooperation and international trade play in the rush to accelerate the green transition. Transforming the NZIA into a comprehensive yet granular industrial strategy, recognizing the fundamental role that energy technologies can play in the long-term while strengthening the manufacturing capacity of segments of the supply chains when representing a valuable strategic option, is what EU institutions need to work on in the months to come.

Recognizing that CCU and nuclear play an important part in the transition both for the achievement of the EU’s climate targets and for the strengthening of our domestic strategic autonomy, it’s a key step into making the NZIA a successful industrial policy.

The Case for CCU

Technology Readiness Level: as recognized and stated by the IEA⁵, CCUS have different maturity when it comes to the different technologies available, several are already considered mature and could be scaled up quickly while others are not.

There are several CCU projects in Europe that today have reached a TRL level of 8, some have even reached a TRL of 9, so higher than the threshold required by the Commission’s proposal to be considered a Strategic Net-Zero technology. The AGGREGACO2⁶ for example, or the Power to Fuel – FlagshipONE⁷ project in Sweden.

Contribution to Decarbonization: In its 6 Assessment report⁸, the United Nations’ Intergovernmental Panel on Climate Change (IPCC) included CCU as one of the important technologies to reduce CO2 emissions. Also, in its assessment of the CCU and CCS technologies⁹, the International Energy Agency (IEA) stresses that “around 230 Mt of CO2 are currently used each year, mainly in direct use pathways in the fertiliser industry for urea manufacturing (~130 Mt) and for enhanced oil recovery (~80 Mt)”. The Agency also underlines that tackling emissions from today’s power stations and industrial plants (by using CCU technologies to retrofit existing power and industrial plants – in particular in hard-to-abate sectors such as cement or steel production) will need to be central to the global clean energy transition. In addition, there are many new applications which may use captured CO2 such as CO2-based synthetic fuels or chemical and building aggregates. According to the IEA, around 5 Mt CO2 per year by 2030 could be captured and used for the production of these synthetic fuels, which will become more present in the coming years also as a way to decarbonise the EU transport sector. Furthermore, CFE's Net-Zero Outlook 2023¹⁰ shows that CCU could contribute up to 150 Mt of CO₂  reductions per year across the EU and UK. This underscores the important role CCU could play in decarbonisation - like as a feedstock for zero carbon liquid fuels - most notably for hard to decarbonise sectors.

Security of Supply Risks: According to the IEA¹¹, using CCU and CCS can enable the production of the least-cost low-carbon hydrogen. The European Commission – in its REPowerEU communication¹² – sees hydrogen production and consumption as one of the key elements of the EU’s energy security. Low-carbon hydrogen (produced among others using CCU) will have a significant role to play in achieving this objective. Furthermore, thanks to CCU technologies, captured carbon can be reused for various applications (such as feedstock to produce fuels and chemicals), CCU can contribute to the EU economy’s resilience and circularity and making it more self-sufficient (reusing carbon emissions that cannot be avoided).

The Case for Nuclear

Technology Readiness Level: Based on the IEA’s assessment, similar to the treatment of CCUS, nuclear energy’s technology readiness level depends on the specific types of nuclear reactors that are being considered. For example, large-scale reactors – currently in operation in many EU Member States and playing an important part in their decarbonisation plans – are considered by the IEA to be at the TRL level of 10-11 – therefore much higher than the threshold suggested by the Commission in its proposal (level 8). Other nuclear reactors are assessed by the IEA at the TRL level of around 8: (a) light water reactor-based small modular reactor – level 6-9, (b) high-temperature reactor and very high-temperature reactor – level 7-8, (c) sodium-cooled fast reactor – level 8-9.

Contribution to Decarbonisation: According to the IPCC, holding a global average temperature increase to 1.5℃ requires a doubling of global nuclear energy generation by 2050¹³. Additionally, a report issued by the IEA and the OECD NEA titled “Projected Costs of Generating Electricity 2020”¹⁴ confirms that “nuclear energy remains the dispatchable low-carbon technology with the lowest expected costs in 2025”. According to Carbon-Free Europe’s Annual Net-Zero Outlook 2023, with technological innovation, nuclear energy could contribute up to 36% of Europe’s electricity and nuclear derived heat could provide 50% of overall primary energy by 2050.

Security of supply risks: nuclear energy contributes to ensuring energy security and decreasing dependence on importing fossil fuels. As assessed by the IEA in its report “Nuclear power and secure energy transitions: From today’s challenges to tomorrow’s clean energy systems”¹⁵, nuclear energy “can help ensure secure, diverse, low-emissions electricity systems”.

Conclusion

The NZIA should be designed in a way that supports the achievement of two fundamental purposes: reaching 2030 and 2050 targets and strengthening the manufacturing capacity of the EU.  A long-term industrial plan that strengthens domestic supply chain resiliency and lessens dependencies from third countries is a welcome policy. However, cooperation and international trade are fundamental in order to reach the EU’s climate targets. Domestic industrial policies and strategic cooperation need to be pursued in tandem. The NZIA should not aim at replacing imports from reliable trading partners, rather it should strengthen the supply chain resiliency of every fundamental clean energy technology needed for the EU to reach its climate targets, this includes CCU and nuclear.