Introduction

The goal of net-zero technologies is to balance the amount of greenhouse gases emitted into the atmosphere with an equivalent amount removed or offset, effectively achieving a state where no additional carbon dioxide is added to the atmosphere. Stemming from the Green Deal Industrial Plan, the Net-Zero Industry Act (NZIA) seeks to boost the EU's clean energy technology manufacturing to stay competitive in the global move towards a net-zero economy.

It compiles a comprehensive yet non-exhaustive list of net-zero technologies and their components, including batteries, heat pumps, solar panels, fuel cells, wind turbines, and carbon capture and storage systems and Member States are allowed to expand upon this list following a certain procedure.

To effectively accomplish the decarbonisation of the building sector, the integration of net-zero technologies is imperative, and this entails the adoption of innovative solutions not only in the construction of new buildings but also during renovation endeavours. Such solutions might entail the combined use of heat pumps and renewables for the decarbonisation of heating and cooling, and the adoption of prefabricated building elements such as facades, harnessing sun, wind, water and biomass to produce energy.

The European Union aims to become a leader in the net-zero technologies market by leveraging its Climate Law, strong economy, skilled workforce, and advanced infrastructure. The objective is not only to reduce dependencies on outer markets but also to support EU industries in decarbonisation and provide citizens with clean, affordable, and secure energy. As can be read in this NZIA preliminary document, the EU's net-zero ecosystem surpassed EUR 100 billion in 2021 and is projected to grow further. The European Union has pledged to achieve climate neutrality by 2050, yet it currently relies on imports for various net-zero technologies and components crucial to realising this goal. It is in response to this that the Commission has introduced the NZIA as a component of the Green Deal Industrial Plan to safeguard the integrity of the green transition.

However, key components for net-zero technologies are produced through energy-intensive processes in industries like steel, aluminium, chemicals, and cement, which have high energy consumption and CO2 emissions. Additionally, as detailed in the NZIA preliminary document mentioned above, Europe heavily relies on imports, particularly from China, for net-zero technologies like solar PV modules and fuel cells. To address these issues, the Act emphasises increasing domestic production capacity, diversifying supply sources, and ensuring clean technology production meets high environmental standards to promote sustainability.

If the NZIA stands as a key instrument to decarbonise the building sector, how can the building sector itself contribute to achieving the NZIA goals?

To further minimise the environmental impact of these net-zero technologies throughout their lifecycle - and thus considering emissions from their production - it is crucial to enhance the energy efficiency of buildings following the energy efficiency first principle. This can be achieved through various means, from implementing advanced energy management systems for resource optimisation to adopting passive heating and cooling methods. 

An example of how the building sector, particularly in the upper part of the value chain – which encompasses product manufacturing, design, engineering, and the integration of advanced technologies and materials - can contribute to sustainability objectives is through the integration of advanced sustainable technologies. Specifically, the use of prefabricated façades equipped with built-in HVAC systems and renewable energy generation capabilities stands out. These innovative components not only enhance energy efficiency and reduce dependence on non-renewable resources but also significantly lower construction waste due to their prefabricated nature. Prefabrication in a controlled factory environment allows for superior quality control, leading to consistent, high-performance building elements that offer greater durability and lower maintenance requirements over time. This approach exemplifies how the building sector can effectively contribute to environmental goals while simultaneously reaping the benefits of improved efficiency and cost savings.
 

Policy context
 

• Green Deal Industrial Plan: It is a plan that rests on four pillars. The first of these involves creating a regulatory framework that facilitates the achievement of targets for the net-zero technology-producing industry, ensures access to raw materials needed to produce these technologies, and helps consumers access low-cost clean energy. Each of these three actions is coupled with a respective initiative: the aforementioned Net-Zero Industry Plan, the Critical Raw Materials Act and the Electricity Market Design.
  The second pillar is to accelerate investment and financing to produce clean technology, and the last two pillars focus on enhancing necessary skills and facilitating open and fair trade.

• Net-Zero Industry Act (NZIA): As the building sector is one of the main sectors regarding emissions, the NZIA stands as an important resource for its decarbonisation, the netzero technologies identified in the act being crucial in this regard. As introduced above, the Net-Zero Industry Act, stemming from the Green Deal Industrial Plan, aims to boost the manufacturing of clean technologies in the EU. It seeks to increase the EU's capacity for producing technologies that facilitate the clean energy transition and emit minimal greenhouse gases. The Act will attract investments, improve market conditions, and aim for the EU to reach 40% of its net-zero technology manufacturing capacity by 2030, aligning with climate targets. It simplifies regulatory frameworks, supports technologies aiding decarbonisation, and was agreed upon by the European Parliament and Council, the latter on 27 May 2024. This proposal aligns with the EU's strategy for accomplishing a fair and just green transition. Moreover, it corresponds with the initiatives outlined for the 2023 European Year of Skills, as well as ongoing efforts outlined in the EU Pact for Skills, including its extensive skills partnerships. Additionally, it harmonises with other prevailing skills policies, such as the Blueprints for sectoral cooperation on skills.

• Revised Energy Performance of Buildings Directive (EPBD): The revised Directive sets ambitious targets to reduce the overall energy use of buildings across the EU, with a specific focus on the national context. It aims to boost the demand for clean technologies from Europe and create new jobs and investment opportunities. The Directive will also boost Europe´s energy independence, in line with the REPowerEU Plan, by reducing the use of imported fossil fuels. In fact, it will make ‘zero-emissions’ the new standards for new buildings: all new residential and non -residential buildings must have zero on-site emissions from fossil fuels, as of 1 January 2028 for publicly owned buildings and as of 1 January 2030 for all other new buildings. This would also lead to decarbonisation of heating and investing in solar power installations. Member States will indeed need to make sure they are ‘solar ready’, which means they should be ready to install rooftop photovoltaics or solar thermal installations at a later stage without costly interventions.
   

Financial instruments and initiatives
 

• Delving into the second pillar of the Green Deal Industrial Plan, under competition policy, the Commission aims to ensure a level playing field within the Single Market while enabling Member States to expedite aid for the green transition. To achieve this, the Commission has consulted Member States and amended the Temporary State Aid Crisis and Transition Framework and revised the General Block Exemption Regulation to align with the Green Deal. Additionally, the Commission will facilitate the use of EU funds like REPowerEU, InvestEU, and the Innovation Fund for cleantech innovation, manufacturing, and deployment. It also plans to establish a European Sovereignty Fund as a mid-term solution for investment needs.

• Working document: ‘Investment needs assessment and funding availabilities to strengthen EU's Net-Zero technology manufacturing capacity’. 
  The document, which is aligned with the Net-Zero Industry Act, is divided into two parts. Part I estimates investment needs to enhance EU manufacturing capacity for strategic net-zero technologies like wind, solar PV, heat pumps, batteries, and electrolysers, based on the Fit for 55 Package and REPowerEU ambitions. Three scenarios are considered: maintaining current market shares, boosting shares as per NZIA objectives, and meeting all EU demand domestically. The estimated investment ranges from EUR 52 billion to EUR 119 billion, with a core estimate of EUR 92 billion for the NZIA policy scenario, suggesting significant public investment.
  Part II examines EU funding availability, noting that most funds are directed towards innovation and deployment, with limited support for manufacturing capacity. It highlights the challenge of reallocating existing funds to meet the NZIA objectives, given broader green transition investment needs. The analysis identifies vulnerabilities in supply chains for technologies like wind, solar, batteries, heat pumps, and electrolysers, emphasising the need for strategic investment to mitigate risks and enhance EU competitiveness in the net-zero technology sector.
   

EU-funded projects

H2020

• INFINITE aims to increase the market penetration of industrialised building envelope kits for deep renovation, promoting sustainable decarbonisation of the EU building stock through innovative, stakeholder-accepted technologies and tools.
  

• StepUP developed a data-driven methodology and innovative plug-and-play technologies to facilitate impactful deep renovations in European buildings, aiming to accelerate energy efficiency improvements and decarbonisation.
  

• DRIVE 0 implemented circular renovation principles through pilots in seven countries, developing modular plug-and-play solutions and raising industry skill levels to promote sustainability in the building sector.
  

• RINNO project aimed at enhancing deep renovation of Europe's building stock by tackling technical and socio-economic barriers through innovative technologies, improved processes, new business models, and large-scale pilot demonstrations, targeting significant energy, cost, time, and carbon savings.
  

• PLURAL aims to develop and validate off-site prefabricated plug-and-play façade components for deep renovation of residential buildings, incorporating innovative systems and materials to achieve optimal energy efficiency across different European climates.
  

Horizon Europe

• REHOUSE aims to develop and demonstrate 8 renovation packages designed for a wide range of building renovation actions in Greece, Italy, France, and Hungary, addressing EU renovation barriers while integrating innovative technologies and inclusive social engagement strategies, aiming for scalable solutions and practical recommendations for market uptake.
  

LIFE programme

• GigaRegioFactory aims to scale up industrialised renovation efforts in Europe, targeting 10% of the market by 2030 and renovating 1 million homes to guaranteed zero-energy levels, through a consortium focusing on open-source tools, coaching and industrialisation support.
  

• BuildUPSpeed aims to accelerate deep renovation in EU buildings to meet 2050 decarbonisation targets by implementing a Market Activation Platform to promote industrialised renovation solutions, leveraging outcomes from related H2020 projects.
  

• Street HP Reno seeks to deploy collective purchasing of heat pumps for individual homes on entire streets, engaging stakeholders to reduce costs, promote mass deployment of heat pumps for housing renovation and decarbonise heat, focusing on characterising housing typologies, developing financing packages, and conducting awareness campaigns for pilot projects.
  

• COSME Reno aims to promote deep energy renovation in small and medium-sized enterprise (SMEs) across multiple countries.  In doing so, it intends to support industrial development towards innovative solutions.
  

• The LIFE IP BUILDEST project aims to significantly reduce CO2 emissions from Estonia's building stock by up to 100% by 2050, with short-term goals targeting a 32% reduction by 2030, achieved through – among various actions- the development of standardised renovation solutions aims to address common and problematic situations, enhancing design speed and quality while reducing future costs.
   

Conclusion

In conclusion, the building sector, responsible for 35% of EU carbon emissions, must aim for decarbonisation by harnessing net-zero technologies. The NZIA seeks to enhance the manufacturing capacity of these technologies, while the building sector can boost their efficiency and reduce their lifecycle impact. Achieving NZIA goals will also require rethinking fund allocation to boost Europe’s domestic manufacturing capacity.