How should EU policymakers reboot the NZIA?

Publishing date
12 June 2023
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How should EU policymakers reboot the NZIA?

The adoption of the US Inflation Reduction Act with its protectionist flavours has revived Europe’s deep-seated fears of deindustrialisation and of missing out on the growth opportunities in clean tech manufacturing. This has fuelled calls for a reciprocal clean tech industrial policy revamp with a stronger strategic autonomy component. 

In March, the European Commission unveiled its legislative proposal for an EU response to the US Inflation Reduction Act: the Net Zero Industry Act (NZIA). This is an unconvincing policy proposal.

The NZIA is not up to deliver on the multidimensional ambitions of matching decarbonisation, global competitiveness and security of supply. The European Parliament and the European Council need to reboot this proposal, and together with its Sovereignty Fund proposal, turn the Act into an impactful NZIA 2.0. The new Act must be able to deliver on the key target in this space: unleashing private sector investments in clean-tech manufacturing by providing the right enabling framework conditions for investment.

To achieve that, policymakers must leverage the European single market and create resilient public-private clean-tech ecosystems within the EU that are able to compete sustainably on a world level. Developing an EU-level public funding strategy for clean-tech which includes the entire clean tech value chain and building a strong governance for the whole green industrial policy process in the EU are fundamental elements to get there. Europe cannot fail in this space. Whether Europe can make the green transition and create a future socio-economic fabric is otherwise at stake.

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About the authors

  • Reinhilde Veugelers

    Prof Dr. Reinhilde Veugelers is a full professor at KULeuven (BE) at the Department of Management, Strategy and Innovation.  She has been a Senior fellow at Bruegel since 2009.  She is also a CEPR Research Fellow, a member of the Royal Flemish Academy of Belgium for Sciences and of the Academia Europeana. From 2004-2008, she was on academic leave, as advisor at the European Commission (BEPA Bureau of European Policy Analysis).  She served on the ERC Scientific Council from 2012-2018 and on the RISE Expert Group advising the commissioner for Research.  She is a member of VARIO, the expert group advising the Flemish minister for Innovation. She is currently a member of the Board of Reviewing Editors of the journal Science and a co-PI on the Science of Science Funding Initiative at NBER.

    With her research concentrated in the fields of industrial organisation, international economics and strategy, innovation and science, she has authored numerous well cited publications in leading international journals.  Specific recent topics include novelty in technology development,  international technology transfers through MNEs, global innovation value chains, young innovative companies, innovation for climate change,  industry science links and their impact on firm’s innovative productivity, evaluation of research & innovation policy,  explaining scientific productivity,  researchers’ international mobility,  novel scientific research.


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