Europe responds – Can Brussels keep Europe's wind sector in the game?

Wind contributes 19% of Europe's electricity consumption and is considered integral to meeting 2030 and 2050 climate targets. As costs rise and competition from Chinese manufacturers intensifies, the EU is intent on accelerating wind development and bolstering energy security across the bloc. The most significant intervention has been the Net Zero Industry Act, which aims to build resilience into Europe's clean energy supply chains and incentivise local green tech manufacturers.

The act will shake up the wind power market on the continent, with changes to renewable energy auction design to give weight to matters such as cybersecurity, responsible business conduct and the ability to deliver projects. National governments may also reward bids on sustainability, energy system integration or supply chain resilience grounds. In short – the changes should give auctions more scope to back projects that keep European energy clean and secure, rather than merely cheap.

The act also considers offshore and onshore wind among eight strategic net zero technologies set aside for greater support. Moreover, typically onerous permitting processes are to be expedited:

• Net zero technology manufacturing projects with a yearly manufacturing capacity of less than one gigawatt (GW) should have permits decided within 12 months from application while projects of more than 1GW will have an 18-month target.
• Net zero strategic projects (such as onshore and offshore wind) with a yearly manufacturing capacity of less than 1GW will face a nine-month target while projects of more than 1GW should be resolved within 12 months.

Additional support comes from the EU's Wind Power Package, which set out 15 immediate actions to support the scaling up of the bloc's wind industry, including calling on member states to make voluntary commitments to increase capacity and using trade instruments to ensure a level-playing field with non-European competitors. The broad-ranging package also includes measures to speed up permitting, improve auction design to ensure projects remain commercially viable and a series of initiatives to support investment in infrastructure, factories and workforce development.

A response was needed. While rising geopolitical tensions have increased the focus on energy security (see Wind power – The security detail), the EU is also in greater competition with the US, where the Inflation Reduction Act (IRA) uses generous tax credits to attract local investment in renewables. Manufacturers can be eligible for a per-unit tax credit for each blade, nacelle and tower they build on American soil. "Those US credits are incredibly attractive, they're doing their job and magnetising investment," says Lewis McDonald, Herbert Smith Freehills Global Co-Head of Energy. "Europe is up against it trying to compete with them."

But while the Net Zero Act may not match the IRA for allure, Europe benefits from a more mature industry and sustained political support for wind power over decades, a contrast to a more polarised debate in the US ahead of a looming presidential election in 2024. The competition is hotting up but Europe will not easily give up its status as a global pioneer of wind power.