Norway: Norwegian Government Publishes Positions To The EU's Critical Raw Materials And Net Zero Industry Act

On 14 July 2023, the Norwegian Government published its official positions on the EU's proposals for a Net Zero Industry Act (NZIA) and a Critical Raw Materials Act (CRMA), based on input from Norwegian businesses and NGOs.

The plans for these two legal acts, which are critical to the energy transition, were unveiled by the EU Commission in March of this year. The proposals will have implications for European industrial players and the wider EU economy, including its relations to third countries, as the EU takes measures to match massive subsidies from competing players (especially USA and China). With the proposals, the EU is planning for a future where the geopolitical realities will necessitate increased self-reliance, while still achieving ambitious climate goals.

The acts in brief

We have previously summarized the EU's proposals (in Norwegian). In short, the NZIA takes its aim at rapidly scaling up the European capacity in manufacturing net zero technologies that are critical to the energy transition, through a goal of 40 % intra-EU production within 2030, to be achieved through more streamlined administrative procedures and other measures designed to increase both supply and demand for EU-manufactured critical technologies.

The CRMA complements the NZIA and aims at securing intra-EU supply chains for the materials needed in the net zero industry, but also has a wider scope, having e.g. the defence and digital industries in mind as well. The CRMA sets targets on the extraction, processing and recycling of critical materials (e.g. battery-grade lithium) within the EU, to be achieved within 2030. The Act's key means are lowered administrative burdens and obligations and measures aiming to increase Member States' exploration and processing of such materials.

A key means of action in the Acts is the obligation on Member States to allow for so-called "one-stop shop" processes, where developers can rely on a single administrative point of contact that will coordinate the entire permitting process, meaning that the developer does not need to liaise with a whole different set of authorities with different competences and at different levels. This proposal may lead to lower administrative burdens and quicker processing of applications, as well as lowering the developers' application costs.

The Acts are considered EEA relevant by the EU, meaning that an implementation in the EEA Agreement is likely – and in our view, necessary to be done without delay compared to the EU implementation – to ensure that Norway can contribute to European decarbonization and economic progress, and reap the same benefits.

The Norwegian Government's position

In their official position documents, the Norwegian Government states that they support the main ambitions of the NZIA and CRMA and welcome more efficient permit-granting procedures.

The Government also supports the "one-stop shop" concept, but not in the form suggested by the EU, where that authority acts as the sole point of contact. Notably, and a point that likely will be the primary point of controversy in Norway, the Government will not accept that a coordinating authority will take over powers from municipalities, particularly their powers under the Planning Act (nw: plan- og bygningsloven) – commonly referred to as the "local veto". The Government can neither support the system where exceeding the proposed time limits for granting permits shall be considered a tacit approval of a permit application. In the Government's view, local planning processes and environmental impact assessments (EIAs) should be considered as separate processes preceding the time-limited permit granting process, meaning that the time limits should not include the time it takes to grant local building permits and conduct EIAs.

Another Norway-specific issue that the Government highlights is the need to fulfil the obligations to protect the rights of indigenous people (Sami) under ILO convention nr. 169 and the International Covenant on Civil and Political Rights Article 27. These provisions protect the traditional Sami nomadic reindeer herding, which uses large areas of north and central Norway. This is a key conflict topic in the debate on land use in Norway that is unfamiliar to most European countries. Norwegian law (the Sami Act) requires authorities to consult the Sami Parliament and other Sami interests in cases that may impact the Sami and the exercise of traditional culture. Such procedures may extend and delay the permitting processes.

Regarding the EU's plans to rapidly scale up carbon capture and storage (CCS) capacity, the Government welcome such initiatives. Norway is at the forefront of developing CCS in Europe, with the Longship project, due to be operational in 2024, being the first full-scale CCS system in Europe. Again, the Government does not support that maximum time limits are set for the permit granting procedures for CCS installations.

The Government also supports amendments to the public procurement rules to incentivize the procurement of net-zero technologies and the circular use of critical raw materials.

Another notable point is that the Government proposes the inclusion of aluminium and synthetic graphite into the critical and strategic raw material list. Norway holds a significant share of the European production capacity for aluminium, and synthetic graphite is a byproduct of the petroleum industry and can therefore contribute to securing the supply chains of these materials.

Haavind's view

The NZIA and CRMA represent massive opportunities for Norwegian industrial players and the general Norwegian economy, as the EU plans to make rapid steps towards securing the supply chains that will lead the transition to a low-carbon society. It is, therefore, to be commended that the Government supports the key principles of the Acts, including making permit-granting procedures more streamlined. Including aluminium as a critical raw material will also contribute to securing European supply chains, with great benefits to Norway, which contributes with a large share of the European production of aluminium in a market where competing imports from third countries otherwise may pressure the Norwegian aluminium industry to the extent that may not be sustainable for future production in Norway.

The key question when discussing the Acts' impact in Norway will be their interactions with the Norwegian tradition for thorough assessment and balancing of environmental, economic and societal interests in questions about the use of land and ocean areas. Such issues have become complex in Norway, with interests in maintaining both unspoiled nature and our Sami cultural heritage, to an extent that may be unfamiliar to many EU countries with their geography. EU's desire to simplify and speed up permitting processes may not be able to account for all these complexities and the Norwegian tradition of dealing with such processes.

In our view, the Norwegian Government should strive to strike a balance between the said interests and the objectives of the Acts, in order to not be left behind by the rapid developments in the rest of Europe. In our view, the framework laid out in the Acts provides room for allowing all interests to be heard and considered, despite a "one-stop shop" coordinating the permitting procedure from the first to the last step. With proper implementation, we believe that the Acts can contribute to improving administrative processes in Norway, without threatening any conflicting interests – but rather contributing to a more holistic approach to permitting.

Therefore, it is our view that the Government's positions are likely too pessimistic and may lead to Norway losing out on big industrial opportunities and possibilities to attract investment. In our opinion, the Government should strive to find ways where key interests can be safeguarded without making administrative processes significantly less efficient than in other EU countries. The Acts' framework, as it stands, admittedly sets strict time limits with few exceptions. It could be in Norway's interests to try to negotiate a more flexible framework with further access to extending the time limits in complex and exceptional cases beyond the provisions giving a right to extend the limits by three months (for strategic projects involving extraction of critical raw materials) or one month (for other projects). As a last resort, Norway could negotiate such adaptations as part of the EEA implementation, though it will be a clear advantage not to have a more restrictive set of rules than other EU member states.

At Haavind, we closely follow these exciting developments in the framework conditions in Norway and Europe. As experienced legal advisors to major industrial players in Norway on i.a. regulatory, contractual, corporate and property/land use-related questions, we are at hand to assist with all issues related to industry development and investment in Norway.

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