Sustainable Transformation: How the EU Net-Zero Industry Act and European Critical Raw Materials Act Support the Green Deal

Jack Winder
May 22, 2023

European Green Deal and its main policy initiatives

The European Green Deal is a legislative package that is designed to help bring the European economy in line with its climate objectives, especially with the REPowerEU Plan to reduce reliance on imported Russian fossil fuels. This, together with the Circular Economy Action Plan, will provide the guidelines for transforming the EU's industry to meet the requirements of reducing net greenhouse gas emissions by 55% by 2030, in comparison to 1990 levels. 

The ambitious goals of the deal are designed to have a positive impact on sustainable development, competitiveness, job opportunities, and the quality of life for all citizens.

The EU is taking significant steps towards a better future for all, and has established a wide range of policy initiatives, including the EU Net-Zero Industry Act (as part of the Green Deal Industrial Plan), the European Critical Raw Materials Act, and the Ecodesign for Sustainable Products Regulation, among others. These acts are designed to encourage businesses to adopt sustainable practices and promote innovation in green technology, ultimately facilitating the transition to a circular economy. 

Ursula von der Leyen, President of the European Commission, stated that in order to accelerate the transition to clean energy, a regulatory environment is necessary. The Net-Zero Industry Act will be able to provide the best conditions for the sectors that are necessary to reach net-zero emissions by 2050. She went on to say that demand is increasing all over Europe and the world, prompting them to act now and make sure they can meet the demand with European supply.

The EU Net-Zero Industry Act: Key Elements and Goals

The EU Net-Zero Industry Act is not just a legislative proposal, it's a bold move towards sustainable development and a better future, designed to have a positive impact on sustainable development, competitiveness, job opportunities, and the quality of life for all citizens.

It's a call for action for all industrial sectors to join the fight against climate change and achieve carbon neutrality by 2050. The act sets forth ambitious goals, including:

  1. the establishment of a comprehensive EU-wide carbon pricing system, 
  2. promotion of energy efficiency and renewable energy sources, and development of innovative low-carbon technologies.
  3. ensuring a level playing field for businesses operating within the EU by:
  • introducing binding targets for reducing greenhouse gas emissions. 
  • providing financial incentives and support measures for businesses investing in low-carbon technologies and practices.

Another crucial aspect of the Net-Zero Industry Act is its focus on collaboration and stakeholder engagement. The act encourages public-private partnerships and the involvement of local and regional authorities in the development and implementation of sustainable industrial strategies. This collaborative approach ensures that the transition to a low-carbon economy is inclusive, economically viable, and socially acceptable.

The European Critical Raw Materials Act: Supporting Sustainable Resource Management

The European Critical Raw Materials Act aims to enhance the EU's resilience and competitiveness by promoting sustainable resource management and reducing dependency on imported raw materials. This legislation targets the responsible sourcing, processing, and recycling of critical raw materials, which are essential for the manufacturing of various high-tech products and renewable energy technologies.

The act establishes a list of critical raw materials that are subject to specific policy measures, such as research and development funding, strategic stockpiling, and investment in sustainable mining practices. It also sets forth guidelines for responsible sourcing, based on internationally recognized environmental and social standards, as well as transparency and traceability requirements for supply chains.

By encouraging a more circular and resource-efficient economy, the Critical Raw Materials Act not only supports the objectives of the European Green Deal but also contributes to the global efforts to achieve the United Nations Sustainable Development Goals.

The Role of the Circular Economy in Achieving the Green Deal Objectives

The circular economy is a pivotal concept within the European Green Deal, as it seeks to redefine the traditional linear model of production and consumption by promoting the efficient use and recycling of resources. This approach aims to minimize the generation of waste, reduce the extraction of raw materials, and maximize the value of products throughout their lifecycle.

The EU has adopted several policy initiatives to facilitate the transition to a circular economy, such as the Circular Economy Action Plan, the Ecodesign for Sustainable Products Regulation, and the Waste Framework Directive. These measures target various aspects of the production and consumption processes, including product design, manufacturing, distribution, and end-of-life management.

In addition to providing a great opportunity for companies to become more sustainable and profitable in the long run, embracing circular business models can also provide numerous economic benefits, such as reducing costs and increasing efficiency. A recent study by the Ellen MacArthur Foundation found that adopting circular economy principles could generate up to $4.5 trillion in additional economic growth by 2030.

By promoting circularity, the EU hopes to achieve a more resilient and competitive economy while also addressing today's pressing environmental challenges. The circular economy is, therefore, a key enabler for the successful implementation of the European Green Deal.

Blockchain Technology: Enhancing Traceability and Transparency

The Ecodesign for Sustainable Products Regulation (ESPR) is an integral part of the European Green Deal, as it seeks to establish EU-wide minimum requirements for the environmental performance of products. This legislation promotes sustainable production and consumption by encouraging manufacturers to design products that are durable, repairable, and recyclable, and by providing consumers with better information on the environmental performance of the goods they purchase. 

The ESPR identifies a Digital Product Passport (DPP) as key to enhancing the traceability of products and their components in the circular economy. 

Digital Product Passport

Blockchain brings with it a variety of unique features that enable material tracing. This is significant for circular economies. Through blockchain, you are able to identify and monitor materials throughout the supply chain. This enables users to more effectively reuse, recycle, and remanufacture products.

Key Blockchain Benefits

- Greater transparency

- Proof of transactions without the need for a central authority

- Permissions-based privacy and security

- Auditable, tamper-proof record-keeping

- Immutability

Digital Product Passports (DPP) is a digital record that contains information on the environmental performance, origin, and composition of a product, as well as information on its repairability, recyclability, and overall lifecycle.

Blockchain technology can play a significant role in the implementation of DPPs, by providing a secure and transparent platform for storing and sharing product information. This decentralized ledger technology can enhance traceability and transparency in supply chains, by enabling real-time tracking of goods and materials, as well as the verification of sustainability claims and certifications.

According to the World Economic Forum White Paper, Blockchain for Scaling Climate Action, published in late April 2023:

“Blockchain is a powerful tool that can provide breadth and depth to climate mitigation and adaptation efforts by democratizing ownership, improving transparency and integrity, and enabling real-time visibility into emissions reduction and sequestration efforts.”

The World Economic Forum White Paper emphasizes that digital technologies like blockchain can serve as an essential infrastructure for managing global climate action effectively and efficiently. It underlines four main advantages of using blockchain for climate initiatives: 

1) fostering trust and ambition in climate negotiations, 

2) improving market transparency and credibility, 

3) channeling more funds towards project developers, and 

4) making climate action opportunities accessible to all.

Conclusion: The Future of Sustainability

These regulations and frameworks promote sustainable development, foster innovation, and enhance competitiveness.

As businesses and governments seek to transition towards a more sustainable and circular economy, new opportunities will emerge for innovation, collaboration, and stakeholder engagement. By leveraging cutting-edge technologies, such as blockchain, businesses can not only comply with regulatory requirements but also gain a competitive advantage in the market, by offering sustainable and eco-friendly solutions.

Together, we can build a more sustainable and prosperous future, where economic growth is decoupled from environmental degradation and social and environmental considerations are integrated into business decision-making. 

To learn more about how blockchain can help you with your sustainable initiatives, reach out to us at