by Laia Alonso Carbó
In the pool of policies that the EU is developing in the context of the Green Deal, the Innovation Fund has awarded more than €1 billion to seven projects that aim to reduce millions of CO2 tonnes. What are the main goals of this fund?
What’s the deal with the Green Deal?
In a time where the fight for sustainability is urged by many and frequently dodged by others, the European Union is trying to lead this battlefield quest against climate change. Here is where the Green Deal comes into the scene. We have heard claims about it and praises too, but it is difficult to grasp what improvements it brings to the challenge. This is why I would like to take an overview of one of the positive advances that have taken place. Last April 1st, it was announced in the European Commission Press release section that the “Commission awards over €1 billion to innovative projects for the EU climate transition”. The main goal of these projects is to reduce up to 76Mt of C02 in the first ten years thanks to the revenues coming from the EU’s Emission Trading System, the press release article reported.
Delivering the European Green Deal: The Innovation Fund
To accomplish its climate goals regarding reducing greenhouse emissions, the European Commission has developed a series of legislative proposals to reach the reduction of CO2 emissions of 55% below 1990 levels by 2030. The main objectives, as the European Commission on Climate Action states are:
“(1) contribute to the European Green Deal objective of EU-wide climate neutrality by 2050; (2) to stimulate the creation of green jobs and maintain the EU’s record of cutting greenhouse emissions and, (3) to ensure that the transition is fair and leaves no-one behind”.
Among these efforts is the Innovation Fund, which has funded the innovative projects for the EU climate transition mentioned above. Fran Timmermans, the Executive Vice-President for the European Green Deal, presented the agenda in the following way:
“With the Innovation Fund, the European Commission is granting €1.1 billion to empower innovative, forward-thinking businesses that develop cutting-edge technologies and drive the climate transition in their respective fields (…).”
The European Climate, Infrastructure and Environment Executive Agency implements this fund with additional assistance from the European Investment Bank for other projects. The aim is to provide financial incentives for investment in low-carbon technologies and, thus, situate EU companies as leaders in global technology.
The mission of the Innovation fund is to bring and direct low-carbon technologies towards the market. The European Commission defends that it is not a mere research program; instead, it is a way of “bringing highly innovative technologies to the market” . Since it is an initiative that requires considerable investments for its comprehensive policies and proposals, it is interesting to highlight from where the revenues for the fund come. The revenues for the Innovation Fund come from the auctioning of millions of emissions allowances for the period 2020-2030 as part of the previously-mentioed EU Emission Trading System and from the unspent funds originally meant for the NER300 programme. The use of the EU’s Emission Trading System is a sustainable and fitted form of funding these projects. I would point out that building mechanisms to directly reduce CO2 emissions can help balance the negative impact that more polluting EU countries can have due to their industrial output. Therefore, I believe it is very constructive to re-invest it in industry and technology development. Usually, climate change projects that aim to redesign traditional patterns of production and consumption require considerable investments and predisposition that not every EU Member can or is willing to offer. Using a type of funding based on taxes can help balance this lack of national investment.
These graphs, retrieved from the European Commission website on Climate Action, are helpful to illustrate which areas of action are part of the Innovative Fund and its main goals.
As emerges from the Commission Decision of 2.7.2020 on the activities related to the Innovation Fund, serving as a financing decision and as a decision launching the first call for proposals in 2020, the Innovation Fund is considered one of the key financing programmes of the Union, contributing to the achievement of the European Green Deal objectives
The “innovative projects”
The selected large-scale projects for the grant regard the following areas: energy-intensive industries, hydrogen, renewable energy, and carbon capture. The first call for these projects opened on 3 July 2020 and received 311 applications for innovative cleantech projects. They promised to be able to reduce around 1,2 billion tons of CO2 during the operating period of the Innovation Fund. This brings, in my opinion, some optimism to the current situation of our planet. Briefly, the criteria to receive the award were based on their degree of innovation; potential avoiding of greenhouse gases emission; the maturity of the project; scalability, and cost-efficiency. It is notable that some of the rejected proposals, due to their potential, will also be receiving development assistance provided by the European Investment Bank.
In summary, I would like to highlight that most of the projects (five out of the seven projects) work in Energy Intensive Industry (highlighted green in the table) and just one in Renewable energy (highlighted pink) that, can begin to tell the direction that the EU might orientate their future policies. It is also worth noting that these projects are long-term since their predictions of CO2 avoidance are, in most cases, in 10 years from now scenario which may be too long term for a much time-sensitive situation as this climate crisis is. I propose the following table as a briefing of the awarded projects and their respective companies.
|COUNTRY OF ORIGIN
|CO2capture and storage
|To create the first and largest cross-border carbon capture and storage value chain
|14 Mt of CO2eq (1st year of operation)
|BECCS at Stockholm
|Biofuels and biorefineries
|Creation of a full-scale Bio Energy Carbon Capture and Storage facility at an existing heat and power biomass plant
|7.83 Mt of CO2eq (During the 1st 10 years of operation)
|Iron and steel
|To replace fossil-based technologies with climate-neutral alternatives such as green hydrogen production and use
|14.3 Mt of CO2
(During the 1st 10 years of operation)
|To deliver a commercial plant for the European market using waste that otherwise would end up in landfills
|3.4 Mt of Co2eq (During the 1st 10 years of operation)
|Cement and lime
|To produce the 1st carbon-neutral cement in Europe. It will deploy an industrial-scale combination of an airtight kiln and cryogenic carbon capture technology with CO2 storage in the North Sea site
|8.1 Mt of CO2eq (During the 1st 10 years of operation)
|To develop an industrial-scale pilot line for the manufacturing of innovative, high performance photovoltaic modules
|25 Mt of CO2eq (During the 1st 10 years of operation)
|To reduce greenhouse gas emissions by moving away from the production of fossil fuel-based hydrogen, towards both renewable hydrogen production
|More than 4Mt of CO2eq (During the 1st 10 years of operation)
These infographics summarize the extent of the project in Europe and the main logic of the initiative. The map, retrieved from the Climate Action website of the European Commission, shows the geographic distribution of the selected projects and the ones that had assistance offered.
This picture, retrieved from the same website, offers us a comprehensive explanation of the Innovation Fund.
Ending on a small note, I argue that this is a notable advancement that can help us understand how the European Union is acting to advance the current climate crisis and bring a little bit of action to the goals put on paper. However, there are questions still left to answer about this initiative that I would like to pose to the reader: Is CO2 avoidance enough to fight the amount of CO2 emissions that we can expect from the future? Is it best to invest in seven big projects that seem solvent or impulse more small companies in different countries? Will funding companies be efficient or sufficient against sanctions on countries and companies in the long term?