The EU is committing over €1.8bn to 17 large-scale innovative clean-tech projects as part of a third round of awards via the Innovation Fund
The EU will disburse grants of more than €1.8bn from the Innovation Fund to bring 17 breakthrough technologies to the market in energy-intensive industries, hydrogen, renewable energy, carbon capture and storage infrastructure, and manufacturing of key components for energy storage and renewables.
The projects have already been identified following the launch of a second call for proposals in October 2021 for large-scale projects with capital costs above €7.5m. The 139 applications, submitted earlier this year, were evaluated by independent experts, who analysed their eligibility for grant funding based on their potential for greenhouse gas emissions avoidance, degree of innovation, project maturity, scalability, and cost efficiency.
An EU official said that the Innovation Fund’s aim was to support the demonstration of low-carbon technologies with breakthrough potential and that the fund would share the investment risk with the promoters of low-carbon technology projects by covering up to 60% of relevant costs. These costs include the additional capital and operational expenditures of large-scale projects, and the capital expenditures of small-scale projects.
They explained: “These grants are disbursed in a flexible way depending on the specific financing needs of the individual projects. Selected projects have to secure the funding of the remaining 40% of relevant costs, as well as any sunk costs. Furthermore, capital costs are often higher than relevant costs, meaning that projects will have to either invest their own equity and/or look for loans to complete the investment.”
Innovation Fund grants can be combined with funding from other EU financing programmes, such as Horizon Europe, the Connecting Europe Facility, or the Modernisation Fund, but also with private capital sources, including institutional investors.
The EU official added: “It is the responsibility of the project promoter to find the best model for financing their project and explain it in the application to the Innovation Fund. We don’t have any specific requirements to the type of investors that the project promoter brings in.”
17 projects across Europe
The 17 selected projects are located across the EU and cover a wide range of sectors contributing to decarbonisation , including the production, distribution and use of green hydrogen, waste-to-hydrogen, offshore wind, manufacturing of photovoltaic modules, battery storage and recycling, carbon capture and storage, sustainable aviation fuels, and advanced biofuels.
These includea project in Finland to chemically recycle plastics to be used as a feedstock for refineries, a project in Iceland to build a highly scalable onshore carbon mineral storage terminal, and a project in Poland that will create an end-to-end carbon capture and storage chain, among others.
The EU claims that collectively these projects have the potential to save 136 million tonnes of CO2 equivalent over their first 10 years of operation.
In addition, the EU will pre-select up to 20 projects that are promising but not yet sufficiently mature for a grant, for project development assistance by the European Investment Bank, to be announced later this year.
60% increase in funding
The EU Emissions Trading System (ETS) has committed revenue of more than €38bn until 2030 to the Innovation Fund to drive companies and public authorities to invest in the next generation of low-carbon technologies and help position EU companies as global clean-tech leaders. This latest call represents a 60% increase in funds following a first call for proposals, which saw €1.1bn of grants awarded to seven projects, with 15 projects given project-development assistance.
A third call for projects is expected in the autumn, in which the funding available will be doubled to around €3bnto support the EU’s independence from Russian fossil fuels.
Frans Timmermans, vice-president of the European Commission, said in a statement: “Today’s grants support innovative businesses across Europe to develop the cutting-edge technologies we need to drive the green transition. The Innovation Fund is an important tool to scale up innovations in renewable hydrogen and other solutions for European industry. Compared to the first disbursement round, the funds available have increased by 60%, enabling us to double the number of projects supported. This is a big boost for the decarbonisation of energy-intensive industry in the European Union.”
InvestEU, an additional source of revenue for clean tech
The EU official was also keen to highlight the InvestEU funding programme, which helps finance a range of businesses aligned with the EU’s policy priorities, including in sustainable infrastructure, which they said that as well as financing EU innovation in its own right, could also be a potential source of funding synergies with the Innovation Fund.
“The InvestEU Fund mobilises public, but also private investments using an EU budget guarantee for providing additional debt and equity financing. Thus, InvestEU de-risks economically viable projects in order to crowd-in private financiers, which again, may include institutional investors,” they said.
“Doubtlessly, institutional investors have a major role to play in decarbonising the EU’s energy systems. It is necessary that investment funds increase the amount of capital that is deployed in clean technology innovation in order to promote the transformation of the EU’s economy into a modern, resource-efficient, and competitive economy. The EU’s sustainable finance taxonomy helps to guide investors in this regard.”