Brussels — The European Commission on July 7 opened a Eur1 billion ($1.1 billion) call to fund large-scale innovative renewables, clean hydrogen, energy storage, and carbon capture and storage/use projects.
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The goal is to get companies to invest now in the low-carbon technologies needed for the EU to achieve its goal of being climate neutral by 2050.
"The EU will invest Eur1 billion in promising, market-ready projects such as clean hydrogen or other low-carbon solutions for energy-intensive industries like steel, cement and chemicals," EC Executive Vice-President Frans Timmermans said on July 3, ahead of the call opening.
The money comes from the EU's Innovation Fund, which is funded until 2030 by selling 450 million EU Emissions Trading System allowances. It has a budget of around Eur10 billion over 10 years at current EU carbon prices, so the EC hopes to offer annual Eur1 billion calls to 2030.
The EC also wants to support innovative renewables, such as offshore wind, ocean energy, geothermal, biofuels and green hydrogen, as well as energy storage and grids.
Successful innovative projects can receive up to 60% of their additional capital and operating costs compared with current technology for up to 10 years.
The EC will provide the grants as lump sums.
The aim is to help close the investment gap as EU carbon prices do not cover the extra costs of such projects, Christian Holzleitner, head of the EC's innovation finance unit in its climate action department, said in an online information session on June 5.
Innovative projects' carbon abatement costs start around Eur80-90/mt CO2 and current EU carbon prices are around Eur20-25/mt CO2, he said.
Only yet-to-be-built new projects with a planned total capital expenditure above €7.5 million and based in an EU country, Iceland or Norway -- countries directly part of the EU ETS -- are eligible to respond to the first call.
This excludes Switzerland, which is only linked to the EU ETS.
UK-based projects will only be eligible if the EU and UK agree this explicitly as part of their post-Brexit future relations.
The first call is not targeted within the eligible sectors.
"We want to see what projects are out there and support those that are most innovative and most ready," Holzleitner said.
The EC may target specific sectors in later calls.
Project developers have to submit their applications by October 29, and will likely find out in the first quarter of 2021 if they can proceed to the next stage.
The EC is looking for projects that will have significantly lower emissions than current commercial technology, and go beyond incremental innovation.
Developers will also have to convince the EC their projects can reach financial close within four years to move to the second stage, where the EC will look at scalability and cost-efficiency.
Second stage applications will be due around the second quarter of 2021, and the EC hopes to award grants to successful projects at the end of 2021.
The EC has also set aside Eur8 million to pay for the European Investment Bank to help develop promising projects which are not yet market ready. Such projects can also apply again for the main funding when more mature.
The EIB is also responsible for selling the Innovation Fund allowances, with a tranche of 50 million due to be sold at the regular thrice-weekly EU auctions from July 16.
The EU's Innovation and Networks Executive Agency is responsible for administering the Innovation Fund and reporting on it to the EC.