Innovation Fund Carbon Next Final Conference 17 July

Innovation Fund Carbon Next Final Conference 17 July 2018 Maria Velkova DG Climate Action European Commission Climate

Innovation fund Support for low-carbon demonstration 450 million allowances, volume of funding will depend on carbon price (€ 4, 5 b at € 10 t/CO 2 - € 11 b at € 25 t/CO 2) +conditional max 50 million allowances post 2025 Building on existing NER 300 Programme for renewables and CCS, applying the lessons learned Extension of scope to low carbon innovation in industrial sectors, CCU, products and energy storage Open for big and small projects in geographically balanced locations in the territory of the EU Climate

• Innovation Fund - project selection ü objective and transparent criteria ü taking into account the extent to which projects contribute to emission reductions well below the benchmarks (if applicable) ü potential for widespread application or for significantly lowering the costs of transitioning towards a low-carbon economy ü due consideration to projects that will have a significant innovation impact across the Union ü technologies receiving support shall not yet be commercially available, but shall represent breakthrough solutions or be sufficiently mature to be ready for demonstration at precommercial scale Climate

• Innovation Fund – funding conditionalities ü up to 60% of the relevant costs of projects may be supported ü out of which up to 40% may not be dependent on verified avoidance of GHG emissions provided that pre-determined milestones are attained ü the maximum percentage of project costs to be supported may vary by category of project Climate

CCU specificities ü Environmentally safe CCU that contributes substantially to mitigating climate change ü projects involving CCU shall deliver a net reduction in emissions and ensure avoidance or permanent storage of CO 2 ü CO 2 stored or avoided on a sufficient scale Climate

Building on NER 300 • Important lessons gathered during NER 300 implementation, also based on extensive expert consultation • Main design issues to improve: • Detailed technology list and pre-defined capacity thresholds - based eligibility • Cost per unit performance – as only selection criterion • Heavy governance with multitude of layers and actors • More accurate design (selection, financing products offered and governance) is explored 6 Climate

Expert consultations – Key conclusions ü No shortage of low-carbon solutions that should be demonstrated in the coming decade • 85 pathways & technologies identified, many of them cross-sectoral ü Markets, technologies and investments change and evolve rapidly • flexibility in eligible technologies ü Cross-sectorial cooperation may unlock new value chains and economic benefits, strong interest • CCUS infrastructure, Hydrogen, Energy Storage or Integration of Renewables 7 Climate

ü Financial support for projects should be linked to their risk profile • A variety of financial products ü Milestones funding according to investment cycle • Re-direct financing from underperforming projects to new projects ü Complementarity with other relevant EU and MS Financial Instruments • Innovation Fund as a set of financing products and services • Project lifecycle perspective (not programme perspective) https: //ec. europa. eu/clima/events/articles/0115_en 8 Climate

CCU in the expert consultations ü CCS and CCU were identified as “end of pipe” and necessary solutions to achieve cross-sectorial deep decarbonisation ü Examples of CCU: • Carbon 2 Chem (Thyssen. Krupp Steel) and Steelanol (Arcelor. Mittal & Lanzatech) (steel) • Building materials incorporating CO 2 (cement and lime sectors) • Conversion to Synfuels (non-ferrous metals) • Chemical valorisation of CO 2 (and CO) from gaseous industrial effluents (Chemical and Bio-based industries) Climate

Innovation Fund: Next steps ü ü ü Expert consultations: 1 H 2017 Public consultation: closed 12/04/2018 Expert group: first meeting 8/6/2018 Impact Assessment: ongoing Draft Delegated Act: by end of 2018 Launch of the Innovation Fund: 2020 10 Climate

NER 300 released funds Innov. Fin Energy Demo Projects NER 300 unused funds (€ 487) Connecting Europe Facility Debt Instrument • For bankable innovative renewable energy • Loans & project development assistance grants • For bankable renewable energy transport • Loans and guarantees • Blending with CEF grant possible → Both managed by the European Investment Bank, in case of interest contact the EIB directly Climate

EU programmes for low-carbon innovation Pre-commercial development (R&D) Demonstration / First -of-a-kind Uptake / Market readiness / Roll out of technology Horizon 2020 Timeline Existing tools Innov. Fin ESIF EFSI CEF LIFE (including PF 4 EE) NER 300 Horizon Europe Invest. EU CEF LIFE (including EE) Innovation Fund Modernisation Fund Climate Future tools (still under developme nt)

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