Innovation Fund Knowledge Sharing Report

ABSTRACT

The Innovation Fund (IF), funded with revenues from the EU Emissions Trading System, is one of the world’s largest funding programmes supporting the deployment of innovative net-zero and low-carbon technologies and knowledge sharing is an essential part of it. The objective of this report is to share knowledge gathered from the IF portfolio of projects that can help other projects looking to deploy innovative low-carbon technologies and minimise risks associated with scaling up. By the end of 2023, the IF project portfolio included 104 ongoing projects in the areas of energy-intensive industries, hydrogen, industrial carbon management, renewable energy or energy storage, with the committed EU contribution amounting to EUR 6.5 billion. By the end of 2023, 19 IF projects reached financial close, and four projects successfully entered into operation. Given their complexity in terms of size, technical ambition and reliance on external market and regulatory developments, IF projects encounter multiple challenges. This report sheds light on challenges related to difficult market conditions, securing finance and offtake agreements, regulatory bottlenecks, including on permit-granting procedures and technical constraints. The report provides insights into how IF projects apply different strategies to overcome these challenges and mitigate the corresponding risks. For example, delays caused by supply chain disruptions, higher capital expenditures or higher cost of capital are mitigated by ensuring sufficient contingencies in terms of project timing and budget, a clear governance structure and close monitoring.

By the end of 2023, 19 Innovation Fund (IF) projects reached financial close (FC), and four projects successfully entered into operation. IF projects encounter multiple challenges due to their inherent high-risk profile, complexity in terms of size, technical ambition and their reliance on external market and regulatory developments.

• Challenging market conditions, stemming from geopolitical and economic crises, such as COVID-19 and the military aggression in Ukraine, have cascaded down on projects, leading to direct and indirect consequences: from delays caused by supply chain disruptions to higher capital expenditures and higher cost of capital. Contingencies in terms of project timing and budget, a clear governance structure (with clear responsibilities between parties and well-defined anticipative planning) and close monitoring constituted successful mitigation strategies.
• Regulatory bottlenecks and challenges with permitting have particularly affected projects operating in emerging and/or fast-growing sectors such as renewable hydrogen, renewable energy and energy storage. Projects mitigated these risks by initiating the permitting process in advance and engaging in a continuous dialogue with the relevant authorities.
• Some projects have experienced technical constraints, such as delays in the project preparatory phase and/or during construction. These mainly resulted from the high complexity of some projects, or their deployment in new locations or countries with limited experience with the envisaged technological solution. Simplifying processes and optimising the technical design helped overcome these constraints.
• The report finds that securing finance is a noticeable challenge for small-scale companies or newly created special purpose vehicles (SPVs). To secure funding for their projects, beneficiaries engaged in discussions with possible funders at an early stage. In addition, projects shareholders provided the necessary support (such as additional equity or guarantees) to facilitate the funding of the projects.

Projects in energy-intensive industries

• Energy-intensive industries (EIIs) projects share the same challenges as other IF projects, such as changed market conditions and delays or disruptions in the supply chain, or issues related to the regulatory framework and permitting. In addition, projects with a high electricity demand may experience issues in securing grid connection and adequate grid capacity, particularly those pursuing renewable hydrogen production and use, or electrification. To overcome this obstacle, some projects enter into close collaboration and negotiations with transmission system operators and distribution system operators from the inception of the project.
• Remaining competitive in the markets for new green products is also challenging for projects in the EIIs cluster. For example, the high production costs of projects developing green products, such as synthetic fuels, result in difficulties in securing offtake agreements under current market conditions. To overcome this issue, certain projects adopted a proactive strategy by engaging potential offtakers in project financing. They secured volume contracts from the early stages of the project and established a diverse offtakers portfolio. Other projects redesigned technical aspects to reduce costs. For biofuels projects, revisions of national incentive schemes have directly impacted the business case of biofuels offtakers. Consequently, lead producers had to explore alternative applications of the product to capitalise on different markets offering more attractive incentives.

Projects with a hydrogen component

• The implementation of the renewable energy directive (RED) ( ¹ ) is demanding as it is not easy to align renewable electricity supply with hydrogen production while fulfilling commitments to hydrogen offtakers and ensuring enough return on the investments. Securing offtakers also poses challenges, primarily due to existing infrastructure constraints. Some offtakers see RED targets for transport and industrial sectors not ambitious enough and they postpone paying the premium cost of the renewable hydrogen. Additionally, obtaining permits for a new technology that lacks established EU standards could result in long and complex validation procedures. These complexities, inherent to an emerging market, require careful planning with sufficient timing contingencies.
• Findings from the report indicate that successful hydrogen projects require robust project frameworks. This involves proactive and early identification of potential project risks, such as technological, operational, financial and contract performance risks. Implementing effective risk mitigation strategies is also essential. These strategies may include integrated projects involving renewable electricity suppliers and hydrogen offtakers, as well as partnerships and collaboration agreements with technology providers.
• Existing challenges underscore the importance of simplifying permitting processes, extending the assistance to low-carbon and renewable hydrogen producers, and fostering the exchange of technological solutions and project experiences.

Projects with a carbon capture and storage component

• For the projects dependent on external CO₂ storage services beyond their project boundaries, a primary concern lies in the scarcity of CO₂ storage sites available on the market within their relevant time frames. The imbalance between storage demand for planned capture projects and the availability of operational storage capacity significantly hampers the market’s development and increases uncertainty related to storage costs. For carbon capture and storage (CCS) projects, risk-sharing and risk-management mechanisms must be addressed across a value-chain consisting of different industrial players. Experience gained from IF projects reveals an urgent need for harmonised CO₂ standards for transport and injection infrastructure given the disperse and different nature of emitters, differences in capture technologies, CO₂ purities and options for transport.
• Projects that develop CO₂ storage sites within their project boundaries face challenges in applying the CCS directive ( ² ) provisions, and in addressing permitting needs for CO₂ storage sites in a timely manner, as this is also a first-of-a-kind activity for managing authorities and prospective CO₂ storage sites operators. Clarity and guidance are needed for relevant authorities and project promoters to overcome regulatory barriers.
• Finally, projects generating net carbon removals face difficulties in monetising the generated negative emissions. Currently, investment decisions for this type of operations mainly rely on state subsidies or voluntary carbon markets. An agreement at political level on an EU-wide voluntary framework for the certification of high-quality carbon removals represents a significant advancement in the business case of such projects.

Projects with a renewable energy generation component

• Several projects encounter challenges in ensuring offtake contracts. Projects usually mitigate this risk by prioritising early dialogue with potential offtakers. Additionally, they leverage the assistance of specialised intermediaries (e.g. associations or network managers) and establish binding agreements and/or long-term contracts.
• Many projects also face regulatory and permitting constraints. Risk-management strategies feature setting careful timelines for project planning, early engagement with permitting authorities and being prepared to address permitting challenges, especially for the innovative elements of the project concept, where permitting requirements are not established.

Projects with an energy storage component

• Insights derived from energy storage projects indicate regulatory and permitting challenges. To overcome some of these obstacles, bi-directional electric vehicle (EV) charger deployment projects have strategically employed behind the meter (BTM) optimisation strategies for fleet charging schedules. This approach has facilitated the effective regulation of the contractual relationship between the supplier and the independent aggregator.
• Projects faced challenges in establishing viable business models for deploying energy storage systems (including thermal storage in district heating and vehicle to grid (V2G) stations deployment), as well as second-hand batteries repurposing and end-of-life battery recycling projects. To address these challenges, risk mitigation strategies were implemented, such as binding agreements with offtakers, adopting SPV ownership models and diversifying their funding sources through a mix of equity, debt and EU grants. In addition, projects such as end-of-life battery recycling and V2G implementation actions fostered strong partnerships across the value chain, facilitating technological development and harmonisation of product specifications. Heating-as-a-service projects incorporated additional revenue streams through additional revenue streams from using heat pump activation and deactivation to support grid stability.
• Supply chain disruptions and increased demand have caused price increases in materials and semiconductors, impacting the costs of electrical equipment. In response, projects have strategically adjusted their initial plans by modifying transformer capacity, resizing designs, integrating a mix of new and second-life batteries or exploring the transition from nickel manganese cobalt to lithium iron phosphate battery systems. Projects have adopted proactive measures such as advance procurement planning, local sourcing, contingency planning and maintaining a strategic stock of critical items. They have also prioritised staying informed about market dynamics, leveraging parent companies’ strength and implementing rigorous risk assessment strategies.

Many of the challenges explained above require structured cooperation between public and private entities either at EU or at Member State level to ensure that regulatory and market prerequisites for projects development are in place as soon as possible, in view of securing investment decisions. Fostering the exchange of technological solutions and project experiences will help in avoiding the costly repetition of inefficient approaches. Knowledge sharing and policy feedback are important elements for speeding up deployment of innovative low-carbon technologies.

The Innovation Fund, financed with revenues from the EU Emissions Trading System (EU ETS) is one of the world’s largest funding programmes supporting the deployment of innovative net-zero and low-carbon technologies.

Endowed with around 530 million EU ETS allowances until 2030, the IF supports projects focusing on:

• innovative low-carbon technologies and processes in energy-intensive industries (EIIs), including products that can substitute carbon-intensive ones;
• carbon capture and utilisation (CCU);
• construction and operation of carbon capture and storage (CCS) facilities;
• innovative renewable energy generation;
• energy storage;
• new sectors following the revision of the EU ETS directive ( ³ ): net-zero mobility (maritime, aviation, road transport) and buildings.

The IF aims to finance a project pipeline composed of a wide range of innovative technologies in all eligible sectors and EU/EEA countries (Figure 1).

Knowledge sharing is an essential part of the IF programme. The objective of knowledge sharing, and of this report, is to enhance market penetration and support the replication of the clean technologies or solutions funded by the programme, reducing their risks. Therefore, IF projects actively share the knowledge gained, supporting commercial scaling-up and accelerating both the deployment and the commercialisation of the technologies. Projects are required to share the acquired knowledge pursuant to Article 10a of the EU ETS directive. Knowledge sharing requirements are incorporated into grant agreements, requiring ( ⁴ ) beneficiaries to share the relevant knowledge acquired during the project’s implementation with the European Commission.

The data and project information presented in this report reflect the status on 31 December 2023.

Insights on project challenges and mitigation measures presented in this report are derived from knowledge sharing requirements of IF projects and thematic knowledge sharing workshops, which are discussed further in this section.

Sensitive project information has been aggregated and anonymised to protect confidential project data and to avoid reverse engineering. This report does not include information that fails to meet the minimum anonymisation and no-reverse-engineering requirements, which may occur when there is an insufficient number of projects of the same type. Public data collected in the framework of knowledge sharing activities, and other publicly available material are presented in a non-anonymised way.

Due to the wide spectrum of technologies covered within the IF portfolio, points in Section 5 structure information around five thematic clusters:

• energy-intensive industries (⁵), including carbon utilisation, biofuels and biorefineries;
• hydrogen, including manufacturing of components for hydrogen production and utilisation;
• carbon capture and storage;
• renewable energy generation, including manufacturing of components for renewable energy production; and
• energy storage, including manufacturing of components for energy storage.

This structure enables the presentation of cohesive, aggregated and anonymised knowledge accumulated to date, outlining key challenges and lessons learned from the project portfolio and respective thematic clusters.

Cross-cutting projects covering aspects of two clusters are analysed in both clusters. For example, a project producing hydrogen from water electrolysis and utilising it in a chemical reaction with captured carbon is referred to in both hydrogen and EIIs clusters. The attribution of projects per cluster, respective EU funding, greenhouse gas (GHG) emission savings and projects’ main location are presented in the Annex.

IF projects have two key project milestones, FC ( ⁶ ) and entry into operation (EIO) ( ⁷ ). These milestones are only considered as achieved once they have been validated by the granting authority ( ⁸ ). Therefore, projects without validated FC and EIO milestones are categorised as projects that have not achieved them yet for the purposes of this report.

The quantitative details included in this document are provided for information purposes only, based on current expectations and assumptions, and inherently subject to significant uncertainties and changes in circumstances. Please be advised that these assumptions should not be regarded as firm predictions, and actual results may differ. The expected GHG savings presented in this report are based on the relevant GHG methodology applicable to the projects at the time of their application to the IF. The ramp-up periods to achieve full-capacity production are omitted in the calculations for simplification purposes.

The early stage of project portfolio does not provide sufficient level of data to elaborate further on potential scalability effects and operational aspects of ongoing projects.

The Commission (Directorate-General for Climate Action) and CINEA regularly organise knowledge sharing workshops, addressing challenges and opportunities of the innovative low-carbon technologies. The meeting summaries, presentations and background documents of the past events on CCS, hydrogen and energy storage are available on CINEA’s website ( ⁹ ). Findings of these meetings are integrated into this report. Knowledge sharing workshops dedicated to renewable energy and decarbonisation pathways in energy-intensive industries are planned to take place in 2024 and in the years that follow. Findings of these meetings, along with further knowledge gained from the growing portfolio, will be integrated into the next editions of this report.

4.1. Portfolio overview

The IF opened its first call for proposals on 3 July 2020. Since then, six other calls have been launched. The IF portfolio consists of 104 projects, among which 45 are small-scale and 59 are large-scale ( ¹⁰ ). The total committed IF contribution for these projects amounts to EUR 6 469 666.52.

Table 1 summarises the number of projects per type of call. Small-scale projects represent a 43 % share of the portfolio, but only account for 3 % of total IF funding.

Table 1. Portfolio overview by end of 2023.

The expected absolute GHG emissions avoidance of ongoing IF projects, calculated over 10 years of operation, sums up to 442 million tonnes of CO₂ equivalent ( ¹¹ ), 99 % of which (432 million tonnes of CO₂ equivalent) stem from large-scale projects (Figure 2).

The expected investment volume (CAPEX) of the ongoing IF projects is around EUR 35.5 billion for large-scale projects and EUR 313 million for small-scale projects, which combined represents more than five times the IF funding committed.

IF projects can be found in 22 countries, some of them in multiple locations. The most frequent locations for projects are Spain (17), Germany (12) and France (10) (Figure 3). Projects implemented in Germany, Sweden and Belgium benefit from the highest IF contribution overall. The geographical distribution of large and small-scale projects per main country of implementation is shown in Figure 4.

SYNERGIES WITH OTHER EUROPEAN UNION PROGRAMMES

The current IF portfolio features eight projects which directly build upon results of previous EU-funded projects. These projects mainly benefited from EU research and innovation actions (RIA) grants received under the Horizon 2020 programme and the 7th framework programme. For example, the CO₂ geological storage technology deployed in the projects Coda Terminal and Silverstone was previously supported by four EU RIA grants from the Horizon 2020 programme. Project ANRAV benefited from four grants to develop technologies on carbon capture in the cement industry. In addition, several IF projects benefit from synergies created with other EU-funded programmes, such as LIFE ( ¹² ), CEF ( ¹³ ), EMFAF ( ¹⁴ ), the EIC Accelerator ( ¹⁵ ) (part of Horizon 2020 and Horizon Europe programmes), Interreg ( ¹⁶ ) and REACT-EU ( ¹⁷ ).

INNOVATION FUND BENEFICIARIES

The 104 ongoing IF projects are implemented by 213 participants ( ¹⁸ ): 202 privately owned, for-profit entities, five public entities, four research organisations, one higher education establishment and one non-governmental organisation (NGO).

Many of the IF projects are mono-beneficiary or are managed by small consortia. Figure 5 captures the distribution of the IF portfolio per consortia size.

4.2. Financial close and entry into operation status and analysis

STATUS

As the IF aims to support cleantech solutions that can be deployed rapidly, projects must reach the first mandatory milestone, FC, within a maximum of 4 years from the grant signature. This period of time reflects the market practice-based time that is required for the preparation, construction and operation of the complex and innovative projects financed under the IF.

Out of 104 projects in the IF portfolio, 19 projects reached FC: 17 small-scale projects (14 selected in SSC-2020 and three in SSC-2021) and two large-scale projects (one selected in LSC-2020 and one selected in LSC-2021), as shown in Figure 6.

Out of the 19 projects that reached FC, four small-scale projects have also successfully entered into operation.

Figure 7 presents the average time to reach FC and EIO per call and the average delay in reaching the respective milestone ( ¹⁹ ).

For small-scale projects, the average time to reach the key milestones remains similar across the calls (14 months from the grant start to FC, and approximately 30 months between FC and EIO, excluding delays). Large-scale projects require more time to reach FC and much longer periods between FC and EIO due to their substantial size and complexity, during both the investment process and the construction phase. At the same time, it appears that projects supported under the last large-scale call (LSC-2022) expect a considerably shorter time to reach FC and EIO compared to previous calls (LSC-2020 and LSC-2021). It can be argued that some of these projects have been submitted to multiple IF calls, thereby attaining a higher level of maturity over time. Furthermore, for some of these projects, the starting date was the end of 2023, thus no delays have been reported yet. The average period per call to reach FC is still well below the maximum period of 48 months, on average 25 months for large-scale projects and 15.8 months for small-scale projects.

Generally, delays in reaching FC result in delays in the EIO date. Some projects compensate for delays in FC by adjusting the construction timeline to meet the planned EIO date.

ANALYSIS

Projects face numerous challenges to achieve FC, and they are often confronted with several of them simultaneously. The most common challenges are listed in descending order, along with the most effective mitigation measures, discussed in more detail under points 5.1 to 5.5 of this report:

1. delays in equipment supply and rise in material/energy costs;
2. securing offtake contracts;
3. regulatory challenges and delays in obtaining permits;
4. facing unexpected technical constraints;
5. changes to the organisational setup.

(i) Delays in equipment supply and rise in material/energy costs

Supply chain disruptions, labour shortages and longer lead times for the delivery either of raw materials or equipment posed significant challenges to the timely implementation of projects.

Successful mitigation strategies employed by IF projects include anticipating orders and coordinating with suppliers, and diversifying the supplier portfolio. In some cases, projects renegotiated delivery schedules with their offtakers to accommodate longer delivery times.

Furthermore, surging prices for raw materials, components, energy and the transportation of goods prompted modifications to the initial project budgets. For instance, within projects with an energy storage component, increased prices of materials like copper, aluminium, steel and semiconductors, significantly impacted the cost of electrical equipment. For example, developers of offshore wind farms have encountered higher-than-budgeted wind turbine installation costs and some hydrogen projects are faced with higher electrolyser costs. These challenges were mostly addressed by increasing planned budgets, asking shareholders for additional contribution and renegotiating contracts with customers. Moreover, a clear governance among project parties combined with the close monitoring of the progress were effective measures in all clusters and for all industrial sectors. Governance arrangements would include a clear decision-making process and accountability framework.

Some projects aimed at manufacturing components for energy storage or components for renewable energy production face heterogeneous supply chains. Typically, in a heterogeneous supply chain every supplier is unique and there may be variations in the types of products, production processes, technologies used, geographical locations and regulatory requirements. Managing a heterogeneous supply chain often involves addressing complexities associated with coordinating and integrating these diverse elements to ensure smooth operations, optimise efficiency and meet customer demands effectively. Heterogeneous supply chains, coupled with limited feedstock volumes (e.g. second-hand and end-of-life batteries) and the absence of pricing for raw (European) recycled materials, have favoured projects with larger orders. This placed smaller companies at a disadvantage. To tackle these challenges, projects have adopted a proactive approach, prioritising advanced procurement planning, local sourcing, contingency planning and maintaining strategic stocks of critical items.

Projects in other clusters, such as EIIs, implemented rigorous risk assessment strategies, stayed constantly informed about market dynamics, relied on support from a parent company or group and proactively participated in the promotion of new processes and their own products through demonstrators and prototypes.

For some projects, on the other hand, the increase in energy prices and tight supply of imported fossil fuels created an opportunity to move business away from natural gas. For example, in the pulp and paper industry, this is possible due to the nearby availability of wood residues.

(ii) Securing contracts with offtakers

Difficulties in securing offtake agreements with favourable terms is one of the most prominent factors contributing to delays in reaching FC. This challenge is partly attributed to the innovative nature of the projects supported by the IF, as they target new markets and/or develop new products or solutions.

Some projects within the hydrogen and EII clusters encountered challenges in customer identification. This can be attributed to low product demand or resistance towards paying a green premium. Additionally, some faced significant regulatory risks and encountered obstacles in risk-sharing and the negotiation of commercially viable terms with offtakers. In the same vein, projects facing increased CAPEX and/or OPEX were under pressure to renegotiate offtake agreements with more favourable terms to cover the increased cost and maintain the expected profitability.

Projects assessed the risks of relying on multiple offtakers, recognising the potential impact on financial viability if these offtakers decrease their planned purchases. These considerations were particularly salient in heat-as-a-service-related projects, where revenue primarily comes from selling heat through customised agreements. Early engagement with potential offtakers and the adoption of a flexible business plan were identified as effective strategies to improve projects’ chances of success in securing agreements. These measures included the ability to accept less favourable contract terms.

(iii) Regulatory challenges and delays in obtaining permits

Nine projects reported challenges in obtaining the relevant permits, resulting in requests for extension of the contractual timeline to FC. In addition, four projects experienced delays attributed to the limited experience of permitting authorities in handling the proposed innovative solutions, or to the necessity to develop new types of permit procedures, such as the end-of-waste permits needed to valorise previously unexploited waste streams. In addition, projects reported shortages in permitting authorities’ personnel, leading to slower processing of permit applications and therefore granting delays. Finally, two projects admittedly underestimated the time and effort needed to acquire the permits and failed to proactively engage with the relevant public authorities, leading to a delay in reaching FC. A primary insight from project beneficiaries emphasised the need to actively engage with regional authorities to streamline administrative procedures for obtaining operating and environmental permits.

Projects implementing first-of-a-kind industrial technologies typically operate in a more unstable regulatory framework which is still under development. For example, projects promoting the integration of energy storage solutions faced unclear or incomplete market rules. To overcome these challenges, consulting firms with expertise in issues related to the siting and operation of battery charging and discharging stations played a crucial role in obtaining the required permits.

Obtaining the necessary construction permits from local and national authorities in a timely manner represented an obstacle for some projects. For example, renewable hydrogen projects reported difficulties in securing renewable electricity due to long permitting processes for developers of renewable energy projects, and due to regional differences in permitting procedures. In addition, extra studies were needed due to the lack of EU standards for the hydrogen production plant, leading to environmental permit delays. Based on the insights gained from the IF projects, initiating the permitting process at an early stage and establishing an ongoing communication channel with the relevant authorities have been beneficial.

(iv) Technical constraints

The number of projects affected by technical challenges is not significant. Some projects have found simpler processes or have optimised the initial design, while maintaining their objectives, while others needed to react to enhanced risks such as ground stability or explosion risks. Technical issues are likely to gain importance as more projects reach FC and start construction and operation. Sufficient buffer time to overcome such constraints should be considered in each project.

(v) Changes to organisational set-up

Changes to the organisational set-up can have important implications, especially if a key project partner such as a proprietary technology holder or a financier decides to leave a consortium, as this may undermine viability of the business plan. Consortia successfully mitigated this risk by replacing the technology provider with another offering similar solutions. To date, there were only a few isolated cases where a key partner could not be replaced because of its unique technology or skills, thus putting the whole project in jeopardy.

IMPACT OF CHALLENGES ON FINANCING AND FINANCIAL CLOSE

Projects were typically confronted with a combination of challenges which could potentially impact the project’s ability to secure the required financing. Insights from projects have shown that failure to secure agreements with anticipated suppliers for essential equipment may require negotiations with alternative suppliers and a revisiting of the project’s financing needs.

Some small companies or SPVs struggle to secure finance, while projects with shareholders willing to provide the necessary guarantees to ensure the funding are more likely to succeed.

The majority of the ongoing IF projects are expected to be funded entirely using a combination of equity and IF grants. One of the reasons is that innovative projects are perceived risky by potential debt providers due to the lack of historical performance data and market standards allowing to price the risks for lenders. Another reason is the complexity of having to manage and coordinate multiple project funders in a timely manner. Consequently, achieving FC while having many funding sources may take longer.

Securing additional funding may be limited if more financing is needed than initially planned. Some projects may plan to get extra state aid support, but it may be reduced by state aid thresholds and might not be enough to meet the total funding needs. Therefore, based on the gained experience, it is recommendable to include a sufficient number of contingencies with adequate financial backing from project shareholders.

Amending the IF grant agreements to postpone the FC date may prove inadequate if project developers encounter issues with significant implications for the commercial and financial viability of their projects. These issues may not be addressed solely through further process optimisation, temporarily downsizing certain aspects of the project or entering into new commercial agreements with more favourable terms.

If no viable alternatives can be found, the ability of these projects to ultimately reach FC may be at risk. Projects may have their grant agreement terminated after it becomes clear that a solid plan to address the delays and to reach FC, within a foreseeable time horizon, cannot be achieved. This applies to only a few projects so far, that were unable to overcome substantial challenges within a foreseeable time frame (see point (v) ‘Changes to organisational set-up’). However, this is a common aspect of investments in novel and risky technologies, especially during rapid market changes.

5.1. Energy-intensive industries

PROJECTS IN THE EIIs

The EIIs cluster covers 49 ongoing projects ( ²⁰ ) with a total capital investment (CAPEX) of more than EUR 18 billion. The projects are located in 18 countries, one third of them being implemented in Sweden and Spain, with others concentrated in Belgium, France and Germany.

Within the EIIs cluster, the number of projects varies significantly across different industries (Figure 11). Industrial sectors, such as chemicals, refineries, cement and lime, and iron and steel, feature most of the large-scale projects, while pulp and paper, non-ferrous metals, biofuels and biorefineries, and glass, ceramics and construction materials are primarily or exclusively represented by small-scale ones.

All large-scale projects in the EIIs cluster are expected to enter into operation between 2027 and 2029. The distribution of the EIIs portfolio between large-scale and small-scale projects has an impact on the expected GHG emission reductions per sector. Namely, large-scale projects in the cement and lime, iron and steel, and chemicals industrial sectors are expected to make a major contribution to the GHG emission avoidance in this cluster (Figure 12).

Nearly all the EIIs small-scale projects plan to reach EIO by the end of 2026. Four small-scale EIIs projects successfully entered into operation between 2022 and 2023: AAL SEB (non-ferrous metals), EB-UV (iron and steel), SKFOAAS (refineries) and W4W (biofuels and biorefineries). Among EIIs small-scale projects, pulp and paper projects are expected to achieve the highest share of GHG emissions avoidance (Figure 13).

EIIs DECARBONISATION PATHWAYS PER SECTOR

Decarbonisation pathways vary across industrial sectors. Nevertheless, some trends can already be identified (Figure 14).

Some industrial sectors prioritise a single decarbonisation pathway. For instance, projects in the cement and lime sector predominantly propose CCS solutions; biofuels and biorefineries projects focus on the use of waste and residues; projects in the glass industry consider exclusively electrification, while pulp and paper projects prioritise substituting fossil fuels with biofuels produced on-site.

Other sectors employ a combination of different decarbonisation pathways. Chemicals, refineries and construction materials projects extensively explore solutions based on CCU, waste/residue utilisation, or a combination thereof. The production and usage of renewable and low-carbon hydrogen, often combined with CCU, is a common feature of iron and steel, chemicals and refineries projects.

Alongside the decarbonisation pathways mentioned above, certain projects aim to reduce GHG by changing processes or the feedstock used. Examples of such approaches can be found in the refineries, iron and steel, cement and lime, and non-ferrous metals sectors.

EIIs PRODUCTS AND PROCESSES PER SECTOR

BIOFUELS AND BIOREFINERIES

Projects in the biofuels and biorefineries sector can be classified into two main groups based on their feedstock and final products. Firstly, waste-to-gas projects propose converting biogas from bio-based waste, such as organic municipal and agri-food waste, into gaseous fuels like biomethane. Examples of such projects include the FirstBio2Shipping project, which aims to convert biogas from organic waste into bio-LNG for cleaner marine fuel, and W4W, which produces grid-compliant biomethane from landfill. Secondly, biomass-to-liquid projects (e.g., project BioOstrand) typically convert biomass, mainly forest residues, into liquid fuels like sustainable aviation fuel (SAF).

CEMENT AND LIME

The distribution of cement and lime projects in the IF portfolio reflects the sector’s reliance on carbon capture, utilisation and storage solutions to mitigate process emissions, especially CO₂ emissions associated with the calcination of raw materials. Ten projects propose CCS and are considered in point 5.3. Other projects, such as C2B, focus on CCU, and Clyngas aims at the substitution of fossil fuels with waste-derived fuels.

CHEMICALS

Most of the projects in the chemical sector aim to produce green methanol (e.g. GREEN MEIGA and AIR) or green ammonia (e.g. GAP and GRAMLI) through renewable and low-carbon hydrogen production and CCU. Additionally, there is an increased emphasis on circularity, with some awarded grants supporting projects aiming to produce sustainable plastics through waste recycling (e.g. SC-HOOP).

CONSTRUCTION MATERIALS

Two small-scale projects have been granted in this field so far. Project CO₂ncrEAT uses by-products of stainless-steel production and CO₂ captured from a lime plant to produce carbon-negative precast materials. The second project, AGGREGACO₂, uses fly ash, slag and air pollution control residues to produce aggregates for the construction sector.

GLASS AND CERAMICS

Glass and ceramics IF projects focus only on glass production, targeting mostly container glass as a final product. An exception is the VOLTA project, which targets float glass production via an all-electric melting technology and oxy-gas combustion that are combined in an integrated furnace with up to 100 % cullet recycling, also envisaging the possibility of gas (hydrogen) blending in its future developments.

IRON AND STEEL

The main decarbonisation trend in the iron and steel projects involves transforming the ironmaking process by replacing coke-fuelled blast furnaces (BF) with direct reduced iron (DRI), using hydrogen as the primary reducing agent. This transition is complemented by the electrification of steelmaking, shifting from basic oxygen furnaces (BOF) to electric arc furnaces (EAF). Two large-scale projects illustrating this shift are the Hybrit demonstration and H₂GS project. Other projects target the decarbonisation of specific stages of production. For instance, the EB UV project replaces the traditional curing ovens in continuous coil coating lines with a new technology based on electron beam curing. The Helexio line project proposes a solution to manufacture ‘ready to plug in’ photovoltaic steel roofing panels.

NON-FERROUS METALS

The non-ferrous metal industry includes two projects focused on enhancing sustainability and efficiency. Project AAL SEB introduces a high-pressure electric boiler in an alumina refinery with the objective of reducing GHG through the integration of renewable energy sources. Project Green Foil is upgrading its process to enable the production of EV-battery grade aluminium foil.

PULP AND PAPER

The sector is represented in the IF portfolio by two small-scale projects. Both projects target fuel use, replacing natural gas with hardwood residues (project LK2BM) or with bio-syngas from wood wastes (project TFFFTP).

REFINERIES

In the refinery sector, the resulting products widely depend on the decarbonisation pathway and the intended use for the product. For example, the E-Fuel Pilot project uses captured CO₂ and renewable and low-carbon hydrogen to create Fischer-Tropsch waxes, which are then refined into sustainable aviation fuels (SAF). Other projects, like Triskelion, synthesise e-methanol from captured CO₂ and hydrogen for the transportation sector, while the Columbus project aims to produce e-methane for maritime use by combining captured CO₂ from a lime plant with renewable hydrogen generated through methanation.

5.2. Hydrogen

PROJECTS WITH A HYDROGEN COMPONENT

The hydrogen cluster includes 33 ongoing projects with a CAPEX of around EUR 18 billion. Notably, 70 % of these are large-scale projects.

This cluster includes projects dedicated to renewable and low-carbon hydrogen production along with projects using renewable hydrogen to produce other final products such as methanol, ammonia, green steel and synthetic aviation fuel.

In terms of the volume of renewable and low-carbon hydrogen produced per year, the projects in this cluster are expected to generate a total of 604 256 tonnes per year. Projects located in Sweden represent the largest share (46 %) of the cluster’s foreseen hydrogen production, followed by the Netherlands with 23 % and Spain with 12 % (Figure 16).

Two major iron and steel projects located in Sweden, namely H₂GS and the Hybrit demonstration, contribute to 32 % of the total expected hydrogen production.

IIn terms of final products, 35 % of the projects generate renewable and low-carbon hydrogen as final products (Figure 17), while the others produce derivatives. The chemical sector, through the production of green ammonia and green methanol, contributes to 18 % of the production and usage of hydrogen. The remaining 15 % of the produced hydrogen is allocated for the production of green fuels, both bio and synthetic (e.g. sustainable aviation fuel).

Figure 18 shows the expected cumulative GHG emission avoidance for various final products. It is expected that the first hydrogen projects will reach FC by the end of 2024, while the remaining projects are expected to reach this stage in 2025. As for the EIO, most projects expect to initiate production between 2025 and 2027.

Concerning the hydrogen production technology pathway, 42 % of the projects will implement alkaline electrolysers, 27 % proton exchange membrane electrolysers, 7 % hybrid (alkaline + proton exchange membrane) electrolysers, 7 % municipal solid waste gasification and 3 % photoelectrocatalysis. The remaining 14 % of the projects have still not finalised the set-up of the technology.

5.3. Carbon capture and storage

PROJECTS WITH A CCS COMPONENT

CCS projects are flagship projects that contribute strongly to the objectives of the EU’s industrial carbon management strategy ( ²² ). There are 16 ongoing IF projects that rely on CCS solutions. These projects have a total CAPEX of more than EUR 5.4 billion, with an IF contribution of EUR 2.6 billion. Most of the projects are located in western Europe, followed by Greece and Iceland.

The portfolio consists of 15 large-scale projects (including a pilot project) and one small-scale project. They address all elements of the value chain of carbon capture, transport and storage across Europe.

Two IF projects, ANRAV and Silverstone, aim to demonstrate the full value chain covering CO₂ capture and permanent storage. ANRAV, in Bulgaria, includes CO₂ capture at the cement plant and CO₂ transport by a pipeline to the permanent carbon storage in a depleted oil and gas field in the Black Sea. Silverstone will demonstrate the CO₂ capture from a geothermal power plant and its permanent storage as carbonate minerals in basaltic rocks in Iceland. Silverstone is the first CCS project of the IF that reached the FC milestone.

CO₂ CAPTURE

Most of these CCS projects concentrate their activities on the capture side, including the CO₂ compression and liquefaction infrastructure. Transport and storage are to be developed mainly outside the project boundaries by external service providers.

Substantial volumes of CO₂ are expected to be captured by IF projects as of 2027–2028 with the EIO of eight large-scale projects (projects ANRAV, Beccs Stockholm, CalCC, GO4ECOPLANET, IRIS, K6, Kairos@C and KOdeCO net zero) with a total volume of 5.8 million tonnes of captured CO₂ per year. The EIO of five more projects is expected between 2029–2030 (projects EVEREST, GeZero, GO4ZERO, IFESTOS and OLYMPUS).

Overall, the projects expect to capture around 12 million tonnes of CO₂ equivalent per year by 2030 thanks to support from the IF. The main source of captured CO₂ is the production process of cement and lime. CO₂ captured by source in the IF projects and its corresponding share is presented in Figure 20.

Additionally, approximately 0.6 million tonnes of CO₂ captured per year will contribute to the net carbon removals originating from a biomass CHP plant in project Beccs Stockholm. Further negative emissions of at least 0.6 million tonnes of CO₂ equivalent per year are expected from the organic fraction of refuse derived fuels used in some of the cement and lime plants. At least 1.2 million tonnes of CO₂ per year will make up the carbon removals eligible for certification through the EU voluntary framework for high-quality carbon removals. This accounts for approximately 11 % of the total CO₂ to be captured and stored by the IF projects.

In terms of the capture technology deployed, most of the projects (11) use Cryocap capturing technology, while amine-based CO₂ capture is only applied by two projects. Project Beccs Stockholm implements a hot potassium carbonate technology, previously demonstrated at their on-site pilot-scale plant. Project CFCPILOT4CCS uses carbonate fuel cells (CFC) to capture CO₂ from dilute industrial streams.

CO₂ TRANSPORT

Captured CO₂ that is not intended for use on site must be compressed for transport by pipeline, ship, barge or rail. Most projects rely on the development of CO₂ transport networks. CO₂ export terminals or hubs located in ports enable the long-distance transport of large volumes of CO₂ via dedicated vessels. Such infrastructure is supported by CEF Energy ( ²³ ), another EU programme managed by CINEA. For the time being, three CEF-supported infrastructure projects will enable the transport of CO₂ via pipelines and the export of CO₂ from five IF projects contributing to the creation of a CO₂ value chain in Dunkirk (CalCC and K6 connected to D’Artagnan CO₂ hub ( ²⁴ )), Antwerp (Kairos@C and Antwerp@C ( ²⁵ )) and Rotterdam (CFCPILOT4CCS connected to Porthos ( ²⁶ )).

Projects ANRAV and Kairos@C address transportation within their project boundaries by building pipelines or ships and portside facilities. For example, project Kairos@C, in Belgium, will build and use vessels to transport liquified CO₂. Railway or pipelines are the most common alternative for IF projects that are located far from maritime ports.

More information about the location of IF projects and synergies with the CEF-supported infrastructure can be found on the dedicated website Industrial Carbon Management: Interactive Stories ( ²⁷ ).

CO₂ STORAGE

On the storage side, the Net Zero Industry Act ( ²⁸ ) (NZIA) recognises CCS as a strategic net-zero technology and sets an annual injection capacity of at least 50 million tonnes of CO₂ to be achieved by 2030, in storage sites located in the EU. The CO₂ volumes to be captured by the IF projects can fill almost 25 % of the required storage capacities, starting as early as 2027.

The IF supports three projects developing CO₂ storage sites. Projects ANRAV and Silverstone will develop storage sites within their respective project boundaries. ANRAV is the first full value chain IF project incorporating all three elements of the value chain, including transport by pipeline and geological storage in a depleted hydrocarbon field. Silverstone will demonstrate a novel mineralisation technique of geological storage of CO₂ in basalt rocks (where the CO₂ reacts with the minerals and forms stable carbonate minerals). Project Coda Terminal demonstrates the mineralisation CO₂ storage method at a large-scale, also involving CO₂ transport via sustainable propulsion ships to Iceland. Its planned EIO is in 2026. The maximum storage capacity of 3 million tonnes CO₂ per year is planned to be operational from 2031.

All other IF projects plan to contract storage capacity and, in most cases, transport services from operators providing such services outside of their project boundaries.

For example, the CFCPILOT4CCS project is the first IF project with secured storage capacity for its relatively small volumes at the Porthos project (Port of Rotterdam CO₂ Transport Hub and Offshore Storage) in the Netherlands. The rest of the projects capturing CO₂ (12) have a total storage demand of 11.2 million tonnes of CO₂ equivalent per year by 2030 (Figure 22). For these projects, storage capacity still needs to be contracted.

5.4. Renewable energy

PROJECTS WITH A RENEWABLE ENERGY GENERATION COMPONENT

The IF renewable energy cluster includes 19 ongoing projects with EUR 721 million of EU contribution and a total CAPEX of around EUR 4.5 billion. Most of the projects are located in Germany, France and Spain.

The cluster is composed of 10 small-scale and nine large-scale projects (Figure 23). Currently, most projects are focused on implementing innovations in solar and wind energy, while funded projects in ocean energy are two large-scale pilots.

Overall, the projects of this cluster should support the generation of around 55 180 TWh of renewable energy during their lifetime.

By the end of 2023, four projects successfully reached FC: three targeting the solar industry (projects AGRIVOLTAIC CANOPY, Helexio line and TANGO) and one implementing renewable heating/cooling solutions (project WH).

The first renewable energy projects expected to enter into operation in 2024 are mainly small-scale projects, such as those focusing on solar energy technologies (e.g. project AGRIVOLTAIC CANOPY). Most small-scale projects are planned to enter into operation in 2025 (Figure 24).

Four out of six large-scale projects (excluding pilots) of the renewable energy cluster are targeting the manufacturing of components for solar energy, which explains the large expected GHG emission reduction (Figure 25). The first large-scale project, the photovoltaic (PV) gigafactory TANGO, is expected to enter into operation in 2024. The remaining large-scale PV manufacturing and wind energy projects are expected to enter into operation between 2025 and 2027.

SOLAR ENERGY

Most solar PV manufacturing projects in the IF portfolio are large-scale projects. They span across the entire value chain: from ingots and wafers (project SunRISE) to c-Si cells and modules (projects TANGO and HOPE), CIGS modules (project DAWN) or modules for building integrated PV applications (project Helexio line).

On the other hand, projects aiming at solar-based energy production are all small-scale and are often combined into bigger concepts or existing facilities. For example, project AGRIVOLTAIC CANOPY features a 2.9 MWp system installed at five meters over agricultural surfaces. Project CO₂-FrAMed aims to install 7.35 MWp of solar power for zero carbon irrigation systems.

WIND ENERGY

Wind energy projects, mainly located in central and northern Europe, drive technological advancements by demonstrating a unique technology or a combination of technologies. During the projects’ lifetime, the expected overall electricity production of the four wind energy projects is 18.6 TWh.

An example of combined technologies involves the deployment of an offshore wind farm with a capacity of 450 MW coupled with on-site hydrogen production (project N2OWF). Another example is the project Aquilon which implements airborne wind energy technology combined with a solar PV and redox flow battery storage.

HYDRO/OCEAN ENERGY

There are two ocean energy projects demonstrating wave energy technologies: SAO in Ireland and SEAWORTHY in Spain. Project SAO operates in a 5 MW array, while project SEAWORTHY combines wave energy solutions (0.8 MW wave energy converter) with other renewable energy solutions (e.g. a 4.3 MW wind turbine), a 1 MW electrolyser and incorporates a 48 MWh hydrogen energy storage and 1.2 MW fuel cell.

WATERBORNE TECHNOLOGIES

In France, project HyPush and, in Spain, project SustainSea showcase innovations aimed at decreasing GHG emissions. The former achieves this by integrating hydrogen technology into existing propulsion systems, while the latter supports propulsion with renewable solutions, using large-scale innovative rigid wind sail systems.

GEOTHERMAL ENERGY

Two IF projects are focused on the deployment of innovative geothermal technologies. For example, project EAVORLOOP in Germany aims to produce renewable power and heat using geothermal heat and advanced combined power generation cycles.

RENEWABLE HEATING AND COOLING

The IF currently supports one small-scale grant in this field. Project WH, in France, demonstrates an innovative mobile thermal storage technology at commercial scale, facilitating the recovery of high-temperature waste heat. The stored heat is then transported to a sport complex, providing renewable heating and cooling services.

5.5. Energy storage

PROJECTS WITH AN ENERGY STORAGE COMPONENT

The energy storage cluster consists of 19 projects addressing various aspects of energy storage system value chains with an IF contribution of almost EUR 480 million and a total CAPEX exceeding EUR 5.4 billion. These projects are located in 12 countries.

In this cluster are five large-scale projects exclusively focusing on new battery-related manufacturing and recycling lines (Figure 28). These projects represent 98 % of the above mentioned CAPEX.

BATTERY MANUFACTURING AND RECYCLING

Projects aiming at establishing a full manufacturing and recycling cycle for battery systems ( ³¹ ) include manufacturing processes for battery cells and packs (projects Giga Artic, NorthFlex, and NorthSTOR+) and for essential battery components (projects ELAN, Green Foil, and Listlawelbattcool). Other manufacturing projects focus their efforts on assembling lines for sustainable EV battery reuse in stationary storage (project CarBatteryReFactory) and recycling critical and strategic ( ³² ) raw materials (projects BBRT and ReLieVe).

Battery packs and cells manufacturing projects are expected to produce around 2 019 GWh of additional battery storage capacity, mainly from the sites located in Norway and Poland. Projects involving the manufacturing and recycling of battery components ( ³³ ) aim to enable the production of around 24 812 GWh of additional battery storage capacity, mainly from the plants located in Czechia and Norway. The substantial difference in capacity creation is attributed to innovations in battery chemistries, including the advancements in electrode materials or electrolytes and specific components like the battery cooler.

BATTERY MANUFACTURING AND RECYCLING

Projects developing local or grid-connected energy storage solutions ( ³⁴ ) aim to optimise the use of resources, adapting demand response measures to local needs or facilitating intraday storage solutions. This improves grid stability and contributes to the decarbonisation of EIIs (project AAL SEB). Demonstrations of virtual power plants (project Green the Flex), sometimes integrated with bidirectional charging (V2G) solutions (projects EVVE and DrossOne), offer flexibility to align electricity demand with generation, shifting consumption to off-peak hours and generating revenue in the energy market. Others define trigger points for disconnection or load shifting according to local energy conditions (projects Aquilon and GREENMOTRIL) or manage excess energy in solar plants (project PIONEER), and some even demonstrate an innovative energy-as-a-service business model (project InnoSolveGreen). Integrated solutions include mobile thermal storage of heat recovered from incinerators (project WH).

Most projects offering energy storage solutions for local and grid applications prefer electricity as the energy carrier, thus taking advantage of its precise control, rapid energy transfer and compatibility with electronic devices. These demand response solutions cater to prosumers and V2G charging stations through seven projects, with a total capacity of 369 GWh, making major contributions in Lithuania and Italy. However, projects utilising heat demonstrate higher capacity compared to those relying on electricity as the primary energy carrier, as just three projects achieve a capacity of around 564 GWh. This is because they are designed for applications that inherently demand larger amounts of energy, such as high-pressure steam production or energy-intensive industrial processes. These projects are primarily located in France and Ireland.

Of the 19 projects in this cluster, seven small-scale projects and one large-scale project have reached FC and have started construction, while the remaining projects aim to reach this milestone between 2024 and 2025. Of the eight projects that reached FC, only one small-scale project (AAL SEB) has entered into operation and four more projects are expected to follow suit in 2024.

A significant majority (89 %) of projects within this cluster uses batteries or manufacturing plants for components as main technology pathways to contribute to achieving climate neutrality by 2050. Figure 29 and Figure 30 show the expected cumulative GHG emission avoidance for the coming years.

In 2024, the projects in the IF portfolio are expected to continue maturing. According to current insights from project beneficiaries, 33 projects are expected to reach FC and 10 projects are expected to enter into operation. In addition, the IF portfolio will increase its number of projects.

In December 2023, the Commission announced the selection of 17 small-scale innovative cleantech projects to receive over EUR 65 million in project support under the IF ( ⁴² ). The grants are expected to be signed in June 2024. If the grant agreement preparation process meets the expectations, the IF portfolio will include the first projects located in Hungary and Latvia.

In 2024, the two calls opened in 2023, one for lump-sum grants and another for the pilot EU renewable (RFNBO) hydrogen auction, will conclude, providing at least EUR 4.8 billion for industry and cleantech players in Europe.

In particular, the IF23 call for lump-sum grants (INNOVFUND-2023-NZT) will award at least EUR 4 billion to innovative decarbonisation projects in various sectors, including EIIs, renewables, energy storage, CCS, and net-zero mobility and buildings. The application window closed in early April 2024. With the revision of the EU ETS directive and the extension of the ETS scope to three new categories, the current call will include new sectors, namely maritime transport, aviation and buildings. Furthermore, a new category of projects, medium-scale projects, has been introduced in the grant calls, to better meet market demand.

The RFNBO hydrogen auction call is the first of its kind in Europe that supports the production of RFNBO hydrogen in Europe under the European Hydrogen Bank ( ⁴³ ). It has made a EUR 800 million budget available to bidders (project developers). Producers of renewable hydrogen can bid for support in the form of a fixed premium per kilogram produced. The premium is intended to bridge the gap between the price of production and the price consumers are currently willing to pay in a market where non-renewable hydrogen is still cheaper to produce.

Projects selected in the IF23 auction and in the IF23 call are expected to sign the grant agreements by November 2024 and March 2025, respectively.

In the last quarter of 2024, the Commission plans to initiate a new round of hydrogen auctions and launch the annual call for proposals.

Finally, the Commission (Directorate-General for Climate Action) and CINEA plan to organise three knowledge sharing events in 2024 to address challenges and share insights from projects. These events will focus on renewable energy, hydrogen and CCS. Additionally, the annual Cleantech Conference ( ⁴⁴ ) in April 2024 concentrated on strategies to support the manufacturing of cleantech devices and their components in Europe.

ANNEX – ASSIGNMENT OF THE INNOVATION FUND PROJECTS TO THE CLUSTERS

ABBREVIATIONS

Endnotes

( ¹ ) Directive – EU – 2023/2413 – EN – renewable energy directive – EUR-Lex: https://europa.eu/!tnv7RM.

( ² ) Directive – 2009/31 – EN – EUR-Lex: https://europa.eu/!FvjFvN.

( ³ ) EU ETS Directive – 2023/959 – EN – EUR-Lex: https://europa.eu/!kxtCVJ.

( ⁴ ) See Innovation Fund Model Grant Agreement: https://europa.eu/!FmWWjr.

( ⁵ ) The energy-intensive industries (EIIs) in the scope of the Innovation Fund programme follow Annex I of the EU ETS directive (https://europa.eu/!kxtCVJ), including sectors such as refineries, iron and steel, non-ferrous metals, cement and lime, glass, ceramics and construction materials, pulp and paper, and chemicals.

( ⁶ ) ‘Financial close’ is the moment in the project development cycle when all the project and financing agreements have been signed and all the required conditions contained in them have been met.

( ⁷ ) ‘Entry into operation’ is the moment in the project development cycle when all elements and systems required for operation of the project have been tested and activities resulting in effective avoidance of greenhouse gas emissions have commenced.

( ⁸ ) The granting authority is the European Climate, Infrastructure and Environment Executive Agency (CINEA) https://cinea.ec.europa.eu/index_en.

( ⁹ ) CCS closed-door knowledge sharing workshops: 28 November 2023, Knowledge sharing workshop on CCS – Realising opportunities along the value chain (summary: https://europa.eu/!7vHGdD, and slide packs: https://europa.eu/!pJ9Qc7,
https://europa.eu/!7cwRnB, https://europa.eu/!tNvyPB and https://europa.eu/!4kpDrb);
10 October 2023, Knowledge sharing workshop on energy storage – Key takeaways and best practices to reach financial close (summary: https://europa.eu/!MptN38);
19 September 2023, Knowledge sharing workshop on hydrogen – Main challenges in reaching financial close and ways to tackle them (summary: https://europa.eu/!MptN38);
30 March 2023, The emerging EU CO₂ transport and storage market (summary: https://europa.eu/!RTwX4Y, slide pack:
https://europa.eu/!DcQmpH, and project fiche: https://europa.eu/!gBMGHM);
15 September 2022, Main challenges in reaching financial close and ways to tackle them (summary: https://europa.eu/!KTBTvf and slide pack: https://europa.eu/!bYXv6j);
15 February 2022, Knowledge sharing workshop on CCS directive – Innovation Fund and projects of common interest (PCIs) (summary: https://europa.eu/!w9JK64).

( ¹⁰ ) In the 2020–2022 IF calls, a small-scale project means a project with a capital expenditure (CAPEX) between EUR 2.5 million and EUR 7.5 million, while a large-scale project (including large-scale pilot demonstration project) means a project with CAPEX above EUR 7.5 million.

( ¹¹ ) As per the applicable IF GHG emission avoidance calculation methodology.

( ¹² ) LIFE Programme: https://europa.eu/!96n39t.

( ¹³ ) Connecting Europe Facility: https://europa.eu/!bNgcwB.

( ¹⁴ ) European Maritime, Fisheries and Aquaculture Fund: https://europa.eu/!cYGGg4.

( ¹⁵ ) EIC Accelerator: https://europa.eu/!Hb36mw.

( ¹⁶ ) Interreg: https://europa.eu/!x768Mm.

( ¹⁷ ) Recovery assistance for cohesion and the territories of Europe (REACT-EU): https://europa.eu/!4GMp4C.

( ¹⁸ ) Participants include beneficiaries, associated partners and linked third parties. For more information regarding the roles and attributions in the IF grants please consult Article 7 of the Model Grant Agreement (https://europa.eu/!HDdGkM).

( ¹⁹ ) Only confirmed delays validated through signed amendments to the grant agreement are taken into account.

( ²⁰ ) The EIIs projects that dedicate their core activities to CCS are analysed in more detail later in point 5.3. EIIs projects that produce renewable and low-carbon hydrogen and use it in their processes are considered in detail in point 5.2. Additionally, the EIIs cluster also includes projects related to biofuels and biorefineries.

( ²¹ ) EU hydrogen and decarbonised gas package: https://europa.eu/!YPpd33.

( ²² ) EU industrial carbon management strategy: https://europa.eu/!b7QDbf.

( ²³ ) Energy infrastructure (Connecting Europe Facility): https://europa.eu/!nnqtpF.

( ²⁴ ) D’Artagnan Dunkirk CO₂ hub: https://europa.eu/!xfcwX4.

( ²⁵ ) Antwerp Liquid CO₂ Export Terminal Studies: https://europa.eu/!D4dR6f.

( ²⁶ ) Porthos CO₂ transport network: https://europa.eu/!QXYYqp.

( ²⁷ ) Industrial Carbon Management: interactive stories: https://arcg.is/1eiWr1.

( ²⁸ ) The Net-Zero Industry Act: https://europa.eu/!THBKQD.

( ²⁹ ) EU-wide certification scheme for carbon removals: https://europa.eu/!4TXHw6.

( ³⁰ ) Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Towards an ambitious industrial carbon management for the EU (https://europa.eu/!4TXHw6).

( ³¹ ) Within this cluster we will refer to them as (1) battery packs /cells manufacturing, (2) battery component manufacturing, (3) battery recycling projects.

( ³² ) Critical Raw Materials Act: https://europa.eu/!kdPp83.

( ³³ ) Such as aluminium foil, coolers or cathode materials, as well as projects recycling end-of-life batteries to obtain metals in the active materials for battery cells production.

( ³⁴ ) Within this cluster we will refer to them as (1) demand response Initiatives and (2) integrated energy storage flexibility solutions.

( ³⁵ ) Fast charging poses still some challenges, such as hardware and design complexity and battery degradation concerns.

( ³⁶ ) The actions of independent aggregators affect suppliers and the balancing responsible party (BRP) designated by the supplier. The BRP can be the supplier itself or a third party. EUI Working Paper RSC 2021/53: https://hdl.handle.net/1814/71236.

( ³⁷ ) A straightforward way to correct the imbalance of the supplier’s balancing responsible party (BRP) due to the actions of the independent aggregator is through a so-called ‘perimeter correction’. With a perimeter correction, the imbalance of the supplier’s BRP is corrected with the metered volume of energy activated by an independent aggregator’s action. This corresponds to an extension of the imbalance adjustment to third party BSPs, including for bids in markets other than the balancing energy market. The correction is done ex post, in most cases by the transmission system operator. As such, the supplier’s BRP is not held responsible for actions it cannot act upon. EUI Working Paper RSC 2021/53: https://hdl.handle.net/1814/71236.

( ³⁸ ) BTM installations consist of placing energy generation and storage systems on the consumer side of the utility meter. This allows users to generate, consume and store energy locally without relying solely on the grid.

( ³⁹ ) Depending on national legislation, BTM energy storage systems installations can actively participate in both the energy market and the balancing market, offering valuable services to the grid such as frequency stability and voltage stability.

( ⁴⁰ ) The gap between the number of Member States where independent aggregation is enabled (19) and those where it also exists in practice (7) has to do with market barriers (e.g. unclear business case), regulatory barriers (e.g. lack of secondary legislation defining responsibilities) and technology constraints (e.g. lagging roll-out of smart meters), and is also linked to the particular conditions in each Member State and its approach to explicit demand response as a resource. Saviuc, I., Lopez, C., Puskas, A., Rollert, K. and Bertoldi, P., Explicit demand response for small end-users and independent aggregators – Status, context, enablers and barriers, EUR 31190 EN, Publications Office of the European Union, Luxembourg, 2022, ISBN 978-92-76-55850-7, doi:10.2760/625919, JRC129745.

( ⁴¹ ) Fast charging still poses some challenges, such as hardware and design complexity and battery degradation concerns.

( ⁴² ) Press release of 19 December 2023 – EU to invest over EUR 65 million in cleantech projects (https://europa.eu/!hF7Hx4).

( ⁴³ ) Press release of 23 November 2023 – Commission launches first European Hydrogen Bank auction (https://europa.eu/!Bq7WVv).

( ⁴⁴ ) Cleantech Conference 2024: https://europa.eu/!wvHTrt.

Contact

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