The European Commission has pledged $3 billion via its Innovation Fund to contribute to the financing of large-scale clean-energy projects in the European Union. The approach is a cornerstone of the EU’s strategy to phase out the use of fossil fuels across the bloc.
The funds will be focused on four key areas. Some $1 billion will go to general decarbonization projects for energy-intensive industries, carbon-capture storage and use, and low-carbon transport fuels; another $1 billion will be for projects involving electrification in industry and renewable hydrogen production and use; $700 million is slated for developers of technologies such as electrolyzers and fuel cells; and $300 million will target companies seeking to scale up disruptive decarbonization technologies.
“The EU Innovation Fund will support even more clean tech projects than before, speeding up the replacement of fossil fuels in hard-to-decarbonize industries and accelerating the uptake of renewable hydrogen in the EU market,” said EC Executive Vice-President Frans Timmermans in a briefing to announce the funding package.
Companies have until March, 2023, to apply for the funding. Money from the fund, which can support up to 60% of a project’s costs, is set to be awarded in the fourth quarter of 2023. Projects could be operational as early as 2025, the EC says.
In its first low-carbon project funding round, introduced 2 years ago, 7 projects shared $1.1 billion. One year ago, 17 projects shared $1.8 billion. The EC was able to double the money for its latest funding round thanks to a hike in revenue from its auctioning of EU emissions-trading system allowances.
European industry association Hydrogen Europe especially welcomed funding dedicated to the construction of electrolyzer and fuel-cell factories. Jorgo Chatzimarkakis, the association’s CEO, stated in a press release that he was “delighted” by the launch of this third Innovation fund which should enable his members to successfully secure a route to market for their hydrogen-based technologies.
The EC estimates that the Innovation Fund will provide $38 billion through 2030 for low-carbon projects. The EC and European member states are currently in negotiations to substantially increase the size of the Innovation Fund. Separately, the EC says the European Investment Bank will assist projects that are not sufficiently mature to qualify for the Innovation Fund.