About

The European Commission has proposed a funding programme worth billions for the period 2021-2030 (with some amount possibly made available before 2021). Called ETS Innovation Fund, it will build on the NER300 programme which saw 2.1 bn EUR awarded to 38 innovative renewable energy and one CCS project. ETS Innovation Fund will additionally include measures to decarbonise industrial production.

The debate on ETS Innovation Fund’s function and form is underway now. In 2017 the European Parliament and Council of Ministers will likely adopt the primary legislation that will set it up.

This website is unofficial and independent, providing

  • News
    ...to keep you up to date with the latest developments, key dates and deadlines
  • Analysis
    ...understand the NER400 Innovation Fund as it takes shape
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Jan 15 2017

2017 predictions for ETS Innovation Fund

By the end of Feb 2017 the European Parliament and Council are expected to have taken their respective positions on the Phase 4 of the Emissions Trading Scheme, including the outline of ETS Innovation Fund. By the end of the year, agreement between the two institutions will likely have been reached. In parallel, DG CLIMA will, in the background, prepare draft secondary legislation to create an ETS Innovation Fund consistent with Parliament and Council’s wishes. Here are some predictions for where we might end up a year or a year-and-a-half from here.

ETS Innovation Fund divided into indicative shares for industry and energy

Recognising the difficulty in comparing projects in such different areas as low-carbon processes in industry, renewable energy production, CCS and energy storage against each other, the EC will propose ex ante an indicative share of the ETS Innovation Fund pot for the main categories of eligible technology. This is standard practice in the EC’s other major funding programme for innovation in energy, Horizon 2020. But the EC will be sure to keep a mechanism that allows it to transfer budget from one category to another. Such a mechanism existed in NER300 and was very useful when CCS proved to be much less commercialisable than initially supposed.

The European Parliament’s Innovation Fund amendments will almost all disappear in trilogue

‘Trilogue’ refers to the untransparent phase of EU lawmaking, when, away from public view, the small number of MEPs most closely involved in drafting the European Parliament’s position (Rapporteurs and Shadow Rapporteurs) and representatives from the Council (from the country holding the Presidency) discuss how to reconcile their sets of amendments. The EC mediates.

The European Parliament will try hardest to defend the increase in the Innovation Fund size from 400 to 600 million EUAs. Both rapporteurs, Ian Duncan and Fredrick Federley proposed this in their initial draft responses (article here and here). The EC seems quite supportive.

The allowances could potentially come from two places: the pool of allowances that would otherwise be auctioned, or from the pool that are allocated for free. There seems to be agreement on the source of the first 400 million: the freely allocated share. ITRE’s suggestion of taking the additional 200 million from auctioned share, to which the 50 million to be transferred into ETS Innovation from the Market Stability Reserve originally belonged, will be adopted.

The Council, keen to see small projects funded and a good spread of projects between countries, will in turn demand that the maximum payment one project can get will be reduced 15% of the expected total pot to 10%.

In addition, the origin of allowances will be used to determine the indicative split between industry and energy projects. The power sector obtains its EUAs from auctioning, so it will seem fair that 250 M out of 650 M EUR is for energy projects. Heavy industry, meanwhile, is freely allocated most of its allowances, so indicatively 400 M will be for industry.

ETS Innovation Fund will remain, essentially, a grant-funding scheme

Schemes that provide non-grant finance to innovative energy (or low-carbon industrial) projects are growing in number and capacity. EFSI has been launched and will be extended. EDP Innovfin, which can support riskier projects than its predecessor, the Risk-Sharing Finance Facility, will also soon be given a cash infusion from the awards made to cancelled NER300 projects.

Sources of grant funding are less common. ETS Innovation Fund’s niche will be that it provides grant funding, to be complemented by the panoply of financial instruments available from other facilities. This approach will be popular with stakeholders. Focusing ETS Innovation Fund on one form of funding will be found to minimise the complexity of administering ETS Innovation Fund, particularly the ranking of projects. This is important as many stakeholders have appealed for simplicity.

The practice of periodically ‘flushing’ cash from failed ETS Innovation Fund projects to EDP Innovfin (or its post-2020 successor), established in NER300, will become standard. The possibility to directly send a portion of the 650 M EUA to EDP Innovfin will not be excluded either.

Targeted calls

One of the biggest decisions the EC will need to make is whether to keep a project’s “innovative-ness” as an eligibility criterion, or make it a selection criterion. In NER300, innovative-ness was an eligibility criterion: a project had to respond to one of a list of defined technological challenges. If it did, it progressed to the next stage of scrutiny. If innovative-ness were a selection criterion, calls could be more open as there would be no need to define ex ante the technology challenge that projects should address.

Different approaches will be taken for energy projects and industrial projects.

Energy projects will need to meet one of a list of defined technological challenges. In contrast to NER300, that list will be updated often in a relatively transparent process. Stakeholder groups will be consulted, possibly as part of a SET Plan exercise.

The industrial sectors targeted by ETS Innovation Fund will be those at significant risk of carbon-leakage. There are very many, from ‘Manufacture of other knitted and crocheted apparel’ to ‘manufacture of flat glass’ and each will have its own set of options for reducing CO2 emissions per unit output. Luckily, there will be no need to anticipate them all because it will be possible for the EC simply to say that projects must deliver a specific CO2 emission of at least 20% better than best-available-technology. The greater the CO2 reduction beyond that threshold, the better the project’s standing in the competition. Such benchmarks exist, for example to determine the number of EUAs to allocate to industrial plants for free. This approach will be consistent with the European Parliament’s wishes and have the support of a leading NGO in the ETS Innovation Fund debate, Carbon Market Watch.

Jan 15 2017

Wrap-up of 2016: state of play in European Parliament and Council

This article is adapted from a piece written for Carbon Pulse of 15 Dec 2016.

The end of 2016 saw the two lead committees on ETS Innovation Fund in the European Parliament, ITRE and ENVI (shorthanded to “European Parliament” in the rest of this piece), adopt their amendments to the European Commission’s (EC’s) proposals. First ITRE voted, on 10 Nov; then ENVI on 15 Dec.

Member States were not ready to adopt their set of amendments on the Emissions Trading Scheme at the Environment Council meeting of 19 Dec, but from the document reflecting the state of their discussions, and their statements in the meeting (Sweden, Luxemburg, Czech Republic, Germany, Estonia), it looks like their position on ETS Innovation Fund is settled.

European Parliament going for a big and generous Innovation Fund — Council reluctant to follow

Like ITRE, ENVI wants a bigger Innovation Fund, made up of 600 million allowances, not the 400 million proposed by the EC. The EC had proposed that a maximum of 15% of the allowances could go to one project. MEPs did not decrease this limit to compensate the increased size of the Fund.

Innovation Fund’s predecessor, NER300, capped “relevant costs” at 50%, and this equated, typically, to around 30-40% of project CAPEX. ENVI voted to be more generous with Innovation Fund, allowing requests of up to 75% of relevant costs, but MEPs never put forward analysis to support that decision. The Commission did not set a good example: its defence of a 60% cap, set out in the Impact Assessment accompanying its proposals, is threadbare (see this article for more). The Council sticks with the EC’s cap nonetheless.

Enlarged scope: European Parliament and Council want funding for energy storage technologies

The co-legislators want ETS Innovation Fund’s scope enlarged: energy storage technologies should be included. They underlined the need to fund CCU — carbon capture and use, which was implicitly already covered by the EC’s proposal — where it “contributes substantially to mitigating climate change” (Council’s phrasing). The European Parliament also underlined bio-based materials.

European Parliament wants even looser link between project performance and award payout

ENVI Rapporteur Ian Duncan was keen to break the link between a project’s performance and its right to keep its award. The Committee took up his suggestion to allow up to 60% of the award to be paid out on effort alone: provided a project meets milestones in construction and commissioning it can keep up to 60% of its award. This would mean, in the extreme case, that only 40% would be payable on the project actually working.

The Member States prefer not to depart from the Commission’s proposals, by which no more than 40% of the award may be paid out on effort alone.

Council makes the 50 M EUAs from the Market Stability Reserve an integral part of ETS Innovation Fund

The Council re-arranged the EC’s text relating to ETS Innovation Fund to more clearly show that the 400 M carbon allowances for ETS Innovation Fund and 50 M allowances from the Market Stability Reserve will be put towards one and the same funding programme.

European Parliament votes for fuzzier selection criteria

MEPs want energy projects in the ETS Innovation Fund to be selected in part for their “future prospects to significantly lower the costs of transitioning towards low-emissions energy production”. Again, the Council prefers the Commission’s language, namely to use “objective and transparent” selection criteria. This was the principle that governed NER300’s design, interpreted in the NER300 Decision to mean that all projects would compete on a measure known as “cost-per-unit-performance”. That measure allowed the many and disparate renewable energy projects to be compared with each other, and was computable from nothing more than those projects’ internal financial and production forecasts.

Roland Schulze, the EC’s counterpart in the European Investment Bank for NER300, gave his views on ETS Innovation Fund’s selection process on 16 Jun 2016.

Jan 13 2017

Factual mistakes

…in amounts awarded

“23 projects were awarded €1.5 billion.”

— page 123 of the EC’s Impact Assessment

No. In the first call, only 1.21 bn EUR was awarded (Dec 2012 Award Decision), although the EC had raised 1.5 bn EUR for projects (July 2012 SWD). The EC preferred to roll some money over to the second call than to award it all in the first call.

… in size of the awards

“The NER 300 funding for RES projects ranges from €7 to €203 million.”

— page 126 of the EC’s Impact Assessment

Wrong: the smallest NER300 award is of 3.9 M EUR to a project in Latvia.

…in the amount of energy projects will produce

“The awarded RES projects are estimated to increase the annual EU renewable energy production by some 18 TWh”

— page 123 of the EC’s Impact Assessment

Wrong: it is 22.5 TWh. This number is obtained by dividing, for each RES project in the applicable amended award decision, the project’s maximum funding amount by the funding rate (or adjusted funding rate in the case of a part of the award being paid upfront), then summing the results and dividing by 0.75 to account for the fact that the maximum funding amount will have been irrevocably disbursed once 75% of bid production has been achieved. 18 TWh is number derived if you forget to divide by 0.75.

  1. NER400.com’s comment

    The projected quantity of energy produced from NER300 installations, quoted as a ‘result’ of the programme, is in any case of doubtful relevance. A better way to evaluate NER300’s success would be to focus on its proximate aim, which is to bring about the rapid replication of the supported technologies without further special financial support. More suitable criteria for success would therefore have been the speed at which projects are built and at which a Project Sponsor or his competitors subsequently deploy the same technology, or a next-generation version of it. This is a view that Gernot Klotz who spoke at DG CLIMA’s first ETS Innovation Fund event, the June 2016 High Level Round Table on Low-Carbon Innovation, would share.

Jan 13 2017

False memories

Indicative shares that were never there

The Impact Assessment says,

“Indicative shares for CCS and RES projects with a smooth spill over possibility between the groups were crucial under the NER 300 programme to ensure the allocation of all available funds.”

(The association EURIMA happens to agree, calling for the principle to be maintained: “Criteria should be flexible enough so as to avoid that part of the funds remain unused if some of the selected projects do not materialise (as might be the case with CCS in the current NER 300 facility).”)

There were no “indicative shares for CCS and RES” in NER300. The shares of funding for CCS and RES depended on the amount of NER300 funding requested by confirmed projects. There was no way before running the competition to know how many confirmed projects in CCS and RES there would be or how much each, on average, would ask for. The text claims the “possibility for smooth spill-over” was crucial, but rules made the magnitude and direction of the spill unpredictable. Furthermore, they were never applied (in the first call, there were 0 confirmed CCS projects; in the second, the funding available exactly managed the funding requested by all the eligible projects in the competition).

…of the reasons for projects not being ‘confirmed’

The Impact Assessment says, of the first call,

“36 [projects] were either not confirmed by Member States or could not be supported due to insufficient funds.”

It would have been more accurate to write,

“36 were not confirmed by Member States either because of the maximum-3-projects-per-Member-State rule or because the EC did not invite them to confirm them.”

The EC requested the MS to confirm only those projects mentioned in the Staff Working Document of July 2012:

“In order for the Commission to adopt award decisions by end 2012, all Member States with candidate or reserve projects on the list in the Annex are requested to proceed swiftly to confirm for all candidates support as well as the national funding contributions”

The consequence of this was that when, at the last minute, the ULCOS CCS project withdrew, there were no projects the EC could award instead.

Jan 13 2017

Airbrushing history

The Impact Assessment says,

“The first call’s cycle lasted 25 months and this may seem as too long, but one has to bear in mind that the first call was also a learning curve for all involved parties. Considerable improvements, due to the streamlining of the process, were made during the second call and that lead (sic) to a much shorter cycle of 15 months.”

These sentences, while not strictly wrong, misrepresent the reason for the length of time to launch and conclude the first call. The circumstances that led to the protracted timing were never likely to be repeated in the second call or indeed in any subsequent call. This is because the delays were due to poor coordination with the process to set up the ‘single union registry’ for carbon allowances, which only needed to be done once.

The monetisation of the 200 million NER allowances for the first call could only begin with the registry in place (Bloomberg article 9 Nov 2011) and it was set up late. Within a couple of days of the adoption on 18 Nov 2011 of the regulation establishing the registry, the EC confirmed that it would “proceed swiftly with the European Investment Bank (EIB) to account opening to enable the delivery of allowances before the end of the month” (statement by Jos Delbeke).

Thus the start of the monetisation was pushed back, with a knock-on effect on the timing of the selection process (see official Summary Record of Climate Committee Meeting 14 Dec 2011).

The delays that the first call of NER300 would face were apparent to the EC even before it was launched. The EC updated the text of the Decision that had been signed off by Member States on 2 Feb 2010 (here) to extend an important NER300 deadline. Projects would no longer have to enter into operation no later than 31 Dec 2015, but within four years of the award decision.

Dec 15 2016

60% cap on ETS Innovation Fund’s refund rate – why?

The EC has not explained why it proposed that a project’s “relevant costs” under ETS Innovation Fund be refunded at a maximum of 60% and not some other rate.

In 2015 an internal working group in the EC, the Impact Assessment Board, saw a draft of the Impact Assessment and sent it back [See IAB negative opinion] to DG CLIMA saying “The Impact Assessment should clarify the method that was used to determine […] the funding rate”. DG CLIMA’s response, which satisfied the IAB, was to add an annex (Annex 14) to the Impact Assessment containing a sensitivity analysis for the effect of different funding rates on the amounts that the ETS Innovation Fund and Project Sponsor would need to cover for a project of given total cost. The result is straight-line charts (see below) whose shape offers no clue as to why 60%, specifically, was felt to be a threshold.

Furthermore, the assumptions used to draw the charts are flaky. Two approximations are used. The first is that total costs are twice additional (or in NER300’s language ‘relevant’) costs. The basis for this assumption is not explained, although the approximation affects the relative position of the sensitivity analysis curves. The second is that additional costs for a typical RES project are 100 M EUR. This appears to contradict the evidence. The average NER300 award for RES projects was 47 M EUR and they asked, on average, to have 39% of their relevant costs refunded. This means a better estimate of additional costs would have been 120 M EUR.

RES

CCS

ind

Source: copy-paste from EC’s Impact Assessment + additions (red outline).

The EC proposed 60% even though it noted, in July 2015, that “more extensive market testing” would be necessary to justify that or any other rate (see this article). The tender for the market testing would be only be issued one year later.

  1. NER400.com’s comment

    Possibly 60% was chosen because it was the ‘centre of gravity’ between the maximum permissible coverage of investment costs under the current State Aid rules – RES: 65%; energy efficiency: 50%; CCS: 100% – weighted according to where the EC expects to see most ETS Innovation Fund projects. Still, different funding rates could have been proposed for each of these categories, as they are for State aid.

    These State Aid rules (details see Annex I of the Guidelines on State aid for environmental protection and energy 2014-2020) apply for the period 2014-2020, in which time only up to 50 M EUAs-worth of awards will be made. Most of the ETS Innovation Fund will be run during under the State Aid regime that will enter into force subsequently. Relevant State Aid Guidelines for that period will begin to be discussed in 2017. The Impact Assessment says ETS Innovation Fund’s rules need to anticipate them: “the maximum funding rates and further design of the operational modalities would need to be consistent with future State Aid rules.” MEPs, in their amendments to the draft legislation, agreed (see Compromise 12, adopted by ENVI committee today).

Sep 16 2016

European Commission gently promoting an increase in the Innovation Fund pot beyond its proposal

Judge for yourself from the quotes below, all made in the last three months. The Commission tends not to draw attention without further comment to amendments it doesn’t like:

9 June

Commissioner Cañete at the High Level Roundtable on low carbon innovation: “[Our proposal] comes with 450 million allowances and I note that both rapporteurs in Parliament have put forward amendments that would see even more allowances.”

20 June

Commissioner Cañete at Environment Council: “Both rapporteurs see the need to increase the endowment of the Innovation Fund from the current 450 M EUA to speed up Europe’s low-carbon transition. That represents a significant amount of money.”

12 July

DG CLIMA Director Mary-Veronica Tovšak Pleterski at European Parliament ITRE committee Consideration of Amendments on Federley Draft Opinion: “I note with interest the reflections about potentially increasing the endowment for industrial projects in the innovation Fund.”

Sep 16 2016

MEPs’ amendments

MEPs’ amendments on the EU Emissions Trading Scheme 2021-2030 are in. The article covers the views of MEPs other than Federley and Duncan on ETS Innovation Fund, expressed through their amendments. For Duncan’s and Federley’s amendments, see this article.

The Industry, Research and energy Committee’s (ITRE’s) package of amendments is available here. This particular pdf contains the amendments that concern Innovation Fund (in English).

The Environment Committee’s (ENVI’s) are here. This particular pdf contains the amendments that concern Innovation Fund (in English).

600 M allowances for the fund, please, not 400

ITRE ENVI
Supported by Greens-EFA, S&D Eickhout, Italy ALDE, Italy ENF
Not supported by EPP – put same amendment as the Greens-EFA and S&D, except for the increase in allowances
Amendment numbers 409, 411, 412 409, 410, 414

Other suggestions for the amount of allowances for the Innovation Fund range from the meanest “up to 400 M EUAs” from Lorenzo Fontana and Matteo Salvini (ITRE Italy ENF) via 550 M (ENVI ALDE Gerbrandy and Faria) to the most generous, 800 M EUA (ENVI S&D Schaldemose, Guteland and Groote). Two out of three 800 M-supporters also signed the more widely-supported amendment calling for 600 M EUA, implying that they see it as an extreme position.

None of these amendments fully reflect the shared position of the two Rapporteurs, which is that the extra allowances beyond the 450 M proposed by the Commission specifically go on low-carbon innovation in industry, not the power sector.

Ivo Belet had reported ENVI’s position to the ITRE committee on 13 June as being supportive of more money in the Innovation Fund: “We agree with ITRE […] on the importance of the Innovation Fund and on looking for as much as possible means for the Innovation Fund. We agree on that one within ENVI and ITRE also.” Except for rapporteur Ian Duncan’s amendment, this support has not come through in ENVI’s amendments. There seems to be a split in Ian Duncan’s Political Group. His colleague in the ITRE committee, Hans-Olof Henkel, in a speech setting out the Group’s position, told the committee, “We should leave the Innovation Fund as it is and not increase it.”

The allowances in the Innovation Fund should be used to ‘leverage’ funding

ITRE ENVI
Supported by EPP, S&D Eickhout, S&D, EPP; Italy, The Netherlands, Spain ALDE; Italy ENF
Not supported by Kyllönen, Konečná (grants only)
Amendment numbers 408, 409, 414 409-412, 414-417, 430

Three others in ENVI, in the ‘justification’ text that accompanies their amendment, explicitly rule-in grants (Bas Eickhout, Gerben-Jan Gerbrandy, José Inácio Faria)

Innovation Fund should support product innovation, not just process innovation

ITRE ENVI
Supported by S&D Italy ALDE
Not supported by
Amendment numbers 409 428

Some companies backing this approach identify themselves here.

Provenance of the Innovation Fund allowances

ITRE ENVI
The auctioned share of EU ETS allowances Hökmark, Niebler, Rübig (EPP); Kappel (ENF) EPP
The freely-allocated share of EU ETS allowances Poche (S&D) The same three S&D who supported increasing the Innovation Fund by 400 M EUAs to 800 M EUAs say in a ‘justification’ that they want the increase on the EC’s proposal to come from the freely-allocated share.
Amendment numbers 414, 418, 422, 423 417

Federley commented, “Regarding the source of allowances, the amendments go in different directions. That means, should we take them from the free allowances or the auctioning share? I would say that most of the amendments are split in two groups, and we can see that all through the amendments there’s a big debate going on how to support the different funds.” (16:24:03)

The EPP Group (the largest Group in the European Parliament) had decided on the line that the allowances should be drawn from the auctioned share in its May 2016 position paper.

Start date

Date Proposer
2018 EPP, Greens-EFA; Gerbrandy, Selimovic (ALDE)
2019 Pargneaux (S&D)
ITRE S&D wants the ETS Innovation Fund monetisation to begin only in 2022, but does not rule out that the first projects could be awarded and receive their money sooner.

Scrap special help for small-scale projects

ITRE ENVI
Supported by Rapporteur Federley, Fontana (ENF) Gerbrandy, Selimovic (ALDE); Salvini (ENF)
Not supported by Dalli (S&D – opposition from Member States, too)

Technology choices

Pro free-for-all

ITRE ENVI
The allowances shall be made available for the entire/whole range of innovation in low-carbon industrial technologies and processes Geier, Krehl (Germany S&D), EPP, ECR Meissner, Müller (Germany ALDE)

Against winner-takes-all

ITRE ENVI
The competition should “ensur[e] a degree of geographical and sectoral balance” S&D incl. Dalli

Additional / emphasised technologies

ITRE ENVI
“energy conversion and storage and battery technologies” EPP, Germany S&D EPP
“innovative technologies for transmission and distribution” Three EPP
“smart grid infrastructures notably for the deployment of electric mobility” S&D Zorrinho (S&D), who adds “electric batteries”
“energy storage” and “bio-based materials” S&D
Extractive industry Meissner, Müller (Germany ALDE)
District heating, cogeneration Marinescu; Krasnodębski, Czesak, Tošenovský (Poland ECR) Wiśniewska, Piecha (Poland ECR)
“supporting energy efficiency improvements” Sylikiotis (GUE)

Fossil fuels

Pro-CCU EPP, S&D, Poland ECR, ENF, Marinescu EPP; Wiśniewska, Piech (Poland ECR); Meissner, Müller (Germany ALDE); Tănăsescu, Sârbu (Romania S&D); Zorrinho (S&D), Leinen (S&D), Marinescu
Pro-CCU subject to strict conditions Gerbrandy
Delete CCS Tamburrano, Evi (Italy ENF); Sylikiotis (GUE) Italy ENF
CCS only for industrial applications Eickhout (Greens-EFA)

Two ENVI MEPs, Gerben-Jan Gerbrandy and Bas Eickhout, adapted the line taken by their colleagues in ITRE (who had submitted their amendments some weeks earlier) and followed the advice of this website and Graeme Sweeney (link) to avoid a requirement for power projects to demonstrate a 20% LCOE improvement. They want 20% saving compared to a benchmark to be an eligibility criterion only for industrial projects.

Federley, lead MEP in the ITRE committee for the ETS proposal, spoke of his attitude to CCS at an event on 20 June. He said, “When it comes to CCS technology, it was not the EU failing. It was the UK government which stopped the funding.” Shell, which sponsored the event, echoed that message in its summary of the event. On CCS, “The technology still needs to be proven on a commercial scale, and this requires demonstration plants. In Europe, the EU has allocated massive funding for these plants, the money hasn’t flowed through because national governments are refusing to match the funding.”

Prioritisation of funding

ITRE ENVI
Implied prioritisation of renewables over CCS through a switching of the terms S&D (AM 435)
“The indicative shares of funding per category shall be the following: 50% industry innovation projects, including CCS and 50% RES.” Greens-EFA, who also outline a way to achieve the split while ensuring that funds are used
Max 50 M EUAs for innovative RES, CCS and CCU ENF Salvini (ENF)

Max refund rate on eligible costs

The amendments are all over the place, but in every case propose a higher refund rate than the Commission. The MEPs do not avail of the ‘Justifications’ section to explain their reasons for the rates they choose. The impression from the divergence of the choices is that the Impact Assessment’s analysis is right: no choice is better than any other. This will be explored in a future article. The table below also shows MEPs’ recommendations for the proportion of grant that may be paid out for effort in delivery an operating rather than on successful operation of that plant.

Max refund rate on eligible costs /% %age that may be paid out on effort alone ITRE ENVI
60 40 [n/a – EC proposal]
75 40 [n/a – Option 1 for the Innovation Fund described in the Impact Assessment]
80 [no comment] Fontana, Kappel (ENF) Salvini (ENF)
75 25 Marinescu
75 55 EPP; Geier, Krehl (Germany S&D)
75 [no comment] Nica (ALDE)
75 60 Henkel (ECR) Duncan (Rapporteur)

Duncan supports amendments that increase the percentage of the award that may be paid out on effort alone. He compared ETS Innovation Fund to a Scottish funding scheme at the Shell event mentioned above, “The Saltire prize is awarded only when you achieve a certain target and given that no enterprise has ever met the target, the prize has never been awarded. So the tantalising prize has done no good. Far better for the money to have gone at the other end to try and get these schemes working.”

Caps on the award

ITRE ENVI
Max 20% of total (or projected total) value of allowances to one project Jens Gieseke, Norbert Lins, Birgit Collin-Langen (Germany EPP) but this looks to be a mistake, as most of it concerns Article 10a point 19, as does the justification

(Recall that rapporteur Duncan wanted max 20% — he seems still to be the MEP happiest concentrating money)

Max 15% S&D: explicit agreement with the current text of the Directive, which the EC does not propose to change
Max 10% or 300 M EUR, whichever is less Greens-EFA
  1. NER400.com’s comment

    On the creation of leverage instruments

    The best way for ETS Innovation Fund to provide ‘leverage instruments’ would be to top up a popular existing scheme administered by the EIB, EDP Innovfin. This financing mechanism, launched in 2015 is oversubscribed. It awards money on a first-come-first-served basis. Many NER300 projects have applied to it for cheap financing of their projects. The wider ‘Innovfin’ programme could be used to finance industry projects. It is important for financing programmes to be open to any project that meets the EIB’s conditions.

    ETS Innovation Fund should distribute most of its money as non-refundable awards. Awards represent a clear public subsidy. The competition for awards would be based exclusively on the amount of non-refundable subsidy going to a project, like with NER300.

    Max reimbursement rate

    The maximum reimbursement rate proposed by MEPs is high, but because of uncertainty over future state aid rules and the amount of national co-funding that will be allowed under those rules for winning projects, it seems a sensible precaution. Many MEPs want state aid rules and ETS Innovation Fund rules to dovetail.

Sep 13 2016

ETS Innovation Fund public events

Wind Europe Summit 2016, Hamburg, 27 Sept 2016

Wind Europe promises a 1:30-hour event that will “provide an overview of the current state of the NER 300 programme and its future. Experiences from [three] funded wind energy projects will be shared with the audience and a panel will discuss challenges and opportunities identified.” More information is available here.

Energy Visions 20 June 2016

As part of their Energy Visions partnership, Politico and Shell co-organised the event ‘Innovation: the Way to a Low-Carbon Economy?’, with panellists including Fredrick Federley and Ian Duncan, the MEPs most closely involved with ETS Innovation Fund.

picture Energy Visions

Carbon Market Watch 25 May 2016

Carbon Market Watch organised this ETS Innovation Fund event at the European Parliament on 25 May. Click image to go to registration form.

The NGO has made some bold statements on ETS Innovation Fund, calling in October 2015 for an ‘NER1000’ fund created from the monetisation of a billion allowances. It said, “Free allocation shields industrial sectors from the carbon price signal and puts European industry at risk of falling behind in deploying low-carbon, state-of-the-art technologies compared to their competitors abroad.”

poster Carbon Market Watch

EPP Group event 4 May 2016

This event by the EPP political group in the European Parliament coincided with the publication of its position paper on the ETS.

poster EPP Group

Sep 07 2016

The legislators debate: three debates in the European Parliament committee and one in the Council of Ministers

Praise for clear criteria

DG CLIMA Director Tovšak Pleterski commented on ETS Innovation Fund in her second appearance in front of the ITRE committee (17:05:45, 12 July). She “noted with interest” the “guidance how […] projects can be evaluated and to have further discussion on the right balance of risk sharing as expressed by the funding rate.”

The only amendment on how projects should be evaluated came from the Greens-EFA Group. Their proposed AM 426 in ITRE said, “Eligible low-carbon industrial projects shall contribute to emissions reductions of at least 20% below the updated benchmark set out in paragraph 2 and shall enhance competitiveness and productivity. Technologies shall compete on GHG saving and on subsidy requirements. Eligible innovative renewable energy projects shall be defined in the delegate act referred to in Article 23, which will also specify a process for updating that list. Those technologies shall compete by their cost-per-unit performance (CPUP).”

Multipartisanship

Perhaps recalling the debacle over his committee’s failure in 2015 to agree on the start of the Market Stability Reserve, Federley is keen to work across the political divide from the outset to achieve a majority for his report: “Once again, I can’t repeat it enough, we have to make sure from all the parties that we deliver a majority, otherwise we lose the influence in the ENVI committee and we will lose influence in the Parliament as such. I call for open, wide and vivid debate, but in the end we have to make sure we deliver a majority from the group.” Jo Leinen, a member of the ENVI Committee from a different Political Group to Federley, also wanted to see the final report leave the Parliament with a strong majority (11:17:03, 21 June).

Small-scale projects

Three Member States appealed for adequate support for small-scale projects. Slovenia was the first country to make the point in the Council debate (20 June). Like the UK and Germany, it explicitly welcomed proposal for ETS Innovation Fund, then added, “Our experiences with the already existing fund called NER300 allows us to support the inclusions of provisions that would take into account the principle of excellence and allow financing for small projects. We therefore welcome the Presidency’s proposal. Future discussions on the Innovation Fund should therefore also focus on provisions that would allow the access of small excellent projects to financing and this would also allow a more balanced geographic distribution of the funds.”

Austria echoed Slovenia’s comments. These two countries had successfully pushed for a derogation helping small projects in NER300. This time, in the Council debate, they were joined by Malta. Miriam Dalli, an MEP from Malta’s governing party, provided further support with her amendment in the Environment Committee (AM 423).

Details on past Council support for small-scale projects were given in this article.

Several Member States also expressed their support for small-scale projects at a meeting of the (rather shadowy) European Climate Policy Group on 1 June 2016.

Appeal for transparency

Austria called for transparency in the operation of the Innovation Fund.