Commission launches market testing survey for the future operation of the EU ETS Innovation Fund

The survey will remain open until 7 March 2023.

DG Climate action launched a market-testing survey, to consult a wide range of stakeholders on key features of the future Innovation Fund and to establish an appropriate portfolio of support instruments that will best meet the market needs. The survey comes in a moment when the EU is defining its ambitions towards a Net Zero Industrial Plan, where the Innovation Fund will also contribute, as well as delivering under the RePower EU Plan and the Hydrogen Bank.

The Commission started the preparatory work for amending the EU ETS Innovation Fund Delegated Regulation (Commission Delegated Regulation (EU) 2019/856) in line with the agreed revisions of the EU Emissions Trading System (EU ETS) Directive.

The questions in the survey, cover both the current calls for proposals and the new auctions mechanism. The Commission is interested in identifying the market needs for the next period of the Innovation Fund operation, in terms of project pipeline as well as expected type and size of support and sectoral or thematic priorities to be established.

With this survey the Commission will have an overview of the types of funding that different industrial sectors and market players will require to close the green premium gap and decarbonise as fast as possible.  This will in turn allow the Commission to establish an appropriate portfolio of support instruments under the EU ETS Innovation Fund.

Project developers, professional/trade/business associations representing companies that could consider applying for funding from the EU ETS Innovation Fund in the current decade are especially targeted by the survey. Financial entities that can provide lending, equity or other type of financial support to projects applying to the Innovation Fund are also encouraged to respond.

Views of EU Member States (and Iceland and Norway) academia/think-thanks and other stakeholders are also welcome.

Background

In March 2018, Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a system for greenhouse gas emission allowance trading within the Union and amending Council Directive 96/61/ECSearch for available translations of the preceding linkEN••• (the ‘ETS Directive’) was amended to establish the Innovation Fund, which aims at using EU European Trading System (EU ETS) revenues to support the commercial demonstration of innovative low-carbon technologies.

In December 2022, as part of the overall agreement on the revision of the ETS Directive, the European Parliament and the Council agreed to amend the provisions on the Innovation Fund, notably to:

• bring additional sectors (maritime, aviation, buildings and road transport sectors) in the scope of the Innovation Fund; and
• introduce new financing mechanisms whereby projects are selected on the basis of an auction (competitive bidding) and are supported through fixed premium contracts, contracts for difference or carbon contracts for difference. This new form of support will in particular support the production and/or consumption of renewable hydrogen.

The Innovation Fund legal basis is the Commission Delegated Regulation (EU) 2019/856 of 26 February 2019 supplementing Directive 2003/87/EC of the European Parliament and of the Council with regard to the operation of the Innovation Fund. Following the revision of the ETS Directive, all the changes need to be included also in the Delegated Regulation. Auctions on renewable hydrogen production under the Innovation Fund are expected to be launched in autumn ’23.

Details

Publication date 7 February 2023
Author Directorate-General for Climate Action