Carbon capture technologies are indispensable for the EU to reach net-zero by 2050. For some industries – especially those with process emissions, carbon capture, utilisation and storage (CCS) technologies are the only solution to decarbonise. The European Commission estimates that by 2040, around 250 Mt of carbon dioxide (CO2) will need to be captured and stored to reach the GHG emissions reduction target. This will require massive investments in the development and roll-out of the technology. However, today only a handful of CCS projects are in operation within the EU.
Since its inception in 2020, the EU Innovation Fund has been an important tool to fund the deployment of CCS projects at a large scale. Nonetheless, to unlock the full potential of the EU Innovation Fund in supporting the development and deployment of CCS technologies to decarbonise Europe’s energy-intensive industries, the following changes in the functioning of the EU Innovation Fund must be considered:
Commitment from Member States: The awarding of an Innovation Fund grant is certainly valuable in supporting the development of key decarbonisation projects. However, in far too many cases projects still struggle to reach financial close due to the lack of support from Member States. In fact, the only CCS projects that have reached financial close with the help of the Innovation Fund have been awarded State aid support. We therefore call on the Commission to ensure that Member States follow its lead in supporting promising decarbonisation projects. Similarly, the demand for the Innovation Fund will always exceed its funding capacity, and therefore Member States should support the projects within their territory that have successfully passed CINEA’s evaluation but were not funded due to high demand.
Allow both CAPEX and OPEX funding under the EU Innovation Fund: In particular, first-movers in carbon capture technologies incur high operating costs alongside significant capital expenditures. Until the business case for CCS improves to cover these expenses, it is vital to provide as much support to front-runner projects as possible.
Dedicated funding call for carbon capture technologies: CCS is a critical technology for industrial decarbonisation – and represents for those industries with process emissions, the only viable alternatives to decarbonise. The costs related to carbon capture projects deployment are often higher than other clean technologies. To reflect that, the EU Innovation Fund needs a dedicated funding call for carbon capture technologies. In fact, the original funding instrument that became the Innovation Fund was primarily meant to fund carbon capture technology through the NER300 programme, as the EU recognised the importance of the technology for the future competitiveness of EU industries. In light of the necessary ramp-up of CCS plants in Europe over the coming 15 years, it is essential that such a dedicated fund is made available to support its deployment.
Inclusion of CO2 infrastructure projects: One of the barriers to investment in carbon capture projects these days is the missing infrastructure to safely transport and permanently store the captured CO2 in a storage site. Therefore, the Innovation Fund should be extended to cover standalone CO2 infrastructure projects and harmonised with other infrastructural funds, such as the Connecting Europe Facility (CEF) – which is already enabling CO2 infrastructure development through Projects of Common Interest (PCIs). This will foster a more cohesive and robust strategy for carbon capture and storage deployment across Europe, ensuring the necessary CO2 infrastructure is in place to handle the required capture volumes.
Expanded selection for carbon capture: As mentioned, the deployment of carbon capture technologies is particularly capital intensive, and the need for the rapid deployment of capture, transport and storage projects is massive. The EU seeks to store annually 50 Mt of CO2 by 2030 – which will require a massive roll-out of CCS projects. To achieve these goals, the Fund should support projects which are beyond first-of-a-kind. Linked to this, the Commission should explore the development of expanded selection criteria for CCS projects under the Innovation Fund, in recognition of their importance in reaching the 2030 annual CO2 injection capacity target. This could include considering CCS projects that contribute to the fulfilment of the binding target under the Net-Zero Industry Act as complying with the innovation requirement of the Innovation Fund automatically. At the same time, the Innovation Fund should include strong consideration to CCS under the pilot project calls, in order to bridge the gap between Horizon Europe and full-scale deployment.