Mobilizing Resources, enabling policies and investments for cost-competitive renewable fuels and bioenergy

Maurizio Cocchi, ETA Florence Renewable Energies, Italy.

State of play of financing mechanisms and opportunities in the EU

Sustainable bioenergy has a key role to play in reducing GHG emissions in the EU energy mix, while at the same time decreasing fossil fuel dependence and building a circular economy, in line with the 2030 and 2050 targets of the EU Green Deal.

The Strategic Energy Technology (SET) Plan is a first step to establish an energy technology policy for Europe. In 2016, representatives of the European Commission, SET Plan countries and industry stakeholders agreed on a Declaration of Intent on strategic targets for bioenergy and renewable fuels, which was followed in 2017 by an Implementation Plan for Action 8 of the SET Plan “Bioenergy and renewable Fuels for Sustainable Transport”, whose goal is to translate key actions into specific recommendations for research and development, and policy measures. The Implementation Plan outlines 13 research and innovation activities that need to be implemented to reach three common goals for bioenergy technologies: Improving the performance of production both in terms of yield and efficiency of processes (i), reduce GHG emissions along the value chain (ii) and reduce costs (iii).

SET4BIO is a Horizon 2020 project launched in 2020 to support the execution of the Implementation Plan of SET Plan Action 8, which aims to facilitate the mobilisation of national and European funds from both the public and private sectors, and to build an enabling framework for the deployment of sustainable bioenergy and renewable fuel technologies in Europe. Better alignment of national research funding needed to deploy synergies for bioenergy technologies In the context of funding and financing, one of the activities of SET4BIO is to get a picture about the public and private financing practices in the EU Member States participating in SET Plan Action 8, and to create awareness of funding needs and challenges. An initial analysis of available public tools including both the institutional funding (that research

Figure 1 - A preliminary map of national bioenergy projects in the Member States supporting SET Plan Action 8 is available on SET4BIO website. The map is regularly updated, and new projects can be submitted for listing.

organizations receive directly from ministries), and the competitive funding mechanisms (distributed by funding agencies through competitive calls), revealed that it is practically impossible to determine the extent of funds that are allocated for Action 8 relevant R&D. The reason is that the individual countries record and categorize the information about funded projects individually and at multiple funding entities. The categories do not entirely correspond to the value chains covered in Action 8, as well as the categories vary from country to country. The consequence of the lack of harmonized and central database is that the progress and efficiency of the various SET Plan implementation plans will be nearly impossible to track. In addition, a sensible fragmentation and lack of alignment in the National public funding strategies for R&D at Member States level was observed. Most of the countries surveyed have both national and regional research financing tools, and all of them with a certain degree of centralization or decentralization, but there are hardly any cases where the national strategies are fully aligned with European ones. Only in few cases an alignment and cooperation among Member States on research funding exists, that allows for joint research funding possibilities; for example the Nordic Co‐operation. Although the analysis is preliminary and will be updated in the next months, this initial outcome indicates that a more structured alignment and better harmonization of research policies and programs among the Member States and with the European Union is necessary, as well as a more efficient exchange of information, in order to deploy the synergies necessary for the achievement of the common goals of the SET Plan Action 8.

MAPPING R&D BIOENERGY PROJECTS IN MEMBER STATES

SET4BIO partners are also conducting a thorough survey of the bioenergy projects funded both with National budgets by the Members States involved in SET Plan Action 8, and the international collaborative projects funded by the European Union. This is an ongoing work, and expectedly the data availability, level of granularity and the information on national projects retrieved at this stage were affected by the fragmentation and the limited harmonization of R&D programs cited above. Nevertheless, so far, the survey has mapped out 204 projects funded at National level in 10 countries and 41 collaborative EU projects, funded mainly through Horizon 2020. The collection of further data is a continuous task, and the project expects to deliver periodical updates and further analysis of the data in 2021 and 2022, including more information on national projects and on EU projects funded with programmes besides Horizon 2020, such as Interreg and LIFE.

PRIVATE FINANCING OPPORTUNITIES FOR BIOENERGY PROJECTS

Another task of SET4BIO is monitoring the private financing opportunities for bioenergy, including available instruments to support private investments, such as grants, equity funds and loans mainly with a view to fund Firstof-a-Kind projects and high TRL solutions.

Renewable energy can be financed using a variety of instruments, from grants to concessional debt and equity, to purely commercial debt and equity. Typically, more mature markets and technologies are financed with private finance on commercial terms, whereas grants and concessional finance are often used to stimulate investments in previously untested technologies and/or countries. Several instruments have been launched in the EU in the past years to support investments in the field of energy (mainly in the form of loans, equity, and guarantees).

A series of instruments are available, and some others are in the process of being launched, which might be interesting to support private investments into renewable based fuels and other technologies covered by SET Plan Action 8.

For instance, the Green Deal Investment Plan is the investment pillar of the Green Deal. The European Green Investment Plan will offer sustainable investments over the next decade with three main objectives: • First, it will increase funding for the transition, and mobilise at least €1 trillion to support sustainable investments over the next decade through the EU budget and associated instruments, in particular InvestEU. • Second, it will create an enabling framework for private investors and the public sector to facilitate sustainable investments. • Third, it will provide support to public administrations and project promoters in identifying, structuring and executing sustainable projects.

The new EU Multi‐Annual Financial Framework 2021‐2027 includes a series of new and updated financing instruments, although

there are still some uncertainties related to their implementation, which will be cleared in the next few months.

The European Investment Project Portal (EIPP), allows project promoters in the EU to give visibility to their projects to a large network of international investors. One of the main issues for small players is how to promote their projects.

Advisory Hubs and accelerators can assist small players in promoting their projects towards private equity investment funds, such as:

• InvestEU Advisory Hub • Get Invest Finance Catalyst • Circular Economy Finance

Support Platform

Two online tools are also available for project developers to look for investors:

EUROQUITY.COM

Euroquity.com is a list of investors in the clean technologies, energy and environment sector. This web platform allows to select the type of investors according to different categories (e.g. individual, business angel, business angels network, crowdfunding platform, investment fund, corporate venture, and bank), sector (e.g. clean technologies, energy and environment), and by country.

INVESTEUROPE.EU

investeurope.eu, where relevant investors can be searched according to the country, the sector (e.g. energy, environment, transportation), and the stage of financing of the project.

In addition to private financing tools, the project has mapped out a series of other institutional opportunities that are available for funding of medium-high TRL bioenergy projects, such as:

EUROPEAN INNOVATION COUNCIL FUND (EIC)

The EIC Fund allows the European Commission to make direct equity investments in companies, with ownership stakes expected to be in general from 10% to 25% in start‐up companies.

INVESTEU FUND

Built on the model of the Investment Plan for Europe launched by the Juncker Plan, the InvestEU Fund aims to mobilise more than €372 billion of public and private investment through a guarantee of €26.2 billion that backs the investment the European Investment Bank (EIB) Group and other implementing partners to invest in more and higher‐risk projects.

MODERNIZATION FUND

The Innovation and Modernisation funds are financed by a part of the revenues of the auctioning of carbon allowances under the EU Emissions Trading System, and will provide €25 billion for the EU transition to climate neutrality, with a special focus on lower‐income Member States (Bulgaria, Croatia, Czechia, Estonia, Hungary, Latvia, Lithuania, Poland, Romania and Slovakia).

THE EUROPEAN BANK FOR RECONSTRUCTION AND DEVELOPMENT (EBRD)

The EBRD works in several countries located in five main geographical areas, as well as Turkey and Russia: South‐eastern Europe; Central Europe and Baltic States; Eastern Europe and the Caucasus; Central Asia; Southern and Eastern Mediterranean.

EU INNOVATION FUND

The Innovation Fund is one of the world’s largest funding programmes for the demonstration of innovative low-carbon technologies. It will provide around EUR 10 billion of support over 2020-2030 for the commercial demonstration of innovative low-carbon technologies, aiming to bring to the market industrial solutions to decarbonise Europe and support its transition to climate neutrality.

RECOVERY AND RESILIENCE FACILITY (RRF)

The Recovery and Resilience Facility is the key financial instrument at the heart of NextGenerationEU and it will make €672.5 billion in loans and grants available to support reforms and investments undertaken by Member States. All national recovery and resilience plans will need to focus strongly on both reforms and investments supporting the green transition.

JUST TRANSITION FUND

The JTF is an EU funding tool for regions dependent on fossil fuels and high‐emission industries which will support the economic diversification and reconversion of the territories concerned.Accelerating the move out of fossil fuel extraction and carbon‐intensive activities through targeted support for economic diversification and creation of new economic opportunities and jobs has enormous potential to get Europe’s economy growing.

CLEAN ENERGY TRANSITION PARTNERSHIP

A transformative Research and Innovation Programme across Europe boosting energy transition in all its dimensions. It enables energy transition from regional to national and global level, acting on the joint priorities of the Member States and Associated Countries and the European Commission.

EUREKA

Eureka is an intergovernmental network which supports the financing of transnational R&D projects, whose funds are provided by Member States.

EIC KICINNOENERGY

The Knowledge and Innovation Community dedicated to sustainable energy (KICInnoEnergy) offers several services to innovators: start‐ups, students and learners, including the financing of innovative projects via its Investment Round.

NEW RENEWABLE ENERGY FINANCING MECHANISM

EU renewable energy financing mechanism is a new initiative of the Commission to better support renewable energy projects that brings together investors and project developers, pooling resources and finding the right balance between public and private funds. The mechanism links countries that voluntarily pay (contributing countries) with countries that agree to have new projects built on their territory (hosting countries) and provides support in the form of low‐interest loans or grants. More detailed information on the specific criteria and requirements of this large and diversified set of financing tools is available at www. set4bio.eu.

CONCLUSIONS

Achieving the objectives of the SET Plan is an ambitious target that requires a collective effort by the European Union and its Member States to combine and coordinate knowledge, skills and resources. SET4BIO will act as a competence and support centre by engaging institutional and non-institutional actors and promoting innovative projects and best practices. The outlined roadmap of funding and financing instruments should enable each project to address those financing tools that best suit it, and to take full advantage of the new opportunities offered by the EU Green Deal and by the Financial Framework 2021‐2027. More at set4bio.eu

ACKNOWLEDGEMENTS

This article is based on a summary of SET4BIO deliverables prepared by Elisa Magnanelli, Judit Sandquist, Kathrin Weber (SINTEF, Norway), Paola Mazzucchelli, Carlos Castellano Pellicena (CIRCE). The SET4BIO project has received funding from the European Union’s Horizon 2020 research and innovation programme under grant agreement No. 884524.

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15.04.2021

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