Impact on the environment and the economy of technological innovations for the Innovation Fund (IF)

The aim of this report is to provide insights into: Which impacts an exemplary set of technological low-carbon innovations promoted by the Innovation Fund (IF) in the fields of energy-intensive industries, renewables, Carbon Capture and Storage CCS/ Carbon Capture and Use CCU and energy storage could have on the environment; - The order of magnitude of investments in innovative demonstration projects that would fall within the scope of the Innovation Fund and how this relates to the available funding. Summed over subsectors and sectors, the total CAPEX range to be financed amounts to EUR 55-68 bn: Energy Intensive Industries EEI (incl. industrial CCS and Carbon Capture and Use CCU) around EUR 31-42 bn, Carbon Capture and Storage CCS (under the assumption of 1 to 2 projects to demonstrate the technology) EUR 0.5-2.8 bn, RES Generation for Wind, bio (including transport), solar PV, hydro and other renewables around EUR 15 bn, RES Transmission/Distribution/Storage around EUR 8 bn. The exemplary set of innovative low-carbon technologies identified, described and analysed in detail, based on sectoral workshops carried out in the first half of 2017, completed with further literature research and results drawn on two energy system models (FORECAST Industry (energy intensive industries) and ENERTILE (RES and CCS) allows to draw the following conclusions. The exemplary set of technologies is intended as a minimum coverage for the IF. The overall GHG reduction potential for the exemplary set of innovative industrial technologies covered by the IF is of the order of 8.3 Mt CO2eq. (with 2015 emission factors for electricity) and about twice, 19.4 Mt CO2eq. (with 2050 emission factors for electricity). The latter presents about 2-2.5% of the overall industrial emissions under the ETS of today. For innovative power sector low-carbon technologies, the overall GHG reduction is of the order of 3.8 Mt CO2eq. (with 2015 emission factors for fossil fuel based electricity generation) and 1.7 Mt CO2eq. (with 2050 emission factors for fossil fuel based electricity generation which still is supposed to be present in the power mix by then, mostly as natural gas). The total investments to be triggered by the exemplary set of technologies covered by the IF is about 9.5 billion Euro for innovative industrial low carbon technologies in terms of full investments, and roughly half or 4.5 billion Euro in terms of differential investments, i.e. compared to the reference technology. Total investments related to innovative power sector low carbon technologies are about 4.7 billion Euro. In total, around 14.2 billion Euro full investments are to be covered by the exemplary IF in order to demonstrate the set of innovative low carbon technologies. The Innovation Fund volume shall be based on 400 million allowances reserved from 2021 onwards for the purpose of the technology support. In addition, a further 50 million of unallocated allowances from 2013-2020 will be added, together with, as early as 2019; any possible un-used or remaining funds from the NER 300 Programme. Further 50 million allowances could be added to the fund post 2025, if these are not used for free allocation to industry.