CleanTech: policy, strategy and financing

Launching the European Industrial Renaissance

The situation in brief

The EU is committed to continuing its efforts to enhance the competitiveness of the EU industry by enabling a conducive environment for innovation and investment and by making public funding available for companies. The funding gap, however, remains significant, and many pressures come from the competition on the global market. While unable to bridge this gap alone, public resources from the EU and Member States are the essential catalyst to crowd in needed additional private funding.

The European Bank for Reconstruction and Development (EBRD) offers financing for industrial players as well as off-takers with the ambition of growing the marketplace for cleantech solution deployments.

Industry supports the development of sectoral skills strategies and welcomes the adoption of the Net-Zero Industry Act (NZIA) and the introduction of the Hydrogen Bank, but alerts to the need for further fine-tuning and adaptation: among others, more flexibility on cumulation of resources, adjustment to inflation, use of non-price criteria.

The funding landscape for cleantech investment

From wind, to solar, to heat pumps or electrolysers, all sectors need support to transition from excellent research made in Europe to excellent products manufactured in Europe.

Funding is usually made available on several levels:

• Horizon Europe: support for technology development and process innovations
  
• Life: financing close-to-market technologies, meaning demonstration and pilot projects for new technologies
  
• Innovation Fund: going beyond bringing early-stage research to late-stage research, this now aims to bring to life first-in-kind manufacturing facilities as well as second-in-kind facilities where the economics are still not sustainable enough to guarantee private investments
  
• Erasmus+: financing skills development
  
• EU funding available at country level: the Cohesion Funds and the Recovery and Resilience Facility are the key support instruments, with at least one third of their budgets allocated to green investments, which could mean both development of green technologies but also supporting off-taking projects.
  

The Net Zero Industry Act

The Net-Zero Industry Act (NZIA) is seen as the most important piece of legislation addressing the cleantech sector. It:

• Creates the necessary conditions to facilitate investments in net-zero technology manufacturing projects
  
• Brings more flexibility around permitting timelines
• Introduces regulatory sandboxes and strategic projects that can be fast-tracked for funding
• Puts emphasis on the creation of NZI Valleys in key EU regions
  

EU Members States are now called on to put the NZIA into practice.

The EBRD's green financing instruments

The EBRD offers the following green financing instruments for both industry and private and public off-takers:

• Direct finance: loans, equity investments or guarantees
• Concessional financing, especially for innovative investments or technologies which face specific barriers: 'soft' loans, partial investment grants or incentive payments, first-loss cover, guarantees
• Technical assistance: capacity building for local FIs and local public authorities, support with design, tendering, monitoring
• Policy dialogue: working with central authorities on optimum legislation for EE and green economy development, and supporting cities with holistic diagnosis of environmental challenges and priority investment planning.

The Hydrogen industry perspective

While the hydrogen sector is expected to generate 249,000 (98,000 direct and 151,000 indirect) by 2030, there is a need to create an investment-friendly regulatory framework for all clean hydrogen production technologies. Focus should be on accelerating the Innovation fund and the Hydrogen Bank and on fostering competitiveness of EU hydrogen producers.

Green Skills for Hydrogen is a valuable case study, as a €3.8 million Erasmus-funded project gathering 33 partners from 15 countries. The objective is to develop sectoral skills strategies that lead to systemic and structural impact on reducing hydrogen-related skills shortages, gaps and mismatches, as well as ensuring appropriate quality and levels of skills, both in the short and the medium term.

How can we help?