(Source: European Commission)
At the United Nations Climate Change Conference of the Parties (COP26) in Glasgow, European Commission President Ursula von der Leyen and Bill Gates, the Founder of Breakthrough Energy, together with European Investment Bank President Werner Hoyer, have officially entered into a pioneering partnership that will boost investments in critical climate technologies. Today’s signing of a Memorandum of Understanding follows up on the initial announcement made in June this year at the Mission Innovation Ministerial Conference.
The partnership between Commission, European Investment Bank and Breakthrough Energy Catalyst will mobilise up to €820 million ($1 billion) between 2022-2026 to accelerate the deployment and rapidly commercialise innovative technologies that will help deliver European Green Deal ambitions and the EU’s 2030 climate targets. Each euro of public funds is expected to leverage three euros of private funds. Investments will be directed towards a portfolio of EU-based projects with high potential in four sectors:
- clean hydrogen;
- sustainable aviation fuels;
- direct air capture; and
- long-duration energy storage.
Ursula von der Leyen, President of the European Commission, said: “The time for action is now. The climate challenge requires us to invest in high-risk innovations and to eliminate the ‘green premium’ involved in commercialising new technologies. I cannot wait to see the technologies coming to the market. The EU-Catalyst partnership is another step on the way to making Europe the first climate neutral and climate innovation continent. I look to Member States, industry and others to join the climate innovation race.”
Werner Hoyer, President of the European Investment Bank, said: “To meet the Paris climate goals we need a global technological revolution and massive investments in game-changing innovations. The European Investment Bank has a strong track record of financing early stage technologies, helping scale them up to become more affordable. Today we are using this expertise to reach the EU’s ambitious climate targets. I am delighted that we can announce today a new partnership with the European Commission and Breakthrough Energy Catalyst to support the green solutions of tomorrow and build a green future for all of us.”
Bill Gates, Founder of Breakthrough Energy, said: “Reaching net-zero will be one of the hardest things humanity has ever done. It will require new technologies, new policies, and new partnerships between the private and public sector at a scale we have never seen before. This partnership with the European Commission and European Investment Bank will help accelerate the widespread adoption of climate solutions, which will build clean industries, and create job opportunities throughout Europe for generations to come.”
The EU-Catalyst partnership will target technologies with a recognised potential to reduce greenhouse gas emissions, but which are currently too expensive to get to scale and compete with fossil fuel-based technologies. It will bring together the public and private sectors to invest in large-scale demonstration projects.
Both the European Investment Bank (using Commission resources) and Breakthrough Energy Catalyst will provide equivalent amounts of grants and financial investments in the projects. As part of its contribution, Breakthrough Energy Catalyst will mobilise partners to invest in projects and/or purchase the resulting green products.
By supporting these technologies in this phase of the demonstration process and creating a market for those green products, the EU-Catalyst partnership will drive down their ‘green premium’, i.e. reduce their costs to a level that is eventually competitive with fossil-fuel based options. This will help to accelerate their global adoption and lead to independence from public support schemes.
EU funding for the partnership will be drawn from Horizon Europe and the Innovation Fund, and will be managed under InvestEU according to established governance procedures. Breakthrough Energy Catalyst will leverage equivalent private capital and philanthropic funds in support of key climate-smart technologies to speed up the transition towards sustainable industrial ecosystems in Europe. The EU-Catalyst partnership will be open to national investments by EU Member States through InvestEU or at project level. The first projects are expected to be selected in 2022.
The European Commission has a range of policies and programmes to deliver on its climate ambitions. Under the European Green Deal, the ‘Fit for 55′ package was adopted in July 2021 with the aim of cutting greenhouse gas emissions by at least 55% by 2030.
EU funding for projects supported under the Commission-Catalyst partnership will be channelled through the InvestEU programme and implemented by the European Investment Bank and other interested financial institutions.
For the purpose of this partnership, InvestEU funding is guaranteed by the Innovation Fund and Horizon Europe, the Europe’s research and innovation framework programme worth €95.5 billion (2021-2027). Horizon Europe dedicates 35% of its budget to climate action, while the programme also supports a range of partnerships which mobilise private funding to deliver on pressing global challenges and modernise industry through research and innovation.
The Innovation Fund is a new funding instrument for delivering the EU’s economy-wide commitments under the Paris Agreement and its climate objectives, by supporting the demonstration of innovative low-carbon technologies.
The Commission supports together with Breakthrough Energy Catalyst the second phase of Mission Innovation to bring about a decade of action and investment in research, development and demonstration to make clean energy affordable, attractive and accessible for all.
European Investment Bank
The European Investment Bank (EIB) is the long-term lending institution of the European Union and is owned by the EU Member States. It makes long-term finance available for sound investment in order to contribute towards EU policy goals both in Europe and beyond. The European Investment Bank is active in around 160 countries and is the world’s largest multilateral lender for climate action projects.
The EIB Group has recently adopted its Climate Bank Roadmap to deliver on its ambitious agenda to support €1 trillion of climate action and environmental sustainability investments in the decade to 2030 and to deliver more than 50% of EIB finance for climate action and environmental sustainability by 2025. Also, as part of the Roadmap, from the start of 2021, all new EIB Group operations will be aligned with the goals and principles of the Paris Agreement.
Founded by Bill Gates, Breakthrough Energy is dedicated to helping humanity avoid a climate disaster. Through investment vehicles, philanthropic programs, policy advocacy, and other activities, Breakthrough Energy is committed to scaling the technologies the world needs to reach net-zero emissions by 2050.
Breakthrough Energy Catalyst is a first-of-its-kind model designed to accelerate the critical climate technologies that will underpin a zero-carbon economy. Catalyst seeks to bring together the public and private sectors to fund commercial-stage demonstration projects for critical decarbonisation solutions. Catalyst will address the early deployment funding gap for these technologies and provide a structure to accelerate their commercialisation. Catalyst will start by funding projects across four technologies: green hydrogen, sustainable aviation fuel, direct air capture, and long-duration energy storage. In the future, Catalyst intends to expand the same framework to other necessary innovations, like low-carbon steel and cement.