Call to rebalance the Innovation Fund to better include renewable energy

Renewables displace fossil fuels – the Innovation Fund must recognise this

cc: European Commissioner for Energy Kadri Simson
cc: European Commissioner for Innovation, Research, Culture, Education and Youth Mariya Gabriels.

BRUSSELS, 20 September 2022.
Dear Executive Vice-President Timmermans

Renewables displace fossil fuels. And in doing so, they make a critical contribution to decarbonisation. We therefore welcome your efforts to rebalance the Innovation Fund to better include renewable energy. The ‘clean tech manufacturing’ and ‘mid-sized & highly innovative’ windows are particularly important for renewables. These windows can deliver a wide range and depth of innovative renewable projects. Such projects will form the basis of Europe’s future energy system whilst strengthening jobs, sustainable growth, competitiveness, and the EU’s strategic energy independence.

It is therefore essential that these windows are well-resourced within the 3rd call budget.

But these windows will only deliver if the main administrative barrier for renewables is removed – the Fund’s current approach to measuring ‘Avoided greenhouse gases’:

• The Fund’s approach to avoided greenhouse gases (GHG) emissions from electricity-generating renewables has been tested via an extensive modelling exercise. 26 different models were run – and in every case avoided GHG emissions from renewables were substantially more than assumed by the Fund’s methodology. The analysis has been shared with your services.

• The Innovation Fund’s current approach to avoided GHG emissions from heating & cooling renewables assumes that new projects will displace gas only. But in reality the fossil fuels supplying the EU’s heating & cooling include a more carbon-intense mix of gas, coal & oil. 

The consequence is a systematic underestimation of renewables’ avoided GHG emissions. This has a large impact on how renewable proposals score – 2 of the 5 Fund’s criteria are based on ‘avoided GHG’.

This may explain why – of all the various renewable technologies – only 3 renewable projects have been selected in the large-scale calls. This compares to 11 projects with carbon capture, and 6 with hydrogen.

To correct this, we recommend:

1. The 3rd large-scale call assumes that renewables exclusively displace fossil fuels, with multipliers for dispatchability, diversity, etc. This is far more accurate than the current assumptions.

2. The Commission undertakes modelling to improve its estimates of avoided GHG emissions due to renewable energy sources – prior to the 3rd large-scale call.

An Innovation Fund which recognises and put renewables at its core will help the EU to meet energy independence and deliver on the REPowerEU targets. It is also essential to Europe’s global leadership in the sector. We stand ready to work with your services to make this a reality.

This message is signed ny:

Dr. Johan Lindahl, Secretary General – European Solar Manufacturing Counci
Jean-Marc Jossart, Secretary General – Bioenergy Europe
Thomas Nowak, Secretary General – European Heat Pump Association
Prof. Dr. Dörte Fouquet, Director – European Renewable Energies Federation
Bérénice Crabs, Secretary General – European Solar Thermal Electricity Association
Anton Schleiss, Coordinator – ETIP Hydropower Europe
Rémi Gruet, Chief Executive Officer – Ocean Energy Europe
Pedro Dias, Secretary General – Solar Heat Europe
Walburga Hemetsberger, Chief Executive Officer – Solar Power Europe
Greg Arrowsmith, Secretary General – The Association of European Renewable Energy Research Centers
Giles Dickson, Chief Executive Officer – Wind Europe