Improving the European Innovation Fund’s Impact
The cement industry is on a trajectory which means it will be well short of meeting European Green Deal targets of decarbonising by 50% by 2030 compared to 1990 levels. Moreover, there is an argument to be made that far too much hope is pinned on CCUS as the technology to decarbonise the industry by 2050, even though it is wholly unproven, exceptionally expensive, and not overly suited to an industry as physically fragmented as cement.
Scalable, low carbon cements have been developed that can reduce the carbon footprint of the cement industry by 70% and by 50% by 2030 if widely deployed. These come with the advantages that the technologies are low cost, require less water and energy, can be produced in existing manufacturing facilities with little additional capital expenditure, and will be available at scale within two years
Directive 2003/87/EC states that the European Innovation Fund seeks to support low-carbon technologies and processes, “including environmentally safe carbon capture and utilisation (CCU)…as well as products substituting carbon intensive ones produced”. The Directive also provides illustrative examples of potential projects for the cement sector, including “less carbon cement and low carbon cement”.
Clinker represents c. 75% of cement constituents in Europe, but accounts for 94% of cement emissions. Clinker substitution is recognised as a leading method of reducing the carbon intensity of cement, despite this, of the five cement projects successful in the Innovation Fund to-date, all relate to CCUS, a clear over-allocation to end-of-pipe solutions.
The European Innovation Fund plays an exceptionally important role in the decarbonisation of European Industry. However, the playing field needs to be levelled so that alternative low carbon solutions can be industrialised, evolved further, and proven at scale. There is, therefore, an urgent requirement to reimagine how the Innovation Fund determines successful applications so that an array of decarbonisation solutions is brought forward in Europe.
Firstly, the Innovation Fund needs to recognise that different industries can be decarbonised in different ways. A one-size-fits-all approach of focussing on green hydrogen and CCUS will lead to the lowest common denominator solution and risk missing specific breakthrough technologies. The cement industry, for instance, can be rapidly decarbonised at low cost today by focussing on scalable clinker replacement technologies. Therefore, the Innovation Fund needs to back sector specific technologies as well as “over-arching” technologies far more effectively than it does today.
Secondly, the process needs to be de-risked by building internal expertise on potential solutions. As with the highly successful Department of Energy Loan Program in the USA, the Innovation Fund should ensure long-term success by engaging with potential applicants early to understand each project in more detail, its technologies and its business case. These conversations would also provide an opportunity for both parties to determine hurdles and pathways to overcome them.
In a problem as complex as decarbonising industry, there is no silver bullet. A range of solutions is required. Those solutions can be determined by focussing on the constituent issues within each industry many of which will be unique to those industries, particularly in the case of cement. With the simple tweaks suggested above, the Innovation Fund could industrialise technologies which, when combined with the likes of CCUS and Green Hydrogen allow for the rapid decarbonisation of European industrial sectors and alignment with a 1.5 oC trajectory.