How Can These Ambitious Projects Be Financed?
To minimize the economic risk for companies and promote investments in innovative projects, both European and national funding programs have been established in recent years to financially support companies in their endeavors. In this article, we take a look at some of the relevant funding programs.
At the European level, there are funding programs that support CCU and CCS projects:
The European Union's Innovation Fund is one of the largest funding programs for innovative technologies to reduce greenhouse gas emissions. Funded by revenues from the EU Emissions Trading System (EU-ETS), the Innovation Fund provides significant resources for large-scale projects with the potential to significantly reduce CO₂ emissions. Numerous projects have been financed under this funding program since 2020 and are being implemented across Europe and various industries.
As the EU's most important research and innovation program, Horizon Europe offers extensive funding opportunities for projects in the CCU and CCS sectors. Horizon Europe has a total budget of around €95.5 billion for the period 2021-2027, with approximately €1 billion specifically allocated for projects in Carbon Capture and Utilization (CCU) and Carbon Capture and Storage (CCS). Projects along the entire innovation chain, from basic research to the demonstration of new technologies, are supported.
The Connecting Europe Facility (CEF) funding program supports the development of infrastructure projects that enable, among other things, the transport and storage of CO2. The aim is to support cross-border projects that facilitate the integration of technologies for CO2 capture and utilization (CCU) as well as CO2 capture and storage (CCS) into the European energy infrastructure. This also includes Projects of Common Interest (PCI) and Projects of Mutual Interest (PMI). Projects of Common Interest (PCI) are important cross-border infrastructure projects that connect or significantly impact the energy systems of two or more EU countries. Projects of Mutual Interest (PMI) connect the energy infrastructure of one or more EU countries with neighboring countries outside the EU.
In Germany, there are also specific funding programs focused on supporting CCU and CCS projects – although a legally binding regulation has not yet been passed in the Bundestag.
The Federal Ministry for Economic Affairs and Climate Action (BMWK) has introduced a comprehensive funding guideline with the Federal Funding for Industry and Climate Protection (BIK) program to support CCU and CCS projects within the framework of the federal government's Carbon Management Strategy. This guideline includes two modules: one for the decarbonization of industry and another for the promotion of CCU and CCS. Extensive research and development projects are also supported under the BIK program.
In the second call for proposals for climate protection contracts, whose preparatory process ended on September 30, 2024, projects in the fields of Carbon Capture and Utilization (CCU) and Carbon Capture and Storage (CCS) were invited to submit project sketches. The aim of these contracts is to significantly reduce CO₂ emissions in industrial processes while strengthening the competitiveness of companies. Companies were asked to submit project proposals that include innovative and technologically advanced processes for CO₂ capture and storage or utilization.
What happens next?
The funding programs are in place. But what about the legal side? And what is the current status of the federal government's Carbon Management Strategy? So far, carbon management projects have been legally excluded in Germany. Will this now change? My colleague Cäcilia Gätsch will address these and other questions in the upcoming 5vor12 article.
Kai Ruske advises companies on the acquisition of funding. If you have any questions about the above-mentioned or other funding programs in the energy sector, please feel free to contact him by email at ruske@cruh21.com.
