The new partnership between the European Union and Bill Gates’ Breakthrough Energy seeks to fund large demonstration projects for the green energy transition.
The European Commission (EC) has teamed up with the European Investment Bank (EIB) and Breakthrough Energy Catalyst to support key technologies for the green energy transition. The announcement was made at the United Nations Climate Change Conference of the Parties (COP26) in Glasgow by EC President Ursula von der Leyen, Bill Gates, the Founder of Breakthrough Energy, and EIB President Werner Hoyer. The three parties sealed their commitment with the signature of a Memorandum of Understanding. The goal is to boost investments in critical climate technologies, with the partnership mobilising up to €820 million in combined funding over the next five years.
The partners will use the funding to accelerate the deployment and scaling up of EU-based technologies particularly in clean hydrogen, sustainable aviation fuel, direct air carbon capture, and long-duration energy storage. These technologies are regarded as having a recognised potential to reduce greenhouse gas emissions, but are currently too expensive to get to scale and compete with fossil fuel-based technologies. The partnership will in particular bring together the public and private sectors to invest in large-scale demonstration projects. In this way, the partnership hopes to drive down the costs of such projects to a level that is competitive with fossil-fuel based options. The EIB (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.
EU funding for the partnership will be drawn from Horizon Europe, more precisely from the Cluster on Climate, Energy and Mobility as well as the Innovation Fund set up under the EU Emissions Trading Scheme (see SwissCore article). It will be managed under InvestEU starting in 2022. Both programmes will top up the InvestEU Green Transition Product, which will allow the EIB to deploy the funding directly to the beneficiary and match the private funding. 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.
This initiative will supplement the EC’s broad range of policies and programmes to deliver on its climate ambitions. Under the European Green Deal, the “Fit for 55” package was adopted by the EC in July 2021 (still awaiting ratification by the EU Council and the European Parliament) with the aim of cutting greenhouse gas emissions by at least 55% by 2030. 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 EC supports, together with Breakthrough Energy Catalyst, the second phase of Mission Innovation (see SwissCore article) to bring about a decade of action and investment in research, development and demonstration to make clean energy affordable, attractive and accessible for all.
For its part, 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 are to be aligned with the goals and principles of the Paris Agreement.