Last week, the European Commission announced the projects which have been pre-selected to receive finance from the Innovation Fund’s 3^rd call for large-scale projects. Part of the revenues generated by the EU ETS are set aside to support the deployment of innovative decarbonisation projects. In this call, 41 projects were selected (out of 196 eligible projects), totalling €3.6 billion of funding.

Bellona is a member of the Innovation Fund Expert Group and provides input to the design of the selection criteria.

The pre-selection this year is marked by the proliferation of carbon capture and hydrogen projects, with differing climate outcomes. In this article, we highlight some key successes, on the deployment of CCS in harder-to-abate sectors, and concerns, with the utilisation of fossil carbon and the absence of additional renewable energy to support RFNBO projects.

Further momentum for the decarbonisation of cement

Once again, as in the previous two calls, the Innovation Fund has pre-selected five projects which will capture and geologically sequester emissions from cement production. While there are many ways to reduce emissions from cement, such as efficiency, circularity, and alternative fuels, only CCS can abate those emissions which are necessarily generated by the cement production process.

• GeZero (Germany) is a full chain CCS project, linking the cement installation to a geological storage site via the rail network. The full chain nature of this project, along with the use of rail infrastructure, make this project highly interesting.
• KOdeCO net zero (Croatia) is another full-chain CCS project on cement. This project plan to capture the emissions from cement production, with an innovative and more efficient process, and ship them to a nearby offshore geological storage site in the Mediterranean. More on this project here.
• IFESTOS (Greece) plans to capture 98.5% of the emissions generated by a cement plant, by retrofitting existing cement kilns with various carbon capture technologies. The captured CO2 is then intended to be geologically stored, also in the Mediterranean.
• GO4ZERO (Belgium) is also a carbon capture storage project for cement, with the captured CO2 intended to be exported via the Port of Antwerp to be geologically stored offshore. This project claims it will also eliminate pollutants from the flue gas.
• EVEREST (Germany) is a CCS project on Europe’s largest lime plant, which will demonstrate oxyfuel carbon capture on both new and retrofitted cement kilns. Although the German Climate Ministry states that this is a CCS project, it is unclear where and whether the CO2 will be stored.

Notable developments are the use of geological storage in the Mediterranean, which has remained unused until now, as well as the reliance on CO2 transport modalities other than pipelines, namely rail and ship. More information about the need for flexible CO2 transport modalities here.

A caveat to the above projects remains the tendency to overinflate the environmental credentials of the projects, with the term “carbon negative” used without substantiation. For a project to be “carbon negative” it must physically and permanently remove more CO2 from the atmosphere than it emits greenhouse gases across the entirety of the project. The EU is currently designing a certification framework for carbon removals to help verify whether projects, such as the above, are removing carbon from the atmosphere, however it is premature to make these claims. More on the Carbon Removal Certification Framework here.

CCU: Catch and release of fossil carbon is not Paris-compatible.

The pre-selection includes five projects which plan to capture and utilise fossil CO2.

IRIS (Greece), plans to capture fossil CO2 from steam methane reforming to be combined with the hydrogen produced in this process. The resulting methanol is intended for use in transport and industry, where it will be combusted and the resulting CO2 emitted to the atmosphere.

eM-Rhone (France), plans to capture fossil CO2 from a cement plant. The CO2 is to be used to produce e-methanol, thus combusting and emitting the CO2 to the atmosphere.

TRISKELION (Spain), captures fossil CO2 from a cogeneration plant to produce e-methanol. It is unclear where the methanol will be used, though it is likely to be either combusted or used as a feedstock for the chemical industry.

Columbus (Belgium) captures fossil CO2 from lime production to produce e-methane. The e-methane is intended to be blended into the natural gas grid or used for industrial purposes.

E-fuel pilot (Norway) will capture fossil CO2 and CO from a metallurgical installation to produce synthetic aviation fuels. More on this here.

All the above projects plan to capture fossil CO2 and combine it with hydrogen, producing synthetic hydrocarbons. The production of such synthetic fuels is highly energy intensive and is associated with significant efficiency losses along the way. When fossil CO2 is captured and then later emitted to the atmosphere, this results in a delayed emission of geologically extracted CO2. In the case of fuels, this delay is very short, often only a matter of weeks, which does not present any significant climate benefit. This Bellona briefing goes into more detail on how to account for CCU.

Only one of the CCU projects recognises this point:

GREEN MEIGA (Spain) plans to capture CO2 with both ‘enzyme-based’ and direct air capture technologies to produce e-methanol. This project combines point-source capture of biogenic CO2 with additional capture of atmospheric CO2, making it the only CCU project in the pre-selection which does not plan to rely on fossil CO2.

The deployment of hydrogen production is not sufficiently linked to additional renewable energy capacity.

The development of hydrogen projects has also taken off since the previous call for large-scale projects, with 15 projects mentioning the production of hydrogen, almost all based on electrolysis. While a few of the projects specifically mention the deployment of additional and on-site renewable energy to power the process, some fail to specify the energy source, whether the renewable energy will be additional, and whether the renewables will be directly connected to the production of hydrogen. These three criteria are vital to ensure hydrogen production is a benefit to the climate and energy transition, as opposed to a burden. More on why additionality requirements are needed for hydrogen here.

Furthermore, the use of hydrogen does not appear to be targeted towards key uses. Only two projects mention the use of hydrogen for steel, with others alluding to use in transport and industry. One project specifically mentions injecting hydrogen (in the form of e-methane) into the natural gas grid.

What’s missing: Direct electrification

Despite naming the category of ‘Industry electrification and hydrogen’ only one project relates to direct electrification.

Volta Project (Czechia) plans to electrify up to 75% of the glass-making process, while also increasing the use of recycled glass to 100%.

The failure to pre-select more projects for direct electrification is a significant shortcoming of this Innovation Fund call. Direct electrification has the benefit of avoiding intermediary steps between energy production and energy use, therefore minimising energy losses and maximising the impact of the renewable energy put into the system.

A likely reason for this is the criteria for the selection of projects, which fail to recognise the inefficiencies associated with indirect electrification. The selection criteria of the Innovation Fund consider the procurement of renewable electricity for the operation of a project as an important element for the evaluation of the criterion “Degree of innovation”. However, the methodology used to calculate the emission reductions of a project states that no emissions shall be ascribed to electricity consumed by the project. With many hydrogen and synthetic fuel projects supported by this call of the Innovation Fund, this methodology is problematic as it ignores their full climate impact.

All in all, the pre-selection significantly advances the decarbonisation of the cement industry, a sector conventionally understood as being hard-to-abate. Once again, the jury has chosen to prioritise these projects. On the other hand, the pre-selection also includes projects which utilise fossil CO2 with the intent of emitting it very shortly after initial capture.

On electrification, the pre-selection heavily favours electrolytic hydrogen at the expense of projects which focus on direct electrification. It will be vital to ensure these hydrogen projects source additional renewable energy capacity to avoid cannibalising the broader energy transition.