The European Union is preparing a new financial instrument aimed at decarbonising energy-intensive industries. The Industrial Decarbonisation Bank is set to mobilise around \u20ac100 billion for investments in reducing industrial emissions, using resources from the Innovation Fund, additional revenue from the EU ETS and InvestEU. The European Commission is positioning the future bank within the framework of the future Competitiveness Fund.<\/p>\n
The Clean Air Task Force (CATF) is examining how the mechanism should be designed so that funding actually leads to industrial projects being brought online. The central point of the report is that the availability of funds alone does not solve the problem of investment in decarbonisation. Projects require, simultaneously, a viable business model, access to infrastructure and conditions that enable the final investment decision to be taken.<\/p>\n
CATF builds on the experience of existing European programmes. In recent years, the Innovation Fund has built up a significant portfolio of projects in the field of low-emission technologies, but some of these encounter difficulties before reaching the implementation stage.<\/p>\n
The report cites the European Commission\u2019s response to Special Report No 11\/2026 of the European Court of Auditors: of the 208 grant agreements analysed up to June 2025, 45 projects had reached financial close, whilst 16 had entered the operational phase. CATF also shows, based on data from the Court of Auditors, that payments made to projects totalled \u20ac331.8 million, compared with \u20ac2.1 billion had they progressed according to their original timetables. The projects remaining in the portfolio were, on average, 14.5 months behind schedule.<\/p>\n
Among the problems identified are the difficulty in securing long-term procurement contracts for low-emission products, rising costs of materials and construction, as well as dependence on infrastructure external to the project: connection to electricity grids, CO\u2082 transport and storage, or hydrogen infrastructure.<\/p>\n
For CATF, this is one of the key lessons for the future Industrial Decarbonisation Bank: success should not be measured by the value of approved funding, but by the number and scale of projects that actually come on stream.<\/p>\n
Energy-intensive industrial sectors \u2013 steel, cement, chemicals, oil refining, paper and pulp \u2013 require very large investments to replace or upgrade existing processes.<\/p>\n
CATF estimates that industries such as steel, cement, chemicals and refining account for approximately 20% of CO\u2082 emissions, and that the necessary investment far exceeds the capacity of current European programmes.<\/p>\n
The report refers to estimates in the Draghi report, according to which the decarbonisation of the four largest energy-intensive industries (chemicals, base metals, non-metallic minerals and paper) could require around 500 billion euros over the next 15 years. By comparison, the Innovation Fund is set to provide around \u20ac40 billion for low-emission technologies between 2020 and 2030, depending on EU ETS revenues.<\/p>\n
The Industrial Decarbonisation Bank would therefore not cover the full investment requirement. Its role would also be to reduce risks sufficiently to attract private capital, funding from Member States and resources from financial institutions.<\/p>\n
The report recommends that the bank should not operate as a single grant programme, but as a system in which three instruments are coordinated.<\/p>\n
The first would be represented by Carbon Contracts for Difference (CCfD)<\/strong>, awarded through competitive procedures. The second would fund the development and maturation of projects prior to their submission for major support. The third would support the shared infrastructure on which industrial investments depend, including CO\u2082 transport and storage networks, hydrogen infrastructure or certain investments in the electricity grid.<\/p>\n Sequencing is important. CATF recommends that support for project development and infrastructure selection should take place before or in parallel with CCfD rounds. A company intending to invest in a CO\u2082 capture facility, for example, cannot credibly calculate the project costs unless it knows when the transport and storage infrastructure will be available, how much access will cost and what capacity it will have.<\/p>\n CATF assigns a central role to carbon contracts for difference.<\/p>\n Under such a mechanism, the project bids for a level of support relative to the cost of reducing emissions. The contract covers the difference between the price determined by auction and a carbon reference price, for the verified quantities of CO\u2082 reduced.<\/p>\n The organisation recommends a competitive and technology-neutral tender process, in which projects relating to electrification, energy efficiency, the use of hydrogen, fuel switching or carbon capture and storage can be compared on the basis of the cost per tonne of CO\u2082 avoided.<\/p>\n At the same time, competition based solely on the lowest cost could concentrate funding in sectors where decarbonisation is cheaper. For this reason, CATF proposes sectoral caps linked to the sectors\u2019 share of EU ETS emissions, and a supplementary fund available to competitive projects once the sectoral cap has been reached.<\/p>\n The report also advocates the use of two-way contracts. If the ETS price falls below the level set in the contract, the project receives the difference. If the carbon price exceeds the contractual level, the surplus would go to the financing mechanism and could be used in subsequent rounds.<\/p>\n One of the most important elements of the CATF proposal is the funding of infrastructure serving multiple industrial projects.<\/p>\n In the case of CCS, a plant may invest in CO\u2082 capture, but the project cannot operate without transport and access to a permanent storage site. The situation is similar for hydrogen or for the electrification of industrial processes, which require additional grid connections and capacity.<\/p>\n It is a circular problem: infrastructure providers cannot easily reach a final investment decision without confirmed users, and companies cannot make a final investment decision without the certainty that the infrastructure will be in place.<\/p>\n CATF proposes that the future bank should link the two processes. The infrastructure could be selected prior to tenders for industrial projects and would publish information on the commissioning timetable, tariffs, access conditions and available capacity. Support for construction would then be conditional upon there being a sufficient number of confirmed projects.<\/p>\n For projects within the same industrial cluster, the report also proposes the option of coordinated submission where several factories rely on the same infrastructure.<\/p>\n The report does not recommend that the Industrial Decarbonisation Bank focus on a single technology. For the industries analysed, CATF identifies several pathways to reducing emissions: process electrification, energy efficiency, clean hydrogen, fuel switching, and carbon capture and storage.<\/p>\n However, needs vary significantly across sectors. In the cement industry, for example, process emissions make carbon capture one of the key solutions. In the steel industry, options may include DRI-EAF, hydrogen and CCS. In certain industries that use heat at lower temperatures, commercial technologies such as heat pumps or electric boilers are available, and the challenge is economic rather than technological.<\/p>\n CATF believes that the bank should focus on technologies that are sufficiently mature for implementation. Solutions still at the prototype or pre-commercial stage should be supported through research and innovation instruments, including the Innovation Fund and Horizon Europe.<\/p>","protected":false},"excerpt":{"rendered":" Uniunea European\u0103 preg\u0103te\u0219te un nou instrument financiar destinat decarboniz\u0103rii industriilor mari consumatoare de energie. Industrial Decarbonisation Bank ar urma s\u0103 mobilizeze aproximativ 100 de miliarde euro pentru investi\u021bii \u00een reducerea emisiilor industriale, folosind resurse provenite din Innovation Fund, venituri suplimentare din EU ETS \u0219i InvestEU. Comisia European\u0103 plaseaz\u0103 viitoarea banc\u0103 \u00een arhitectura viitorului Competitiveness Fund. […]<\/p>\n","protected":false},"author":4,"featured_media":9718,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"iawp_total_views":0,"footnotes":""},"categories":[9],"tags":[],"class_list":["post-10848","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-noutati"],"_links":{"self":[{"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/posts\/10848","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/comments?post=10848"}],"version-history":[{"count":1,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/posts\/10848\/revisions"}],"predecessor-version":[{"id":10849,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/posts\/10848\/revisions\/10849"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/media\/9718"}],"wp:attachment":[{"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/media?parent=10848"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/categories?post=10848"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/esghub.ro\/en\/wp-json\/wp\/v2\/tags?post=10848"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Carbon contracts for difference<\/h2>\n
Shared infrastructure<\/h2>\n
Which technologies might be relevant?<\/h2>\n