May 8, 2022

Cleantech for energy independence, innovation and energy storage - April Policy Update

Our Policy Update shares key news from the past month in Brussels – and their potential impact on EU cleantech. This month, we look into response to the Ukraine war, REPowerEU. We also touch on the French elections and the upcoming EU Innovation Agenda.

REPoweringEU through upping renewables targets

REpowerEU, the Commission’s roadmap for phasing out the EU’s reliance on Russian fossil fuels, envisions a key role for renewable energy. The Commission is working on increasing the EU renewables share in the EU’s energy mix from 40% to 45% by2030. Key EU lawmakers are already on board with a renewables target of 45 %, and 11 Member States signed a joint letter the urge for a fast transition to renewable energy. On May 18, the Commission will present a detailed plan to phase out Russian energy imports by 2027. The European Commission stated that the plan will mostly target the deployment of mature technologies, but that there will be some space to support emerging technologies. The Commission is also evaluating the possibility of including a European funding package similar to the Covid recovery fund, where the Commission for the first time in EU history borrowed money on capital markets on behalf of all Member States. The action plan will be the main element of a broader energy package that will be published on the same date. Other proposals will include a strategy on solar energy, a strategy on energy partnerships with third countries like the Gulf countries as well as rules to produce renewable hydrogen from electricity.

Impact on cleantech: Ramping up of renewables to reduce reliance on all fossil fuels could see a surge in heat pumps, wind turbines and solar PV rollout, and enable an acceleration of capacity for renewable hydrogen, hydrogen derivatives and energy storage. It will also increase the need for grid modernisation.

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Vast deployment of renewable energy not possible without long-duration energy storage

While massively rolling-out renewables is a crucial step for the EU’s energy independence, REPowerEU did not lay out concrete measures on how to balance the intermittency of renewables. Breakthrough Energy, SolarPower Europe, WindEurope and the European Association for Storage of Energy  sent a letter to the Commission to ensure that the policy framework is supportive for energy storage in the short term, creating market signals that would mobilize investments. The four organisations proposed four actions that the EU can take (1) introduce energy storage targets for 2030 in the upcoming REPowerEU action plan; (2)promote the market uptake of energy storage technologies; and (3) mainstream energy storage in the implementation of the REPowerEU action plan and in the ongoing review of the Electricity Market Design.

Impact on cleantech: The massive deployment of renewables will lead to a demand shock for cleantech applications in energy storage technologies. This means more demand for all types of long-duration storage, including electrochemical, thermal, mechanical and as gases.

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President Macron pledges to overhaul France’s climate policy

Emmanuel Macron defeated Marine Le Pen in the presidential election and will serve another five-year term as president of France. One of the key points that granted President Macron 58.6% of the vote was a pivot toward the left, and in particular aa climate policy agenda. President Macron underscored that “France will be stronger if it knows how to tackle the ecological issue”. In this context, he committed to make France the first major economy to stop using fossil fuels which will be overseen by the Prime Minister as well two new ministers, specifically tasked with energy planning and territorial ecological planning. As a vocal supporter of the EU’s energy independence from Russian gas, he plans to significantly boost France’s solar, offshore wind and nuclear capacity. Nevertheless, his track record of delivering on climate has been weak at best, as attested by a report from Réseau Action Climat, an NGO. The report underlines that President Macron’s mandate was full of symbolic gestures without any concrete action. The report mentions, among other things, that France is the only EU country not to have achieved its energy target in 2020, while the country’s top administrative court condemned the government’s climate in action. As he tries to fend off a leftwing contest in the June parliamentary elections, it remains to be seen whether his climate commitments will turn into action.

Impact on cleantech: At the EU level, as France currently holds the rotating Presidency of the Council until the end of June President Macron’s strong willingness to advance the climate transition could lead to a swift progress in the negotiations of key Fit for 55 files, like the revamp of the EU’s carbon pricing system. At the French level, a pro-climate agenda could accelerate the deployment of clean technologies, which are already booming in the country.

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Shaping the EU’s Innovation Agenda

The European Commission is seeking input on devising its new European Innovation Agenda aiming to tackle the EU’s scale-up problem. The upcoming non-legally binding document will set actions to help more European start-ups grow into scale-ups. It will also aim to stimulate innovation-friendly regulation, better connect innovation ecosystems around the bloc, initiatives reduce the gap between most and least innovative European regions, and create a more diverse and entrepreneurial workforce. In this context, the Commission is contemplating a set of measures including making the large-scale deployment of public funds in the European innovation landscape more effective and facilitating access to state-of-the art technology infrastructures for deep-tech companies. The deadline to provide feedback ends on May 10.

Impact on cleantech: The upcoming EU Innovation Agenda will build on the current innovation ecosystem we have in Europe, and look to create an enabling environment for both pre-market cleantech innovation and development and commercialization.

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