Our Monthly Policy Update shares key policy news from Brussels – and their potential impact on cleantech in the EU. This month, we salute Ukrainian cleantech leaders and get into why Russia’s invasion should prompt us to invest in our energy independence and move away from fossil fuel energy. We also touch on the Renewable Energy Directive, carbon pricing, removals and IPOs.
As the war rages on in Ukraine, we wish to highlight the important work of cleantech innovators in the country who, before having to fend off an invasion, were already dedicating their lives to solving the climate crisis.
Carbominer has developed a direct-air capture technology that allows industrial installations to capture CO2 and reuse it in nearby greenhouses for food production.
Yunasko is a developer and manufacturer of ultracapacitors, energy storage devices with applications in green mobility, industry and smart grids.
Unido’s Global Cleantech Innovation Program has been running accelerator competitions in Kyiv as well as in 4 regional sites in Ukraine, nurturing the next generation of cleantech leaders in the country.
With Russia supplying one third of all gas consumed in the EU, the invasion of Ukraine is forcing a reckoning in the EU, and illustrating the need to urgently change our energy system. The solution to this geopolitical challenge is the same as the solution to our climate challenge. We need to reduce our dependence on fossil fuels and build the energy system of the future. In the coming months, the EU has an opportunity to create the conditions for a once-in-a-generation deployment of clean technologies at scale, from renewables to energy efficiency, electric cars, renewable hydrogen and more. The Fit for 55 package currently being negotiated in Parliament should be made even more ambitious and allow Europe to build strategic autonomy and increase its resilience against price hikes.
One key component of the Fit for 55 package is the recast of the legislative framework on the promotion of renewable energy (RED III). The recast RED III proposal provides for the increase of the overall binding target for renewable energy in the EU energy mix from the current 32% to 40% by 2030, complemented by indicative national contributions of Member States to reach the collective EU target. To mainstream the use of renewables in the industry, the recast proposal recommends setting targets to incentivise the industry to switch to renewables-based production processes that not only are fueled by renewable energy, but also use renewable-based raw materials such as renewable hydrogen. Markus Pieper, the German MEP writing the main Parliamentary report on this file, does not seem to lack in ambition. One of the milestones in his report is recommendation to set quotas for the development of innovative renewables, acknowledging that ‘the energy transition will not succeed only with conventional wind and solar power.’
One of the most heated legislative debates among Member States and the European Parliament is whether the EU’s carbon pricing framework should extend to fuels used for cars and heating homes. The European Commission proposes to cap emissions from road transport and building sectors, with the cap reduced over time so emissions for these sectors are reduced by 43% by 2030, compared to 2005 levels. To ensure that consumers are protected from the new system, the Commission put forward the development of a Social Climate Fund to support investments in energy efficiency of buildings, decarbonisation of heating and cooling of buildings, and granting improved access to zero- and low-emission mobility and transport. This proposal was met coldly by the EU lawmakers and Member States, who fear social backlash in a time of energy crisis.
Capturing and storing CO2 from the atmosphere is key to reaching carbon neutrality by 2050, as underlined by the European Commission’s Green Deal Chief, Frans Timmermans. The European Commission is working on a legislative framework setting the rules for the monitoring, reporting and verification of carbon removals certificates. It is currently seeking input from stakeholders on what these rules could look like. The two key points the Commission wants stakeholders to consider are: (i) the possible types of carbon removals (reforestation, carbon farming, CCS); and (ii) whether private operators or public authorities should perform the carbon removals certification.
The European Commission is aware that EU SMEs make less use of capital markets for debt and equity financing than their US counterparts. The European Commission is considering tweaking its listing requirements framework and make it more accessible to SMEs. As part of the relevant public consultation, we shared with EU policymakers the cleantech community’s position on the topic. Our research shows EU cleantech start-ups attracted less than 7% of global cleantech IPO proceeds. Our proposals focus on: (i) the development of an EU wide program to support small-cap equity research; (ii) a more proportionate prospectus for SMEs; and (iii) an EU regulatory framework for SPACs.