Joint letter on the ETS Innovation Fund

The document argues that the ETS Innovation Fund should be scaled up by recycling auctioning revenues instead of providing free emission allowances. It recommends prioritising transformational projects in industrial clusters, mandating additionality for renewable electricity to avoid grid-emission accounting errors, and limiting CCS funding to non-abatable process emissions while excluding fossil-based hydrogen and gas.

• The current funding of approximately 1 billion euros per year for the Innovation Fund is considered insufficient to drive the clean energy transition in industrial sectors. The authors argue that the fund's financial capacity should be increased by recycling more auctioning revenues and rapidly phasing out the free allocation of emission allowances, which are expected to be worth as much as EUR 160 billion between 2021 and 2030.
• To prevent negative impacts on the power sector transformation, the fund should mandate the use of additional renewable electricity for large industrial projects. The authors oppose using future grid emission factor projections for 2030 and 2050 to calculate the current climate impact of projects like electrolytic hydrogen.
• The fund should strategically prioritise projects that enable the decarbonisation of industrial clusters and focus on production process transformation. Funding for Carbon Capture and Storage (CCS) should be restricted exclusively to non-abatable process emissions in sectors like cement and chemicals, and should not be used to green fuels in the energy supply chain, such as natural gas.
• Regarding hydrogen and the circular economy, the fund should exclude renewable hydrogen projects where direct electrification is possible and avoid supporting fossil-based hydrogen or gas. Circular economy support should prioritise the recovery of materials like steel and cement for long-term use rather than the production of chemicals and fuels.

APA

Carbon Market Watch (2020). Joint letter on the ETS Innovation Fund. https://carbonmarketwatch.org/publications/joint-letter-on-the-ets-innovation-fund/

Chicago

Carbon Market Watch. Joint letter on the ETS Innovation Fund. 2020. https://carbonmarketwatch.org/publications/joint-letter-on-the-ets-innovation-fund/.

Wikipedia

{{cite press release |author=Carbon Market Watch |title=Joint letter on the ETS Innovation Fund |date=2 July 2020 |url=https://carbonmarketwatch.org/publications/joint-letter-on-the-ets-innovation-fund/ |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@misc{carbonmarketwatch2020joint, author = {{Carbon Market Watch}}, title = {{Joint letter on the ETS Innovation Fund}}, publisher = {Carbon Market Watch}, year = {2020}, month = jul, url = {https://carbonmarketwatch.org/publications/joint-letter-on-the-ets-innovation-fund/}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }