PATHWAYS TO SUSTAINABLE INDUSTRIES Energy efficiency and CO2 utilisation

Research & Projects for Policy

Research and Innovation PATHWAYS TO SUSTAINABLE INDUSTRIES – Energy efficiency and CO2 utilisation European Commission Directorate-General for Research and Innovation Directorate D – Industrial Unit D.2 – Advanced Systems and Biotechnologies.

Contacts Nicolas SEGEBARTH Carmine MARZANO E- [email protected] [email protected] [email protected]

European Commission B-1049 Brussels

Manuscript completed in January 2018.

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Luxembourg: Publications Office of the European Union, 2018

Print ISBN 978-92-79-77476-8 doi:10.2777/154816 KI-AZ-18-001-EN-C PDF ISBN 978-92-79-77477-5 doi:10.2777/74667 KI-AZ-18-001-EN-N

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PATHWAYS TO SUSTAINABLE INDUSTRIES Energy efficiency and CO2 utilisation

Research & Innovation Projects for Policy

2018 Directorate-General for Research and Innovation

TABLE OF CONTENTS

EXECUTIVE SUMMARY 4

INTRODUCTION 6

POLICY CONTEXT 7 1. 2050 climate policy targets 8 2. Investments and investment gaps in research and innovation in Europe 8 3. Energy efficiency first 9

4. Circular economy and CO2 utilisation 9

PORTFOLIO OF EU-FUNDED R&I PROJECTS 11 1. Programme areas contributing to energy efficiency and carbon capture and utilisation 12 2. Portfolio of beneficiaries 13 3. Portfolio of research topics covered 14

IMPACT OF R&I FUNDING ON EU POLICY GOALS 17 1. R&I achievements supporting policy challenges 18 2. Added value of EU-level R&I investment 20 3. Impact for policies 21

POLICY RECOMMENDATIONS 23

PATHWAYS TO SUSTAINABLE INDUSTRIES Energy efficiency and CO2 utilisation 3 EXECUTIVE SUMMARY

Projects for Policy (P4P) is a European Commission initia- emissions savings, at 22 % on average, compared to tive that aims to use research and innovation (R&I) project state of the art practices at the start of the project, with results to shape policymaking through evidence-based significant energy savings and a decrease in operating policy recommendations. This report belongs to this ini- costs. However, especially for some CCU projects, the tiative. It provides an overview of the policy context and availability of abundant and cheap low carbon electric- challenges relating to enabling a low carbon economy. ity is a necessary condition to realise the claimed envi- It highlights the specific efforts that need to be pursued ronmental benefits and build a business case. As renew- by process industries, providing recommendations for pol- able energy is still a precious and limited resource for icy on the basis of an EU funded project portfolio analysis the foreseeable future, suitable policies and tools supported by relevant literature in the field. should be designed to ensure its best use, considering all possible pathways and accounting for the efficient The policy context is clear. The EU has committed to act use of limited resources (efficiency in the sense of cli- to keep global warming below 2°C. To this end, it has set mate impact reductions per kilowatt hour), while consid- ambitious targets in terms of Greenhouse Gas emissions, ering all the relevant aspects (environmental, economic, with a minimum reduction of 80 % by 2050. The achieve- strategic, political). The report also demonstrates the ment of such targets will require a wide range of policy impacts of R&I funding on the speeding up of technol- initiatives, in particular aimed at increasing investments ogy development and deployment, with an average in research and innovation to foster the deployment of readiness level (TRL) increase of 2.3 during clean technologies. The report focuses on energy effi- the project lifetime, and a reduction in time to market ciency and on carbon dioxide (CO2) utilisation, from a cir- of 24-36 months. European R&I projects enable com- cular economy perspective. munity and efficient resource coordination, bringing together players from different sectors and This study analyses a portfolio of 559 research and inno- different countries to achieve an enhanced impact. vation (R&I) projects funded by the EU over the last dec- ade, addressing specifically energy efficiency and CO2 Based on the project analysis and on additional infor- utilisation (CCU), two different pathways showing diverse mation gathered from projects through a survey, the technological maturity, to gather evidence concerning report proposes five policy recommendations to foster the impact of EU funded R&I for these two areas. The the transition to a cleaner , each support by pro- portfolio analysis shows that, projects reported sizeable posal for concrete actions and measures.

4 Research & Innovation Projects for Policy FIVE KEY POLICY INDUSTRIAL STRATEGY AND REDUCTION OF GHG EMISSIONS

RECOMMENDATIONS Build investor Introduce standardised confidence in metrics to enhance disruptive low carbon R&I funding and decision technologies through making processes for low efficient funding of carbon technologies. demonstration projects and easier access to finance.

ENERGY EFFICIENCY FIRST CO2 UTILISATION AND CIRCULAR ECONOMY

Extend the scope of Realise the full Remove regulatory

energy to foster potential of CO2 and knowledge the deployment of cutting utilisation, beyond barriers to Industrial edge energy efficiency greehouse gas (GHG) Symbiosis so as to unlock technologies, including mitigation, through the unexploited potential support for capacity targeted regulatory of industrial waste streams building of auditors. and market measures, and enhance circular supported by harmonised utilisation of resources. life-cycle assessment.

PATHWAYS TO SUSTAINABLE INDUSTRIES Energy efficiency and CO2 utilisation 5 INTRODUCTION

Energy intensive industries, like the chemicals, The report is not limited to presenting a mere analysis of and steel sectors, are responsible for 20 % of CO2 emis- the EU R&I project portfolios, but sets out the policy con- sions. Drastically lowering these emissions is crucial to text, including the relevant legal instruments, putting fore- reach the agreed EU 2050 Greenhouse Gas Emission ward policy recommendations and actions to the Euro- reduction objective of at least 80 %. Decoupling produc- pean Commission, Member States and industry. tion from the utilisation of fossil resources (75 million tonnes of oil equivalent are used today in Europe as raw This publication builds on a study 1 carried out by inde- material feedstock by the ) is an addi- pendent experts, Professor André Bardow from Germany tional necessary step towards achieving a more sustain- and Mr Damien Green from the United Kingdom. The able society. , based on non- study analysed a wide portfolio of EU research projects energy, and the use of biomass, which is put forward in (559 in total) addressing energy efficiency and CCU the EU Bioeconomy Strategy, is seen as an obvious (which stands for ‘carbon capture and utilisation’), com- solution to decrease dependency on fossil resources. plemented by consultation of a wide range of stakehold- However, biomass resources are limited and have many ers via a survey and a validation workshop held on 6 existing uses, including for food and feed, as well as November 2017. The study outcomes and policy recom- energy. Their use may also have negative environmental mendations are based on quantitative and qualitative impacts. Therefore, a broader set of technologies must data analysis, of both the R&I portfolio and relevant lit- be developed to reduce the dependency of European erature, as well as on survey responses and feedback industry on fossil resources, while making it cleaner and obtained from a validation workshop. more sustainable. In this context, research, innovation, and investment efforts are necessary to keep European industry competitive at global level, saving jobs from moving to other areas in the world.

1 Low-Carbon Process Industries Through Energy Efficiency and Carbon Dioxide Utilisation, A Bardow and D. Green, https://doi.org/10.2777/175882.

6 Research & Innovation Projects for Policy POLICY CONTEXT 1. 2050 CLIMATE POLICY TARGETS

Global engagements to combat climate change and the use of energy, and can be decarbonised through adapt to its effects have been taken in the Paris Agree- electrification and the decarbonisation of the power ment reached at COP 21 in December 2015, in an effort supply sector, some industries – such as steel and to limit global warming below 2°C this century 2. This is cement production – generate greenhouse gas emis- considered the only way to avoid major climate related sions through their processes, and the chemical/petro- catastrophes in the years to come. In the context of this chemical sector products – being based on fossil carbon global political drive to achieve a sustainable society, feedstocks – generate further emissions as their prod- the EU will have to review its current 2050 targets on ucts arrive at their end-of-life. Considering the variety GHG emissions 3 reduction and milestones to allow for of sectors and processes involved, a significant their achievement. The targets are currently as follows: decrease in GHG emissions from the process industries cannot be delivered by a single set of technologies. In > 20 % reduction in emissions by 2020 (compared this respect, the two topics addressed in this study – to 1990). energy efficiency (EE) and, to a lesser extent, CCU > 40 % reduction in emissions by 2030 (compared approaches – can provide a significant contribution to to 1990). the achievement of GHG targets. They will need to be > 80 % reduction in emissions by 2050 (compared complemented by a broader spectrum of technological to 1990). approaches and breakthroughs spanning over multiple domains (e.g. bio-based, CCS, , clean Industry brings significant wealth to society, but industry steel making, etc.). In terms of regulation and limitation is also a significant contributor to GHG emissions. In of GHG emissions, the EU has a well established legis- particular, process industries (e.g. steel, chemicals, lative framework, with the EU Emission Trading System cement, oil refineries, non-ferrous metals and , (EU-ETS) Directive (for which an agreement has been glass or and paper) are resource and energy inten- reached November 2017 on its revision for the fourth sive and represent 20 % of the global GHG emissions: phase) being a substantial element of this framework. significant GHG emission reductions from these sectors The EU-ETS represents the cornerstone of the EU’s pol- will be essential to achieving the goals icy to combat climate change and is a key tool for (the 2011 roadmap sets a EU industry trajectory of reducing emission intensity from high GHG emitting 43 % reduction in direct emissions by 2030, compared industrial sectors, such as process industries and the to 2005. While most industrial emissions are linked to power sector.

2. INVESTMENTS AND INVESTMENT GAPS IN RESEARCH AND INNOVATION IN EUROPE

Investments in research and innovation to build the tech- lic Private on “Sustainable Process Industry nological base and to develop energy efficient, clean and through Resource and Energy efficiency” (SPIRE cPPP) in low-carbon technologies and support to the wide market Horizon 2020 and dedicated Energy Research Pro- deployment of the most efficient technologies are central grammes. In addition to the direct funding to research elements of the overall strategy to meet global climate projects, the EU coordinates national research efforts in policy targets. The EU has invested significantly over the its strategic energy technology plan (SET plan), in particu- years in energy efficiency through its research framework lar Action 6 for energy efficiency and Action 9 also programmes, including the launch of the contractual Pub- addressing CCU. The ETS directive includes a funding

2 http://newsroom.unfccc.int/unfccc-newsroom/finale-cop21

3 ‘Emissions’ = CO2, CH4, N2O, PFCs, SF6, and NF3 measured in CO2 equivalents.

8 Research & Innovation Projects for Policy scheme to support and large-scale demonstration of efforts are still needed to establish a more favourable technologies aimed at lowering emissions (currently the framework to translate research and innovation concrete NER300 and the upcoming Innovation Fund). In its uptakes by markets. renewed EU industrial policy strategy 4, the European Commission reiterated the role, and increasing coordina- A 2015 report from the Energy Efficiency Financial Insti- tion, of the European Fund for Strategic Investments tutions Group (EEFIG) 5, for instance, has suggested that (EFSI), of the European Investment (EIB), and of the just in the field of energy efficiency the EU’s 2050 European Structural and Investment Fund (ESIF) to close decarbonisation target will require EUR 4.25 trillion the investment gaps. In addition, the instrument on additional investment (across all sectors) compared to Important Projects of Common European Interest (IPCEI) the current business-as-usual pathway. Bridging this has been designed to facilitate joint and coordinated investment gap is a key challenge for policymakers to efforts and investments by Member States and industries address policy goals. The EU-ETS Directive will be in strategic projects. These instruments can represent instrumental in strengthening the carbon price signal significant sources of support to research and innovation and in accelerating low-carbon investments. in clean technologies. However, it is clear that significant

3. ENERGY EFFICIENCY FIRST

To date, only 17 % of our energy comes from renewable a new package of measures with the goal of providing the energy sources. Fossil resources represent the major share stable legislative framework needed to facilitate the clean in the energy mix in the EU and will continue to do so for energy transition – and thereby taking a significant step the foreseeable future 6, while all sectors (heat, , towards the creation of the Energy Union. This package, etc.) will move towards electrification. As a consequence, named ‘Clean Energy for All Europeans’, stresses further energy is directly related to GHG emissions. the importance of energy efficiency, proposing a binding This is why energy efficiency is considered one of the key 30 % improvement target by 2030 7. These policies include approaches to decrease GHG emissions in all sectors, several measures to support energy efficiency, in particular including in the process industry. Major EU policies highlight under the Energy Efficiency Directive (EED). The ‘Clean the importance of energy efficiency; it is for example one Energy for All Europeans’ package also stresses the impor- of the central areas identified in the Energy Union, with the tance of research and innovation and the business oppor- Energy Efficiency First principle. The EU has established tunities which could result for the European industry. There- precise targets with respect to energy efficiency improve- fore, great care must be taken to ensure that EU policy and ments, including a 20 % improvement by 2020. On 30 legislation is coherent and favours these business November 2016, the European Commission presented opportunities.

4. CIRCULAR ECONOMY AND CO2 UTILISATION

In its circular economy package 8, the EU has set clear answer to the current unsustainable exploitation of lim- objectives and proposed a broad set of measures to ited natural resources. A circular economy is multifac- move towards the establishment of a circular economy eted and will require novel production and consumption for Europe. Moving to a circular economy is the societal systems to enable a shift towards more sustainable

4 Communication on a renewed EU industrial policy strategy (COM(2017) 479). 5 http://www.eefig.com 6 EU countries agreed on a renewable energy target of at least 27 % of final energy consumption in the EU as a whole by 2030. 7 The proposed 30 % target in Energy Efficiency by 2030 will achieve a 23 % cut in energy consumption compared to 2005 levels. 8 http://ec.europa.eu/environment/circular-economy/index_en.htm

PATHWAYS TO SUSTAINABLE INDUSTRIES Energy efficiency and CO2 utilisation 9 utilisation and re-utilisation of scarce resources, such as includes a very broad set of technologies and approaches, fossil fuels (e.g. oil and gas). The transition to a circular which can provide flexibility in transforming CO2 from economy will deeply affect industries which will need waste streams, or even air, into a wide array of added investment substantially in advanced manufacturing, in value products ranging from fuels, to chemicals and people’s skills and talents, as well as in tangible and minerals. In addition to potential environmental and GHG intangible assets like research and innovation. Novel busi- emission reduction benefits, CCU may represent a long- ness models will facilitate the circular utilisation of term business opportunity for industry, transforming resources to enable this transition. Industrial symbiosis, waste (CO2 emissions) into value (new products). which includes recovering, , reusing and redirect- Deployment of CCU technologies and approaches could ing energy and material streams across multiple indus- also be a driver for wider use of renewable energy trial sectors, holds the potential to enhance the model of sources (e.g. wind, solar) because it can provide a route circular economy in industry. It needs to be further devel- to chemical energy storage, allowing the dealing with oped and promoted. In light of establishing a circular inherent limitations of fluctuating energy sources (e.g. for economy, CCU may play a role, if CO2 is used as an alter- grid stabilisation). native feedstock (since it includes the re-use of emitted

CO2 sources), instead of being released into the atmos- The role of CCU to support policy targets is cur- phere. This CO2 re-utilisation for one or more cycles may rently under discussion. In this respect, the Scientific reduce the use of fossil-based resources. This potential Advisory Mechanism (SAM) has been invited by the has to be thoroughly evaluated through appropriate Commission to provide advice on the climate mitigation Life-Cycle Assessment methodologies. The term CCU potential of CCU technologies by April 2018 9.

9 https://ec.europa.eu/research/sam/index.cfm?pg=ccu

10 Research & Innovation Projects for Policy PORTFOLIO OF EU-FUNDED R&I PROJECTS 1. PROGRAMME AREAS CONTRIBUTING TO ENERGY EFFICIENCY AND CARBON CAPTURE AND UTILISATION

Energy efficiency is a central objective of the “Sustain- grammes (projects funded under FP7 and Horizon 2020, able Process Industries through Resource and Energy the research for and steel programme (RFCS) and Efficiency” contractual Public-Private Partnership (SPIRE the Europe programme (IEE, under the cPPP). Most of the projects funded in this context expect 2007-2013 competitiveness and innovation pro- gains in energy efficiency. Energy efficiency has how- gramme, aiming mainly at SMEs). The analysis of the ever been a long-standing driving principle both for EU complete portfolio of projects funded under these four policymakers, who have regularly endorsed the principle programmes after 2007 identified 488 different pro- of “efficiency first”, as a means to reduce energy con- jects addressing energy efficiency for process industries, sumption and to reduce GHG emissions, but also for representing a total EU public investment of EUR 1.36 industries, who see in energy efficiency an effective way billion, spread fairly homogeneously over 2008-2017 to enhance their competitiveness. As such, energy effi- (see Figure 1). On average, annual funding for energy ciency has been core to several EU research pro- efficiency projects has increased by 20 % in Horizon grammes: the energy and industrial research pro- 2020 compared to FP7.

A total of 61 projects on CCU technologies have bene- fited so far from a smaller, albeit still very significant, FIGURE 1 EU financial contribution to EU funding of over EUR 243 million, from both FP7 and projects addressing energy efficiency in Horizon 2020. Relevant projects have also been funded process industries since 2007 by programme under the RFCS programme, although their focus was

mostly on carbon capture rather than on CO2 conversion. As can be seen in Figure 2, the funding for these tech- RFCS nologies has been growing steadily in recent years, €111m reaching EUR 50 million in 2017, since the very first FET IEE H2020 (101) and ERC projects from 2008-2009. With regard to the €519m €35m funding programmes, projects are funded mainly (173) (28) through the Energy and the NMPB thematic areas under LEIT (Leadership in Enabling and Industrial Technolo- gies) and Societal Challenges pillars of FP7 and Horizon 2020, but also notably from the ERC and the FET, which are fully bottom-up programmes, reflecting the high interest of the academic and the early development stages for some of the CCU technologies (lower TRLs, requiring still significant development and validation at lab scale).

FP7 €695m (183)

12 Research & Innovation Projects for Policy FIGURE 2 EU financial contribution to projects addressing carbon capture and utilisation since 2007 by programme and by year

H2020 FP7 €140m €103m (29) (32)

€60 H2020 FP7

€50

€40

€30

€20

€10

€0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

2. PORTFOLIO OF BENEFICIARIES

The analysis of the energy efficiency and CCU portfolios the EU industrial landscape, with the top six countries shows similar trends in terms of beneficiaries. receiving most funding being Germany, Spain, the United Kingdom, Italy, the Netherlands and France. A total of 46 countries participated in energy efficiency Germany on its own received about 20 % of the funding, projects, involving, for FP7 and Horizon 2020, over double the amount Spain received, in second position. 2 200 unique participants (3 554 participations), with a balanced representation between research or higher In the CCU projects, we observed the participation education organisations (19 % each) and private for- of 26 countries, involving 341 different participants profit organisations (56 %), of which no less than 32 % (475 participations). Private for-profit organisations are (of the total participations) were SMEs. In terms of slightly less present than in the energy efficiency portfolio budget , as can be seen from Figure 3, non- but still represent 42 % of the participants and 35 % of profit and profit organisations have an equal share the funding, reflecting again the high interest of commer- (SMEs receiving 27 % in total). This indicates the cial entities for this domain of activities, but also in gen- high interest of industrial partners in this field, as well eral a lower technological development level with as the effective open innovation framework offered by a larger share of the funding going to research organisa- the research programmes. From the geographic point of tions (and confirmed by the TRL analysis in section three). view, the distribution of funding over countries reflects

PATHWAYS TO SUSTAINABLE INDUSTRIES Energy efficiency and CO2 utilisation 13 FIGURE 3 Share of the financial contribution going to different types of organisation [HES = Higher Education; PRC = private for profit (excluding education); REC = research organisation; OTH = others; PUB = public body (excluding research and education)]

Energy Efficiency Projects CCU Projects

OTH PUB OTH €31m €7m €2m HES PRC REC HES €281m €586m €67m €87m

REC PRC €317m €86m

3. PORTFOLIO OF RESEARCH TOPICS COVERED

Energy efficiency projects are addressing innovation in cepts to sustainably introduce CO2 into the chemical all key areas (Figure 4): process (which covers value chain. Given the early stage of research activities, catalysis and advanced materials, process modification, all catalytic concepts have been addressed, ranging as well as monitoring and control); resource and energy from chemo-catalysis to electro-catalysis, photo-catal- efficiency; process heat efficiency; process electricity ysis and bio-catalysis, the latter with an emphasis on efficiency; and industrial symbiosis. Although not a new algae-based conversion of CO2. Some projects focused concept per se, cross-sectoral industrial symbiosis is still on catalysis aspects or CO2 capture, while other projects limited to a relatively small number of examples in considered the entire value chain from feedstock supply

Europe, an issue which funded projects aim to unlock to the final product. The CO2-based products investi- through digitisation approaches, blueprints and gated in the EU-funded projects include chemicals data-sharing (EPOS, Sharebox), but also with systems (e.g. syngas, ethane, , oxygenates and alkenes, analysis (SCALER). A number of projects, mainly funded polymers, and carboxylic acid) and fuels (e.g. methanol by the IEE and the energy programme, also address and ). The chemicals mainly address bulk capacity building, i.e. projects that promote efficiency chemicals, which could sometimes even be used networks, energy auditing, energy sys- as fuels, but also polymers (plastics such as PU). In tems, training and benchmarking, knowledge transfer, order to provide a net decrease in CO2 emissions, most and specifically address the issue of barriers to energy of these approaches rely on the availability of electricity efficiency and effective policymaking. CO2 may be with a low, or very low, . The mineralisa- transformed into a wide range of products, for various tion route to solid inorganic carbonates, which offers applications, through different technologies and pro- possibilities for long term storage of carbon while also cesses (Figure 5). CO2 utilisation projects have identified being exothermic, is the least tackled approach, followed and further developed a broad range of process con- only by a few projects.

14 Research & Innovation Projects for Policy EU funding has not only supported the technological Energy efficiency and CCU projects have been funded at development of the field, but also the development of all stages of development, supporting their technologi- an understanding of the potential of CCU for policy chal- cal progression and creating a pipeline for commercial- lenges. In this regard, information-oriented projects like isation. The TRL of energy efficiency products averaged SCOT provided techno-economic and environmental 5.3, while CCU projects only 3.8, which is in line with the assessments, and proposed policy action plans. generally lower technological maturities of these approaches. In this regard, EU funding has followed the technology maturity curve. For CCU, EU project funding has been particularly important to provide critical mass for early stage research.

FIGURE 4.A Distribution of EE projects FIGURE 4.B Distribution of in key innovation areas (based on within Process Design key area a classification of 176 EE projects) ProcessProcess CatalystsCatalysts ModificationModification / / & Advanced& Advanced ProcessProcess Design Design / Performance / Performance RefinementRefinement MaterialsMaterials 50 50 14 14 (46(46 %) %) (13(13 %) %) Resource-EnergyResource-Energy Efficiency Efficiency

ProcessProcess Heat Heat Efficiency Efficiency

InformationInformation / Capacity / Capacity Building Building

ProcessProcess Electricity Electricity Efficiency Efficiency

Monitoring IndustrialIndustrial Symbiosis Symbiosis Monitoring & Process& Process ControlControl 44 44 0 0 20 20 40 40 60 60 80 80 100100 120120 (41(41 %) %)

PATHWAYS TO SUSTAINABLE INDUSTRIES Energy efficiency and CO2 utilisation 15 FIGURE 5 CO2 Use (adapted from Bui, Bardow, Mac Dowell et al., Energy Env. Sci., submitted)

ECOSPHERE TECHNOSPHERE

Power plants, Direct use industry

Biomass CO2 Conversion Chemicals, fuels End-of-life

Solid inorganic carbonates Air capture

FIGURE 6 TRL Spread (all EE and CCU projects were asked to report the starting TRL of their innovations. Each project may address more than one innovation, with different starting TRL; 202 projects provided answers for 414 starting TRLs)

TRL 1 9 (4.5 %)

TRL 2 16 (7.9 %)

TRL 3 53 (26.2 %)

TRL 4 72 (35.6 %)

TRL 5 84 (41.6 %)

TRL 6 68 (33.7 %)

TRL 7 47 (23.3 %)

TRL 8 22 (10.9 %)

TRL 9 22 (10.9 %)

N/A 21 (10.4 %) 0 10 20 30 40 50 60 70 80 90 100 Number of projects (202 responses)

16 Research & Innovation Projects for Policy IMPACT OF R&I FUNDING ON EU POLICY GOALS 1. R&I ACHIEVEMENTS SUPPORTING POLICY CHALLENGES

The impacts and results of EU-funded projects on energy efficiency and CO2 utilisation for policies have been assessed based on project reports and on the 2016 SPIRE cPPP progress monitoring report, as well as on a survey of all projects identified and conducted specifically for this study 10.

SUPPORTING GHG ABATEMENT AND INDUSTRIAL EFFICIENCY GOALS

The project portfolio assessment and the survey show The average GHG saving reported by the projects may that the CCU and energy efficiency projects have a sig- appear relatively modest compared to the EU’s 80 % nificant potential to improve energy efficiency and to (and foreseeable 95 %) reduction objective envisaged reduce GHG emissions in the EU. On average, the pro- by 2050. However, it must be considered that this target jects reported a GHG saving of 22 %, compared to cur- uses a 1990 baseline, while the projects responses rent practices (e.g. conventional fossil based process), refer to current practices (meaning from 2007 onwards, with some projects claiming GHG reductions of over based on the project start). If a 1990 state-of-the-art 40 %. Interestingly, CCU projects reported on average benchmark was used, much higher figures for GHG sav- the largest emissions saving potential (32 %), but this ings would be obtained. For instance, applying the 22 % might well be linked to the lower TRL (and consequent to the 61 % savings already achieved by the chemical higher optimism) of these technologies, as well as to sector between 1990 and 2016, would result in GHG the use of different benchmarks and system boundaries reductions of about 70 %. Furthermore, it must also be (e.g. replacement of fossil-based energy with a low car- considered that projects address often only part of the bon alternative). With regard to their energy saving operations within a certain industrial sector (e.g. down- potential, 59 % of the projects providing estimates stream processing, reactor, and furnace). Therefore, the claimed gains of over 10 % and up to over 30 % for results of several projects could potentially jointly be almost quarter of them. Some projects reported more applied leading to higher potential emission savings modest savings, of less than 10 %. However, those than those reported by a single project. often address the most emissions-intensive sectors, such as steel and cement, where small percentage improvements could result in large absolute savings in GHG emissions.

10 208 responses (37 % answer rate).

18 Research & Innovation Projects for Policy FIGURE 7 Mean savings for GHG emissions, energy and operating cost as reported by the projects in the survey. Projects are classified by technology focus

MEAN REPORTED SAVINGS Emission savings Energy savings Operation cost savings 40 %

30 %

20 %

10 %

0 %

-10 %

-20 % Process Catalysts Monitoring modification/ & advanced & process -30 % Chemicals Fuels refinement materials control CARBON CAPTURE & UTILISATION PROCESS DESIGN/PERFORMANCE PROCESS ENERGY & RESOURCE EFFICIENCY

CO2 UTILISATION TECHNOLOGIES IN SUPPORT OF GHG EMISSIONS REDUCTION AND OF THE CIRCULAR CARBON ECONOMY

CCU technologies, although limited by the low chemical fertilisers, etc.) in the chemical industry. Within the ana- reactivity of CO2, are gaining significant momentum. For lysed portfolio, CCU projects reported the largest poten- example, CO2 could constitute an abundant and recycla- tial for GHG savings. However, GHG emission reductions ble carbon feedstock in the circular economy. This facet can be achieved in different ways by different CCU tech- of the circular economy has particular relevance in nologies. Most projects in the portfolio on CO2-use aim Europe considering that carbon feedstocks for energy at GHG reductions and avoidance via directly replacing and manufacturing purposes are mostly imported. fossil-based feedstocks, improving resource efficiency Therefore, CCU technologies and approaches could con- and integrating renewable energy, but not via the route tribute to reduce Europe’s dependence on imports. The of carbon storage. Such substitution also increases poor reactivity of CO2 poses an intrinsic challenge and resource . Some CCU technologies and thus the potential size of these technologies is unclear approaches can offer direct reductions of CO2 emissions today. The interest in these is also linked to the current by increasing resource and energy efficiency compared transition towards renewable energy sources (e.g. wind, to traditional fossil-based processes (e.g. CO2-based solar). They offer the opportunity for chemical energy polyols). Other concepts rely on the utilisation of low storage that could help manage fluctuations in energy carbon energy in the production process (e.g. CO2-based supply, along with other solutions to stabilise the grid. fuels), often in the form of renewable hydrogen. Only if these technologies employ zero-carbon energy and are

EU R&I investment has been highly valuable within the applied to unavoidable CO2 emissions, CO2 emissions field of CCU utilisation in providing funding to early from sustainable biomass incineration, CO2 re-captured stage technology developments (low TRL), addressing at the end-of-life of a CCU product or captured directly major and markets (e.g. fuels, plastics, from air, would lead to net-zero GHG reductions over the

PATHWAYS TO SUSTAINABLE INDUSTRIES Energy efficiency and CO2 utilisation 19 full life-cycle. Critically, with some notable exceptions deploy the technology and the often higher operating

(e.g. mineralisation, CO2-based polyols), most CCU con- costs, weigh heavily on the cost of novel CO2-based cepts require large amounts of cheap (low carbon) products, making it often impossible for them to com- energy to be both economically viable and environmen- pete with established fossil-based alternatives today. In tally beneficial. this respect, from the portfolio assessment, it is clear that to be competitive on price terms with fossil based

Beyond the technological developments, the EU-funded products, CO2-based alternatives would often require projects have provided significant input for policy devel- some sort of subsidy. Several survey responders drew opment in this area, by identifying barriers for the large- attention to the need for an explicit definition of the role scale implementation of CO2 utilisation. The major bar- of captured and avoided by CCU utilisation under the EU riers to the deployment of CO2 utilisation technologies ETS scheme, in order to clarify the way towards a circular and approaches are the current low prices of fossil CO2 feedstock utilisation. feedstocks and low price of CO2 emissions. These fac- tors, coupled with the capital investment needed to

2. ADDED VALUE OF EU-LEVEL R&I INVESTMENT

Projects are mostly cross-sectoral and their research transfer of best practises, as well as cross-sectoral activities include, or are directly relevant to, two or three transfer, market replication and making industrial sym- industrial sectors. Interestingly, the most cited sectors biosis a reality. European projects show significant are steel and chemicals, which are major European potential in terms of bringing novel technologies closer industrial sectors economically, and are the largest to market deployment. Data gathered from projects energy consuming industries. This shows how European show an average TRL increase of 2.3 (during the project collaborative research is able to connect different sec- lifetime) with about 50 % of SPIRE projects expecting tors and value chains, which is key for cross fertilisation, full deployment of their concepts within a five year

FIGURE 8 Number of EE and CCU projects reporting relevance to different sectors

Iron/Steel Chemicals/Pharmaceuticals /Machining Fuels Water Food/Drink Non-Ferrous metals Transport Electricity Cement Paper/Pulp Minerals Other Glass 0 10 20 30 40 50 60 70 80 90 100

20 Research & Innovation Projects for Policy period after project completion, speeding up commer- efficiency portfolio which is more oriented towards cialisation by 24-36 months compared to the time to near-market research and IP protection for technology market for their internal R&D. exploitation.

In terms of scientific impact, projects on CCU utilisation The assessment of the portfolio shows that beyond are more oriented towards scientific publications com- merely providing financing, EU R&I support has fostered pared to energy efficiency ones. The number of publica- connections between industries, research institutions, tions from projects is in line with the average for and governments, which are vital to building and struc- the FP7 cooperation programme (36 publications by turing an ecosystem to enable the efficient develop- EUR 10 million). However, the majority of projects are ment and commercialisation of innovations. Projects still running and a significant share of publications is have contributed by taking a value chain approach, still expected after the end of the projects. The energy including all stakeholders, to ensure rapid technology efficiency portfolio, on the other hand, shows a lower development and fast deployment. On the other hand, number of scientific publications, roughly half of the the EU has strongly supported the establishment of average for FP7, but with double the number of submit- broad cross-sectoral platforms such as SPIRE and the ted patents (two patents per EUR 10 million funding). Climate-KIC flagship enCO2re, which are key to connect This illustrates the lower level of technological maturity actors and structure value chains across sectors, Mem- of the CCU projects, which seem to still be mostly at ber States and regions, and to promote the dissemina- an earlier development stage, compared to the energy tion and exploitation of scientific outcomes.

3. IMPACT FOR POLICIES

The absence of (harmonised) reporting requirements, A survey amongst participants of projects addressed this tailored specifically to address policy issues, currently difficulty. While based on self-assessment, the survey makes it very difficult to model the impact of R&I fund- provided very useful policy information, enabled spotting ing on policy goals. In addition, there is a lack of clear trends and conclusions. With a response rate of benchmarks and models to assess qualitatively and 37 %, the survey shows the great reservoir of policy and quantitatively the project impacts on specific KPIs technology knowledge that can be mobilised through the (e.g. GHG emission reductions). EU research projects and shows the great availability and willingness of the actors to provide feedback for policy making.

SUPPORTING THE TRANSFER OF POLICY-RELEVANT INNOVATIONS TO MARKET

The assessment of the project portfolio and the survey It is vital that these technologies achieve commercialisa- results highlighted how EU R&I funding has financed tion if they are to improve the competitiveness of Euro- innovations with strong market potential. With the nota- pean industry, realise their potential environmental ben- ble exception of the CO2-to-fuels projects (because of efits and enable the achievement of the EU’s overarching their large requirement for renewable energy), most of political targets. On this aspect, the survey respondents the projects reported potential to reduce operating costs flagged a number of issues, corroborating the literature (7 % on average compared to current practice), high- findings, which are hindering the full exploitation of the lighting the potential competitive advantage that novel technologies, up to their market deployment. In particular, technologies in energy efficiency may provide to indus- project stakeholders revealed that a major hurdle to bring try operators. their technologies to the market is related to a range of behavioural and knowledge barriers.

PATHWAYS TO SUSTAINABLE INDUSTRIES Energy efficiency and CO2 utilisation 21 Another major hurdle identified, hindering market From the assessment of the project portfolio, both for deployment, is the scaling up of R&I results, which is CCU and energy efficiency, industrial symbiosis emerges considered a major challenge, in particular for expensive as a way forward. In Europe there are already several large-scale first-of-a-kind demonstrators (FOAK). From cases of industrial symbiosis clusters, but cross-sectoral the responses to the survey it is clear that significant integration has yet to be achieved on a broader scale. economic barriers are encountered by private investors A deeper integration of industrial operations may lead when trying to raise the required financing for imple- to significant and even breakthrough improvements in menting novel technologies at full scale, in order to bring resource and energy efficiency, even for very mature their project results to the market. technologies where the processes are highly optimised and therefore major gains are difficult to achieve Many of the stated breakthroughs, in the CCU portfolio (e.g. cement, steel). The establishment of broader indus- in particular, critically rely on the availability of abun- trial symbiosis in the process industry is one of the dant and cheap low carbon electricity to realise their major objectives of the SPIRE PPP, where several pro- environmental benefits and build a business case. jects in this direction have already been funded. In addi- In this respect, the deployment of these technologies tion, industrial symbiosis is crucial to CCU technologies, needs to go hand in hand with the increase of the which are mostly cross sectorial and rely on symbiosis renewable energy share and priority should be given to concepts because they generally require the integration those who provide the most efficient use of energy. of a point source of CO2 (e.g. often gaseous waste Therefore, tools and methodologies are necessary to streams from an industrial plant) coupled to a conver- compare technologies and identify those that will sion unit of chemical nature. However, from the analysis deliver the most benefit next to their needed economic of the industrial symbiosis projects included in the port- viability. In environmental terms, LCA methodologies are folio, it emerges that non-technological issues are major broadly used to assess the environmental footprint of hurdles to scaling up industrial symbiosis in Europe. For technologies. Therefore, the availability of harmonised example, this is the case for contracting issues, issues LCA methodologies, for CCU in particular, is needed linked to sharing of information among different com- when comparing the GHG abatement potential and panies, relevant standards, utility support related to other environmental benefits of different CCU technol- permitting and infrastructure establishment including its ogies. This would allow better informed decisions on the management, and regulations linked to utilisation of best technological pathways to achieve the GHG abate- waste streams (Member State implementation of the ment goals, and in principle, once identified as benefi- waste framework directive in particular). cial to deliver policy targets, a certain CCU utilisation technology could then be integrated into relevant EU, national and regional support schemes.

22 Research & Innovation Projects for Policy POLICY RECOMMENDATIONS RECOMMENDATIONS IN RELATION TO THE INDUSTRIAL STRATEGY AND TO THE REDUCTION OF GHG

Bringing breakthrough technologies to market so as to deliver policy goals in relation to low carbon industries will require very significant financial support and smart R&I policies. Public and private financial resources should be marshalled to ensure that projects of relevance to policy challenges are appropriately supported on their TRL journey and can be proven at scale. Appropriate knowledge transfer is necessary for technological uptake and market replication; additional efforts are needed to communicate successful results.

1. BUILD INVESTOR CONFIDENCE IN DISRUPTIVE LOW CARBON TECHNOLOGIES THROUGH EFFICIENT FUNDING OF DEMONSTRATION PROJECTS AND EASIER ACCESS TO FINANCE

Increasing investor confidence is essential for the nology services for projects seeking to move from uptake of novel low carbon technologies with high GHG laboratory validation to industrial prototype. The Invite reduction potential. Large-scale demonstration projects facility in Leverkusen provides a valuable illustration play a critical role in this regard by showing the techni- of the way to go in this regard. Initially established cal capacity and viability of these new technologies, under the F3 FACTORY FP7 project, and set up with thus attracting private investment. Their optimum regional funding, it operates on a membership basis, development is currently hindered by suboptimal financ- allowing industry, including SMEs, and academia to ing arrangements and this must be remedied. work together under a single roof. The Open Innova- tion Test Beds concept, as proposed in the NMBP work > Public financing instruments already exist to fund such programme 2018-2020, should be exploited the large-scale demonstrators, including in national and develop further Open Innovation Centres to support EU research programmes, the European Structural and large-scale demonstration projects in relation to CCU Investment Fund (ESIF) and the Innovfin and Energy and energy efficiency more generally. Demonstration Projects Facility of the European > Large-scale demonstration projects are medium term Investment Bank (EIB). However, these need to be in nature so the need to source successive rounds of applied more efficiently. In particular, given that the funding hinders technology progression. To address scale of demonstration projects, a single financing this obstacle, funding programmes should extend the source will generally not be sufficient to cover the application of mechanisms such as the ERC Proof of funding need, and flexibility is needed to allow for Concept grant to facilitate successive funding of pro- financing from different public and private sources to jects in strategic areas such as CCU and energy be pooled. In this regard, Member States should look efficiency. at Important Projects of Common European > As well as the non-economic barriers discussed above, Interest (IPCEI). In addition, the appropriateness of there are of course very significant economic barriers state aid rules, notably in relation to industrial to implementing efficiency improvements on the scale research aid intensity limits, need to be reviewed in required to meet EU policy goals. In particular, the the light of the critical importance of projects aimed need for de-risking investments, while guaranteeing at reaching climate targets. faster pay-back times and better ROI, seems one of > Open Innovation Centres can also have an important the major obstacles to pulling increased private role to play and contribute to investor confidence. investments towards novel energy efficiency technol- They provide shared access to equipment and tech- ogies. A number of institutions are working on these

24 Research & Innovation Projects for Policy issues and provide recommendations to this effect Standardised risk assessment, bundling of financing (EC activities on Sustainable Finance 11, the Energy propositions, and securitisation should be fur- Efficiency Financial Institutions Group, EIB Innovfin 12). ther investigated to widen access to cheap capital.

2. INTRODUCE STANDARDISED METRICS TO ENHANCE R&I FUNDING AND THE DECISION-MAKING PROCESS FOR LOW CARBON TECHNOLOGIES

Standardised metrics improve funding decision-making to energy consumption, GHG emissions, etc., based on by measuring the impact of R&I funding programmes growth forecasts and business-as-usual assumptions. as well as capturing the value of individual project In parallel, R&I projects should be required to produce results. Thus, they can guide future funding decisions by standard of Key Performance Indicators to improve enabling European, national and regional authorities to transparency and impact assessment. On this basis, measure the extent to which publicly funded R&I is on Member States and regions could develop similar track to deliver the expected policy goals. They can also metrics to support policy-making and funding build private investor confidence in the consistency and decisions. reliability of public funding decisions. > Moreover, such standard metrics could be used by public-private and in coordination and > The Commission should lead the way with standard- support actions to connect researchers, projects and ised metrics by putting in place an official moving industrial , as well as communicating baseline of value chain practices in the EU in relation success stories and sharing lessons learnt.

RECOMMENDATIONS IN RELATION TO THE ENERGY EFFICIENCY FIRST PRINCIPLE There is significant technical potential to improve industrial energy efficiency but also the need to unlock this potential by alleviating non-economic and economic barriers to investment.

3. EXTEND THE SCOPE OF ENERGY AUDITS TO FOSTER THE DEPLOYMENT OF CUTTING-EDGE ENERGY EFFICIENCY TECHNOLOGIES, INCLUDING SUPPORT FOR CAPACITY BUILDING OF AUDITORS

> Under Article 8 of the Energy Efficiency Directive, Commission focused on a new overall energy effi- Member States have to ensure large enterprises con- ciency target of 30 % by 2030, and on the energy duct mandatory energy audits every four years and performance of buildings. Article 8 of the Energy Effi- encourage SMEs to undergo audits and implement ciency Directive remains unchanged. However, to meet their recommendations. In its energy efficiency pro- the new energy efficiency targets, an appropriate posals of the Clean Energy Package of November implementation of energy audits will be essential. In 2016 (COM/2016/0761 and COM/2016/0765), the the short term, this requires a focus at Member State

11 https://ec.europa.eu/info/business-economy-euro/banking-and-finance/sustainable-finance_en 12 www.eib.org/attachments/pj/access_to_finance_study_on_bioeconomy_en.pdf

PATHWAYS TO SUSTAINABLE INDUSTRIES Energy efficiency and CO2 utilisation 25 and European level on how to improve imple- > In the medium term, in the framework of the next revi- mentation, taking into account the limited resources sion of the Energy Efficiency Directive, consideration available. As the effectiveness of energy audits criti- should be given to enlarging the scope of energy cally depends on the method used and on the quality audits, so that they include a new forward looking of auditors, the EU should promote best auditing prac- function. In this way, the audit could be a catalyst for tices, developing benchmarking tools, open data and increasing awareness in enterprises of the value of libraries of energy savings opportunities. The training energy efficiency innovations and the advantages they and development of auditors (for example through the may bring in environmental and economic terms. This Blueprint for Sectoral Cooperation on Skills), the would be an enhanced pull factor in bringing novel establishment of professional profiles, and the har- clean and energy efficient technologies into the market, monisation of qualification requirements should be benefitting the citizens, the environment and the explored. economy. Audits could also consider and provide rec- ommendations with regard to industrial symbiosis clus- tering opportunities.

RECOMMENDATIONS IN RELATION TO THE CO2 UTILISATION AND TO A CIRCULAR ECONOMY The establishment of a circular economy in Europe to move to a sustainable society is one of the key objectives of the European Commission, as set-out in the communication “Closing the loop – An EU action plan for the Circular Economy” 13. In the R&I project portfolios investigated in this report, industrial symbiosis and CCU technologies emerge as having significant potential to contribute to the progress towards a circular economy in Europe. They have the potential to contribute to policy challenges in relation to reducing GHG emissions and strengthening energy security, increasing resource efficiency including circularity of manufacturing and consumption, along with providing novel business opportunities for industry, jobs and growth. The policy recommendations in this section aim at harnessing the potential of these two approaches.

4. REALISE THE FULL POTENTIAL OF CO2 UTILISATION, BEYOND GHG MITIGATION, THROUGH TARGETED REGULATORY AND MARKET MEASURES, SUPPORTED BY HARMONISED LIFE-CYCLE SUSTAINABILITY ASSESSMENT

> The European Commission should coordinate the cost-effective way and, hence, adopt appropriate development of harmonised Life Cycle Sustaina- policy measures. In this regard, the EU has started bility Assessment (Life Cycle Assessment (LCA), a workshop series on Life Cycle Assessment for CCU Life Cycle Costing and social LCA) to benchmark the and should continue efforts to harmonise LCA meth- socio-economic and environmental benefits of CCU odologies for CCU. This should be a short-term priority technologies, as well as the greenhouse gas emis- at European level, and coordinated and aligned with sions savings (compared to current technologies) over Member States and industry. the full life-cycle. This information is necessary to > The application of rigorous LCA methodologies to understand which technologies and approaches con- CCU is the pre-requisite to define possible market

tribute to achieving environmental targets in the most support for CCU products and captured CO2.

13 COM(2015) 614 final.

26 Research & Innovation Projects for Policy This could take various forms, for instance, incorpo- > CCU can play a role in the transition to renewable rating CCU-fuels as an option to fulfil renewable fuel energy sources by utilising excess energy, providing quotas as proposed by the Commission in the pro- chemical storage in synthetic fuels (methanol, syn-

posal for REDII (2021-30), certifying CO2-feed- thetic ), and therefore contributing to the stock content in chemicals and plastics, and proper low carbon energy transition and energy security.

accounting of CO2 feedstock-use in the ETS. In this However, these technologies (e.g. CCU fuels) rely on respect, in the revision of the ETS Directive 2003/87/ cheap low carbon energy, to provide decarbonisation EC, the European Commission deemed a regulatory benefits and be economically viable. Therefore, if the treatment as being premature considering the cur- energy storage potential of CCU is to be fully har- rent state of development of CCU technologies. It is nessed, a coordinated and integrated development of recommended that in the next review of the ETS renewable energy capabilities at Member State and Directive, this exemption is extended to CCU technol- European level remains a prerequisite. In addition, ogies that offer demonstrated permanent storage other linked technologies should also be developed in (e.g. mineralisation). For CCU products where end-of- parallel. This is notably the case for the development life emissions happen outside the ETS, and providing of cost-efficient and carbon-efficient hydrogen pro-

therefore no incentive to capture and use CO2, the EU duction technologies, which are critical to enable CCU should explore demand-side incentives, such as rec- in the production of fuels. ognising CCU transport fuels in RED quotas, as pro- > Given that renewable energy will remain a precious posed in the REDII directive, or standards and and limited resource for the foreseeable future, the EU quotas for inclusion of CCU-chemicals in products in and Member States should design suitable policies relevant policy instruments. With these principles, all and tools to ensure its best use, while considering all

CO2 emissions from ETS sectors would be counted the relevant aspects (environmental, economic, stra- once within the ETS, while incentivising all beneficial tegic, political). In this context CCU technologies CCU pathways even outside the ETS. should be supported only when this is considered the best use of renewable energy.

5. REMOVE REGULATORY AND KNOWLEDGE BARRIERS TO INDUSTRIAL SYMBIOSIS SO AS TO UNLOCK UNEXPLOITED POTENTIAL OF INDUSTRIAL WASTE STREAMS AND ENHANCE CIRCULAR UTILISATION OF RESOURCES

Industrial symbiosis (IS) can provide major improve- > The viability of industrial symbiosis is affected by ments in energy efficiency and material flows, and can waste permitting requirements that can uninten- play a role in delivering EU goals relating to emissions tionally create obstacles to transferring resource reduction, the circular economy and industrial competi- streams between companies. In 2015, as part of tiveness. However, the realisation of a deep industrial the Circular Economy Package, the Commission symbiosis is very challenging and faces profound obsta- has proposed amending waste regulation to cles of technical and non-technical nature. Sound remove obstacles to resource valorisation life-cycle assessment is again needed to identify bene- between companies, in particular through the har- ficial routes: monisation of how Member States apply the legal definition of ‘by-product’ and ‘end-of-waste status’, > The EU should consider developing an industrial which is a welcome step forward. However, further symbiosis strategy as a follow-up of the implemen- steps must be taken to ensure that, as a general rule, tation of the circular economy action plan and explore resource streams used in industrial symbiosis are the feasibility of legislation to require Member States classified as ‘by-products’ rather than ‘waste’. Such an to promote it in the future. approach is supported, by the European Parliament.

PATHWAYS TO SUSTAINABLE INDUSTRIES Energy efficiency and CO2 utilisation 27 In the longer term, the definition of waste and the Furthermore, implementing industrial symbiosis issue of its should be reviewed in the light requires highly skilled and trusted practitioners to of a growing body of evidence suggesting that moving coordinate and advise companies. The EU should sup- towards a circular economy may require a new under- port capacity building projects to train industrial sym- standing of waste as a common pool resource. biosis specialists at European and Member State level, > The EU should promote the dissemination of best similar to the way capacity building projects to train practices in industrial symbiosis policy at the energy auditors and managers have been promoted. Member State level. This could include, for instance, > The EU should encourage Member States to facili- extending auditing requirements to consideration of tate industrial symbiosis through their planning industrial symbiosis and developing best practices, decisions and infrastructure investments, which might be included under the Industrial Emis- including its management, promoting industrial sions Directive framework, following the model of the clusters and smart cities. One recent EU initiative that generic BREF on energy efficiency. may serve as a model in this area is the European > The EU should alleviate barriers to industrial symbiosis Sustainable Chemicals Support that is helping by promoting networks, information-sharing six model regions develop sustainable chemical pro- tools, and capacity-building initiatives. In this duction practices, including exploring using local waste

regard, the EU and Member States should take further and CO2 as feedstock. The EU should also ensure that action to establish platforms for network-building ini- State Aid guidelines do not unduly inhibit Member tiatives, such as the European Circular Economy States from providing incentives for clustering through Stakeholder Platform, taking a steer from successful fiscal reliefs or subsidies. projects that have built energy efficiency networks. Policy Area Recommendation Who acts? Actions

Industrial 1. Build investor EC, MS > Increase support to First of a Kind (FOAK) Strategy and confidence in disruptive demonstrations, in particular through the reduction of low carbon technologies coordination of multiple sources of funding. GHG emissions through efficient funding > Support the development of Open Innovation of demonstration projects Centres through research programmes, and easier access to regional funds, and national programmes. finance > Enable successive funding for most successful projects, supporting them over a longer period and range of TRL. > De-risking investments.

2. Introduce standardised EC > Introduce standardised impact metrics metrics to enhance R&I to measure potential research impacts. funding and decision > Strengthen results communication. making process for low carbon technologies

Energy 3. Extend the scope of EC, MS > Improve energy audit implementation (EED Efficiency First energy audits to foster art. 8): further develop best auditing practices, the deployment of cutting benchmarking, open data tools and libraries edge energy efficiency of energy savings opportunities, and ensure technologies, including appropriateness of audits and auditors skills. support for capacity > Enlarge the scope of energy audits to transfer building of auditors knowledge from R&D results.

CO2 utilisation 4. Realise the full potential EC, MS, > Develop harmonised Life Cycle Assessment & Circular of CO2 utilisation, beyond stakeholders methodologies to assess and benchmark CCU Economy GHG mitigation, through technologies throughout their development targeted regulatory cycle and across the legislative framework. and market measures, > Consider further potential benefits of supported by harmonised CCU, e.g. resource efficiency and non-GHG life-cycle sustainability emissions for producing synthetic fuels assessment from excess renewable energies. > Ensure the most efficient use of renewable energy. > Enable market development of CCU technologies with demonstrated benefits: review existing, and consider new, relevant EU legislation to introduce incentives to enable CCU technologies, both from an emission perspective (e.g. under the EU-ETS), and from a demand-side perspective (e.g. under REDII or under circular economy relevant acts).

5. Remove regulatory EC, MS > Consider developing an integrated and knowledge barriers EU industrial symbiosis strategy. to industrial symbiosis > Review and ensure an IS supportive waste to unlock unexploited legislative framework, waste permitting potential of industrial in particular. waste streams and enhance circular > Support dissemination of Member States utilisation of resources best practices, promote networks, information- sharing tools, and capacity-building initiatives. > Encourage Member States to facilitate IS through their planning decisions and infrastructure investments.

PATHWAYS TO SUSTAINABLE INDUSTRIES Energy efficiency and CO2 utilisation 29

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Research and innovation results generated by EU Framework Programmes play a key role in addressing societal challenges, strengthening sustainable growth and creating new jobs. They can also provide solid evidence and the latest knowledge to inform and improve policymaking. ‘Research and Innovation Projects for Policy’ is a series of reports exploring this opportunity and putting it into practice. Each report focuses on selected issues and challenges in a topical policy area, highlighting the corresponding pertinent results from Framework Programmes and concluding with concrete recommendations for policy actions in Europe and internationally.

Research and Innovation policy

ISBN 978-92-79-77476-8978-92-79-77477-5