Article 10a(8) of Directive 2003/87/EC establishes a mechanism for the financing of commercial demonstration projects that aim at the environmentally safe capture and geological storage of CO₂ (hereinafter ‘CCS demonstration projects’) and demonstration projects of innovative renewable energy technologies (hereinafter ‘RES demonstration projects’), using 300 million allowances from the system for greenhouse gas emission allowance trading within the Union (‘EU ETS’) which were set aside for new entrants but not allocated.

In its Decision 2010/670/EU2, the Commission laid down rules and criteria for the selection and implementation of those projects and basic principles for the monetisation of allowances and for the management of revenues.

By mid-2014, as a result of a first and second call for proposals, funds have been awarded to support the implementation of 39 RES and CCS demonstration projects in 20 EU Member States. However, given the challenging economic environment globally and in the EU, some of the 20 projects awarded under the first call for proposals, found it difficult to raise sufficient equity or to attract additional financiers. As a consequence, by 31 December 2016, 14 projects have reached their final investment decision in accordance with Article 9 of Decision 2010/670/EU and at least 436 million EUR related to the awarded projects for this first call for proposals have not been used.

The non-disbursed funds should be used to directly fund projects within the scope defined in Article 10a(8) of Directive 2003/87/EC. Moreover, considering the specific situation of highly innovative renewable energy and CCS demonstration projects, a part of financing should be provided in the form of grants.

In order to increase investment in these highly innovative projects in the energy sector in the EU, a priority recognised by the Commission in its Communication on Accelerating Clean Energy Innovation3, non-disbursed revenues from the first call for proposals should be redeployed without delay, and with priority, using the InnovFin EDP Facility under Horizon 20204. This support would be complementary to existing and forthcoming financial support, such as grants under Horizon 2020.

In order to increase investment in these highly innovative projects in the transport sector, eligible projects should only promote innovative, replicable and scalable use of renewable energy using the Debt Instrument in the sector of transport under Connecting Europe Facility5.

Projects awarded under the first or second call for proposals that have reached final investment decisions and are under implementation will be deemed eligible for applying to the relevant financial instrument.

In order to raise broad public awareness about the relevant financial instruments the Commission and the European Investment Bank Group will continue to regularly organise dedicated technical workshops for Member States and project sponsors.

The Commission will report sufficiently in advance to the Climate Change Committee on the development of the relevant Delegation Agreements between the Commission and the European Investment Bank, in particular as regards the related eligibility criteria, implementation of the relevant financial instruments, especially the build-up of the project pipeline, assessment of the project applications and finally on the use of the redeployed revenues, and take appropriate account of the views of Member States.

The measures provided for in this Decision are in accordance with the opinion of the Climate Change Committee,