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(Carbon) Contracts for Difference: Priorities and Red Lines for the EU Scheme
November 28 @ 14:00 - 16:00
This new work stream aims to bring together stakeholders, including policymakers and industry on a regular basis to discuss substantive issues around the topic of (C)CfDs, informed by original intellectual input from ERCST.
(C)CfDs are discussed as one of the most promising alternatives to foster the deployment of low-carbon industrial technologies. However, it is still uncertain how (C)CfDs can be part of the policy mix towards decarbonization.
In the revision of the EU-ETS Directive, the Commission proposed to extend the scope of the Innovation Fund. This extension will allow the innovation fund to provide support through competitive tendering mechanisms (such as CCfDs), whereby up to 100% of the relevant costs of the projects may be supported. Further details will be provided in secondary legislation (Delegated Act) once the legislative process for the EU-ETS Directive revision is completed. In preparation for this Delegated Act, DG Clima published in March 2022 a tender for assistance on the analysis and set-up of a competitive bidding mechanism for contracts for difference, carbon contracts for difference and other comparable schemes under the Innovation Fund.
The European Commission further specified in the REPowerEU communication the technological scope for (C)CfDs, namely renewable hydrogen production and its application in industry.
As some of the key design and implementation features of an EU-wide scheme for (C)CfDs are now being shaped, we would like to encourage a discussion on three key issues: (1) what are the priorities and red lines for the design of an EU-wide scheme, (2) whether just renewable hydrogen and its application in industry should be eligible for support and (3) how can be ensured that the industrial playing field is not altered by the implementation of national schemes.
Questions for discussion:
- What are the priorities and redlines in the design of an EU-wide competitive bidding mechanism for the innovation fund?
- What should be the technological scope for (C)CfDs?
- What are the interlinkages between the EU scheme and national schemes and how could a distortion of the industrial level-playing field be avoided?