European Commission

EU financial programmes in

support of eco-innovation

Hervé Martin – Aurelio Politano LIFE Environment & Eco-innovation unit

DG Environment European Commission

European Commission

What will we focus on?

• Main financial programmes and instruments supporting eco-innovation and managed at European level

• Not dealing exclusively with research, but with post-research financing close to commercialisation

• Traditional forms of financial support (i.e.: grants) as well as more innovative ways (i.e.: so called financial instruments)

European Commission

So which ones?

European Commission

LIFE

• LIFE is a funding instrument that provides specific support for the development and implementation of Community environmental policy

• Individuals, public and private bodies, NGOs can participate and be beneficiaries

• Preceding programmes: LIFE I, II, III (1992-2006)• Total EC contribution €1.6 Billion.

• LIFE+ budget of €2.143 billion (2007-2013)• It comprises three components: - LIFE+ Nature & Biodiversity

- LIFE+ Environment Policy & Governance- LIFE+ Information & Communication

Life + - Background -

European Commission

• LIFE+ is centrally managed by the EC

• Annual call for projects (next deadline June 2011)

• Projects proposals normally include a total budget between 1 and 3 million Euro but there is neither a minimum nor a maximum

• Independent selection procedure (about 8 months)

• Best projects are co-financed

• A fixed share of the total budget for each Member State (if projects from a MS pass the selection)

• 50% of the budget is reserved for LIFE+ Nature & Biodiversity projects

• Co-financing rate: 50% of eligible costs (75% in some cases, i.e. conservation of priority species and habitats)

• The EC follows up the project implementation

Life + - Background -

European Commission

• LIFE+ Environment Policy & Governance continues and extends the former LIFE-Environment strand.

• 13 priority objectives : Climate change, water, air, soil, urban environment, noise, chemicals, environment & health, waste, natural resources, forest, innovation, strategical approaches, governance

LIFE+ Env - How? -

European Commission

• LIFE+ Environmental Policy and Governance co-finances projects that contribute to:

– innovation and demonstration– the implementation of Community environmental policy– the development of innovative policy approaches, technologies,

methods and instruments, – the knowledge base as regards environment policy and legislation– the monitoring of environment (including forest monitoring)– LIFE+ aims to support innovative and demonstrative solutions both in

the public and private sectors

LIFE+ Env - How? -

• LIFE I, II, III (1992-2006)• Nearly 2800 projects

• LIFE+ (2007-2013)• About 550 projects co-financed

• A total of about 3350 projects (1992-2009)

• LIFE Environmental Policy & Governance• More than 1800 projects (55% of the whole LIFE)• SMEs and large enterprises are/were co-ordinating beneficiaries of about 13% of

projects under this strand• Target on municipalities, public actors, enterprises, NGOs aiming to develop and

demonstrate innovative policy approaches, technologies, methods and instruments

Results so far?

European Commission

Examples

European Commission

Zaragoza: water saving city. Small steps, big solutionsCoordinating beneficiary: City of Zaragoza

• The aim of the project was to reduce household water consumption in Zaragoza by 1,000,000 m3 in one year

• This target has been achieved by changing consumption patterns and through the effective use of water saving technology.

• The project involved government, social bodies, business and consumers.

EFFENERGY (LIFE06 ENV/L/000121): Energy efficiency insulating against climate change

• The project developed a thermal-mass panel made of wax. The wax melts, absorbing heat,as temperatures rise and re-solidifies,releasing heat back into the internal environment, as temperatures cool.

• Results:• Summer - the panelled attic enjoyed a

temperature decrease of up to 7°C• Winter - the energy required to keep it at a

constant temperature of 20°C was 8% less. • Panels may be retrofitted into existing buildings • Return on investment remains under 10 years• http://energain.co.uk/Energain/en_GB/

references/life_project/index.html

Examples

European Commission

• More integration with other EU funds CAP, Cohesion Funds, Structural Funds, Competitiveness and Innovation Programme

• A clearer differentiation between LIFE+ and CIP Eco-Innovation market replication projects

• A programming approach for facing environmental issues at a larger territorial scale

• A better networking and communication for the dissemination of results

Life+ - Some lessons and food for thought

European Commission

Where to find more information on LIFE?

• http://ec.europa.eu/life– Programme publications– Projects (lists of projects with

links to more information)– Best projects– LIFE project database– LIFEnews features– LIFE project publications– Contacts

European Commission

European Commission

Competitiveness and Innovation Programme

CIP - Background -

European Commission

Entrepreneurship and Innovation Programme

(EIP)

Information Communication Technologies Policy support

Programme (ICT PSP)

Intelligent Energy Europe(IEE)

• Better access to finance for SMEs through venture capital investment & loan guarantee instruments • Business & innovation support services delivered through a network of regional centres • Promotion of entrepreneurship & innovation • Support for eco-innovation • Support for policy-making that encourages entrepreneurship & innovation

• Developing a single European information space • Strengthening the European internal market for ICT & ICT- based products & services • Encouraging innovation through the wider adoption of & investment in ICT • Developing an inclusive information society & more efficient and effective services in areas of public interest• Improving of quality of life

• Fostering energy efficiency & the rational use of energy sources • Promoting new & renewable energy sources & energy diversification • Promoting energy efficiency & new energy sources in transport

~2,17 B€ ~0,73 B€ ~0,73 B€

Financialinstruments

€ 228 million

Networkof actors

€ 10 million

Pilot and market replication projects

€ 195 million

Eco-innovation in EIP

European Commission

CIP - Background II -

• Support innovative ideas which can be turned into ‘marketable’ green products and services

• Bridging the gap between RTD and commercialisation

• Potential for replication and wider application must be demonstrated

• Direct funding (no intermediaries)

• Risk sharing for green ideas (50% per project)

• Budget ~ €200 million (2008-2013)

• Managed by the Executive Agency for Competitiveness and Innovation (EACI)

Eco-innovation market replication projects-How?-

• Non exclusive, annually fine-tuned, supporting policy objectives in the areas of:

Materials recycling

Sustainable building products

Food and drink

Greening business/ smart purchasing

Priorities

Eco-innovation market replication projects-How?-

19

2008 2009 2010Proposal Received

134 202 287

Yearly increase + 50% + 42%Projects funded 43 46/47 40-50

• Important attention from the market, mainly SMEs• More than 1000 web enquiries answered every

year

Results so far?

19%

15%

66%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%SME

LARGE Enterprises

Universities/Public/Others

Our beneficiaries (Source: call 2010)

81% private sector

Beneficiaries

Results so far?

21

Resource Efficiency Examples • CFT: Ceramic tiles dry cutting system assisted by

ultrasound – 500.000 sq.m/year production line– 100% in water consumption and sludge generation– 98% Energy Consumption– 90% Processing scrap, sound pollution (from -3 to -5 dB)

• EuroC2C Carpetchains: Close loop manufacturing system to collect and recycle 4% (16k t/y) of European contract market carpet waste (offices/public buildings…)

– reduce the use of virgin materials by 8,000 tons per year; – reduce energy consumption by 72,000,000 kWh per year, corresponding to the

average energy consumption of 3,200 households. – 8% (32k t/y) of European carpet waste 2 years after the project

European Commission

Eco-innovation market replication projects-Some lessons and food for thought-

• Market failure justifies public support for placing eco-innovation on the market

• Stress on innovation AND commercialisation → making use of research results

• Flexibility in the covered areas without losing focus (non-exclusive priorities and not only focussed on technologies makes it open for market-driven innovative ideas)

•Direct funding, no intermediaries and short time to contract → high SMEs participation

• A proof of concept that economic and environmental problems may be tackled together

• Can a programme like this reach a critical mass, given the limited budget?

European Commission

Financial Instruments (FI) -How?-• High Growth and Innovative SME Facility (GIF): it allows Community participation in Eco-

innovative risk capital funds which provide equity to SMEs (GIF1 seed or early development, GIF 2 expansion)

• No direct funding to SMEs, but investment through European Investment Fund in funds active in the field of eco-innovation

European Commission

Results so far?• Four deals with eco-innovative Venture Capital (VC) Funds:

– Capricorn Cleantech Fund (Belgium)– Wheb Ventures Private Equity Fund 2 (UK)– Pinova Fund 1 (Germany)– Demeter 2 (France)

• Geographical focus of the funds is mainly western Europe (particularly Germany, UK, France, Belgium and Austria)

• Development stage focus ranges from start up (first 2 funds) to expansion (remaining ones)

• EIF is in negotiation for further deals with VC funds targeting eco-innovative SMEs, outlook is positive

European Commission

Examples

European Commission

GIF- Some lessons and food for thought• Instrument justified by strong market failure rationale of start-up and growing

SMEs across the EU (EIP mid term evaluation)• Very efficient form of intervention (EIP mid term evaluation)• “Absorption capacity” driven, and “limited” by different conditions of VC market

and “existence” of eco-innovation• Focussing only on high growth “commercially viable” eco-innovative SMEs, what

about the rest? • Cleantech VC funds usually go for relatively “big” investments, what about the

rest? BAs can apply under GIF, but there is not much uptake• Monitoring the “environmental” performance of eco-innovative SMEs is a

challenge

European Commission

Informative sources

http://ec.europa.eu/environment/etap/funding/index_en.html

http://www.eif.org/what_we_do/equity/resources/european_commission/index.htm

http://ec.europa.eu/enterprise/policies/finance/cip-financial-instruments/

http://www.sme-finance-day.eu/index.php?id=10#c26

European Commission

RSFF

• The Risk Sharing Finance Facility is an innovative FP7 debt-financing instrument co-developed by the EC/ EIB to provide additional loan finance for Research, Development, Demonstration and Innovation in the European Research Area

• RSFF provides loans for riskier but creditworthy RDI projects by risk-sharing between the European Community and the EIB

• Demand-driven: projects are supported on a “first come, first served” basis (no grant procedures, no expert panels)

• RSFF projects are evaluated by the EIB (not by the EC) for their creditworthiness, technical and economic aspects

• European Commission (DG RTD, co-operation with other DGs) checks RSFF projects proposed by the EIB whether they concern R&D and contribute to FP 7 objectives; if so (Commission approval), the EIB can use FP 7 budget for risk coverage

RSFF - Background -

European Commission

RSFF - Background -

European Commission

RSFF - How? -

European Commission

RSFF - How? -

European Commission

• Up to EUR 10 billion loan finance for RDI can be mobilised• So far, more than EUR 8 billion already approved and more than

EUR 5 billion signed

Results so far?

Signed RSFF Projects by Sector

ENGINEERING / INDUSTRY

40%

ICT14%

LIFE SCIENCE/SPECIALITY CHEMICALS

26%

RESEARCH INFRA.

5%

ENERGY15%

BANK RISK SHARING1%

European Commission

Examples

European Commission

• Customised offer: flexible debt financing adapted to project implementation and the borrower’s repayment capacity

• Implemented in an effective and efficient manner through a close partnership between the European Commission and the EIB

• Reasonable financing costs: non-subsidised loans but advantage of EIB’s AAA based funding and its non-profit lending policy > reduces overall project cost

Potential for improvement:• Some target groups (SMEs and research infrastructures but also

universities) not reached sufficiently (due to more risky characteristics, nature of investments and legal barriers)

• the Commission and the EIB have already started working on improvements for SMEs and similarly for research infrastructures

RSFF - Some lessons and food for thought

European Commission

European Commission

Informative sources

• http://ec.europa.eu/invest-in-research/funding/funding02_en.htm

• http://www.eib.org/products/loans/special/rsff/index.htm

DG RTD EIB

• Many and different programmes and instruments already exist

• From more traditional to more sophisticated ones• Market driven vs policy driven, can we better combine

the two? • Challenge is to adapt them to better suit the needs of

early stage eco-innovative SMEs or• To develop new ones if gaps exist• Can more synergies be created among these different

programmes?

Concluding points

European Commission

European Commission

Informative sources

Thank you

herve.martin@ec.europa.eu

aurelio.politano@ec.europa.eu

DG Environment Life Environment and Eco-innovation unit - E4 -