The European Commission today awarded over €1.2 billion (US$1.6 billion) in funding to 23 innovative renewable energy demonstration projects under the first call for proposals for the NER300 program. The projects cover a wide range of technologies—among them, bioenergy (including advanced biofuels), concentrated solar power, geothermal power, wind, ocean energy and distributed renewable management (smart grids).

Climate Action Commissioner Connie Hedegaard commented, "This year, Christmas has come early. Today's decision is a major milestone in European Union climate policy. The NER300 program is, in effect, a 'Robin Hood' mechanism that makes polluters pay for large-scale demonstration of new low-carbon technologies. The €1.2 billion of grants—paid by the polluters—will leverage a further €2 billion (US$2.6 billion) of private investment in the 23 selected low-carbon demonstration projects. This will help the EU keep its frontrunner position on renewables and create jobs here and now, in the EU."

The objective of NER300 is to establish a testbed program comprising the best possible carbon capture and storage (CCS) and renewable energy source (RES) projects and involving all Member States of the European Union. Unfortunately, no carbon capture and storage (CCS) project could be awarded funding under this first award decision. The unused funds will be carried over and made available for the second call for proposals in mid-2013.

The program is called NER300 because it is funded from the sale of 300 million emission allowances from the New Entrants Reserve (NER) set up for the third phase of the EU Emissions Trading System (ETS)—the first and biggest international scheme for the trading of greenhouse gas emission allowances, involving some 11,000 power stations and industrial plants in 30 countries. The funds from the sales are to be distributed to projects selected through two rounds of calls for proposals, covering 200 million and 100 million allowances, respectively.

NER300 funding will provide up to 50 percent of the “relevant costs” of the project—meaning, the additional costs compared to existing, proven technologies; the rest will be covered by private investment and/or additional national funding. NER300 funding will be made available on an annual basis, based on proven performance (the amount of green energy produced) and compliance with knowledge-sharing requirements

NER300 funding is expected to:

• Leverage a considerable amount of private investment and/or national co-funding across the EU,
• Boost the deployment of innovative low-carbon technologies, and
• Stimulate the creation of jobs in those technologies within the EU.

While the Commission is responsible for the overall implementation of NER300, the sale of emission allowances is administered by the European Investment Bank (EIB), which publishes regular reports. The EIB has also provided a summary report with more details of the first round of NER300 sales. The EIB is also responsible for scrutinizing the project bids submitted and for allocating funding to the Member States for disbursement to the project sponsors.

Once up and running, these projects will collectively increase annual renewable energy production in Europe by some 10 terawatt hours (TWh), an energy amount corresponding to the annual fuel consumption of more than one million passenger cars. More importantly, the aim is to successfully demonstrate technologies that will subsequently help scale-up production from renewable sources across the EU substantially.

Collectively, the award winning projects will provide jobs to several thousand full-time workers over the next three to four years, during the construction phase. Once operational, about 1,000 full-time workers will be engaged for the next 15-20 years to keep the installations running. Positive growth and employment effects are also intended along the supply chain feeding the sector.

The Commission will proceed swiftly with the implementation of the second call for proposals, covering unused funds from the first call as well as the revenue of the remaining 100 million allowances in the new entrants' reserve.

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