This is Tom Rowlands Reese and you're listening to Switched on the podcast brought to you by b and EF, and today we bring you a recording from our b and EF Summit Munich, which took place on the twentieth of May. The panel featured on today's show is titled getting Industrial Decarbonization mega Projects on their Feet evaluating early success with large scale carbon capture hubs in the UK, carbon storage facilities in Denmark, the Netherlands and Italy, and cross border carbon transit facilities being built in Norway. Europe has been making quick work of successfully executing large industrial decarbonization infrastructure facilities. But just how have policymakers managed to facilitate installation of these massive projects and what can other companies and governments glean from their successes. On today's show, the panelists share their learnings and discuss what forms of policy have proved successful and what more is required to facilitate further growth in the sector. The panels include Kristin Nishka, Director General and Head of Climate Industry and Technology for the Norwegian Ministry of Energy, Andres Hoffmann, Deputy Permanent Secretary for the Danish Ministry for Climate Energy and util is Deek ben Shop, chair of the Border Mission Possible Partnership, and Stephanie Heisinger, head of Unit Low Carbon Solutions for DT Climber at the European Commission. The panel was moderated by Martin Tangler, BNF's head of Hydrogen Research. For more information regarding BNF summits, including our upcoming BNF Summit New Delhi on August twenty second, and t V recordings from our previous events, head to about BNF dot com slash summit. Now, let's say it from our panel.

This is Tom Rowlands Reese and you're listening to Switched on the podcast brought to you by b and EF, and today we bring you a recording from our b and EF Summit Munich, which took place on the twentieth of May. The panel featured on today's show is titled getting Industrial Decarbonization mega Projects on their Feet evaluating early success with large scale carbon capture hubs in the UK, carbon storage facilities in Denmark, the Netherlands and Italy, and cross border carbon transit facilities being built in Norway. Europe has been making quick work of successfully executing large industrial decarbonization infrastructure facilities. But just how have policymakers managed to facilitate installation of these massive projects and what can other companies and governments glean from their successes. On today's show, the panelists share their learnings and discuss what forms of policy have proved successful and what more is required to facilitate further growth in the sector. The panels include Kristin Nishka, Director General and Head of Climate Industry and Technology for the Norwegian Ministry of Energy, Andres Hoffmann, Deputy Permanent Secretary for the Danish Ministry for Climate Energy and util is Deek ben Shop, chair of the Border Mission Possible Partnership, and Stephanie Heisinger, head of Unit Low Carbon Solutions for DT Climber at the European Commission. The panel was moderated by Martin Tangler, BNF's head of Hydrogen Research. For more information regarding BNF summits, including our upcoming BNF Summit New Delhi on August twenty second, and t V recordings from our previous events, head to about BNF dot com slash summit. Now, let's say it from our panel.

At least three things are needed in other Industrial League organization projects to go ahead, and that's government support, infrastructure and demand. And the thing that we will discuss, the question we will discuss today with our four brilliant panelists is if you are a government, how can you best foster these conditions in your country? And let's start by looking at the current situation with a question to Dick. So, Dick, you are at the Mission Possible Partnership MPP, and on your website there's a beautiful map of more than five hundred industrial decarbanization projects and the one common problem that they all have is that very few of them have actually reached a final investment decision or FID. I think it was eight between April and November, if i'm if I'm not mistaken. So beyond the three things that government incentives infrastructure demand, is there anything else that these projects need in order to go ahead?

At least three things are needed in other Industrial League organization projects to go ahead, and that's government support, infrastructure and demand. And the thing that we will discuss, the question we will discuss today with our four brilliant panelists is if you are a government, how can you best foster these conditions in your country? And let's start by looking at the current situation with a question to Dick. So, Dick, you are at the Mission Possible Partnership MPP, and on your website there's a beautiful map of more than five hundred industrial decarbanization projects and the one common problem that they all have is that very few of them have actually reached a final investment decision or FID. I think it was eight between April and November, if i'm if I'm not mistaken. So beyond the three things that government incentives infrastructure demand, is there anything else that these projects need in order to go ahead?

Yes, so, thank you very much and good morning.

Yes, so, thank you very much and good morning.

Yeah.

Yeah.

The Global Project Trecker is one of the things we do in order, yes, to keep track of the progress, we map it against where do we need to be in twenty thirty and worldwide in the seven harder to abate sectors from steel, ce mental, aluminium, aviation fuel, we need about seven hundred plants in operation by twenty thirty. Perhaps we have around twenty percent now at FID under construction or in operation. And if you quoted the progress between April and November last year, it's not going fast enough. We'll have an update in a couple of weeks time next half year update to see where we are. So it's not that we have not started at the beginning is there, But the pace and the question of the scaling is absolutely important, and it's not going fast enough. I think fortunately that the and you see that in the European Commission and in national governments as well, that the attention for industrial decarbanization is growing. It's thirty percent of emissions. So it's not just the energy sector, it's the industrial sector as well. It's and it's in the heart of what we are currently living heavy we have to have. We have the clean deal, the green deal, the clean deal. We have finally in Europe attention for competitiveness because green stuff only get built if it's competitive.

The Global Project Trecker is one of the things we do in order, yes, to keep track of the progress, we map it against where do we need to be in twenty thirty and worldwide in the seven harder to abate sectors from steel, ce mental, aluminium, aviation fuel, we need about seven hundred plants in operation by twenty thirty. Perhaps we have around twenty percent now at FID under construction or in operation. And if you quoted the progress between April and November last year, it's not going fast enough. We'll have an update in a couple of weeks time next half year update to see where we are. So it's not that we have not started at the beginning is there, But the pace and the question of the scaling is absolutely important, and it's not going fast enough. I think fortunately that the and you see that in the European Commission and in national governments as well, that the attention for industrial decarbanization is growing. It's thirty percent of emissions. So it's not just the energy sector, it's the industrial sector as well. It's and it's in the heart of what we are currently living heavy we have to have. We have the clean deal, the green deal, the clean deal. We have finally in Europe attention for competitiveness because green stuff only get built if it's competitive.

Is the Drugy Report.

Is the Drugy Report.

We see progress there and I guess with security, the whole question of what are we producing in Europe is becoming more and more important. And inside this trilemma between clean, secure, and competitive you find the question what's going to happen to the European industry in general terms? What we have learned and I think the Potsdam Institute did great work on that. On the policy mix, you need three elements. You need an element of pricing see carbon pricing, see the ets, which Europe has other geographies only to a certain extent. You need an element of support, which Europe has to a certain extent, which others had more at least us with now the uncertainty around it. And you need regulations, and for example, one of the things that really worked in Europe was the aviation mandate, the blending mandate, because if you look at the tracker, the number of sustainable aviation fuel plants is really growing. The investment is happening because of that certainty that is there because of the mandate. So get this policy mix right. And in the regulatory part, I would say we have to focus on the demand side because subsidies give it the deficits defense spending, they won't go over the moon in Europe. You can't do it FIA pricing alone. I think demand side interventions, but will probably come to that is the key to be looking at now.

We see progress there and I guess with security, the whole question of what are we producing in Europe is becoming more and more important. And inside this trilemma between clean, secure, and competitive you find the question what's going to happen to the European industry in general terms? What we have learned and I think the Potsdam Institute did great work on that. On the policy mix, you need three elements. You need an element of pricing see carbon pricing, see the ets, which Europe has other geographies only to a certain extent. You need an element of support, which Europe has to a certain extent, which others had more at least us with now the uncertainty around it. And you need regulations, and for example, one of the things that really worked in Europe was the aviation mandate, the blending mandate, because if you look at the tracker, the number of sustainable aviation fuel plants is really growing. The investment is happening because of that certainty that is there because of the mandate. So get this policy mix right. And in the regulatory part, I would say we have to focus on the demand side because subsidies give it the deficits defense spending, they won't go over the moon in Europe. You can't do it FIA pricing alone. I think demand side interventions, but will probably come to that is the key to be looking at now.

Okay, so as the government carrots, government sticks, and demand side is what you find to be the most important. Let's talk about the financing the government carrots for them for a moment, and let's start with you, Kristin. So, Norway has almost fully financed one massive carbon capture and storage project, which is called long Ship in Norway, and you've pretty much paid for almost the entire project. Now that that project is almost about to come online, is the private sector going to be able to take over? Is that enough to get the sector going.

Okay, so as the government carrots, government sticks, and demand side is what you find to be the most important. Let's talk about the financing the government carrots for them for a moment, and let's start with you, Kristin. So, Norway has almost fully financed one massive carbon capture and storage project, which is called long Ship in Norway, and you've pretty much paid for almost the entire project. Now that that project is almost about to come online, is the private sector going to be able to take over? Is that enough to get the sector going.

Well, thank you for that question.

Well, thank you for that question.

I think it takes more than one project for this market to come online. But I think it's important to keep in mind that this is not sort of a static picture. In a way, it's dynamic. We started working on the long Ship, which consists of you to capture from a cement facility, be hydlriy materials, ways to energy facility.

I think it takes more than one project for this market to come online. But I think it's important to keep in mind that this is not sort of a static picture. In a way, it's dynamic. We started working on the long Ship, which consists of you to capture from a cement facility, be hydlriy materials, ways to energy facility.

And alslow on by Hochlin.

And alslow on by Hochlin.

And then it's the Northern Light Storage Solutions on the west coast of Norway.

And then it's the Northern Light Storage Solutions on the west coast of Norway.

We started working on that.

We started working on that.

In twenty fourteen twenty fifteen, where we saw that from a sort of government perspective in Norway, the Climate Mitigator, if we are to reach the climate targets in the Paris Agreement, it's not possible without CCS. So we started working on that as a public private partnership to develop.

In twenty fourteen twenty fifteen, where we saw that from a sort of government perspective in Norway, the Climate Mitigator, if we are to reach the climate targets in the Paris Agreement, it's not possible without CCS. So we started working on that as a public private partnership to develop.

The CCS technology.

The CCS technology.

And one of the aims for the Longship project is that Norway and Europe are to reach sort of the climate targets as at the lowest possible cost. So this is our contribution to the entire sort of CCS development as a technology.

And one of the aims for the Longship project is that Norway and Europe are to reach sort of the climate targets as at the lowest possible cost. So this is our contribution to the entire sort of CCS development as a technology.

And then what's next and then is this enough?

And then what's next and then is this enough?

Well, what we've done and what's important to us with the longship project is to share the knowledge. We have de risked a lot of the CCS chain. Northern Lines recently made a commercial Phase two decisions, so they have spare capacity. They were open for business for European industry. It's well, there are discussions on going for C two storage on the Norwegian continental shelf. And then we are also from a Norwegian perspective, now assess saying so what's next for you to capture for the rest of the Norwegian industry, which is a debate in our way.

Well, what we've done and what's important to us with the longship project is to share the knowledge. We have de risked a lot of the CCS chain. Northern Lines recently made a commercial Phase two decisions, so they have spare capacity. They were open for business for European industry. It's well, there are discussions on going for C two storage on the Norwegian continental shelf. And then we are also from a Norwegian perspective, now assess saying so what's next for you to capture for the rest of the Norwegian industry, which is a debate in our way.

So I think this is it's not a static picture.

So I think this is it's not a static picture.

The different countries have sort of different approaches.

The different countries have sort of different approaches.

It's important to.

It's important to.

See this as a it's a joint solution. We have a common target here and then there's an element of competition, but that is just it's good to have that competition.

See this as a it's a joint solution. We have a common target here and then there's an element of competition, but that is just it's good to have that competition.

So you said, there's some learnings that you've derived from this for not just Norway but for the global community. What are the what is the one thing that you think you did really really.

So you said, there's some learnings that you've derived from this for not just Norway but for the global community. What are the what is the one thing that you think you did really really.

Well in I think what made this happen is that we.

Well in I think what made this happen is that we.

Had a trust between the government, the authorities and the private companies and a common goal that this was a project that we really wanted to see happening together. And then there are risks in the chain between the capture and storage that we need to sort of be aware of and deal with. But I think actually from a sort of from our perspective, the trust that this is something that we all want to see happening was actually the most important success factor in that project.

Had a trust between the government, the authorities and the private companies and a common goal that this was a project that we really wanted to see happening together. And then there are risks in the chain between the capture and storage that we need to sort of be aware of and deal with. But I think actually from a sort of from our perspective, the trust that this is something that we all want to see happening was actually the most important success factor in that project.

Okay, so you were you were one of the biggest first projects out there, and you show that this is possible. And the follow up question that is was the one thing you would not repeat?

Okay, so you were you were one of the biggest first projects out there, and you show that this is possible. And the follow up question that is was the one thing you would not repeat?

Mm hm hm. That's a difficult one. I don't know, actually.

Mm hm hm. That's a difficult one. I don't know, actually.

I think.

I think.

For in the Launschip project, the States serve as a cushion between the capture side and the transportant storage side. That we won't be able to do that for the coming projects.

For in the Launschip project, the States serve as a cushion between the capture side and the transportant storage side. That we won't be able to do that for the coming projects.

So I think maybe.

So I think maybe.

That that is something that we did to actually make this project go or happen. But it's not a role that the state can take sort of indefinitely for the coming projects.

That that is something that we did to actually make this project go or happen. But it's not a role that the state can take sort of indefinitely for the coming projects.

Right, so the market will eventually need.

Right, so the market will eventually need.

To the market will have to take over.

To the market will have to take over.

And what we've done with this project is sort of to get a good overview over the different risks because these are mega projects.

And what we've done with this project is sort of to get a good overview over the different risks because these are mega projects.

It's I don't know in.

It's I don't know in.

Euros, two point five billion euros or something for the entire chain. Norwegian State is contributing some roughly two billion euros into this, so two thirds of course, so maybe three of them. So I think the sort of the risk picture is something that we've contributed with.

Euros, two point five billion euros or something for the entire chain. Norwegian State is contributing some roughly two billion euros into this, so two thirds of course, so maybe three of them. So I think the sort of the risk picture is something that we've contributed with.

Great I wonder if Andrews will have any comments on that, because Andrews Denmark is taking a very different approach from Norway.

Great I wonder if Andrews will have any comments on that, because Andrews Denmark is taking a very different approach from Norway.

Is that right?

Is that right?

Norway has financed this one big project long ship, whereas what just happened in Denmark is you've shortlisted ten companies on Friday for a three point eight billion euros or so of funding and they can all get this funding, but the condition is they actually have to start storing.

Norway has financed this one big project long ship, whereas what just happened in Denmark is you've shortlisted ten companies on Friday for a three point eight billion euros or so of funding and they can all get this funding, but the condition is they actually have to start storing.

They have to store that.

They have to store that.

Carbon before they get any money, whereas in Norway that money came up front. So what do you think is the advantage of that kind of an approach.

Carbon before they get any money, whereas in Norway that money came up front. So what do you think is the advantage of that kind of an approach.

I think we had great lounges in Denmark then when we started designing policy back in twenty twenty. I mean, Norway has been doing this for fifteen years, so we could sort of piggyback on some of their learnings and also from the UK, and I think when we started designing policy, I think we had sort of three main things we wanted to solve. I mean, first of all, we really believe that this should be market based in the end, so everything we did on the way towards that should enable that.

I think we had great lounges in Denmark then when we started designing policy back in twenty twenty. I mean, Norway has been doing this for fifteen years, so we could sort of piggyback on some of their learnings and also from the UK, and I think when we started designing policy, I think we had sort of three main things we wanted to solve. I mean, first of all, we really believe that this should be market based in the end, so everything we did on the way towards that should enable that.

Market to be created. So I think that was sort of the oral A vision.

Market to be created. So I think that was sort of the oral A vision.

And then secondly, what we heard was what was really challenging in this sector was this whole chicken and egg You wouldn't if you had the storage, that wouldn't be developed because you know, nobody capturing and nobody would make pipelines. Because so all of this, I mean, how do you have a really complicated value value chain created at the same time. So we wanted to fix that. And then finally, we had all of these rooms about billions of euros being thrown at policy sort of projects that never developed. So we're quite worried that we would waste CUD out of government money. So based on that, we sort of had the decision that, Okay, if you don't want to waste money, at least we should only pay if they store, So if they store it, we pay. By definition, you can't lose money. The second one was we really want to have that you shouldn't only be storing, you should also sort of manage the entire value chain. So the winner of our sobsity would be responsible for the entire value chain and would have to pay for all of these have to create the contracts and all of that. So by that we hope in some way to sort of solve the chicken and egg problem at least by if somebody have all the money they need to have all the other parts of the chain aligned with their deadlines, and thereby, hopefully by twenty thirty all of these things would be aligned. I think that was sort of the name thinking about the design.

And then secondly, what we heard was what was really challenging in this sector was this whole chicken and egg You wouldn't if you had the storage, that wouldn't be developed because you know, nobody capturing and nobody would make pipelines. Because so all of this, I mean, how do you have a really complicated value value chain created at the same time. So we wanted to fix that. And then finally, we had all of these rooms about billions of euros being thrown at policy sort of projects that never developed. So we're quite worried that we would waste CUD out of government money. So based on that, we sort of had the decision that, Okay, if you don't want to waste money, at least we should only pay if they store, So if they store it, we pay. By definition, you can't lose money. The second one was we really want to have that you shouldn't only be storing, you should also sort of manage the entire value chain. So the winner of our sobsity would be responsible for the entire value chain and would have to pay for all of these have to create the contracts and all of that. So by that we hope in some way to sort of solve the chicken and egg problem at least by if somebody have all the money they need to have all the other parts of the chain aligned with their deadlines, and thereby, hopefully by twenty thirty all of these things would be aligned. I think that was sort of the name thinking about the design.

And the three point eight billion euros that you'll be giving to those companies. Is that enough to get the sector going in Denmark?

And the three point eight billion euros that you'll be giving to those companies. Is that enough to get the sector going in Denmark?

I think it's enough to get quite a lot of tons of sew to start. I think if you look at it, we had a first subsidy scheme which was won by us. Did they would be starting up capture within a few months. Actually they would be storing in Norway. Thank you so much for that for the first part. And then I think based on that auction that was zero point five million tons.

I think it's enough to get quite a lot of tons of sew to start. I think if you look at it, we had a first subsidy scheme which was won by us. Did they would be starting up capture within a few months. Actually they would be storing in Norway. Thank you so much for that for the first part. And then I think based on that auction that was zero point five million tons.

The next one is much much bigger.

The next one is much much bigger.

So we're pretty sure that this auction would develop enough U two capacity to meet our seventy percent climate target in twenty thirty.

So we're pretty sure that this auction would develop enough U two capacity to meet our seventy percent climate target in twenty thirty.

And that's really the main reason.

And that's really the main reason.

And although if you compare to Norway, I mean Norway has a bit more policy and creating a new market, I think Denmark's policy was really solving a problem with too much carbon dioxide.

And although if you compare to Norway, I mean Norway has a bit more policy and creating a new market, I think Denmark's policy was really solving a problem with too much carbon dioxide.

So it's all a slightly different approach.

So it's all a slightly different approach.

Ours is clearly a climate policy. It's just a very sort of a cheap way, but a cheaper way than some of the other policy we could have chosen.

Ours is clearly a climate policy. It's just a very sort of a cheap way, but a cheaper way than some of the other policy we could have chosen.

Okay, so it will get us certainly a good part of the way. And the interesting thing about Denmark is you are looking at onshore storage, whereas the Norwegian project is offshore. So if you're taking it from Denmark to Norway, you need to put it on a ship liquefy it then taking on a pipeline.

Okay, so it will get us certainly a good part of the way. And the interesting thing about Denmark is you are looking at onshore storage, whereas the Norwegian project is offshore. So if you're taking it from Denmark to Norway, you need to put it on a ship liquefy it then taking on a pipeline.

That pipeline is pretty long.

That pipeline is pretty long.

And bears it under the sea, which is quite a lot more expensive than what you're looking at.

And bears it under the sea, which is quite a lot more expensive than what you're looking at.

Right. Yeah, I think that was the main reason for going on shore.

Right. Yeah, I think that was the main reason for going on shore.

So and then of course Denmark is blitsed with sort of a subsurface that is actually extremely useful and it's very I mean, we have gas storage already. We're using the exact same technology, the same storage formation. So we have been given that we've been storing gas for forty years without any problem whatsoever. We thought it would be sort of a natural thing to move to that, and it turned out that there was quite a lot of interest on that. And we do really hope that getting back to my point about being market based, that this could dramatically reduce costs. And then, I mean, we have a lot of carrots in the danger policy might put we all to have some sticks.

So and then of course Denmark is blitsed with sort of a subsurface that is actually extremely useful and it's very I mean, we have gas storage already. We're using the exact same technology, the same storage formation. So we have been given that we've been storing gas for forty years without any problem whatsoever. We thought it would be sort of a natural thing to move to that, and it turned out that there was quite a lot of interest on that. And we do really hope that getting back to my point about being market based, that this could dramatically reduce costs. And then, I mean, we have a lot of carrots in the danger policy might put we all to have some sticks.

I mean, we do have a very strict see two tax that.

I mean, we do have a very strict see two tax that.

Would sort of kick in, and you have the ETS price going up, so you have the two sticks, and then if you have the on store short storage, and if you have some development of technology, we should be able to phase out the need for these subsidies over time.

Would sort of kick in, and you have the ETS price going up, so you have the two sticks, and then if you have the on store short storage, and if you have some development of technology, we should be able to phase out the need for these subsidies over time.

Yeah, that's great, because the ETS, from my understanding, will probably not be high enough for the next five or ten years for serious projects Bible, so you need to have your own additional program like what happened in Germany. Christian I saw you raise your hands before we go over to Stefinie.

Yeah, that's great, because the ETS, from my understanding, will probably not be high enough for the next five or ten years for serious projects Bible, so you need to have your own additional program like what happened in Germany. Christian I saw you raise your hands before we go over to Stefinie.

Just a very small comment because I think in Norway, one of the reasons why we're developing CCS as a technology is that we have the competence. We have stored CO two on the Norwegian Continental Shelf since nineteen ninety six where they started. That's like I feel, due to CEO two tax in posts on the Norwegian or on the petroleum sector, so we we know that this works, we know that it's safe, we monitor it very closely. So that's also a reason why this is something where we had the competence and the knowledge to develop this. And then on shore in Norway the sand that's hard rocks, so it's not possible to store to onshore in Norway, so the continental Shelf is the only city storage stuff.

Just a very small comment because I think in Norway, one of the reasons why we're developing CCS as a technology is that we have the competence. We have stored CO two on the Norwegian Continental Shelf since nineteen ninety six where they started. That's like I feel, due to CEO two tax in posts on the Norwegian or on the petroleum sector, so we we know that this works, we know that it's safe, we monitor it very closely. So that's also a reason why this is something where we had the competence and the knowledge to develop this. And then on shore in Norway the sand that's hard rocks, so it's not possible to store to onshore in Norway, so the continental Shelf is the only city storage stuff.

It's closer to Scotland. Then it's Norway right where you're staring the COEO two.

It's closer to Scotland. Then it's Norway right where you're staring the COEO two.

It's not closer to Scotland because then it would have been on the UK continental but it's in the middle there.

It's not closer to Scotland because then it would have been on the UK continental but it's in the middle there.

But maybe just to add I mean, we'd also store in the norseea.

But maybe just to add I mean, we'd also store in the norseea.

I mean the first project that they have if ID in Denmark is in the North Sea really also want to uses incoment, just like Norway in the old oil and gas fields.

I mean the first project that they have if ID in Denmark is in the North Sea really also want to uses incoment, just like Norway in the old oil and gas fields.

Let's talk about the EU as well, Stephanie. You told me on a call last week when we were debating and discussing about this panel, that the EU has realized that industrial decorganization projects are not bankable and that's why we have the Green Industrial Deal right now in the EU. And the question is how is the EU going to support the Green Industrial Deal. Is it going to be more like Norway with kapex funding for projects before they start storing. Is it going to be more like Denmark where you must store in order to get paid.

Let's talk about the EU as well, Stephanie. You told me on a call last week when we were debating and discussing about this panel, that the EU has realized that industrial decorganization projects are not bankable and that's why we have the Green Industrial Deal right now in the EU. And the question is how is the EU going to support the Green Industrial Deal. Is it going to be more like Norway with kapex funding for projects before they start storing. Is it going to be more like Denmark where you must store in order to get paid.

Is it going to be a combination of the two.

Is it going to be a combination of the two.

My understanding is there is a hint, but it's not yet clear how this is going to happen.

My understanding is there is a hint, but it's not yet clear how this is going to happen.

Thank you. So I like how the discussion is already involving because I think we all want the same thing you said, project on a bankable but in the end, what we want is that those projects get to the market and that they are happening by them. So there is this gap. We see it in the Innovation Fund. We have the Innovation Fund that we operate at the EU level is a fund that has for the period twenty twenty to twenty thirteen estimated budget of forty billion euros estimated because it is contingent on the EU carbon price. But we already in the four years of operation of the fund, we already have around two hundred projects in our portfolio and committed around twelve billion euros to those projects. And a large number of projects are actually familiar to people here on stage because they are related to industrial comb management. So now well we will when it comes to funding, built on that success of the Innovation Fund. We have indeed now we had a European Green Deal which has now also been going forward into the Clean Industrial Deal, as we see that many of the well that the industries are not necessarily struggling with the technology, but they are struggling with building the business case, and that's where the Clean Industrial Deal comes in. There was a discussion on that this morning already. So there are some drivers. In the speech before our panel we heard in particular also that affordable energy is one of the drivers, and financing as well. So for the financing part, we will build on the Innovation Fund and its success.

Thank you. So I like how the discussion is already involving because I think we all want the same thing you said, project on a bankable but in the end, what we want is that those projects get to the market and that they are happening by them. So there is this gap. We see it in the Innovation Fund. We have the Innovation Fund that we operate at the EU level is a fund that has for the period twenty twenty to twenty thirteen estimated budget of forty billion euros estimated because it is contingent on the EU carbon price. But we already in the four years of operation of the fund, we already have around two hundred projects in our portfolio and committed around twelve billion euros to those projects. And a large number of projects are actually familiar to people here on stage because they are related to industrial comb management. So now well we will when it comes to funding, built on that success of the Innovation Fund. We have indeed now we had a European Green Deal which has now also been going forward into the Clean Industrial Deal, as we see that many of the well that the industries are not necessarily struggling with the technology, but they are struggling with building the business case, and that's where the Clean Industrial Deal comes in. There was a discussion on that this morning already. So there are some drivers. In the speech before our panel we heard in particular also that affordable energy is one of the drivers, and financing as well. So for the financing part, we will build on the Innovation Fund and its success.

We have.

We have.

The pledge that we will next year, in the context of the revision of the EU ETS come forward with a proposal for an industrial Decarbitalization bank that is supposed to provide one hundred billion euros in funding for clean projects, not only clean technology but industrial decarbonization projects. The details are not yet there. We will this year have already a pilot for this industrial decarbonization banks. My team is working on a fixed premium option for industrial process heat decarbonization that we will launch in the last quarter of this year as well. And while in terms of support or support mechanisms, we work a lot with grants, but we also know that and the Clean Industrial Deal also says that very clearly that we need to maybe make that a bit more targeted and looking at what does the project actually really need to de risk And Kirsten said it, I mean this is really we need to de risk those projects as long as needed until the market takes over. We have a lot of experience now with the hydrogen auction that we have been running under the Innovation Fund. Actually today I'm not sure the news is already out. We are going to announce the winners of the second auction on renewable hydrogen today.

The pledge that we will next year, in the context of the revision of the EU ETS come forward with a proposal for an industrial Decarbitalization bank that is supposed to provide one hundred billion euros in funding for clean projects, not only clean technology but industrial decarbonization projects. The details are not yet there. We will this year have already a pilot for this industrial decarbonization banks. My team is working on a fixed premium option for industrial process heat decarbonization that we will launch in the last quarter of this year as well. And while in terms of support or support mechanisms, we work a lot with grants, but we also know that and the Clean Industrial Deal also says that very clearly that we need to maybe make that a bit more targeted and looking at what does the project actually really need to de risk And Kirsten said it, I mean this is really we need to de risk those projects as long as needed until the market takes over. We have a lot of experience now with the hydrogen auction that we have been running under the Innovation Fund. Actually today I'm not sure the news is already out. We are going to announce the winners of the second auction on renewable hydrogen today.

Just when my European hygien analyst is on holiday in Thailand.

Just when my European hygien analyst is on holiday in Thailand.

So there's a lot of experience with different ways of providing public support, and in particular this well, it depends very much on what it is that you want to support. For an auction like the hydrogen auction, you need a very homogeneous product like hydrogen. We will do the same now for as I said, industrial heat solutions, but you cannot have a one size fits all. On the other hand, I mean the project that we just have been talking about and I just mentioned it's full value chain support. So you need to bring all these actors with their different needs around the table. And Dick mentioned one important aspect also regulation, So it's not only about funding, it's also about setting standards. It's about coming forward. We will we are working on ZE to Transport Infrastructure infrastructure package as well, so to enable that support to the entire value chain, not only with money, but also through other ways and means we have.

So there's a lot of experience with different ways of providing public support, and in particular this well, it depends very much on what it is that you want to support. For an auction like the hydrogen auction, you need a very homogeneous product like hydrogen. We will do the same now for as I said, industrial heat solutions, but you cannot have a one size fits all. On the other hand, I mean the project that we just have been talking about and I just mentioned it's full value chain support. So you need to bring all these actors with their different needs around the table. And Dick mentioned one important aspect also regulation, So it's not only about funding, it's also about setting standards. It's about coming forward. We will we are working on ZE to Transport Infrastructure infrastructure package as well, so to enable that support to the entire value chain, not only with money, but also through other ways and means we have.

And when do you expect the market will take over in the EU on these big industrially organization projects.

And when do you expect the market will take over in the EU on these big industrially organization projects.

Yeah, that's of course the one hundred billion dollar question. No, I cannot it's impossible to give you an exact timeline when these projects will will be taken by the market. It very much depends on the speed at which the technology is mature. It very much depends on other factors like the infrastructure in particular, when it comes to C two. We are working on a ze to Investment ATLAS also in the EU, so that we start mapping actually potential storage site with the industrial clusters that will actually need to store you too. And there are lots of other factors. If you want me to express a wish, I would say as soon as possible, because that would be the ideal scenario. But it's really hard to give you an exact timeline on this one.

Yeah, that's of course the one hundred billion dollar question. No, I cannot it's impossible to give you an exact timeline when these projects will will be taken by the market. It very much depends on the speed at which the technology is mature. It very much depends on other factors like the infrastructure in particular, when it comes to C two. We are working on a ze to Investment ATLAS also in the EU, so that we start mapping actually potential storage site with the industrial clusters that will actually need to store you too. And there are lots of other factors. If you want me to express a wish, I would say as soon as possible, because that would be the ideal scenario. But it's really hard to give you an exact timeline on this one.

Yeah, hopefully as soon as possible.

Yeah, hopefully as soon as possible.

Indeed.

Indeed.

And one question that I actually have before we move on to talking about demand is about a different way that the government can help. Our government agencies can help projects get off the ground and dig. That's a question to you around dead guarantees or other ways that governments can can help. For example, the Stegra project in Sweden, there's really large green hydrogen steel making project in northern Sweden. It's building seven hundred and forty megabats of electualizers.

And one question that I actually have before we move on to talking about demand is about a different way that the government can help. Our government agencies can help projects get off the ground and dig. That's a question to you around dead guarantees or other ways that governments can can help. For example, the Stegra project in Sweden, there's really large green hydrogen steel making project in northern Sweden. It's building seven hundred and forty megabats of electualizers.

One of the ways through which it.

One of the ways through which it.

Was able to come online, to the best of my understanding is through debt and debt guarantees from the German government and from the Swedish government. Could these debt guarantees be used more broadly for other industrial sectors too.

Was able to come online, to the best of my understanding is through debt and debt guarantees from the German government and from the Swedish government. Could these debt guarantees be used more broadly for other industrial sectors too.

Yes, I think so, because companies they are looking at the policy side and assurrety around it and is the right mix in place. Companies are looking at the demand site and I'll say something about it, and companies are looking indeed at the risk and the financing site, because there's all kinds of hurdles there. For first of a kind, project's insurance, risk, engineering risks, project risk accumulated in a way that is almost prohibitive in some cases. So that's where an element of government support on the risk side or on the financing site on the being a backstop can help enormously indeed on that part. But Stagger and those type of projects are very interesting as well because you see that they tend to get the customers in as well, even as a shareholder in order to be a customer, you get that type of construct which all I has to do with that question, can I be certain about the demand and how do I organize that, Because if you want to have bankable demand, that means something in terms of commercial constructs, long term contracts, and are you able to get that and not all markets are structured in in that way, So that's really an issue. Allen just showed the green premium, and it's huge at the beginning of the value chain. For even more, what it did not show is that it is not huge at the end of the value chain when you come to the consumer product. Even still in a is in the order of magnitude of four hundred or five hundred euros for the price of a car, green p amumonia to green fertilizer to your bread, you'll hardly see behind the scent in terms of the cost of the bread. In percentages, ten percent of the new stuff in those sectors in twenty thirty is less than one percent price increase at the end consumer end. So that gives another perspective on affordability. You have always to be very careful and we have to go up the learning curve and bring the cost down. But if you say even a ten percent perspective in twenty thirty is rather higher compared to where we are today, that is in terms of passing it through, not absorbing it by the government, not absorbing it by the companies, but getting it to the end consumer is doable, and that gives a very great interest in the question and how can we activate that demount?

Yes, I think so, because companies they are looking at the policy side and assurrety around it and is the right mix in place. Companies are looking at the demand site and I'll say something about it, and companies are looking indeed at the risk and the financing site, because there's all kinds of hurdles there. For first of a kind, project's insurance, risk, engineering risks, project risk accumulated in a way that is almost prohibitive in some cases. So that's where an element of government support on the risk side or on the financing site on the being a backstop can help enormously indeed on that part. But Stagger and those type of projects are very interesting as well because you see that they tend to get the customers in as well, even as a shareholder in order to be a customer, you get that type of construct which all I has to do with that question, can I be certain about the demand and how do I organize that, Because if you want to have bankable demand, that means something in terms of commercial constructs, long term contracts, and are you able to get that and not all markets are structured in in that way, So that's really an issue. Allen just showed the green premium, and it's huge at the beginning of the value chain. For even more, what it did not show is that it is not huge at the end of the value chain when you come to the consumer product. Even still in a is in the order of magnitude of four hundred or five hundred euros for the price of a car, green p amumonia to green fertilizer to your bread, you'll hardly see behind the scent in terms of the cost of the bread. In percentages, ten percent of the new stuff in those sectors in twenty thirty is less than one percent price increase at the end consumer end. So that gives another perspective on affordability. You have always to be very careful and we have to go up the learning curve and bring the cost down. But if you say even a ten percent perspective in twenty thirty is rather higher compared to where we are today, that is in terms of passing it through, not absorbing it by the government, not absorbing it by the companies, but getting it to the end consumer is doable, and that gives a very great interest in the question and how can we activate that demount?

How do we do that?

How do we do that?

Because if I go if I buy a new Folvo, I can't say I want green steel in my car. It's not on offer if I go to my supermarket, etc. So something has to happen there. Mandates. We have a sustainable aviation mandate, it clearly works. It triggers investment. Why not the green fertilizer mandate? Why not other mandates, fuel standards, carbon intensity standards. A lot of things to do there which could give that certainty of demand in those sectors, which would then help enormously in terms of creating the conditions forever. The next to the government support and next to the financing and the risk side. One more element that you could consider as well. Then you mentioned the auctions that are taking place and h to global broader use of market makers of intermediaries, because there are markets where you have the need for the financing side to have long term contracts, but on the demand.

Because if I go if I buy a new Folvo, I can't say I want green steel in my car. It's not on offer if I go to my supermarket, etc. So something has to happen there. Mandates. We have a sustainable aviation mandate, it clearly works. It triggers investment. Why not the green fertilizer mandate? Why not other mandates, fuel standards, carbon intensity standards. A lot of things to do there which could give that certainty of demand in those sectors, which would then help enormously in terms of creating the conditions forever. The next to the government support and next to the financing and the risk side. One more element that you could consider as well. Then you mentioned the auctions that are taking place and h to global broader use of market makers of intermediaries, because there are markets where you have the need for the financing side to have long term contracts, but on the demand.

Side, it's short term.

Side, it's short term.

Like in aviation, airlines don't buy fuel for fifteen years. It's a short term market. But if you want to have e fuel project off the ground, you need a contract for ten to fifteen years. Who is going to do that. Nobody's going to do that. Stuck a bit like a chicken and egg. But then on the commercial side, so create intermediaries where you absorb the risk and the intermediation between the long and the short term. You do some government support in there as well to de risk it, and you can get a market certainly connected. Individual players are not able to make that connection. So I think there's a lot to do there on the demand side to create a certainty of demand in my view, a very affordable end consumer prices in a way that can trigger a lot of investment. And now the European Commission announced that as well as part of the cleaning to deal with the Industrial Decentralization Accelerator Act.

Like in aviation, airlines don't buy fuel for fifteen years. It's a short term market. But if you want to have e fuel project off the ground, you need a contract for ten to fifteen years. Who is going to do that. Nobody's going to do that. Stuck a bit like a chicken and egg. But then on the commercial side, so create intermediaries where you absorb the risk and the intermediation between the long and the short term. You do some government support in there as well to de risk it, and you can get a market certainly connected. Individual players are not able to make that connection. So I think there's a lot to do there on the demand side to create a certainty of demand in my view, a very affordable end consumer prices in a way that can trigger a lot of investment. And now the European Commission announced that as well as part of the cleaning to deal with the Industrial Decentralization Accelerator Act.

I really hope and.

I really hope and.

I think we should all contribute to that effort that we can create those demond mechanisms because that I think that's very interesting.

I think we should all contribute to that effort that we can create those demond mechanisms because that I think that's very interesting.

Yeah, the intermediary point is really interesting. We had the pleasure of having Susanna Morera from h to Global on a panel in our summit in London in October last year, and it was a really interesting discussion. How do you marry the fact that you need a ten year off take agreement for the producer, but the off taker does not want ten years, They want to take max one year maybe two, and they bridge that gap by buying this and then selling it on which it's a fascinating model. It would be great if it can work for other parts of the industrial de carbonization as well. Stephanie, let's move to you and the demand question is they was saying something really interesting. I think Andrews was saying the same thing about quotas. So the EU has different mandates or quotas for sustainable aviation fuel for green hydrogen or renewable fuel of non biological origin RFMBO use with instead of gray hydrogen. And the deadline for member states in the EU to transpose this quota for forty two percent of green hydrogen replacement for gray into their national law is tomorrow, if I'm not mistaken, and also if I'm not mistaken, only about five member states have actually transposed this, and probably only about two of them actually fully. So what's the EU gonna do about that? Is are there going to be fines? Are these states going to be punished for not meeting it? Or are we just going to let them let them not comply with these regulations.

Yeah, the intermediary point is really interesting. We had the pleasure of having Susanna Morera from h to Global on a panel in our summit in London in October last year, and it was a really interesting discussion. How do you marry the fact that you need a ten year off take agreement for the producer, but the off taker does not want ten years, They want to take max one year maybe two, and they bridge that gap by buying this and then selling it on which it's a fascinating model. It would be great if it can work for other parts of the industrial de carbonization as well. Stephanie, let's move to you and the demand question is they was saying something really interesting. I think Andrews was saying the same thing about quotas. So the EU has different mandates or quotas for sustainable aviation fuel for green hydrogen or renewable fuel of non biological origin RFMBO use with instead of gray hydrogen. And the deadline for member states in the EU to transpose this quota for forty two percent of green hydrogen replacement for gray into their national law is tomorrow, if I'm not mistaken, and also if I'm not mistaken, only about five member states have actually transposed this, and probably only about two of them actually fully. So what's the EU gonna do about that? Is are there going to be fines? Are these states going to be punished for not meeting it? Or are we just going to let them let them not comply with these regulations.

So, first of all, I think it's even if it's tomorrow, it's too early to already kind of throw out the baby with the buzz water. Let's let's wait what comes our way tomorrow. Usually when there's the deadline, you know, things are sent close to the deadline. But I also think, well, those quotas have been decided by the co legislators. So it's the Renewable Energy Directive and its anexes, So the co legislature in the EU, that's the European Parliament and the Member States. So the decision how to implement those targets have been that has been left to the Member States in that legislative process. But that's where I think, well, if this is agreed between the Parliament and the Member States, we should give them the benefit of, you know, now telling us first how they are going to meet those targets before we talk about what do we do if they don't do what they prompt to do so, I think it's the only fair from that perspective. But when it comes to demand, if you allow me, in the Clean Industrial Deal, we have indeed also strength emphasized quite strongly the fact that first of all, we need to define the clean products, so we're working, for example, on the green steel label. But I think that's really important that we all know what it is that we're actually talking about. And then second, we will also use the public procurement rules to create that demand. And that's actually quite a strong driver because public procurement is huge on certain markets, and that can also be since we spoke about public financing a good way on how the public can actually finance that demand.

So, first of all, I think it's even if it's tomorrow, it's too early to already kind of throw out the baby with the buzz water. Let's let's wait what comes our way tomorrow. Usually when there's the deadline, you know, things are sent close to the deadline. But I also think, well, those quotas have been decided by the co legislators. So it's the Renewable Energy Directive and its anexes, So the co legislature in the EU, that's the European Parliament and the Member States. So the decision how to implement those targets have been that has been left to the Member States in that legislative process. But that's where I think, well, if this is agreed between the Parliament and the Member States, we should give them the benefit of, you know, now telling us first how they are going to meet those targets before we talk about what do we do if they don't do what they prompt to do so, I think it's the only fair from that perspective. But when it comes to demand, if you allow me, in the Clean Industrial Deal, we have indeed also strength emphasized quite strongly the fact that first of all, we need to define the clean products, so we're working, for example, on the green steel label. But I think that's really important that we all know what it is that we're actually talking about. And then second, we will also use the public procurement rules to create that demand. And that's actually quite a strong driver because public procurement is huge on certain markets, and that can also be since we spoke about public financing a good way on how the public can actually finance that demand.

For the especially interesting for cement, it's about half of the cement is subject to public procure Governments alone can de risk green cement.

For the especially interesting for cement, it's about half of the cement is subject to public procure Governments alone can de risk green cement.

That's that's great, Let's do it. What are you waiting for, Stephanie. You only answered my question halfway though, so I'm going to probe a little bit deeper. So you said, let the Member states figure it out. It's up to them to meet the meet the EU quotas. Now, if the majority of Member states at this moment have yet to transpose them, I would say there is a relatively high probability that the majority of member states will not meet them by twenty thirty. What if that happens, is the majority of the EU going to punish itself for not meeting you quotas?

That's that's great, Let's do it. What are you waiting for, Stephanie. You only answered my question halfway though, so I'm going to probe a little bit deeper. So you said, let the Member states figure it out. It's up to them to meet the meet the EU quotas. Now, if the majority of Member states at this moment have yet to transpose them, I would say there is a relatively high probability that the majority of member states will not meet them by twenty thirty. What if that happens, is the majority of the EU going to punish itself for not meeting you quotas?

Yeah, I think you know that.

Yeah, I think you know that.

You will not get me into speculation here because I really think let's wait first tomorrow and then there's five years until we get to twenty thirty, so there is also time to try progress and to then take measures in between. On the side of the member states, I mean, they they pledged or they agreed to those targets, so there's also this drive from the side of the member states to make them happen. And I think also the in the industrials. I mean, what targets provide you is predictability, and and that is what industries strive for. So I think we need to, you know, also work towards UH giving that predictability through tracking the progress and then if if needed, take additional measures. But it's not good I find to put in question targets that you know, even at that stage when they when the transposition deadline has not yet lapsed, and so it's I think it's our strength, and Dick mentioned it in the beginning. It's also about the regulatory framework in the EU. Will love a climate neutrality target for twenty to fifty. It's often forgotten, but that is in a law, in legislation. It's a democratically agreed climate neutrality target. We not only have that climate neutrality target, we have a twenty thirty target that is underpinned by a solid climate and energy policy framework, and that I think is driving a lot of the action that we're seeing today, including CCS because quite frankly, the CCS directive dates from two thousand and eight, but for many, many years we didn't see anything happening. So now we have a fifty million tom C two injection capacity target in the natzio industry, and yet that stimulates the debate that in not only in industry but also in the Member States countries like Austria, like Germany start a public debate about CCS, and that's what we actually need. So I think targets are important, and it is important to of course truct the progress towards meeting them, but not speculate on them.

You will not get me into speculation here because I really think let's wait first tomorrow and then there's five years until we get to twenty thirty, so there is also time to try progress and to then take measures in between. On the side of the member states, I mean, they they pledged or they agreed to those targets, so there's also this drive from the side of the member states to make them happen. And I think also the in the industrials. I mean, what targets provide you is predictability, and and that is what industries strive for. So I think we need to, you know, also work towards UH giving that predictability through tracking the progress and then if if needed, take additional measures. But it's not good I find to put in question targets that you know, even at that stage when they when the transposition deadline has not yet lapsed, and so it's I think it's our strength, and Dick mentioned it in the beginning. It's also about the regulatory framework in the EU. Will love a climate neutrality target for twenty to fifty. It's often forgotten, but that is in a law, in legislation. It's a democratically agreed climate neutrality target. We not only have that climate neutrality target, we have a twenty thirty target that is underpinned by a solid climate and energy policy framework, and that I think is driving a lot of the action that we're seeing today, including CCS because quite frankly, the CCS directive dates from two thousand and eight, but for many, many years we didn't see anything happening. So now we have a fifty million tom C two injection capacity target in the natzio industry, and yet that stimulates the debate that in not only in industry but also in the Member States countries like Austria, like Germany start a public debate about CCS, and that's what we actually need. So I think targets are important, and it is important to of course truct the progress towards meeting them, but not speculate on them.

Okay, so we'll need to wait five years so five years from now, I'll invite you to the summit.

Okay, so we'll need to wait five years so five years from now, I'll invite you to the summit.

Thank you so much everyone.

Thank you so much everyone.

I think we've established that the carbonizing industry is really hard, but it seems like with our four panelists, we're a lot clearer on what works and what might not work as well. And thank you so much to our great panelist.

I think we've established that the carbonizing industry is really hard, but it seems like with our four panelists, we're a lot clearer on what works and what might not work as well. And thank you so much to our great panelist.

Thank you.

Thank you.

Today's episode of Switched On was produced by Cam Gray with production assistants from Kamala Shelling. Bloomberg ne EF is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute, nor should it be construed, as investment and vice investment recommendations, or a recommendation as to an investment or other strategy. Bloomberg anniah not be considered as information sufficient upon which to base an in decision. Neither Bloomberg Finance Lp Nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the information contained in this recording, and any

Today's episode of Switched On was produced by Cam Gray with production assistants from Kamala Shelling. Bloomberg ne EF is a service provided by Bloomberg Finance LP and its affiliates. This recording does not constitute, nor should it be construed, as investment and vice investment recommendations, or a recommendation as to an investment or other strategy. Bloomberg anniah not be considered as information sufficient upon which to base an in decision. Neither Bloomberg Finance Lp Nor any of its affiliates makes any representation or warranty as to the accuracy or completeness of the information contained in this recording, and any

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