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What are the new policies and programs put forward to boost clean energy innovation?

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Many nations have created new policies to assist the development of sustainable energy technologies in the last few years, particularly in the aftermath of Covid-19.

Several countries announced significant public financing initiatives in 2021–2022, particularly for the development of hydrogen technology, CCUS, industrial decarbonization, energy storage, batteries, and electric vehicles (EVs). Direct grants, loans, loan guarantees, and tax credits are just a few of the financial instruments that governments use to fund initiatives.

Let’s look at some of the examples by IEA,

  • Hydrogen: About 40% of the budgets that have been made public under the US Bipartisan Infrastructure Law, 40% of the budgets for the first confirmed projects under the Japan Green Innovation Fund, and 25% of the budgets that have been made public for energy-related projects under the France 2030 recovery plan all involve hydrogen. The US Inflation Reduction Act also provides tax incentives for clean hydrogen projects worth up to USD 13 billion. Several nations, including Australia, China, France, Germany, Japan, and the United States, are working to develop new technologies and establish low-carbon hydrogen supply chains.
  • CCUS: About half of the initial batch of projects’ budgets under the EU Innovation Fund and more than 15% of projects’ declared budgets under the US Bipartisan Infrastructure Law are funded by CCUS. The Inflation Reduction Action expands funding options for CCUS projects in the US, including retrofits at existing facilities and tax incentives for initiatives that directly capture air. The support for CCUS initiatives, including those for direct air capture, CO2 transit, and permanent CO2 storage, is increasing in Canada.
  • Biofuels: 10% of the funding for the initial round of projects funded by the EU Innovation Fund is allocated to biofuels. Second-generation biofuels are supported by the US Inflation Reduction Act, which also provides special tax credits and roughly USD 250 million for the development of low-carbon aviation fuel.
  • Industry decarbonization: The focus on cross-cutting technological initiatives for industrial decarbonization is also advantageous. They represent about 50% of the budgets for energy-related projects under France 2030 that have been publicly announced, 50% of the budgets for the initial batch of projects funded by the EU Innovation Fund (including CCUS), and 20% of the budgets for projects funded by Japan’s Green Innovation Fund. For the implementation of sophisticated industrial facilities, including assistance with energy efficiency, electrification, low-emission fuels and heat, and CCUS, the US Inflation Reduction budget allots USD 5.8 billion.

Globally, demonstration projects for clean energy technologies must receive at least USD 90 billion in public investment by 2026 if they are to be ready for commercial use by 2030 and contribute to the achievement of net zero emissions by the middle of the century.

Some of the examples by the US in CCUS projects are:-

  • Industrial CCUS: The second round of large-scale projects to receive funding from the EU Innovation Fund includes four CCUS initiatives in the cement industry (including ground-breaking facilities in Bulgaria and Poland), three initiatives in the chemical industry (including a ground-breaking CO2-to-methanol plant using renewable hydrogen in Sweden), and two initiatives in the refining industry (including for CO2-based synthetic aviation fuels production in Sweden). New CCU technology that creates cementitious materials from CO2 directly collected from kiln exhausts is being tested in the US by HeidelbergCement and Fortera.
  • Direct air capture and storage: As part of a strategy to show multi-megatonne capacity by 2030, the project’s sponsors, Climeworks and Carbfix, also announced the building of a 36 kt CO2/year expansion. The first-of-its-kind 4 kt CO2/year facility in Iceland started absorbing CO2 from the air and storing it underground.
  • Hydrogen production: With a capacity of 20 MW and an annual production rate of around 3 ktH2, Air Liquide began operations at Bécancour, the largest electrolytic hydrogen production facility in the world. Sinopec unveiled plans for a massive 260 MW electrolyzer in China that would start operating in the middle of 2023 and produce 20 ktH2/year.

Source: IEA

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