European Union (EU) Welcomes Non-EU Companies for Greenhouse Gas Reduction Efforts

[Asia Economy Reporter Hwang Yoon-joo] The European Union (EU) announced the establishment of an Innovation Fund to promote the commercialization and market deployment of greenhouse gas reduction technologies, opening fund participation to non-EU companies as well. This move is analyzed to present an opportunity for Korean companies possessing carbon emission reduction technologies to enter the EU market.

According to the "Global Green Deal Era, EU Innovation Fund and Utilization Plans for Our Companies" report released on the 20th by the Korea International Trade Association's Brussels office, the EU Commission plans to establish the Innovation Fund and support approximately 10 billion euros over 10 years until 2030 for the commercialization of greenhouse gas reduction technologies. The fund's capital will be sourced from revenues generated by the EU Emissions Trading System.

The report stated, "The Innovation Fund will be a crucial implementation tool for achieving the Paris Climate Agreement and the 2050 carbon neutrality goal, as well as a strategic investment to secure the EU's leadership in the global greenhouse gas reduction technology market."

In particular, the Innovation Fund's support targets include non-EU member companies as long as they operate businesses within the EU through joint ventures with EU companies or by establishing EU legal entities. Recruitment will be conducted annually from 2020 to 2030, and selected companies will receive support for up to 60% of their project costs.

Selection of support recipients will be conducted by the Innovation Network Executive Agency (INEA) under the EU Commission, based on five evaluation criteria: greenhouse gas emission reduction, level of innovation, project maturity, project scalability, and cost efficiency. Feedback on reasons for rejection will be provided to unsuccessful applicants, who may revise their applications and reapply.

Additionally, Innovation Fund support can be received concurrently with member state subsidies and existing EU funding programs such as Horizon Europe, which is expected to greatly assist companies in financial procurement.

The report noted, "The cement, steel, energy storage devices, and renewable energy sectors will be advantageous for our companies," adding, "Companies possessing cement production demonstration technologies that have obtained international certification for greenhouse gas reduction technologies and those with technologies producing shaped steel and rebar from steel scrap, which is evaluated as eco-friendly, meet both the eligibility criteria for Innovation Fund support and the support fields, making it worthwhile to apply."

Kang No-kyung, deputy director of the Korea International Trade Association's Brussels office, said, "Since the Innovation Fund supports projects within the EU by non-EU member countries as well, it will be a good opportunity for our companies with innovative technologies to enter the EU market," and added, "As 40% of the project costs must be self-financed, it is necessary to form consortia when entering the EU to distribute operational and financial risks."