Together, these two processes shape much of the funding toolbox available for industrial decarbonisation. Where past efforts have been disjointed, there is now the chance to design a suite of tools that build a more coherent landscape of support for projects from innovation to scale-up. Still, as negotiations intensifiy, trades offs become inevitable. Bad choices made under pressure could also leave gaps or lock in an ineffective architecture for years to come.

The carbon market is more than a price signal: since 2013, it has generated more than €270 billion in auction revenues. The European Commission now wants to use these revenues more strategically. A new Industrial Decarbonisation Bank and an ‘Investment Booster’ could support technologies nearing commercial deployment, while the Innovation Fund would focus on breakthrough, first-of-a-kind projects.

The Innovation Fund shows why getting this division of labour right matters. It is coming under scrutiny, with 40% of funded projects reporting delays and a growing number stuck before financial close. In a new analysis, Ciarán Humphreys examines why, and argues that the ETS review offers an opportunity to redesign the Fund around the risks it is best placed to address. More broadly, today’s fragmented landscape of EU instruments must become a continuum, where each tool tackles the risks it handles best, allowing projects to move from one phase to the next.

The Commission has drawn the blueprint and will design the tools. But how well stocked the toolbox is, and how firm the carbon-price signal underpinning it, will be settled with Member States and the European Parliament. Benoît Leguet, Managing Director at I4CE argues in his latest op-ed, any sign of hesitation will be read as encouragement by companies that have yet to engage in decarbonisation.

Rarely does Europe get the chance to take a step back and reimagine its cleantech financing toolbox. A coherent design process could leave the bloc with a suite of tools best suited to every task – but with political pressure and looming elections, the risk is that a rushed job leaves the toolbox in the same jumble as before. The stakes go beyond the climate: for a continent poor in resources, a strong clean industrial base is Europe’s best bet for staying competitive.

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L’article Europe’s cleantech toolbox is taking shape est apparu en premier sur I4CE.

“Europe can, must and will stay on course towards our climate targets.” A clear message from the President of the European Commission during her recent State of the Union speech. Europe must stay on course. It goes without saying, as the Commission President pointed out: the European Union is poor in fossil fuels, and its only chance of remaining competitive is to free itself from its costly dependence on imported fossil fuels and to move steadily towards carbon neutrality. The Strait of Hormuz is there to remind us of this every day.

Furthermore, following ‘the hottest summer on record’, as Ursula von der Leyen put it, we must step up our efforts on adaptation to climate change. This applies both to crisis preparedness and management and to reducing our vulnerabilities to a changing climate.

So, what does it take for Europe to stay on course? The EU’s road map for moving towards carbon neutrality, the Green Deal, was agreed in 2019 in a very different political climate. We have since come through the summer of 2026; and, with the war in Ukraine and then in Iran, we have seen a surge in fossil fuel prices. This stark revelation of our vulnerabilities should strengthen our ambition and determination.

Yet Europe finds itself – paradoxically – in a political climate less conducive to a productive debate on ‘climate’ issues. This is true at the level of the European Parliament. It is also true at the level of the Member States. Still, it will be critical for Ursula von der Leyen’s ambition to stay on course to ensure that the EU Member States remain on board with not just the long-term view but also agree on how to get there.

The timing is just right. In the coming weeks, there will be ample opportunity to gauge the extent to which Member States are aligned with the President’s ambition.

Negotiations on the Emissions Trading System

The first opportunity will be the negotiations on the EU’s Emission Trading System (ETS), the CO2 allowance system for industry. The Commission has put forward proposals to reform the system. It is a delicate balancing act between measures designed to encourage investment in the decarbonisation of European industries and measures aimed at lowering the price of carbon.

These proposals have not yet garnered clear or widespread support from the Member States, although coalitions of Member States are pulling in different directions. Beyond the differences between Member States, it is indeed necessary to resolve differences within Member States – a number of which, including France, are still fleshing out their positions; between industrial sectors; and within industrial sectors, between industries capable of decarbonising and those which are not yet able to do so.

Whilst there are though decisions to be made, one point is clear: Europe’s only chance to improve its competitiveness is by freeing itself of imported fossil fuels. Signs of hesitation on this, will be read as an encouragement to the enterprises who are not engaging in the decarbonisation.

Preparing for crises

The second opportunity will be the ambition to improve the resilience and crisis preparedness of the EU and its Member States. After a thorough preparation phase, the European Commission will publish the much-anticipated new framework for climate change resilience and risk assessment by the end of October. In several Member States the different implications of this summer’s heat waves, fires and droughts are still materialising. Likely proposals to align the risk assessments practices in Member States and to consider a common reference trajectory when developing national plans should fall into fertile ground. Still, the new framework needs to tread a careful balance with national competences for land use and planning as well as economic opportunities to get all Member States fully on board.

Taking an aim at just this, Ursula von der Leyen highlights the potential of tapping into a huge market for adaptation technologies, which Europe can lead. That is the carrot. But alongside the carrot, the stick of climate change must spur us to think quickly, effectively and collectively to reduce our vulnerabilities.

Staying the course may well be one of the European Union’s existential challenges. Only the coming years will demonstrate our collective ability to do so. And the coming months will be crucial. Not to say heated.

L’article Staying the course – with carrots and sticks est apparu en premier sur I4CE.

Established in 2019 with its first calls launching in 2020, the Innovation Fund is Europe’s leading programme to support demonstration and scale-up of the cleantech necessary for decarbonisation. With around €40 billion for 2020-2030, it is one of the largest of its kind globally. 

Innovation in clean technologies remains crucial if Europe is to reach a both fully decarbonised and more competitive economy. But bringing those solutions to market is risky and capital-intensive. A firm proving an unprecedented technology at scale struggles to build a business case that attracts private investment. Therefore, the demonstration stage depends on the public purse. 

In the Innovation Fund, the bulk of support committed to date has been in the form of grants – the “regular grants” – rather than the more recently established fixed-premium contracts auctioned under the Hydrogen Bank and Heat Auction. 

The grant portfolio is coming under serious scrutiny in 2026. In the spring of this year, the European Court of Auditors published a report assessing the Fund’s performance, with striking headline findings. By mid-2025, the Fund had awarded €12.3 billion in grants across 228 selected projects. Of that, €331.8 million had been paid out – 2.7%. 

The headline figures don’t by themselves tell you whether this is a problem. Most of the pipeline sits before financial close, and for recent additions that’s unremarkable – reaching a final investment decision takes time.

However, there are other signs of a portfolio in distress. According to the Commission’s own evaluation, 40% of projects have reported delays against the financial close date they set themselves, and some awarded in 2020 and 2021 are now past their four-year deadline for financial close. Terminations rose from eleven at the end of 2024 to twenty-eight a year later, and twenty-four of the twenty-eight never reached financial close. Many projects in the portfolio are struggling to build a convincing business case.

Why are so many projects struggling to become bankable? In its response to the Court of Auditors, the Commission points to an “exceptional and challenging market environment since 2020” – a credible explanation, with rising interest rates and import competition jeopardising cleantech investment more broadly. 

Yet market conditions are not the whole story. The design of the grants may also play a part, in three ways :

First, the Fund is asked to back a very broad range of projects. The ETS Directive gives it a mandate covering not just innovation but also “scaling up” and “broad roll-out”, so first-of-a-kind demonstrators compete in the same calls as near-commercial projects. Assessing such different projects side by side pushes selection towards what they share, chiefly the prospect of reaching financial close through offtake, supply contracts and private capital. The result is a portfolio in which many projects face commercial risk at least as much as technology risk. 

Second, a fixed capital grant is not always well suited to commercial risk. Grants are strongest where technology risk dominates and private finance would not price the project at all. Where the main barrier is commercial, a grant sized at award only helps if the funding gap stays roughly the same size. For many projects it has not: promoters cite offtake difficulties and rising capital and operating costs as barriers to financial close. When the gap widens, a fixed grant covers less of it and does less to reassure investors. 

Third, once a project stalls, little in the grant’s design forces a decision on whether it should continue. Financial close within four years is a firm deadline, but it is a long one, and it is often extended case-by-case: a delay is usually easy to justify in a market the Commission itself calls “exceptionally challenging”. A live grant costs the promoter nothing to hold, so both sides have reason to wait. The result is a pipeline of projects clustered before financial close. The Commission expects a wave of final investment decisions in 2028, but that expectation rests on agreed financial close dates, which have already slipped across the portfolio. 

The Commission is reassessing the Fund through the proposed ETS revision. From 2031, the Innovation Fund 2.0 would shrink to 200 million allowances, compared to over 500 million currently – although only a cut of €10 billion in euro value to €30 billion, based on the Commission’s working carbon price of €150/t over the next decade. Its (non-binding) recitals point it at early-stage, high-risk technologies, with scale-up and roll-out in energy-intensive industries moving to the new Industrial Decarbonisation Bank. The legal text, however, would keep its scope broad: cleantech manufacturing remains in, and support can take any form under the Financial Regulation. Unless the calls themselves change, the mismatch described above could carry straight into the new Fund. 

Meanwhile, the Fund is already moving beyond grants for projects where commercial risk dominates. The Hydrogen Bank and Heat Auction pay fixed premia on output. In June 2026 the Commission launched the Battery Booster Facility: up to €1.5 billion in interest-free loans for the capital-intensive ramp-up of battery cell manufacturing, where debt serviced by an operating plant is a more natural fit than an upfront grant. 

These new tools are, however, sitting alongside the regular grants, which still carry most of the Fund’s money and are where the stuck pipeline sits. Here the revision opens real room for change. Article 10cb – the “Innovation Fund 2.0” provision – would remove the legal language mandating a fixed funding rate, the link between disbursement and verified emissions avoidance, and the cap on how much one project can receive, leaving a future redesign to a delegated act. 

Grants remain the right tool for first-of-a-kind projects that no investor can yet price. The task is to design them for that role. Our forthcoming paper, coming in October, sets out what a grant designed for breakthrough cleantech would look like, and what the Commission can change in how it assesses and supports projects. It will be the first in I4CE’s Cleantech Toolbox series, releasing just as the EU reimagines its cleantech financing arsenal. The task ahead is to better target tools at the projects they can truly benefit, and to build a more coherent path to scale out of today’s fragmented landscape. 

L’article The Innovation Fund has a growing pipeline of stuck projects est apparu en premier sur I4CE.

Climate change is already reshaping economic realities, as extreme heat, droughts, floods and wildfires affect communities, infrastructure and economic activity across regions. At the same time, continued dependence on fossil fuels leaves economies exposed to volatile energy prices and geopolitical tensions. The urgency is clear: what we finance today must reduce, rather than deepen, existing vulnerabilities as climate- and nature-related risks intensify. Aligning financial flows with low-carbon, resilient and sustainable development is a priority that can no longer be postponed.

But how do we know where progress is being made, where gaps remain and what the effective policy levers are? After almost two years of work with Frankfurt School of Finance and Management (FS) and local partners in G20 economies, we have launched the Sustainable Finance Progress (SFP) Framework. Tested in Brazil, France, Germany, Indonesia and South Africa, the SFP provides a unique integrated approach that brings together what existing approaches often track separately:  commitments, policy implementation and financial outcomes across the main levers shaping sustainable finance. Alongside this, our new work with the World Resources Institute (WRI) on transformational finance explores how public development banks can go beyond individual projects to address systemic barriers and create the conditions for wider change.  

Ministries of Finance are among the key actors with the tools and levers to make this transformation happen. This is why we have also focused our efforts on co-creating spaces for them to exchange experiences and learn directly from one another. Earlier this month, we joined forces with key partners to support the 2nd Inter-regional Exchange of Ministries of Finance for Climate, which brought together representatives from Africa and Latin America and the Caribbean in Salvador de Bahia, Brazil. Over three days, they shared practical experiences on managing climate-related fiscal risks, strengthening fiscal and financial resilience, and addressing governance challenges for implementation. There is no single blueprint, but better evidence, more effective use of financial tools and stronger learning across countries are essential elements to accelerating the transition towards more resilient and sustainable economies.

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L’article Towards resilient economies: from progress to transformation est apparu en premier sur I4CE.

From 9 to 11 September 2026, representatives from Ministries of Finance from Africa and Latin America and the Caribbean (LAC) gathered in Salvador de Bahia, Brazil, for the 2nd Inter-regional Exchange of Ministries of Finance for Climate. 

The three-day meeting provided a dedicated space for Ministries of Finance from both regions to exchange directly on a shared challenge: how to strengthen fiscal and financial resilience in the face of climate change and related economic shocks, and translate climate commitments into implementation.

As climate impacts increasingly affect public finances, Ministries of Finance are playing a growing role in managing climate-related fiscal risks and integrating resilience into budget planning, public financial management and broader economic decision-making. Yet countries are approaching these challenges from different institutional and economic contexts, creating significant opportunities for peer learning across regions. 

Building on the first inter-regional exchange held in September 2025 in Addis Ababa, Ethiopia, the Salvador meeting brought African and LAC experiences into dialogue through country cases, technical discussions and participatory peer exchanges. Rather than a traditional conference format, the event placed Ministries themselves at the centre of the conversation, creating space to discuss not only successful approaches but also implementation challenges, institutional bottlenecks and lessons learned. 

Discussions explored the fiscal and financial instruments available to strengthen resilience to climate and disaster risks and economic shocks, as well as the institutional and governance arrangements needed to put them into practice. Participants also considered how Ministries of Finance can work across government and how experiences developed in one region can inform approaches in another, while recognising differences in national circumstances. 

Beyond the technical discussions, the exchange contributed to a broader ambition: building sustained South–South cooperation among Ministries of Finance working on climate. By connecting peers from Africa and LAC, the initiative seeks to create an ongoing space in which countries can share practical experience, identify common priorities and develop solutions grounded in the realities of emerging and developing economies. 

The exchange was convened by the LAC Regional Climate Change Platform of Economy and Finance Ministries (MEF Climate Change Platform) and the Pan-African Finance Ministers Forum for Climate Action (PAFCA), bringing together Ministries of Finance from Africa and Latin America and the Caribbean, with support from the 2050 Pathways Platform, the French Development Agency (AFD), the Inter-American Development Bank (IDB), and the Institute for Climate Economics (I4CE). 

The lessons emerging from Salvador will help inform the next steps of this growing inter-regional collaboration, with a focus on turning peer exchange into practical approaches that can support support Ministries of Finance from Africa and Latin America and the Caribbean in advancing towards more resilient economies.

L’article Second Inter-regional Exchange of Ministries of Finance for Climate est apparu en premier sur I4CE.

Europe currently invests 534 billion euros annually in the energy, buildings, transport and cleantech manufacturing sectors. To reach the 878 billion euros required to meet the EU’s 2030 objectives, an additional 344 billion euros are needed each year. In addition, the European Commission estimates that about €70 billion per year is needed in climate adaptation. For an energy-independent future, a competitive Europe and to protect the population, the EU, Member States, subnational governments and the private sector must prepare to accelerate investment.

The proposed €2 trillion EU budget (2028 – 2034) will be at the center of attention.  With limited fiscal space in many Member States, combined with a growing number of challenges to tackle, a lot of debate will focus on the overall size of the EU budget, new revenue stream for the EU, and the headline priorities. Although the EU budget is a significant public investment muscle, at 1.26% of the EU’s GNI it will remain limited compared to the collective spending power of Member States. Therefore, getting the wider toolbox right – also beyond the EU budget – will be essential.

The European Competitiveness Fund (ECF) is the EU’s best bet at financing its clean industrial ambitions. It will need not only a strong public budget allocation but also a data driven approach to guide strategic choices and investment decisions for Europe’s industries of the future. The ECF must also boost the mobilisation of private capital, including from commercial banks. Despite the ambition to support the cleantech sector, the scale-ups struggle to secure long-term bank loans. The barrier is less of a shortage of capital than a shortage of bankable projects. Helping more projects reach bankability faster will require targeted early-stage public derisking tools, stronger equity support, and local ecosystem clusters.

With the future of the EU’s Emission Trading System also up for debate, the coming months will see the acceleration of important design discussions – from launching contracts for difference under the Industrial Decarbonisation Bank to refocusing the Innovation Fund towards riskier, highly innovative projects. Revenues are crucial not only for supporting national investment in decarbonsing the industry, but for supporting European mechanisms developing the climate innovation needed tomorrow. 

The proposal for a revised Governance of the Energy Union regulation, expected towards the end of the year, is an opportunity to reinforce clean transition implementation measures. Turning the current National Energy and Climate Plans into investment plans could actively steer economic transformation and guide public and private investment for both mitigation and adaptation measures. It would deliver on investors’ demand for clear and predictable national investment strategies in the medium term, increasing resilience in the face of future energy crises.

The EU’s Integrated Framework for Climate Resilience and Risk Assessment will also be unveiled towards the very end of the year. It should lift the Europe-wide ambition on adaptation policies. In a space of overlapping competences between local, regional, national and the EU level, proposals much offer clarity on the sticky issues of who pays for the much-needed adaptation measures across different levels of government.

The proposed introduction of a “climate resilience by design” approach in the next EU budget period can go some way in ensuring that resilience and adaptation considerations are embedded in EU-funded investments in for example infrastructure, water management, agriculture, energy, transport, buildings and civil protection. If the objective is efficiency in public spending, the challenge will be to ensure a solid application across EU funding programmes.

Finally, the recent EU Electrification Action Plan focuses on reducing the price gap between electricity and fossil fuels and sets the scene for a critical debate later in the year on the Union’s electrification target. Lowering the upfront costs for electrification for end-user, including households, will be essential to ensure buy in and public support for the clean transition. This will be the backdrop for I4CE’s forthcoming research, focussing on the affordability of electric vehicles or heat pumps for low- and middle-income households in the EU and the public policies needed to effectively deliver this.   

The political agenda this autumn will provide key opportunities for policy makers to develop structural responses to the overlapping crises, which ultimately come at a high cost. Our engagement to identify the levers of the transition, informing debates and guiding decisions continue in France, Europe and internationally. More details in the newsletter below.

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L’article From wake-up call to investment action est apparu en premier sur I4CE.

As the threat of another immediate heatwave in Europe recedes, we can hope to see the end of this movie. A movie with a rich script, but not a pleasant one: overheated schools, hospitals under strain, unlivable city centers, canceled trains, parched harvests, nuclear plants running at reduced capacity, critical water levels, and unprecedented wildfires. 

Coming up next: the cost of summer 2026 

All of this has direct and indirect impacts on every sector across European countries. No one can say they went untouched this summer, whether professionally or personally. The theoretical warning has been proven by experience: our economy isn’t adapted to today’s climate — let alone tomorrow’s, as long as we keep burning fossil fuels and emitting greenhouse gases. 

The bill will fill several more scenes of the movie. First, the tally of direct summer losses: hectares of burned forest, canceled vacations, the deficit deepened by emergency aid. Then the delayed effects: impacts on the health of exposed populations; on our food systems; on homes, as rehydrating clay soils cause cracks to appear; and even on autumn weather, with an increased flood risk from a warmer sea.

Let’s skip the reruns 

We already have everything needed on the technical, administrative, and scientific fronts to avoid being condemned to live the same scene again and again every summer. So let’s not waste a good crisis. This summer’s sequence should lead to a debrief: what held up, what had to be adjusted, what failed — to understand which actions and decisions were effective, and which shouldn’t be repeated. In a few years, summer 2026 may look like the norm, but improvised, last-minute fixes — as has too often been the case — won’t cut it anymore. After the 2003 heatwave in France, crisis management improved considerably. After 2026, we need to go further on anticipation — and even if we can’t adapt to everything, go further on structural transformation.

Does the word “transformation” sound scary, evoking the “investment wall” described by Monique Barbut, the French Minister of Environment? The size of that wall depends first on what we want to protect “at all costs” and what we are willing to give up. It also depends on which adaptation options we choose: some responses might require little investment — shifting working hours during heatwaves, say, rather than fully overhauling buildings. And finally, it depends on sequencing: the goal isn’t to adapt everything within five years, but to systematically factor future climate into every investment, so that our economies gradually become more resilient. 

Seen this way, adaptation isn’t an added expense — it’s the plot for well-designed economic policy on land use planning, housing, and economic development, one that spares us considerable risk and expense down the line. 

Bring on the next saga 

After the summer 2026 that left millions of people in Europe affected, failing to offer a credible response on climate adaptation could well cost elections. It’s up to political leaders to design and implement such a response — credible, including on financing. 

L’article Groundhog Day est apparu en premier sur I4CE.

The recent heat wave in large parts of Europe reminds us that the forthcoming European framework for climate resilience and risk assessment comes with high stakes: it is about the safety of populations and the competitiveness of the European economy.

Over the past couple of weeks, agriculture and livestock farming were severely affected in large parts of Europe; homes were unlivable; public transport was struggling; energy infrastructure was challenged; classrooms and exam rooms were overheating; schools closed; sports events and cultural activities were cancelled…for many people there was a clear impact on their work life and daily routines.

Although there is both knowledge and tools at our disposal to put adaptation policies into practice, the heat wave exposed a lack of anticipation in Europe. At both the national and the local level, there will be lessons learnt about the actions and decisions which were effective, and those not to repeat.

While many adaptation measures are planned and, above all, implemented by Member State and local authorities, the impact is Europe-wide. A European framework will support greater preparedness. First and foremost, establishing a common reference warming trajectory would provide a shared baseline. On this basis, the concept of “resilience by design” must become operational in EU funding programs, ensuring that every euro of European public money effectively contributes to the continent’s adaptation. Finally, some issues are European by nature—such as the EU Civil Protection Mechanism (rescEU) or certain cross-border infrastructure projects—and therefore require an adaptation strategy designed directly at EU level.

The climate has already changed and will continue to do so. This must be incorporated into every public—and private—decision-making process going forward. In a few years, the recent heat wave may well be the new summer norm. By then, emergency responses and last-minute measures can no longer be the norm.

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L’article The heat is on est apparu en premier sur I4CE.

Uncertainty over the rules for claiming credits is presented as a major barrier to financing European agricultural carbon credits. This uncertainty points directly to what is known as “double claiming”: when a farmer engages in a low-carbon project and sells carbon credits to a third party, the agri-food company that sources from them fears being unable to account for those same reductions in its own GHG inventory. As a precaution, many companies then turn away from these projects, and even discourage their suppliers from taking part.

Our new I4CE study “Double claiming of agricultural carbon credits: time to stop worrying” shows that this fear is largely unfounded. Counting a physical emissions reduction in one’s inventory and funding it are two separate things, and they can coexist: clarifying European regulation would be enough to remove the ambiguity. We hope this work will add a useful voice to the debate. 

Alongside this publication, we are releasing two further contributions: 

• Recommendations for certifying improved forest management, as work on a CRCF methodology in this area gets underway, amid concern over the capacity of the European forest carbon sink. 

• A policy brief on best practices for the future Buyers’ Club for European agricultural carbon credits. 

These contributions share one conviction: scaling up low-carbon agricultural and forestry practices depends as much on solid public and private financing as on pragmatic and transparent rules. 

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L’article Unblocking finance for low-carbon agriculture  est apparu en premier sur I4CE.

I4CE’s latest edition of the State of Europe’s climate investment shows that Europe is moving forward, but not fast enough. After a sharp increase following the 2022 energy crisis, investment in the low-carbon transition has stagnated. It reached 534 billion euros in 2025, well below the 878 billion euros needed annually to meet the EU’s 2030 targets. Unmet investment needs do not disappear. They pile up, widening the gap and increasing the cost to reach climate neutrality for future generations. Early signals in 2026 suggest that the new energy crisis could once again push investment upward. Sustaining the tendency will require robust long-term planning. 

Europe cannot afford another cycle of crisis-driven investment surges followed by years of stagnation. The current situation calls for both immediate measures to protect households and businesses from rising energy prices, but also for structural initiatives to mitigate the impact of future crises. The EU and its Member States have concrete tools at their disposal: pursuing and resourcing electrification plans at the EU level and nationally, prioritising the clean transition in the next multiannual EU budget,, maintaining the ambitions of the CO2 emissions standards for cars and vans regulation, and ensuring that the forthcoming revision of the EU emission trading system increases investment in industrial decarbonisation.   

Above all, these policy levers must provide investors, businesses, and citizens with the clear, stable, long-term signals they need to commit to an energy independent and low carbon future for Europe. 

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L’article Accelerating investment for an energy-independent and low-carbon future est apparu en premier sur I4CE.