Breakthrough Energy Catalyst (BEC)
Public funding of projects that promote the priorities and objectives of the European Union, particularly in support of the climate and disadvantaged regions.
The Breakthrough Energy Catalyst is a new financing tool created at the initiative of Bill Gates. This is a private financing fund, to which corporate foundations such as American Airlines, ArcelorMittal, Bank of America, Boston Consulting Group and Microsoft have contributed. Its objective is to accelerate the development and commercial deployment of innovative cleantech with significant potential for reducing greenhouse gas emissions. Funded projects must fall into five priority thematics: green hydrogen, long duration energy storage, sustainable aviation fuel, direct CO2 air capture and cement, steel, and plastics manufacturing. These may be demonstration projects (TRL 5-7, with a size between €30 M and €100 M) which will de-risk an emerging cleantech, or more mature and larger projects which aim for the first commercialisation of such a technology (TRL 6-9, with a size between ~€100 M and €1 B.
These projects face difficulties in accessing private capital markets due to their low technical maturity and significant levels of risk. The cost of the new targeted technologies is also too high for them to be competitive with traditional technologies based on fossil fuels, which limits their industrial deployment and the potential for cost reduction that goes along with it (technological lock-in effect). The Breakthrough Energy Catalyst therefore aims fill the gap in the financing landscape and to unlock investments in the deployment and commercialisation of innovative solutions contributing to carbon neutrality, allowing them to ultimately become competitive by reducing the green premium – that is to say the cost difference between a carbon-emitting technology and its cleaner alternative.
In 2021, the Breakthrough Energy Catalyst and the European Union agreed to a partnership aimed at boosting investments in climate energy. By combining financing from the Breakthrough Energy Catalyst and the European Investment Bank (EIB), this partnership aims to generate €820 million in investments over the period 2022-2026, in order to contribute significantly to the Green Deal for Europe as well as the “Fit for 55” package which aims to reduce the European Union’s net greenhouse gas emissions by at least 55% by 2030 compared to 1990 levels.The EIB and the Breakthrough Energy Catalyst provide equivalent amounts of grants and investments in the projects, which in total represent between 10% and 49% of the capital needs of the project – with the grant representing a maximum of 20% overall.
The application process begins with an online form to complete. Within 90 days following this first step, the selected projects are invited for a presentation. If successful after this presentation, the projects start two parallel due diligence processes with the EIB and the Breakthrough Energy Catalyst. Projects receive their first funding within a year of submitting the online form. The selection criteria relate to the expected reductions in CO2 and/or other greenhouse gases, and the impossibility of having access to other financing mechanisms (failure of the financial market).
european economics is involved in numerous projects that qualify for funding from the Breakthrough Energy Catalyst. For instance, in the hydrogen sector, there are 78 projects, of which 48 have received funding totaling €12.4 billion, while in the battery sector, there are 25 projects, with 22 of them securing funding amounting to €7.0 billion.
With the aim of providing turnkey public financing solutions for our clients’ strategic projects, we systematically incorporate an analysis of co-financing opportunities from the European Investment Bank (EIB) and the Breakthrough Energy Catalyst into our financing strategies.