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.
Contents
What is the Breakthrough Energy Catalyst?
The Breakthrough Energy Catalyst is a new financing tool created at the initiative of Bill Gates. It 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 themes:
- green hydrogen;
- long-duration energy storage;
- sustainable aviation fuel;
- direct air capture of CO₂;
- cement, steel and plastics manufacturing.
These may be:
- demonstration projects (TRL 5-7, with a size of between €30 million and €100 million) that will de-risk an emerging cleantech;
- more mature and larger projects aiming to achieve the first commercialisation of such technologies (TRL 6-9, with a size ranging from approximately €100 million to €1 billion).
Why do innovative cleantech projects need dedicated financing?
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 compete with traditional fossil fuel-based technologies, which limits their industrial deployment and the potential for cost reduction that comes with it (technology lock-in effect).
The Catalyst therefore aims to fill this gap in the financing landscape and to unlock investments in the deployment and commercialisation of innovative solutions contributing to carbon neutrality. The goal is to allow these solutions 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.
What does the partnership with the European Union involve?
In 2021, the Breakthrough Energy Catalyst and the European Union agreed to a partnership aimed at boosting climate and energy investments. By combining financing from the Catalyst and the European Investment Bank (EIB), this partnership aims to generate €820 million in investments over the period 2022-2026.
It is intended to contribute significantly to the European Green Deal and to the Fit for 55 package, which aims to reduce the European Union’s net greenhouse gas emissions by at least 55% by 2030 compared with 1990 levels.
The EIB and the Catalyst provide equivalent amounts of grants and investments to the projects, together representing between 10% and 49% of each project’s capital needs, with grants representing a maximum of 20% overall.
How does the application process work?
The application process follows several stages:
- Applicants complete an online form.
- Within 90 days, the selected projects are invited to give a presentation.
- If the presentation is successful, the projects begin two parallel due diligence processes with the EIB and the Catalyst.
- Projects receive their first funding within one year of submitting the online form.
The selection criteria relate to the expected reductions in CO₂ and/or other greenhouse gas emissions, and to the inability to access alternative financing mechanisms (market failure).
How does european economics support its clients with the Breakthrough Energy Catalyst?
european economics is involved in numerous projects eligible for funding from the Breakthrough Energy Catalyst. For instance, in the hydrogen sector, this represents 78 projects, 48 of which have secured funding totalling €12.4 billion, while in the battery sector, it represents 25 projects, 22 of which have secured funding amounting to €7.0 billion.
With the aim of providing turnkey public funding solutions for our clients’ strategic projects, we systematically include an analysis of co-financing opportunities from the European Investment Bank (EIB) and the Breakthrough Energy Catalyst in our financing strategies.
