CELEX: 
Language: en
Date: 2021-05-10 00:00:00
Title: COMMISSION DELEGATED REGULATION (EU) …/... amending Delegated Regulation (EU) 2019/856 as regards the application and selection procedures under the Innovation Fund

EXPLANATORY MEMORANDUM
            
            
               1.CONTEXT OF THE DELEGATED ACT
            
            
               The Innovation Fund was established by Article 10a(8) of Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a system for greenhouse gas emission allowance trading within the Union and amending Council Directive 96/61/EC, in order to support innovation in low-carbon technologies and processes. On the basis of the delegated powers conferred to the Commission by the same Article, the Commission adopted on 26 February 2019 Commission Delegated Regulation (EU) 2019/856 supplementing Directive 2003/87/EC of the European Parliament and of the Council with regard to the operation of the Innovation Fund, which included details on the application procedure and selection criteria.
            
            
               In particular, the Delegated Regulation (EU) 2019/856 established a two-phase selection procedure for large-scale projects. The Commission could already gather practical experience on the selection procedures as the first call for large-scale projects was launched in July 2020 with a two-phase selection procedure and the first call for small-scale projects was launched in December 2020 with a one-phase application procedure.  
            
            
               The first call for large-scale projects received more than 300 applications. In total, the applicants requested more than EUR 20 billion of grants, compared to the call volume of EUR 1 billion. A deeper look at the applications reveals a very robust and well-diversified pipeline of clean tech projects.
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                Even though the application period is not yet closed, the first call for small-scale projects also seems to raise large interest. 
            
            
               While the evaluation of the applications from the first call for large-scale project is still ongoing, a high number of mature and promising projects may not be selected due to the limited budget. In order to respond to the current high demand for support by the Innovation Fund, the Commission should be given the flexibility to choose between a two-phase and one-phase selection procedure for the call for large-scale projects, as is already the case for the call for small-scale projects. A one-phase selection procedure will offer a considerable shorter period until grant award and allow a faster support to existing pipeline of mature clean tech project in the context of a fast green recovery. 
            
            
               Based on the high oversubscription of the first call launched in July 2020 and with a view to provide faster support to innovative clean technology projects, the Delegated Regulation (EU) 2019/856 should therefore be amended in order to provide the Commission with the flexibility to decide on organising the application, and consequently, the selection procedures, in either two or one phase(s). 
            
            
               The decision to resort to the one-phase or the two-phase application procedure will be made by the Commission in consultation with the Member States on a case-by-case basis, depending on the project pipeline of promising clean tech projects from the previous calls, with a view to best match market demand.
            
            
               An additional amendment concerns project development assistance, which may be provided to projects of insufficient maturity, but having the potential to meet all selection criteria if further developed. The proposal clarifies that this assistance can also be provided in the form of technical assistance.
            
            
               2.CONSULTATIONS PRIOR TO THE ADOPTION OF THE ACT
            
            
               In line with paragraph 4 of the Common Understanding on Delegated Acts annexed to the Inter-institutional Agreement on Better Law Making between the European Parliament, the Council and the European Commission
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               , appropriate consultations were carried out in the course of preparation of this Delegated Regulation. An exchange of views on the topic was held at the meeting of the Innovation Fund Expert Group on 7 December 2020. A written consultation on the principle of the amendment, which ran between 23 December 2020 and 15 January 2021, showed strong support in its favour (eighteen favourable replies, five not favourable). The experts of the Innovation Fund Expert Group were subsequently consulted in writing between 10 and 23 February 2021 on the draft text of this Delegated Regulation and two members submitted written comments.  
            
            
               The documents relevant to the consultation have been transmitted simultaneously to the European Parliament and the Council, as foreseen in the Common Understanding on Delegated Acts. 
            
            
               The comments communicated by the expert group were taken into account when preparing the Delegated Regulation.
            
            
               The draft Delegated Regulation was published on the Better Regulation portal for a four-week feedback period from 17 March to 14 April. During this period, feedback was received from two citizens, seven businesses and eight associations of businesses, organizations and consultancies. Thirteen replies expressed a positive opinion on the introduction of a one-phase selection procedure, two a negative opinion and two did not express an opinion on the matter. Mostly, stakeholders welcomed the prospect of reduced lead time between application and grant award that the amendment makes possible. Some feedback concerned the organization of calls for proposals, such as designing calls so that applicants can provide all the information required for the submission of a sound, high quality proposal and that sufficient support to applicants is provided. 
            
            
               All feedback received regarding the provision of project development assistance in the form of technical assistance was positive.
            
            
               3.LEGAL ELEMENTS OF THE DELEGATED ACT
            
            
               The present Delegated Regulation introduces relevant amendments to Delegated Regulation (EU) 2019/856 in order to provide for the option of one-phase application procedure for large-scale projects to be funded under the Innovation Fund, and in order to clarify the forms in which project development assistance is provided. 
            
            
               Article 9(2)(d) is amended to include the mandatory minimum elements in Commission decisions launching calls for proposals compatible with a one-phase application for large-scale projects.
            
            
               Article 10 is amended in order to introduce the possibility to apply a one-phase selection procedure for large-scale projects.
            
         
         
            
               A new Article 12a is introduced, which describes the selection procedure of applications submitted in the one-phase application process.
            
            
               Article 13(2) is amended in order to include technical assistance as a form of project development assistance granted in accordance with Article 12(2).
            
            
               Article 21 is amended in order to introduce consultation of the Member States as regards project development assistance in case the one-phase application procedure is applied, and to extend the reporting obligation of the Commission towards the Member States on the implementation of award decisions to the one-phase procedure.
            
            
               COMMISSION DELEGATED REGULATION (EU) …/...
            
            
               of 10.5.2021
            
            
               amending Delegated Regulation (EU) 2019/856 as regards the application  and selection procedures under the Innovation Fund
                  
            
            
               THE EUROPEAN COMMISSION,
            
            
               Having regard to the Treaty on the Functioning of the European Union,
            
            
               Having regard to Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a system for greenhouse gas emission allowance trading within the Union and amending Council Directive 96/61/EC
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               , and in particular Article 10a(8), fourth subparagraph, thereof,
            
            
               Whereas:
            
            
               (1)Commission Delegated Regulation (EU) 2019/856
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                lays down rules on the operation of the Innovation Fund. It establishes a two-phase application procedure comprising an expression of interest and the full application.   
            
            
               (2)While the two-phase application procedure has the advantage of reducing the administrative burden for project proponents in the first phase, it increases the period between the submission of applications and the provision of funding to successful projects. The experience with the first call for proposals, where a high number of applications were received at different stages of project maturity, showed the need to reduce that period in order to allow providing timely support to mature projects. Reducing that period would also be beneficial in the context of economic recovery where investments in scaling-up of clean technologies need to be mobilised quickly.
            
            
               (3)It is therefore necessary to provide for a one-phase application procedure comprising the full application without the phase of expression of interest. The Commission should be able to choose between the two-phase application procedure and the one-phase application procedure as appropriate when deciding on the launching of the calls for proposals. 
            
            
               (4)Delegated Regulation (EU) 2019/856 provides for project development assistance for projects that do not meet the project maturity criterion set out in Article 11(1), point (c), of that Regulation, but which have the potential to meet that criterion. In accordance with Article 13(2) of Delegated Regulation (EU) 2019/856 that assistance may only take the form of a grant. In order to facilitate further development of those projects, it is necessary to allow such assistance to be provided also in the form of technical assistance. 
            
            
               (5)Delegated Regulation (EU) 2019/856 should therefore be amended accordingly, 
            
            
               HAS ADOPTED THIS REGULATION:
            
            
               Article 1
            
            
               Amendments to Delegated Regulation (EU) 2019/856
            
            
               Delegated Regulation (EU) 2019/856 is amended as follows:
            
            
               (1)in Article 9, paragraph 2 is amended as follows:
            
         
         
            
               (a)point (d) is replaced by the following: 
            
            
               ‘(d) a description of the application procedure, specifying whether a one-phase or two-phase procedure applies, and a detailed list of information and documentation to be submitted with the application;’;
            
            
               (b)point (f) is replaced by the following: 
            
            
               ‘(f) where small-scale projects are subject to a simplified application procedure in accordance with Article 10(4) and to a specific selection procedure in accordance with Article 12b, the rules on those specific procedures;’;
            
            
               (2)Article 10 is amended as follows:
            
            
               (a)paragraph 1 is replaced by the following:
            
            
               ‘1. The implementing body shall collect the applications and organise the application procedure as determined pursuant to Article 9(2), point (d).’;
            
            
               (b)paragraphs 2 and 3 are replaced by the following:
            
            
               ‘2. The two-phase application procedure shall consist of the following subsequent phases:
            
            
               (a)the expression of interest phase;
            
            
               (b)the full application phase.
            
            
               At the expression of interest phase, the project proponent shall submit a description of key project characteristics in line with the requirements laid down in the relevant call for proposals, including the description of the project's effectiveness, degree of innovation, and maturity as specified in Article 11(1), points (a), (b) and (c).
            
            
               At the full application phase, the project proponent shall submit a detailed description of the project and all supporting documentation, including the knowledge-sharing plan.
            
            
               3. Where the one-phase application procedure applies, the project proponent shall submit a full application as described in paragraph 2, third subparagraph.’;
            
            
               (3)Article 12 is amended as follows: 
            
            
               (a)the title of Article 12 is replaced by the following:
            
            
               ‘Selection procedure for the two-phase application procedure’;
            
            
               (b)paragraph 6 is deleted;
            
            
               (4)the following Articles 12a and 12b are inserted:
            
            
               ‘Article 12a
            
         
         
            
               Selection procedure for the one-phase application procedure
            
            
               1. Based on the applications received, the implementing body shall assess, for each project, the eligibility in accordance with Article 10a(8) of Directive 2003/87/EC. The implementing body shall then proceed with the selection of eligible projects under paragraphs 2 and 3 of this Article.
            
            
               2. Based on the applications received, the implementing body shall draw up a list of the projects that meet the selection criteria laid down in Article 11 and shall proceed with the project evaluation and ranking based on the selection criteria laid down in that Article. For the purposes of that evaluation, the implementing body shall compare the projects with the projects in the same sector as well as with projects in other sectors. At the end of the evaluation, the implementing body shall draw up a list of pre-selected projects.
            
            
               3. Where the implementing body concludes that a project meets the selection criteria laid down in Article 11(1), points (a), (b), (d) and (e) and, where applicable, the selection criterion established in accordance with Article 11(2), but does not meet the criterion laid down in Article 11(1), point (c), the implementing body shall assess whether that project has the potential to meet that selection criterion if further developed. Where the project has such a potential, the implementing body may award project development assistance to the project concerned or, where the Commission awards project development assistance, propose to the Commission to award project development assistance to the project.
            
            
               4. The list of pre-selected projects referred to in paragraph 2 and, where applicable, the suggestion referred to in paragraph 3 shall be communicated to the Commission and shall include at least the following:
            
            
               (a)
                     a confirmation of the compliance with the eligibility and selection criteria;
            
            
               (b)
                     details on project evaluation and ranking;
            
            
               (c)
                     total project costs and relevant costs referred to in Article 5, in euro;
            
            
               (d)
                     the request for the total Innovation Fund support in euro,
            
            
               (e)
                     the projected amount of greenhouse gas emissions to be avoided;
            
            
               (f)
                     the projected amount of energy to be produced or stored;
            
            
               (g)
                     the projected amount of CO2 to be stored;
            
            
               (h)
                     information on the legal form of the Innovation Fund support requested by the project proponent.
            
            
               5. On the basis of what was communicated pursuant to paragraph 4 of this Article, the Commission shall, after consulting the Member States in accordance with Article 21(2), adopt the award decision specifying the support to the selected projects and, where appropriate, draw up a reserve list.
            
            
               Article 12b
            
            
               Selection procedure for small-scale projects
            
            
               By derogation from Articles 12 and 12a, a specific selection procedure may be applied to small-scale projects.’;
            
            
               (5)in Article 13, paragraph 2 is replaced by the following:
            
            
               ‘2. The project development assistance shall be awarded by the Commission or by the implementing body in accordance with Article 12(2) or 12a(3) in the form of a grant or a technical assistance.’;
            
            
               (6)Article 21 is amended as follows:
            
         
         
            
               (a)in paragraph 2, point (a) is replaced by the following:
            
            
               ‘(a) the list of the pre-selected projects, including the reserve list, and the list of projects proposed for project development assistance in accordance with Article 12(2), second subparagraph, or Article 12a(3), prior to the award of the support;’;
            
            
               (b)paragraph 4 is replaced by the following:
            
            
               ‘4. The Commission shall report to the Member States on the progress made in implementing this Regulation, in particular on the implementation of award decisions referred to in Article 12(5) or Article 12a(5).’;
            
            
               (7)in Article 27, paragraph 4 is replaced by the following:
            
            
               ‘4.   The project proponents shall provide detailed information on the planned actions in accordance with paragraphs 1 and 2 of this Article in the knowledge-sharing plan submitted in accordance with Article 10(2), third subparagraph.’.
            
            
               Article 2
            
            
               Entry into force
            
            
               This Regulation shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union.
            
            
               This Regulation shall be binding in its entirety and directly applicable in all Member States.
            
            
               Done at Brussels, 10.5.2021
            
            
               
                     For the Commission
               
               
                     The President
                     Ursula VON DER LEYEN
               
               
            
         
         
            
                  
                     (1)
                  
                        See the report on the applications: https://ec.europa.eu/clima/sites/clima/files/innovation-fund/large-scale_call_statistics_en.pdf
               
               
                  
                     (2)
                  
                        Interinstitutional Agreement Between the European Parliament, the Council of the European Union and the European Commission of 13 April 2016 on Better Law-Making (OJ L 123, 12.5.2016, p.1).
               
               
                  
                     (3)
                  
                        OJ L 275, 25.10.2003, p. 32.
               
               
                  
                     (4)
                  
                        Commission Delegated Regulation (EU) 2019/856 of 26 February 2019 supplementing Directive 2003/87/EC of the European Parliament and of the Council with regard to the operation of the Innovation Fund (OJ L 140, 28.5.2019, p. 6).