The European Investment Bank (EIB) has announced a new €3 billion ($3.5 billion) facility for investments in cleaner heating and cooling and reducing energy demands in buildings and road transport.
The ETS2 Frontloading Facility, jointly developed with the European Commission, will be available to EU member states that have transposed the EU’s new emissions trading system (ETS2), which will introduce carbon pricing for fuel combustion in buildings, road transport and small industry, ahead of its planned start date in 2028.
It will allow these member states to pre-finance programs before the ETS2 start date and revenues begin to be collected, with investments expected to directly benefit low- and middle-income households.
“The aim is to accelerate the deployment of solutions that reduce energy and transport bills, such as heat pumps and electric vehicle schemes,” said Commissioner for Climate, Net-Zero and Clean Growth, Wopke Hoekstra. “This is part of a package of measures to ensure a smooth phase in of ETS2 and socially fair transition. And this will come on top of the Social Climate Fund.”
The frontloading facility is also expected to support measures encouraging a shift to public and shared transport, the expansion of e-mobility schemes and help to accelerate the uptake of zero-emission vehicles, e-bikes and the deployment of recharging and refuelling infrastructure.
Other measures proposed by the commission in order to ensure a smooth launch of ETS2 include amending the Market Stability Reserve Decision and implementing an earlier start of ETS2 auctions to deliver an early price signal. A statement available on the EU’s website says there is a possibility of a top-up facility at a later date.
The EU opened its first European-wide auction for decarbonizing industrial process heat in December. Known as the IF25 Heat Auction, it is aimed at supporting electrified and direct-renewable heat production with up to €1 billion available. The auction closes for applications on February 19.
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