Imaduddin Ahmed, PhD – Academic Board Member, Paddy Ashdown Forum

Professor D’Maris Coffman – Professor of Economics and Finance of the Built Environment, University College London Bartlett School of Sustainable Construction 

European Liberal Forum – A European Industrial Policy – Preparing the ground for innovation | November 2021

Background

Europe has several funds to support technological and business process innovation geared towards combatting climate change. Since these largely came about through bureaucratic processes that largely circumvented political debate, we will make the case for a European innovation seed fund in a political forum, and will argue for slightly different mandates and investment theses from what has been provided. But before we do that, we will present a brief overview of Europe’s existing innovation funds.

The European Commission recently established an Innovation Fund that made its first call for small scale and large-scale investments in 2020 and launched its second call in October 2021. The Innovation Fund was established under the revised EU Emissions Trading System (ETS) Directive 2003/87/EC, supporting the European Commission’s strategic vision for a climate neutral Europe by 2050, as outlined in its communication “A Clean Planet for All” of 28 November 2018 and in the European Green Deal Investment Plan (European Commission, 2019c, no date b).

The Innovation Fund’s aim is to offer financial support low-carbon technology demonstration projects in energy-intensive industries, renewable energy, energy storage and carbon capture, use or storage in all Member States until 2030 (European Commission, 2019a). The fund will offer this support while adapting to market needs and projects’ profiles, and while attracting additional public and private resources. It will fund projects with high innovation and business potential and provide synergies with other European Union programmes (European Commission, 2019a). The Innovation Fund is financed by revenues from the auction of emission allowances from the EU’s Emissions Trading System (European Commission, 2021a) and with a projected budget of EUR 25 billion by 2030 (assuming a carbon price of EUR 50/tCO2e). It is implemented by the European Climate, Infrastructure and Environment Executive Agency (CINEA), while the European Investment Bank provides the project development assistance to promising projects that are not ready for full application (European Commission, 2021a).

While the Innovation Fund aims to support innovation from pilot to pre-commercial-scale up, another European institution, Horizon Europe, supports technological solutions cross the “valley of death” to the market.

Figure 1 EU institutions funding innovation

Source: European Commission, 2019b

Like the Innovation Fund, the Horizon Europe programme aims to tackle climate change, as well as help achieve the UN’s Sustainable Development Goals and boost the EU’s competitiveness and growth by funding research and innovation. It has a budget of EUR 95.5 billion and is focused on supporting innovations with disruptive potential but which may be too risky for private investors; 70% of the budget is earmarked for small and medium sized enterprises (European Commission, no date a). To pursue these purposes, the Horizon Europe programme set-up the European Innovation Council earlier this year together with the dedicated equity fund, the European Innovation Council Fund (European Commission, 2021b).

Besides these two sources of funding for innovation targeted at reducing greenhouse gas emissions, increasing climate resilience and reducing inequalities in Europe, the

• European Investment Bank runs the InnovFin Energy Demo Projects fund which provides loans, loan guarantees or equity-type financing typically between €7.5 million and €75 million to innovative demonstration projects in the fields of energy system transformation (European Investment Bank, 2021);
• Connecting Europe Facility promotes growth, jobs and competitiveness through targeted energy, telecommunications and transport infrastructure at the European level (European Commission, 2021c);
• InvestEU Programme aims to trigger a new wave of more than €372 billion in public and private investments using an EU budget guarantee of €26.2 billion to boost investment, innovation and job creation in Europe over the period 2021-27 (European Union, no date);
• the Modernisation Fund is dedicated to supporting 10 lower-income EU Member States in their transition to climate neutrality by helping them modernise their energy systems and improve energy efficiency (European Commission, no date c);
• European Parliament is considering a Just Transition Fund to support ‘territories most affected by the transition towards climate neutrality’ and to avoid regional disparities growing (European Commission, 2020).

The case for an innovation seed fund

Whether the policy objective is to facilitate the low carbon transition or is merely to build a fairer, more equal society in the wake of the COVID-19 pandemic, innovation can be a driver of value in the real economy. It may, as in the case of the rapid development of mRNA vaccines, enable timely and robust responses to a public health emergency. But equally, innovation is necessary if society is to rise to the challenges of rapid decarbonisation to meet Net Zero targets by mid-century. An innovation seed fund is one of several policy instruments European governments must use to steer humanity towards climate resilience. Technological advances are necessary to reduce or mitigate greenhouse gas emissions, to adapt to rising median global temperatures (which are inevitable even if emissions reached Net Zero tomorrow) and to remediate or repair anthropogenic climate change in human time scales.

As Europeans, we also need to care about innovation taking place in Europe. Europe’s increasing dependence on the financial sector at the expense of manufacturing is a recipe for increased economic bubbles followed by financial crises, deskilled workforces, growing inequality and a loss of politically liberal and democratic values. Not only is there space for a public investment fund to seed innovation in Europe, but also there is a need for one if Europe is not to cede productivity in the face of increasing free market competition through new generation trade and investment partnerships with East Asia, India and North America.

Moreover, not only does public investment not crowd out private investment, but also private investors are rarely incentivised to invest adequately in innovation as often the social benefits outweigh the private benefits accruing to large breakthroughs due to uncaptured and dispersed positive spill-overs, impatience and risk aversion. In general, private firms will invest in low-risk, low expenditure incremental change, where returns can be quickly recovered, but where value-addition gains are relatively small.

The public sector can and does stimulate innovation through various policy instruments,including procurement, regulation, consumption taxes for undesirable outputs, tax waivers for desired outputs, as well as through the legal creation and protection of intellectual property. In an open free-trade economy, these policy instruments promote innovation globally rather than promote innovation locally. At the same time, the effect of these enabling policies is partially negated by policies that promote competition.

To ensure that the economic benefits of innovation are enjoyed as fully as possible domestically, European governments should also

• intervene by helping attract top global scientific, mathematical, engineering and administrative talent;
• provide world-class education to their populations;
• fund university research;
• nurture research hubs and collaboration between universities and the private sector; as well as
• directly fund, and mobilise private funding for specific innovation outputs and outcomes.

Why we care about innovation

The reasons why we care about innovation are numerous. In our daily lives, we care about innovation because of the benefits that accrue to us as consumers; and we care about innovation because we care about employment, wages and a high standard for ourselves and for people sharing our democracy. We care about innovation as consumers and as global citizens because of the welfare effects it brings.

Medical innovation has helped us live longer and healthier lives. Innovation in communicating knowledge – from the creation of written scripts and printing press to the creation of a network that allows us to access information anywhere in the world, to the creation of handheld devices that convert microwaves containing data into readable languages – have helped us live less ignorant and more fulfilling lives. Innovation has made our domestic housebound lives less labour intensive with vacuum cleaners and washing machines; allows us to become more worldly by allowing us to travel further from our homes faster.

Innovation can also help us address the causes and consequences of climate change.[1] Indeed, there is an imperative for technological solutions to the climate crisis.In addition to

• regulating greenhouse gas emissions,
• inducing behavioural changes among consumers and corporations, and
• investing in nature based solutions to sequester greenhouse gases and to build resilience against climate events,

European governments need to invest in emissions mitigation and resilience innovations where they believe that market forces[2] and their other interventions are not going to mobilise as much private capital as is required.  

We have very little time left to drastically reduce our greenhouse gas emissions before we cause irreversible biodiversity loss and ultimately imperil human societies. Research published by the Intergovernmental Panel on Climate Change in 2018 suggested that earth had a carbon budget of approximately 10 years (given humanity’s rate of greenhouse gas emissions) before a point of no-return in triggering Earth system feedback effects which would exacerbate the adverse effects of climate change (IPCC, 2018, p. 108; Liberal International, 2021). These irreversible system feedback effects include the thawing of permafrost in the Arctic releasing methane; weakening of the land and sea to act as carbon sinks and instead acting in the opposite way with increased forest fires and increasing bacteria in the ocean producing more CO2 (Berners-Lee, 2019, p. 272; Liberal International, 2021). What this means for Europeans is increased frequency of droughts, floods, increased food insecurity, increased diseases and bacteria, greater risks of injuries and deaths owing to more intense heatwaves and fires, and greater migration to Europe as the poor become poorer in low income countries or altogether lose their nation states under water (Biermann and Boas, 2017; IPCC, 2018, pp. 234, 238, 240–241, 244; Liberal International, 2021). 

We have already been using technologies that allow us to weather some effects of climate change. Examples of such technologies thus far in operation include curvatures on roads and rooftops that allow water to run towards drains that run to the sea, weather and hazard forecasting systems, sophisticated flood control systems that protect London and Amsterdam.

We also are already using technologies that reduce our societal greenhouse gas emissions. Examples of such technologies and processes include

• pumped hydropower; geothermal power; solar photovoltaic panels that harness the sun’s energy into electricity and thus displace some amount of fossil fuel driven energy (at least during sunlight hours);
• electric vehicles, which if used extensively, are responsible for fewer emissions than vehicles that run on fossil fuels on a lifecycle basis;
• heat pumps which extract warmth from the air or the ground, or from water and which heat buildings; 
• the sharing economy which, in the case of cars, reduces the stock of cars and hence embedded carbon on the road; and
• the circular economy which maximises the use of minerals and materials whose extraction, production and transportation emitted greenhouse gases.   

But we require more innovation in both scientific discoveries, its practical application and in the way we do things if we are to achieve the drastic reduction in greenhouse gas emissions required. Further innovations on the horizon that are in the ideation stages or pre-commercial stages include

• carbon dioxide removal technologies such as carbon capture utilisation and storage of greenhouse gas emissions from thermal power generation and industrial processes;
• green hydrogen production so that hydrogen can be used as a cheap, climate resilient and dispatchable source of energy; 
• adapting transportation to run on hydrogen; and
• solar radiation management solutions with cloud seeding or space mirrors;
• nuclear fusion and next generation nuclear fission;
• zero-carbon cement and steel;
• plant and cell-based meat and dairy.

With energy used in industry, transport and buildings; agriculture, forestry and land use change; industry; and waste being the main emitters of greenhouse gases, innovation must focus on making these sectors of the economy both more energy efficient and less carbon intense.

Why we care about innovation in Europe

China and the USA have been climate technological innovation leaders, but as Europeans, it is in our own interest to not rely on their continued leadership. By investing heavily in scaling solar PV production capacity, China has done much of the heavy lifting to make solar production commercially competitive. So why bother investing European taxpayers’ money into innovation when we can free-ride on the investments of others’ tax investments?

Answering this question requires a recognition that public spending in Europe has generally been devoted to counter-cyclical policy responses to crises either in the form of direct subsidies and transfer payments (in the wake of COVID-19)[3] or policies like the Juncker Plan which supported European integration in the wake of the Eurozone debt crisis. Yet for all the investment in new infrastructure, much existing regional infrastructure languished and the spatial spill-over effects were not always positive, as rural communities may have been excluded from positive network effects that resulted from better connected, larger cities. Investment in innovation can be an adjunct to industrial policy and infrastructure policy, as decarbonising transport through making road networks suitable for electric vehicles entails improvements to existing infrastructure alongside the buildout of new infrastructure. There is a lot of evidence that these kinds of investments have better welfare outcomes than standalone, new infrastructure investment in capturing the benefits of innovation. 

Relying on foreign innovation is not free-riding. Yes, we too benefit from the emissions abatement thanks to the Chinese solar industry. But we are also supporting Chinese investors and workers, rather than developing our own Greentech industries. We are not investing in our productivity, in our economic resilience and in equality between our labour and capital. By neglecting to do so, we are also not investing in our own political resilience.

Asymmetric trade with a technologically advanced economy kills the most advanced economic sectors in the less advanced country. This is known as the Vanek-Reinert effect, and is what happened when the Central and Eastern European (CEE) and newly independent countries from the former Soviet Union (NIS) integrated into world markets after the fall of the Berlin Wall in 1989. In all countries but Hungary, industrial employment fell from 1990 to 2001. In the least developed economies (Armenia, Azerbaijan, Bulgaria, Kyrgyzstan, Romania), the surplus labour from deindustrialisation moved into agriculture, lowering agricultural productivity. In the relatively more developed countries (Czech Republic, Estonia, Latvia, Poland, Russian Federation, Slovakia, Slovenia), the surplus labour moved into the service sector (Reinert and Kattel, 2019).

In the absence of state support for innovation, investment in R&D will naturally flow into sectors with high short-run profitability such as financial services. This scenario risks misallocating investment away from manufacturing industries that have enabled social democracy to flourish in Europe by providing higher productivity and therefore higher wages to a broader base of society, who with greater financial power, have secured greater political power resulting in a broad consensus around a multigenerational social contract.

There is an opportunity post-pandemic to use innovation policy and an innovation seed fund to help facilitate structural change in an economy where sectors such as retail, hospitality, tourism and commercial office space are ripe for disruption and may undergo such radical change as to re-emerge in ways that render them virtually unrecognisable. If we are to Build Back Smarter, and Build Back Better, and operate more broadly in circular economies, we need to accelerate innovation in Web 3.0 in ways that feed through to the real economy. Today, most of the interest in Web 3.0 has been around applications to financial services.

As it stands, increasing investment in financial services and away from manufacturing has contributed to rising inequality. Those not employed in finance will deskill and real wages will fall as income and wealth inequality will rise between those in finance and those not.

Why we can’t leave innovation to the private sector in our current vision of capitalism

In our current vision of market capitalism, private investors will invest less than what is socially and economically optimal in innovation.Private investors will underinvest because

• They do not want to cannibalise their own products. This happened, for example, when Radio Corporation America decided not to fund the development of liquid crystal technology of its researchers because managers were concerned that development of a rival liquid crystal display technology would undermine its highly profitable cathode ray tube television business and royalties received from licenses. (The Japanese multinational Sharp purchased the patent license for LCD, thus spelling the beginning of the end of US market dominance in television manufacturing sector.)
• The benefits of their research are not fully internalised within the company; indeed, competitors benefit. Xerox PARC invested heavily in research that benefited others. Bill Gates reportedly said to Steve Jobs, that it was as if they “both had this rich neighbour Xerox and I broke into his house to steal the TV set and found out that you had already stolen it (Hertzfeld, 1983).”
• They are highly impatient for returns. So long as high thresholds of Internal Rates of Return are socially acceptable, projects that require large capital expenditures and have long payback periods, venture capital will not invest in socially and economically valuable innovation projects. It will prioritise low capital expenditure projects with short payback periods, such as investments in software. The US Small Business Innovation Research (SBIR) serves as the first place many entrepreneurs involved in technological innovation go to for funding and supports five to seven times as many early-stage tech start-ups as does private venture capital (Gruber and Johnson, 2019).  (Not that the two are in competition: a Phase 1 SBIR grant almost doubles the chances of a recipient receiving venture capital money (Howell, 2017)). 
• They are risk averse. Left alone, multinationals will tinker with incremental innovation rather than finance game-changing but highly uncertain innovation. That is the merit of funding outsiders such as Tesla to disrupt the mature automobile market with electric vehicles. This is also why Treasuries of multinationals invest heavily in diversified portfolios of other companies’ stocks rather than in their own innovation.

Good things happen when public funds invest in R&D

‘Yes, the government will be somewhat inept—but the private sector is in general inept. How many companies do venture capitalists invest in that go poorly? By far most of them. And it’s just that every once in a while a Google or a Microsoft comes out, and some medium-scale successes too, and so the overall return is there, and so people keep giving them money’  – Bill Gates (Bennett, 2015). He calls on governments to quintuple their spend on energy and climate-related R&D (Gates, 2021, p. 200).

Many of the innovations that enrich our lives are the results of public investment in research and development.Consider that two-thirds of the most innovative drugs trace their research back to the Human Genome Project, a government-sponsored collaboration across universities and research centres spanning the USA, UK, Japan, France, Germany, India and China, the “most significant undertaking […] mounted so far in all of science”, according to the then director of the US National Institutes of Health (Gruber and Johnson, 2019).

The instant access to information you have about your surroundings as well as the world at large in the palm of hand is also thanks to public funding. Html was written at the Conseil européen pour la recherche nucléaire (CERN), the internet and SIRI were funded by the US Department of Defence, GPS came about because of the US Navy, while we have touchscreen displays thanks to the CIA. A US National Science Foundation grant funded Google’s algorithm (Mazzucato, 2018).

The US Department of Energy has helped make a transition to net zero emissions imaginable by funding nuclear, solar and battery innovations, and by funding the development of Tesla’s Model S electric car when the company was yet a start-up. By prioritising renewable procurement, the European Investment Bank, have helped Chinese suppliers achieve economies of scale and make solar PV cost competitive on a produced kilowatt-hour of energy basis. The question arises as to why in the first place Chinese and not European manufacturers were ready to meet the European Investment Bank’s demand. One reason is that since the Kyoto Protocol, European policy influencers and makers have been gaming carbon accounting by obsessing over Europe’s territorial carbon production, rather than counting imported carbon. The quickest way to show a reduction in emissions is by pursuing policies that encourage the closing down of energy and carbon-intensive manufacturing, even though Europe still requires the manufactured products, and could have played a role in reducing the energy and carbon intensity of manufacturing processes (Helm, 2021).    

Publicly funded research has had unintended benefits in addition to the intended benefits. Research has saved lives, increased our quality of life and helped us on our path to downsize our carbon footprint. It also generates economic growth, creates direct jobs, yields a return to private companies and stimulates private investment into R&D. Due to the increasing returns to scale, productivity explosions and linkages with the rest of the economy, investments in innovation can theoretically have multiplier effects[1] , resulting in more money returning to public purses through increased tax receipts than the value of the investment. This is because the euro of government investment generates more than a euro of returns on onward spending in the economy as the initial investment stimulates further investment through linkages in the economy. It is estimated that the Human Genome Project produced nearly $1 trillion in economic growth, and that US National Institutes of Health (NIH) funding on average yield three times their investment value for private firms on the stock market. The NIH itself captures 43% return on its investments and stimulates over eight times industry R&D (Gruber and Johnson, 2019).

Investment thesis for a European Innovation Seed Fund

Having made the case for a European innovation seed fund, we move onto defining its investment thesis. Innovations that should be prioritised are those that

• reduce the stock of greenhouse gases (GHGs) in the atmosphere in a manner that is safe;
• help climate vulnerable populations become more resilient to the effects of climate change;
• improve health;
• improve productivity in a low emission manner and create low emissions jobs.

The applicable discount rate for climate mitigation and resilience innovation projects ought to approach zero.Investors use discount rates to assess how quickly they need to be repaid. A high discount rate is associated with a high impatience level and a low threshold for risk. The UK Treasury uses a low discount rate for long-term infrastructure projects because the only risk it is worried about are catastrophes and because the intended benefits of infrastructure projects are meant to be spread over decades and generations. Nonetheless, it uses a positive discount rate because

1. underpinning its time preference assumption is that future generations will be more prosperous than us because of technological advancements, and
2. the risk of a catastrophe occurring is unpredictable and could negate the benefits of its investments.

Neither of these assumptions are good for the purpose of evaluating projects that are intended to drastically reduce our emissions, remove the stock of GHGs in the atmosphere and come up with ways to keep climate affected places habitable. First, precisely because we have lived carbon intense lifestyles with short-term perspectives, future generations are in danger of living much worse lives than us. We have borrowed at their expense, and it is time for us to pay back. Second, we are highly certain that catastrophes will occur if we do not invest in climate abating energy production and industrial processes.

The fund should not negatively discriminate against high capital expenditure projects with long payback periods, as these are the projects that would not be funded by private investors. On the other hand, the fund cannot favour such investments as this would induce innovators to propose longer payback periods and higher budgets than required. The fund should favour products over processes, however, to the extent that processes are lower risk investments that are likelier to be funded by private investors.

As we will seek to rectify the intergenerational imbalance through the fund’s discount rate, we will also want to weigh more heavily the benefits conferred to lower income and more vulnerable populations.This is in order to promote greater parity in our society and to strengthen democracy. In addition, the fund appraisal process should assess multiplier effects, and so look at not only the direct economic benefits of a project if it is successful, but the indirect and induced effects to the extent possible (as well as, of course, the likelihood of success).

The fund should favour the lifecycle of ventures that are likeliest to be shunned by private investors:applied research should be the fund’s majority sort of investment. A small portion of funding could be spared for “blue skies research” where the “real-world” applications are not immediately apparent, since scientific breakthroughs sometimes have more valuable outcomes than agenda-driven research. To the extent that it does this, it should carefully coordinate with existing initiatives and funding sources such as the European Science Foundation, CERN and universities to ensure that it offers additionality. It should however still invest in proofs of concept and to a lesser extent working prototypes where these are unlikely to be funded commercially in order that good ideas cross the “valley of death” to becoming self-sustaining profitable ventures that investors will flock to. It should avoid investing at stages where private investors are likely to come in, such as scaling as the technology becomes commercially viable, or where long-term or working capital loans can be made.

On the flipside, the fund should not seek to socialise risks and privatise profits, as was the case with US government investments made in Solyndra and Tesla. Where there is something to commercialise, investments should be structured as founder’s equity, the dividends of which are reinvested into further innovation projects, or, in the absence of good propositions, are paid as dividends to taxpayers. If the investment is made into high-cost life-saving medicines, investment returns can be used to subsidise the costs of procuring those medicines to consumers, or used to buy patents outright in order to disperse the knowledge and introduce competition to reduce costs to patients. Where research funded is exploratory, it is appropriate to award grants.

While we have already made the point that in order to deliver additionality, a European innovation seed fund would seek to complement rather duplicate private capital, the same is true of existing sources of public capital. Appraisers should also look to synergies with sister European government institutions, universities and companies both at the European Commission level and at via national governments (Cerniglia and Saraceno, 2020), such as the European Climate Foundation, the European Science Foundation, CERN, European development finance institutions, and Fraunhofer-Gesellschaft and Innovate UK. The administrators of the innovation seed fund should be well-networked professionals who are capable of brokering relevant introductions for expertise.

Metrics to evaluate the fund’s efficacy should be metrics that measure the intended outputs, such as:

• contributions to climate-friendly technologies
• potential for scalability
• network effects
• contribution to founder’s equity.
  

More importantly, to keep an eye on the mission-oriented goals of the fund, there should be metrics to evaluate outcomes, such as:

• what has been the effect on the stock of greenhouse gas emissions?;
• how many people has the fund allowed to live a high quality of life where they are in climate-affected parts of the world?;
• how many quality-adjusted life years (QALYs) has the fund added?;
• how much higher are wages because of the fund?

The direct, indirect and induced multiplier effects should be measured to the extent that they can be credibly attributed to the fund.

The answers to most of these questions can be monetised to calculate economic and financial returns, with the exception of the last question:

• what would have been the economic and financial values of destruction at higher temperatures that the fund prevented?;
• what would have been the cost to the economy of receiving climate induced people had the fund not enabled them to become more climate resilient?;
• how much more productive are workers?
• how much more equal is society and resilient are our democracies?

Key takeaways

The European Commission has taken the initiative to set up Europe-wide mission-oriented public funds for the purpose of promoting innovation that will help decarbonise the economy. The effort is a welcome one as investment in innovation in the absence in public spending will be less than what is socially optimal.

Public investment in innovation has a long and storied history of success, and innovation will have an important part to play in the reduction of stock of greenhouse gases in the atmosphere and in helping communities adapt to climate change, as it has in the promotion of life-saving medical advances and in delivering efficient communication systems. Investment in innovation is also important to securing productive and higher paying jobs in Europe and therefore in promoting greater equality, social harmony and more functional democracies.

A modification we would suggest for the current system is to stop socialising costs and risks and privatising returns: public investments should, wherever possible, be made in exchange for partial state ownership, so that returns can be reinvested into further innovation, can  be repaid to citizens as dividends, or be used to provide end-users with greater access at reduced costs.

Footnotes

[1] A European innovation seed fund that prioritises climate mitigation and adaptation projects could create moral hazards if it distracts attention from mitigating greenhouse gas emissions by firms and households. Even as an asset class, innovation is not the only thing we need to invest heavily in if we are to avoid the worst effects of climate change. Governments will need to invest heavily in the most ancient and least innovative solutions: natural capital – woodlands, wetlands. Creating and maintaining these in itself can create jobs, contribute to better health outcomes and increase our happiness. 
Public investment is but one policy tool required to achieve the outcomes outlined above.

As a society, we will have to reign in our consumerism; governments can nudge us with behavioural interventions such as metering our carbon footprints, small taxes on plastic bags and associating social stigma with behaviours that quickly become associated with anti-social behaviour. Regulations; outcome-oriented procurement policies; prizes; taxes; subsidies; state-brokered partnerships; support for university research; strong education systems; immigration policies that attract top science, mathematics, engineering, medical and science administration talent; industrial hubs; and a healthy balance between policies that allow innovators to economically profit from their inventions for a period, and policies that encourage competitors to both distribute the benefits of innovation at reduced prices and continue innovating, all have their parts to play.    

[2] Such as they are. A more socially-oriented market economy may do a better job of mobilising private capital to address greenhouse gas mitigation and climate resilience.

[3] In spite of state aid being generally prohibited according to the Treaty on the Functioning of the European Union (TFEU). (Innovation Fund grants are not considered to be state aid according to the European Commission.)

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