The latest surveys and statistics show that investments into sustainable projects have been growing in the long term, also thanks to the COVID-19 pandemic. Moreover, it seems that ESG (Environmental, Social, Governance) funds are more profitable than the traditional ones. The public sector is not lagging behind in aiding sustainable transformation; it is already possible to draw new funds on the Operational Programme Enterprise and Innovations for Competitiveness (OPEIC), which can be used for driving innovation and more sustainable businesses. At a European level, new calls in the Horizon 2020 programme were announced which should help fulfil the goals of Green Deal. In addition, the European Commission published guidelines that will allow member states to compensate certain businesses for indirect costs in relation to the greenhouse gas emission trading scheme after 2021.
Investments into sustainable projects and the effect of the coronavirus pandemic
Businesses have long dealt with sustainability. Until recently, however, it was difficult to measure its benefits accurately. In contrast, the related financial costs and regulatory burden were clearly visible. This has been gradually changing over the last couple of years and the latest CFO survey shows that the perception of sustainability benefits is changing. The coronavirus pandemic has speeded up this process and there has been growing evidence that sustainability pays off – even in times of economic turbulence. In the first quarter of 2020 alone, over USD 45 billion poured into ESG funds (focused, among other things, on investments into projects related to environmental protection and social responsibility). Yet in the same period, investment funds as a whole recorded an outflow of funds in an aggregate amount of USD 380 billion.
At the same time, there is growing evidence that ESG funds produce a higher yield than “traditional” ones. This suggests that companies that deal with sustainability matters as part of their business operations are more resilient in times of economic shocks. However, the golden era of sustainability is yet to come. That is because the issue of environmental protection and social responsibility is becoming one of the main pillars of economic recovery plans, which the member states are preparing in reaction to economic damage caused by the coronavirus pandemic.
Last OPEIC calls in research and development for the period of 2014-2020
At the beginning of September, new grant calls were announced in the Operational Programme Enterprise and Innovations for Competitiveness (OPEIC). Applicants may receive grants amounting up to tens of millions of Czech crowns under the programmes Application, Innovation and Potential. In total, up to CZK 10 billion should be distributed. The grants are aimed predominantly at small and medium-sized enterprises; however, large enterprises can also apply if the application concerns a project with a positive environmental impact.
The Application programme supports projects aimed at implementing industrial research and experimental development activities leading to specific outputs in the form of, for example, prototypes, software, and industrial or utility models (the application deadline is 15 December 2020). The Innovation programme is aimed at supporting projects introducing new or innovated products, technologies or services into production and on the market (the application deadline is 29 January 2021). The Potential programme supports projects aimed at building or expanding industrial research, development and innovation centres (the application deadline is 23 November 2020).
EU member states can compensate manufacturers for costs of emission allowances
The EU has long been striving to reduce carbon emissions caused by production. One of the tools to achieve this goal is to keep increasing the price of emissions that producers freely trade with under the European emission trading scheme. However, a negative consequence of this effort is a problem known as “carbon leakage”. To reduce production costs and maintain competitiveness on global markets, European producers move their production capacities to more “climate benevolent” countries. That is why in September, the European Commission published new guidelines, which govern state aid to companies in areas most vulnerable to carbon leakage (e.g. steelmaking). If specific conditions are met, member states will be allowed to provide state aid to these producers, covering up to 75% of indirect costs incurred in relation to the producers’ participation in the emission allowance trading scheme. The state aid should prevent the transfer of production from the EU to third countries, help producers stay competitive and at the same time help fulfil the goal of carbon neutrality.
New calls in the Horizon 2020 programme
With its budget of almost EUR 80 million for the period 2014–2020, Horizon 2020 is the largest research and innovation programme of the EU. At the end of September 2020, the European Commission published the last calls on its website for grant applications in a number of individual programmes, which are aimed at helping to fulfil the goals of the Green Deal. The deadline for submitting the applications is 26 January 2021 and support is aimed at projects focused for example on the following:
- Prevention and fight against forest fires
- Finding a fossil fuel replacement
- Innovations supporting the “farm-to-fork” strategy
- Social changes as part of the Green Deal
- Innovations for adapting to climate change at a regional level
- Green airports and harbours or climate-neutral and socially innovative cities