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Industrial Decarbonization as a Key Element of French Government's Recovery Plan

On September 3, 2020, the French Prime Minister unveiled the priorities and milestones of France's Recovery Plan to address the economic effects of the COVID-19 pandemic. Based on three main pillars—ecology, competitiveness, and cohesion—the French Recovery Plan includes measures in favor of the decarbonization of industry, which currently represents 20% of annual greenhouse gas emissions in France. To meet the national and European objective of carbon neutrality in 2050, the French Government urges industrial companies to steer their production methods, still largely based on the use of fossil fuels, toward a low-carbon model. In order to support such change, the French Government has earmarked €1.2 billion through 2022 to improve energy efficiency, develop electrification of manufacturing processes, and decarbonize heat production.

This industrial decarbonization support plan, which will grant subsidies based on calls for proposals and expressions of interest, includes two components:

  • Support for energy efficiency: Acknowledging that greenhouse gas emissions are mainly concentrated in certain sectors and specific industrial sites, efforts to support energy efficiency will focus on sites identified as the highest emitters to assist them in significantly reducing their emissions. Calls for proposals for energy efficiency investments are managed by the French Agency for the Environment and Energy Management ("ADEME"), which establishes the rules and conditions for allocating financial aid. A first call for proposals was recently completed, with a submissions deadline of October 20, 2020, for projects representing an investment of more than €3 million. Several additional opportunities will follow through 2022. Examples of eligible projects include the replacement of an industrial process or utilities with energy-efficient equipment or technology and the installation of heat recovery equipment. For smaller-scale projects, a one-stop-shop service will be implemented, based on a predefined list of eligible equipment. For 2020, the budget allocated to energy efficiency support is €100 million.
  • Support for low-carbon heat: The purpose of this component is to offset the extra cost of less carbon-intensive energy compared to fossil fuels, in order to encourage industrial companies to switch from fossil fuels to a low-carbon heat source. Calls for proposals are also to be managed by the ADEME. The 2020 allocated budget of €100 million is directed to supporting biomass projects exceeding 12,000 megawatt-hours/year and supplying heat to manufacturing industries, particularly small- and medium-sized enterprises. An additional budget will be allocated through 2022.
For the years 2021 and 2022, ADEME will be able to commit €1 billion out of the Decarbonization Fund to support industrial projects. Such a large amount of government aid is expected to create opportunities for industries and services offering energy solutions earmarked as efficient and/or low-carbon.

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