Innovation Fund (InnovFund)

1 Innovation Fund (InnovFund) Call for proposals Annex C: Methodology for GHG Emission Avoidance Calculation Innovation Fund Large-scale Projects InnovFund-LSC-2021 Version 7 February 2022 EU Grants: InnovFund-LSC-2021 Call document Annex C: 2 HISTORY OF CHANGES Version Publication date Change Initial version. Clarification on the emissions to be excluded when fossil fuels are used as inputs ( ); Clarification in the example for emissions associated with transport ( ); Clarification that the combined-cycle natural gas turbine (partial load) reference in table is to be used for auxiliary grid services; a hybrid RES and ES project should never be assumed to store power from the grid at the same time as it is exporting renewable power to the grid ( ); FFCs should be placed in the combustion box of the reference scenario ( , ).

2 Clarification on the calculation of the credit in CCU projects which capture CO2 that is not generated within the project boundaries ( ); Clarifications in section dealing with rigid inputs and diverted emissions; adjustments concerning the biogenic input emissions in section 2 for EII ( ) and in RES equation in order to be in line with Section ; clarification on the classification and subsequent GHG emissions calculation for Energy Storage and Hybrid projects ( ). Clarification that double-counting should be avoided (1); Clarification concerning the emissions of non-principal products, which contain embedded carbon ( ); Clarification on reference conditions for auxiliary services provided by energy storages ( ).

3 Correction under section to specify that any additional GHG emissions is considered under Quality of the calculation, net carbon removals, other GHG savings sub-criterion. Table Unit for the substituted fossil fuel added. EU Grants: InnovFund-LSC-2021 Call document Annex C: 3 Annex C: Methodology for GHG Emission Avoidance Calculation Contents Foreword .. 5 1 7 GHG emission avoidance .. 7 Absolute GHG emission avoidance .. 8 Relative GHG emission avoidance .. 9 GHG considered and global warming potentials .. 9 GHG emissions that are generally excluded .. 9 GHG emissions associated with transport .. 10 Calculation of GHG emission avoidance: reference scenario.

4 11 Emission factors for electricity .. 12 Relationship to calculation of relevant cost .. 14 Specification of a sector for the purpose of the GHG emission avoidance calculations and principal products .. 15 Hybrid projects .. 16 Manufacturing of 18 Monitoring, reporting and verification of performance for disbursement and knowledge-sharing .. 20 2 Energy intensive industry (EII), including substitute products, and carbon capture and use (CCU) .. 22 Scope .. 22 GHG emissions avoidance .. 22 Absolute and relative GHG emissions avoidance .. 22 Life-cycle stages .. 23 System 24 Choice and construction of a processes box in the reference scenario to match the function of the project s principal product(s).

5 25 Emissions from processes (incl. carbon capture) .. 35 Emissions from inputs .. 40 Emissions from combustion (principal products) .. 49 Emissions from change to in-use (principal products) .. 50 Emissions from end of life (principal products) .. 51 Emissions from non-principal 54 Data and parameters .. 57 3 Carbon Capture and Storage .. 58 Scope .. 59 Plant of origin .. 59 59 Storage sites .. 59 System boundary .. 59 Absolute GHG emission avoidance .. 60 Relative GHG emission 62 Data and parameters .. 62 4 Renewable electricity, heat and cooling .. 64 Scope .. 65 Products .. 65 Possible types of projects .. 65 System 66 Absolute GHG emission avoidance.

6 66 Reference emissions sub-equations .. 68 EU Grants: InnovFund-LSC-2021 Call document Annex C: 4 Project emissions sub-equations .. 69 Construction of a manufacturing plant of innovative technologies components .. 70 Relative GHG emission 71 Data and parameters .. 71 5 Energy storage .. 74 Scope .. 74 Services and products .. 74 75 Energy sources .. 75 Energy sinks .. 75 System boundary .. 75 Absolute GHG emission avoidance .. 76 Relative GHG emission 81 Data and parameters .. 81 List of figures .. 85 List of tables .. 86 6 Appendices .. 87 Appendix 1. Hierarchy of data sources for inputs and products in industrial projects.

7 87 Appendix 2. Processes with a fixed ratio of outputs: definition of rigid, elastic and semi-elastic products .. 89 Appendix 3. Attribution of emissions to co-products in emissions calculations for IF projects .. 91 Appendix 4. Overview of the Monitoring Reporting and Verification requirements for IF projects .. 93 Legislation Overview .. 93 MRV specific provisions for IF projects .. 95 Appendix 5. Definitions .. 101 EU Grants: InnovFund-LSC-2021 Call document Annex C: 5 Foreword This methodology combines the previous methodologies published for the 2020 Innovation Fund calls for proposals for large-scale and small-scale projects. The texts are clarified and many examples are given based on the experience of the application and evaluation process in order to help applicants to prepare easier their submissions.

8 Applicants that have used the previous texts should take into consideration that the following changes are made: General changes The treatment of transport emissions for raw materials for EII projects has been clarified. Transport of raw materials must only be considered for waste feedstock and for biomass (see section ). Manufacturing of components. A requirement has been introduced that emissions savings from the use of manufactured components should be multiplied by the component s fractional contribution to the capital cost of a facility (see section ). The conditions under which a project may be treated as a hybrid project have been clarified, including that the RES part of a hybrid project must supply energy to the EII/ES part (see section ).

9 Classification of sectors is now placed as a separate Annex E, see details there. The following changes are made: o Deletion of CO2 transport and storage, Bio-electricity, Bio-fuels and bio-refineries and Renewable heating and cooling sectors. All CCS projects have to choose an EII or RES (only for geothermal projects) sector (but no change in the calculation), Bio-electricity and bio-heat projects choose EII/Other (but their calculation approach still follows section 4), Biofuels projects choose Refineries, Bio-refineries choose Refineries, Chemicals, Paper or Pulp depending on principal product(s), Renewable heating and cooling choose Renewable energy sector depending on the source.

10 O New sectors: Manufacturing of components for production of renewable energy or energy storage and Use of renewable energy outside Annex I. EII changes The boxes representing lifecycle stages for EII projects have been changed. Combustion (principal products) has been disaggregated from the process (es) box and is now a separate box, it has been clarified that changes to in-use emissions should be accounted only in the project scenario and not the reference scenario, and the products box has been renamed non-principal products for clarity. The explanation of how the process (es) box of the reference scenario should be filled out has been expanded into seven explicit cases.