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  • Grants for Environmental Technology

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    The environmental technology scheme provides grants for development and demonstration of innovative products or processes that solve an environmental problem.

    Norwegian version.

    Testing environmental technology at full scale may be very expensive and the potential return on investment is uncertain. Through this funding scheme, the State assumes part of the risk associated with developing, building and testing environmental technology.

    Grants provided by Innovation Norway must comply with EU State aid regulations. The rules require that the State aid provided must not exceed what is necessary to realise the project.

    Funding provided by Innovation Norway will be based on an overall assessment of the enterprise and project. The grant will only partially cover project costs; additional funding must be obtained from other sources.

    The Environmental Technology Scheme provides funding for innovation projects. The purpose of an innovation project is to develop or significantly improve a new product, process or service. At the core of the project are research and development activities. Our grants for innovation projects are intended to strengthen the enterprise’s competitiveness and trigger the potential for sustainable growth. The overarching goal is lasting value creation in Norway.

    Read more about the criteria for all of Innovation Norway’s innovation grants here.

     

    Who may apply for funding?

    The Environmental Technology Scheme is aimed at Norwegian enterprises of all sizes.

    The enterprise must comply with international principles for corporate responsibility.

    What is meant by environmental technology?

    The scheme is aimed at enterprises that can provide a reasoned response to the question: How will the project contribute to solving an environmental problem? The EU Taxonomy defines what is ‘green enough’ for the Environmental Technology Scheme. Read more about this under the heading ‘The EU taxonomy is important’ below.

    Environmental technology includes technologies, processes, solutions and services that are better for the environment than those currently in use. This is a broad definition that requires further clarification. A quantified description of the project’s environmental impact is required to be eligible for funding from the Environmental Technology Scheme.  An account of any potential negative impacts of the project must be provided as well.

    Environmental technology includes obvious solutions aimed at climate challenges, for example technology for renewable energy production or energy efficiency. It covers zero emission transport solutions, energy storage and energy systems, as well as purification technologies for air and water.

    However, it also includes less obvious areas of technology such as more efficient resource utilisation, solutions for the transition to a circular economy and other specific environmental challenges.

    Environmental technology also includes ‘enabling technologies’ when these have a direct or indirect positive environmental impact. These are far-reaching technologies that support other areas of technology and contribute to the development of new industries and new products. Examples of such technologies include ICT, biotechnology, and new materials/nanotechnology. These areas of technology can provide a basis for new, more environmentally friendly solutions in most areas of society, for example in food production, energy efficiency and transportation.

    To be eligible for the Scheme, the environmental impact of the project must be described and quantified. The solution must be compared to the best available technology/solution on the market. Please use comparable quantities, such as CO2 equivalents, kWh or percentage improvement. Also describe any negative impacts the solution may have (for example, increased use of resources).

    For more information on criteria for innovation projects, read here.

    Not eligible projects for the scheme

    The Scheme is not relevant for reparative measures aimed at solving local environmental challenges, but with no potential for scaling, such as clean-up after previous emissions or compliance with environmental requirements imposed by the authorities.

    The scheme does not cover routine or regular changes to existing products, production lines, production methods, services and work operations, even if such changes may constitute improvements.

    Projects that do not qualify for the EU Taxonomy will not be prioritized for the Environmental Technology Scheme. This includes environmental technology projects within the petroleum industry. Measures that may reduce the environmental impact of oil and gas production in the short term, will in a life-cycle perspective still undermine the overall goal of reducing greenhouse gas emissions.

    Aid cannot be provided for normal overheads and other operating costs. Only costs related to the project, additional to the enterprise’s ordinary operations, can be included. Marketing and sales activities cannot be supported, irrespective of whether the market is national or international.

    What sort of projects can receive funding?

    The Environmental Technology Scheme may contribute to funding at different stages of a development project.

    The purpose of the Scheme is to provide enterprises with an opportunity to test their solutions prior to commercialisation and to ensure that products are suitable for the national and international markets in which they will compete. The grant reduces the cost of project risk for the enterprise and other investors in the project.

    The Environmental Technology Scheme is primarily aimed at supplier enterprises that develop environmental technologies for sale.

    What costs are eligible?

    The grant will amount to a proportion of the total costs associated with the project, including personnel costs.

    For more information about activities that may be eligible, read here. Grants for the project activities mentioned below can be combined with innovation loans.

    Grants from the Scheme must be provided in line with the relevant block exemptions (GBER) in the State aid regulation, and the scheme primarily covers the following activities:

    Development activities (GBER 25)

    The Scheme covers development activities intended to result in new products, processes or services. Research and development activities will often comprise several phases, from exploring ideas and hypotheses, and determining principles and concept testing, to building a prototype or full-scale demonstration model. All development costs are eligible for inclusion, although as a general rule Innovation Norway expects feasibility studies for research and development to be carried out by the enterprise on its own and for these to be included as a basis for an application to Innovation Norway for the main project.

    Please note that this also applies to the development of new services. Market testing and marketing to pilot customers as part of the development are eligible for inclusion in the cost base. Partnerships between enterprises are encouraged where these result in greater competitiveness and can in some cases provide a basis for partnership bonuses.

    Aid for additional costs of investments (GBER 36 and 47)

    Within the purposes of the Environmental Technology Scheme, funding can also be provided for full-scale demonstrations of environmentally and climate friendly solutions. In these circumstances, the research and development work in the project will have been completed and the technology demonstrated for the first time at full scale.

    Additional costs refers to the additional costs associated with the chosen environmental solution compared with conventional solutions.

    The solution can have been developed by the enterprise itself or in partnership with a supplier. There are two main groups of projects that can receive aid for additional costs of investments:

    1. Aid for additional costs of investments where new solutions are being introduced and demonstrated that are better for the environment than what the EU currently requires. In this case, the projects must explain the current EU requirements, how the new solution contributes to reducing negative environmental impacts in excess of these requirements and what the additional costs of this are. (Article 36 of the State aid rules)
      A grant for up to 40% of the eligible additional costs can be provided for large enterprises, 50% for medium-sized enterprises and 60% for small enterprises. The rates can be increased by 5 percentage points in areas where rural policy applies.
    2. Aid for additional costs of investments where new solutions are being introduced and demonstrated for recycling or reusing waste or solutions that make use of waste streams in new ways. This applies to enterprises that will process waste from other enterprises (i.e. not their own waste). (Article 47 of the State aid rules)
      A grant for up to 35% of the additional costs can be provided for large enterprises, 45% for medium-sized enterprises and 55% for small enterprises. The rates can be increased by 5 percentage points in areas where rural policy applies.

    Training aid (GBER 31)

    An enterprise’s own employees often need training in connection with the implementation of new environmental technologies. This can also be supported through the Environmental Technology Scheme. Grants can cover up to 50% of the training costs for large enterprises, 60% for medium-sized enterprises and 70% for small enterprises.

    Registration for the General Block Exemption Regulation (GBER)

    The Environmental Technology Scheme has been registered with the ESA in line with the General Block Exemption Regulation (GBER). The following articles of the GBER apply to the Scheme. You can find more information about the individual articles of the GBER on the webpage about State aid rules. Please note that registration for the GBER in no way implies that all of these articles are used in practice.

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    1) Applies to feasibility studies for research and development that are eligible under Article 25 of the GBER.
    2) Aid for large enterprises is contingent on partnering with an SME, where the SME must account for a minimum of 30% of the total costs eligible for aid.
    3) Only applies to the additional costs for that part of the investments that result in greater environmental protection. The rates can be increased by 5 percentage points in areas where rural policy applies.
    4) Applies to studies prior to environmental investments (Articles 36, 37, 41 and 47 of the GBER)

    The EU Taxonomy is important

    The EU has launched its own classification system for defining what will count as sustainable economic activity, the so-called EU Taxonomy. The EU hopes that this will establish a common standard for what is approved as green, not least in the financial services market, and thus counter greenwashing and fund the transition to a low emissions society. 

    The Taxonomy Regulation was adopted by the EU in 2020, and Norway will enact it via a separate Act on sustainable finance. The draft bill was presented in a cabinet meeting on 4 June 2021 and is currently being considered by the Standing Committee on Finance and Economic Affairs. The Taxonomy is expected to have direct and indirect consequences for Norwegian industry and commerce and, therefore, also Innovation Norway’s assessments of environmental/climate related projects.

    The Taxonomy defines specific threshold values that activities must meet in order to be approved as sustainable. The EU expects that, over time, the more sustainable an enterprise is, the easier it will be for it to raise capital. ​An obligation on enterprises to provide comparable information about sustainable activities will enable investors and banks to better assess which enterprises they want to invest in or lend money to. Please note that the Taxonomy covers reporting requirements, not environmental requirements. Together with the EU’s other regulations on sustainability reporting, large enterprises and a number of financial services players have a statutory duty to report on the proportion of their turnover and investments related to Taxonomy-approved activities. However, the framework is also relevant for small enterprises, since the reporting may be required by banks, investors and customers, and the Taxonomy’s requirements will regulate access to green funding.

    ​In order for an activity to be classified as sustainable, it must satisfy the following criteria:

    ​1) Significantly* contribute to at least one of six environmental objectives:

    1. Climate change mitigation
    2. Climate change adaptation
    3. Sustainable use and protection of water and marine resources
    4. Transition to a circular economy
    5. Pollution prevention and control
    6. Protection and restoration of biodiversity and ecosystems

    2) Do no significant harm* in relation to any of the other environmental objectives

    3) Uphold the guiding principles for responsible business in line with the OECD Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights.

    * Significant contributions and significant harm are defined at the activity level through technical screening criteria for the six environmental objectives.

    ​The Taxonomy focuses heavily on the big picture. Therefore, it is important to consider all aspects of economic activity under the Taxonomy, including the use of finite resources, production and delivery methods, the circularity of commodity flows, etc.

    A project must be in line with the EU Taxonomy in order to secure a grant from the Environmental Technology Scheme.  This means that applicant enterprises must describe and quantify the extent to which their project significantly contributes to achieving at least one of the environmental objectives. This applies both when the positive environmental impact is direct and when it is indirect. In addition, any negative impacts on the other environmental objectives (point 2) must be described, as well as the extent to which the enterprise complies with the principles for responsible business (section 3).

    Common provisions for State aid

    Grants from the Environmental Technology Scheme must comply with the State aid rules. This means:

    The aid awarded cannot exceed the aid intensity specified for the justifying purpose of the aid. All forms of aid must be included in the calculation of aid. The aid is calculated as a percentage of the project costs, i.e. the cost items that are eligible for inclusion in the calculation basis.  When aid is granted for the same project from several sources of public funding with different purposes, the total amount of public support measures for the aided activity or project shall be taken into account, regardless of whether that support is financed from local, regional, national or Community sources.

    In the vast majority of cases, the aid must have an incentive effect, i.e. a triggering effect. The requirement for an incentive effect is addressed by the application being submitted before the project starts.

    The State aid rules prohibit providing aid for certain ‘export-related activities’.

    Aid cannot be provided to enterprises that are ‘in difficulty’.

    Aid cannot be provided if the recipient of the aid is being prosecuted for an outstanding recovery order to repay unlawful State aid following a decision by the ESA.

    More detailed information about these provisions in the State aid rules can be found here.