Good practice:

Pilot project on funding for the reduction of CO2 emissions in Austria (financing not linked to cost

The Austrian environmental subsidy scheme (Umweltförderung im Inland – UFI) is the central national funding programme for the country’s environmental policies and supports Austrian enterprises increasing their energy efficiency and use of renewable energy sources.
In accordance with Regulation 1046/2018, it is possible to make reimbursements from the EU budget in a form of financing which is not linked to costs of the relevant operations but is based on the fulfilment of conditions (‘financing conditions’). This pilot project is being conducted as an “operation” in accordance with Art. 2 Regulation 1303/2013 using CO2 emission (tonnes per year) reduction as financing conditions aretonnes (Annex to Delegated Regulation 694/2019).
As one out of 16 current intermediate bodies, KPC now acts as a beneficiary for the “operation” on behalf of and for the account of the Federal Minister for Climate Action, Environment, Energy, Mobility, Innovation and Technology.
In order to fulfil the required financing conditions, KPC is continuing to manage individual projects allocated to the “operation” based on the Austrian Environmental Support Act, the Austrian Guidelines for Environmental subsidy scheme and other relevant national regulations.
KPC settles accounts with the managing authority (MA) (= ÖROK Secretariat) and the European Commission (EC) based on the agreed financing conditions.

The financial volume of the “operation” comprises 14.625 million euros of ERDF funds, which corresponds to approximately 54.17 million euros of total funds. By December 2020, 497 projects with a potential reduction in CO2 of around 150,000 tonnes had been approved (funds paid out for 107projects)

The final objective of this operation is a total of 58.500 tonnes of reduced CO2 emission by the end of 2023. For this purpose the already existing indicator “CO34 - tonnes of CO2 saved per year” will be used.

For this pilot project of 14,625,000 euros, the target is to achieve a final financing condition of up to 58,500 tonnes of CO2 per year (14,625 million euros/250 euros a/t) by the end of the project period.

The aim for this project and the release of European funds is the use of financing conditions (as opposed to the cost-based model) to be applied in Austria so that initial insights can be gained for the purpose of assessing wider applicability in the period of 2021-2027.

Taking into account future technological developments in the area of energy efficiency and renewable energy and the resulting potential changes in the market and falling investment costs, 250 euros/t was determined to be a realistic and valid accounting unit for calculating the ERDF funding costs for the current period of the pilot project.
In the future, similar indicators or “accounting units” could be identified in other funding areas (including outside of KPC) so that the “financing not linked to costs” method could be applied here as well