Funding of promising sectors: the revolution made in Brussels
“Long life budget deficit”! Even if nobody would dare to claim such a sentence in public, not doubt some companies from the French hydrogen sector have been recently thinking about it, especially those involved in the Zero Emission Valley project, in the Auvergne-Rhône-Alpes region. On November 30, 2017, the plan aiming at deploying hydrogen mobility over the territory, which was defined by regional authorities, together with local energy producers, charging stations and vehicles manufacturers, was approved by Brussels : 1000 zero-emission hydrogen cars are to be deployed by 2020 and “refill” (in three minutes only!) in the 20 stations that are to be built at the same time – knowing that only “green” and “local” hydrogen is to be used of course. This is a first for Europe. Moreover, this totally reshapes the way we are used to innovating and funding promising sectors.
Beyond its large coverage, this plan has a major feature: it includes the fact that the planned investments will be profitable in ten years and even defines the way to reach this objective. The time of eternal subsidies for projects whose benefits have never been demonstrated is over! In the Zero-emission valley project, both the European and regional support have been designed to ensure the launch – and only the launch! – would be a success. We can count on the banks that have accepted to grant loans to keep an eye on the overall budget. We can also count on regional authorities to ensure an adequate balance between the ambition to maximise profitability and the need to well manage the land – which is a major key of success in the long run.
Such a financing mechanism could certainly never have been created if we were not in lean years. Giving subsidies without imposing a solid business plan is so much easier! The approach, however, may deserve to be recognized and systematized, even if its authors belong to the European Commission and are not French! Taxpayers would like it. Promising sectors – including the one of hydrogen mobility – also. It would certainly boost their growth, since there is nothing like having a profitability constraint to spur all involved organizations to make efforts so that they fit with the market’s needs (in terms of products and price in particular).
In the Zero-emission Valley project, the price of hydrogen vehicles is similar to the one of diesel cars, whereas hydrogen itself is also proposed at a competitive price compared with other fuels. And that the only possible way to solve the dilemma of the chicken and the egg, which has hindered the deployment of hydrogen mobility for so long (only about 250 vehicles drive in France today): automotive manufacturers were refusing to massively produce cars until there was a clear commitment of national authorities to build hydrogen recharging stations all over the territory. In front of them, national authorities were refusing to pay until cars were available…
While the government is to publish a project bill on mobility, it may be incited to preserve combustion engines as long as possible even if they pollute, since it is often said that the great “Zero emission” ambition would cost a lot. The Auvergne Rhône-Alpes project demonstrates this is not true. That’s good news for the 48 000 French people who die prematurely because of pollution every year. Also, for the Minister Nicolas Hulot. Yes, it is possible to ban combustion engines by 2040 without widening again this famous budget deficit.”
Fabio Ferrari, CEO of Symbio
and first Vice President of AFHYPAC
“The Zero-Emission Valley project constitutes a milestone for introducing H2 as an alternative fuel for road transport in Europe, because it makes for the first time the transition from a demonstrator or real-life trial to a full market roll-out organised and lead by European industry.
In particular we are impressed by the courage and innovative strength of the companies involved as well as the outstanding support by the entire Auvergne-Rhône-Alpes region, expressed by so many letters of support of regional government and administrations, towns and transport users. The grant from the EC bridged the remaining financial gap of 20%, but at the same time assured the consortium of continuous political support from the European Union.”
Adviser to the Director
and Coordinator for Innovation, DG MOVE