Innovation fund – €4 billion for decarbonizing technologies

As part of the Innovation Fund, the European Commission has announced a record €4 billion in support for the deployment of innovative decarbonization technologies. This support is financed by the EU Emissions Trading System(EU ETS). The Innovation Fund plays a fundamental role in the implementation of the EU’s climate commitments, which derive from the Paris Agreement, with the main goal of supporting the EU to achieve climate neutrality by 2050.

Scope of support

Support from the Innovation Fund can be given to projects that fall into five different categories: large-scale decarbonization projects (investment of more than €100 million), medium-scale (investment between €20 million and €100 million) and small-scale (investment between €2.5 million and €20 million), clean technology production projects and pilot projects.

Clean technology projects can include the production of components for renewable energy, energy storage, heat pumps and hydrogen production. The pilot projects are highly innovative initiatives aimed at the deep decarbonization of sectors listed in Annexes I and III of EU ETS Directive 2003/87, including environmentally safe carbon capture and utilization, and products to replace carbon-intensive products manufactured in sectors also listed in Annex I of the Directive.

Projects will be evaluated based on their potential to reduce greenhouse gas emissions, degree of innovation, maturity, replicability and cost savings. The innovation fund can cover up to 60 percent. relevant project costs.

Innovation fund

The innovation fund uses revenue generated by the EU Emissions Trading Scheme. It is estimated that in the period from 2020. By 2030. revenues will be about 40 billion euros. The innovation fund is designed to create financial incentives for companies and public authorities to invest in cutting-edge low-carbon technologies, and is expected to support Europe’s transition to climate neutrality. Previous calls for proposals have already awarded some €6.5 billion to more than 100 innovation projects.

The Innovation Fund also recently launched the first pilot auction under the European Hydrogen Bank, with a budget of €800 million available to project developers in the EEA. A condition of participation is that interested parties may not combine the support received under the Innovation Fund call and the support received under the European Hydrogen Bank pilot project.

Innovation Fund vs European Green Deal

The Innovation Fund is fully aligned with the priorities of the Carbon Neutral Industry Act and provides funding for the low- and zero-carbon economy, helping and accelerating the demonstration and deployment of innovative low-carbon solutions in Europe. It is one of the key tools of the European Green Deal’s industrial plan and an important funding mechanism for promoting clean technology investments.

Under the “clean technology production” category, support can be sought for projects that include the production of components for renewable energy, energy storage, heat pumps and hydrogen production. An increased budget of €1.4 billion has been allocated to this category (compared to €700 million for the previous call for projects).

When will the projects be introduced?

Originators have until April 9, 2024. for submitting projects through the EU’s funding and bidding portal. Applicants will be informed of the results of the evaluation in the fourth quarter of next year. As envisioned, selected applicants will sign grant agreements in the first quarter of 2025.