Climate Action

Innovation Fund

Policy

The Innovation Fund is one of the world’s largest funding programmes for demonstration of innovative low-carbon technologies.

Innovation Fund

The Innovation Fund focuses on:

  • Innovative low-carbon technologies and processes in energy intensive industries, including products substituting carbon intensive ones
  • Carbon capture and utilisation (CCU)
  • Construction and operation of carbon capture and storage (CCS)
  • Innovative renewable energy generation
  • Energy storage

The EU Emissions Trading System (EU ETS), the world’s largest carbon pricing system, is providing the revenues for the Innovation Fund from the auctioning of 450 million allowances from 2020 to 2030, as well as any unspent funds from the NER300 programme.

As the successor of the NER300 programme, the Innovation Fund improves the risk-sharing for projects by giving more funding in a more flexible way through a simpler selection process and is also open to projects from energy-intensive industries.

For the period 2020-2030, the Fund may amount to about €10 billion, depending on the carbon price. In parallel to the Innovation Fund, the EU ETS provides the main long-term incentive for these technologies to be deployed.

The Innovation Fund is a key funding instruments for delivering the EU’s economy-wide commitments under the Paris Agreement and its objective to be climate neutral Europe by 2050, as recognised also in the European Green Deal Investment Plan.

The first call for proposals under the Innovation Fund contributes to the green recovery of the EU economy by helping businesses invest in clean energy and clean industry to boost economic growth, create local jobs and give a competitive advantage to EU industry.

What will be funded?

The Innovation Fund will focus on highly innovative technologies and big flagship projects with European value added that can bring on significant emission reductions. It is about sharing the risk with project promoters to help with the demonstration of first-of-a-kind highly innovative projects.

It aims to finance a varied project pipeline achieving an optimal balance of a wide range of innovative technologies in all eligible sectors (energy intensive industries, renewable energy, energy storage, CCS and CCU) and Member States.

At the same time, the projects need to be sufficiently mature in terms of planning, business model and financial and legal structure.

The Fund will also support cross-cutting projects on innovative low-carbon solutions that lead to emission reductions in multiple sectors, for example through industrial symbiosis.

The Fund is also open to small-scale projects with total capital costs under €7.5 million which can benefit from simplified application and selection procedures.

Application process

The application process has two stages:

  • Expression of interest, with a first assessment on the project effectiveness, innovation and maturity level. Projects that meet only the first two criteria may qualify for project development assistance.
  • Full application, where projects are assessed on all the criteria, including scalability and cost efficiency.

For small-scale projects, the application process will have only one stage.

Project proponents can apply by submitting their projects when there is an open call for proposals.

The first call for proposals for large-scale projects is open until 29 October 2020. Projects can apply via the EU Funding and Tenders portal.

For more information on the first call, check the large-scale projects tab.

There will be regular calls for proposals in the lifetime of the Innovation Fund.

Selection criteria

Projects will be selected based on:

  • Effectiveness of greenhouse gas emissions avoidance
  • Degree of innovation
  • Project maturity
  • Scalability
  • Cost efficiency

The detailed scoring and ranking methodology, as well as possible additional criteria for geographical and sectorial balance, are set in each call for proposals. For small-scale projects, the selection criteria can be simplified.

For the criteria of the first call for proposals for large-scale projects, check the Funding and Tenders Portal.

Grant financing

The Innovation Fund will support up to 60% of the additional capital and operational costs linked to innovation.

The grants will be disbursed in a flexible way based on project financing needs, taking into account the milestones achieved during the project lifetime.

Up to 40% of the grants can be given based on pre-defined milestones before the whole project is fully up and running.

Grant financing

Implementation

European Commission

The European Commission, assisted by the implementing bodies INEA and EIB is tasked with the overall management of the Innovation Fund. The final responsibility for the selection of projects that will be awarded the Innovation Fund grant or the PDA support lies with the Commission.

For the development of the Innovation Fund, the Commission is assisted by the Innovation Fund Expert group. Information on the group and its meetings is available in the Register of Commission Expert Groups, while its work in preparing the first call for proposals is available under the large-scale projects tab.

Executive Agency for Innovation and Networks

The Commission has designated the Executive Agency for Innovation and Networks as the implementing body of the Innovation Fund. It will:

  • manage the calls for proposals and all related procedures
  • provide guidance and support for applicants
  • manage the project proposal submission and evaluation processes, including eligibility checks
  • sign grant agreements
  • disburse the Innovation Fund grants
  • monitor the technical/financial management of projects in the Innovation Fund portfolio
  • provide expert technical support and services to project promoters
  • monitor and control projects ex-post, including management of recoveries
  • ensure visibility of the programme, available funding, results and achievements via communication actions and products, including events.

INEA will report regularly to the Commission and provide feedback on general orientations for further development of the Innovation Fund.

European Investment Bank

The European Investment Bank is responsible for the provision and management of the Project Development Assistance (PDA) support. The EIB will also be in charge of the monetisation of the Innovation Fund allowances and the management of the Innovation Fund revenues. The EIB will report regularly to the Commission.

Member States

Member States actively participate in the implementation of the Innovation Fund. They are consulted on key decisions, including:

  • decision to launch the call for proposals,
  • maximum amount of the Innovation Fund support to be made available for the PDA,
  • list of pre-selected projects for PDA support and
  • list of pre-selected projects for the Innovation Fund grants, prior to the award of grants.

If requested by the Commission, Member States will also advise and assist the Commission in setting general orientations for the Innovation Fund, as well as in addressing problems in the implementation of a project. Regulatory and financial support from a government or local authority will be an important element to evaluate the maturity of projects.

Other forms of support and funding synergies

Innovation Fund grants can be combined with funding from other support programmes, for example:

Other forms of support and funding synergies

Innovation Fund and State aid

The Innovation Fund grant is not considered to be State aid. To cover the remaining costs, a project applicant can combine the Innovation Fund grant with public support by a Member State.

The amount of public support for a project will depend on the cumulation thresholds of the applicable State aid rules, such as:

  • the Guidelines on State aid for environmental protection and energy – EEAG (2014/C 200/01) ;
  • the General Block Exemption Regulation – GBER (651/2014) ;
  • the State aid rules applying to the Important Projects of Common European Interest – IPCEI (2014/C 188/02).

The above-mentioned State aid measures are currently under review and possibly subject to update.

Stakeholder engagement

In 2019, the Commission organised an Innovation Fund Tour of workshops hosted by sector associations and Member States to prepare the first call for proposals.

The Commission presented the new funding instrument and the essential elements to be developed for the first call, while companies came forward with their project ideas and discussed key sector-specific issues.

The list of projects presented at the workshops helped the Commission gather real life examples as test cases for various methodologies on the selection criteria.

More information:

More information

For more information you can contact the Innovation Fund Team at DG Climate Action at CLIMA IF EXPERTGROUP.

Large-scale projects

The Innovation Fund delegated regulation defines as ‘large-scale’ projects with capital expenditure above EUR 7.5 million, and as ‘small-scale’ projects below this threshold.

How to apply

The first call for large-scale projects is open until 29 October 2020.

You will find all information and documentation needed at the Funding and Tenders Portal, including the call text, application forms and Frequently Asked Questions.

More information is also available on INEA website.

Webinar

On 14 July, we are organising a webinar on the application process of the first call of the Innovation Fund. The webinar is taking place from 14.00 to 16.00 CET and it will be webstreamed (no registration needed). During the webinar, we will briefly present the key features of the call, explain step by step the application forms and answer questions from participants. You can already ask questions via Slido using the event code #IF1C.

Key elements of first call for large-scale projects

The first call will fund clean energy and clean industry innovative investments to contribute to the green recovery of EU economy and maintain the momentum in EU journey to climate neutrality.

Key elements of the first call for proposals for large-scale projects:

Timing

Event Timing
Launch of large-scale call 3 July 2020
Deadline for submission of applications to 1st stage 29 October 2020
Information on evaluation results and invitation for the 2nd stage or PDA Q1 2021 (indicative)
Deadline for submission of applications to 2nd stage Q2 2021 (indicative)
Information on 2nd stage evaluation results Q4 2021 (indicative)
Award of the grants End 2021 (indicative)

Preparation of the first call for large-scale projects

The first call for large-scale projects was prepared throughout 2019 and 2020 with the active involvement of the Innovation Fund Expert Group.

5th meeting Innovation Fund Expert Group

On 5 June 2020, the Innovation Fund Expert Group had a live-streamed virtual meeting.

The following background documents informed the discussions:The following background documents informed the discussions:

These build on the discussion papers developed for the technical workshops in February and March and subsequent feedback received.

Technical workshop on project maturity, scalability and innovation selection criteria

On 12 March, a web-streamed workshop addressed the project maturity, innovation and scalability selection criteria, due diligence, project development assistance and knowledge sharing under the Innovation Fund.

Technical workshops on GHG emission avoidance and relevant costs

On 5-6 February 2020 a group of technical experts selected by the members of the Innovation Fund Expert Group (IFEG) met to discuss potential methodologies to estimate GHG emissions avoidance and relevant costs of innovative projects eligible for funding under the Innovation Fund, in the preparation for the first call for proposals expected for June 2020.

4th meeting Innovation Fund Expert Group

On 18 December 2019 the Innovation Fund Expert Group (IFEG) met to start the final preparation for the first call.

3rd meeting Innovation Fund Expert Group

On 28 March 2019, the Innovation Fund Expert Group met to start the discussions on the preparation for the first call.

2nd meeting Innovation Fund Expert Group

On 4 December 2018, the Innovation Fund Expert Group met to discuss the draft Delegated Regulation on the operation of the Innovation Fund.

1st meeting Innovation Fund Expert Group

On 8 June 2018, the Innovation Fund Expert Group met for the first time to discuss its role, the lessons learned from the NER 300 programme and the rules for financing, application, project selection and governance of the Innovation Fund.

Small-scale projects

The Innovation Fund is also open to small-scale projects with total capital costs below EUR 7.5 million. They can benefit from simplified one-stage application and selection procedures.

The Commission is working on the first call for small-scale projects to be launched in end of 2020.

Legal framework

First call for large-scale projects

Financing decision

Innovation Fund regulation

Innovation Fund Expert Group