Innovation Fund

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

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.

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 supporting the European Commission’s strategic vision of a climate neutral Europe by 2050.

Objectives

The Innovation Fund will:

• help create the right financial incentives for projects to invest now in the next generation of technologies needed for the EU’s low-carbon transition
• boost growth and competitiveness by empowering EU companies with a first-mover advantage to become global technology leaders
• support innovative low-carbon technologies in all Member States in taking off and reaching the market.

The Innovation Fund is designed to take into account the lessons learned from its predecessor, the NER300 programme. It is bigger and better in several ways:

• Open to projects from energy intensive industries
• Improves the risk-sharing for projects: its grants cover up to 60% of the additional capital and operational costs of innovation
• Provides support in more flexible way, following the cash flow needs of the project through pre-defined milestones
• Simpler selection process
• Stronger synergies with other EU funding programmes
• Streamlined governance and simplified decision-making

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 or business model innovation.

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 phases:

• 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.

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

The Commission aims to launch the first call in 2020, followed by regular calls until 2030.

More details on the application process, including relevant documentation, will be published in the call(s) for proposals.

Selection criteria

Projects will be selected based on:

• Effectiveness of greenhouse gas emissions avoidance
• Degree of innovation
• Project viability and maturity
• Scalability
• Cost efficiency (cost per unit of performance)

The selection criteria will be weighted according to their relative importance. The final ranking of projects will be established based on comparing the scores across and within different sectors.

The calls for proposals will set the detailed scoring and ranking methodology, as well as possible additional criteria for geographical and sectorial balance.

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 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.

Innovation Fund Expert Group

The Innovation Fund Expert Group assists the Commission with the development of the Fund and its calls for proposals.

Information on the group and its meetings is available in the Register of Commission Expert Groups. You can also check the Documentation tab.

For more information, please contact us at CLIMA IF EXPERTGROUP.

Stakeholder workshops

As part of the preparation of the first call for proposals under the Innovation Fund, the Commission has invited sector associations and Member States to organise sectoral workshops.

In these workshops, the Commission presents the Innovation Fund and the essential elements to be developed for the first call for proposals in 2020, while companies can come forward with their project ideas and to discuss key sector-specific issues.

The calendar of workshops, their conclusions and other useful information can be found under the ‘Workshops’ tab.

Other forms of support and funding synergies

Innovation Fund grants can be combined with other sources of funding, for example:

• InvestEU investment support instrument
• Horizon Europe
• Enhanced European Innovation Council (EIC) pilot
• InnovFin Energy Demo Projects
• NER300
• Connecting Europe Facility for the roll-out of key infrastructure
• Modernisation Fund and Cohesion Fund to boost innovation in all Member States
• National programmes supporting research and innovation for low-carbon technologies
• Private capital

Innovation Fund regulation

• 28/05/2019 - C(2019) 1492 - Commission Delegated Regulation (EU) 2019/856 of 26 February 2019 supplementing Directive 2003/87/EC of the European Parliament and of the Council with regard to the operation of the Innovation Fund (Text with EEA relevance.)
• 26/02/2019 - C(2019) 1492 - Commission delegated regulation of supplementing Directive 2003/87/EC of the European Parliament and of the Council with regard to the operation of the Innovation Fund, including  the Explanatory Memorandum
• 26/02/2019 - SWD (2019) 85 - Impact Assessment accompanying the document Commission Delegated Regulation supplementing Directive 2003/87/EC of the European Parliament and of the Council with regard to the operation of the Innovation Fund (Executive Summary)
• Presentation
• Factsheet
• Press release
• FAQ

Innovation Fund Expert Group

• Innovation Fund Expert Group in the Register of Commission Expert Groups

Meeting of 28 March 2019

• Presentations
  • Innovation Fund
  • European Innovation Council
  • HORIZON Europe, RFCS & Innovation Fund
  • Thematic Investment Platform
  • PIA 3: Programme des Investissements d’Avenir
• Video recording
• Invitation for stakeholder workshops

As part of the preparation of the first call for proposals under the Innovation Fund, the Commission has invited sector associations and Member States to organise sectoral workshops.

In these workshops, the Commission presents the Innovation Fund and the essential elements to be developed for the first call, such as further elaboration of the selection criteria, their scoring and weighing, relevant costs, calculation, monitoring, reporting and verification of GHG emission avoidance, milestones for disbursement and recovery, knowledge-sharing requirements, project development assistance.

More information: Invitation for stakeholder workshops

Indicative calendar of planned workshops and their conclusions: