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Innovation Fund

Policy

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

Innovation Fund

It will provide around EUR 10 billion of support over 2020-2030 for the commercial demonstration of innovative low-carbon technologies, aiming to bring to the market industrial solutions to decarbonise Europe and support its transition to climate neutrality.

The goal is to help businesses invest in clean energy and industry to boost economic growth, create local future-proof jobs and reinforce European technological leadership on a global scale.

This is done through calls for large and small-scale projects focusing 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

How is the Innovation Fund funded?

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 EUR 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 instrumen t for delivering the EU’s economy-wide commitments under the Paris Agreement and its objective to be climate neutral by 2050, as recognised in the European Green Deal Investment Plan.

What will be funded?

The Innovation Fund focuses on highly innovative technologies and big flagship projects within Europe 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 and Member States, Norway and Iceland.

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

The f und supports 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.

Application process

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

Large-scale call

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.

Project proponents can apply by submitting their projects when there is an open call for proposals. Projects can apply via the EU Funding and Tenders portal.

The first call for proposals for large-scale projects closed on 29 October 2020. For more information, check the large-scale projects tab.

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

Small-scale call

The application process is simplified and has only one stage:

  • full application, where projects are assessed on all the selection criteria, as specified below.

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

The first call for proposals for small-scale projects is open until 10 March 2021. Projects can apply via the EU Funding and Tenders portal.

For more information, check the small-scale projects tab.

Award 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 are simplified.

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

Grant financing

The Innovation Fund will support up to 60% of the additional capital and operational costs of large-scale projects and up to 60% of the capital costs of small-scale projects.

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:

A paper provides more clarifications on the combination of Innovation Fund support with other public support.

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

‘Large-scale’ are projects with a capital expenditure above EUR 7.5 million.

The first call for large-scale projects opened on 3 July 2020 with a budget of EUR 1 billion for breakthrough technologies for renewable energy, energy-intensive industries, energy storage, and carbon capture, use and storage. The call closed on 29 October 2020 and the next step is the admissibility and eligibility checks of all submissions.

Questionnaire on the Innovation Fund application process

We gathered feedback on the first stage application process of the call for large-scale projects. Thanks to all stakeholders who filled out the questionnaire. It will help improve the application process to future Innovation Fund calls.

Closure of first call for large-scale project proposals & next steps

The first call for large-scale project proposals closed 29 October 2020. The next step in the first call of the Innovation Fund is the admissibility and eligibility checks of all submissions. External evaluators will evaluate proposals that fulfil the admissibility and eligibility conditions against the award criteria.

Applicants will be informed about the results of the evaluation in the first quarter of 2021. The best ranked 70 projects will be invited to submit a full application for the second stage by 23 June 2021.

Rejected proposals that have the potential to improve their maturity may be invited for the project development assistance provided by the EIB. The information on the evaluation results from the second stage will be provided in the fourth quarter of 2021. Grants will be awarded at the end of 2021.

We received 311 applications for innovative clean tech projects, promising to reduce around 1.2 billion tonnes of CO2 during their operating period within the Innovation Fund. Further analysis shows the main technological pathways employed in the proposed projects.

How to apply

The first call for large-scale projects closed 29 October 2020. More calls will take place at a later stage in time.

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

You can start your submission on the funding and tenders opportunities portal.

More information is also available on INEA website.

Webinars

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:

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

‘Small-scale’ are projects with total capital costs below EUR 7.5 million.

The first call for small-scale projects opened on 1 December 2020 with a budget of EUR 100 million for breakthrough technologies for renewable energy, energy-intensive industries, energy storage, and carbon capture, use and storage.

It is eligible for projects with a capital expenditure comprised between EUR 2.5 and 7.5 million and focuses on innovative yet mature technologies that are ready to reach the market.

How to apply

The first call for small-scale projects is open until 10 March 2021.

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

More information is also available on INEA’s website.

Webinars

Innovation Fund webinar 1: small-scale call application step-by-step

Key elements of first call for small-scale projects

The first call for small-scale projects will fund innovative projects in clean energy and industry to support the deployment of key technologies needed to reach climate neutrality and contribute to Europe’s green recovery.

Key elements of the first call for small-scale projects:

Innovation Fund

The emphasis is on truly innovative projects that are ready for commercial deployment, for instance delivering installations to a customer in a new market segment. Besides, three key activities are encouraged: products that substitute carbon-intensive ones, net carbon removal innovations and direct air capture.

Timing

Event Timing
Launch of small-scale call 1 December 2020
Deadline for submission of applications 10 March 2021
Information on evaluation results and invitation for grant preparation August 2021 (indicative)
Award of the grants As of Q4 2021 (indicative)

Preparation of the first call for small-scale projects

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

Events

Legal framework

First call for small-scale projects

First call for large-scale projects

Innovation Fund regulation

Innovation Fund Expert Group

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