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European Climate Infrastructure and Environment Executive Agency

Policy Background

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

IF-Driving clean innovative technologies - infographic

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.

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.

Graph grant financing