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INNOVATION FUND: Ready to take-off

The European Commission is in the final stages of designing the new EU Innovation Fund, which is expected to invest 10 billion euro until 2030 in projects which bring innovative low-carbon technologies to the market.

What is the Innovation Fund?

The Innovation Fund is a DG for CLIMATE ACTION programme that builds on the lessons learned from the NER300 programme, on which it multiplies its budget to a total of 10 billion euros. The funds come from the European Union Emissions Trading Scheme (EU ETS). With respect to NER300, support for energy-intensive industry projects is highlighted, in addition to energy sector projects. This is very good news, as the Innovation Fund will fill the funding gap that existed after the R&D projects generally funded by HORIZON 2020 or HORIZON EUROPE, in the first commercial projects of a technology before it is mature.

Innovation Fund proposes that real investment projects, with highly innovative content and in many cases with very high investment values, can receive a subsidy of up to 60% of their additional costs, including not only the extra costs of the investment phase but also the extra costs during the first years of operation. By financing the additional costs, co-financing with other sources is greatly encouraged, which facilitates the financial viability of the projects.

The calls for projects for INNOVATION FUND will be managed by the INEA agency. The first of the calls, for projects with CAPEX higher than 7.5 million euros, will be published in June 2020, with proposals in two phases. In the future, there will also be calls for smaller, probably more breakthrough projects with a simplified process.

The deadline for submission of the first phase is scheduled for September this year. In the first phase, the projects will be evaluated according to their degree of technological novelty, the avoided greenhouse gas emissions (GHG), and the “maturity” of the project, i.e. whether the project is ready to be evaluated by investors. The second phase of the call will close in spring 2021, and the criteria of potential market or scalability and cost-efficiency or how much support is requested in terms of expected GHG emission savings are added.

The Innovation Fund is one of the key elements that should help in the European Commission’s strategy for a climate-neutral Europe by 2050 which is described in its communication as ‘A clean planet for all’.

An investment project of a company, as it would be presented to the CEO of the company or to potential investors or banks, is the basis for an application to the Innovation Fund, and will be accompanied by a calculation of the avoided greenhouse gas emissions. INEA also aims to make the management of the grant in an easy and flexible way, based on milestones and the degree of compliance with emission targets, unlike other programs based on technical and economic justifications.

Who’s it for?

This is a great opportunity for both the energy sector and for industrial sectors such as steel, chemicals, paper, cement, ceramics, etc. that need to offset the risk of innovating in their decarbonisation strategy: projects that help to decarbonise energy-intensive industries (both their processes and products), renewable energy generation, energy storage, and carbon capture and use (CCU) or carbon captura and storage (CCS).

Based on our experience in NER300, we at ZABALA are already preparing for the new program, following very closely the definition process of the Innovation Fund, and very motivated to support pioneering projects.