What you need to know about the Innovation Fund

Innovation Fund is a programme of DG CLIMA that builds on the lessons learned from the NER300 programme. The programme is expected to allocate some 38 billion euros until 2030, to finance the decarbonisation of Europe. It is one of the key elements that should help in the European Commission’s strategy for a climate-neutral Europe by 2050 outlined in its communication A clean planet for all.

The funds come from the European Union Emissions Trading System (EU ETS). And from the end of 2022 they are also supported by REPowerEU, the EU’s plan to eliminate dependence on Russian fossil fuels.

Who’s it for?

This is a great opportunity both for the energy sector and for industrial sectors such as steel, chemicals, paper, cement, ceramics, maritime, land transport, buildings and other energy-intensive industries. The Innovation Fund is therefore primarily aimed at companies.

Who manages the Innovation Fund?

The Innovation Fund calls for projects will be managed by the European Climate, Infrastructure and Environment Executive Agency (CINEA), the same one that manages programmes such as CEF – Connecting Europe Facility, or or the energy or transport demonstration projects in Horizon Europe.

INEA aims to make grant management easy and flexible, based on milestones and the degree of compliance with emission targets, unlike other programmes based on technical and economic justifications.

What’s new in Innovation Fund

• In its early stages, the Innovation Fund calls were defined by the scale of the projects they targeted. This led to the creation of the Large Scale and Small Scale calls, which shaped the initial steps of the programme. However, at the end of 2023, the Net Zero Technology call was introduced. This new call, whose second edition was launched on 3 December 2024 with a budget of €2.4 billion, is open to small-scale projects (investments between €2.5 million and €20 million), medium-scale projects (investments between €20 million and €100 million), and large-scale projects (investments exceeding €100 million). Under the umbrella of the Net Zero Technology call, there are also two additional topics. The first focuses on projects for the construction and operation of facilities to manufacture key components for alternative energy technologies (Clean-Tech Manufacturing). The second is dedicated to battery projects for highly innovative pilot initiatives in key sectors. The deadline for proposal submissions is 24 April 2025.
• In parallel with this main call, the second auction for mature renewable hydrogen projects, under the framework of the European Hydrogen Bank initiative, was also launched on the same day, with a submission deadline of 20 February 2025.
• Additionally, 3 December 2024 marked the launch of the first Batteries call, aimed at financing projects related to the manufacturing of battery cells for electric vehicles that demonstrate innovative technologies, processes, or products that are sufficiently mature and hold significant potential for reducing greenhouse gas emissions. The deadline for this call is also 24 April 2025.

What exactly does technological novelty mean?

We are not talking about R&D projects, which would reach a technological readiness level (TRL) 7, but in this case we would be in a TRL8: the first industrial application of a technology (first-of-a-kind projects) or with technologies that are not yet commercially available. Only projects that are innovative in relation to the state of the art will be financed.

How are the avoided greenhouse gas emissions calculated?

INEA will provide guidelines to clearly calculate the avoided greenhouse gas emissions, whether CO2 or other gases included in the Emissions Trading Scheme. The calculation methodology will be different depending on the type of project: a renewable project is not the same as an industry project, and an energy storage project is not the same as a carbon capture and use project.

What is the maturity of the project?

The project is considered mature if it is ready to be evaluated by investors. A company’s investment project, as it would be presented to the company’s CEO or to potential investors or banks, is the basis for an Innovation Fund application.

What is the difference between a Horizon Europe project and an Innovation Fund project?

The Innovation Fund will fill the funding gap that lies behind the R&D projects usually funded by  Horizon Europe, and which hinder the first commercial projects of a technology before it is mature.

The Innovation Fund proposes to subsidise real investment projects, with high innovative content and in many cases with very high investment values. Furthermore, as these are investment projects, no consortium is required: a company can submit an individual application to the Innovation Fund, although it is also possible to do so in a consortium.