The primary focus of the Innovation Fund is financing innovative projects that significantly reduce greenhouse gas emissions. By providing substantial financial support, the EU empowers companies to scale up novel technologies that might otherwise face barriers in their development or implementation phases.

The Innovation Fund funds projects through Grants and Auctions and is targeted to supporting manufacturing, production and use in:

  • Energy intensive industries
  • Renewable energy
  • Energy storage
  • Carbon capture, use and storage
  • Net-zero mobility and buildings

Funds for the Innovation Fund are generated through the EU’s Emissions Trading System (ETS). The total budget for the fund for 2020-2030 is €40 billion.

Innovation Fund call 2023

The Innovation Fund focuses on highly innovative technologies and flagship projects within Europe that can bring about significant emission reductions. The Innovation Fund aims to support technologies, business models and processes that are not yet commercially available but represent breakthrough solutions or are sufficiently mature to be ready for demonstration at pre-commercial scale.

The total budget for the Innovation Fund call is €4 billion and the deadline for the call (for all topics) is 9 April 2024.

The grants will be given on the basis of a lump sum scheme, which allows for some budget flexibility within the project. Fixed funding rate for all the call topics is 60% of the relevant costs.Under the 2023 Innovation Fund call, five calls are open for project applications with a total budget of €4 billion euros:

  • General decarbonisation, Small-Scale projects. Total topic budget €200 million.
    • Capital expenditure above €2.5 million and up to €20 million per project
  • General decarbonisation, Medium-Scale projects. Total topic budget €500 million.
    • Capital expenditure above €20 million and up to €100 million per project
  • General decarbonisation, Large-Scale projects. Total topic budget €1.7 billion.
    • Capital expenditure above €100 million per project
  • Clean-tech manufacturing. Total topic budget €1.4 billion.
    • Capital expenditure above €2.5 million per project
  • Pilot projects. Total topic budget € 200 million.
    • Capital expenditure above €2.5 million per project

The general decarbonisation call (small, medium and large scale) can fund activities supporting innovation in low-carbon technologies and processes in all ETS sectors including carbon capture and utilisation that support innovation in low-carbon technologies and processes. It can also fund activities helping to stimulate the construction and operation of projects that aim at the environmentally safe carbon capture and storage of CO2 as well as renewable and energy storage technologies can be funded.

Clean-tech manufacturing topic supports projects for manufacturing innovative clean-tech components for hydrogen production/ consumption, renewable energy and energy storage.

The pilot projects topic aims to support highly innovative, disruptive or breakthrough technologies in deep decarbonisation needed for achieving the climate neutrality goal. Activities funded in this topic should focus on validating, testing and optimising highly innovative the highly innovative, deep decarbonisation solutions.

The evaluation criteria that will be taken into account are the amounts of emissions avoided thanks to the project implementation, the degree of innovation of such solutions, replicability, cost efficiency and technical and financial maturity.

Auction for renewable hydrogen

For the first time ever, the European Commission has also opened an auction targeting renewable hydrogen production, with a call budget of €800 million. The hydrogen auction is aimed at de-risking projects and leveraging private capital into them while helping to form market and price discovery.

Under this auction call, funding is awarded based on a competitive bidding procedure based on the price for producing hydrogen. It is therefore subject to specific conditions. The selected projects will receive support in form of a fixed premium in €/kg of renewable hydrogen produced over 10 years. The financial support is the top-up needed to make the production of renewable hydrogen financially viable for the producer.

The basic requirements for the projects include:

  • 5 MWe of newly installed electrolyser capacity in a single location (virtual pooling of capacity is not permitted)
  • Ceiling price: €4.5/kg
  • Certification that the total volume of hydrogen produced by the supported capacity achieves at least 70% of GHG savings
  • Location in the European Economic Area
  • No specific rules for different technologies, regions or actors
  • Max grant amount: not more than 1/3 of the overall budget

After having passed eligibility checks and assessments procedures (such as renewable electricity sourcing strategy, hydrogen off-take and price hedging strategy, electrolyser procurement strategy among other things), the bids are ranked by price with the incentive of lowest price winning the grant.

The Auction closes on 8 February 2024.

Information Sessions

The European Commission organises two information sessions for the new call, one dedicated to the Auction for renewable hydrogen, and one for the Innovation Projects.

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