Innovation Fund

A budget of 40 billion euros for decarbonizing European industry

Innovation Fund is one of the world’s largest funding programs for industrial decarbonization

Between 2020 and 2030, the Innovation Fund invests 40 billion euros of EU ETS revenues in the commercial deployment of innovative low-carbon technologies in European industry, making it one of the world’s largest funding programs for industrial decarbonization. It finances projects focused on the following activities:

  • Innovative low-carbon technologies and processes in energy-intensive industries, including:
    • Utilisation of waste heat
    • Improvements in electrification and energy efficiency
    • Products replacing carbon-intensive ones
  • Construction and operation of innovative renewable energy and energy storage technologies or their manufacturing facilities
  • Carbon capture, utilisation and storage (CCS/CCUS)
  • Innovative hydrogen production and applications in industry
  • Innovative maritime and aviation technologies and infrastructure
  • Clean-tech manufacturing for renewable energy technologies, electrolysers and fuel cells, energy storage solutions and heat pumps (including recycling and reusing of CRMs)
  • Manufacturing of cells used in EV batteries.

What costs are funded by the Innovation Fund?

The Innovation Fund can fund up to 60% of a project’s Relevant Costs, meaning 60% of the net extra costs that are borne by the applicant as a result of the application of the innovative technology related to the reduction or avoidance of greenhouse gas emissions. Funding is disbursed in increments following the achievement of project milestones.

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Innovation Fund in short

Which sectors? Which sectors?

Sectors participating in the EU Emission Trading System are eligible for Innovation Fund support, i.e., energy intensive industries, including heat and power generation, refineries, iron & steel, non-ferrous metals, cement & lime, glass, ceramics & construction material, pulp & paper, chemicals, hydrogen, aviation, and maritime & road transport. Renewable energy sectors, including wind, solar, hydro/ocean, geothermal and bioenergy as well as energy storage, including intra-day electricity and other energy storage, are also eligible.

Who can apply? Who can apply?

Innovation Fund applications can be submitted by legal entities (public or private bodies) that are established in any country in the world. Importantly, the project must be located within the European Economic Area (i.e. European Union member states plus Norway, Iceland and Liechtenstein). Applications can be submitted by a sole beneficiary or by a consortium of partners.

Project size Project size

The minimum project size is 2.5 million euros of CAPEX (small-scale projects), while much larger projects of over 100 million euros of CAPEX (large-scale projects) can also be funded.

Evaluation criteria

This criterion concerns the degree to which the project goes beyond incremental innovation on a scale from intermediate to breakthrough innovation, including scaling-up, taking into account the European start-of-the-art as a reference point (or also national level in case of small scale projects). The focus is on technologies, business models and processes that are not yet commercially available. This typically includes first-of-a-kind commercialisation or large-scale commercial size demonstration, but also innovative smaller demonstrations and pilot plants or second- (or more) of a kind commercialisation projects, where proportionally high relevant costs prohibit commercialisation without further public support.

Projects must achieve relative GHG emission avoidance of at least 50% compared to the state-of-the-art in the sector (at least 75% for pilot projects). Applicants need to strictly follow the Innovation Fund GHG emission methodology, identify principal product(s), select the sector, scenario and respective methodology accordingly, use the correct emissions factors, make robust assumptions and justify choices made in the application of the GHG emissions avoidance methodology.

Successful projects need to be technically, financially and operationally mature. Project development must be well advanced with major project decisions e.g. regarding technology choice and financing taken. Applicants need to provide evidence regarding the characteristics of the proposed plant, realistic technical assumptions, robust and credible assumptions for the plant operation and outputs expected. In addition, revenues, CAPEX and OPEX assumptions need to be substantiated and all funding sources and the progress made in negotiating them need to be clearly presented, showing strong commitment and support from project stakeholders. Importantly, the project must not have reached financial close before application submission and must achieve financial close within four years of grant signature.

Beyond the projects itself, the demonstrated products, processes and technologies need to show a large replication potential in terms of future efficiency gains, environmental impacts and further deployment in the same or other sectors. In addition, projects need to contribute to European competitiveness and industrial leadership, e.g., through supporting the development of new industrial ecosystems, energy infrastructure, knowledge and IP, or resilience of the supply chain.

Successful projects show an attractive cost efficiency in terms of tons of CO2 saved per euro of funding requested, with a maximum of 200 EUR/tCO2eq or 2,000 EUR/tCO2eq for pilot projects. What makes a competitive cost efficiency varies per sector, but for some projects intentionally requesting a lower funding amount can be advisable to improve cost efficiency.

 

What about Innovation Fund auctions?

If your project is less innovative but targets the production of RFNBO (or electrolytic low carbon) hydrogen, industrial process electrification or the direct use of renewable heat, the Hydrogen Auction or the newly introduced Industrial Heat Auction under the Innovation Fund umbrella could be interesting alternatives for you. Both auction schemes support projects with a fixed-premium subsidy awarded through a competitive bidding process. Contrary to the Innovation Fund grants, innovation is not a program requirement in the auction schemes.

Some of our reference projects

KAIROS@C

Program: Innovation Fund Large-Scale
Sector: Carbon-capture and storage. The project develops a complete CCS value chain, over the first 10 years of operation in the port of Antwerp, deploying pioneering technologies including blue H2 with CCS.
Funding: 356.9 M€
PNO Innovation support: Full development, consortium support and application writing.

ELYGATOR

Program: Innovation Fund Large-Scale
Sector: Hydrogen. It involves the realization of a large-scale ‘next generation’ renewable hydrogen production facility, with a production capacity of 200 megawatts. This hydrogen plant will be located in Terneuzen, in the Dutch province of Zeeland.
Funding: 99 M€
CO2 Avoidance: 3.3 Mt CO2eq/10 years
PNO Innovation support: Application support.

INNOSOLVEGREEN

Program: Innovation Fund Small-Scale
Sector: Solar Energy. It will demonstrate an innovative Energy-as-a-Service model that enables industrial users to meet 100% of their annual electricity needs with affordable locally generated solar PV-plus-storage.
Funding: 2.16 M€
CO2 Avoidance: 16.67 kt CO2eq/year
PNO Innovation support: Project scoping and in-depth review.

Is your project eligible for funding?

In sum, to be eligible, your project must at least:

  • involve the demonstration of a new and highly innovative technology, product or process;
  • have significant potential to reduce greenhouse gas (GHG) emissions;
  • have a capital expenditure of at least 2.5 million EUR (for Small-scale projects), at least 20 million EUR (for Medium-sized projects), or 100 million EUR (for Large-scale projects)
  • score sufficiently on the evaluation criteria: Innovation, GHG avoidance, maturity, replicability and cost efficiency.

Precise requirements may be adjusted by CINEA with each annual call for proposals.

The Innovation Fund rewards sufficiently mature yet highly innovative projects with significant potential to reduce GHG emissions and boost European competitiveness.


>100
Innovation Fund projects supported

>40
Innovation Fund proposals funded

40%
Innovation Fund success rate

>3.5 bln EUR
Funding secured for our clients

≃300
mt CO2eq avoided over the first 10 years of operation

>75
Innovation Fund consultants involved each year

How can PNO Innovation help you with your Innovation Fund application?

PNO uses a proven 3-phase, 6-step methodology to guarantee a high-quality Innovation Fund application, starting with the development phase including a Viability Assessment (ASSESS, step 1) of the project characteristics against the eligibility and evaluation criteria. Following the outcome of the assessment, the project undergoes scoping (SCOPE, step 2), where the boundaries, scope and main assumptions of the project are defined. The conclusion of the scoping step triggers the apply phase, including the GUIDE, WRITE/CALCULATE and SUBMIT steps of the application. Once the project is selected for funding, our compliance experts can support you in the Grant Agreement Preparation, as well as the correct implementation throughout the project lifetime (COMPLY, step 6).

Further details on some of our services during Innovation Fund project development and application preparation:

A few of our Innovation Fund experts

What our clients say

HeidelbergCement >

"Writing a proposal for the EU Innovation Fund, especially when it is the first application, is a demanding exercise. We have experienced when preparing the ANRAV proposal that it can only be successful if both the Consultant and the Proponent team are working hand-in-hand to get it done. ANRAV has a unique value for Europe, for Bulgaria and for HeidelbergCement as well as Petroceltic. It is the first CCUS cluster at scale for industrial emitters in Eastern Europe, leveraging on the storage potential in the Black Sea and the experience of HeidelbergCement in carbon capture. The project will give a significant contribution to the Fit for 55 targets of Bulgaria." "PNO has been essential in the timely and high-quality work for the application. Both the Italian and the German branch of PNO has worked smoothly together with our Bulgarian team of Devnya cement and Petroceltic and the HeidelbergCement Group functions involved. PNO has shown to be able to keep a holistic view, yet to combine with pragmatic, down to earth work which is necessary for a winning proposal." Jan Theulen Director Technologies & Partnerships/Lead CCUS, HeidelbergCement

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