The Innovation Fund is one of the world’s largest funding programmes for the demonstration of innovative low-carbon technologies, providing around €40 billion of support over 2020-2030. Its objective is the reduction of greenhouse gas emission by incentivising investments into the demonstration of next generation technology needed to achieve the climate goals.

The Innovation Fund is funded by the EU Emissions Trading System (ETS), a mechanism that asks polluters to pay for their greenhouse gas emissions, and targets among others energy intensive-industries, carbon capture use and storage, renewables, energy storage, and net-zero mobility and buildings.

The funding targets projects which have the necessary maturity for a demonstration from a technical, operational, and financial perspective. The grants can cover up to 60% of the capital and operational cost of innovation. Until now, the Innovation Fund has worked with yearly calls for small-scale (up to €7.5 million) and large-scale (up to several hundred million euros).

Open call

Currently, the Innovation Fund third call for small-scale projects with a total capital expenditure below €7.5 million is open. The deadline for submitting proposals is 19 September 2023.

The call makes €100 million in grant funding available to projects in the fields of renewable energy, decarbonisation of energy-intensive industries, energy storage and carbon capture, use and storage. In order to be selected for funding, applicants need to propose sufficiently mature technologies with a strong potential to achieve significant greenhouse gas emission reductions compared to conventional technologies.

While the deadline for the 2024 calls are not public yet, the Commission has already communicated some novelties that will be introduced, to develop new ways of supporting decarbonisation projects.

Innovation Fund changes to come

Following a revision of the EU ETS, there will be some important changes to the Innovation Fund. The size of the fund will increase, its scope will be expanded to new sectors (e.g. maritime) and medium-scale projects will be introduced. These changes will happen on the next year call, hence the currently open call for small-scale project will not be affected.

In addition, competitive bidding (auctions) will be introduced with a first hydrogen auction to be organised by the end of the year, and for other low carbon projects and products in the future, with a mechanism that has been very successful to support the uptake of renewable energy in Member States. There will also be a change for the Project Development Assistance (PDA), which is the advisory support provided by the European Investment Bank to improve the maturity of projects, in terms of technical and financial due diligence, business planning, and concept development support. The PDA, which was offered in the past to projects considered of high quality but not yet ready to be funded, will in the future be open for application without first needing to apply for the Innovation Fund.

Luxinnovation support

The Luxinnovation team is available to support companies interested in applying for fundings from the Innovation Fund by discussing its different elements and help them progress in their application journey. The team can analyse to what extent the innovation strategy of the company matches with the requirements of the call, inform on how to structure the R&D and innovation project in order to prepare a competitive proposal, review early drafts, and provide legal and financial support.

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