The Innovation Fund is one of the most important funding programs for the demonstration of innovative low-carbon technologies.

Objective

It is a key funding instrument for delivering on EU economic commitments under the Paris Agreement and its goal of being a climate-neutral Europe by 2050, as also recognized in the investment plan of the European Green Deal.

Features

Financial envelope for implementation

The Fund, whose budget for the period 2020-2030 amounts to around 40 billion euros, is financed by the European Union Emissions Trading System (EU ETS).

Fundable projects

The Innovation Fund supports investments in:

The evaluation of the projects is based on five Award Criteria:

1. Degree of Innovation;
2. Effectiveness of greenhouse gas (GHG) emissions avoidance;
3. Project Maturity;
4. Scalability;
5. Cost Efficiency.

In 2023, amendments to the EU ETS Directive underwent an enhancement, which notably bolstered the Innovation Fund in the following ways: 

• Increased Size: The overall size of the Innovation Fund was expanded from 450 million ETS allowances to approximately 530 million ETS allowances 
• Expanded Scope: The scope has been broadened to encompass new sectors (such as maritime, aviation); Additionally, medium-scale projects are now elegible. Starting in 2025, the Do Not Significant Harm (DNSH) principle will be applied with a stronger emphasis on multiple environmental impacts 
• Introduction of Financial Instruments: New financial instruments, referred to as 'Competitive Bidding', have been introduced
• Geographical Balance: There is a heightened focus on achieving geograpgical balance, including providing technical assistance to Member States with low effective participation. 

With these enhancements, the Innovation Fund is well-prepared to contribute to the objectives of the European Green Deal, lead in clean technology innovation and serve as global example.