Innovation Fund: EU invests €3.6 billion of emissions trading revenues in innovative clean tech projects
Today, the Commission is awarding over €3.6 billion to 41 large-scale clean tech projects, to be financed through the EU Innovation Fund. With a focus on the REPowerEU Plan and phasing out Europe’s imports of Russian fossil fuels, these projects cover a wide range of industries, such as cement, steel, advanced biofuels, sustainable aviation fuels, wind and solar energy, and renewable hydrogen and its derivatives. The funding will contribute to the greening of significant sectors of the European economy, in particular those that are difficult to decarbonise.
The selected projects are located in 15 EU Member States: Austria, Belgium, Croatia, Czechia, Denmark, Finland, France, Germany, Greece, Ireland, Italy, the Netherlands, Portugal, Spain and Sweden; as well as Norway. The supported projects will all enter into operation before 2030, and have the potential to avoid 221 million tonnes of CO2 emissions in their first 10 years of operation.
The 41 projects were selected following the third call for large-scale projects, covering four topics: “general” decarbonisation; “industry electrification and hydrogen”; “clean tech manufacturing”; and “mid-sized pilots”.
Projects in brief
- In “general” decarbonisation topic: 8 projects worth €1.4 billion
They include 3 projects from refineries and 5 projects in the cement and lime sector, and are located in Belgium, Croatia, Germany, Greece, the Netherlands, Portugal, and Sweden.
- In “industry electrification and hydrogen” topic: 13 projects worth almost €1.2 billion
They include 6 projects on renewable hydrogen production as well as 7 projects on hydrogen use in different sectors: chemical industry, refineries and steel. The projects are located in Austria, Belgium, France, Germany, the Netherlands, Portugal, Spain, Sweden and Norway.
- In “clean tech manufacturing” topic: 11 projects worth almost €800 million
They include 4 projects on electrolyser manufacturing, 4 projects on batteries (including recycling) and 3 projects on photovoltaic panels and modules, located in Belgium, Denmark, Germany, Finland, Spain, Sweden and Norway.
- In “mid-sized pilots” topic: 9 projects worth €250 million
They include 2 projects on wind energy, 2 on ocean energy, 2 on chemicals, and projects in the glass sector, on carbon capture and on e-fuels. The projects are located in Czechia, Denmark, France, Germany, Ireland, Italy, the Netherlands, Spain and Norway.
The selected projects were evaluated by independent experts against five award criteria: ability to reduce greenhouse gas emissions compared to traditional technologies; level of innovation; operational, financial and technical maturity; scalability; and cost effectiveness. In addition to the 41 projects selected for funding today, other promising but insufficiently mature projects will receive project development assistance from the European Investment Bank. These will be announced in the fourth quarter of 2023. At the end of the year, the Commission will launch the next call for proposals for large-scale projects under the Innovation Fund, with an increased budget of €4 billion.
Background
The EU ETS Innovation Fund is one of the world’s largest funding programmes for the deployment of net-zero and innovative technologies. It is one of the key tools of the European Green Deal Industrial Plan. Financed by revenues from the auctioning of allowances from the EU Emissions Trading System (EU ETS), it has already held two large-scale calls awarding €1.1 billion and €1.8 billion in grants to 7 and 16 projects respectively.
With a currently estimated revenue of approximately €40 billion until 2030[1], the Innovation Fund aims to help businesses invest in clean energy and bring to market technologies that can decarbonise European industry while fostering its competitiveness. Grants are awarded to cover the cost gap between such innovative technologies and conventional ones. The Innovation Fund awards grants through regular calls for proposals and in the future through competitive bidding procedures (auctions).
In 2023, the revision of the EU Emissions Trading System Directive strengthened the Innovation Fund to lead the way in clean tech and set the example on a global stage to contribute to the goals of the European Green Deal by increasing its budget and introducing new auctioning tools. As announced in the REPowerEU Plan, the projects under this call will provide further support towards the EU’s phasing out of Russian fossil fuel imports.
The Innovation Fund is implemented by the European Climate, Infrastructure and Environment Executive Agency (CINEA), while the European Investment Bank (EIB) provides the project development assistance to promising projects that are not sufficiently mature for Innovation Fund grants.
This call for projects attracted 239 applications. About 196 were eligible and admissible for evaluation. Over 40% of the eligible projects passed all the evaluation thresholds and could be considered for the ‘Sovereignty Seal’, the EU’s new quality label to be awarded to high-quality projects contributing to the objectives of the Strategic Technologies for Europe Platform (STEP).
