Launch of the innovation fund, the fund for innovative low carbon technologies

forums
  • economy
  • environment
  • knowledge society
date
22-08-2019
deadline
22-08-2019

The Innovation Fund is one of the world’s largest funding programmes for demonstration of innovative low-carbon technologies.

The Innovation Fund focuses on:
  • Innovative low-carbon technologies and processes in energy intensive industries, including products substituting carbon intensive ones
  • Carbon capture and utilisation (CCU)
  • Construction and operation of carbon capture and storage (CCS)
  • Innovative renewable energy generation
  • Energy storage
The EU Emissions Trading System (EU ETS), the world’s largest carbon pricing system, is providing the revenues for the Innovation Fund from the auctioning of 450 million allowances from 2020 to 2030, as well as any unspent funds from the NER300 programme.
The Fund may amount to about €10 billion, depending on the carbon price. In parallel to the Innovation Fund, the EU ETS provides the main long-term incentive for these technologies to be deployed.
The Innovation Fund is a key funding instruments for delivering the EU’s economy-wide commitments under the Paris Agreement and supporting the European Commission’s strategic vision of a climate neutral Europe by 2050.
 
Objectives
 
The Innovation Fund will:
  • help create the right financial incentives for projects to invest now in the next generation of technologies needed for the EU’s low-carbon transition
  • boost growth and competitiveness by empowering EU companies with a first-mover advantage to become global technology leaders
  • support innovative low-carbon technologies in all Member States in taking off and reaching the market.
 
The Innovation Fund is designed to take into account the lessons learned from its predecessor, the NER300 programme. It is bigger and better in several ways:
  • Open to projects from energy intensive industries
  • Improves the risk-sharing for projects: its grants cover up to 60% of the additional capital and operational costs of innovation
  • Provides support in more flexible way, following the cash flow needs of the project through pre-defined milestones
  • Simpler selection process
  • Stronger synergies with other EU funding programmes
  • Streamlined governance and simplified decision-making
 
What will be funded?
The Innovation Fund will focus on highly innovative technologies and big flagship projects with European value added that can bring on significant emission reductions. It is about sharing the riskwith project promoters to help with the demonstration of first-of-a-kind highly innovative projects.
It aims to finance a varied project pipeline achieving an optimal balance of a wide range of innovative technologies in all eligible sectors (energy intensive industries, renewable energy, energy storage, CCS and CCU) and Member States.
At the same time, the projects need to be sufficiently mature in terms of planning, business model and financial and legal structure.
The Fund will also support cross-cutting projects on innovative low-carbon solutions that lead to emission reductions in multiple sectors, for example through industrial symbiosis or business model innovation.
The Fund is also open to small-scale projects with total capital costs under €7.5 million which can benefit from simplified application and selection procedures.
 
Application process
The application process has two phases:
  • Expression of interest, with a first assessment on the project effectiveness, innovation and maturity level. Projects that meet only the first two criteria may qualify for project development assistance.
  • Full application, where projects are assessed on all the criteria, including scalability and cost efficiency.

Project proponents can apply by submitting their projects when there is an open call for proposals.

 
The Commission aims to launch the first call in 2020, followed by regular calls until 2030.
More details on the application process, including relevant documentation, will be published in the call(s) for proposals.
 
Selection criteria
Projects will be selected based on:
  • Effectiveness of greenhouse gas emissions avoidance
  • Degree of innovation
  • Project viability and maturity
  • Scalability
  • Cost efficiency (cost per unit of performance)
The selection criteria will be weighted according to their relative importance. The final ranking of projects will be established based on comparing the scores across and within different sectors.
The calls for proposals will set the detailed scoring and ranking methodology, as well as possible additional criteria for geographical and sectorial balance.
 
Grant financing
The Innovation Fund will support up to 60% of the additional capital and operational costs linked to innovation.
The grants will be disbursed in a flexible way based on project needs, taking into account the milestones achieved during the project lifetime.
Up to 40% of the grants can be given based on pre-defined milestones before the whole project is fully up and running.
 
More information on the DG CLIMA website.