THE EU LAUNCHES INNOVATION FUND TO PROMOTE LOW CARBON TECHNOLOGIES

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https://ec.europa.eu/clima/policies/innovation-fund_en

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.

As the successor of the NER300 programme, the Innovation Fund improves the risk-sharing for projects by giving more funding in a more flexible way through a simpler selection process and is also open to projects from energy-intensive industries.

For the period 2020-2030, 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 its objective to be climate neutral Europe by 2050, as recognised also in the European Green Deal Investment Plan.

The first call for proposals under the Innovation Fund contributes to the green recovery of the EU economy by helping businesses invest in clean energy and clean industry to boost economic growth, create local jobs and give a competitive advantage to EU industry.

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 risk with 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.

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 stages:

  • 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.

For small-scale projects, the application process will have only one stage.

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

The first call for proposals for large-scale projects is open until 29 October 2020. Projects can apply via the EU Funding and Tenders portal.

For more information on the first call, check the large-scale projects tab.

There will be regular calls for proposals in the lifetime of the Innovation Fund.

Selection criteria

Projects will be selected based on:

  • Effectiveness of greenhouse gas emissions avoidance
  • Degree of innovation
  • Project maturity
  • Scalability
  • Cost efficiency

The detailed scoring and ranking methodology, as well as possible additional criteria for geographical and sectorial balance, are set in each call for proposals. For small-scale projects, the selection criteria can be simplified.

For the criteria of the first call for proposals for large-scale projects, check the Funding and Tenders Portal.

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 financing 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.

Grant financing

Implementation

European Commission

The European Commission, assisted by the implementing bodies INEA and EIB is tasked with the overall management of the Innovation Fund. The final responsibility for the selection of projects that will be awarded the Innovation Fund grant or the PDA support lies with the Commission.

For the development of the Innovation Fund, the Commission is assisted by the Innovation Fund Expert group. Information on the group and its meetings is available in the Register of Commission Expert Groups, while its work in preparing the first call for proposals is available under the large-scale projects tab.

Executive Agency for Innovation and Networks

The Commission has designated the Executive Agency for Innovation and Networks as the implementing body of the Innovation Fund. It will:

  • manage the calls for proposals and all related procedures
  • provide guidance and support for applicants
  • manage the project proposal submission and evaluation processes, including eligibility checks
  • sign grant agreements
  • disburse the Innovation Fund grants
  • monitor the technical/financial management of projects in the Innovation Fund portfolio
  • provide expert technical support and services to project promoters
  • monitor and control projects ex-post, including management of recoveries
  • ensure visibility of the programme, available funding, results and achievements via communication actions and products, including events.

INEA will report regularly to the Commission and provide feedback on general orientations for further development of the Innovation Fund.

European Investment Bank

The European Investment Bank is responsible for the provision and management of the Project Development Assistance (PDA) support. The EIB will also be in charge of the monetisation of the Innovation Fund allowances and the management of the Innovation Fund revenues. The EIB will report regularly to the Commission.

Member States

Member States actively participate in the implementation of the Innovation Fund. They are consulted on key decisions, including:

  • decision to launch the call for proposals,
  • maximum amount of the Innovation Fund support to be made available for the PDA,
  • list of pre-selected projects for PDA support and
  • list of pre-selected projects for the Innovation Fund grants, prior to the award of grants.

If requested by the Commission, Member States will also advise and assist the Commission in setting general orientations for the Innovation Fund, as well as in addressing problems in the implementation of a project. Regulatory and financial support from a government or local authority will be an important element to evaluate the maturity of projects.

Other forms of support and funding synergies

Innovation Fund grants can be combined with funding from other support programmes, for example:

Other forms of support and funding synergies

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