Innovation Fund

The Innovation Fund is one of the world’s largest funding programmes for the demonstration of innovative low-carbon technologies. The funding originates from credits of the Emission Trading Scheme (ETS). It focusses, among others, on innovative technologies and processes in energy-intensive industries, including products substituting carbon-intensive ones and on innovative renewable energy generation. The Innovation Fund can be seen as one of the key funding instruments for delivering the EU’s economy-wide commitments under the Paris Agreement external link icon and supporting the European Commission’s strategic vision of a climate-neutral Europe external link icon by 2050. The fund will be piloted in 2020 and will be fully implemented in 2021.

The Innovation Fund is designed to take into account the lessons learned from its predecessor, the NER300 programme. Important improvements in comparison with the NER300 programme are stronger synergies with other EU funding programmes, a simpler selection process, and its opening for projects from energy-intensive industries.

What is the relevance for Circular Cities?

The Innovation Fund supports cross-cutting projects on innovative low-carbon solutions that lead to emission reductions in multiple sectors, for example through renewable energy generation, industrial symbiosis or business model innovation. Since transitioning to a circular economy can involve energy-intensive practices, such as recycling and recovering materials, the demand for clean energy technologies will increase. The Innovation Fund can therefore contribute significantly to speeding up the circular economy transition.

As a city government, you can help energy intensive initiatives by pointing them to the opportunity of the Innovation Fund.

How to apply?

Eligible projects:

The Innovation Fund focusses on highly innovative technologies and big flagship projects with EU value that can bring on significant emission reductions. It aims to finance a varied project pipeline achieving an optimal balance of a wide range of innovative technologies in all eligible sectors and countries. Eligible sectors are:

  • Energy intensive industries
  • Renewable energy
  • Energy storage
  • Carbon capture and storage (CCS)
  • Carbon capture and utilisation (CCU)

The Innovation 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.

Application process:

The application process has two phases:

  • Phase I: expression of interest with a first assignment on the project effectiveness, innovation, and maturity level. Projects that meet only the first two criteria may qualify for project development assistance.
  • Phase II: full application in which projects are assessed on all the criteria, including scalability and cost efficiency.

Small-scale projects (costs under EUR 7.5 million) can benefit from a simplified application and selection procedure. Project proponents can apply by submitting their projects when there is an open call for proposals external link icon. The Commission aims to launch the first call in 2020, followed by regular calls until 2030.

Selection criteria for the projects are:

  • Effectiveness of greenhouse gas emissions avoidance
  • Degree of innovation
  • Project viability and maturity
  • Scalability
  • Cost efficiency (cost per unit of performance)

The grant amounts to up to 60% of the additional capital and operational costs linked to innovation.