ENERGY: New €10 billion EU Innovation Fund established for the period 2021 – 2030

05/03/2019
The Commission announced an investment programme worth over €10 billion for low-carbon technologies in several sectors to boost their global competitiveness. The first call for applications will be launched in 2020.

The Innovation Fund is one of the funding instruments supporting the European Commission's strategic vision for a climate neutral Europe by 2050 as outlined in its communication “A Clean Planet for All” of 28 November 2018. The Fund will support the demonstration of low-carbon technologies and processes in energy intensive industries (including products substituting carbon intensive ones), environmentally safe carbon capture and utilisation and storage of carbon dioxide (CCU and CCS), innovative renewable energy and energy storage technologies.”

The Innovation Fund will offer financial support, adapting to the market needs and the risk profiles of the projects, while attracting additional public and private resources. It will fund sufficiently mature projects with the biggest innovation potential. It will work in synergy with the InvestEU and other EU programmes on research and innovation for low-carbon technologies.
The Commission aims to launch the first call for proposals already in 2020, followed by regular calls until 2030.
The Commission will manage the Innovation Fund with the support of a public implementing body. Member States will be consulted on key decisions (calls for proposals, pre-selected projects). This combination will ensure efficient, simple and sufficiently flexible management of the Innovation Fund.
The Innovation Fund builds on the lessons learnt from the NER 300 programme. A key takeaway is that selecting immature projects and providing support too late in the project lifespan in an inflexible way led to a low success rate of projects.
 
The Innovation Fund support will be provided in a more flexible way, following the cash flow of the project through pre-defined milestones, with clear criteria for withdrawing funding in case of failure in order to make funds available to other projects as quickly as possible. The decision-making process is simplified and better coordination with other funding programmes. The selection procedure is also simplified and takes into account the economic viability of projects, their compliance with EU and national climate and energy policy priorities and the existence of a firm commitment from Member States vis-à-vis the project.
Furthermore, the Innovation Fund has an expanded scope compared to the NER300 programme as it is also open to highly innovative projects from energy intensive industries.
 
What projects can receive funding from the Innovation Fund?
The Innovation Fund will focus on highly innovative technologies with European added value that can bring on significant emission reductions in multiple sectors and unleash further low-carbon investments in all Member States. At the same time, the projects need to be sufficiently mature in terms of planning, business model, financial and legal structure.
 
The Innovation Fund aims to finance a broad variety of projects 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. It is important that the projects financed by the Fund are at advanced technology readiness levels so the Innovation Fund helps them reach the market with a competitive advantage and viability. The Fund is also aiming to support cross-cutting projects bringing innovative low-carbon solutions leading to emission reductions in multiple sectors, for example through industrial symbiosis or business model innovation.
 
The Innovation Fund aims for an optimal geographical and sectoral balance of the project portfolio it will support, financing big projects which can reduce emissions substantially in key sectors. While under the NER300 programme the maximum size of the grant awarded was €300 million and the average grant was €54 million, the Innovation Fund has a much higher maximum support level and is thus aiming higher: supporting big flagship projects that can make a tangible difference in the EU's low-carbon transition.
The Innovation Fund will also be open for small-scale projects with eligible costs under €7.5 million which can benefit from simplified arrangements for application, selection and definition of relevant costs.
 
What type of financial support does the Innovation Fund offer?
The Fund will support up to 60% of the additional capital and operational costs linked to innovation mainly via grants. The grants will be disbursed in a flexible way based on the needs of the market and of the concrete project, taking into account the milestones achieved during the project's lifetime. Up to 40% of the grant can be given based on pre-defined milestones before the whole project is fully up and running. This way the Innovation Fund will give support in a flexible manner, following the cash flow of each project. 
 
How can projects apply?
Project proponents can submit their applications for funding when there is an open call for proposals. The Commission aims to launch the first call for proposals already in 2020, followed by regular calls until 2030.
The application procedure will be organised in two phases.
In the first phase, the project proponent submits an expression of interest application
If the project scores sufficiently the project prwill be invited to submit a full application
 
How will projects be selected?
The Innovation Fund aims to finance low-carbon breakthrough innovative projects that contribute to the strategic vision of a climate neutral Europe by 2050.
The projects will be selected based on the selection criteria consistent with this vision as defined in the Commission Delegated Regulation on the Innovation Fund. These criteria are the following:
  • potential to avoid greenhouse gas emissions,
  • degree of innovation,
  • maturity in terms of planning, business model, financial and legal structure,
  • potential for widespread application and
  • cost efficiency in terms of emissions avoidance.
How is the Innovation Fund different from other EU or national programmes?
The Innovation Fund focuses on supporting highly innovative low-carbon technologies and projects to reach the market once they have successfully passed the research phase. It is not a new research funding programme as it focuses on closing the financial gap right before bringing an innovative project or technology to the market.
Therefore, the Innovation Fund is complementary to other EU funding programmes and it will not crowd out other public or private investment. It will complement Horizon 2020 and Horizon Europe funding given to the earlier stages of projects as it will support the later stages of technological development closer to commercialisation. The Innovation Fund will also be complementary to the European Regional Development Fund that supports wider innovation activities, as well as to the Connecting Europe Facility and the European Structural and Investment Funds, including the Cohesion Funds, that can support the infrastructure elements of a project.
 
The press release on this new Fund: http://europa.eu/rapid/press-release_IP-19-1381_en.htm

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