REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the implementation of the Innovation Fund, including the review referred to in Article 24 of Regulation (EU) No 1031/2010
Date: 2022-08-26
Institutions: Directorate-General for Climate Action, European Commission
Subjects: EU Emissions Trading Scheme, EU emission allowance, EU environmental policy, auction sale, carbon neutrality, clean technology, fund (EU), greenhouse gas, innovation, tradeable emission permit

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 26.8.2022  COM(2022) 416 final  REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL on the implementation of the Innovation Fund, including the review referred to in Article 24 of Regulation (EU) No 1031/2010   
 
 
REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND 
THE COUNCIL 

on the implementation of the Innovation Fund, including the review referred to in 
Article 24 of Regulation (EU) No 1031/2010 

1. INTRODUCTION  

 The Innovation Fund is one of the world’s largest funding programmes for the commercial 
demonstration  of  innovative  low-carbon  technologies,  aiming  to  bring  to  market  industrial 
solutions  to  decarbonise  Europe  and  support  its  transition  to  climate  neutrality.  Among  the 
wide range of financial instruments available on the EU level, it plays a unique role due to its 
size and focus on the last steps in the rollout of innovative clean tech.  

Endowed  with  more  than  EUR  38  billion1  financed  from  the  auctioning  of  EU  Emissions 
Trading System allowances, the Innovation Fund targets: 

■  Energy intensive industries, including environmentally safe carbon capture and utilisation 
(CCU) that contributes substantially to climate change mitigation, as well as products that 
substitute carbon intensive ones; 

■  Environmentally safe capture and geological storage of CO2 (CCS) projects; 

■  Innovative renewable energy generation technologies; and, 

■  Energy storage technologies.  

Its  goal is to  create the right financial incentives for  companies to invest  in clean tech now 
and to empower them to become global clean tech leaders. 

Figure 1: Overview of the Innovation Fund 

1 Depending on carbon price, the volume is estimated using EUR 75 / tCO2 as carbon price. 

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The proposed revision of the ETS Directive put forward by the Commission in July 2021 as 
part of Fit for 55 package2 is aimed to further strengthen the Fund by increasing the number 
of  ETS  allowances  and  therefore  the  budget  available  to  the  Fund,  extending  its  scope  to 
maritime, road transport and buildings sector. 

DG Climate Action has the overall responsibility for the Innovation Fund, including defining 
the  volume  and  policy  priorities  of  calls  for  proposals  and  their  essential  elements  and 
adopting  the  award  decisions.  The  European  Climate  Infrastructure  and  Environment 
Executive Agency (CINEA) is tasked with running the calls for proposals, evaluations, grant 
preparation  and  signatures  and  daily  follow  up  of  projects.  The  European  Investment  Bank 
provides  project  development  assistance.  Member  States  are  consulted  on  the  financing 
decisions  and  list  of  selected  projects,  while  their  role  is  essential  for  reaching  to  potential 
applicants on their territory and supporting them in project application (e.g. through support 
schemes) and implementation (e.g. through facilitating permitting).  

1.2. Purpose of this report 

According  to  Article  23(6)  of  Delegated  Regulation  (EU)  2019/856  of  26 February  2019 
supplementing  Directive  2003/87/EC  of  the  European  Parliament  and  of  the  Council  with 
regard to the operation of the Fund (hereafter “the Delegated Regulation”), the Commission 
shall  report  annually  to  the  Council  and  to  the  European  Parliament  on  the  progress  of  the 
implementation of the Fund.  

This report fulfils the requirement for 2020 and 2021 by summarising the results of the first 
two calls of the Fund that were available only at the end of 2021: the first call for large-scale 
proposals (defined as projects with total  capital  expenditure above EUR 7.5m) and the first 
call for small-scale proposals (defined as projects with total capital expenditure  below EUR 
7.5m).  The  first  call  for  large-scale  proposals  opened  on  3  July  2020  and  the  results  were 
announced on 16 November 2021, while the first call for small-scale proposals opened on 1 
December 2020 and the results were announced on 27 July 2021. 

This report analyses the results of these calls and their contribution to the aims of the Fund, 
while focussing on lessons learnt and policy relevant conclusions.  

Although the 2nd call for large-scale projects was launched on 26 October 2021 and the 2nd 
call for small-scale projects  on 31 March 2022, these calls are still ongoing, therefore their 
results will be reported in the second Innovation Fund report. 

Article  24(3)  of  the  Auctioning  Regulation3  provides  that  the  Commission  shall  review  the 
amount of allowances remaining to be auctioned after the Innovation Fund award decision of 
each  call  for  proposals,  and  other  aspects  related  to  the  Innovation  Fund  operations.  Such 

2 EU economy and society to meet climate ambitions (europa.eu) 

3 Commission Regulation (EU) No 1031/2010 of 12 November 2010 on the timing, administration and other 
aspects of auctioning of greenhouse gas emission allowances pursuant to Directive 2003/87/EC of the European 
Parliament and of the Council establishing a system for greenhouse gas emission allowances trading within the 
Union  EUR-Lex - 02010R1031-20191128 - EN - EUR-Lex (europa.eu) 

2 

 
 
 
 
 
 
                                                           
reviews shall take place every two years, with the first review taking place no later than 30 
June 2022. This present report also fulfils this purpose.  

2. OUTCOME OF THE FIRST TWO INNOVATION FUND CALLS  

2.1. Private interest in the Innovation Fund 

Thanks to an extensive communication campaign and over 30 awareness-raising workshops 
with numerous EU industry associations and Member States throughout 2019 and 20204, both 
calls attracted an impressive number of applications: 3115 for the large-scale and 2326 for the 
small-scale.  Applications  covered  all  eligible  sectors  and  Member  States,  thereby  helping 
meeting the Fund’s objective to fund projects in a broad sectoral and geographical spectrum.  

The  number  of  applications  shows  that  industry  is  interested  in  developing  clean  tech 
solutions that contribute to EU climate neutrality, and that the Fund can select from a varied 
portfolio  of  green  projects  that  need  support  and  leverage  private  capital.  Compared  to  the 
applications  to  the  large-scale  one,  the  first  call  for  small-scale  proposals  attracted  fewer 
applications from energy-intensive industries and carbon capture, use and storage, but more 
applications from the renewables and energy storage sectors. 

2.2. Quality of the applications 

The  Commission  provided  extensive  call-specific  assistance  to  applicants  throughout  the 
application procedures for both calls. The overall quality of applications was high, leading to 
strong competition between projects in both calls. However, the quality of applications was 
lower  for  the  small-scale  call,  as  evidenced  by  the  lower  number  of  proposals  meeting  all 
minimum thresholds. 

For each call, the Commission and CINEA organised dedicated webinars7 and info days. Call 
texts  were  explained  in  detail,  potential  applicants’  questions  answered  and  explanatory 
material  was  provided  to  facilitate  companies  in  preparing  their  applications.  In  parallel,  a 
dedicated  helpdesk  answered  over  1500  questions  in  total  for  both  calls.  After  the  calls 
closed,  a  report  on  best  practices  that  could  help  potential  applicants  was  presented  and 
published8. 

For the first call for large-scale proposals, out of the 311 applications received, 19 (5%) were 
found inadmissible or ineligible at the first stage9. For the first call for small-scale proposals, 
out  of  the  23210  applications  received,  55  projects  (24%)  were  found  inadmissible  or 
ineligible,  2  were  disregarded  (test  proposals),  leading  to  a  total  of  175  eligible  proposals 
competing for grants (see Figure 2).  

4 Policy development (europa.eu) under Stakeholder Engagement  
5 First Innovation Fund call for large-scale projects: 311 applications for the EUR 1 billion EU funding for clean 
tech projects 
6 First Innovation Fund call for small-scale projects: 232 applications for the EUR 100 million EU funding for 
small clean tech projects 
7 Large-scale projects (europa.eu) and Small-scale projects (europa.eu) under Webinars 
8 policy_innovation-fund_best_practice_en_0.pdf (europa.eu) 

9 The Delegated Regulation allows conducting large-scale calls in one or two stages, whereas small-scale calls 
are run in one stage. The first large-scale call was conducted in two stages. 
10 232 initial applications of which 2 were disregarded before evaluation. 

3 

 
 
 
 
 
 
                                                           
Figure 2: Number of eligible and admissible proposals by call 

Projects were selected based on five award criteria defined in the Delegated Regulation and 
the call texts (for small-scale projects, the award criteria were simplified):  

1.  Degree of innovation; 
2.  Effectiveness of greenhouse gas emissions avoidance; 
3.  Project maturity; 
4.  Scalability; and 
5.  Cost efficiency. 

Overall, projects in the first call for large-scale proposals scored higher than the small-scale 
proposals on the award criteria, with stronger competition between projects (see Figure 3). In 
the large-scale call, which consisted of two rounds of evaluation, the 70 best-ranked, eligible 
proposals  from  the  first  stage  were  invited  to  the  second  stage.  Of  those  70  invited,  66 
proposals  were  submitted.  Ultimately,  seven  projects  were  invited  for  grant  preparation, 
while 41 high-scoring projects (i.e., they passed the minimum threshold on all award criteria) 
could not be financed due to insufficient budget in the call for large-scale proposals.  

In  the  first  call  for  small-scale  proposals,  from  the  175  proposals  evaluated,  137  were  not 
meeting all award thresholds. There were only 6 proposals that were above all thresholds but 
could  not  be  financed  due  to  insufficient  budget  and  32  projects  were  invited  for  grant 
preparation. Ultimately, grants were awarded to 30 projects while two projects withdrew.  

The  evaluation  of  the  award  criteria  shows  significant  differences  in  the  distribution  of  the 
median  score  between  the  two  calls.  In  the  1st  LSC  more  proposals  scored  above  all 
thresholds  so  the  competition  for  funding  was  stronger  (41  above  threshold  and  seven 
awarded), while in the first call for small-scale proposals only 38 proposals scored above the 

4 

136292InadmissibleIneligibleEvaluated3421175InadmissibleIneligibleEvaluatedCall for small-scale projectsCall for large-scale projects 
 
 
 
 
  
award thresholds and 32 were awarded. However, the awarded proposals in  the small-scale 
call scored relatively higher than the ones awarded in the large-scale call.  

Figure 3: Level of competition between projects in the first large scale and small-scale 
call - final ranking 

The  Commission  is  continuing  its  efforts  to  assist  companies  applying  to  the  Fund  with 
multiple  webinars  for  each  call,  guidance  documents  and  best  practices  reports,  as  well  as 
innovative  tools,  such  as  the  self-check  questionnaire  developed  for  the  second  small-scale 
call.  

The  very  high  number  of  applications  for  both  calls  and  the  significant  oversubscription  of 
the  budget  predicted  strong  competition  for  funding  and  therefore  only  few  projects  were 
awarded grants, while many projects passing all thresholds did not receive support, especially 
in  the  large-scale  call.  This  indicates  that  companies  have  serious  interest  in  the  Fund  and 
therefore the Commission increased the size of the second  large-scale call with  50% and is 
also  making  it  easier  for  projects  from  the  first  round  of  calls  to  re-apply  by  amending  the 
Delegated Regulation to allow for a single stage application. 

2.3. Requested grants vs. available budget 

The  projects  applying  for  both  calls,  but  especially  for  the  large-scale  one,  requested  much 
higher  funding  than  the  amounts  available  under  the  respective  calls.  Therefore,  the 
Commission  maximised  the  call  budgets  by  using  the  20%  flexibility  in  line  with  the 
Financing  Decision.  The  projects  applying  for  the  first  call  for  large-scale  proposals 
requested a total of EUR 21.7 billion, massively oversubscribing the available budget of EUR 
1  billion.  For  the  first  call  for  small-scale  proposals,  the  oversubscription  was  slightly  less 

5 

Call for small-scale proposals –eligible proposalsCall for large-scale proposals –2ndStage1175137638327463Failing other thresholdFailing innovation thresholdBelow budgetInvited for grant preparationMeeting all thresholdsFailing a thresholdInvited and submitted to Round 2Invited but not submitted70466411771Invited for grant preparationRejected / inadmissibleBelow budgetManifest errorInadmissible 
 
 
 
 
 
 
 
pronounced:  the requested budget  was EUR 12.1 billion, 10 times  the available budget.  To 
address the oversubscription, the Commission maximised the call budgets by using the 20% 
flexibility in line with the Financing Decision, and awarded grants for EUR 1 145 586 747 in 
the first call for large-scale proposals and EUR 109 163 733 in the first call for small-scale 
proposals.  

2.4. Contribution of Innovation Fund projects to EU climate neutrality 

2.4.1. Greenhouse gas emissions reductions  

The  first  two  Innovation  Fund  calls  are  supporting  projects  with  significant  potential  to 
reduce greenhouse gas emissions and contribute to EU climate neutrality.  

The projects awarded grants in the first round of Innovation Fund calls indicate a reduction of 
77.4 Mt CO2eq over their first 10 years of operation. The first emission reduction results can 
be expected as of 2023 with the entry into operation of first awarded projects. 

Figure 4: Expected absolute GHG emissions avoidance over 10 years of operation of the 
awarded projects 

2.4.2. Highly innovative projects with significant potential for scalability 

The first two Innovation Fund calls support highly innovative projects that will facilitate the 
transition  to  climate  neutrality  of  entire  industrial  ecosystems.  Projects  have  to  offer  more 
than incrementally innovation in comparison to the state-of-the-art in the EU to be considered 
for funding, while more often they are evaluated as very strong or breakthrough innovations. 
The  awarded  projects  have  substantial  potential  for  scalability,  showing  the  opportunity  to 
trigger further GHG reductions by transferring the technology or its application to other sites 

6 

4,5572,8801020304050607080902020 CallsMt CO2eqLarge-Scale Call2020Small-Scale Call2020Planned absolute GHG avoidance 
 
 
 
 
 
 
 
 
and  sectors,  and  entailing  cooperation  of  different  actors  in  the  regional  and  European 
economy.  

First call for large-scale projects 

The  projects  evaluated  at  the  first  stage  of  the  first  call  for  large-scale  proposals  showed  a 
wide  variety  of  technological  pathways  and  innovative  clean-tech  solutions11.  This  variety 
was maintained in the second stage of the call, and the seven awarded projects.   

Under the first call for large-scale proposals, the seven selected projects12 address challenges 
in  diverse  sectors:  steel,  chemicals  (ammonia,  methanol,  ethylene  oxide),  hydrogen  (green 
and blue), PV cells production, cement, CCU concrete, electricity, heating and cooling. The 
awarded  projects  will  be  game  changers  and  drive  the  decarbonisation  in  their  sectors, 
Member States and regions. 

The  technologies  applied  are  breakthrough  and  first-of-a-kind  at  the  scale  proposed  with  a 
wide scalability potential across sectors and the economy: 

  1,2Mt/y  (25%  of  steel  production  in  Sweden)  direct  reduction  steel  plant  based  on 

renewable hydrogen in HYBRIT Demonstration. 

  500MW electrolyser in HYBRIT Demonstration, 50MW electrolyser in SHARC 
  3 GW factory of bifacial heterojunction photovoltaic cells (B-HJT) manufacturing in 

TANGO 

  CO2 capture in cement (K6), steam methane reforming, ammonia and ethylene oxide 

production (Kairos@C), preparation for CCU for refineries in SHARC 

  First-of-a-kind ship for CO2 transport in Kairos@C 
  4 projects supplying CO2 for geological storage in various locations in the North Sea 

(Kairos@C, BECCS@STHLM, SHARC, K6) 

  Conversion of municipal solid waste to methanol rather than energy recovery through 

incineration in ECOPLANTA 

  Net carbon removals in BECCS@STHLM 

The main locations of the projects are Belgium, Italy, Sweden (2), France, Spain and Finland, 
but  through  the  transport  and  storage  of  CO2  the  Netherlands  and  Norway  will  be 
indispensable partners. 

The  solid  project  pipeline  of  close  to  300  applications  for  the  first  call  for  large-scale 
proposals call shows a very wide variety of technological pathways that can lead to the green 
transition of multiple sectors.  

Within  the  energy-intensive  industries  category,  three  main  technological  pathways  were 
identified:  i)  hydrogen,  ii)  carbon  capture  use  and/or  storage  and  iii)  bio-based  solutions, 
while at the same time a number of projects employ more than one of these main pathways 
and combine with other technical solutions. Other common pathways are recycling (e.g. scrap 

11 Statistics of the proposals received for the first large-scale call of the Innovation Fund in October 2020.docx 
(europa.eu) 
12 policy_funding_innovation-fund_large-scale_successful_projects_en.pdf (europa.eu) 

7 

 
 
 
 
 
 
                                                           
metal, plastics), pyrolysis, gasification and electrification. A significant number of proposals 
(7%) within the energy-intensive industry category have integrated hydrogen distribution and 
use  to  various  transport  modes  (e.g.  heavy-duty  vehicles,  buses,  fuel  cell  and  hydrogen 
vehicles,  ships).  About  a  fifth  of  the  total  number  of  proposals  consider  various  biomass 
feedstock, mostly waste and residues.  

Within the CCUS category, most proposals focus on one part of the CCUS value chain and 
the  CO2  is  captured  from  various  sources  (bio-refineries,  ferrous  and  non-ferrous  metal 
production, cement and lime, refineries, chemicals, bio- and geothermal combined heat  and 
power  plants,  Waste  to  Energy  or  ambient  air),  and  aim  to  produce  different  products 
(electricity & heat, hydrogen, methanol, aviation fuels, methane, construction materials, other 
chemicals and other fuels).  

Within  the  renewables  category,  all  main  types  of  technologies  can  be  found:  on-  and 
foundations,  concentrated  solar  power, 
offshore  wind,  floating  and  ground-based 
photovoltaics  (PV),  production  facilities  for  PV  cells  and  modules,  tidal,  wave,  salinity 
gradient  and  hydro  energy,  deep  geothermal  energy.  Many  renewable  energy  proposals 
combine different renewable energy technologies such as combinations of CSP and PV, CSP 
and  biomass,  wind  and  PV.  Often  variable  renewable  energy  sources  are  combined  with 
battery or thermal storage or the production of hydrogen.  

Within  the  energy  storage  category,  many  proposals  aim  to  find  solutions  for  the  intra-day 
electricity  storage,  while  other  proposals  include  other  storage  types  such  as  batteries, 
compressed  or  liquid  air  storage,  thermal,  hydrogen,  and  hydro  storage.  Some  proposals 
cover demand-side measures by applying smart grids or virtual power plant solutions, while 
others concern production facilities for batteries. 

Figure  5:  Technological  pathways  of  first  call  for  large-scale  proposals:  applications, 
invited to second stage and awarded projects 13  

13 policy_innovation-fund_lsc_statistics_en_0.pdf (europa.eu) 

8 

 
 
 
 
 
 
 
 
                                                           
First call for small-scale projects 

Under the first call for small-scale proposals, 30 projects were awarded grants14 and the main 
characteristics of some of the projects are highlighted below: 

 

Introducing  first-of-a-kind technologies  in  new sectors:  e.g.  develop  the first mobile 
thermal  battery  by  recovering  6  GWh  per  year  of  industrial  waste  heat  to  provide 
energy  where  district  heating  or  cooling  infrastructures  are  absent  (WH  project)  or 
build and operate one of the world’s first Airborne Wind Energy array with a capacity 
to produce 1.2MW of renewable power (NAWEP project); 

  Applying first-of-a-kind technologies to existing industrial processes: e.g. regenerate 
high quality oil from used oil, thus helping to avoid the need to produce virgin fossil-
based  oil  (SKFOAAS)  or  breakthrough  technology  to  enhance  the  recovery  of  bio-
methane  and  improving  its  quality  to  make  it  grid-compliant,  using  existing  landfill 
gas (W4W); 

 

Introducing  a  novel  combination  of  existing  technologies:  e.g.  produce  low  carbon 
aggregates, by combining activities from a refinery, a waste treatment company and a 
construction materials producer (AGGREGACO2) or transform a seaport into the first 
European  port  able  to  operate  off-grid,  based  on  a  self-managed  energy  community 
using  6  300  MWh  of  renewable  energy  per  year  (GREENMOTRIL)  or  combine 
technologies  from  airborne  wind  energy,  solar  photovoltaics  and  redox  flow  battery 
storage, supplying 73% of the baseload energy consumption needed at a gas storage 
(AQUILON); 

  Substituting  existing  technologies:  e.g.  introduce  an  innovative  retrofit  solution  to 

substitute fossil-fuels with a biomass fuel in a pulp mill's lime kiln (LK2BM). 

14 Small-scale projects (europa.eu) 

9 

Technological pathways, large-scale projects awardedRenewable power; 15Renewable heat; 14Renewable fuels; 12Production facility; 5Storage; 16H2 for transport; 1Green H2; 19Blue H2; 4CCS; 7CCU; 12Electrification; 7Bio-based; 12Recycling /reuse; 1865Eligible proposalsRenewable power; 1Renewable heat; 1Renewable fuels; 1Production facility; 1Green H2; 2Blue H2; 2CCS; 4CCU; 1Electrification; 1Bio-based; 1Recycling /reuse; 17Awardedprojects 
 
 
 
 
 
 
                                                           
The projects applying for the first call for small-scale proposals also show a wide variety of 
technological  pathways  in  smaller  sectors  and  innovative  solutions  in  new  sectors  and 
markets. The technology pathways of the 30 projects which signed a grant agreement can be 
regrouped  in  seven  bigger  technological  pathways,  with  most  projects  covering  energy 
storage, renewable energy and hydrogen. 

Figure 6: Technological Pathways first call for small-scale proposals (awarded projects) 

2.4.3. Mature projects  

The first two Innovation Fund calls are supporting projects with high financial and business 
maturity.   

As  the  Innovation  Fund  aims  to  support  clean-tech  solutions  which  can  be  deployed  fast, 
projects have to reach financial close15 within maximum four year from grant signature, i.e. 
in  2025-2026  at  the  latest  for  the  first  two  calls.  The  graph  below  illustrates  that  of  the  37 
awarded projects, 20 (54%) are expecting to reach financial close within one year, 13 (35%) 
within 2 years and 4 (11%) within 3 years. Small-scale projects plan to reach financial close 
relatively  faster  which  correlates  with  their  smaller  costs  and  usually  simpler  financial 
structure. 

15 In the  framework of the Innovation Fund, financial close  is defined as:  the  moment  in  the  project development 
the  required  conditions 
cycle  where  all 
contained in them have been met. 

the  project  and  financing  agreements  have  been  signed  and  all 

10 

Technological pathways, small-scale projects awardedHydrogen; 10CCUS; 2Recycling/-use; 5Other EII; 2Renewable Energy; 11Bio-based; 4Energy Storage; 14Hydrogen; 75CCUS; 10Recycling/-use; 33Other EII; 10Renewable Energy; 54Bio-based; 19Energy Storage; 5830Awardedprojects175 Eligibleapplications 
 
 
 
 
  
 
 
                                                           
Figure 7: Number of projects planning to reach financial close per quarter16 

Furthemore, all projects awarded a grant in the first Innovation Fund calls plan to enter into 
operation by 2026, demonstrating a high level of operational maturity. Most of the projects, 
29 out of 37, plan to enter into operation by Q1 2025. This would ensure emission reductions 
already before the end of the decade. 

2.4.4. Project development assistance for less mature projects  

The Innovation Fund has a special facility – Project Development Assistance17 - to improve 
the  maturity  of  projects  through  high-quality  technical  and  financial  advisory  support 
provided by the European Investment Bank (EIB), and tailored to the needs of the projects. 
The  Project  development  assistance  aims  to  benefit  especially  small-scale  projects  and 
projects  in  lower-income  Member  States  to  help  achieve  a  geographically  balanced 
distribution of the Innovation Fund support. The project development assistance is available 
to  both  large  and  small-scale  projects,  and  can  help  increase  their  chances  of  reaching 
financial close and entering into operation.  A Contribution  Agreement  on  providing project 
development assistance was signed with the European Investment Bank in April 2021 and is 
already being implemented.  

Under each call, up to 20 proposals rejected for a grant are being offered project development 
assistance:  under the first call for large-scale proposals, 15 proposals were invited18 to access 
project development assistance worth EUR 4.4 million, and under the first call for small-scale 
proposals, 10 projects were awarded project development assistance worth EUR 1.7 million.  

16  Data  based  on  application  form  and  adapted  when  necessary,  based  on  latest  information  from  project 
coordinators.  
17 
assistance_en  
18  14  Large-Scale  proposals  signed  a  project  development  assistance  support  agreement  with  the  EIB,  as  one 
project withdrew from the process.  

https://ec.europa.eu/clima/eu-action/funding-climate-action/innovation-fund/project-development-

11 

Planned dates to reach financial close2 5 4 2 4 5 5 1 --1 -1 ----1 2 2 --1 1 ---- - 1 2 3 4 5 6 7 8Q4 2021Q1 2022Q2 2022Q3 2022Q4 2022Q1 2023Q2 2023Q3 2023Q4 2023Q1 2024Q2 2024Q3 2024Q4 2024Q1 2025Q2 2025Q3 2025Q4 2025Small-Scale Call 2020Large-Scale Call 2020 
 
 
 
 
 
                                                           
Projects awarded project development assistance also cover a very large range of technology 
pathways: from green hydrogen and synthetic aviation fuels in energy intensive industries to 
energy  storage.  The  expectation  is  that  these  projects  re-apply  for  future  Innovation  Fund 
calls, contributing to the creation of a continuous pipeline of excellent projects to be funded. 
In terms of geographical location, project development assistance is contributing in reaching 
a good spread of Innovation Fund-supported projects among Member States as well.  

Future  calls  will  aim  to  use  even  more  the  potential  of  project  development  assistance  to 
support projects in underrepresented countries and smaller applicants. 

2.4.5. Geographical and sectoral balance 

The  Innovation Fund aims  to  achieve geographical  and sectoral  balance  in  its lifetime until 
2030.  As  illustrated  below,  the  two  calls  concluded  received  applications  from  almost  all 
Member  States,  projects  are  developed  in  many  Member  States,  albeit  with  a  lower 
representation  in  Eastern  Europe.  There  are  many  cross-sectoral  and  cross-border  projects 
with  significant  potential  to  decarbonise  whole  regions  and  sectors,  beyond  national  and 
sectoral borders.  

Figure 8: First call for large-scale projects: proposals by country 

While implementing the Fund, the Commission will seek to further broaden the geographical 
balance  through  three  specific  avenues.  First,  the  regular  calls  for  small-scale  projects  with 
costs under EUR 7.5 million can be better suited to companies from smaller Member States 
which are looking to invest in clean tech at a smaller scale. Second, the project development 
assistance  provided  by  the  European  Investment  Bank  to  large  and  small  projects  can  help 
companies  prepare  better  applications  and  increase  their  chances  to  receive  an  Innovation 
Fund  grant.  Third,  the  Commission  established  a  network  of  national  contact  points  on  the 

12 

Large-scale proposals by country9193458105133547344721213514712534411528115517201461167311171111222321311111205101520253035404550ATBEBGHRCYCZDKEEFIFRDEELHUISIEITLVLTLUMTNLNOPLPTROSKSIESSE1st stage - eligible (292)1st stage - above thresholds (117)Project development assistance (14*)Pre-selected projects (7)* Initially 15, of which 1 project dropped out of PDANote: Some proposals are located in more than one country. Results are based on countries for implementation selected by applicants in Form C, adapted as necessary.  
 
 
 
 
   
Innovation  Fund  in  all  EU  Member  States,  Iceland  and  Norway19  that  can  provide 
information to potential applicants about the Fund and its interactions with national funding 
instruments and other EU programmes available in each Member State.  

Projects  from  nearly  all  sectors  have  been  supported  through  the  first  two  calls.  The 
technological  pathways  of  applying  and  awarded  projects  as  outlined  in  Section  2.4.2. 
illustrate the variety of the project pipeline and shows that the Innovation Fund can serve all 
sectors  currently  eligible  and  potentially  eligible  in  the  future.  For  example,  the  Innovation 
Fund  has  already  supported  projects  relevant  to  waterborne  and  road  transports  and  until 
2030  it  can  support  the  green  transition  of  the  whole  EU  economy,  by  funding  clean  tech 
solutions  spanning  from  energy  generation,  to  energy-intensive  industries,  transport, 
buildings and agriculture. The figure below illustrates the impact of the Innovation Fund per 
sector so far. 

Figure 9: Innovation Fund impact by sector 

2.4.6. Financial support tailored to the projects’ needs 

The Innovation Fund support is tailored to the market needs and risk profiles of the supported 
projects. This helps attract additional public and private resources.  

The  initial  budget  (EUR  1  100  000  000)  for  the  first  two  Innovation  Fund  calls  has  been 
entirely allocated and the 20% budget flexibility allowed under the Financing Decision20 has 
also been used to address the budget oversubscription.  

19 National Contact Points (europa.eu) 
20 https://ec.europa.eu/info/funding-tenders/opportunities/docs/2021-2027/innovfund/wp-call/wp_innovfund-
2020_en.pdf  

13 

Overall impact by sector - 1 2 3 4 5 6 7 8 9 10Project development assistance for large-scale projects (14)Project development assistance for small-scale projects (10)Awarded large scale projects (7)Awarded small-scale projects (30) 
 
 
 
 
  
                                                           
The total expected capital expenditures (total CAPEX), as calculated and communicated by 
applicants  in  their  applications,  is  used  as  a  proxy  measure  for  total  expected  investment 
volumes mobilised by the Fund grants.  

The total expected CAPEX of all awarded projects in the 2020 calls amounts to EUR 4 783 
136 117 (91% of which under the large-scale call, and 9% under the small-scale call). Figure 
12  shows  that  Innovation  Fund  grants  will  leverage  investments  4  times  bigger  than  their 
volume. 

Figure 10: Total grants awarded vs. CAPEX under the first Innovation Fund calls

The total expected CAPEX of the awarded projects significantly exceeds the Innovation Fund 
grants  awarded.  This  illustrates  the  need  for  additional  private  and  public  investments  into 
these  clean  tech  solutions,  the  commitment  of  companies  to  find  financing  for  their  green 
innovative solutions and shows the positive leverage effect of the Innovation Fund grants. 

14 

Total CAPEX vs. Grant amounts awarded109192114645910100020003000400050006000Total Grant Amount AwardedTotal CAPEXMillion EURSmall Scale CallLarge Scale CallInnovation Fund Grants help mobilise additional funding sources 
 
 
 
 
 
 
Figure 11: First call for large-scale projects: funding examples 

2.5. Contribution to other EU policy objectives 

2.5.1. Circular economy, Energy Efficiency and Renewable Energy 

The  awarded  projects  will  bring  other  environmental  benefits  to  the  European  economy 
within  the  framework  of  the  European  Green  Deal,  and  support  EU  strategies  related  to 
hydrogen, sector integration, and circular economy. For example, awarded projects will: 

-  Advance  deep-decarbonisation  solutions  for  energy  intensive  industries  such  as 

Hydrogen DRI21 in the steel sector or CCUS solutions for the cement industry;  

-  Bring solutions to facilitate the system integration of renewables such as offering the 
provision of renewable electricity during peak demand through the use of second-life 
car batteries;  

-  Promote  sector  coupling  and  indirect  electrification  through  green  hydrogen 

production for hard-to-electrify sectors; 

-  Support  the  application  of  circular  economy  and  energy  efficiency  principles  at 
various levels, through for example recycling of material residues and use of heat that 
would  otherwise  be  lost,  and  the  cooperation  of  different  industries;  Support  the 
replacement  of  fossil-fuels  and  the  deployment  of  additional  innovative  renewable 
energy capacity such as wind energy, solar energy, and geothermal power.  

21 Hydrogen Direct Reduced Iron 

15 

2020 call for large-scale projects: funding examples180,0106,4608,9185,2455,7749,72707,52496,50,0500,01000,01500,02000,02500,03000,0BECCSECOPLANTAInnovation Fund GrantEstimated Relevant CostProject CAPEXTotal Project CostsMillion EUR 
 
 
 
 
 
                                                           
2.5.2. Positive spillovers to other sectors  

While  the  Innovation  Fund  aims  to  support  the  decarbonisation  of  the  energy  and  industry 
sectors, through the production and use of renewable energy carriers, including hydrogen and 
synthetic fuels, the Innovation Fund has been able to support a wide variety of projects with 
application in sectors currently not  covered by the ETS such as maritime, road and railway 
transport and agriculture: 

  Supporting  the  development  of  new  sectors  and/or  markets:  e.g.  production  of 
hydrogen  for  zero-emissions  transportation  (H2  VALCAMONICA  and  ZE  PAK 
green H2) or replace fossil-based plastics (TLP Production); 

(bio-LNG) 

  Decarbonizing  the  maritime  transport  through  the  production  of  low-carbon  bio-
liquefied  natural  gas 
fuel 
to 
(FirstBio2Shipping).  Three  other  relevant  projects  are  supported  through  project 
development assistance: a pusher vessel combining a battery and a fuel cell in freight 
transport  (HyPush);  a  large  sailing  cruise  ship  featuring  an  innovating  wind 
propulsion technology (WAVE) and a zero-emission vessel powered by a large-scale 
fuel  cell  system  will  exclusively  use  green  hydrogen  from  renewable  sources 
(HYDROGEN EU-ROPAX); 

replace  conventional  maritime 

  Benefiting  agriculture  with  integrated  large-power  photovoltaic  irrigation  systems 
(PVI) that do not require back-up batteries and significantly reduce risks related to the 
integrity of the water distribution infrastructure (CO2-FrAMed); 

  Contributing 

to 

infrastructure:  a  seaport 
in 
(GREENMOTRIL) and an airport (PIONEER) will maximize their use of renewable 
energy.    

reducing  emissions 

transport 

2.5.3. Social and economic benefits 

The awarded projects will also bring social and economic benefits such as enhanced growth 
of  new  sectors  (e.g.  production  of  green  hydrogen),  creation  of  quality  jobs  in  the  green 
transition, support for local economies and cooperation between different industries to foster 
innovation  and  sustainability.  Further,  they  will  lead  to  specific  economic  benefits,  for 
example by lowering prices of new technologies and products and creating new markets. The 
Innovation Fund can also help address the social and labour markets aspects of a fair green 
transition.  

2.5.4. Synergies with other funding instruments 

The  Innovation  Fund  aims  to  ensure  synergies  with  other  investment  support  instruments, 
such  as  InvestEU  or  lending  programmes  of  the  European  Investment  Bank,  and  other 
relevant EU funding programmes, such as Horizon Europe or Connecting Europe Facility. 

INVESTEU PROGRAMME 

Since  attracting  additional  public  and  private  resources  is  a  fundamental  objective  of  the 
Fund, it is important that there are synergies with InvestEU, which is the EU’s flagship tool 
to  support  investment  (via  loans  and  other  types  of  support)  needed  for  recovery,  green 

16 

 
 
 
 
 
 
growth,  employment  and  a  just  transition.  Cumulation  of  InvestEU  and  Innovation  Fund 
funding  for  a  specific  project  is  possible.  Furthermore,  the  European  Investment  Bank  is 
implementing  the  so-called  Green  Transition    thematic  product22  under  the  InvestEU 
Programme.  The  Green  Transition  product  will  be  available  for  highly  risky  projects  with 
high policy added value eligible under the sustainable infrastructure and research, innovation 
and  digitalization  policy  windows.  The  product  will  benefit  from  a  top-up  from  the 
Innovation  Fund23  aiming  to  further  support  deep  decarbonization  projects  in  energy  and 
industry sectors.  

EU-Breakthrough Energy Catalyst (BEC) partnership will enable to enlarge the impact of the 
Green  Transition    product.  This  partnership  brings  together  the  European  Commission,  the 
European  Investment  Bank  and  Breakthrough  Energy  Catalyst24.  A  Memorandum  of 
Understanding between these parties was signed at the COP26 in Glasgow. The  partnership 
seeks  to  mobilise  up  to  EUR  820  million  (USD  1  bn)  for  innovative  projects  in  the 
EU between 2022 and 2027. 

In  January,  Breakthrough  energy  Catalyst  Europe  published  a  request  for  proposals25  for 
large-scale projects.  The  call  focuses  on  the  fields  of  clean  hydrogen,  sustainable  aviation 
fuels,  direct  air  capture  and  storage,  and  long-duration  energy  storage.  EU  funding  for  the 
partnership comes from  Horizon Europe26 (in the form of grants to be used as blending for 
selected  operations)  and  the  Innovation  Fund  (in  form  of  a  top-up  of  the  EU  guarantee 
available to de-risk EIB lending), managed under InvestEU GT product. Catalyst funding (in 
the form  of  grants  and equity  funding) comes from  philanthropies and corporates.  Both  the 
European  Investment  Bank  and  Breakthrough  Energy  Catalyst  will  provide  equivalent 
amounts of financing for the projects.  

EXAMPLES OF SYNERGIES ACHIEVED BY AWARDED PROJECTS  

Effective and operational synergies with other Union programmes notably to promote faster 
dissemination  and  uptake  of  research  and  innovation  results  and  to  enable  the  pursuit  of 
common objectives and common areas for activities has been anchored in  the objectives of 
different Union progammes.  

22 EIB, Relevance of Thematic Impact Finance for Innovation Fund eligible projects (6.7.21 presentation to the 
8th Meeting of the IFEG). Available at:  https://ec.europa.eu/clima/system/files/2021-
07/20210706_ifeg_4_en.pdf  
23 The Commission Decision C(2021) 7404 of 19.10.2021 on the activities related to the Innovation Fund, 
serving as the financing decision for 2021 and as a decision launching the second calls for proposals and its 
Annex 
24 https://www.breakthroughenergy.org/scaling-innovation/catalyst  
25 EU-Catalyst Partnership: Request for proposals of pioneering green technology projects is launched | 
European Commission (europa.eu) 

26 Regulation (EU) 2021/695 of the European Parliament and of the Council of 28 April 2021 establishing 
Horizon Europe, Annex IV, Art. 15 details synergies between the Innovation Fund and Horizon Europe, and 
Council Decision (EU) 2021/764 of 10 May 2021 establishing the Specific Programme implementing Horizon 
Europe, section 5.1 lays out the need for complementarity between the Innovation Fund and Cluster 5 of the 
Horizon Europe programme. 

17 

 
 
 
 
 
 
                                                           
Several  of  the  awarded  projects  under  the  first  round  of  Innovation  Fund  calls  already 
demonstrate  the  existing  strong  synergies  between  the  Fund  and  other  EU  and  national 
funding mechanisms:  

  Six projects are building on prior work supported under Horizon Europe predecessor 
programmes  -  Horizon  and  FP7  (CarBatteryReFactory,  CO2-FrAMed,  GtF, 
Silverstone, TLP and TANGO);  

  Three projects have also benefitted from the support of other EU instruments such as 
(CCGeo, 

the  LIFE  programme  and 

transport  call 

the  CEF 

NER300, 
FirstBio2Shipping and HELEXIO line); and,  

Apart  from  this,  five  out  of  the  seven  awarded  large-scale  projects  have  already  or  are 
planning  to  receive  financial  support  from  national  or  regional  authorities  (Kairos-at-C, 
BECCS at STHLM, K6, HYBRIT demonstration and SHARC). The financial supports may 
constitute State aid within the meaning of Article 107 TFUE. The  Commission has exclusive 
competence  to  assess  the  compatibility  of  State  aid  measures  with  the  internal  market  and 
Member States need to notify any such aid pursuant to Article 108 TFEU. 

2.5.5. Knowledge-sharing on clean-tech solutions 

To  ensure  cost  reductions  and  accelerated  commercialisation  of  clean  technologies  across 
Europe,  the  Innovation  Fund  is  supporting  knowledge-sharing  among  projects  and 
stakeholders on clean tech solutions.  

The  Delegated  Regulation  requires  that  grant  agreements  are  conditional  on  knowledge 
sharing by the grant beneficiary. The project proponent is to submit a knowledge-sharing plan 
at  the  application  stage  covering  the  full  project  cycle.  These  knowledge-sharing 
requirements  are  critical  to  safeguard  the  public  interest  while  respecting  non-disclosure  of 
commercially  sensitive  information.  They  facilitate  market  penetration  of  the  demonstrated 
technologies and lower risks in the transition to large-scale production and use of low-carbon 
products. Knowledge sharing has to start at  grant award to build on learnings of challenges 
met  and  strategies  for  overcoming  them  in  the  critical  phase  between  grant  award  and 
financial close, as well as between financial close and start of operation. The first reports on 
knowledge-sharing are expected to  be submitted  by the  awarded projects  in  2022-23.  Later 
on,  during  the  operation  phase,  knowledge-sharing  efforts  will  focus  on  the  technological 
deployment of the projects.  

In 2020 and 2021, over 10 virtual events were successfully organised to support all types of 
stakeholders  to  understand  better  the  current  and  potential  developments  of  clean  tech 
solutions  in  the  EU,  such  as  specific  knowledge-sharing  event  for  innovative  clean  tech 
projects  “From  NER300  to  the  Innovation  Fund”27,  clean  tech  financing  conferences28, 
webinars  on  the  application  process  for  the  Fund  and  the  lessons  learned29and  a  general 
Innovation  Fund  event  during  the  2020  Sustainable  Energy  Week.  The  Commission 
organised  regular  meetings  of  the  Innovation  Fund  Expert  Group  to  discuss  with  Member 

27 From NER 300 to the Innovation Fund: knowledge-sharing for innovative clean tech projects (europa.eu) 
28 First Financing Innovative Clean Tech virtual conference (europa.eu)  
How can the Innovation Fund foster innovative clean tech small-scale projects? (europa.eu) 
Delivering on the European Green Deal: Financing clean technology with the Innovation Fund (europa.eu) 
29 Events and webinars (europa.eu) 

18 

 
 
 
 
 
                                                           
States and industry representatives the implementation and future orientations of the Fund. In 
addition,  DG  CLIMA  and/or  CINEA  participated  in  multiple  events  organised  by  third 
parties to increase the knowledge and awareness of the Fund.  

2.6. Review referred to in Article 24, paragraph 3, of Regulation 1031/2010 

According to the second subparagraph of Article 24(3) of Regulation 1031/2010 (also known 
as the Auctioning Regulation), the Commission shall review every two years the amount of 
allowances  to  be  auctioned  for  the  Innovation  Fund,  paying  particular  attention  to  ‘the 
support available for future calls for proposals, the maximum amount of the Innovation Fund 
support  available  for  project  development  assistance,  the  part  of  the  total  amount  of  the 
Innovation  Fund  support  available  for  the  call  to  small-scale  projects  reserved  by  the 
Commission, the support foreseen for the awarded projects as well as the disbursement and 
the recovery rate’.  

This part of this report constitutes the first such review. 

The amount available for each call for proposals, including the maximum amount available 
for  project  development  assistance,  is  determined  in  each  financing  decision  and  call  text. 
The graph below summarises the 2020 Financing Decision.30  

Figure 12: Financing Decision 2020 

The  graph  below  shows  the  total  amounts  of  grants  and  of  project  development  assistance 
awarded under each call. 

30 Commission Decision amending Decision C(2020) 4352 of 2 July 2020 as regards the launch of the call for 
proposals for small-scale projects in 2020 

19 

2020 Financing Decision1: 1132.136 million EUR + 20% flexibility100220Call for small-scale projectsGrantsProject development assistanceFlexibility Grants10008200Call for large-scale projectsGrantsProject development assistanceFlexibility GrantsMillion EUR157,136OtherAdditional project developmentassistance for the current Agreementwith EIBAdministrative ExpenditureTotal 2020 FD (excluding 20% flexibility amounts) = 1132.136 million EUR1) Commission Decision amending Decision C(2020) 4352 of 2 July 2020 as regards the launch of the call for proposals for small-scale projects in 2020 
 
 
 
 
 
                                                           
 Figure 13: Grants and project development assistance amounts under each call 

The table below summarises the number of allowances auctioned for the Innovation Fund for 
2020 and 2021, and the funds available (EUR) available on the  Innovation Fund account in 
mid-May 2022. 

Number of allowances  
Assets 
available 
Nominal amount) 

(EUR  m 

End 2020 

End 2021 

         50,000,000  

         40,000,000  

13/5/2022 
           15,582,000  

1,335,841,072 

   4,146,382,569  

     5,434,617,254  

The  assets  available  include  the  amounts  committed  to  projects  that  have  received  grants 
from the first two calls. No payments have been made yet to Innovation Fund projects. 

Overall,  the  pace  of  auctioning  of  Innovation  Fund  allowances  addresses  the  need  of  clean 
tech projects. In the context of the RePowerEU Plan, it was decided that the Commission will 
double  the  funding  available  for  the  2022  Large  Scale  Call  of  the  Innovation  Fund  this 
autumn to around EUR 3 billion. Specific REPowerEU windows will be instituted to support 
(1) electrification and hydrogen applications in industry, (2) clean tech manufacturing and (3) 
mid-sized pilot projects for validating highly innovative solutions. 

3.  CONCLUSIONS AND NEXT STEPS 

The  first  two  calls  of  the  Fund  gathered  very  big  interest  from  businesses  and  received 
applications that by far exceed the available budget of each call, creating strong competition 
among  clean-tech  projects.  This  clearly  shows  the  strong  and  varied  clean-tech  project 
pipeline that the Fund can support in its next calls, which calls to further upscale the budget. 
A third call for large-scale projects is planned for autumn 2022. 

20 

1stCalls Project development assistance and awarded grants1,74,400,511,522,533,544,55Small Scale CallLarge Scale CallMillion EURAwarded project development assistance10911460200400600800100012001400Small Scale CallLarge Scale CallMillion EURAwarded grants 
 
 
 
 
 
 
 
The  calls  for  small-scale  projects  play  a  unique  role  in  supporting  projects  with  smaller 
capital  costs  (between  EUR  2.5  and  7.5  million)  but  with  decarbonisation  potential  in  new 
sectors and in smaller EU Member States. The second call for small-scale projects opened on 
31  March  2022  with  a  budget  of  EUR  100  million  and  projects  can  apply  until  31  August 
2022. 

Already  with  the  first  two  calls  and  the  projects  benefiting  from  project  development 
assistance,  the  Innovation  Fund  was  able  to  support  projects  across  the  eligible  sectors  and 
countries.  The  Fund  has  several  instruments  to  further  encourage  geographical  and  sectoral 
balance  of  awarded  projects.  There  is  the  special  facility  of  project  development  assistance  
provided  by  the  European  Investment  Bank  to  promising  but  not  yet  mature  projects,  the 
network  of  national  contact  points,  the  helpdesk  replying  to  applicants’  questions  for  each 
call,  the  multiple  targeted  webinars  and  info  days,  the  self-check  questionnaire.  These 
instruments  have  shown  to  help  companies  prepare  their  applications  for  the  Fund.  The 
Commission  will  further  develop  and  exploit  these  tools  to  enhance  the  geographical  and 
sectoral balance of the Fund. 

In  terms  of  the  governance,  the  clear  definition  of  responsibilities  (between  the  European 
Commission, the European Climate,  Infrastructure and Environment  Executive Agency, the 
European  Investment  Bank  and  the  Member  States)  and  the  collaboration  between  these 
entities  have  delivered  an  effective  implementation  of  the  Innovation  Fund  within  the 
foreseen timelines. . 

The  REPowerEU  Communication31  recognised  the  Fund  as  one  of  the  key  instruments  to 
accelerate industrial decarbonisation, outlining three avenues.  

Firstly, increased revenues due to  the higher carbon price can enable larger calls.  Based on 
the experience of the first calls, the project pipeline indicates that the market can absorb an 
increase of the available budget, while keeping the approach that only highly innovative, high 
impact and market-ready projects get funding.    

Secondly, the  Innovation Fund can broaden its portfolio of instruments for support of clean 
tech  projects.  For  instance,  an  EU  wide  competitive  bidding  mechanism  (e.g.  Contracts  for 
Difference  or  Carbon  Contracts  for  Difference)  for  specific  technology  baskets  can  be  a 
powerful  instrument  to  encourage  the  production  and  cost-effective  deployment  of  low-
carbon solutions. Such an instrument is already proposed by the Commission as part of the 
Fit for 55 package.  

Thirdly, while preserving a bottom-up and excellence-based approach, the  Innovation Fund 
can become more focused on strategic priorities, as put forward in the REPower EU Plan32.  

31  COM(2022)108,  REPowerEU:  Joint  European  Action  for  more  affordable,  secure  and  sustainable  energy, 
Communication  from  the  Commission  to  the  European  Parliament,  the  European  Council,  the  Council,  the 
European Economic and Social Committee and the Committee of the Regions 

32  COM(2022)230,  REPowerEU  Plan,  Communication  from  the  Commission  to  the  European  Parliament,  the 
European  Council,  the  Council,  the  European  Economic  and  Social  Committee  and  the  Committee  of  the 
Regions 

21