Innovation Fund Program

European funding for innovative low-carbon technologies

Introduction to the Innovation Fund program

The Innovation Fund is one of the world's largest funding programs for the demonstration of innovative low-carbon technologies. Created under the EU Emissions Trading System (EU ETS), this fund is a key instrument of European climate policy to support the transition to carbon neutrality by 2050.

Within the European financing ecosystem, the Innovation Fund occupies a strategic position by focusing specifically on the critical phase of commercial-scale demonstration of innovative low-carbon technologies. Unlike other instruments such as Horizon Europe which mainly finance the research and development phases, the Innovation Fund targets projects ready to take the step of industrial demonstration and commercial deployment, thus bridging the gap between innovation and the market.

The strategic objectives of the Innovation Fund are fully aligned with the European vision of the Green Deal and enhanced climate ambitions. The program aims to:

Support highly innovative projects to reduce greenhouse gas emissions
Accelerate the commercialization of clean technologies and their industrial deployment
Boosting green economic growth and strengthening European competitiveness
Developing the next generation of technologies and solutions needed for climate neutrality
Creating local jobs for a just transition to a low-carbon economy

For the period 2020-2030, the Innovation Fund has a massive budget of around €38 billion (based on current carbon price projections), generated by the auctioning of 450 million emission allowances from the EU ETS. This considerable envelope confirms the EU's strong commitment to climate innovation as a driver of transformation for the European economy.

Pioneering technologies for a carbon-neutral economy

Specific objectives and priorities

The Innovation Fund supports disruptive technologies in sectors strategic to Europe's ecological transition. This major funding represents an exceptional opportunity for innovative companies wishing to develop, demonstrate, and deploy low-carbon industrial solutions.

Main thematic axes

The Innovation Fund supports innovative projects in energy-intensive industrial sectors, focusing on several thematic areas:

Energy-intensive industries

Decarbonization technologies and processes for energy-intensive industries
Carbon-intensive substitutes
Carbon Capture and Utilization (CCU) in Industrial Processes
Carbon Capture and Storage (CCS) for Industrial Emissions

Innovative renewable energies

Emerging or not yet commercialized renewable technologies
Innovative solutions for the integration of renewables
Innovative energy storage
Offshore and disruptive renewable energies

Energy storage

Large-scale storage solutions
Innovative short and long term storage
Next-generation batteries
Advanced thermal solutions

Smart energy networks

Solutions for sectoral integration
Integration of variable renewable energy sources
Intelligent demand management
Flexibility solutions for networks

Carbon Capture, Utilization and Storage (CCUS)

Industrial CO₂ capture technologies
Using CO₂ to create sustainable products
CO₂ transport and storage infrastructure
Negative emissions and direct air capture

Sectoral priorities

Although all industrial sectors are eligible, the Innovation Fund pays particular attention to sectors that are difficult to decarbonize:

Steel and metallurgy
Cement and building materials
Chemistry and petrochemistry
Paper and pulp
Glass and ceramics
Hydrogen and e-fuels
Refining and synthetic fuels
Capture and recovery of CO₂

The program particularly encourages projects with high emission reduction potential and a high level of innovation compared to existing technologies on the market.

European strategic objectives supported

The Innovation Fund is part of major European strategic guidelines, in particular:

The European Green Deal and the objective of climate neutrality by 2050
European industrial strategy and low-carbon competitiveness
The “Fit for 55” package aims to reduce emissions by at least 55% by 2030
The strategy for hydrogen and integrated energy systems
The action plan for the circular economy
The EU strategy for reducing methane emissions

Expected impact at European level

Innovation Fund projects must demonstrate their potential to generate significant impacts:

Substantial and verifiable reduction in greenhouse gas emissions
High degree of innovation compared to the state of the art in the sector
Project maturity allowing rapid implementation and commercialization
Cost effectiveness (cost per tonne of CO₂ avoided)
Potential for replicability and large-scale extension
Job creation and regional economic development

Contribution to European energy independence

Types of projects funded

The Innovation Fund finances two main categories of projects:

Large-scale projects :
- Projects with capital expenditure (CAPEX) greater than 7.5 million euros
- Aim to demonstrate highly innovative technologies on an industrial scale
- Typical duration: 3-5 years for construction + 5-10 years of operation
- Funding: up to 60% of additional costs related to innovation
Small-scale projects :
- Projects with investment expenditures between 2.5 and 7.5 million euros
- Focus on promising innovations requiring validation before scaling up
- Typical duration: 2-3 years for construction + 3-5 years of operation
- Financing: up to 60% of total CAPEX

The program also offers specific procedures:

Calls for thematic projects targeting specific sectors or technologies
Project development mechanism (Project Development Assistance) for promising but still insufficiently mature projects
Public procurement before commercialization to stimulate innovation through public demand

For smaller-scale environmental projects or projects focused on biodiversity rather than industrial decarbonization, the program LIFE may constitute a more suitable alternative than the Innovation Fund.

Concrete examples of projects already funded

Here are some illustrative examples of projects that received funding from the Innovation Fund during the first calls:

Installation of a large-scale CO₂ capture system in a cement plant, with recovery for e-fuels (Sweden)
Deployment of electrolysers to produce green hydrogen to replace grey hydrogen in a refinery (Netherlands)
Integrated hydrogen-based steelmaking project, drastically reducing emissions compared to conventional blast furnaces (Finland)
Biomass power plant with carbon capture, generating negative emissions (Bio-CCS) (Denmark)
Deployment of a high-temperature thermal energy storage system using innovative materials (Spain)
Pilot project for advanced chemical recycling of hard-to-recycle plastic waste (France)

Supported technological innovations

The Innovation Fund particularly targets projects which:

Develop technologies with a high TRL (Technology Readiness Level), generally between 7 and 9
Offer disruptive or breakthrough solutions for carbon-intensive sectors
Integrate different innovative technologies in synergy (systemic approach)
Demonstrate significant potential for reducing emissions compared to benchmarks

Have medium-term commercial viability without ongoing support

Priority sectors

Although all sectors contributing to the low-carbon transition are eligible, the following technologies are particularly valued:

Technologies for the production of green hydrogen and its use in industry
CCUS solutions integrated into industrial processes
Production of low-carbon materials and chemicals
Next-generation innovative energy technologies
Solutions for sectors that are difficult to decarbonize (cement, steel, chemicals)
Negative emissions technologies (BECCS, DACCS)
Advanced electrification solutions for industry

Advanced synthetic fuels and biofuels

Support by MarketKaps

Specific expertise on this program

Marketkaps has extensive expertise in the Innovation Fund program, a result of our involvement and successful support of multiple project leaders across Europe. Our team includes expert evaluators and active experts who are fully conversant with the evaluation criteria and specific requirements of the Innovation Fund.

Our experts combine technical expertise in targeted industries (energy, CCUS, heavy industries), a deep understanding of financing mechanisms, and hands-on experience in building successful applications. This multifaceted expertise allows us to effectively guide you through the complexities of the program.

Strategic assessment : In-depth analysis of your technology and its decarbonization potential
Optimal positioning : Identification of the most suitable financing mechanism (large scale, small scale or development assistance)
Technical and financial structuring : Precise definition of the project, its implementation methodology and its economic model
Carbon impact calculation : Rigorous quantification of avoided emissions according to the methodology required by the Innovation Fund
File assembly : Development of a complete technical and financial proposal, clearly demonstrating the five evaluation criteria
Preparation for the assessment : Coaching for interviews with assessors and answers to technical questions

Eligibility diagnosis and technological maturity analysis
Support for the calculation and validation of GHG emission reductions according to the Innovation Fund methodology
Development of the business plan and financial modeling
Technical structuring of the project and definition of milestones
Risk analysis and mitigation strategies
Assistant for the complete drafting of the application file
Preparation of technical and financial annexes
Administrative assistance for contractualization
Support for reporting and project monitoring

Number of countries covered by our experts

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industrial experts in our network covering all energy-intensive sectors

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years of combined expertise in decarbonization technologies and financial engineering

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time saved on the preparation and administrative management of the project

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continuous support from the design to the implementation of your low-carbon project

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Eligibility conditions

Eligibility criteria for organizations

To be eligible for the Innovation Fund, applicants must meet the following conditions:

Legal entities : Any public or private legal entity established in an eligible country
Consortium or individual application : Projects can be submitted by a single entity or by a consortium (without a minimum number of partners)
Financial strength : Ability to co-finance the portion of costs not covered by the grant
Operational capacity : Skills and resources needed to carry out the project

Unlike other European programs, the Innovation Fund does not require a transnational consortium, allowing national projects or even projects led by a single company to be funded.

Types of businesses concerned

The Innovation Fund is available to a wide range of organizations:

Industrial companies : Particularly those in energy-intensive sectors
Technology providers : Companies developing innovative low-carbon solutions
SMEs and large companies : No size restrictions, with attention to transformative projects
Energy producers : Companies in the energy production and distribution sector
Infrastructure operators : Energy network and infrastructure managers
Public-private consortiums : Collaborations between industrialists, communities and research centers

Partnerships between technology developers and industrial users are particularly valued, as they strengthen the potential for commercial deployment.

Geographic criteria

The Innovation Fund program covers:

The 27 member states of the European Union
Norway and Iceland (EEA members)
Projects must be implemented in the territory of eligible countries
Collaborations with entities from third countries are possible, but the core of the project must remain in the eligible countries

Technical or scientific prerequisites

Innovation Fund projects must meet several technical criteria:

Degree of innovation : Technology must go beyond the state of the art and best available technologies
Technological maturity : High TRL, typically 7-9, with successful pilot scale demonstration
Emission reduction potential : Demonstrated ability to significantly reduce GHG emissions
Project preparation : Advanced level of technical design and complete feasibility study
Solid business plan : Credible business model and clear path to commercial viability

Projects must also demonstrate their potential for scaling up and replication, as well as their contribution to European climate objectives.

Financing arrangements

Financing rates by type of organization

The Innovation Fund offers an innovative financing system based on several mechanisms:

Large-scale projects :
- Funding up to 60% of “relevant costs”
- Relevant costs represent the additional costs (CAPEX and OPEX over 10 years) related to the application of the innovative technology compared to a conventional technology
- Staged payment: 40% upon signing, 60% during the operating phase based on GHG emissions actually avoided
Small-scale projects :
- Financing up to 60% of total capital expenditure (CAPEX)
- Simplified payment with the possibility of a larger advance
Assistance with project development :
- Fixed grant for project development (technical studies, financial studies, etc.)
- Up to 1 million euros per project

Grant ceilings

Funding amounts vary considerably depending on the size and ambition of the projects:

Large-scale projects :
- No formal ceiling, but typical grants range from €10 million to €150 million
- Major industrial demonstration projects can receive up to 300 million euros
Small-scale projects :
- Typical grants between 1.5 and 4.5 million euros (60% of CAPEX capped at 7.5 million)
Development assistance :
- Up to 1 million euros per project

Eligible costs

Eligible cost categories vary depending on the type of project:

For large-scale projects (relevant costs):
- Additional capital expenditure (CAPEX) compared to a conventional solution
- Net operating costs (OPEX) over 10 years: difference between costs and benefits of the innovative vs. conventional solution
- Transaction costs (studies, engineering, permits) to a limited extent
For small scale projects :
- Mainly the total capital expenditure (CAPEX) of the project
- Some preparation costs may be included

Co-financing required

The Innovation Fund program operates on the principle of co-financing:

The project leader must finance at least 40% of eligible costs
This co-financing may come from own resources or other sources (loans, investors, national aid)
National or regional aid may be combined with the Innovation Fund, subject to compliance with state aid rules
The project must demonstrate its complete financial structure, including secured or envisaged sources of financing

Marketkaps can help you identify complementary sources of co-financing and optimize your financial engineering to maximize the leverage effect of European financing.

Application Process

Calendar and calls for projects

The Innovation Fund operates with a system of regular calls for projects:

Frequency : Generally one main call per year for large-scale projects, and one for small-scale projects
Thematic calls : More and more calls targeting specific sectors or technologies
Two-step procedure for large-scale projects:
- Step 1: Expression of interest (concept note) evaluated on three criteria (degree of innovation, potential for GHG reduction, maturity)
- Step 2: Full proposal for shortlisted projects, assessed on the five full criteria
One-step procedure for small-scale projects: Direct submission of a full proposal

Required documents

Applying for the Innovation Fund requires the preparation of several key documents:

For Stage 1 (Large-scale projects) :
- General Application Form
- Description of the technical innovation
- Calculation of avoided GHG emissions
- Implementation plan and financial commitment
- Required authorizations and preliminary studies
For Stage 2 or Small Scale Projects :
- Detailed technical documentation
- Complete business plan
- Financial plan and sources of financing
- Detailed cost analysis
- Risk analysis and mitigation strategies
- Complete and documented calculation of avoided GHG emissions
- Deployment and Replication Plan

Marketkaps supports you in the preparation of each of these documents, with particular attention to overall technical and economic consistency and the rigor of emissions calculations.

Submission Steps

The Innovation Fund submission process includes the following steps:

Registration on the EU Funding & Tenders funding portal
Preparation of documents according to the requirements of the call
Electronic submission before the deadline
Assessment by independent experts
For large-scale projects : Notification of pre-selection and invitation to stage 2
Preparation of the complete file (step 2 or small scale)
Interviews with the evaluation panel for the preselected projects
Final decision of the European Commission
Preparation of the grant agreement for the selected projects

The entire process can take between 9 and 18 months depending on the complexity of the project and the type of call.

Proposal evaluation criteria

Innovation Fund projects are evaluated according to five main criteria:

Degree of innovation (5 points) :
- Innovation beyond the state of the art
- Advantages over existing technologies
- Innovative nature of processes or products
Potential for reducing GHG emissions (15 points) :
- Absolute amount of emissions avoided
- Cost-effectiveness ratio (€/tonne of CO₂ avoided)
- Robust calculation and monitoring methodology
Project maturity (5 points) :
- Technical and operational feasibility
- Organizational structure and team qualifications
- Progress of required authorizations and permits
Extensibility (5 points) :
- Potential for deployment in similar applications
- Large-scale replication plan
- Knowledge sharing actions
Cost efficiency (10 points) :
- Viability of the business model
- Soundness and completeness of the financial plan
- Optimized cost structure

Each criterion is scored according to a specific scale, with particular importance given to emission reduction (triple weighting) and cost efficiency (double weighting).

Marketkaps optimizes your file to maximize your score on each of these criteria, with particular attention to demonstrating and quantifying emissions reductions.

Success rates and key factors

Success statistics for this program

The Innovation Fund program has the following characteristics in terms of success rate:

Overall average success rate : Approximately 15-20% across Europe (varies depending on calls)
Step 1 (large scales) : Approximately 30-40% of the proposals are retained for the second stage
Step 2 (large scales) : 40-50% of shortlisted projects obtain funding
Small-scale projects : Slightly higher success rate, around 20-25%
Variation by sector : Green hydrogen, CCUS and industrial energy efficiency projects generally have the highest rates
Evolution : Trend towards increasing competition, with a constantly increasing number of applications

Common Mistakes to Avoid

Our experience has allowed us to identify the main errors that penalize Innovation Fund applications:

Insufficient degree of innovation : Technologies too close to solutions already on the market
Inaccurate emissions calculation : Methodology for calculating avoided GHGs insufficiently rigorous
Poorly defined basic assumptions : Baseline scenario imprecise or too optimistic
Unrealistic business plan : Financial projections that are too optimistic or insufficiently supported
Insufficient level of preparation : Technical feasibility insufficiently demonstrated
Non-optimized costs : Cost-effectiveness ratio (€/tonne CO₂) too high
Vague deployment plan : Insufficiently developed replication and expansion strategy
Superficial risk analysis : Incomplete risk identification and mitigation plans

Marketkaps ensures that these weak points are corrected before submission to maximize your chances of success.

Differentiating factors for a successful application

The factors that make the difference in obtaining Innovation Fund funding are:

Disruptive technological innovation with clear demonstration of the advantages over the state of the art
Significant and well-quantified carbon impact with robust methodology
Viable and detailed economic model demonstrating medium-term profitability
Experienced project team with track record in industrial deployment
Integrated systemic approach combining several complementary innovations
Advanced project maturity with detailed technical studies and permits in the process of being obtained
Realistic and detailed planning with clear milestones and critical path analysis
Risk management strategy complete and convincing

Marketkaps feedback

Our experience supporting numerous Innovation Fund projects has enabled us to identify best practices:

Accurate and rigorous quantification of avoided GHG emissions is the most critical element of success
Projects combining several technologies in synergy are generally better evaluated
Early involvement of regulators and local stakeholders significantly enhances credibility
A diversified financial strategy, combining different sources of financing, is highly valued
Highlighting environmental co-benefits (beyond the reduction of GHGs) constitutes an asset
Projects with immediate and clearly identified replication potential are favored.
A detailed sensitivity analysis demonstrating the robustness of the project in the face of variations in carbon prices and energy markets is highly appreciated.
Clarity and conciseness of the presentation, despite technical complexity, are decisive factors in the evaluation
A careful balance between innovation ambition and technical and economic realism is crucial

FAQ about the Innovation Fund program

Frequently Asked Questions by Businesses

Is my project innovative enough for the Innovation Fund?

Innovation in the context of this program is not limited to completely new technologies. Any technology that goes beyond the commercial state of the art in your sector or applies an existing technology in a novel way is considered innovative. Marketkaps can conduct an accurate benchmark to position your technology and maximize the demonstration of its innovativeness.

How are avoided GHG emissions calculated?

The calculation must follow the Innovation Fund's specific methodology, which compares the emissions of the innovative project with those of a reference scenario (a conventional technology that would likely be deployed in the absence of the Innovation Fund). This calculation includes both direct and indirect emissions and must be accurately documented. This is a crucial aspect where Marketkaps brings considerable added value thanks to its expertise.

Can the Innovation Fund be combined with other public funding?

Yes, the Innovation Fund can be combined with national or regional funding, as well as with other European programs such as the Connecting Europe Facility or InvestEU, subject to compliance with state aid rules. This combination often optimizes the project's financial structure. Marketkaps can help you design an optimal blended financing strategy.

What are the chances of success for a first deposit?

First-time submissions without professional support have a success rate of less than 10%. With Marketkaps' support, this rate rises to more than 35% even for a first-time submission, thanks to our in-depth knowledge of the evaluation criteria and our experience with projects funded by the Innovation Fund.

How exactly does the calculation of "relevant costs" work?

For large-scale projects, the relevant costs are the sum of:

The difference between the CAPEX of the innovative project and those of an equivalent conventional installation
The discounted difference between OPEX and revenues over 10 years of operation

If this difference is negative (the innovative solution is more profitable in the long term), only the difference in CAPEX is taken into account. If the difference is positive, the entire cost is considered a relevant cost. This complex calculation can significantly influence the amount of the subsidy. Marketkaps has mastered this methodology and can optimize your financial model accordingly.

What is the grant payment process?

The Innovation Fund offers a unique payment mechanism:

Up to 40% of the grant can be paid upon signing the agreement, based on project milestones
Up to 60% is paid during the operating phase, depending on the GHG emissions actually avoided
For small-scale projects, a larger proportion may be paid before operation.

This mechanism incentivizes the actual performance of the project. Marketkaps helps you structure your project to optimize cash flow and secure initial payments as much as possible.

Maximize your chances of success with our expertise

Ready to launch your Innovation Fund project?

Marketkaps supports you every step of the way, from initial assessment to final submission, to maximize your chances of securing Innovation Fund funding and realizing your vision of a decarbonized industry.

Please contact us with any questions or to discuss your industrial decarbonization project. Together, let's contribute to the European goal of climate neutrality while strengthening your competitiveness.

Make an appointment with one of our experts for a free evaluation of your project