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:
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
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.
The Innovation Fund supports innovative projects in energy-intensive industrial sectors, focusing on several thematic areas:
Although all industrial sectors are eligible, the Innovation Fund pays particular attention to sectors that are difficult to decarbonize:
The program particularly encourages projects with high emission reduction potential and a high level of innovation compared to existing technologies on the market.
The Innovation Fund is part of major European strategic guidelines, in particular:
Innovation Fund projects must demonstrate their potential to generate significant impacts:
Contribution to European energy independence
The Innovation Fund finances two main categories of projects:
The program also offers specific procedures:
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.
Here are some illustrative examples of projects that received funding from the Innovation Fund during the first calls:
The Innovation Fund particularly targets projects which:
Have medium-term commercial viability without ongoing support
Although all sectors contributing to the low-carbon transition are eligible, the following technologies are particularly valued:
Advanced synthetic fuels and biofuels
Support by MarketKaps
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.
Our support approach for the Innovation Fund follows a proven 6-step methodology:
Marketkaps offers complete or modular support according to your needs:
To be eligible for the Innovation Fund, applicants must meet the following conditions:
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.
The Innovation Fund is available to a wide range of organizations:
Partnerships between technology developers and industrial users are particularly valued, as they strengthen the potential for commercial deployment.
The Innovation Fund program covers:
Innovation Fund projects must meet several technical criteria:
Projects must also demonstrate their potential for scaling up and replication, as well as their contribution to European climate objectives.
The Innovation Fund offers an innovative financing system based on several mechanisms:
Funding amounts vary considerably depending on the size and ambition of the projects:
Eligible cost categories vary depending on the type of project:
The Innovation Fund program operates on the principle of co-financing:
Marketkaps can help you identify complementary sources of co-financing and optimize your financial engineering to maximize the leverage effect of European financing.
The Innovation Fund operates with a system of regular calls for projects:
Applying for the Innovation Fund requires the preparation of several key documents:
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.
The Innovation Fund submission process includes the following steps:
The entire process can take between 9 and 18 months depending on the complexity of the project and the type of call.
Innovation Fund projects are evaluated according to five main criteria:
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.
The Innovation Fund program has the following characteristics in terms of success rate:
Our experience has allowed us to identify the main errors that penalize Innovation Fund applications:
Marketkaps ensures that these weak points are corrected before submission to maximize your chances of success.
The factors that make the difference in obtaining Innovation Fund funding are:
Our experience supporting numerous Innovation Fund projects has enabled us to identify best practices:
FAQ about the Innovation Fund program
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.
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.
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.
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.
For large-scale projects, the relevant costs are the sum of:
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.
The Innovation Fund offers a unique payment mechanism:
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
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.
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