The EU Innovation Fund (EUIF), managed by the European Climate, Infrastructure, and Environment Executive Agency (CINEA) and funded through the EU Emissions Trading System (EU ETS), is one of the world’s largest funding programmes for the demonstration and market maturation of innovative low-carbon technologies. It supports projects that contribute to greenhouse gas (GHG) reduction such as manufacture, production, and use of innovative low-carbon technologies in energy intensive industries; net-zero mobility and buildings; carbon capture and storage; generation of renewable energy; and energy storage. The objective is to share the risk with project promoters to help with the demonstration of first-of-a-kind highly innovative projects to decarbonise Europe and support its transition to climate neutrality.
EUIF supports pilot projects (total CAPEX, i.e., capital expenditure, below €2.5 million), small-scale projects (CAPEX between €2.5 million and €20 million), medium-scale projects (CAPEX between €20 million and €100 million), and large-scale projects (CAPEX above €100 million) through grants. In addition, the Fund has a technical assistance component which allows unsuccessful proposals that meet certain conditions to benefit from Project Development Assistance (PDA) support by the European Investment Bank (EIB). EUIF grants aims to support technologies that are not yet commercially available but represent breakthrough solutions or are sufficiently mature to be ready for demonstration at a pre-commercial scale. Second-of-a-kind commercialisation can also be considered innovative under certain conditions – where the relevant costs remain a significant share of total costs that prohibit commercialisation without further public support.
Competitive bidding is expected to provide an additional line of support and to contribute to market creation on key low carbon products. Auctions commenced in Q1 2024 through the first pilot auction on RFNBO hydrogen, supported by the European Hydrogen Bank and aligned with CEEAG guidelines. This competitive bidding is expected to be expanded to other low carbon products, such as methanol or SAF, and for carbon storage.
EUIF grants supports up to 60% of relevant costs held by projects. Relevant costs are calculated using the best estimate of the undiscounted total Project CAPEX and the Net Present Value (NPV) of the project revenues, operational benefits, maintenance CAPEX, and operational costs (OPEX), arising over the first 3-10 years of the project’s operation. EUIF auctions will provide a fixed-premium support for up to 10 years to the low carbon products included in the bid.
The application process for both EUIF grants and auctions is based on a written proposal, submitted electronically for given deadlines. EUIF grants will be evaluated based on (1) GHG emission avoidance potential, (2) degree of innovation, (3) project maturity, (4) scalability/replicability, and (5) cost efficiency. In the EUIF auctions, bids will be ranked based on price only, after some eligibility and quality checks.
