The European Commission has invited proposals for the Innovation Fund, with a record budget of €4 billion (~$4.3 billion) to support innovative decarbonization technologies.

Funded by the European Union Emissions Trading System, the Commission has increased the available funds and doubled the budget allocated for cleantech manufacturing projects. A total of €1.4 billion ($1.52 billion) has been earmarked to strengthen industrial manufacturing capacity, technology leadership, and supply chain resilience in Europe.

These grants underpin the importance of carbon pricing for the green transition in the region. The fund aims to create financial incentives for companies and public authorities to invest in cutting-edge low-carbon technologies that will help Europe achieve its net zero targets.

In July this year, the EU allocated nearly $4 billion in the previous call to fund 41 large-scale clean tech projects across the region.

The fund will cover 60% of the project’s relevant costs. Project promoters have until April 9, 2024, to apply for grants under five topics with distinct budget and capital expenditure (CAPEX) requirements-

• General decarbonization (large-scale) – €1.7 billion ($1.8 billion) available for projects with CAPEX above €100 million ($109 million)
• General decarbonization (medium-scale) – €500 million ($545 million) available for projects with CAPEX between €20 million ($21 million) and €100 million ($109 million)
• General decarbonization (small-scale) – €200 million ($218 million) available for projects with CAPEX between €2.5 million ($2.7 million) and €20 million ($21 million)
• Cleantech manufacturing – €1.4 billion available for projects with CAPEX above €2.5 million ($2.7 million) focusing on manufacturing components for renewable energy, energy storage, heat pumps, and hydrogen production.
• Pilot – €200 million ($218 million) available for projects with CAPEX above €2.5 million ($2.7 million) focusing on deep decarbonization.

The assessment of the projects will be based on their potential to reduce greenhouse gas emissions, degree of innovation, maturity, replicability, and cost efficiency. Successful applicants will sign grant agreements in the first quarter of 2025.

The EU has adopted several steps in its bid to transition to a net-zero economy. Earlier this year, the Commission adopted a new Temporary Crisis and Transition Framework that sought to support measures in sectors that are key for a clean energy transition.