Five years of the Innovation Fund: accelerating the clean industrial transition

The first Innovation Fund calls were launched in June 2020 and, as of mid-2025, the Fund has had 11 calls for proposals awarding more than €12 billion to over 210 projects across the European Economic Area. Backed by revenues from the EU Emissions Trading System (EU ETS), the Innovation Fund is one of the world’s largest funding programmes for the demonstration of innovative clean technologies. With an estimated overall budget of €40 billion for the 2020–2030 period (calculated by using a carbon price of €75/tCO2), it plays a critical role in strengthening the EU’s competitiveness and supporting the transition to climate neutrality. Since the first calls for large-scale and small-scale projects were launched, the Innovation Fund has attracted thousands of applications from across Europe. The selected projects span a broad spectrum of sectors: from innovative low-carbon technologies and processes in energy-intensive industries, to Industrial Carbon Management (ICM), innovative renewable energy technologies, and energy storage. At the beginning, the Fund operated exclusively through regular calls for grants, evaluated through competitive selection based on innovation potential, effectiveness of greenhouse gas emission avoidance, maturity, scalability, and cost efficiency. In 2023, a second mechanism was introduced: competitive bidding (auctions), which provides fixed-price support for specific outputs (such as renewable hydrogen production). This mechanism was designed to...