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 accelerate the roll-out of innovative low-carbon technologies needed for the clean transition and already tested at smaller scale. 

The Innovation Fund’s impact goes beyond financing. By de-risking early deployment, it has enabled projects to attract substantial private and public co-investment.  

Knowledge sharing is an essential component of the Innovation Fund, as it provides support to fellow Innovation Fund projects, industrial stakeholders and future applicants. Funded projects are required to disseminate technical and operational insights to help accelerate learning, replication, and innovation across the European Economic Area. A dedicated knowledge-sharing webpage makes these lessons available to a wide range of stakeholders .  

The Innovation Fund will continue to evolve in line with EU priorities. New calls are expected by the end of 2025. The Net-Zero technology call will run in parallel with two Auctions in line with the policy directions set in the Net-Zero Industry Act and Clean Industrial Deal. Notably, the Innovation Fund will launch a new auction that will have a budget up to €1 billion to support projects that decarbonise industrial process heat through innovative electrification technologies.