Green Recovery of Europe: €1 billion investment in innovation by EU
The Innovation Fund (IF) aims to create the right financial incentives for companies and public authorities to invest now in the next generation of low-carbon technologies and give EU companies a first-mover advantage to become global technology leaders. The IF, which is mainly managed by the European Commission with the assistance of two other EU bodies (INEA and EIB), has launched the first call for proposals in the beginning of July 2020. Being one of the world’s largest programs for the development of innovative low-carbon tech, the IF is aiming to finance breakthrough technologies for renewable energy, energy-intensive industries, energy storage and carbon capture.
For the period between 2020 and 2030, the IF will allocate around EUR 10 billion from the auctioning of 450 million allowances from 2020 to 2030 under the EU Emissions Trading System, in addition to undisbursed revenues from the predecessor of IF, the NER 300 program. Compared to the NER300 program, the IF improves the risk-sharing for projects by giving more funding in a more flexible way through a simpler selection process and is also open to projects from energy-intensive industries. The IF will support up to 60% of the additional capital and operational costs linked to innovation, 40% of these grants can be given before the whole project is fully up and running, thus helping initiation of new green tech companies and assisting new technologies with reaching the market. On top of these aids, IF backing can be coupled with other state aid initiatives and EU funding packages providing further support for companies.
The EU also participates, and will invest €1 billion in promising, market-ready projects such as clean hydrogen or other low-carbon solutions for energy-intensive industries like steel, cement and chemicals. There will be a further EUR 8 million for project development help for technologies which require more development before market-readiness. Projects in eligible sectors from all EU Member States, Iceland and Norway are invited to apply until 29 October 2020. Projects will be evaluated according to their effectiveness of greenhouse gas emissions avoidance, degree of innovation, financial and technical maturity, scalability and cost efficiency.
These large-scale investment of around EUR 10 billion - depending on the carbon price - allocated by the IF for the next 10 years is part of the EU’s EUR 1 trillion green recovery plan, which provides key funding instruments for delivering the EU’s economy-wide commitments under the Paris Agreement and may help restart the EU economy and create a green recovery that leads us to the ultimate goal of climate neutrality in 2050.