"Mind the Gap: Unveiling the Innovation Fund's Discrepancies Across the EU"

It is clear that in the allocation of green funds, a more equitable and proportionate approach across EU’s geographies need to be set. But, how can this be achieved?

Money for a greener future

The Innovation Fund, one of the European Union (EU)’s most ambitious initiatives, has been established to bolster the development and implementation of groundbreaking low-carbon technologies and projects. Its primary objective is to expedite the transition towards a clean and sustainable economy within the EU. Positioned as an integral part of the EU Green Deal's pursuit of its environmental objectives, the Innovation Fund stands tall as one of the world's most substantial funding programmes dedicated to deploying innovative and net-zero technologies.

Adopted in 2020, this fund forms a pivotal component of the EU's comprehensive endeavours to combat climate change and fulfil its commitments outlined in the Paris Agreement. With its primary focus on energy and industry sectors, the Innovation Fund strives to introduce solutions that facilitate the decarbonisation of European industries, propelling them towards climate neutrality while bolstering their competitiveness.

The Innovation Fund operates primarily through allocation, wherein the fund's pricing is closely linked to the prevailing carbon price. Boasting a substantial total budget of EUR 40 billion for the period between 2020 and 2030, the fund has witnessed an increase in overall size, now encompassing approximately EUR 530 million from European Union Emissions Trading System (EU ETS) allowances. Through auctions and grants, the fund supports critical strategic areas encompassing energy-intensive industries, renewables, energy storage, carbon capture (including utilization and storage), and achieving net-zero goals in mobility and buildings.

With a keen focus on highly innovative technologies and flagship projects within Europe, the Innovation Fund seeks to facilitate significant emissions reductions in accordance with the Net-Zero Act. Emphasizing a diverse project pipeline, it aims to strike a well-balanced approach by incorporating a wide array of innovative technologies across all EU member states, as well as Norway, Lichtenstein, and Iceland.

Large scale projects:

The Innovation Fund provides substantial financial support for large-scale projects that demonstrate innovative low-carbon technologies and contribute to the EU's climate objectives. Large-scale projects play a crucial role in driving the deployment of innovative technologies and accelerating the transition to a sustainable and low-carbon economy. Some of these examples include the K6 project in Hauts de France, the world first carbon neutral cement factory and BECCS Stockholm, a cutting-edge facility to capture and store CO2, which is financed with a EUR 180 million grant.

On July 13th, the European Commission awarded over 3.6 billion euro to 41 large scale clean tech projects, ranging from decarbonisation (8 projects in the refineries as well as cement and lime sectors) to industry electrification, green hydrogen and clean tech manufacturing (photovoltaic panel, batteries, electrolysers).

Small Scale projects:

Small-scale projects involve grants less than 7.5 mil euro, focused on the development and deployment of innovative renewable energy technologies, such as solar, wind, biomass, geothermal, or ocean energy, mainly focusing on improving energy generation, storage, integration, or grid management.

Flagship projects include Green H2 (4,2 mil euro), a small-scale green hydrogen production in Poland and PRIMUS (4,4 mil euro), a crystal glass manufacturing plant situated in Italy.

Overviews of Innovation Fund Signed Projects:

Mind the gap:

From the data shown we can notice that France has the highest number of projects (15) and participations, followed by Sweden (10), Germany (9), Spain (12), and the Netherlands (7). These countries are actively involved in multiple projects and are likely to have a diverse range of innovation initiatives.

With regard to funding, Sweden, France and Germany have received the highest EU contributions, with flagship projects like BECCS, K6 and C2B (Carbon to business/Germany) benefitting from more than 100 mil. Euros each.

Other Member States, such as Estonia, Greece, Hungary, Latvia, Luxembourg, Malta, Romania and Slovakia have no reported projects, suggesting a relatively lower level of interest and involvement in the innovative technologies, energy management systems, or behaviour change campaigns that reduce energy consumption and greenhouse gas emissions.

It is evident that Member States possessing robust research and development (R&D) capabilities as well as innovation ecosystems may enjoy a favourable position when it comes to accessing the Innovation Fund. Such nations have well-established institutions, experienced researchers, and a history of accomplishing successful projects, which provides them with a greater ability to formulate and present competitive proposals. By bolstering R&D infrastructure and cultivating innovation ecosystems in Member States that are currently underrepresented (Romania, Hungary, Greece), we can strive to create a more equitable environment.

The EU can address these disparities with a multi-faceted approach:

• Capacity Building and Support: Offering training programs, workshops, and mentorship to countries with limited experience or administrative capacity can enhance their ability to access and utilize the Innovation Fund effectively.
• Enhanced Communication and Outreach: Promoting the fund through targeted communication strategies, including localized information dissemination, can raise awareness among underrepresented countries and ensure that they have access to relevant information and resources
• Collaboration and Networking: Encouraging collaborations and partnerships between countries with varying levels of experience can facilitate knowledge sharing, capacity building, and the development of stronger project proposals.
• Tailored Funding Mechanisms: Introducing flexible funding mechanisms, such as middle-scale grants (to be introduced later in the year by the Commission) or seed funding, can provide opportunities for countries at different stages of development to participate and demonstrate their potential for larger-scale projects.

Time&Place Funding stands as a reliable hub for companies striving to attain their climate goals, providing unwavering support in navigating the funding landscape. Backed by our extensive expertise spanning across Europe, we offer a comprehensive platform that not only showcases best practices but also fosters knowledge exchange among industry leaders. At Time&Place Funding, we pride ourselves on delivering a diverse array of services geared towards assisting businesses in identifying and securing crucial EU funding. From crafting compelling project proposals to forming and managing consortia, as well as overseeing project coordination, our dedicated team ensures a streamlined process. Moreover, we provide valuable training sessions covering funding strategies and project management, alleviating the complexities associated with the entire funding journey.

With Time&Place Funding by your side, accessing the necessary resources to drive sustainable initiatives becomes significantly more attainable.

What do you think are the reasons for such large disparities of funding from the Innovation Fund among the EU Member States? Tell us your opinion on:

• climate.ec.europa.eu/eu-action/funding-climate-action/
• climate.ec.europa.eu/eu-action/funding-climate-action/innovation-fund/
• single-market-economy.ec.europa.eu/publications/net-zero-industry-act_en
• cinea.ec.europa.eu/index_en
• cinea.ec.europa.eu/programmes/innovation-fund/