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The Horizon Europe Innovation Fund Explained



What is the Innovation Fund?


The Innovation Fund is one of the world’s largest funding programmes for the demonstration of innovative low-carbon technologies. It is a key funding instrument for delivering the EU’s economy-wide commitments under the Paris Agreement and its objective to be climate neutral by 2050, as recognised in the European Green Deal Investment Plan.


The Innovation Fund will provide up to €40 billion of support from 2020 to 2030, assuming an average of over €75 / tCO2 in the coming years, for the commercial demonstration of innovative low-carbon technologies, aiming to bring to the market industrial solutions to decarbonise Europe and support its transition to carbon neutrality and climate-positive development.


The main goal of the Fund is to help businesses invest in clean energy and industry to boost economic growth, create local future-proof jobs, and reinforce European technological leadership on a global scale.


This is done through calls for large- and small-scale projects focusing on five main areas:

  1. Innovative low-carbon technologies and processes in energy-intensive industries, including products substituting carbon-intensive ones

  2. Carbon capture and utilisation (CCU)

  3. Construction and operation of carbon capture and storage (CCS)

  4. Innovative renewable energy generation

  5. Energy storage


How is the Innovation Fund funded?


The EU Emissions Trading System (EU ETS), the world’s largest carbon pricing system, is providing the revenues for the Innovation Fund from the auctioning of 450 million allowances from 2020 to 2030, as well as any unspent funds from the NER300 programme, the Innovation Fund’s predecessor.


For the period 2020-2030, the Fund may offer as much as €40 billion, depending on the price of carbon during this period. Alongside the Innovation Fund, the EU ETS also provides the main long-term incentive for these technologies to be deployed.


What will be funded?


The Innovation Fund focuses on highly innovative technologies and big flagship projects within Europe that can bring on significant emission reductions, sharing the risk with project promoters to help with the demonstration of first-of-a-kind highly innovative projects.


It aims to finance a varied project pipeline achieving an optimal balance of a wide range of innovative technologies in all eligible sectors and Member States, Norway, and Iceland, with a prerequisite that projects are sufficiently mature in terms of planning, business model as well as financial and legal structure. This is to ensure proper support for cross-cutting projects on innovative low-carbon solutions that lead to emission reductions in multiple sectors.


The projects within the Innovation Fund can be classified into two types of calls: large-scale and small-scale. ‘Large-scale’ projects have a capital expenditure above €7.5 million, while ‘small-scale’ projects have total capital costs below €7.5 million.


Innovation Fund projects and funding opportunities


The Innovation Fund’s third call for large-scale projects was launched on 3 November 2022, with a budget of €3 billion thanks to increased revenue from the auctioning of EU ETS allowances. This third call counts for the following areas:

  1. General decarbonization – all projects eligible for the Innovation Fund except those which fall under dedicated RePowerEU topics (Budget: €1B).

  2. Clean tech manufacturing – supporting manufacturing of components and final equipment such as electrolysers and fuel cells, innovative renewable equipment, energy storage, or heat pumps (Budget: €700M)

  3. “Mid-sized pilots” – projects for validating, testing and optimising highly innovative solutions (Budget: €300M)



The following activities can be funded under this topic:

  • “Activities that support innovation in low-carbon technologies and processes in sectors listed in Annex I to the EU ETS Directive 2003/87 , including environmentally safe carbon capture and utilisation (CCU) that contributes substantially to mitigating climate change, as well as products substituting carbon-intensive ones produced in sectors listed in Annex I to the EU ETS Directive”

  • “Activities that help stimulate the construction and operation of projects that aim at the environmentally safe capture and geological storage of CO2 (CCS)”

  • “Activities that help stimulate the construction and operation of innovative renewable energy and energy storage technologies.”



The following activity (with its affiliated subcategories) can be funded under this topic:

  • “Construction of manufacturing facilities and their operation to produce specific components for:

  • renewable energy installations (in photovoltaics, concentrated solar power, on-shore and offshore wind power, ocean energy, geothermal, solar thermal, and others), including their connection to the electricity/heat grid;

  • electrolysers and fuel cells;

  • energy storage solutions for stationary and mobile use for intra-day and long duration storage;

  • heat pumps.”



The following activity can be funded under this topic:

  • “Construction and operation of pilot projects that focus on validating, testing and optimising highly innovative, deep decarbonisation solutions in sectors eligible for Innovation Fund support. Pilot projects can thus concern: industrial sectors listed in Annex I to the EU ETS Directive 2003/87, including environmentally safe carbon capture and utilisation (CCU) that contributes substantially to mitigating climate change, as well as products substituting carbon-intensive ones produced in sectors listed in Annex I to the EU ETS Directive or construction and operation of innovative energy or CO2 storage solutions or construction and operation renewable energy installations (in photovoltaics, concentrated solar power, onshore and offshore wind power, ocean energy, geothermal, solar thermal, and others), including innovative systems aspects such as connection to the electricity/heat grid.”


How Linq Consulting can help make sense of the Horizon Europe Innovation Fund


Linq Consulting specializes in all areas of creating and managing successful proposals and projects, with dedicated project planning specialists that have experience with multi-million Euro collaborative funding applications. Our team of expert researchers, writers, and project managers can help with all aspects of not only writing a work plan, but also carrying it through and implementing it for Horizon Europe proposals or project management.


The dedicated experts at Linq Consulting are available to assist with Horizon Europe proposals at every stage of the writing and application process. With our expertise in grants management, we can help you secure funding from Horizon Europe, as well as any other grant opportunities that may be available.


For more information on how we can help, get in touch with us at info@linq-consulting.com.


Be sure to follow us on Twitter @linq-consulting and connect with us on LinkedIn as well.


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