The European Commission launches second call for large-scale project proposals regarding the Innovation Fund
05/11/2021

On 26 October 2021, the European Commission has for the second time initiated a call for proposals of large-scale projects, i.e. those with a capital cost exceeding EUR 7.5 million, in the context of the Innovation Fund with a budget of EUR 1.5 billion.

Depending on the carbon prices and for the period 2020-2030, the Innovation Fund has an envisaged revenue of over EUR 25 billion resulting from emission allowances auctions (in the framework of the EU Emissions Trading System) as well as any unspent funds from the Innovation Fund’s predecessor, the NER300 programme.

The Fund’s purpose is to stimulate companies from EU Member States, Iceland and Norway to develop low-carbon technologies by nurturing innovative projects that significantly cut emissions. It is administered by the European Climate, Infrastructure and Environment Executive Agency (CINEA).

In light of the European Green Deal’s envisaged climate neutrality set to be achieved by 2050 and the broader economic policy of general industrial decarbonisation, the Commission hereby further promotes the fostering of clean energy ventures. More specifically, the Innovation Fund will furnish grants for trailblazing projects in the fields of (i) renewable energy, (ii) energy storage and (iii) carbon capture, use and storage that contribute considerably to this objective. It is also open to projects from energy-intensive industries on which it can evidently have a large impact.

The Innovation Fund will support up to 60% of the additional capital and operational costs of large-scale projects to better divide the risk associated with them, boosting incentives for more pioneering endeavours. Advances up to 40% of the grants can be awarded based on pre-defined milestones even before the whole project is fully operational.

The main criteria that will determine the final ranking of the various applications are the project’s:

  1. Potential to minimise greenhouse gas emissions,
  2. potential for innovation,
  3. financial and technical maturity,
  4. scalability, and
  5. cost efficiency.

Projects considered as being too premature to benefit from a grant will not be entirely left out as concerns European funding since these can still count on support from the European Investment Bank in the framework of project development assistance.

Although there will be additional demands for proposals in the years to come, applications for this call are expected by 3 March 2022 at the latest, as the grant awards are still envisaged before the end of 2022. In the meantime, a simplified process has been set up to shorten the waiting period between the application and the effective grant award compared to the previous call for proposals in 2020. This will allow grant beneficiaries to swiftly kickstart their project thanks to the financial means allocated to it.

The form for the application is available on the following link:  https://ec.europa.eu/info/funding-tenders/opportunities/docs/2021-2027/innovfund/temp-form/af/af_innovfund-lsc-2021_en.pdf.

Importantly, it should be clarified that this grant is not considered State aid as it is not funded by a Member State’s public resources. However, the remaining costs of a project not covered by the Innovation Fund can be supplemented with public support by the relevant Member State and such public measure will have to be assessed under State aid rules. The aid may possibly be declared compatible under the General Block Exemption Regulation which is currently in draft amendment in the same spirit of stimulating the transition towards a greener economy. If it does not fall within the scope of the General Block Exemption Regulation, the Member State concerned will have to notify the envisaged aid to the European Commission prior its granting.

Please do not hesitate to contact us for further information on this topic.

Annabelle Lepièce - Partner, Brussels

Sander De Volder - Junior Associate, Brussels

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