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Climate Change

European Commission Awards Grants to Seven Large-Scale Projects Under the Innovation Fund

On March 10, 2022, the European Commission ("the Commission") adopted a decision on the award of grants under the Innovation Fund ("the Fund"). A total of seven projects obtained a grant after a first call for large-scale projects. 

The Innovation Fund is provided for by the Commission Delegated Regulation (EU) 2019/856, supplementing Directive 2003/87/EC, which established a scheme for greenhouse gas emission allowances and is financed by revenues from the auctioning of the allowances under the EU Emissions Trading System. The Fund aims at supporting projects involving highly innovative technologies, processes, or products that are sufficiently mature and offer significant potential to reduce greenhouse gas emissions.

The first call for projects above €7.5 million of capital expenditure, "large-scale projects," opened on July 3, 2020, with a budget of €1 billion for breakthrough technologies for renewable energy, energy-intensive industries, energy storage, and carbon capture, use, and storage. Assessment of the admissibility and eligibility conditions was undertaken based on five criteria established in Article 11 of Delegated Regulation (EU) 2019/856: Potential for greenhouse gas emission avoidance, degree of innovation, project maturity, scalability, and cost efficiency.

Seven projects have been awarded grants. These projects aim at reducing a total amount of more than 76 Mt of CO2eq during the first 10 years of operation. 

By way of illustration, one of the selected projects will reduce emissions at a refinery in Finland by transitioning from the production of grey (fossil fuel-based) hydrogen toward both green hydrogen production (through the introduction of electrolysis) and blue hydrogen production (by applying carbon capture technology). This grant award is in line with the adoption by the Commission in December 2021 of legislative proposals, a regulation and a directive, to facilitate the uptake of renewable and low-carbon gases, in particular hydrogen, by setting up common rules for the internal market in hydrogen. The directive proposal also defines how hydrogen production qualifies as renewable ("green") or low-carbon ("blue").

The other selected projects will include innovative low-carbon technologies at industrial scale, covering other key sectors such as steel, chemicals, cement, solar energy, biofuels, and carbon capture and storage.

On October 26, 2021, the Commission launched the second call for large-scale projects, with a budget of €1.5 billion, which is increased by 50% compared to the previous call. Grants will be awarded in the last quarter of 2022. Calls for projects under the Innovation Fund are planned until 2030.

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