The Innovation Fund (IF) is set to provide around EUR 40 billion between 2020-2030, based on the auctions of approximately 530 million allowances from the EU Emissions Trading System (ETS) since the latest revision in 2023.
The IF supports decarbonised industrial solutions that can be marketed and facilitate Europe’s transition to climate neutrality.
How much is available for carbon removal?
Although carbon dioxide removal (CDR) projects can benefit from the IF, CDR is not listed as a targeted area, whereas carbon capture and utilisation (CCU) and carbon capture and storage (CCS) are. Moreover, when projects related to CDR do receive support, support is lower in comparison to technologies such as CCU and CCS. Since CDR projects are labelled as CCS, it is difficult to track exact CDR funding.
In 2021, Stockholm Exergi’s BECCS project received EUR 180 million and Carbfix’s Silverstone, EUR 3.8 million. In 2022, only one project out of 16 was related to CDR, the Coda Terminal, which received EUR 115 million. In 2023, 41 projects were awarded a total of EUR 3.6 billion, among which none were directly CDR-related.
On the horizon
Another call for projects amounting to EUR 4 billion closed in April 2024, with results being published at the end of 2024. This call mentioned that pilot project funding would be open to funding CDR projects. The call also provided additional points to projects that resulted in CDR. Furthermore, as per the revised EU-Emissions Trading System Directive, the IF will also look at the feasibility of creating carbon contracts for difference (CCfDs). Depending on how this scheme is designed, it could benefit CDR projects by providing predictable financial support to CDR projects.
Technology readiness level support
There are no technology readiness level (TRL) requirements for IF applications, but the calls often offer support for first commercial examples and large-scale demonstrations. Therefore, IF’s support is more in line with the definition of TRL 6-8.
Eligibility
The IF is open to a wide range of technologies. Since the latest revision of the ETS Directive, the maritime, road transport and building sectors are also in the scope of the IF. CDR technologies eligible for Innovation Fund support currently only include those with a CCS component, namely direct air carbon capture and storage (DACCS) and bio-energy with carbon capture and storage (BECCS). CO2 transport and storage infrastructure projects are also eligible, which benefits CDR indirectly.
There are also some technology-specific calls, such as the first hydrogen auction.
The Innovation Fund is open to all EU member states, Norway and Iceland.
Funding rates
The Innovation Fund can cover up to 60% of a project’s relevant costs.