EU Commits €4 Billion to Accelerate Decarbonization: Largest-Ever Call for Cleantech Manufacturing Projects Under EU Innovation Fund

The European Commission has announced a €4 billion investment for deploying innovative decarbonization technologies, emphasizing cleantech manufacturing projects. Financed through the EU Emissions Trading System (EU ETS), this marks the fourth large-scale call for decarbonization projects under the EU Innovation Fund, one of the world’s largest funding programs for low-carbon technologies. The increased size of this call, at €4 billion, is attributed to higher revenue from EU ETS allowances.

The EU ETS, established in 2005, prices carbon emissions in key sectors. Recent expansions have increased direct emissions reductions and extended the system to new sectors, projecting revenues of around €40 billion from 2020-2030. The Innovation Fund, integral to supporting industries in transitioning to climate neutrality, allocates €2.4 billion for general decarbonization, €1.4 billion for cleantech manufacturing, and €200 million for deep decarbonization pilot projects.

General decarbonization funding includes categories for large-scale, medium-scale, and smaller projects, covering technologies in energy-intensive industries, carbon capture, renewable energy, and more. Cleantech manufacturing sees doubled investment from previous calls, focusing on components for renewable energy, energy storage, heat pumps, and hydrogen production. Pilot funding targets innovative projects for deep decarbonization, including environmentally safe carbon capture and product substitutes.

Projects will be evaluated based on emission reduction potential, innovation, maturity, replicability, and cost efficiency. The Innovation Fund can cover up to 60% of a project’s relevant costs. Maroš Šefčovič, Executive Vice-President for European Green Deal, highlighted the significance of innovating and decarbonizing industries, transport, and energy sectors to achieve the goals of the European Green Deal.