Innovation Fund

The Innovation Fund has a total estimated budget of €40 billion available between 2020-2030, making it one of the largest funding programmes for demonstration of innovative low-carbon technologies. It is also one of the most important instruments of the European Union to reach the goals set under the Paris Agreement. For 2025-2026 the European Commission has launched €5.2 billion in new calls. Read on to discover more.

Innovation Fund 2025–2026: European Commission Launches €5.2 Billion in New Calls

The European Commission has opened three major calls under the Innovation Fund, making €5.2 billion available to accelerate industrial decarbonisation and scale up clean technologies across Europe. The funding is sourced from EU ETS revenues and aims to support projects with strong greenhouse gas reduction potential and high market-deployment impact.

Three New Calls Now Open

1. Net-Zero Technologies Call – €2.9 billion

This flagship call supports breakthrough technologies with substantial emission-reduction potential. Eligible sectors include energy-intensive industries, renewable energy generation, energy storage, mobility, buildings, and carbon capture, utilisation and storage (CCUS).

What project types can apply?

Projects can apply under several categories:

• Large-scale – CAPEX above €100 million
  • Topic budget: €1.2B
• Medium-scale – CAPEX between €20–100 million
  • Topic budget: €300M
• Small-scale – CAPEX between €2.5–20 million
  • Topic budget: €100M
• Pilot projects – CAPEX above €2.5 million
  • Topic budget: €300M
• Clean tech – CAPEX above €2.5 million
  • Topic budget: €1B

Grant amounts are not fixed in advance but are calculated per project and typically cover up to ~60 % of relevant project costs.

Deadline: 23 April 2026

2. European Hydrogen Bank Auction – €1.3 billion

The Innovation Fund 2025 Hydrogen Auction supports renewable and low-carbon hydrogen production through a competitive bidding mechanism. Projects submit a fixed-premium bid (€/kg of hydrogen) for up to 10 years of verified hydrogen production.

Budget per Topic:

• RFNBO General: €600 million
• RFNBO + Low-Carbon Hydrogen (General): €400 million
• RFNBO + Low-Carbon Hydrogen for Maritime & Aviation: €300 million

How Funding Works Per Project

• Funding is not a one-off grant but a production-based premium paid for a maximum of 10 years.
• The total award to a project depends on:
  1. Its bid premium (capped at €4.00/kg) — any bid above €4.00/kg will automatically be rejected
  2. Its contracted hydrogen volume
  3. Actual verified production delivered over time meaning successful projects can secure significant, long-term revenue support under this €1.3 billion call

Deadline: 19 February 2026

3. Industrial Heat Decarbonisation Auction – €1.0 billion

The first call of its kind under the Innovation Fund, the 2025 Industrial Heat Auction supports electrified and renewable industrial process heat through a production-based premium.

The total call budget is €1.0 billion, divided into:

– €150 million for medium-temperature heat projects (3–5 MW)

– €350 million for medium-temperature heat projects (above 5 MW)

– €500 million for high-temperature heat projects.

For each project, the maximum project budget is:

– Up to €100 million for medium-temperature topics (both 3–5 MW and >5 MW)

– Up to €250 million for high-temperature projects.

Funding is awarded as a fixed premium per tonne of CO₂ avoided and paid over a period of up to 5 years after the project enters operation. There is no ceiling price on the premium (no €/tCO₂ cap), but projects compete on price: the lower the premium requested and the stronger the performance, the better their chances within each topic budget.

Deadline: 19 February 2026

Innovation Fund Key Requirements and Updates

• Open to applicants from EU and EEA countries.
• Strong compliance with environmental principles, including DNSH (Do No Significant Harm), assessed during application.
• Strengthened supply-chain requirements for hydrogen projects (e.g., diversified electrolyser sourcing).

Who can apply for Innovation Fund?

A single legal entity, as well as a consortium of legal entities, can apply for funding under the Innovation Fund. The aim is to support innovative low-carbon technologies in all Member States (EU companies) in taking off and reaching the market. The project has to be implemented in one of the EU Member States, Norway or Iceland. This means that projects implemented outside these countries are ineligible. However, the project applicant does not need to be controlled by EU investors.

What is the focus of Innovation Fund?

The Innovation Fund focuses on highly innovative technologies and big flagship projects with European value added that can lead to significant reductions in emissions. It is about sharing the risk with project promoters to help with the demonstration of first-of-a-kind highly innovative projects. At the same time, the projects need to be sufficiently mature in terms of planning, business model and financial and legal structure.

The Innovation Fund focuses on:

• Innovative low-carbon technologies and processes in energy intensive industries, including products substituting carbon intensive ones
• Carbon capture and utilisation (CCU)
• Construction and operation of carbon capture and storage (CCS)
• Innovative renewable energy generation
• Energy storage

Visit the Innovation Fund website for more information