This year, the European Commission has committed €3.4 billion in grants from the Innovation Fund. Financed through revenues from the EU’s Emission Trading Scheme, the Commission seeks to support projects it deemed to have an innovative component with a high potential to reduce greenhouse gas emissions.

The European Commission selected 77 projects to receive €3.4 billion in Innovation Fund support, up from the €2.9 billion allocated to 61 projects under the previous call. The increase follows the Commission’s decision to expand the initial net-zero technologies call budget from €2.4 billion to €2.9 billion, in line with the EU’s push to strengthen European industrial competitiveness under the Clean Industrial Deal by supporting domestic clean-tech manufacturing and accelerating industrial decarbonisation.^[1] Nevertheless, funding remains below the record €4.8 billion allocated in 2024 to 85 projects under the 2023 call, launched against the backdrop of exceptionally high EU ETS carbon prices following Europe’s energy crisis. To date, the Innovation Fund has awarded approximately €13 billion to around 240 projects.^[2]

The selected projects span five categories, including 12 large-scale decarbonisation projects receiving approximately €1.58 billion, 17 medium-scale projects awarded around €458 million, and 20 small-scale projects receiving approximately €124 million. The Fund will also support 12 clean-tech manufacturing projects with almost €895 million, focusing on the production of components such as heat pumps, solar panels, electrolysers, electric-vehicle batteries and rare earth magnets. A further 16 pilot projects will receive around €394 million to demonstrate innovative decarbonisation technologies.

The significant oversubscription across all five funding categories demonstrates the strong demand for Innovation Fund support and the intense competition between different decarbonisation technologies. It also highlights the challenge of allocating limited funding in a way that supports a diverse range of technologies while prioritising those with the greatest potential to deliver emission reductions.^[3]

The selected projects cover a broad range of decarbonisation technologies, with particularly strong representation from energy-intensive industries, renewable energy and energy storage, and clean-tech manufacturing. Industrial carbon management and advanced alternative fuels also account for a significant share of the selected projects.

Direct electrification, storage and flexibility

The selected projects include useful examples of how industrial decarbonisation can be delivered through direct electrification. Wherever technically feasible, direct electrification (alongside energy-efficiency improvements) should be prioritised, since it makes the most efficient use of renewable electricity and avoids additional conversion losses associated with hydrogen and its derivatives. E-Mix, in France, would replace fossil fuel burners in asphalt production with electric heating and high temperature thermal storage, eliminating fossil fuel combustion. TERRA-Q, in Romania, would produce mineral tiles through a fully electrified, low-temperature manufacturing process that replaces conventional high-temperature kiln firing. By combining electrification with process redesign and material circularity, it aims to reduce greenhouse gas emissions by around 80%. 

The selection also acknowledges the contribution of flexibility and storage to electricity system resilience and decarbonisation. BESS-4-C, in France, proposes a model in which a privately operated battery provides location-specific congestion management, absorbing excess solar generation and easing grid bottlenecks. TALOS, on Crete, would combine solar and wind generation with a 400-MWh battery, shifting renewable electricity to periods of demand and providing grid stability services to help displace diesel generation on the island. EuniFlex VPP, in Cyprus, would combine stationary batteries and bidirectional electric vehicle charging to reduce renewable curtailment, making better use of available clean electricity. These projects illustrate how flexibility and storage can support a more efficient, affordable and decarbonised electricity system by improving the use of renewable generation and existing networks and reducing reliance on fossil fuels.

Hydrogen

Some selected projects target hydrogen industrial applications where direct electrification is not currently a viable alternative, which are the uses for which hydrogen should be prioritised. GravitHy Fos-sur-Mer, in France, would use low-carbon hydrogen produced on-site to manufacture hot briquetted iron, an intermediate product for lower emissions steelmaking. RE-MET, in Sweden, would use renewable hydrogen instead of coke to recover metal from oxidised steelmaking residues and reintegrate them into steel production. Prioritising these applications reduces reliance on fossil fuels while directing limited hydrogen supplies towards uses where more efficient alternatives are unavailable.         

Zero-emission construction equipment

The selection also includes MOBIUS, a small-scale project that will deploy a dual-use mobile battery system in Belgium. The batteries will power zero-emission heavy machinery on off-grid construction sites, and when idle, will provide grid ancillary services and support on-site renewable generation.

Combining these revenue streams is expected to fully offset the levelised cost of mobile storage and transport, lowering the cost of renewable electricity delivered to construction sites and closing the cost gap between diesel-powered and zero-emission equipment.

The project targets one of the main barriers to the uptake of zero-emission construction machinery: limited grid capacity and charging infrastructure on construction sites^[4], where diesel generators remain the default power source. Its selection signals growing attention to non-road mobile machinery emissions within EU decarbonisation funding. Scaling such solutions will still depend on demand-side measures, such as public procurement criteria that reward zero-emission construction sites.

Carbon Capture and Storage

16 Industrial Carbon Management (ICM) projects have been selected and will receive close to €1.2 billion in funding and are expected to tackle approximately 122 million tonnes of GHG emissions over their first ten years of operation.^[5] This investment supports the EU’s efforts to kick-start the market for the technological abatement of CO₂ and accelerate the deployment of CCS, particularly in hard-to-abate sectors such as cement and lime, where CCS will play an essential role in achieving deep emission reductions.^[6]

Several supported projects, including Ravenna CCS Phase 2, MOSUSOL-netCO₂ and KI-ZERO, may also contribute to the EU’s target of developing 50 million tonnes of annual CO₂ injection capacity by 2030, provided they meet the relevant regulatory requirements. Importantly, the funding also supports the development of CO₂ transport infrastructure, recognising the need for all three elements of the CCS value chain (capture, transport and storage) to develop in tandem, particularly as the European Commission has reported that demand for CO₂ transport and storage services exceeds available supply – in other words, CO₂ emitters are ready to invest in CO₂ capture projects.^[7]

Geographically, the selected ICM projects remain concentrated in Northern and Western Europe; the regions where CCS deployment has historically been most advanced. Nevertheless, the inclusion of projects in countries such as Spain and Austria, which have so far played a relatively limited role in Europe’s emerging ICM market, is an encouraging sign that the technology is gaining traction beyond its established strongholds. Central and Eastern Europe, however, remains notably absent from the selected ICM projects, highlighting persistent geographical disparities in the development and financing of CO₂ transport and storage infrastructure across the EU.^[8]

The Austrian KI-ZERO project is particularly noteworthy for its element of onshore CO₂ storage development. Supporting the development of onshore storage is essential, as it can come with significantly lower costs than offshore alternatives. Successful demonstration projects can also play an important role in building societal trust and addressing local opposition to CO₂ storage. Scaling up onshore storage could substantially reduce the overall cost of CCS, accelerating industrial decarbonisation while making storage more accessible to Central European and landlocked countries, which would otherwise face the considerable expense of transporting captured CO₂ over long distances to offshore storage sites. This would also help foster greater regional parity in access to CO₂ storage infrastructure, ensuring that industrial decarbonisation opportunities are not disproportionately concentrated in the North Sea and other European coastal regions.

CCS and supplementary cementitious materials SCMs represent two key decarbonisation pathways for cement production, particularly when combined with the electrification of industrial processes. RE-MENT and Orion are especially relevant in this regard, as they focus on reducing clinker use and leveraging electrification to meet process heat requirements, thereby addressing both the material and energy-related sources of emissions in cement production.

Scaling up SCM production is particularly important to reduce emissions from cement manufacturing while valorising waste streams and industrial by-products from other sectors. This can offer a cost-effective route to decarbonisation, especially considering the high cost associated with CCS needed to address residual emissions. Orion is particularly promising in this respect, as it aims to demonstrate the potential for scaling up calcined clay cement with high clinker substitution rates. Calcined clay offers significant emissions reduction potential at relatively low cost, making it a particularly relevant solution for a sector characterised by tight margins.

Carbon Capture and Utilisation and Synthetic Aviation Fuels

More questions arise around the support for several e-SAF projects. Their contribution should be assessed against alternative uses of the same resources, rather than solely against the emissions of conventional jet fuel. Five of the twelve large-scale projects in this Innovation Fund round are dedicated to e-SAF: BELair, ECO2FLY, EFR, H4 Marseille Fosand L’Ardoise. That makes e-SAF the single biggest category in the large-scale call. This reflects the Commission’s ReFuelEU Aviation mandate, which requires synthetic aviation fuels to make up 1.2% of aviation fuel supplied from 2030, rising over time. Importantly however, these projects also provide the opportunity to answer important questions regarding the associated climate benefit of e-SAF. 

Projects such as H4 Marseille Fos, which plans to use biogenic CO₂ to produce e-SAF, and ECO2FLY, which intends to convert captured cement emissions into aviation fuel, illustrate the risk of using CO₂ in products that ultimately release it back into the atmosphere rather than storing it permanently. Bellona’s analysis, using Norway as a case study, estimates that producing e-SAF from biogenic CO₂ requires around 43 times more electricity and costs approximately five times as much as permanently storing that CO₂ while continuing to use conventional jet fuel, for a comparable net CO₂ benefit.^[9]

Bellona accepts that climate-neutral aviation will ultimately depend on renewables-based e-SAF. But it argues that this only holds if the carbon in the fuel comes from the atmosphere, through Direct Air Capture (DAC), or if the CO₂ released in flight is later removed through DACCS. None of the funded projects appears to use DAC. Notably, ECO2FLY proposes using CO₂ captured from cement production, which will be released again when the fuel is burned, rather than permanently stored. As Bellona argues, recycling fossil industrial CO₂ delays its release but does not deliver net-zero aviation.^[10] From the descriptions made available on the Commissions website, none of the other projects CO₂ sources can be verified at this time. 

Not all CCU applications present the same concerns: project Eagle, for example, would convert captured CO₂ from waste incineration into plastics, although permanent storage could still offer greater climate benefits. Given the significant share of large-scale funding these projects receive, the Innovation Fund should require full disclosure of the GHG methodologies, carbon sources and electricity-sourcing arrangements behind each emission-avoidance figure, and subject these claims to independent verification.

Carbon Removals

This is the first time a Direct Air Carbon Capture and Storage (DACCS) project, Furu, is funded by the Innovation Fund. DACCS is part of the portfolio or Carbon Dioxide Removals (CDR) activities, which results solely in the removal of CO₂directly from the atmosphere for a climate benefit. The project will be located in Norway, which has already operating geological storage activity. DACCS is also an eligible activity under the Carbon Removals Carbon Farming framework (CRCF), a voluntary initiative to invest and scale up removals with a Delegated Act in force for permanent removals (DACCS, Bio-CCS and biochar). The bottle neck of DACCS is the additional renewable energy demand, the investments for scale-up and access to geological storage and the modular capture technology itself, which will be tackled via the project. Bellona as a member of the CRCF expert group participated in the development of the DACCS methodology from the CRCF Delegated Act, which is scientifically robust. 

Project SCALA is a retrofit of a Combined Heat and Power bioenergy plant with carbon capture and storage (Bio-CCS) located in France. The project aims at using innovative metallic organic frameworks for the capture of CO₂ from the bioenergy production. Bio-CCS is one of the activities from the permanent removals Delegated Act of the CRCF. Bellona warns that the sustainability of biomass for any Bio-CCS project is paramount and that all life cycle emissions from biomass must be taken into account for calculating the net removal of a Bio-CCS project. Biomass is a limited resource and must be used for bioenergy as a last resort following the cascading principle embedded in the Renewable Energy Directive (RED). We hope that the carbon neutrality of biomass and sustainability criteria will be dealt with accordingly.

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The scale of the selected projects and the significant oversubscription across all funding categories send a clear message: Europe’s industrial decarbonisation is well underway, and businesses are ready to invest. At a time when the EU ETS^[11]is facing growing political pressure, CBAM implementation is being eased and the Commission is proposing to delay methane reporting requirements for fossil fuel importers, Europe cannot afford to undermine the policy certainty that these investments depend on.

While decarbonisation is increasingly portrayed as a burden on Europe’s economy, the real threat to European competitiveness lies in persistently high energy costs, dependence on imported fossil fuels and exposure to geopolitical instability. Rather than slowing down its climate ambitions, the EU must double down on a predictable and ambitious climate policy framework, accelerating clean energy deployment and industrial transformation to deliver greater strategic independence, affordable and clean energy and a competitive European industrial base.

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^[1] 9514576c-2d3c-4d3f-a455-53561d8ba809_en

^[2] Commission invests €3.4 billion in net-zero technology projects

^[3] For Bellona Europa’s criteria for funding industrial decarbonisation effectively, see: A Criteria-based Framework for Effective Industrial Decarbonisation Funding – Bellona EU

^[4] Bellona Europa developed a database of zero-emission construction technologies to help public buyers deploy zero-emission construction sites. Download it here.

^[5] d11902d4-6a35-49e1-8c6f-37f12ad53431_en

^[6] For our assessment on the climate benefit of CCS applications in different sectors, read: Carbon Capture and Storage Ladder 2.0 – Bellona EU

^[7] eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52026DC0252

^[8] CCS4CEE Project – Bellona EU

^[9] Feedback from: Bellona Europa

^[10] Feedback from: Bellona Europa

^[11] Read our recent position paper “Raising the bar: Bellona Europa’s Assessment of the Commission’s ETS Review Proposal” here: Raising the bar: Bellona Europa’s Assessment of the Commission’s ETS Review Proposal – Bellona EU