Innovayt’s contribution to the ongoing public EUIF consultation
After the 2024 call deadline: State-of-play for the EU Innovation Fund
By Kenneth Glarbo Andersen and Rui Silva, Innovayt A/S.
Thursday 24 April 2025 was deadline day. For European grant consultants, arguably the deadline day of 2025, as it was the submission date of the EU Innovation Fund’s (EUIF) annual grant call – the world’s largest grant programme for net-zero technology and decarbonization projects.
After overcoming yet another intense round of squaring large net-zero technology projects into round Innovation Fund application holes, it is time to stop and reflect a bit on the state and evolution of the EUIF.
Launched in 2019, the EUIF represents one of Europe’s most ambitious efforts to support low-carbon innovation. Funded by proceeds coming from the European Emission Trading System, its legal underpinnings are anchored in Article 10a(8) of Directive 2003/87/EC, reinforced by the Commission Delegated Regulation (EU) 2019/856, and further informed by the legacy of the former NER300 programme, not to mention the Financial Regulation 2018/1046, which sets out general financial rules for its instruments.
The EUIF is in many ways a global frontrunner in providing large-scale grant funding for truly novel decarbonization technologies. Just as the EUIF funds mainly First-Of-A-Kind (FOAK) full-scale commercial facilities, the EUIF itself is arguably First-Of-A-Kind. As a funding programme, it has no real global equivalent. For example, the US Inflation Reduction Act was and is mainly based on volume-driven incentives for already proven technologies.
Change-making – always for the better?
Since its inception, the evolution so far of the EUIF – in one word – has been characterized by change. From the launch of the first EUIF grant call around 5 years ago, there has been a history of continuous modification, clarification, and expansions, concerning the Fund’s remit as well as its instruments.
Changes have come mainly from one call deadline to the next, but also during the implementation of single calls, in the latter case mainly through the issuing of Q&A documents throughout call implementation. These in-call changes have provided additional – and often material – guidance for everything from the eligibility of certain sectors for EUIF funding; over the definition of reference scenarios for calculating emission avoidance with new technology; to the possibilities for complementing EUIF with other public funding. Some of these changes obviously carrying profound effects on proposals that are already under preparation.
Frequent change and adjustment are hardly surprising feats for any grant programme. Some changes introduced are clearly warranted, supported either by new developments in technology, or by new EU policies having cascading impact on the Fund. And in all fairness, the EUIF by definition is and should be complex – simply as it aims to fund very large projects with very sophisticated impacts. Also, CINEA as the managers of EUIF clearly puts a lot of effort into timely consultation and announcement of changes. For example, the majority of material changes introduced from the EUIF23 to the recent EUIF24 call were flagged at a stakeholders event in June 2024.
But in many instances, changes to a grant programme are harmful and frustrating, simply as they change the rules of the game significantly for applicants, and sometimes at too short notice. We would argue that for future calls the EUIF should generally consider to limit the changes introduced, both with regard to substance and timing, to avoid frustrating applicants unnecessarily.
Among recurrent changes are the fluctuating levels of EUIF budgets offered. Between the 2023 and 2024 calls, the grant budget for the general net-zero technology pot was reduced from more than 4 Billion to 2.4 Billion Euro. Even as budget cuts were generally announced some time before the 2024 call publication, and also were largely dictated by incoming proceeds from the Emission Trading System as the ultimate financier of EUIF, it is clear that the transparency and predictability of the EUIF suffer as a consequence of this fluctuation.
This is felt sorely by EUIF applicants who, given the sheer size and risk of their projects, generally have a strong interest in being able to anticipate future budgets – and thus expected success rates and possibilities for resubmissions in future calls maybe 1 or 2 years from first submission.
For the future, in our view it would appear that policymakers and the EUIF have an opportunity in making sure that budgets are more levelized, or growing steadily from call to call, and even advertised well in advance.
This concern extends to EUIF subprogramme budgets, where in recent calls there has been a propensity towards offering specific budgets for particular sectors rather than for general net-zero technology projects – and to do this quite late and with limited justification.
In the 2024 call, the very same budget cut just mentioned for the general pool was partially introduced to make room for a budget of 1 Billion Euro offered to innovative EV battery cell manufacturing projects. This shift, stirred mainly by geopolitical developments, was only advertised in loose terms by EU officials in the time leading up to the publication of the call, and was based strictly on an EU policy-driven priority given to building European capacity in the EV battery field.
Whereas the battery priority in many ways appear as sensible, from the viewpoint of the average EUIF applicant holding a promising net-zero concept in other fields than EV batteries, the whole idea and timing of this budget carve-out may nevertheless cause frustration of the sort that could eventually be damaging to the EUIF reputation. Notably, while 359 proposals were submitted for the €2.4 billion general NZT pool, only 14 were received for the €1 billion EV battery manufacturing pool.
Priority sectors in EUIF
The 2024 call’s dedicated budget for battery projects underscores the EUIF’s increasing tendency to prioritize specific sectors, such as also maritime sector for EUIF Actions, through dedicated budgets and indirectly through measures like bonus points for evaluation.
While sector prioritization can be beneficial, it is essential to consider its broader impact on competition. In some instances, we have seen how the current practice of priority sectors in EUIF results in skewed incentives and even in the crowd-out of other fields in ways that appear as counter-intuitive under the current EUIF framework.
To illustrate, consider the example of two different projects proposing hydrogen production facilities, one for e-methanol and another for sustainable aviation fuel (SAF). Both projects could be eligible to go, for instance, for the EUIF Hydrogen auction with the part of the process related to hydrogen. But since the first project will supply e-methanol for the shipping sector, this project will be allowed to go for a specific basket with dedicated budget (the maritime basket), whereas the other project producing SAF for the aviation sector would need to compete in the general pool. This may seem all fair and good given the political priority given to maritime. But since the actual project scopes compared deal with hydrogen production alone, for practical purposes it appears as plainly unfair that the SAF project will be pitted against much stronger competition in the general net-zero pot.
Regarding bonus points, Innovayt has generally observed fair and objective attribution during evaluations. However, the system can inadvertently skew evaluations toward certain sectors or introduce ‘noise’ through auxiliary criteria that invite elaborate and sometimes far-fetched arguments, such as bonus points for “other GHG savings.”
State of the EUIF evaluation system
Beyond programmatic changes and sector prioritization, the EUIF’s evaluation system as such has faced more enduring criticism. While the Fund employs a detailed “cascading criteria” evaluation approach, inconsistencies have been noted in managing key processes and criteria, particularly concerning global panel meetings and bonus point allocations, as highlighted by the European Association of Innovation Consultants in March 2025.
Innovayt’s experience indicates generally fair assessments for the sizeable group of projects we’ve supported. In the specific case of bonus points, although we believe their relevance is limited, the actual administration of bonus points appears to work on a fair and objective basis. The philosophy appears to be: If the impact is credible, bonus points will be awarded, and the actual score (0.5 or 1) will depend on the level and credibility of impact.
This aside, we believe a more important observation is the high attrition rate of EUIF projects. Apparently, large groups of EUIF projects actually drop out of the process for other reasons than poor evaluation. In the 2023 call 17 percent of submitted proposals were deemed ineligible. But also, for several years we have noted how a relatively large group of projects – around 10 percent according to CINEA – from the overall group of winners drop out of the EUIF funded list, and most of them soon after award and during contract negotiations before the granted project can begin.
Based on these numbers, seemingly up to around a quarter of all submitted EUIF projects are either not evaluated, or are evaluated in vain. This constitutes an unacceptable fail rate both from the viewpoint of programme owner and programme user.
So far, one can only speculate as to the underlying causes of this attrition. Potential causes could include misunderstandings of EUIF criteria or misrepresentations in proposals, leading to wasted resources on unviable applications. Addressing such issues is crucial to prevent resource wastage and in order to enhance the Fund’s transparency and effectiveness.
Financial maturity the deal breaker
Finally, past EUIF call results have shown an extremely strong correlation between the financial maturity score obtained with funding outcomes. Data shows that the vast majority of failed proposals have in fact failed their evaluation mainly due to perceived low financial maturity.
By all means, financial maturity is a desirable trait of funded EUIF projects, as the sheer size of projects would seem to justify stringent demands on how applicants show financial credibility and ability to manage their project finance.
But at the same time, the correlations mentioned should provide cause for reflection for the Commission. It essentially begs the question: should there be a very tangible entry requirement in the programme related to financial maturity, for example around the relative level of private funding already committed to projects?
In recent calls, real progress has been made in the application format, in particular through the addition of fixed templates and specific requirements for financial annexes. However, defining clear admission criteria for financial maturity could help applicants make informed decisions about their readiness, potentially simplifying the application process and further conserving resources both with applicants and programme owners.
The Innovation Fund about to take off
The EU Innovation Fund is here to stay. Not only that, it is also likely to get heavily inflated soon as the Commission has just announced up to €100 billion in anticipated new funding for decarbonization under the new Clean Industrial Deal. This is great news for the climate and for European green innovators and industrialists.
Given the EUIF’s pioneering nature as a “FOAK” grant programme, some challenges are always expected. However, as the Fund gains further prominence, it is imperative to speedily address operational flaws that could undermine its credibility. As active participants in the European grant funding ecosystem, Innovayt remains committed to monitoring the Fund’s developments and contributing constructive feedback to enhance its efficacy.
Contact us to learn more about the EUIF
EUIF is managed by the European Climate, Infrastructure, and Environment Executive Agency (CINEA) and funded through the EU Emissions Trading System (EU ETS).