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18 December 2024 European Commission announces €4.6b for decarbonization, EV batteries and hydrogen
On 3 December 2024, the European Commission (EC) announced its fifth call for funding under the European Union (EU) Innovation Fund (IF). The EU is allocating €4.6b for innovative decarbonization and clean tech projects. This funding aims to support projects involving, for instance, hydrogen, clean tech manufacturing, carbon capture, batteries and energy storage, contributing to the EU's goal of reducing net greenhouse gas emissions by at least 55% by 2030. Key allocations include €2.4b for net zero technologies (IF24 NZT), €1.2b for hydrogen production and off-take (IF24 Auction), and €1b for electric vehicle batteries (IF24 Battery). The application deadlines are 24 April 2025 for IF NZT and IF Batteries, and 20 February 2025 for IF Auction. The EU IF is the EU's primary decarbonization fund, supporting up to 60% of the additional capital and operational costs of large projects for a period between 3 to 15 years. This Alert summarizes key aspects and considerations for businesses innovating in the decarbonization and clean-tech space, highlighting the alignment with the European Green Deal's imperative to innovate and decarbonize industries, transportation and the energy sector. This year, the IF budget is split in three calls for proposals. All three align with the European Green Deal's imperative to innovate and decarbonize industries, transportation and the energy sector. Funded by emissions trading revenues (EU ETS), the EU IF is a key enabler to enhance European industry competitiveness while also accelerating industry decarbonization; however, depending on the nature of the proposed project, the rules may differ. Funding for the three calls for proposal is available for projects located in the European Economic Area (EEA), which comprises the EU-27 plus Norway, Iceland and Liechtenstein. The geographical origin of the applicants is not a restriction. Another important criterion for the three calls is that financial close must not have occurred prior to submitting a proposal. The largest call is IF24 NZT. It is worth noting the budget for clean tech manufacturing projects has been reduced compared to the previous call, due to the decrease of carbon permits price, the introduction of the dedicated instrument for batteries (IF24 Battery) and the increased budget of the IF24 Auction for hydrogen. Nevertheless, substantial funding remains available — for capital expenditures (CAPEX) and operating expenses (OPEX). There are five types of projects funded under IF NZT — or topics, namely small, medium and large scale decarbonization projects, clean-tech manufacturing and pilot projects focusing on deep decarbonization. Following the recent revision of the EU Emissions Trading System, the IF24 NZT call also welcomes proposals from the maritime, aviation, road transport and buildings sectors, in addition to technologies in energy-intensive industries, renewable energy or energy storage. The EU Innovation Fund can cover up to 60% of a project's relevant costs for up to 10 years of operations.
Evaluation: Each project application will be subject to a detailed eligibility criteria set out by the EC, depending on the specific call. For IF24 NZT, projects will be assessed based on degree of innovation, greenhouse gas emission reduction potential (absolute and relative), maturity (technical, financial and implementation), replicability and cost efficiency. Results and grant agreement: Successful applicants will be informed of results in Q4 2025, and grant agreements will be signed in Q1 2026. InfoDay: On 17-18 December 2024, an online InfoDay was organized — find more information here. For the first time, a €1b call for electric vehicle battery cell manufacturing (IF24 Battery) will support projects that can produce innovative electric vehicles battery cells or deploy innovative manufacturing techniques, processes and technologies. This call is only one measure in a broader approach to mobilize investment in an area that is essential for Europe's success in the clean energy transition and its competitiveness. It supports companies in targeting investments in Europe with new technologies where advances are still being made. Multiple instruments are needed to overcome some of the economic barriers that the battery value chain in Europe, including its gigafactories, is currently facing. Evaluation: In addition to the criteria applied to IF24 NZT, this call will also evaluate the manufacturing carbon footprint reduction and the security of supply and countering dependency. Results and grant agreement: Successful applicants will be informed of results in Q4 2025, and grant agreements will be signed in Q1 2026. InfoDay: On 17-18 December 2024, an online InfoDay was organized — find more information here. In addition to the significant funding noted above, the EU IF published the terms and conditions of the second European Hydrogen Bank auction (IF24 Auction) on 27 September 2024. The auction opened on 3 December 2024 with a €1.2b budget, offering parallel opportunities for RFNBO hydrogen producers in the EEA EU-27 plus Norway, Iceland and Liechtenstein) to bid for support in the form of a fixed premium per kilogram of renewable hydrogen produced. Part of the total budget (€200m) is specifically reserved for supporting the production of RFNBO hydrogen that will be used by stakeholders in the maritime sector. Importantly, projects cannot combine support from both the IF24 NZT call and the IF24 Auction. Important changes of this second auction include an increase in the completion bond to 8% of the requested grant, and the restrictions to electrolyzers from China. Evaluation: Hydrogen projects will be assessed based on a pass/fail basis on the credibility of RFNBO hydrogen production, technical and financial maturity and operational quality. Projects that pass the initial screening will be then ranked on the sole criteria of their bidding price (requested premium, in EUR/kg RNFBO hydrogen). Results and grant agreement: Successful applicants to the hydrogen auction call will be informed of results in Q2 2025, and grant agreements will be signed in Q3-Q4 2025. InfoDay: An online InfoDay took place on 10 December 2024 — find more information here. With the climate crisis continuing to unfold, financing sustainable innovation and technologies are key priorities for the EC. Businesses should consider seizing the strategic opportunity presented by the EC's €4.6b EU Innovation Fund calls. In particular, businesses engaged in hydrogen and derivatives, carbon capture and storage/use and electric vehicle battery cell manufacturing should explore the newly available funding. Activities for businesses to consider, with the assistance of a knowledgeable tax advisor, include assessing funding eligibility in line with EU or national frameworks, preparing application documents, evaluating feasibility studies and business cases, and considering project implementation plans. Accessing available financing, funding and other incentives (tax and non-tax) is a critical element of any business's sustainability strategy. One important first step is to systematically map business plans to the funding and incentives landscape.
Document ID: 2024-2324 | ||||||
