Innovation Fund Knowledge Sharing Report

ABSTRACT

The Innovation Fund (the Fund), funded with revenues from the European Union Emissions Trading System, is one of the world’s largest funding programmes supporting the deployment of innovative net-zero and low-carbon technologies. Knowledge sharing is an essential part of the programme. This report presents knowledge and insights from funded projects to empower other players to overcome the challenges of scaling up low-carbon technologies. At the end of 2024, the Fund’s project portfolio comprised 120 ongoing projects in energy-intensive industries, hydrogen, industrial carbon management, renewable energy and energy storage. The committed contribution amounted to EUR 7.1 billion. Moreover, 36 projects reached financial close by the end of 2024, and seven successfully entered into operation. Given their complexity in size, technical ambition, reliance on external market conditions and regulatory developments, projects have encountered multiple challenges. This report highlights strategies they employed to overcome these challenges and mitigate associated risks, such as supply chain disruptions and securing contracts with off-takers.

The Innovation Fund has succeeded in selecting and supporting a large number of innovative projects that have the potential to drive the transition to a low-carbon and net-zero economy. Due to their high-risk profile, complexity, size, technical ambition and dependence on external market conditions and regulatory developments, these projects have found creative and effective ways to overcome multiple challenges, demonstrating the power of innovation and collaboration.

By supporting these pioneering projects to confront and address real-world challenges, the Fund is a catalyst for innovation and knowledge sharing. The insights from these projects highlight best practices that other projects of the same type can employ and inform policymakers about the interventions needed to support similar ventures, reinforcing the importance of adaptable and practical policy frameworks.

One of the key challenges projects face is securing off-take agreements, particularly in nascent markets, which can be difficult due to market uncertainty and the still limited competitiveness of innovative green products compared to conventional alternatives. Some projects have overcome this by establishing firm agreements with off-takers from the start, incorporating key partners and suppliers into the project consortium, diversifying their off-take and identifying various back-up off-taker parties. They have also found it necessary to closely monitor international trends to remain competitive in the global markets.

Most projects have also faced significant cost increases due to rising material, equipment and construction costs and more demanding technical requirements. Projects have implemented contingency buffers, renegotiated agreements and sought additional funding to remain financially viable.

Supply chain constraints have also created challenges for projects, leading to equipment shortages and rising costs, which impact timelines and budgets. To mitigate these risks, projects have diversified suppliers, renegotiated delivery schedules, explored local sourcing and implemented strategic stock management.

Other main challenges projects face are the complexity of permitting procedures, which can be lengthy and vary across EU Member States, and regulatory uncertainty, which can lead to delays and increased costs. However, projects have addressed these challenges by engaging early with relevant stakeholders, having an open dialogue with local, regional and national authorities and performing environmental impact assessments for innovative technologies. Projects also believe these barriers could be further reduced by increasing the capacity of permitting authorities, granting a special permitting regime (e.g. creating regulatory sandboxes (¹)) to innovative solutions and simplifying the application process.

Finally, many projects relied on the timely completion of external infrastructure such as grid connections, carbon dioxide (CO₂) transport and storage facilities and hydrogen/CO₂ pipelines, which extend beyond project boundaries and direct control. To mitigate such risks, projects coordinated early with infrastructure developers and monitored progress, though their ability to influence construction timelines remained limited. Some projects collaborated closely with local authorities to design and develop transportation infrastructure that meets the project’s logistical demands.

All projects, independently of their sector, faced the challenges mentioned above to a greater or lesser degree. Nevertheless, some issues were predominant in specific sectors.

Projects within energy-intensive industries (EIIs) have encountered difficulties due to the limited competitiveness of innovative green products, high electricity demands and costs, permitting and difficulties securing off-taker agreements.

Projects with a hydrogen component have faced challenges securing long-term off-take agreements, high production costs, permitting and obtaining equipment and power supply contracts. The expected transposition of Renewable Energy Directive (RED) III (²) targets by Member States into national law should improve the market conditions of renewable and low-carbon hydrogen projects.

Projects in the industrial carbon management cluster have struggled with challenges related to the timely availability and permitting of CO₂ storage sites and the associated transport infrastructure, along with significant increases in capital expenditures and operating expenses. Moreover, projects utilising captured CO₂ faced important market uptake challenges due to the premium needed to compensate for the higher production costs of low-carbon products.

Projects within the renewable energy cluster have encountered difficulties due to permitting, supply chain disruptions and access to financing. The photovoltaic (PV) manufacturing projects have faced a particularly challenging situation, where global competition and overcapacity push market prices below European Union (EU) production costs, making the business case non-viable.

In the energy storage cluster, projects have faced challenges related to permitting, regulatory frameworks and supply chain disruptions. Like PV projects, battery projects have faced higher production costs and more regulatory barriers than their global competitors.

Despite these challenges, projects have made significant progress in finding solutions or are working diligently to overcome them. As a result, by the end of 2024, 36 projects had reached financial close (FC) (³), and seven projects had successfully entered into operation (EIO) (⁴).

Nevertheless, some issues that projects face will remain outside their remit. Hence, concerted efforts of all involved actors – and in particular policymakers at all levels – are necessary to accompany the development of projects. To address the challenges faced by projects, policymakers can implement various measures, including the following.

1. Establishing clear regulatory frameworks and standards to support the development of innovative technologies. A clear and consistent regulatory framework is essential for hydrogen production and use.
2. Providing further financial support and incentives to help projects overcome high production costs and technical risks.
3. Streamlining permitting processes and reducing administrative burdens to facilitate project development, including by recognising projects as strategic net-zero industry projects, benefiting from permitting one-stop shops and accelerated procedures.
4. Supporting infrastructure development, such as pipelines and ports, to transport CO₂ and address storage challenges. Harmonised EU-wide guidelines/recommendations for CO₂ capture, transport and storage would be valuable to this end.
5. Encouraging the development of new business models, such as energy-as-a-service (⁵), to address financing and off-take challenges.
6. Providing continued research and development support to improve innovative technologies’ efficiency and cost-effectiveness.

The Fund’s success is a testament to the power of innovation and collaboration in driving the transition to a low-carbon economy. Funded projects demonstrate that it is possible to reduce greenhouse gas emissions while driving economic growth and improving energy security.-

The Innovation Fund, financed with revenues from the EU Emissions Trading System (EU ETS), is one of the world’s largest funding programmes supporting the deployment of innovative net-zero and low-carbon technologies.

Endowed with around 530 million EU ETS allowances until 2030, the Fund supports projects focusing on:

• innovative low-carbon technologies and processes in EIIs, including products that can substitute carbon-intensive ones;
• carbon capture and utilisation (CCU);
• construction and operation of carbon capture and storage (CCS) facilities;
• innovative renewable energy generation;
• energy storage;
• net-zero mobility (maritime, aviation, road transport) and buildings.

The Fund aims to finance a project pipeline comprising various innovative technologies in all eligible sectors deployed in Member States and European Economic Area (EEA) countries (Figure 2). The Fund awards grants through calls for proposals (referred to as ‘calls’) and through competitive bidding (referred to as ‘auctions’).

Knowledge sharing is an essential part of the Fund. The objective of knowledge sharing, and this report, is to enhance market penetration and support the replication of the clean technologies or solutions funded by the programme while reducing risks. To this end, projects actively share the knowledge gained, supporting commercial upscaling and accelerating the deployment and commercialisation of the technologies. Projects are required to share the acquired knowledge under Article 10(a) of the EU ETS directive. Knowledge sharing requirements are incorporated into the grant agreements, requiring beneficiaries to share the relevant knowledge acquired during the project’s implementation with the European Commission (⁶).

The report includes projects from seven closed calls for proposals between 2020 and 2023. The data and project information presented in this report reflect their status as of 31 December 2024.

Insights on project challenges and mitigation measures presented in this report are derived from the projects’ knowledge sharing reports, a targeted survey on permitting carried out among the projects in the last quarter of 2024 and thematic knowledge sharing workshops, which are discussed further in this section.

Sensitive project information has been aggregated and anonymised to protect confidential project data and to avoid reverse engineering. This report does not include information that fails to meet the minimum anonymisation and no-reverse-engineering requirements, which may occur when there is an insufficient number of projects of the same type. Public data collected in the framework of knowledge sharing activities and other publicly available material are presented non-anonymised.

Due to the broad spectrum of technologies covered within the portfolio, the information in Section 5 (Challenges and key messages per Innovation Fund cluster) is structured around five thematic clusters:

• EIIs (⁷), including carbon utilisation, biofuels and biorefineries;
• hydrogen, including the manufacturing of components for hydrogen production;
• industrial carbon management (ICM), including carbon capture, utilisation and storage;
• renewable energy generation, including the manufacturing of components for renewable energy production; and
• energy storage, including the manufacturing of components for energy storage.

This structure enables the presentation of cohesive, aggregated and anonymised knowledge accumulated to date, outlining key challenges and lessons learned from the project portfolio and respective thematic clusters.

Cross-cutting projects, including aspects covered in more than one cluster, are analysed in multiple clusters. For example, a project producing hydrogen and utilising it in a chemical reaction with captured carbon is referred to each of the hydrogen, ICM and EIIs clusters. The attribution of projects per cluster, respective EU funding, greenhouse gas (GHG) emission savings and projects’ main location are presented in Annex II.

Projects have two key milestones: financial close (FC) and entry into operation (EIO). These milestones are only considered achieved once they have been validated by the granting authority (⁸). Therefore, this report categorises projects without validated FC and EIO milestones as projects that have not yet achieved the respective milestone(s).

The quantitative details included in this document are provided for information purposes only, based on current expectations and assumptions, and are inherently subject to significant uncertainties and changes in circumstances. Please be advised that these assumptions should not be regarded as firm predictions, and actual results may differ.

For statistical analysis, projects with implementation sites in multiple countries are assigned to the main country of implementation. This country is defined as the one where the largest proportion of funding is allocated. Consequently, data on the budget and GHG emissions avoidance are attributed to this country.

The expected GHG savings presented in this report are based on the relevant GHG methodology applicable to the projects at the time of their application. The ramp-up periods to achieve full-capacity production are omitted in the calculations for simplification purposes.

As the portfolio as a whole is still in the early stages, the level of data is considered insufficient to elaborate further on aspects related to potential scalability or replicability effects and operational aspects of ongoing projects.

The Commission (Directorate-General for Climate Action) and the European Climate, Infrastructure and Environment Executive Agency (CINEA) regularly organise knowledge sharing workshops, addressing challenges and opportunities for innovative low-carbon technologies. The meeting summaries, presentations and background documents on past events on CCS, hydrogen, the renewable energy value chain and energy storage are available on CINEA’s website (⁹). The main findings of these meetings are integrated into this report. Further knowledge sharing workshops will be dedicated to permitting, CCS, decarbonisation pathways in EIIs, and manufacturing components for clean technologies in 2025 and the following years. The findings of these meetings, along with further knowledge gained from the growing portfolio, will be integrated into the subsequent editions of this report.

4.1. Portfolio overview

The Innovation Fund opened its first call for proposals in July 2020. Since then, 11 calls have been launched, including 9 lump-sum calls for proposals and 2 renewable fuel of non-biological origin (RFNBO) hydrogen auctions. The portfolio consists of 120 ongoing projects, among which 54 are small-scale (¹⁰) projects, 60 are large-scale projects (including large-scale pilots) and 6 are projects selected in the RFNBO hydrogen auction (¹¹). The total committed funding from the Fund for these projects is more than EUR 7.1 billion.

Table 1 summarises the number of projects per call. Small-scale projects represent 45 % of the total number of projects but account for only 3 % of the total funding from the Fund.

Table 1. Portfolio overview by the end of 2024

The expected absolute GHG emissions avoidance of ongoing projects, calculated over 10 years of operation, adds up to 452 million tonnes of CO₂ equivalent, (¹²) 96 % of which (435 million tonnes of CO₂ equivalent) stem from large-scale projects (Figure 4).

The expected investment volume (to cover for CAPEX) of the ongoing projects is around EUR 34.2 billion for the large-scale projects, EUR 371.7 million for the small-scale projects, and EUR 4.1 billion for the auction projects. Their combined CAPEX (EUR 38.7 billion) represents more than five times the committed funding from the Fund (EUR 7.1 billion).

Projects are implemented in 24 different countries (¹³). The most frequent locations for projects are Spain (20 projects), France (14 projects) and Italy (11 projects) (Figure 5). On the other hand, projects implemented in Germany, Spain and Sweden benefit from the highest overall funding.

Figure 6 illustrates the share of funding against the shares of the gross domestic product (GDP) and EU ETS allowances per main country of implementation. In absolute terms, Germany, Spain and Sweden receive the highest contributions. However, comparing the funding to the GDP provides an alternative measure of the country’s success in funding absorption. The share of funding for Spain, Sweden and Belgium, followed by Norway, Greece, Portugal, Finland, Croatia and Iceland, exceeds the country’s GDP and EU ETS allowances shares. Contrarily, countries like Germany, Italy, Poland, Austria, Czechia and Romania have smaller funding shares than EU ETS allowances.

The Fund is well-distributed geographically in terms of the number of projects, covering almost every country in the EU/EEA. Figure 7 shows the geographical distribution of auction, large-scale and small-scale projects. Analysis of the applications to the Fund calls per country and the call results are presented in the annual Fund progress reports (¹⁴).

SYNERGIES WITH OTHER EU PROGRAMMES

The current fund portfolio contains 13 projects that directly build upon results from previous EU-funded initiatives. These projects mainly received EU research and innovation action grants under the Horizon 2020 programme (¹⁵) and seventh framework (¹⁶) programmes. For instance, the CO₂ geological storage technology used in the Coda Terminal and Silverstone projects was developed with the support of research and innovation action grants through the Horizon 2020 programme and previous EU research and innovation programmes. The ANRAV project also builds on four Horizon 2020 grants to advance carbon capture technologies in the cement industry. Additionally, several projects benefit from synergies with other EU-funded programmes such as the programme for the environment and climate action (¹⁷), Connecting Europe Facility (CEF) (¹⁸), European Maritime, Fisheries and Aquaculture Fund (¹⁹), the EIC Accelerator (²⁰) (part of Horizon 2020 and Horizon Europe programmes), Interreg (²¹) and the recovery assistance for cohesion and the territories of Europe initiative (²²).

INNOVATION FUND BENEFICIARIES

The 120 ongoing projects are implemented by 242 unique participants (²³) (with 259 project participants). Most of the beneficiaries are privately owned, for-profit entities (231). The rest are public entities (5), research organisations (3), higher education establishments (2) and one non-profit organisation.

Many projects are mono-beneficiaries or are managed by small consortia. For instance, 41 % of the projects (49) are managed by one beneficiary, while 34 projects are managed by a consortium with three beneficiaries or more (Figure 8).

4.2. Financial close and entry into operation status and analysis

STATUS

As the Fund aims to support readily deployable clean technology solutions, awarded projects must reach their first mandatory milestone, FC, within a maximum of four years from the grant signature date. Projects awarded under the auctions must reach EIO within five years from the grant signature. This is crucial to ensure timely implementation and to maximise the Fund’s impact on accelerating the transition to a climate-neutral economy.

At the end of 2024, 36 projects had reached FC: 26 small-scale projects (16 selected from SSC-2020, 8 from SSC-2021 and 2 from SSC-2022) and 10 large-scale projects (1 from LSC-2020, 2 from LSC-2021 and 7 from LSC-2022), as shown in Figure 9. This is a noteworthy result considering the innovativeness of the projects and the relatively short period since the signature of the first fund grants.

Out of the 36 projects that reached FC, 7 small-scale projects have already successfully entered into operation.

Figure 10 presents the average expected time to reach FC and EIO (from the grant agreement signature date) per call and the average delay in reaching the respective milestone.

Small-scale projects generally require less time to achieve FC compared to large-scale projects. On average, small-scale projects take 10 to 12 months from the start of the grant to reach this first milestone. Some projects from the latest small-scale call in 2022 exhibited even shorter durations for reaching both FC and EIO.

In contrast, large-scale projects typically require slightly more time to reach these milestones. This is primarily because these projects are more complex and face more challenges in securing financing, off-take and supply contracts, along with regulatory challenges and permitting delays. These projects sometimes rely on the timely completion of infrastructure (pipelines, power lines, dedicated renewable energy sources (RES), etc.) outside of the project’s scope.

At the same time, projects supported under the 2022 large-scale call (LSC-2022) are expected to take less time to reach FC and EIO than previous calls (LSC-2020 and LSC-2021). A possible reason could be that some projects gained experience and maturity as they were resubmitted from previous years (about 30 % in the LSC-2022).

Despite delays, the average period to reach FC per call (including delays) is still expected by the projects to be much below the maximum limit of 48 months, with on average 20 months for large-scale projects (including the auction projects) and around 14 months for small-scale projects. In general, delays in reaching FC cause corresponding delays in the EIO date.

ANALYSIS

Typically, innovative projects face numerous challenges to achieving FC and are often confronted with several simultaneously. The information collected through the Fund knowledge-sharing activities helps identify the major challenges and how projects address them.

I. Regulatory challenges and delays in obtaining permits

Permitting is one of the key challenges in projects deploying innovative solutions for climate change mitigation, as recognised by the Net-Zero Industry Act (NZIA) (²⁴). This finding emerged in the first Annual knowledge sharing report of the Innovation Fund – De-risking innovative low-carbon technologies (²⁵). As a result, CINEA conducted a dedicated survey on permitting, targeting the whole Fund portfolio of ongoing projects; 90 replies were received. The survey’s main takeaways are explained below.

Most project coordinators confirmed that obtaining the necessary permits is a critical step in the project’s progression. Namely, most projects indicated that they need to acquire permits to operate, whether by applying for new permits (35 %), updating existing ones (11 %) or both (43 %). Together with financing agreements, supply and off-take contracts, permits are mandatory documents that often need to be approved and in place for projects to successfully reach FC (some permits, such as operational ones, are due at a later stage). However, in many instances the process of obtaining the necessary permits is very demanding and time-consuming. Permitting is an issue for many projects in the Fund portfolio, with 68 % identifying it among the top challenges and more than 10 % of the projects identifying it as their primary challenge. About half of the projects report a concrete risk of being delayed because of difficulties obtaining the required permits or challenging permitting procedures. Some projects reported that permitting delays may put the project at risk of not meeting the four-year deadline for achieving FC. Less than a quarter of the respondents considered permitting not to be a challenge.

In most cases, the challenges and delays are due to the difficulty of applying the existing permitting procedures to innovative solutions. Even those projects that reported positive interactions with the permitting authorities (over a third of the total) experienced delays and difficulties. Difficulties arose due to several issues; for example, the lack of specific rules and the lack of harmonised EU practices on emerging technologies such as CCS, CCU or hydrogen production, along with the unavailability of necessary benchmarks to set reference values and the complexity in combining different technologies each falling under separate regulations and permitting procedures.

Projects responded to the permitting challenges in several ways. Most commonly, in 23 cases, they enhanced their interactions with the authorities, making them closer, deeper and more frequent. In 14 cases, projects hired external specialists; in 10 cases, they allocated more numerous and/or experienced employees. This underscores the importance of early engagement with the authorities, evaluating the effort needed and devoting sufficient personnel to it. Projects revised their permitting approach less frequently or engaged with similar projects to share information and best practices. In some cases, where the problem was the difficulty of proving their technology’s worth to the authorities, they invested in collecting additional data and measurements.

The projects proposed various solutions to improve the permitting process. Key suggestions included ensuring that more financing and resources are made available to the authorities dealing with project permitting, establishing a special regime for key decarbonisation projects such as a regulatory sandbox or priority status, simplifying interactions with authorities through a one-stop shop or single point of contact, and introducing more flexibility, such as by allowing limited design changes or parallel permitting procedures. The digitalisation of the procedures is well advanced: complete digital submission is already available to over 60 % of projects, while about half of them report that a fully digital interface is made available by the permitting authority for the entire process. A common recommendation by the participants is to digitalise the procedures further.

A more detailed analysis of the survey’s results, including the lessons learned, is available in Annex I of this publication and the full analysis is available in a dedicated report (²⁶).

II. Securing contracts with off-takers

The difficulty in securing adequate off-take agreements is a primary reason for delays in reaching FC. This is especially acute for projects targeting nascent markets, where clean technology projects and their potential customers face numerous uncertainties. In markets for novel products (e.g. biofuels, e-fuels), defining a price structure that satisfies feedstock suppliers and final customers has been a key challenge to achieving optimal risk-sharing.

Specific markets, like renewable hydrogen, have been evolving more slowly than anticipated, primarily because their high production costs hinder market adoption compared to current alternatives. Similarly, the additional price mark-up (‘green premium’) for green products (like biorefineries and e-fuels) has not been accepted, as initially accounted for in their business plan.

Relying on a single or a limited number of off-takers can be risky, affecting timelines and project viability. Diversifying the off-take and identifying various back-up off-take parties is always beneficial, wherever possible. In several cases, off-takers failed to confirm their commitment, forcing projects to seek alternative customers and causing significant delays. However, projects that mitigated market risks successfully engaged potential off-takers early and established firm agreements from the outset. Some even incorporated key partners by including them in the project and defining the relationship via a consortium agreement.

More developed global markets, like electric vehicle (EV) batteries, face intense competition from China, prompting projects to re-evaluate business cases due to significant market price declines. Projects in volatile markets emphasise the need to monitor international trends closely.

As a key lesson learned, projects that have reached FC highlighted the importance of allocating sufficient resources early for in-depth market analysis. This ensures timely collaboration with key suppliers (see item on supply chains below) and customers.

III. Supply chain challenges

While geopolitical factors and related logistical challenges contribute to supply chain disruptions, projects most frequently cited the lack of feedstock availability and/or key technological components and raw materials as the primary concern. This relates to the lack of supply of strategic raw materials such as platinum group metals used as catalysts in manufacturing proton exchange membrane (PEM) electrolysers and rare earth elements in manufacturing solid oxide electrolysers. Another example is projects relying on waste as feedstock. The beneficiaries struggle to secure high-quality waste at a stable and affordable price, making it difficult to sustain their processes.

Successful mitigation strategies recommended by projects include (i) early placement of orders for raw materials and equipment and (ii) supplier portfolio diversification. Projects sometimes renegotiated customer delivery schedules to mirror and accommodate longer supply delivery times.

Specific projects focusing on manufacturing components for energy storage or renewable energy systems have diverse (or heterogeneous) supply chains. Each supplier is distinct in such chains, with variations in product types, production methods, technologies, locations and regulatory requirements. Managing these complex supply chains requires coordinating and integrating these elements to ensure efficient operations. Energy storage projects faced dependence on non-EU suppliers for raw materials, components and machinery due to the lack of domestic production capacity in Europe.

To address these challenges, projects adopted proactive strategies, including advanced procurement planning, local sourcing, contingency planning and maintaining strategic reserves of crucial supplies.

IV. Project infrastructure dependencies

The success of many projects also depends on the timely completion of related external projects, such as electricity grid connections, CO₂ storage facilities, hydrogen/CO₂ pipelines/hubs or transportation infrastructure.

For instance, sufficient CO₂ storage capacity in Europe before 2030 is still uncertain, potentially affecting ICM projects reliant on these facilities.

Additionally, it is crucial to complete critical infrastructure promptly, such as hydrogen/CO₂ pipelines, grid connections or district heating networks. Funded projects must coordinate early and monitor the progress of external projects.

Some projects collaborated closely with local authorities to design and develop transportation infrastructure that met the project’s logistical demands.

V. Rise in material and energy costs

Several projects reported substantial cost increases due to factors such as inflation, revised technology costs or market dynamics.

Sometimes, cost increases were primarily due to technical challenges during implementation. For example, technical issues identified during the testing of the electrolyser solutions led to significant delays and related cost increases. In some cases, these technical challenges caused a shift towards more mature (yet still innovative) technologies with a lower investment requirement, such as shifts from PEM to alkaline electrolysers. Another example is related to several ICM projects that witnessed a surge in project costs, primarily driven by more stringent CO₂ transport and storage specifications.

Projects have undertaken various strategies to address rising costs, such as working with sufficient cost contingencies, revising project specifications, possibly renegotiating agreements and requesting additional funding from public or private sources.

VI. Technical challenges

From a technical point of view, most projects have not faced significant difficulties so far. However, several key lessons have been learned across different sectors, technologies and project sizes.

Projects awarded the Fund grant are expected to already have a sufficiently high level of technical maturity. Nevertheless, as projects matured in the development process, the results of the in-depth feasibility and technical studies often led to adjustments and refining of the technical requirements. In addition, these studies provided more realistic cost estimates, which, in some cases, increased significantly.

Complex projects combining several innovative technologies emphasised the need for rigorous technical due diligence early in the project lifetime to ensure compatibility between the different technology solutions. For projects integrated within existing facilities, the integration risk is identified as a common challenge, requiring meticulous technical planning.

VII. Changes to project organisation

Until now, a few projects have changed the consortium structure, which means adding or withdrawing beneficiaries from the project. In most cases, projects continue to operate by redistributing the tasks among the beneficiaries. Only in a few cases was finding another entity willing to take over impossible, given the project’s complexity or critical dependency on a single partner/proprietary technology, which unfortunately led to the termination of the project.

IMPACT OF CHALLENGES ON THE FINANCING OF THE PROJECT

Some projects were confronted with a combination of the challenges mentioned above, which had an impact on the project’s ability to secure financing. For example, projects in developing markets (such as hydrogen in certain regions) faced difficulties securing the initially planned bank debt financing. Other projects had to re-evaluate their financing requirement due to increasing costs and supply chain issues. Securing this additional funding delayed FC. Based on the experience gained, projects should include sufficient contingency funding from the project’s onset. Although most of the ongoing projects anticipate being funded entirely using a combination of equity and funding from the Fund, some projects also rely on debt financing. Lenders generally consider projects riskier due to the lack of historical performance data (e.g. data on operational performance) and often limited market standards. Moreover, some projects highlight the complexity of coordinating multiple project funders promptly (e.g. potential lenders might require a lengthy due diligence process). In addition, accessing debt financing for first-of-a-kind projects requires specialised project finance skills, which are not always readily available in the project team. Few projects (less than 20 %) plan to access other public funding sources (regional or national public support), and some highlight the restrictive conditions for combining national and European funding programmes.

The above challenges can be overcome, resulting in acceptable delays in the implementation but no substantial change in scope. In some cases, however, amending the Fund grant agreements to postpone key milestones may not be feasible if project developers encounter issues with significant implications for their commercial and financial viability. Attempts to solve these issues by process optimisations or entering into new commercial agreements may not be successful. If no viable alternatives can be found, projects may have their grant agreement terminated (11 projects have been terminated so far, of which eight were small-scale projects). In most cases, there were major changes in the project markets and/or supply chain, leading to significant cost increases in CAPEX and/or a reduction in potential revenues. In all cases, the projects could not reach the planned FC as the viability of the business case was seriously impaired. This is not uncommon when working with innovative technologies in novel markets.

It is possible to draw several positive conclusions and lessons learned shared by the projects that have successfully achieved FC. Some of them, for instance, reported that a well-developed regulatory context driven by EU climate neutrality objectives, the European Green Deal (²⁷) and sectoral policies, such as the EU’s hydrogen strategy (²⁸) and RED II, improved projects’ financial viability and contributed to their financial success by creating a favourable regulatory environment and market demand. According to their experience, a clear regulatory framework represents a market driver for projects, first helping investors consider the technology itself and leading to a further boost of the first production sales. In general, the possibility of receiving an EU grant further helped de-risk projects and accelerate the process towards a favourable final investment decision. Finally, according to some projects, applying for the Fund grant obliged them to create a robust market analysis and business plan, which they believed was one of the crucial factors that facilitated reaching FC. This market analysis enabled selecting the most suitable technology for the intended application, leading to the optimal choice of equipment and processes.

5.1. Energy-intensive industries

PROJECTS IN ENERGY-INTENSIVE INDUSTRIES

The EIIs cluster comprises a portfolio of 49 ongoing projects (²⁹), with combined funding from the Fund of EUR 4 billion and CAPEX value of around EUR 19.3 billion. Geographically, these projects are in 17 countries, with a notable concentration in southern Europe, particularly Spain and Italy, where more than one-third of the total EIIs projects are located (Figure 13). Additionally, projects in Sweden, France and Germany have had a prominent presence in the portfolio.

The cluster consists of 21 small-scale projects and 28 large-scale projects. Reflecting the inherent scale of the different sectors, large-scale projects are predominant in industries such as chemicals, refineries, cement and lime. Conversely, small-scale projects are more common in sectors like pulp and paper, biofuels and biorefineries, glass and construction materials. Within the EIIs cluster 14 projects have already achieved the FC milestone. These are mainly small-scale projects and large-scale pilots.

For large-scale projects in the EIIs cluster, the largest GHG emission savings are expected from projects in sectors such as cement and lime (49 % of total), iron and steel (23 % of total), and chemicals (18 % of total) (Figure 14). Despite facing some delays in reaching FC, all large-scale projects in the EIIs cluster are planned to enter into operation between 2026 and 2029.

For small-scale projects in the EIIs cluster, the majority are on track to achieve EIO by the end of 2026, and four small-scale projects have already successfully started operations: EB UV (iron and steel), SKFOAAS (refineries), PRIMUS (glass) and W4W (biofuels and biorefineries). The cement and lime projects (34 % of total) are expected to deliver the highest significant share of GHG emissions avoidance within the EIIs small-scale portfolio, as highlighted in Figure 15.

EIIs decarbonisation pathways per industry

A review of the decarbonisation pathways employed by the industrial sectors reveals a variety of approaches (Figure 16).

Cement and lime sector projects primarily rely on CCS solutions. In contrast, those in the biofuels and biorefineries sector projects focus on utilising waste and residues, and the glass industry is exclusively exploring the electrification pathway.

Other sectors, such as chemicals, refineries and construction materials, are adopting a more multifaceted approach. Projects in these sectors explore various solutions, including CCU, waste and residues use, or combinations thereof. The production and use of renewable hydrogen, often in conjunction with CCU, is common in iron and steel, chemicals and refineries projects.

In addition to these decarbonisation pathways, some projects explore process changes or feedstock substitutions to reduce GHG emissions. Examples of such innovative approaches can be found in the refineries, iron and steel and cement and lime sectors.

EIIs PRODUCTS AND PROCESSES PER INDUSTRY

Cement and lime

The distribution of cement and lime projects in the Fund’s portfolio reflects the sector’s reliance on carbon capture, utilisation and storage to mitigate process emissions, especially CO₂ emissions associated with the calcination of raw materials. Eleven cement and lime projects propose CCS or CCU and are discussed in detail in Section 5.3. Other projects are CLYNGAS, which aims to substitute fossil fuels with waste-derived fuels, and ERACLITUS, which aims to produce new low-carbon supplementary cementitious materials.

Chemicals

Projects in the chemical sector aim to produce green methanol (e.g. GREEN MEIGA, eM-Rhone, ECOPLANTA), green ammonia (e.g. GAP and GRAMLI) or sustainable plastics (e.g. SC-HOOP, PULSE, BOOST and MoReTec-1).

In the case of green methanol production, the main decarbonisation pathway is the use of renewable hydrogen in combination with CCU. However, project ECOPLANTA stands out by decarbonising the sub-sector through the use of municipal solid waste. Meanwhile, green ammonia production relies solely on renewable hydrogen, while plastic production relies on waste recycling, such as municipal solid waste and non-recyclable plastic.

construction materials

Decarbonisation in this sector has been primarily achieved through two key pathways: the utilisation of externally or internally sourced captured CO₂, and the conversion of waste and residues, such as fly ash, slag and air pollution control residues, into valuable products. The construction materials sector has a relatively small share of the Fund portfolio and includes two notable projects: CO2ncrEAT and AGGREGACO2. The CO2ncrEAT project uses waste by-products from stainless steel production and captured CO₂ from a lime plant to create carbon-negative precast materials. The AGGREGACO2 project utilises fly ash, slag and air pollution control residues to produce aggregates, thereby reducing waste and promoting sustainability.

glass and ceramics

Glass and ceramics projects focus on glass production. While most projects target container glass as a final product (BEAR, PRIMUS, VITRUM and MAGNUS), two projects focus on decarbonising the glass wool production process (HiteUp and HFP). Additionally, the Volta project targets float glass production.

All the projects aim to use electrification as their decarbonisation pathway, replacing existing furnaces with hybrid ones with various levels of electrification, ranging from 35 % to 100 %. In addition to electrification, the Volta project also aims to substitute virgin raw materials with up to 100 % recycled glass.

iron and steel

The main decarbonisation pathway in the iron and steel projects, exemplified by projects HYBRIT Demonstration and STEGRA (formerly H2GS (³⁰)), involves a complete transformation of the ironmaking process by replacing coke-fuelled blast furnace with direct reduced iron technology, using renewable hydrogen as the primary reducing agent. This decarbonisation pathway is complemented by the electrification of steelmaking, shifting from basic oxygen furnace to electric arc furnace.

Other projects target the decarbonisation of specific production stages in addition to complete process transformations. For example, the EB UV project replaces the traditional curing ovens in continuous coil coating lines with a new technology based on electron beam curing.

pulp and paper

There is only one small-scale project, LK2BM, in the pulp and paper sector. A rotary kiln burner and its wood fuel feeding lines and equipment will be designed and built to shift from natural gas to 100 % hardwood residues (eucalyptus sawdust and pellets) in an existing pulp mill’s lime kiln.

Refineries

The portfolio of refinery projects includes a diverse range of decarbonisation pathways and a variety of applications for the final products. For example, the e-fuel pilot project utilises captured carbon monoxide / CO₂ and renewable and low-carbon hydrogen to generate Fischer-Tropsch waxes, which are refined into sustainable aviation fuels (SAFs). Similarly, projects like TRISKELION use captured CO₂ and green hydrogen to synthesise RFNBO methanol for the transport sector. Other projects within the refineries portfolio, mostly small-scale projects, focus on the implementation of new processes, such as waste oil purification (project SKFOAAS) or on improvements in existing processes, like project CIRQLAR, which enables the recovery of low-temperature waste heat by using heat pumps.

Biofuels and biorefineries

The biofuels and biorefineries sector can be categorised into two main groups based on the type of feedstock used and the final product generated. The first group encompasses waste-to-gas projects, which focus on converting biogas produced from organic waste, including municipal and agricultural waste, into gaseous fuels such as biomethane. Notable examples of this group include the FirstBio2Shipping, a project aimed at producing liquified biomethane from organic waste for use as a clean fuel, along with projects like W4W and LuGaZ, which generate grid-compliant biomethane from landfill and agricultural waste, respectively. Conversely, a second group of biofuels and biorefineries projects, consists of biomass-to-liquid projects, which involve the conversion of biomass, primarily forest residues, into liquid fuels such as SAFs. A representative example is the BioOstrand project.

CHALLENGES AND LESSONS LEARNED

EIIs projects often share common key challenges. For instance, in biofuels, chemicals and refineries, beneficiaries encountered challenges related to the limited competitiveness of innovative green products compared to conventional alternatives and the market’s willingness to pay the related green premium. As a result, some projects faced difficulties securing necessary funding besides the Fund. This challenge has been partially overcome by integrating off-takers into the consortium in the early stage of the project or by redesigning technical aspects, such as adopting standard equipment, to reduce costs while maintaining the project’s original objectives.

In addition, projects with high (green) electricity demands may face difficulties in securing green electricity at affordable prices and challenges due to limitations of the local grid infrastructure. Some projects collaborate early with transmission and distribution system operators to address this.

Sectors where the main decarbonisation pathway is relatively mature, such as electrification, experience a smoother transition. The ease of incorporating new technologies into current operations enhances the feasibility of the decarbonisation process. Such projects are less likely to face difficulties related to permitting, market acceptance and securing funding.

In other cases, the industrial sector’s specific characteristics and choice of decarbonisation pathway lead to distinct challenges, as outlined below.

Chemicals

Financial viability has been a concern for some green methanol production projects due to the limited market willingness to pay a price that would cover the project costs. Additionally, increasing CAPEX driven by changing market conditions, such as inflation and pressure on supply chains, have led to the need for project re-engineering, further threatening their financial viability. The development of full-scale commercial plants can sometimes require changes to the equipment or materials used in their components, resulting in increased costs and delays.

Projects focused on producing and utilising renewable hydrogen as a decarbonisation pathway have faced difficulties securing equipment that meet their specific size and/or performance requirements. This is largely due to supply chain constraints, particularly a shortage of electrolysers’ supply capacity.

Projects that rely on waste as a feedstock face challenges related to the availability and pricing of quality waste suitable for their processes, as completely new value chains must be established. Furthermore, these projects face some regulatory uncertainty, particularly concerning implementing requirements for end-of-waste products. For instance, the EU mass balance rules for plastic recycled content development are still underway.

Glass and ceramics

The main decarbonisation pathway for glass sector projects, electrification, is relatively mature and consists of integrating hybrid technologies into existing production processes (e.g. curing and melting). Therefore, the glass projects in the Fund’s portfolio have less difficulties related to permitting, market acceptance and securing funding than other sectors.

Construction materials

The main challenges faced by projects in the sector have been related to the end-of-life treatment / permitting of the novel materials and their market uptake.

Local authorities’ limited experience with novel eco-construction materials such as eco-aggregates and carbonated bricks has often impeded obtaining the necessary permits, including end-of-waste permits. To address this challenge, companies work closely with local authorities in the approval procedure by providing samples of the new materials and results from pilot testing.

Additionally, securing off-taker agreements can be challenging, as the market for green construction materials is still not well-established in Europe. Off-takers may be reluctant to purchase eco-construction materials due to concerns about their performance, durability or cost-effectiveness. Projects engage off-takers early on to mitigate this issue through collaborative testing and quality performance evaluation. Furthermore, projects promote their new eco-construction materials through targeted marketing to raise awareness among potential customers.

Cement and lime

Challenges and mitigation measures for the cement and lime sector are addressed in Section 5.3 covering CCS and CCU as decarbonisation pathways.

Iron and steel

Due to their scale and complexity, iron and steel projects must comply with various permitting requirements, often involving multiple stakeholders and regulatory bodies. To address this, significant time and resources are strategically invested to manage and minimise the risk of delays.

The Fund’s projects rely heavily on electricity to power operations, and consequently, electricity costs associated with deploying the new technologies represent a substantial share of the operational costs. Therefore, the limited availability and high cost of electricity, particularly from green sources, pose significant challenges to the viability of the iron and steel projects.

In addition, iron and steel projects tend to demand substantial capital investment, positioning them as one of the most capital-intensive sectors within the Fund portfolio. Establishing and operating these projects entails significant expenditures, which poses considerable funding challenges. Therefore, to overcome these challenges, project developers are expected to use multiple funding sources, such as equity, loans and public funding, to bring these projects to fruition.

Green steel production is expected to come at a green premium due to the increased electricity required for decarbonisation. However, some off-taker sectors are hesitant to accept this premium, especially in sectors with difficult market conditions. Factors such as global overcapacity, increasing Asian competition, lower demand from some sectors (e.g. automotive) and import tariffs hinder the uptake of green steel. To address this, projects are working closely with off-takers to create market demand and incentivise the adoption of low-carbon products.

Refineries

The refineries sector faced challenges in terms of competitiveness with the emergence of renewable and low-carbon products. E-fuels and e-methane, produced by integrating renewable energy (e.g. electrolysis-based hydrogen production) and advanced chemical processes, are often hindered by high production costs due to the required technologies and significant related investments. This makes securing off-take agreements difficult, as the targeted sales price exceeds what market is willing to pay. As a result, securing financing to reach FC poses a significant challenge. To mitigate this issue, projects focus on optimising the project’s CAPEX, eliminating unnecessary costs while maintaining the performance and quality of the final product.

The existence and clarity of a clear regulatory framework enabling the certification of renewable and/or low-carbon fuels also has an impact on investors’ commitment to these projects.

Biofuels and biorefineries

Two key factors have influenced the financial viability of biofuels and biorefineries projects: the market’s willingness to pay a green premium price for the final product and the availability of regional and national incentives that can be combined with grants from the Fund. While Fund grants can play an important role in supporting these projects, they may not always be enough to attract the necessary private investment, which can lead to delays or challenges in reaching FC.

Some projects targeting the production of bio-based SAF faced significant financial risks. Bio-based SAF production costs are higher than those of fossil fuels, making it challenging to compete in the market. Additionally, market demand in the SAF sector is not yet mature, which affects bio-based products.

Regarding incentives, recent amendments to national schemes in some Member States – following the transposition of RED II into national law – directly impact the business case of biofuels, leading to the need to put in place mitigating measures, such as looking for alternative applications of the product in a different market segment with more attractive incentives.

5.2. Hydrogen

PROJECTS WITH A HYDROGEN COMPONENT

The hydrogen cluster includes 40 ongoing projects with a total funding from the Fund of around EUR 3.1 billion and CAPEX of nearly EUR 23 billion. Most of the projects are large-scale (28), six are the successful bidders of the first Innovation Fund Renewable Hydrogen Auction (IF23 Auction), while only six are small-scale projects. The hydrogen cluster comprises projects that focus on the production of renewable and low-carbon hydrogen, along with those that produce and utilise renewable hydrogen as a feedstock to produce a range of final products within the project’s boundaries, such as methanol, ammonia, synthetic fuels and bio-based fuels, along with projects using hydrogen for the direct reduction production process of steel. Additionally, the cluster includes projects that aim to establish manufacturing capacities for equipment used in hydrogen production facilities. The projects are located in 17 countries, with strong representation in Spain (8), followed by the Netherlands (5) and Germany (4), as shown in Figure 20.

Figure 21 presents the expected cumulative GHG emission avoidance for the different final products. The largest GHG avoidance is expected from the direct reduction of steel and manufacturing of components projects.

By the end of 2024, five projects had achieved FC, mainly focusing on manufacturing hydrogen and electrolyser components. Notable examples include project STEGRA (formerly H2GS), which integrates renewable hydrogen production with the direct reduction process of producing steel, and ZE PAK green H2, which is set to produce renewable hydrogen in Poland. Most hydrogen projects are expected to reach FC in 2025 and 2026. In terms of EIO, several projects are expected to start production between 2027 and 2028.

Hydrogen production

Hydrogen production includes the projects in the hydrogen cluster, including those that produce and consume it internally. It does not include the projects on manufacturing electrolysers or electrolyser components covered in a separate category (see the section below). These projects are expected to produce more than 0.8 million tonnes of renewable and low-carbon hydrogen annually (more than 0.7 million tonnes of which is renewable only) and achieve 5.7 gigawatts (GW) of new electrolyser capacity in Europe. As such, the Fund’s projects will contribute approximately 15 % to the 4.5 Mtpa(³¹) needed to meet the RED III targets for RFNBO in industry and transport.

Projects located in Sweden are expected to generate 31 % of the cluster’s hydrogen output, while projects in Spain and the Netherlands account for 18 % and 17 % respectively (Figure 22).

Projects that produce renewable hydrogen to be sold on the market, that is, as the main principal product, account for 42 % of the total hydrogen volume produced in the cluster’s project portfolio, with significant growth driven by new projects that secured funding in the first Innovation Fund Renewable Hydrogen Auction, such as MP2X (Portugal) and Grey2Green II (Portugal) (Figure 23). Projects producing hydrogen and directing it as feedstock to the steel production, within the project’s boundaries, come in at 23 % of the total hydrogen volume, primarily due to two large projects in Sweden: STEGRA (formerly H2GS) and HYBRIT. Additionally, projects with low-carbon hydrogen as the principal product to be sold in the market account for 13 % of the total volume, with substantial volumes to be supplied by projects IRIS (Greece) and FUREC (Netherlands). Other derivatives produced from hydrogen within the projects’ boundaries, such as ammonia, methanol and e-methane, contribute to around 14 % of the total volume. In comparison, fuels (bio- and synthetic) make up the remaining 8 % (e.g. projects GAP in Norway, GREEN MEIGA in Spain or BioOstrand in Sweden). Notably, winners of the Fund’s first Renewable Hydrogen Auction will also play a key role in installing a substantial additional capacity (over 2 gigawatts electrical) of new renewable electricity generation assets.

Among the projects producing electrolytic hydrogen and that specified their electrolyser technology in their proposal, the majority (53 %) intend to install alkaline electrolysers, while a smaller proportion (22 %) plan to use PEM electrolysers (Figure 24). A few projects (3 %) considered a hybrid approach, combining alkaline and solid oxide electrolyser cell (SOEC) electrolysers, while another 6 % plan to combine alkaline and PEM electrolysers. The final technological solutions will depend on the evolution of the market and technology performance, so projects may decide to change the technology for a more suitable option. At the moment of the application, 16 % of the projects had not yet decided on the type of electrolyser.

Manufacturing electrolysers or electrolyser components for hydrogen production

Four ongoing projects (located in Germany, Denmark and Belgium) aim to manufacture electrolysers or their components. These projects entail the manufacture of SOEC electrolysers (TopSOEC), fuel cells (HyNCREASE), alkaline electrolyser membranes (GIGA-SCALES) and stack modules (ELYAS).

CHALLENGES AND LESSONS LEARNED

Even though the hydrogen cluster includes 40 ongoing projects, the majority of them focus on the production of renewable hydrogen, either as a principle product or as one that is consumed within the project’s boundaries to produce a secondary product (such as methanol, ammonia, synthetic, bio-based fuels), along with projects using hydrogen for the direct reduction production process of steel). This part of the chapter therefore encompasses the main challenges and lessons learned relating to renewable hydrogen production, as the challenges related to the abovementioned derivates were already discussed under the EIIs and ICM clusters, while the few projects on manufacturing hydrogen producing equipment are not yet numerous and are still at an early stage.

One of the critical challenges of hydrogen projects is securing long-term off-take agreements. The willingness among direct consumers to pay a market premium for products with an RFNBO-compliant or other low-carbon component still appears to be low. This reluctance is largely driven by cost considerations and the still-pending binding targets for consumption in regulatory frameworks for some sectors. The lack of a liquid and transparent market for renewable hydrogen further exacerbates the issue, as it hinders hydrogen price discovery and creates uncertainty about future price stability, making potential buyers hesitant. The insufficient availability of long-term off-take agreements may adversely affect the non-recourse debt project financing, which is being considered as a financing structure by several projects. Many projects lean towards corporate financing within large groups, while others, unable to obtain support from the parent company or banks, seek additional (ideally inflation-adjusted) grants, despite administrative burdens.

Additionally, the slow development of required transport infrastructure to support the efficient production and distribution of hydrogen results in a fragmented supply chain that adds complexity to securing reliable, long-term off-take commitments. With the eventual transposition of the RED III targets for RFNBO consumption in the industrial sector into national law and the construction or repurposing of transport infrastructure across Europe, off-take agreements could be secured more easily. To this extent, several project developers engage with national authorities early (already at the project’s inception) to signal demand and need for such infrastructure. Securing renewable power purchase agreements (PPAs) for RFNBO-hydrogen production poses a challenge primarily due to the competition for renewable energy resources and the specific demands of hydrogen production. The competition for renewable energy resources has been intense, as the same wind, solar and other renewable sources have been targeted by a wide array of sectors (transport, EIIs, etc.) aiming to decarbonise. This high demand can limit availability, posing grid availability constraints and increasing prices.

Furthermore, renewable hydrogen production requires a stable, predictable and often continuous electricity supply to ensure the economic efficiency of the electrolysis process. However, most RES are intermittent by nature, which can complicate structuring PPAs that can guarantee the necessary power availability and stability. Finally, the long-term nature of PPAs (often spanning 10–20 years) requires renewable hydrogen producers to accurately forecast production needs and market conditions far into the future, which carries inherent risk and uncertainty. Some projects attempt to mitigate this risk by securing an oversized volume of renewable electricity or adding a storage facility within their project’s boundaries. Others construct the renewable power-generating assets themselves (often with additional storage facilities). This trend was observed at the Fund’s Renewable Hydrogen Auction, where half of the awarded projects plan to implement an integrated power generation and hydrogen production model, which has led to a positive side effect, namely the large buildout (over two gigawatts electrical) of renewable electricity installations. Nevertheless, such mitigation measures result in significantly higher capital expenditure for the project.

Regarding crucial equipment and supply contracts, it is important to underline that electrolyser production capacity has not yet scaled up to meet the surge of demand. Another challenge is the rapid technological advancements occurring in the field of electrolysis. With continuous research and development, new and more efficient technologies have frequently emerged, making it difficult for hydrogen project developers to commit to contracting specific equipment that might soon become outdated, even at the moment of delivery. Additionally, the high capital costs associated with electrolysers add to the difficulty. Securing financing and justifying investment for these high-value assets can be challenging, especially when market conditions and future returns are uncertain. Lastly, given the complexity of manufacturing electrolysers, a limited number of suppliers can provide high-quality equipment with a long-term service commitment. This limited supplier base can restrict negotiating power, elevate prices and reduce flexibility in contract terms. Incorporating long-lasting service guarantees and other customer-protecting provisions in the equipment supply contracts can secure a stable and predictable demand for electrolysers.

Regarding permitting, one significant hurdle has been the lack of clear legislative frameworks for their technology, particularly for first-of-a-kind projects, creating uncertainty among developers. Furthermore, permitting procedures can vary significantly by region, leading to regional differences within Member States that complicate the application process. In addition, applicants may frequently encounter unexpectedly complex requirements during the permitting process, disrupting project timelines. Delays can also be exacerbated by a perceived lack of capacity within the permitting authorities and the impossibility of running permitting procedures in parallel rather than sequentially, along with changes in government that may alter priorities or regulatory focus. Ensuring active engagement with local communities, authorities and stakeholders early in the permitting process can address concerns, build support and facilitate smoother approvals.

This is compounded by a lack of clear long-term risk-sharing between electrolyser manufacturers, engineering, procurement and construction contractors, project developers and off-takers. Many counterparties involved in hydrogen projects can be considered high risk, with non-investment-grade credit ratings. As a result, their risk has often been deemed unacceptable by banks, which may not be willing or able to provide guarantees to clarify the risk responsibilities across the value chain. Consequently, this creates a barrier to securing agreements between the various parties and delays the development of these projects.

5.3. Industrial carbon management

PROJECTS WITH AN INDUSTRIAL CARBON MANAGEMENT COMPONENT

ICM projects funded under the Fund strongly contribute to the EU’s industrial carbon management strategy (³²). In all, 25 ongoing projects rely on industrial carbon management solutions (16 CCS and 9 CCU projects). These projects have a total CAPEX of nearly EUR 8.8 billion, with funding of around EUR 3.2 billion. The ICM cluster has 21 large-scale (including one pilot) and four small-scale projects.

Most ICM projects funded, by number and volume of CO₂ captured, are under development in Greece, Belgium, Germany and France, as these countries mainly host large-scale projects. Spain, Norway, Italy and the Netherlands mainly host small-scale or pilot projects under the Fund, so the volume of CO₂ managed in these countries is lower (Figure 26). Some countries, including Norway and the Netherlands, have important ICM projects outside the Fund.

The ICM cluster portfolio addresses all elements of the value chain across Europe: CO₂ capture, transport, utilisation and storage. Most projects (13) are focused on deploying CO₂ capture technologies in an industrial context, while one project is dedicated to developing a CO₂ storage site. In addition, eight projects will showcase the industrial use of captured CO₂, and three will span across the entire value chain, encompassing either CCS or CCU. Notably, two projects, ANRAV and Silverstone, will showcase the full CCS value chain, from CO₂ capture to transport and permanent storage. In contrast, the C2B project will demonstrate the complete CCU value chain, leveraging CO₂ capture, transport and utilisation to produce e-methanol and other synthetic fuels.

Silverstone is the first ICM project to reach the FC milestone under the Fund.

CO₂ capture

Most projects concentrate on carbon capture, including CO₂ compression and liquefaction infrastructure. In these cases, transport and utilisation / permanent storage are due to be developed outside the project boundaries by external service providers.

The first volumes of CO₂ are expected to be captured by small-scale projects from 2025 with the EIO of Silverstone, and from 2026 with the EIO of the pilot project CFCPILOT4CCS.

By 2028, the first large-scale projects, such as Beccs Stockholm in Sweden, Kairos@C in Belgium, IRIS in Greece or KOdeCO net zero in Croatia, are expected to start operations. By 2030, all projects in the ICM cluster are expected to be in operation.

Overall, the projects expect to capture around the equivalent of 26 million tonnes of CO_₂ by the end of 2030, reaching almost 50 million tonnes of CO₂ captured by 2032. The share of CO₂ captured by source in the projects is presented in Figure 27. The main source of captured CO₂ is the cement and lime industry. Regarding its final destination, 89 % of the captured CO₂ will end up in permanent storage sites, while 11 % will be used to produce synthetic fuels.

In addition to avoiding CO₂ being emitted into the atmosphere thanks to the capture technologies, approximately 0.8 million tonnes of the captured CO₂ per year will contribute to generating net carbon removals. These net carbon removals (or negative emissions) originate from capturing biogenic CO₂ from the biomass-based combined heat and power plant in the project Beccs Stockholm. Additional negative emissions, amounting to at least 0.6 million tonnes of CO₂ equivalent per year, should be generated from the organic fraction of refuse-derived fuels used in two cement plants. At least 1.4 million tonnes of CO₂ equivalent per year will be eligible for certification through the EU voluntary framework for high-quality carbon removals. This amounts to approximately 11 % of the total CO₂ to be captured and stored annually by the projects.

Regarding capture technology deployed, post-combustion technologies are the most widely used, with 10 projects employing cryogenic processes and two using amine-based CO₂ capture processes. Project Beccs Stockholm implements a post-combustion hot potassium carbonate technology, previously demonstrated at their on-site pilot-scale plant. Additionally, projects such as C2B and GeZero use second-generation oxyfuel technologies, while project CFCPILOT4CCS employs an innovative approach using carbonate fuel cells to capture CO₂ from industrial streams.

CO₂ transport

Captured CO₂ not intended for use on site must be compressed for transport by pipeline, ship, barge or rail. Most projects rely on the deployment of CO₂ transport networks. CO₂ export terminals or hubs located in ports enable the long-distance transport of large volumes of CO₂ via dedicated vessels. Part of this infrastructure is supported by CEF Energy (³³). Currently, four CEF-supported infrastructure projects will enable the transport of CO₂ via pipelines and the export of CO₂ captured in five Fund projects, contributing to the creation of a full CO₂ value chain. These projects are located in Dunkirk, France, (CalCC and K6 connected to D’Artagnan CO₂ hub (³⁴)), in Antwerp, Belgium, (Kairos@C connected to Antwerp@C (³⁵)), in Rotterdam, in the Netherlands, (CFCPILOT4CCS connected to Porthos (³⁶)) and in Gdańsk, Poland, (GO4ECOPLANET connected to 4CCS Interconnector (³⁷)).

The ANRAV and Kairos@C projects have proactively developed transport solutions within their project scope by investing in infrastructure such as pipelines or ships. Specifically, Kairos@C will construct and operate vessels to transport liquified CO₂, and ANRAV will develop a pipeline infrastructure to transport CO₂ captured by the project and other emitters in the area.

Most CCU projects use CO₂ captured on-site at facilities like cogeneration plants, eliminating the need to transport CO₂. Projects like TRISKELION and GREEN MEIGA are examples of this approach. However, some projects rely on CO₂ transported from nearby external sources, using waterways or railways, as is the case for eM-Rhône.

More information about the location of Fund projects and synergies with the CEF-supported infrastructure can be found on the dedicated website ‘Industrial Carbon Management: Interactive Stories’ (³⁸).

CO₂ utilisation

The portfolio includes nine projects that utilise captured CO₂ from various sources, such as cement production, biomass combustion and other industrial processes, to create either fuels or materials. A group of projects, including GREEN MEIGA and TRISKELION, utilises CO₂ and renewable hydrogen from electrolysers to produce synthetic methanol as a green chemical or maritime fuel. Other projects like AGGREGACO2 or CO2ncrEAT focus on producing cement-free building materials and carbon-negative aggregates for the construction materials sector.

CO₂ storage

The NZIA requires CCS projects, including related capture and transport projects, be recognised as net-zero strategic projects to benefit from faster administrative, legal and permitting procedures. The regulation sets an annual EU injection capacity of at least 50 million tonnes of CO₂ to be achieved by 2030. The CO₂ volumes to be captured and stored by the Fund’s projects can achieve almost 25 % of this storage target.

The Fund supports three CO₂ storage projects. ANRAV and Silverstone will develop CO₂ storage sites within their project boundaries in addition to the capture and transport activities. ANRAV will store CO₂ permanently in the Bulgarian subsoil. At the same time, Silverstone will demonstrate a novel mineralisation technique of geological storage in basalt rocks, where the CO₂ reacts with the minerals and forms stable carbonate minerals. Coda Terminal focuses on developing CO₂ storage infrastructure to be offered to CO₂ emitters and demonstrates the mineralisation of stored CO₂ at a large scale; it also offers CO₂ transport via low-carbon propulsion ships to Iceland. The project’s commercial operation is planned for 2029, and the maximum storage capacity of three million tonnes of CO₂ per year will be operational from 2032.

All other Fund projects plan to contract storage capacity to operators outside the project boundaries. In most cases, transport services are also contracted out. For example, the CFCPILOT4CCS project is the Fund’s first project with secured storage capacity for its relatively small volumes at the port of Rotterdam CO₂ transport hub and offshore storage (project Porthos under CEF Energy) in the Netherlands. The rest of the projects capturing CO₂ for permanent storage (14) have a total storage demand of 11.2 million tonnes of CO₂ equivalent per year by 2030 (Figure 29). For these projects, storage capacity still needs to be contracted or developed.

CHALLENGES AND LESSONS LEARNED

2024 has marked significant progress for the net-zero strategic projects of this cluster, especially with the launch of the industrial carbon management strategy. Frontrunner projects have considerably advanced in the preparatory activities necessary to achieve FC, and they benefited from the experience and collaboration with ongoing CO₂ projects of common interest supported by the CEF via thematic discussions held during the knowledge sharing activities organised by CINEA. The CEF and Fund projects reached significant milestones in 2024 and demonstrated the importance of collaboration between national governments and private actors in deploying CO₂ networks in the EU. Significant milestones reached in 2024 include the approval of state aid from the Swedish government to Beccs Stockholm and its planned collaboration with the CEF-funded Northern Lights project under its phase two expansion.

In the upcoming years, several challenges must be overcome for ICM projects to advance. These challenges can be divided into two main categories: challenges related to the timely availability of CO₂ storage sites and associated transport infrastructure, and challenges related to the viability of the business case.

The main challenges encountered by projects capturing CO₂ for permanent storage are delays in developing CO₂ hubs and transport infrastructure, and the limited availability of CO₂ storage sites on the market within their relevant time frames. The Porthos project is currently the only storage site in the EU/EEA with a CO₂ storage permit, and it is due to enter into operation before 2030. The imbalance between storage demand from planned capture projects and the availability of operational injection capacity significantly impedes market growth and increases uncertainty around storage costs and the complexity of contractual risk-sharing discussions between parties across the value chain. Timely operational availability of storage capacity at reasonable prices and access to CO₂ storage sites are of utmost importance if these projects are to reach their full potential. Therefore, fulfilling the EU 50 million tonnes per annum injection capacity target by 2030 is critical.

Even where the CO₂ storage site is developed within the project boundaries, projects face notable challenges, particularly regulatory constraints. Projects that develop CO₂ storage sites within their project boundaries face challenges in applying the CCS directive provisions and promptly addressing permitting needs for CO₂ storage sites.

In April 2024, the Commission established a permanent Expert Group on the Geological Storage of Carbon Dioxide (³⁹), bringing together the competent permitting authorities for the ICM project of all Member States and EEA countries. The three meetings of the expert group in 2024 focused on the implementation of the EU objective of storing 50 million tonnes of CO₂ annually in accordance with Regulation (EU) 2024/1735. Since 2022, the work of the expert group has been building on best practice sharing between permitting authorities during four meetings of the preceding informal Exchange Group of the CCS Directive (⁴⁰).

In the Netherlands, a CO₂ storage permit has already been issued. CO₂ storage permitting remains a first-of-a-kind activity in most Member States for managing authorities and prospective CO₂ storage site operators, raising significant permitting challenges. This becomes even more important in the context of the NZIA, which introduces the requirement for Member States to facilitate and speed up permitting processes for net-zero projects, including CCS. Public perception has been another important challenge faced by storage operators. Public perception can strongly impact the permitting process and poses a significant risk of delaying it. Projects are implementing significant public communication activities to inform the public about the benefits and safety of CO₂ storage technologies. Finally, agreeing with potential customers on the supply of sufficient volumes of captured CO₂ is a market challenge that storage developers face to reach a final investment decision. This is particularly difficult for sites with higher transportation costs.

In addition, several capture projects have been confronted with a significant increase in CAPEX and operating expenses since the signature of the grant agreement, putting the business case at risk and leaving a significant cost gap for a successful FC. These projects are conducting cost-optimisation analyses or exploring alternative funds and national schemes to supplement the Fund, such as the carbon contracts for difference.

Uncertainties around CO₂ specifications also add substantial costs to the investments. Excessively tight CO₂ specifications significantly increase capital investments, highlighting the importance of setting CO₂ standards that balance costs, liabilities and safety risks associated with the different levels of purity of CO₂.

Similarly, projects utilising captured CO₂ also encounter significant technical and market challenges: firstly, scaling up capabilities to reach sufficient production volumes, and secondly, achieving the high price premium needed to compensate the higher production costs. One of the main challenges remains the incentives for the different off-takers (chemicals, transport and materials) to pay for the low-carbon products.

Furthermore, projects generating net carbon removals faced difficulties in monetising the generated negative emissions. The EU ETS directive does not currently cover industrial carbon removals. Since the EU ETS does not recognise negative emissions, investment decisions for capturing and storing biogenic and atmospheric CO₂ emissions (BECCS and direct air carbon capture and storage) mainly rely on revenues from state subsidies or voluntary carbon markets. The EU-wide voluntary framework for the certification of high-quality carbon removals, which entered into force in December 2024, is an important step towards improving the business case of such projects.

In general, all Fund projects are frontrunners that deploy first-of-a-kind carbon management solutions at industrial scale, encountering several implementation challenges that the Commission has proposed to address in the industrial carbon management strategy. The proposed measures include exchanges and structured synchronised cooperation between public and private entities at the EU and the Member State level, to ensure that regulatory and market prerequisites for project development are in place as soon as possible, and to secure investment decisions.

5.4. Renewable energy

PROJECTS WITH A RENEWABLE ENERGY GENERATION COMPONENT

The renewable energy cluster comprises 22 ongoing projects with total funding from the Fund of EUR 742 million and a total CAPEX of around EUR 3.9 billion. The cluster is composed of 12 small-scale and 10 large-scale projects. Most projects (17) focus on manufacturing or deploying innovative solar and wind energy technologies (Figure 31). Other sectors covered in this cluster are geothermal energy, ocean energy and projects using RES that are not included in Annex I of the EU ETS directive (e.g. for the propulsion of ships). For all sectors combined, there are eight manufacturing projects in comparison to 14 deployment projects. Projects are located in 13 countries, with the strongest representation in France, Spain, Germany and Norway.

By the end of 2024, seven projects had successfully reached FC: three related to solar industry manufacturing (SHEEFT, HELEXIO line, TANGO), one small-scale solar deployment project (AGRIVOLTAIC CANOPY), one pilot and one small-scale wind energy project (HIPPOW, SustainSea) and one large-scale geothermal project (EAVORLOOP). One project has entered into operation, namely AGRIVOLTAIC CANOPY in France. Most projects are expected to reach this milestone between 2025 and 2027.

The biggest impact expected for GHG emissions avoidance reduction within this portfolio comes from the eight manufacturing projects, both large and small-scale (Figure 32 and Figure 33). Manufacturing projects will lead to the implementation of much larger amounts of RES than deployment projects. Unlike projects focusing on a single installation, these manufacturing projects will enable the deployment of several renewable energy systems.

Manufacturing projects

Eight projects aim to manufacture components for renewable energy production technologies. Seven of these projects are related to solar PV production, while one will produce a component for the wind industry.

PV manufacturing projects in the portfolio span the entire PV value chain. The energy production expected from the four large-scale PV manufacturing projects represents over 99 % of the total energy production foreseen from this cluster. Recently, two small-scale PV manufacturing projects were added to the portfolio. Project SHEEFT consists of a 100 MWp (megawatt peak) manufacturing line in France making lightweight solar modules for large building rooftops with low weight-bearing capacities. Project GEN2HU consists of a PV-tile manufacturing line in Hungary based on cutting-edge technology for residential applications. The aggregated PV module production capacity to be developed by the projects in the portfolio (including building integrated PV modules) represents about 20 % of the EU’s annual deployment needs of around 50 GW by 2030, while the NZIA aims for at least 40 % of the deployment needs to be manufactured in the EU.

On the other hand, the project RoboticRepair in Latvia aims to deploy 30 robotic systems for wind turbine generator rotor blade repairs, reducing wind turbine downtime.

Solar energy

Deployment projects aiming at solar energy production are all small-scale projects, often attached to larger concepts or existing facilities. For example, the project SUNAGRI Carbon Farm aims to ensure agricultural production, allowing farms to be self-sufficient thanks to solar energy. This will be demonstrated via a 5.3 MWp agrivoltaic installation in France. Another project, SUNBREWED, combines a 5.75 MWp concentrated solar thermal power plant with thermal energy storage to demonstrate the feasibility of using solar thermal energy with an innovative business model for the food and beverage industry.

Wind energy

By the end of 2024, the portfolio included five projects related to wind energy: two pilots (HIPPOW, NEXTFLOAT PLUS), one large-scale project (N2OWF) and two small-scale projects (NAWEP, SustainSea). These projects, mainly located in central and northern Europe, drive technological advancements by demonstrating unique technology or a combination of technologies. For example, the project HIPPOW in Denmark aims to demonstrate the world’s most powerful offshore wind turbine prototype.

Ocean energy

Two pilot ocean energy projects demonstrate wave energy technologies: one in Ireland and one in Spain. For example, project SEAWORTHY combines wave energy solutions (a 0.8 MW wave energy converter) with other renewable energy solutions (a 4.3 MW wind turbine), an electrolyser (1 MW) and incorporates hydrogen energy storage (48 MWh) and a fuel cell capacity of 1.2 MW.

Use of renewables outside of Annex I

Projects in this sector aim to use renewable power outside of the scope covered by Annex I of the EU ETS Directive. For example, the small-scale project Solvent2Energy in the Netherlands converts waste solvents from the flexographic printing industry into biogas through a bio-treatment process.

Geothermal energy

The large-scale project EAVORLOOP in Germany aims to produce renewable energy using deep geothermal heat for district heating and electricity production.

CHALLENGES AND LESSONS LEARNED

Delays in project implementation negatively impact negotiations with suppliers and off-takers, create uncertainty for investors and may increase CAPEX. Sometimes, these delays put the projects at high risk. The main reasons for delays in projects with a renewable energy component are related to issues with permitting, supply chain disruptions and access to financing.

Lengthy, complex and multiple permitting procedures, often with different rules across Member States, affect the project implementation. For example, two projects focused on airborne wind energy production, developing similar technologies in different Member States, were asked to follow very different permitting procedures. The first project was requested to follow permitting procedures under drone legislation, without undue complications. The second project required different levels of authorisation: one related to wind turbines and another related to flying zones from aviation and military authorities. The project faced significant delays and a high increase in costs.

The implementation of very innovative components requires, in some cases, specific permitting procedures that still need to be created, while in other cases, the legislation is evolving. This is the case, for example, for using innovative fuels in offshore wind farms, implementing offshore innovations or deploying airborne technologies.

Some of the mitigation measures proposed by the projects include engaging early with the relevant stakeholders and having a direct, open dialogue with the relevant local, regional and/or national authorities. Performing environmental impact assessments for innovative technologies helps with the permitting procedures and to deal with local communities’ reluctance towards the respective technologies.

Other solutions proposed by the projects to face permitting challenges include the creation and use of regulatory sandboxes, the establishment of clear, coherent guidelines from local and regional permitting authorities, the creation of redress mechanisms at national level to address and resolve decision inconsistencies and the organisation of training on permitting procedures for the relevant stakeholders.

The challenges to achieving FC included securing a location (wind projects), supply chain disruptions, high energy and material costs, inflation and difficulties securing funding sources.

The European PV manufacturing industry faces difficulties securing financing and off-take contracts. The viability of business models for EU manufacturing is under high pressure. There is a cost efficiency advantage for products from non-EU countries caused by economies of scale, better access to subsidies and issues with patent infringements. Additionally, global overcapacity and implementing tariffs in the US markets has worsened the situation, pushing EU market prices further down. The current level of uncertainty and prices offered by non-EU competitors threatens the remaining EU manufacturers’ survival. On top of this, banks financing deployment projects require developers to secure PV modules from well-established companies, making it even harder for new entrants to access the utility market. Finally, acquiring and upgrading machinery and tools for PV manufacturing from European sources compared to non-EU suppliers is more expensive and requires longer lead times, making it more difficult to foster a local solar manufacturing ecosystem.

Some proposed mitigation strategies include developing higher-quality products at premium prices and products for niche markets, where aligning the product to the specific market requirements enables a unique selling point.

PV projects have proposed several strategies to policymakers to level the playing field for solar PV production in the EU. These include using trade defence instruments against low-cost imports from non-EU countries, simplifying taxation policies, promoting environmentally and socially responsible practices in manufacturing, ensuring EU supply security through non-price procurement or public funding criteria and implementing certification requirements, which could be facilitated by a product-specific digital passport. Such a passport would enable consumers to choose between sustainable, high-quality products and low-cost alternatives.

Finally, some projects commented on the difficulties of finding a highly specialised workforce. They underline the importance of engaging with universities and academia to exchange ideas on ways to train the required skilled workforce and foster the successful deployment of innovations.

5.5. Energy storage

PROJECTS WITH AN ENERGY STORAGE COMPONENT

The energy storage cluster includes 19 ongoing projects, 5 large-scale and 14 small-scale. These projects have a total CAPEX of around EUR 4.9 billion, with funding from the Fund of EUR 481 million. Located across 12 countries, these projects aim to advance and deploy technologies in battery manufacturing and recycling and energy storage solutions (including heat storage and grid energy storage). Most projects are implemented in France, Italy, Norway, Poland and Spain (Figure 36).

Figure 37 and Figure 38 show the expected cumulative GHG emission avoidance of the large-scale and small-scale projects respectively. 5 of the 19 projects are large-scale projects focused on establishing new battery manufacturing and recycling lines. These projects account for 96 % of the total CAPEX and 70 % of the expected GHG emission avoidance in the cluster. All projects are still in the preparatory stages prior to FC, and their expected EIO is planned mainly for 2027 and 2028.

The avoidance of GHG emissions in small-scale projects is mainly expected from battery manufacturing, recycling and grid energy storage. Among the 14 small-scale projects, nine have already achieved FC, mainly those focusing on grid services. Notable examples include project PIONEER in Italy, which develops a dynamic storage system with second-life automotive batteries, storing excess power from a 30 MW solar PV plant to cover peak demand for a nearby airport facility. Additionally, two projects have already started their operations; for example, the CarBatteryReFactory project in Germany repurposes electric vehicle batteries for stationary energy storage. Most remaining projects are projected to begin operating by 2028.

Battery manufacturing and recycling

Projects in this category will contribute to establishing a fully integrated battery system lifecycle, covering manufacturing and recycling. Innovative technologies developed in these projects include producing synthetic graphite anode materials, creating battery cooling plates and generating battery-grade aluminium foil. Furthermore, some projects aim to repurpose electric vehicle batteries for stationary energy storage and recover critical raw materials necessary for battery production, thereby minimising waste and promoting a more circular and sustainable industry. For instance, project BBRT deploys a recycling plant that can process around 120 000 tonnes of end-of-life batteries per year, in which nickel, cobalt, lithium, copper and manganese will be recovered.

ENERGY STORAGE SOLUTIONS

Heat storage projects

Four projects in this category focus on developing advanced heat storage systems. Among the integrated solutions are mobile thermal storage systems that use heat recovered from an incinerator (project WH) and a thermal energy storage system employing granite rocks within steel tanks (project RockStore).

Another example of a heat storage solution is the project MITIGAT. This multi-energy smart grid project addresses the dual challenges of intermittent waste heat and intermittent renewable energy. This first-of-a-kind solution will create a hub that combines heat storage, the conversion of renewable electricity into heat and the conversion of waste heat into power to power a heavy industry plant, reducing its annual GHG emissions.

Grid energy storage projects

Several projects aim to optimise electricity demand and enhance energy storage flexibility. This includes implementing virtual power plant demonstrations (project GtF) to synchronise electricity demand with generation. Some initiatives incorporate bidirectional vehicle-to-grid (V2G) charging solutions, allowing flexibility to align demand with generation. This synchronisation helps shift consumption to off-peak periods and generates revenue in the energy market. Other projects develop controls to manage disconnection or load shifting based on local energy conditions. Additionally, some projects focus on managing excess solar energy, while another showcases an innovative energy-as-a-service business model (project InnoSolveGreen).

Most of these projects, which provide energy storage solutions for local and grid applications, use electricity as the energy carrier, taking advantage of its precise control, rapid energy transfer capabilities and compatibility with electronic devices. Through eight projects, these demand response solutions cater to prosumers and V2G charging stations.

CHALLENGES AND LESSONS LEARNED

Energy storage projects encountered significant challenges due to the varying permitting processes and regulatory frameworks across Member States. In countries with well-developed frameworks such as Germany, France and Belgium, regulations facilitated the operation of EV storage and recharging systems by clearly defining contractual relationships and enabling the efficient operation of multiple decentralised units. However, in Member States with less mature regulatory environments, projects prioritised the deployment of behind-the-meter solutions and implemented flexible demand response strategies to optimise energy consumption. These approaches allowed for improved fleet charging coordination and direct participation in energy markets, enhancing grid flexibility in real time.

A recurring lesson across multiple projects was the urgent need for European standardisation in metering and sub-metering systems. The absence of uniform standards hindered interoperability and access to real-time monitoring data, slowing the deployment of fast-charging V2G infrastructure. Addressing these gaps will be essential for ensuring seamless integration into energy markets, improving grid flexibility and enabling more efficient energy storage solutions, while also improving interoperability, real-time data access and the rollout of standardised V2G charging stations.

Recycling, incentives and business models also played a critical role in project success. To enhance the use of recycled metals in new battery cells, efforts focused on improving recycling processes to recover a high percentage of metal components while ensuring they remain suitable for battery manufacturing. Business models had to be tailored to the specific national context of each Member State. However, challenges persisted in defining viable approaches for thermal storage in district heating, V2G station deployment and end-of-life battery recycling. To mitigate financial risks and attract investors, projects relied on binding agreements with off-takers. They adopted special purpose vehicle ownership models that combined equity investments, debt facilities and EU grants, enhancing the financing structuring and improving investment clarity.

Additionally, second-hand battery reuse, end-of-life recycling and V2G projects minimised risks by fostering strong partnerships along their value chains, integrating banks, suppliers, logistics providers and intermediaries to ensure technological harmonisation and standardisation. Heat-as-a-service projects explored innovative business models by leveraging additional revenue streams from grid-stabilising heat pump operations. However, this approach increased the overall risk due to the dependency on specialised customers and technologies.

Supply chain disruptions posed another major challenge, leading to delays and increased costs due to equipment shortages. Lithium-ion battery manufacturing projects addressed these issues through advanced procurement planning, local sourcing and strategic stock management. Energy storage and virtual power plant projects are adapted to these constraints by redesigning systems without compromising performance. Adjustments included modifying storage power parameters, extending charge and discharge durations and integrating a mix of new and second-life batteries. These measures ensured cost-effectiveness, enhanced equipment availability and supported the transition to alternative systems for long-term sustainability.

The European battery market is experiencing low demand for electric vehicles, competition from cheaper imports and difficulties in terms of recycling batteries. As a result, several European battery producers are experiencing financial difficulties, workforce reduction and difficulty securing project funding. These challenges have already resulted in severe difficulties for two projects focusing on producing battery energy storage systems, one on battery recycling and one on battery cell production.

In 2025, the number of projects in the Fund’s portfolio is expected to increase with the addition of the projects selected from the IF23 Call and the auction launched at the end of 2024. Among the ongoing projects, 34 are expected to reach FC in 2025, and 20 are expected to enter into operation.

Following the closure of the evaluation procedure, in March 2025, the European Commission announced that 77 projects had signed their grant agreements under the IF23 Call (⁴¹). The total budget for these projects is EUR 4.2 billion. Moreover, in October 2024, six projects signed their grant agreements under the IF23 Auction for a total of EUR 694 million to be disbursed over 10 years (⁴²).

In 2024, a general call (IF24 Call) and a battery call (IF24 Battery) were launched. The IF24 Call, with a budget of EUR 2.4 billion, covers EIIs, renewables, energy storage, CCS, net-zero mobility, hydrogen technologies and buildings. The IF24 Battery, with a budget of EUR 1 billion, focuses on electric vehicle battery cell manufacturing. The submission deadline for both calls was April 2025.

Following the success of the IF23 Auction, which was the Fund’s first renewable hydrogen auction, the IF24 Auction was launched in December 2024, with an overall budget of EUR 1.2 billion (⁴³), of which EUR 200 million was earmarked for the maritime sector. In 2023, Germany activated the auction-as-a-service option. In 2024, Spain, Lithuania and Austria announced their participation. The submission of proposals closed in February 2025.

Projects selected under the IF24 Auction are expected to sign grant agreements by November 2025.

Before the revision of the ETS Directive in 2026, the Commission will launch a pilot auction with EUR 1 billion in 2025. The auction will focus on decarbonising heat from industrial processes, benefit companies across various energy-intensive sectors, including small and medium enterprises and mid-caps, and use national resources through the auctions-as-a-service mechanism (⁴⁴).

Finally, in the last quarter of 2025, the IF25 Call and IF25 Auction will be launched.

In 2025, knowledge-sharing events addressing challenges and sharing insights from projects in the EIIs, CCS and manufacturing of components for clean technologies sectors will be organised, along with an event dedicated to permitting.

Finally, the annual Cleantech Conference (⁴⁵) took place in April 2025. This year’s conference explored the Clean Industrial Deal and how Europe will manage investments for decarbonisation, specifically focusing on decarbonisation through innovation.

ANNEX 1 – EXECUTIVE SUMMARY OF PERMITTING ANALYSIS

Introduction

Permitting has been recognised as a central issue in EU policymaking. The REPowerEU (⁴⁶) initiative has provided specific recommendations on speeding up permit-granting for renewable energy and related infrastructure projects; projects deemed strategic under the Critical Raw Materials Act (⁴⁷) benefit from shorter permitting timeframes. Furthermore, most significantly for the Fund, the NZIA, which aims to boost the competitiveness of EU industry and technologies crucial for decarbonisation, places the reduction of administrative burdens and simplification of permit-granting processes as its first key pillar. Specifically, projects deemed strategic under the NZIA (⁴⁸) obtain priority status at the national level for all administrative processes and enjoy a faster permitting timeline (between 9 to 18 months depending on the project), and Member States are encouraged to establish Net-Zero regulatory sandboxes to test innovative net-zero technologies in a controlled environment. The act also envisages the creation of a single point of contact within each Member State. The importance of permitting has been confirmed by the bottom-up evidence emerging from the projects, which finance the deployment of low-carbon solutions on the ground in the EU. Namely, in the 2024 Annual knowledge sharing report of the Innovation Fund – De-risking innovative low-carbon technologies, permitting was found to be one of the main factors for delay in reaching FC or other important project milestones.

In view of the difficulties reported by the Fund’s projects with obtaining the necessary permits to operate, in November 2024 CINEA collected relevant information via a dedicated survey (⁴⁹) addressed to the Fund’s portfolio of running projects. The results of the survey, based on 90 replies, are summarised and analysed in this section. In addition, the importance of permitting in the transition is confirmed by the more recent EU policy initiatives, in particular the Clean Industrial Deal (⁵⁰) and the announced Industrial Decarbonisation Accelerator Act.

Permitting in the Innovation Fund portfolio

The results of the permitting survey clearly support the need to streamline permitting processes to increase the speed of industrial decarbonisation in the EU. The survey results further underline the conclusions of the 2024 Annual knowledge sharing report of the Innovation Fund – De-risking innovative low-carbon technologies regarding permitting.

With regard to the sample of replies, as shown in the figure below, the respondents belong almost equally to large- and small-scale calls. In terms of their maturity, 22 belong to the 2020 calls, 24 to the 2021 calls and 44 to the 2022 calls (reflecting the doubling of the budget available in 2022, and thus of the proposals approved for financing in that year). At the time of the completion of the survey, the grant agreements for the proposals shortlisted for financing under the 2023 calls were not signed yet.

Figure 42 shows that 90 % of the Fund’s projects who responded required permits. Only 9 projects reported that they do not need to work on permitting, while the vast majority reported that they needed to, either by submitting a request for new one(s) (32), updating existing one(s) (10) or both (39).

Types of permits and permitting authorities

The implementation of 90 Fund projects requires the management of over 700 distinct permits, an average of more than seven per project. The most required permits fall into four main categories: environmental, land use, operational and construction permits. Figure 43 shows the number of respondents that need at least one permit in each of the main categories.

NB: The bar numbers indicate how many projects needed at least one permit in each category.

Types of permits

Environmental permits, designed to mitigate the negative impacts that projects may have on natural resources, ecosystems and public health, are the most commonly required. Among them, the most recurrent are those required to obtain a general environmental authorisation, followed by the need to complete an environmental impact assessment and by water use permits.

The second most required category is operational and safety permits, which includes a very diverse range of requirements, including electricity production/generation licenses, exploitation authorisations, grid connection permits, health and safety certifications, fire permits and very specific permits such as those related to radar interferences. These permits are essential to ensure the safe and efficient operation of projects, and their acquisition is a critical step in the project development process.

Third is the category of land use/zoning permits, which play a vital role in the successful completion of projects, as they grant authorisation for the use of a specific surface area; followed by securing the various permits necessary to initiate and manage construction-related works. This category, construction permits, encompasses a wide range of permits, including those required for refurbishment, building, equipment installation, administrative authorisations, declarations of public utility and grading permits. Depending on the jurisdiction, they can be combined or issued separately. Among the transport permits, it is noteworthy that a substantial number of projects need a road transportation permit, generally related to the exceptional or hazardous nature of the goods transported. Finally, the additional local permits category covers those permits which do not belong to the main categories listed (e.g. an archaeological permit, compliance with landscaping constraints or an authorisation to fell mature trees).

The administrative level

Different permitting authorities are involved in the process from local and regional governments to national governments or government agencies. Figure 44 presents the authorities responsible for issuing permits for the surveyed projects – it is important to note that projects could select several options in reply to this question, if applicable. A large majority of the projects interact with the local government (83 %) and/or the regional government (73 %). In addition, government agencies (e.g. water authorities) and national governments are involved in the process for almost half of the projects.

Regarding their experience of interacting with permitting authorities, 79 % of projects reported the existence of processes in place for timely engagement with authorities before and during the permitting process, two thirds of them stated that a fully digital submission was accepted and 55 % that a fully digital interface was made available by the permitting authorities for the entire process. In addition, around a third of the surveyed projects (32 %) have benefited from the existence of a one-stop-shop / single point of contact and five projects reported that they benefited from a regulatory sandbox.

Regarding their relations with the public, slightly more than half of the respondents reported that as part of the permitting procedures they were required to engage with the local community and to hold a public hearing, and about a third had to engage with the public in order to acquire the necessary land or the required land access rights. It should be noted that while most projects did not report significant challenges in this area, those which did so considered it a serious challenge. In particular, 12 projects estimated that issues with land acquisition could have a very high impact on the permitting process.

Quantifying the effort

This section attempts to quantify the challenges projects face in obtaining the permits and to estimate the effort the respondents required to meet such challenges. The permitting process was recognised as a major challenge for project development, with two thirds of respondents ranking it among their top challenges. An additional 10 % went even further, identifying it as the single most significant hurdle in their projects, as illustrated in Figure 45.

Time required

Projects reported an average of 16.1 months from the time they started working on the permit preparation to the time the permits were filed with the relevant authority. Most projects (58 %) required (or expect to need) one year or less before completing the permit application, and about a quarter spent (or expect to need) between one and two years. Only 16 % projects needed more than two years from the start of the preparatory work to the submission of the permit (Figure 46(a)).

The time required for granting after permit applications were filed was similar, with an average of 16.4 months. The time reported by projects is presented in Figure 46(b). Similar trends are observed with most projects expecting to need no more than 12 months between the first permit filing and the finalisation of the process. However, almost 45 % of projects expected permits to take longer than the current NZIA strategic project requirement of one year.

In the case of the projects for which the permitting procedure was finalised (28 projects), it is interesting to compare the projects’ expectations with the actual time needed from the first submission of the permit to the permit being granted. Figure 47 shows the difference between the time projects required and the time they had estimated for the granting of their permission(s).

More than half of the projects required more time than they had anticipated, although most of them (12 projects) required less than one additional year to have their permits granted. Eight projects used the same amount of time as they had estimated, and only a few projects (5) could have saved time in the permission process. Within the group of 28 projects, all biofuels and biorefineries projects (3) and chemicals projects (3) needed more time for the permitting process than anticipated. It should be noted that, as the Fund’s projects participating in the survey were signed between late 2021 and late 2023, these results may be skewed towards projects with shorter permitting periods.

Cost and personnel needed

With regard to the personnel effort required, the respondents replied on average that around four full-time employees were involved in preparing permitting documentation and overseeing the permitting process. Considering that the average includes projects that reported zero employees involved (as logically the case when no new permits are needed), it is clear that the personnel effort required is significant. In fact, several projects also commented that they had to increase the personnel (internal or external) dedicated to permitting.

Regarding the cost required to obtain the necessary permits, it was not possible within the limited context of the survey to ask respondents to follow a common, but complex quantification methodology such as the EU standard cost model (⁵¹). However, the respondents were asked to provide a reasonable estimate; their replies range from a few thousand euro to over a million in cases where the project is at risk of being cancelled due to permitting issues, thus putting at risk the investments already made.

The most burdensome permitting procedures

In the survey, projects were asked to rank, among a list of permits, the top five permits in terms of the burden they caused. Each permit belongs to one of five main categories (environmental, land use, operational and safety, construction and transport).

The survey results presented in Figure 48 indicate that the environmental permit is overwhelmingly perceived as the most burdensome and time-consuming to obtain, consistently ranking first among a third of the respondents. This is followed by the construction permit and the environmental impact assessment completion permit which were frequently placed in the top three, highlighting their significant administrative complexity and lengthy approval processes. The air quality permit and grid connection permit complete the top five, suggesting that while they may not be as challenging as the top-ranked permits, they still require considerable effort to obtain.

From a different perspective, when analysing the pattern of choice for each of the top three most burdensome permits, the survey results highlight a slightly different proportion. The environmental authorisation/permit is the most frequently mentioned, with 58 % of respondents ranking it amongst the first three choices, as described in Figure 49. The construction permit follows, with 55 % of respondents selecting it as the first (18 %), second (18 %) and third (19 %) most difficult permit. The environmental impact assessment completion ranks as the most burdensome permit for 11 % of respondents and appears as the second choice for 18 % of respondents and for 2 % as the third, totalling almost a third (31%) of respondents that consider it as one of the top three most burdensome.

Identifying the causes

Projects were asked to identify the main challenges related to the permitting procedures in their own experience. The results are illustrated in the table below. It emerges clearly that the scale of the effort required is in itself a root cause of the difficulties in the permitting procedures. In particular, projects reported as the most common challenge the amount of time needed, followed by the number of authorities with which they must interact. Similarly, also the complexity of conducting an environmental impact assessment and the high number of documents required suggest that a very substantial effort is required.

Table 2. Main challenges related to permitting procedures identified by respondents.

However, a more attentive analysis, combined with the qualitative feedback provided by the respondents, suggests that the sheer amount of the work to be performed is only a partial explanation. Additional important factors emerge.

First, the interdependency of different permitting procedures and the need to work sequentially (i.e. the need to obtain a permit before starting the procedure to obtain another) can cause delays and have a chain effect on the project development timeline. A good example of this are land use permits, which play a vital role in the successful completion of projects, as they grant authorisation for the use of a specific surface area. Many of the other permits discussed are contingent upon obtaining land use permits, which are often intertwined with environmental authorisations; this can create a sequential dependency. This means that the permits cannot be processed simultaneously, as the outcome of one may impact the other. Similarly, other authorisation processes are also subject to interdependencies, which can limit opportunities for streamlining and expediting the permitting process due to the need to wait for preceding approvals.

Importantly, permitting issues that lay outside of the boundaries of an Innovation Fund project can nevertheless impact it. Namely, almost half (47 %) of the respondents stated that the success of their project depends on activities or infrastructure that require permits but are outside of the project scope. The most common case reported consists of power supply or distribution issues outside the scope of their own project, such as the building of a high voltage power line or a connection to the grid. In addition, the success of several projects is dependent on the timely completion of infrastructure they are not involved in, such as the laying of pipelines to transport CO₂ or hydrogen, or the construction of a plant for the off-taker of their product. Permitting issues affecting these ‘external’ activities can have a potentially strong impact on the timeline, or even on the viability, of some of the Fund’s projects: 23 projects (26 % of the sample) reported being subject to a potentially very high impact of permitting issues outside their control, while another 10 reported a high impact. This fact, illustrated in Figure 50, indicates clearly that the transition to a zero-emissions economy needs a systemic change with regards to permitting in industry.

Most significantly, it emerges clearly that many of the issues reported are due to the novelty of the solution proposed. Over 40 % of the respondents identified as a challenge the fact that the novel nature of their operations does not fit well into the existing permitting procedures, almost a third cited the lack of existing legislation applicable to them, and the lack of expertise/human resources in the permitting authorities – cited by 44 % of respondents – is also often related to the novelty of their solution.

Specifically, the fact that the project set up is a first-of-a-kind can have an impact on the permitting procedure. About 64% of the projects in the survey consider themselves to be first-of-a-kind for the permitting authorities. When asked to assess the institutional capacity of the permitting authorities in evaluating their projects, over a quarter of them evaluated it as low or very low (Figure 51).

In addition, as reported above, the challenge can originate from the lack of a well-defined permitting procedure for a new solution, or more generally of specific legislation. For example, the permitting procedures for existing technologies are often based on detailed regulations and well-defined parameters. New technologies, for instance using oxyfuel combustion instead of air combustion in a cement kiln, can struggle as the procedures are based on the Best Available Technologies (BAT) parameters of the traditional solution, which do not always correspond well with the parameters of the new solutions. Specifically, multiple hydrogen projects report having to operate without the existence of ad hoc legislation, which forces them to apply for permits by adapting the regulations developed for other sectors; this adds to the complexity of the process. For projects introducing new circular processes and valorising hitherto unexploited waste streams, the challenge often consists of the lack of harmonised standards and the different interpretation of rules at the national and the regional level. In particular, the end of waste regulations and the classification of materials as by-products are reported as being implemented differently across the EU, which causes difficulties in obtaining the necessary authorisations and permits to source, process or market the material.

Lessons learned

As detailed above, permitting challenges are often underestimated in terms of effort and time. Projects reacted to such challenges in several ways.

The most common way projects responded to permitting challenges (23 cases) was by devoting more effort to their interactions with the authorities. This was not limited to making interactions more frequent, but also consisted of providing information in advance to anticipate possible concerns on the part of the authorities and organising coordination meetings involving all the different institutions involved. Often, projects increased the workforce dealing with permitting; in 10 cases they devoted additional and/or more experienced employees to permitting, while in 14 cases they hired external specialists. Interestingly, in the latter case the specialist consultants were technical experts in the relevant fields, along with legal and specialised permitting experts. Less frequently, projects revised their permitting approach or engaged with similar projects to share information and best practices. In some cases, where the problem was the difficulty of proving their technology’s worth to the authorities, they invested in the collection of additional data and measurements, a solution they deemed effective, but costly.

Projects were also encouraged to provide suggestions to improve the permitting procedures, and to identify the good practices they encountered.

A key suggestion, supported by numerous projects (14), is to increase the capacity of the permitting authorities by providing them with more resources in terms of personnel, expertise or both. A recurrent situation emerging from the survey is that while the national legislation sets an adequate timeline for granting permits, the experience on the ground can be that ‘authorities … do not have sufficient resources to meet the required timelines for permissions’.

Several projects (13), while calling for shortening the ‘time to permit’ in general terms, also provided ideas about how to do so, suggesting, for example, agreeing with the authorities a time plan from the start of the project, or specifying a maximum time after which the request has to be considered as granted. A substantial number of projects (11) advocated a special regime for projects which are either pilot projects or key projects for decarbonisation. This regime could consist of a regulatory sandbox or a similar special permitting regime for very innovative and pre-commercial projects, or of a priority system for projects which can prove to be strategic in terms of decarbonisation or other EU policy priorities. Importantly, this request chimes well with the positive experience reported by five other projects, which benefited from being recognised as strategic, thus enjoying priority status and/or administrative support to obtain the necessary permits.

A substantial number of projects (13) suggested simplifying the interaction with the authorities in a number of ways. Most commonly advocated was better coordination among the relevant institutions, either via the introduction of a one-stop shop / a single point of contact, or by enhancing the institutional coordination, for instance by appointing a focal office or a project permitting manager so that projects can interact in a more structured manner with the different authorities. In addition, the introduction of more flexibility (e.g. allowing limited design changes without requiring the restart of the procedures or starting procedures with some details to be provided later) was also recommended (five cases), as was favouring parallel permitting procedures rather than sequential ones (three cases) to reduce the overall time required.

Finally, the digitalisation of the procedures is well advanced: full digital submission is already available to over 60 % of projects, while about half of them report that a fully digital interface is made available by the permitting authority for the entire process. A common recommendation by the participants is to further digitalise the procedures, by making digital submission available where currently it is not, but also by digitalising all correspondence, eliminating paper copies and more generally pushing for a fully digitalised process.

Table 3. Summary of the main challenges and the solutions identified

Conclusion

The results of this survey are clear: permitting is a major issue in the deployment of innovative low carbon solutions in terms of the scale, complexity and length of the efforts projects require to acquire the necessary permits to operate. The main takeaway messages from the survey are the following.

• Permitting requires very substantial efforts by most Innovation Fund projects participating in the survey, with an average of seven permits needed per respondent. Two thirds of them consider it a top challenge and 1 in 10 consider it the main challenge.
• Complexity in obtaining permits is often increased by the interdependency of different permitting procedures within a project, but also by the frequent dependency on permits outside of the project’s scope (e.g. for infrastructure such as pipelines or power lines).
• Environmental permits are both the most frequently needed and the most frequently cited as the most burdensome and/or time-consuming.
• Projects deploying first-of-a-kind solutions face additional hurdles, as their technologies often do not fit well into the existing framework.
• Increased capacity of the authorities, more flexibility and greater digitalisation, along with a special permitting regime for pilot or strategic projects are identified by the respondents as potential solutions.

The feedback from projects suggests that the attention given to streamlining permitting for decarbonisation projects by policymakers is well justified, and that relevant policy efforts at the EU level are well-targeted. Relatively new initiatives such as the streamlining of permitting for strategic projects under the NZIA, the flexible approach to permitting of new technologies of the Revised Industrial and Livestock Rearing Emissions Directive (IED) (⁵²) or the multiple workstreams under the amended Renewable Energy Directive are too recent to impact on the survey results, but appear well in tune with the needs that emerged in the survey. Future analysis should be used to quantify the impact of these measures. The results of this survey will support streamlining efforts, by feeding into the coming Industrial Decarbonisation Accelerator Act, which under the Clean Industrial Deal will ‘propose concrete measures to address permitting bottlenecks related to industrial access to energy and industrial decarbonisation’.

ANNEX 2 – ASSIGNMENT OF THE INNOVATION FUND PROJECTS TO THE CLUSTERS

* Calculated according to the relevant GHG methodology (tonnes CO₂ eq).

More information about Innovation Fund projects is available in the CINEA dashboard:

https://europa.eu/!8gQ67m

ABBREVIATIONS

Endnotes

(¹) A sandbox is a framework that allows companies and start-ups to test innovative products, services, or business models in a controlled environment, under the supervision of a regulatory authority.

(²) Directive (EU) 2023/2413 – Renewable Energy Directive: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A32023L2413&qid=1699364355105

(³) Financial close is the moment in the project development cycle where all the project and financing agreements have been signed and all the required conditions contained in them have been met.

(⁴) Entry into operation is the moment in the project development cycle where all elements and systems required for operation of the project have been tested and activities resulting in effective avoidance of greenhouse gas emissions have commenced.

(⁵) Energy-as-a-service is a business model where customers receive comprehensive energy solutions, including supply, management, and optimisation, via a subscription or performance-based contract, without needing to invest in or manage the energy infrastructure themselves.

(⁶) See the Model Grant Agreement (Article 16 and Annex 5): https://ec.europa.eu/info/funding-tenders/opportunities/docs/2021-2027/innovfund/agr-contr/mga_innovfund_en.pdf.

(⁷) The energy-intensive industries in the scope of the Fund’s programme follow Annex I of the EU ETS Directive, including sectors such as refineries, iron and steel, non-ferrous metals, cement and lime, glass, ceramics and construction materials, pulp and paper and chemicals.

(⁸) The granting authority is the European Climate, Infrastructure and Environment Executive Agency.

(⁹) Knowledge sharing closed-door knowledge sharing workshops included:

• 2 October 2024, The CCS Value Chain workshop by the Innovation Fund (workshop summary, Commission presentation, participant presentation);
• 21 March 2024, Knowledge sharing workshop on Renewable Energy Value Chain – Key takeaways to strengthen the renewable energy value chain in Europe;
• 28 November 2023, Knowledge sharing workshop on CCS – Realising opportunities along the value chain (summary, presentations and slide pack: Capture, Transport and Storage);
• 10 October 2023, Knowledge sharing workshop on energy storage – Key takeaways and best practices to reach financial close (summary);
• 19 September 2023, Knowledge sharing workshop on hydrogen – Main challenges in reaching financial close and ways to tackle them (summary);
• 30 March 2023, The emerging EU CO₂ transport and storage market (summary, presentations and background documents);
• 15 September 2022, Main challenges in reaching financial close and ways to tackle them (summary, presentations);
• 15 February 2022, Knowledge sharing workshop on CCS directive – Innovation Fund and projects of common interest (summary).

(¹⁰) In the Fund calls launched between 2020 and 2023, a small-scale project means a project with CAPEX between EUR 2.5 million and EUR 7.5 million at the time of application, while a large-scale project (including large-scale pilot demonstration project) means a project with CAPEX above EUR 7.5 million at the time of application.

(¹¹) In 2023, the European Commission launched the IF23 Auction, the first EU-wide auction for the production of renewable or RFNBO hydrogen: https://climate.ec.europa.eu/eu-action/eu-funding-climate-action/innovation-fund/calls-proposals/if23-auction-renewable-hydrogen-production_en.

(¹²) As per the applicable Fund methodology for GHG emission avoidance calculation.

(¹³) Eligible countries with no funding from the Fund are Estonia, Liechtenstein, Luxembourg, Malta, Romania and Slovakia.

(¹⁴) Innovation Fund progress report 2022 – Report from the Commission to the European Parliament and the Council on the implementation of the Innovation Fund in 2022: https://op.europa.eu/en/publication-detail/-/publication/573130fe-e024-11ee-a5fe-01aa75ed71a1.

(¹⁵) Horizon 2020: https://research-and-innovation.ec.europa.eu/funding/funding-opportunities/funding-programmes-and-open-calls/horizon-2020_en.

(¹⁶) 7th Framework Corner for Research: https://ec.europa.eu/commission/presscorner/detail/hu/memo_16_146.

(¹⁷) LIFE Programme: https://cinea.ec.europa.eu/programmes/life_en.

(¹⁸) Connecting Europe Facility: https://cinea.ec.europa.eu/programmes/connecting-europe-facility_en.

(¹⁹) European Maritime, Fisheries and Aquaculture Fund: https://oceans-and-fisheries.ec.europa.eu/funding/emfaf_en.

(²⁰) EIC Accelerator: https://eic.ec.europa.eu/eic-funding-opportunities/eic-accelerator_en.

(²¹) Interreg: https://ec.europa.eu/regional_policy/policy/cooperation/european-territorial_en.

(²²) Recovery assistance for cohesion and the territories of Europe: https://commission.europa.eu/funding-tenders/find-funding/eu-funding-programmes/react-eu_en.

(²³) Participants include beneficiaries, associated partners and linked third parties. For more information regarding the roles and attributions in the IF grants, please consult Article 7 of the Model Grant Agreement: https://ec.europa.eu/info/funding-tenders/opportunities/docs/2021-2027/innovfund/agr-contr/mga_innovfund_en.pdf.

(²⁴) Regulation EU 2024/1735 of the European Parliament and of the Council of 13 June 2024 on establishing a framework of measures for strengthening Europe’s net-zero technology manufacturing ecosystem and amending Regulation (EU) 2018/1724: http://data.europa.eu/eli/reg/2024/1735/oj.

(²⁵) European Commission: European Climate, Infrastructure and Environment Executive Agency, Przadka, A., Sales Agut, C., Bravo, B., Grosjean, M. et al., Annual knowledge sharing report of the Innovation Fund – De-risking innovative low-carbon technologies, Publications Office of the European Union, 2024: https://data.europa.eu/doi/10.2926/861952.

(²⁶) Permitting – Insights from Innovation Fund projects (publication planned for summer 2025): https://cinea.ec.europa.eu/programmes/innovation-fund/knowledge-sharing_en.

(²⁷) Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions – The European Green Deal (COM/2019/ 640 final, 11.12.2019): https://eur-lex.europa.eu/legal-content/EN/AUTO/?uri=celex:52019DC0640.

(²⁸) Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions – A hydrogen strategy for a climate-neutral Europe (COM/2020/ 301 final, 8.7.2020): https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=celex:52020DC0301.

(²⁹) The EIIs projects that dedicate their core activities to ICM are included in the EIIs cluster and are analysed in more detail in Section 5.3. EIIs projects that produce renewable and low-carbon hydrogen and use it in their processes are also included in the EIIs cluster and are examined in detail in Section 5.2. Additionally, the EIIs cluster also includes projects related to biofuels and biorefineries.

(³⁰) Originally referred to as H2GS, the project has been renamed as STEGRA.

(³¹) A range of 3–6 Mtpa is needed to meet the RED III targets for industry and transport, i.e. an average of 4.5 Mtpa.

(³²) Regulation (EU) 2024/1735 of the European Parliament and of the Council of 13 June 2024 on establishing a framework of measures for strengthening Europe’s net-zero technology manufacturing ecosystem and amending Regulation (EU) 2018/1724: http://data.europa.eu/eli/reg/2024/1735/oj.

(³³) CEF Energy: https://europa.eu/!nnqtpF.

(³⁴) D’Artagnan Dunkirk CO₂ hub: https://europa.eu/!xfcwX4.

(³⁵) Antwerp Liquid CO₂ Export Terminal studies: https://europa.eu/!D4dR6f.

(³⁶) Porthos CO₂ transport network: https://europa.eu/!QXYYqp.

(³⁷) Studies4CCS Interconnector: https://ec.europa.eu/info/funding-tenders/opportunities/portal/screen/opportunities/projects-details/43251567/101146907/CEF2027.

(³⁸) Industrial Carbon Management: Interactive Stories: https://webgate.ec.europa.eu/cineaportal/apps/storymaps/stories/9340ba62369c4f15bc99662070691120.

(³⁹) Expert Group on the Geological Storage of Carbon Dioxide: https://ec.europa.eu/transparency/expert-groups-register/screen/expert-groups/consult?lang=en&do=groupDetail.groupDetail&groupID=3924&Lang=EN.

(⁴⁰) Informal Exchange Group under the CCS Directive (Directive 2009/31/EC, Article 27(2): https://climate.ec.europa.eu/eu-action/industrial-carbon-management/deploying-industrial-carbon-management-europe_en#ccs-directive-expert-group.

(⁴¹) European Commission Press release of 11 March 2025: ‘Innovation Fund: €4.2 billion to support 77 cutting-edge decarbonisation projects for EU’s clean energy transition’: https://cinea.ec.europa.eu/news-events/news/innovation-fund-eu42-billion-support-77-cutting-edge-decarbonisation-projects-eus-clean-energy-2025-03-11_en.

(⁴²) European Commission Press release of 7 October 2024: ‘Winners of first EU-wide renewable hydrogen auction sign grant agreements, paving the way for new European production’: https://climate.ec.europa.eu/news-your-voice/news/winners-first-eu-wide-renewable-hydrogen-auction-sign-grant-agreements-paving-way-new-european-2024-10-07_en.

(⁴³) European Commission Press release of 3 December 2024: ‘Commission earmarks €4.6 billion to boost net-zero technologies, electric vehicle battery cell manufacturing and renewable hydrogen under the Innovation Fund’: https://ec.europa.eu/commission/presscorner/detail/en/ip_24_6184.

(⁴⁴) Questions and answers on the Clean Industrial Deal of 26 February 2025: https://ec.europa.eu/commission/presscorner/detail/en/qanda_25_551.

(⁴⁵) 2025 Cleantech Conference: https://cinea.ec.europa.eu/programmes/innovation-fund/2025-cleantech-conference-advancing-europes-clean-industrial-transformation_en.

(⁴⁶) https://ec.europa.eu/commission/presscorner/detail/en/ip_24_2489

(⁴⁷) https://single-market-economy.ec.europa.eu/sectors/raw-materials/areas-specific-interest/critical-raw-materials/critical-raw-materials-act_en

(⁴⁸) https://single-market-economy.ec.europa.eu/industry/sustainability/net-zero-industry-act/strategic-projects-under-nzia_en

(⁴⁹) https://ec.europa.eu/eusurvey/runner/InnovationFund_Permitting_Survey

(⁵⁰) https://commission.europa.eu/topics/eu-competitiveness/clean-industrial-deal_en

(⁵¹) Described in Better Regulation: Guidelines and toolbox: https://commission.europa.eu/law/law-making-process/better-regulation/better-regulation-guidelines-and-toolbox_en.

(⁵²) Revised Industrial and Livestock Rearing Emissions Directive (IED 2.0) – European Commission: https://environment.ec.europa.eu/topics/industrial-emissions-and-safety/industrial-and-livestock-rearing-emissions-directive-ied-20_en.

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