Commission Earmarks €4.6 Billion to Boost Net-zero Technologies, Electric Vehicle Battery Cell Manufacturing and Renewable Hydrogen Under the Innovation Fund

Today, in the first week of its new mandate, the Commission is stepping up its efforts to boost net-zero technologies that are key to ensure the competitiveness of European industry while meeting agreed climate goals. It is launching two new calls for proposals with a budget of €3.4 billion to accelerate the deployment of innovative decarbonisation technologies in Europe, including electric vehicles batteries. It is also launching the second auction of the European Hydrogen Bank to accelerate the production of renewable hydrogen in the European Economic Area (EEA) with a budget of €1.2 billion from EU funds, plus over €700 million from three Member States. Both calls for proposals and the auction are financed by the Innovation Fund, using revenues from the EU Emissions Trading System (ETS).

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All three calls include new resilience criteria to boost European industry. The batteries call and hydrogen bank auction will also include specific resilience criteria to protect Europe against dependency on a single supplier.

Boosting net-zero technologies and electric vehicle battery cell manufacturing across Europe

The two calls underscore the EU's commitment to bolster Europe's leadership and manufacturing capacity in innovative, cutting-edge, net-zero technologies, while pursuing the path to climate neutrality by 2050*.*

The general call for net-zero technologies worth €2.4 billion (IF24 Call) supports decarbonisation projects of different scale, as well as projects focusing on the manufacturing of components for renewable energy, energy storage, heat pumps and hydrogen production.

Projects that apply to the Net-Zero Technologies Call will be assessed based on their potential to reduce greenhouse gas emissions, degree of innovation, project maturity, replicability, and cost efficiency. Furthermore, for the first time under the Innovation Fund call for proposals, Member States will have the possibility to complement the Net-Zero IF 24 Call with national funding schemes. This new option, called ‘Grants-as-a-Service', allows the Member States to leverage on the Innovation Fund's evaluation process and streamlined State aid approval process. 

For the first time, a €1 billion call for electric vehicle battery cell manufacturing (IF24 Battery) will support projects that can produce innovative electric vehicles battery cells or deploy innovative manufacturing techniques, processes and technologies. Today's call is only one measure in a broader approach to mobilise investment in an area that is essential for Europe's success in the clean energy transition and its competitiveness. It supports companies in targeting investments in Europe with new technologies where advances are still being made. Multiple instruments are needed to overcome some of the economic barriers that the battery value chain in Europe, including its gigafactories, is currently facing. The Commission will continue to deploy instruments at hand and engage in new avenues, including in the short term, for addressing barriers to large-scale industrial scale up.

Also today, the Commission and the European Investment Bank (EIB) have initiated a new partnership to support investments in the EU's battery manufacturing sector. This partnership will see a €200 million top-up (loan guarantee) to the InvestEU programme from the Innovation Fund. The money will be directed to support innovative projects along the European battery manufacturing value chain to address financing challenges by enabling additional EIB venture debt operations over the next three years. 

Supporting the production of renewable hydrogen

Today, the Commission is also launching the second auction under the European Hydrogen Bank, via the Innovation Fund (IF24 Auction). It will allocate €1.2 billion from EU Emissions Trading System (ETS) revenues to support producers of hydrogen categorised as Renewable Fuel of Non-Biological Origin (RFNBO) located in the European Economic Area (EEA).

With a budget increased by €400 million compared to the first IF23 Auction, the new IF24 Auction will support projects for renewable hydrogen production regardless of the sector in which it will be consumed, with a dedicated budget of €1 billion; as well as hydrogen production in projects with off-takers in the maritime sector, with a dedicated budget of €200 million. 

The Commission is also offering an ‘Auctions-as-a-service' mechanism, which allows Member States to finance projects that had bid in the auction but were not selected for Innovation Fund support due to budgetary limitations. This enables Member States to use national funds to support projects on their territory without the need to run a separate auction at national level, reducing the administrative burden and cost for all parties. Spain, Lithuania and Austria have recently announced their participation in Auctions-as-a-Service this year, pledging up to €836 million in national funds to support renewable hydrogen production projects located in their countries.

Next steps

Project promoters for the net-zero technologies and battery calls have until 24 April 2025, 17:00 (CET), to apply to both Innovation Fund calls via the EU Funding and Tenders Portal. Applicants are strongly encouraged to attend the Info Day which will take place online from  17-18 December 2024. Successful applicants are expected to sign grant agreements by first quarter of 2026.

As regards the renewable hydrogen auction, bidders have until 20 February 2025 to apply via the EU Funding and Tenders Portal. In preparation for the application, project promoters are strongly advised to consult the call documents and the Questions and Answers section in the Portal,  as well as engaging soon with a financial institution concerning their completion guarantee.   Successful bidders will sign Grant Agreements within nine months after the call closure.

Background

With an estimated revenue of €40 billion from the EU Emissions Trading System between 2020 and 2030, the Innovation Fund aims to create financial incentives for companies and public authorities to invest in cutting-edge low-carbon technologies and support Europe's transition to climate neutrality.

The Innovation Fund has already allocated about €7.2 billion to more than 120 innovative projects through its previous  calls for proposals. The results of the IF23 Call boosted the total amount of support to €12 billion for over 200 projects.

It also allocated nearly €700 million of grants in support for 6 RFNBO hydrogen producing projects through the first auction. (IF23 Auction). In addition, the IF23 Auction also counted with €350 million contribution from Germany under the Auctions as a Service scheme.    

Quote(s)

 By investing more than €4.5 billion in clean technologies at the very beginning of the mandate, the Commission is showing its commitment to deliver on its decarbonisation objectives, and to support European industries’ competitiveness in key strategic sectors. The new resilience criteria for hydrogen and batteries will boost Europe’s industrial leadership and competitiveness while enhancing the EU’s strategic autonomy. 

Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition

 As promised, we’re already delivering for European citizens and businesses. We are investing €4.6 billion to back cutting-edge European projects in net-zero technologies, electric vehicles batteries and renewable hydrogen. Under the Innovation Fund, we’re putting revenues from the Emission Trading System to work, once again. 

Wopke Hoekstra, Commissioner for Climate, Net Zero and Clean Growth