|European Union Carbon Market Glossary|
The Innovation Fund is a funding instrument set up for the revised EU Emissions Trading System (EU ETS).
The Fund will amount to about (the revenues of these sales depend on the carbon price) EUR 10 billion.
- market value of at least 450 million allowances at the time of their auctioning from 2020 to 2030,
The Innovation Fund will support, on a competitive basis, the demonstration of innovative technologies and breakthrough innovation in sectors covered by the EU ETS, including innovative renewables, carbon capture and utilisation (CCU) and energy storage (Report from the Commission to the European Parliament and to the Council, Report on the functioning of the European carbon market, COM(2018) 842 final, p. 10).
Projects in all EU Member States, including small scale projects, will be eligible.
The procedure for making the Innovation Fund operational started with a public consultation, which was carried out in the period 15 January 2018 - 10 April 2018.
The legal basis for the operation of the Innovation Fund is Article 10a(8) of the EU ETS Directive (Directive 2003/87/EC, as amended by the Directive 2018/410).
The said Article 10a(8) of Directive 2003/87/EC establishes the Innovation Fund and lays down general rules of the functioning of the Innovation Fund, namely, the source of the Innovation Fund revenues, the projects eligible for the Innovation Fund support, as well as the general rules for the disbursement of the support.
Moreover, Article 10a(8) specifies the criteria for the selection procedure and allows the complementary financing of the eligible projects to be provided by the Member States or the Union.
In addition, Article 10a(8) of Directive 2003/87/EC empowers the European Commission to adopt delegated acts to supplement the Directive concerning rules on the operation of the Innovation Fund, including the selection procedure and criteria.
This delegation has been exercised by the Commission Delegated Regulation (EU) 2019/856 of 26 February 2019 supplementing Directive 2003/87/EC of the European Parliament and of the Council with regard to the operation of the Innovation Fund.
The said Regulation establishes the rules necessary for the operation of the Innovation Fund while at the same time leaving some decisions to be made in the calls for proposals and in the contractual documentation.
The key vehicle to deliver the support through the Fund are grants - the Innovation Fund will cover up to 60% of the relevant costs (in line with Article 10a(8) of the EU ETS Directive).
The definition of additional costs accentuates the difference in costs and revenues compared to a conventional technology (which is also in line with the practice in EU state aid assessment and the NER 300 programme).
Small-scale projects are treated preferentially (by establishing a simplified definition of relevant costs).
The Regulation envisions the following structure of financing:
- up to 40% of the award provided as upfront funding at financial close (to de-risk projects),
- the remaining 60% of the grant provided according to the cash-flow needs of the project at specific milestones.
The two-phase application procedure is envisioned. The calls for proposals for the Innovation Fund will be organised centrally by the European Commission with the support of implementing bodies.
The Regulation also lays down the rules for reporting, monitoring, evaluation, control, and publicity.
Regular calls for proposals up to 2030 are foreseen, however, the Regulation does not set any timing in-between, thus enabling the necessary adaptations to demand and maturity of the projects.
The first call for proposals will be published in January 2020 (Commission Staff Working Document, Progress in Accelerating Clean Energy Innovation 2018, 9.4.2019 SWD(2019) 157 final, p. 17).
28 May 2019
Commission Delegated Regulation (EU) 2019/856 of 26 February 2019 supplementing Directive 2003/87/EC of the European Parliament and of the Council with regard to the operation of the Innovation Fund published in the OJ L 140,, p. 6–17
14 March 2018
Directive (EU) 2018/410 of the European Parliament and of the Council amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments, and Decision (EU) 2015/1814
15 January 2018
EU ETS Directive, Article 10a(8)
Directive (EU) 2018/410 of the European Parliament and of the Council of 14 March 2018 amending Directive 2003/87/EC to enhance cost-effective emission reductions and low-carbon investments, and Decision (EU) 2015/1814
|Last Updated on Friday, 05 July 2019 15:31|