EU Selects 77 Net-Zero Technology Projects for €3.4 Billion in Innovation Fund Support

The European Commission has selected 77 net-zero technology projects across 23 European Economic Area countries to receive €3.4 billion in funding support under the EU Innovation Fund. Announced on 19 October 2026, the investment will support industrial decarbonisation, renewable energy, clean technology manufacturing, energy storage and critical raw materials processing. The funding comes from revenues generated through the EU Emissions Trading System (EU ETS), which directs carbon market proceeds towards technologies intended to reduce greenhouse gas emissions.

According to the Commission, the selected projects could collectively avoid approximately 290 million tonnes of CO2 equivalent during their first 10 years of operation. The portfolio includes technologies at different stages of development, from commercial-scale industrial projects to pilot facilities. The latest selection also introduces the Innovation Fund's first small modular nuclear reactor and direct air carbon capture and storage projects, reflecting a wider range of technologies being considered for Europe's transition towards climate neutrality by 2050.

 

Industrial Decarbonisation Receives the Largest Share of Funding

 

The largest funding allocation is directed towards 12 large-scale projects requesting approximately €1.58 billion. These projects cover advanced low-carbon fuels, industrial carbon management, chemicals, iron and steel, aviation and critical raw materials. Another 17 medium-scale projects have been selected for around €458 million, targeting sectors including cement, glass, ceramics, maritime transport, hydrogen and energy storage.

A further 20 small-scale projects have been selected for approximately €124 million, covering technologies such as critical mineral recycling, ocean energy and alternative fuels. The distribution reflects the Innovation Fund's approach to supporting projects of different sizes, including industrial facilities that require substantial capital investment and smaller technologies seeking to demonstrate their commercial potential.

 

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Clean Technology Manufacturing and First-of-a-Kind Projects

 

Clean technology manufacturing accounts for 12 selected projects requesting almost €895 million. These investments will support the production of components such as heat pumps, solar panels, electrolysers and electric vehicle batteries. The portfolio also includes a rare earth magnet manufacturing facility. Across the overall selection, six critical raw materials projects will contribute to EU priorities under the Net-Zero Industry Act and RESourceEU Action Plan, which aim to strengthen domestic clean technology supply chains.

The remaining 16 projects fall within the pilot category, requesting approximately €394 million. These include technologies involving nuclear energy, direct air carbon capture and storage (DACCS), hydrogen, aviation, ocean energy and industrial processes. The inclusion of a small modular nuclear reactor and DACCS project for the first time broadens the fund's technology coverage. However, both remain subject to project development and implementation, and their inclusion does not establish that these technologies have already achieved commercial deployment at scale.

 

Funding Demand Exceeds Available Resources

 

The December 2025 Innovation Fund call attracted 358 applications requesting a combined €17.5 billion in grant support, substantially exceeding its original €2.9 billion budget. The call's published conditions allowed the available budget to be increased by up to 20%, subject to resources. All five funding categories were oversubscribed, indicating considerable demand from European companies developing industrial and clean energy technologies.

Beyond the 77 selected projects, another 84 proposals passed the evaluation process but did not receive funding from the available budget. Both groups will qualify for the Strategic Technologies for Europe Platform (STEP) Seal, a quality label intended to help projects attract alternative public and private investment. Additionally, 160 proposals that are not receiving grants remain eligible for Project Development Assistance from the European Investment Bank. This support provides technical and financial advice to help improve project readiness, although it does not guarantee future financing.

 

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EU ETS Revenues Support Industrial Climate Investment

 

The Innovation Fund uses revenues from the EU ETS to finance technologies that can contribute to Europe's emissions reduction goals. The Commission estimates that the programme could draw on approximately €40 billion in ETS revenues between 2020 and 2030. With the latest selection, the broader Innovation Fund portfolio encompasses around 320 projects and almost €17 billion in grant commitments, according to the Commission.

Projects are evaluated by independent experts against criteria including greenhouse gas reduction potential, innovation, project maturity, replicability and cost efficiency. The estimated 290 million tonnes of avoided emissions represents projected performance over the selected projects' first decade of operation, rather than verified reductions already achieved. Wopke Hoekstra, European Commissioner for Climate, Net Zero and Clean Growth, said, "These projects show that Europe’s innovators are turning climate ambition into industrial leadership."

 

Grant Agreements and Next Funding Round

 

The 77 selected project developers have been invited to begin grant agreement preparations with the European Climate, Infrastructure and Environment Executive Agency (CINEA). This process will establish final budgets, project schedules, technical deliverables and contractual obligations. The Commission expects to announce the results of these negotiations in the first quarter of 2027, meaning the selection does not yet represent completed grant agreements.

The Commission is also preparing another Innovation Fund call for early December 2026, including a €1 billion clean technology manufacturing category aimed at strengthening European supply chains. The latest selection demonstrates continued demand for public support in bringing low-carbon technologies to market. Its longer-term contribution will depend on projects securing final agreements, completing development and delivering the emissions reductions outlined in their funding applications.

 

Source: European Commission