ZEP recommendations for the Innovation Fund

The Zero Emissions Platform (ZEP) submitted a response to the EU call for evidence on evaluating the Innovation Fund‘s (IF) operation. ZEP commends the European Commission for its successes in advancing industrial carbon management. To enhance the impact of the IF on industrial decarbonisation efforts, ZEP offers recommendations for improving the Fund’s design so it better supports industrial carbon management deployment across the EU. ZEP also suggests actions the Commission can take to further support projects with IF funding.

Key recommendations

Preserve the funding model

Ensuring the Innovation Fund remains directly linked to EU Emissions Trading System (ETS) revenues under the European Competitiveness Fund is critical to safeguard long-term funding stability.

Instruments such as Auctions as-a-Service (AaaS) should be expanded to industrial carbon management and complement efforts to establish the Industrial Decarbonisation Bank. This would enable greater project deployment and fair regional access to funding.

Enable adaptive funding and transparent monitoring

Given the significant time gap between the Innovation Fund application and financial close, adjusted flexibility mechanisms could:

1. Help mitigate cost increases, particularly those caused by permitting delay,
2. Allow for reasonable changes to project timelines and design.

Enhanced transparency, by publishing detailed milestones of awarded projects, could help to support public oversight and progress tracking.

Assess the administrative burden for applicants

Streamlining documentation, simplifying financial modelling requirements, and improving transparency in evaluation criteria could help to reduce entry barriers while preserving the educational value of the application process.

Enhancing grant intensity, or exploring performance-based revenue support mechanisms, can help attract additional financing and improve the likelihood of reaching financial close.

Ensure Innovation Fund projects can access CO₂ infrastructure on time

Ensuring timely and safe permitting and development of CO₂ transport and storage infrastructure is essential to making the Innovation Fund work.

Cross-border coordination and alignment of permitting procedures should be encouraged to overcome permitting bottlenecks and meet the rapidly growing storage demand.

Assess potential risk-sharing mechanisms

Addressing financial and coordination risks is needed to ensure supporting infrastructure will be available on time.

The Innovation Fund could seek to provide risk-sharing mechanisms that have proven successful in the UK, as well as other instruments that can help de-risk CO₂ infrastructure investments, such as consortium-based bidding.

ZEP’s full feedback is also available on the European Commission’s public consultation portal.