Summary

• The European Commission has selected 77 projects across 23 European Economic Area countries for €3.4bn of potential Innovation Fund support.
• The selection covers industrial decarbonisation, clean technology manufacturing, critical raw materials, low-carbon energy, and pilot projects, including new nuclear and carbon removal applications.
• The Commission estimates 290 million tonnes of avoided emissions over the projects' first ten operating years, but grant agreements are not expected to be finalised until 2027.

The European Commission has selected 77 industrial and clean technology projects for €3.4 billion in potential funding, directing revenue from the EU’s carbon market towards manufacturing capacity, energy infrastructure, and technologies intended to reduce industrial emissions.

The projects span 23 countries in the European Economic Area and cover renewable energy, storage, industrial processes, critical raw materials, alternative fuels, and carbon management. Their selection follows an Innovation Fund call launched in December 2025, with demand for support considerably exceeding the money available.

The European Commission estimates that the selected projects could avoid the equivalent of approximately 290 million tonnes of greenhouse gas emissions during their first ten years of operation. That figure depends on the developments being completed and achieving their proposed performance, rather than measuring reductions already delivered.

The successful applicants have been invited to prepare grant agreements with the European Climate, Infrastructure and Environment Executive Agency, or CINEA. Those negotiations will determine final budgets, technical commitments, timetables, and legal responsibilities, with results expected in the first quarter of 2027.

Industrial investment extends beyond renewable generation

The funding call supports several different forms of industrial development, reflecting the challenge of reducing emissions while expanding Europe’s domestic capacity to manufacture equipment required for the energy transition.

Twelve large-scale projects have been selected, requesting approximately €1.58 billion in support. Another 17 medium-scale projects are seeking around €458 million, while 20 smaller developments account for approximately €124 million.

The division allows the programme to support projects with different financing requirements rather than directing its resources exclusively towards the largest proposed installations.

Twelve clean technology manufacturing projects have also been selected, requesting almost €895 million. These include proposals involving components for solar panels, heat pumps, electrolysers, and electric vehicle batteries, alongside a facility intended to produce rare earth permanent magnets.

Manufacturing capacity is relevant because Europe’s efforts to expand lower-carbon energy and transport systems depend on equipment and materials supplied through international industrial networks.

Locating additional production within Europe could reduce dependence on particular overseas suppliers, although a domestic factory may still rely on imported raw materials, specialist machinery, or technology licences.

The Commission has included six projects involving critical raw materials, linking the funding programme with its wider efforts to strengthen supply chains under the Net-Zero Industry Act and RESourceEU priorities.

These proposals extend into processing and recycling, where material availability can constrain the manufacture of batteries, magnets, and other components used across clean energy and industrial applications.

However, selection for funding does not establish that new production capacity is available or that existing import dependencies have been eliminated. Developers must still secure equipment, suitable sites, operating permits, and markets for the materials they intend to produce.

New technology carries different levels of risk

The programme has selected 16 pilot projects requesting approximately €394 million, with applications spanning aviation, maritime activities, hydrogen, chemicals, energy, and carbon management.

For the first time within this Innovation Fund selection, the portfolio includes a small modular nuclear reactor project and a direct air carbon capture and storage development.

Small modular reactors are intended to use reactor designs that could permit greater standardisation and different approaches to construction compared with conventional large nuclear facilities. Their eventual commercial performance will depend on licensing, engineering delivery, capital costs, and reliable operation.

Direct air capture aims to remove carbon dioxide from the atmosphere rather than capturing emissions directly from an industrial exhaust stream. The process requires energy and equipment to separate carbon dioxide from ambient air, with subsequent storage arrangements needed to deliver durable removal.

Both technologies illustrate the risks involved in financing projects before their commercial economics have been established. Support for early deployment may help generate operational evidence, but a grant award cannot itself prove that a technology will become competitive without public assistance.

Other selected applications build on technologies already used in industrial settings, although scaling them can introduce new technical demands. Large renewable fuel facilities, energy storage installations, and electrified manufacturing processes depend on feedstock availability, electricity prices, and reliable equipment supply.

The economic conditions facing such projects vary between countries, even where the same technology is being deployed. A process that performs competitively in one industrial region may face different costs elsewhere because of differences in power supply, transport, or local infrastructure.

Demand for funding exceeds the selection

The December 2025 call attracted 358 applications requesting €17.5 billion in grants, demonstrating substantial demand for investment assistance across Europe’s clean technology industries.

Only 77 projects have been selected for the €3.4 billion package. Another 84 proposals passed the assessment process but did not receive funding within the available allocation.

Both the successful applicants and those 84 qualifying projects are expected to receive the Strategic Technologies for Europe Platform Seal, a quality designation intended to help developers seek other public or private financing.

A further group of proposals remains eligible for Project Development Assistance, through which the European Investment Bank can provide technical and financial advice intended to improve their readiness for investment.

These arrangements acknowledge that an unsuccessful funding application does not necessarily indicate that a project lacks technical merit. Some proposals may meet evaluation requirements but compete against others that achieve higher scores or fit more closely within the available budget.

For developers, alternative financing can still be difficult to obtain. Technologies requiring large initial investments may face uncertain operating costs, unresolved permitting, or limited customer commitments, all of which affect lenders’ and investors’ willingness to provide capital.

The Innovation Fund is intended to share part of that risk rather than finance every aspect of the selected developments.

Carbon market revenue supports industrial investment

The programme draws money from the EU Emissions Trading System, under which covered organisations must account for their greenhouse gas emissions through allowances.

Revenue generated by the auctioning of allowances is used to support technologies that can reduce future emissions, linking the carbon pricing system with industrial investment.

The size of the fund ultimately depends partly on carbon market revenues. The Commission estimates that the Innovation Fund could draw approximately €40 billion from the system between 2020 and 2030, using an assumed carbon price of €75 per tonne.

Such estimates are not equivalent to a guaranteed annual funding allocation because the value of emissions allowances can change.

The programme’s evaluation process considers potential greenhouse gas reductions alongside innovation, project maturity, replicability, and cost efficiency. Those criteria are intended to distinguish developments with credible implementation plans from proposals whose environmental benefits remain largely speculative.

Nevertheless, the Commission’s selection remains one stage in the investment process. Project promoters must still agree the terms under which public funding will be provided and establish that the associated technical and commercial obligations can be met.

Large industrial developments also face risks beyond the financing agreement. Planning decisions, procurement delays, electricity connections, construction costs, and changes in customer demand can alter the viability of a project between selection and operation.

Contracts will establish what proceeds

The Commission expects the grant preparation process to conclude in the first quarter of 2027, providing greater certainty about the individual financial commitments and development milestones.

The latest selections would expand an Innovation Fund portfolio that the Commission says now comprises around 320 projects, with almost €17 billion in grants committed across the wider programme.

Those portfolio figures describe cumulative programme activity rather than facilities delivered under the October announcement. They should not be used as evidence that the 77 newly selected proposals are already constructing or operating their planned technology.

The Commission is also preparing another funding round for December 2026, including a proposed €1 billion topic supporting clean technology manufacturing and associated supply chains.

Europe has therefore established a substantial pipeline of projects seeking to reduce emissions and expand industrial capability, but the difference between selection and delivery remains significant.

For the 77 successful applicants, the immediate milestone is the completion of binding agreements. Construction progress, operating performance, and the emissions actually avoided will determine how much of the Commission’s projected benefit materialises over the following decade.