Innovation Fund and Its Contribution to Sustainable Development Goals (SDGs)

Overview of the Innovation Fund

The Innovation Fund, launched its first calls in June 2020, and as of mid-2025, it has conducted 11 calls for proposals. It has awarded over €12 billion to more than 210 projects across the European Economic Area (EEA). Funded by revenues from the EU Emissions Trading System (EU ETS), the Innovation Fund is among the world’s largest funding programs dedicated to demonstrating innovative clean technologies.

Financial Scope and Strategic Importance

With an estimated overall budget of €40 billion for the 2020–2030 period, calculated using a carbon price of €75/tCO₂, the Innovation Fund plays a critical role in:

• Strengthening the EU’s competitiveness
• Supporting the transition to climate neutrality

This aligns directly with SDG 9 (Industry, Innovation and Infrastructure), SDG 7 (Affordable and Clean Energy), and SDG 13 (Climate Action).

Project Scope and Sectors Covered

The Fund has attracted thousands of applications across Europe, supporting projects in various sectors including:

1. Innovative low-carbon technologies and processes in energy-intensive industries
2. Industrial Carbon Management (ICM)
3. Innovative renewable energy technologies
4. Energy storage solutions

These projects contribute to SDG 9, SDG 7, and SDG 12 (Responsible Consumption and Production).

Funding Mechanisms

Initially, the Innovation Fund operated through regular calls for grants evaluated on criteria such as innovation potential, greenhouse gas emission avoidance, maturity, scalability, and cost efficiency.

In 2023, a second mechanism was introduced — competitive bidding (auctions) — providing fixed-price support for specific outputs like renewable hydrogen production. This mechanism accelerates the rollout of innovative low-carbon technologies already tested at smaller scales, further advancing SDG 7 and SDG 13.

Impact Beyond Financing

• De-risking early deployment to attract substantial private and public co-investment
• Facilitating knowledge sharing among Innovation Fund projects, industrial stakeholders, and future applicants

Funded projects are mandated to disseminate technical and operational insights to accelerate learning, replication, and innovation across the EEA. A dedicated knowledge-sharing webpage supports this objective, promoting SDG 17 (Partnerships for the Goals).

Future Directions and Upcoming Calls

The Innovation Fund will continue to evolve in alignment with EU priorities and the Sustainable Development Goals. New calls are expected by the end of 2025, including:

• A Net-Zero technology call running parallel with two auctions, in line with the Net-Zero Industry Act and Clean Industrial Deal
• A new auction with a budget of up to €1 billion to support projects that decarbonise industrial process heat through innovative electrification technologies

These initiatives will further contribute to SDG 9, SDG 7, and SDG 13 by fostering clean industrial innovation and accelerating the transition to climate neutrality.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 7: Affordable and Clean Energy
   • The article discusses funding for innovative renewable energy technologies and renewable hydrogen production, which directly relate to clean and affordable energy.
2. SDG 9: Industry, Innovation and Infrastructure
   • The Innovation Fund supports innovative clean technologies, industrial carbon management, and the transition to climate neutrality, emphasizing sustainable industrialization and innovation.
3. SDG 13: Climate Action
   • The Fund is backed by the EU Emissions Trading System and focuses on greenhouse gas emission avoidance and decarbonisation of industrial process heat, aligning with climate action goals.
4. SDG 17: Partnerships for the Goals
   • The article highlights co-investment from private and public sectors and knowledge sharing among stakeholders, supporting partnerships to achieve the SDGs.

2. Specific Targets Under Those SDGs Identified

1. SDG 7 Targets
   • Target 7.2: Increase substantially the share of renewable energy in the global energy mix.
   • Target 7.a: Enhance international cooperation to facilitate access to clean energy research and technology.
2. SDG 9 Targets
   • Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency and greater adoption of clean and environmentally sound technologies.
   • Target 9.5: Enhance scientific research and upgrade the technological capabilities of industrial sectors.
3. SDG 13 Targets
   • Target 13.2: Integrate climate change measures into national policies, strategies, and planning.
4. SDG 17 Targets
   • Target 17.16: Enhance the Global Partnership for Sustainable Development, complemented by multi-stakeholder partnerships.
   • Target 17.6: Enhance North-South, South-South, and triangular regional and international cooperation on access to science, technology, and innovation.

3. Indicators Mentioned or Implied to Measure Progress

1. Indicators Related to SDG 7
   • Share of renewable energy in total final energy consumption (implied through renewable energy projects and hydrogen production).
   • Amount of funding allocated to clean energy technologies (e.g., €12 billion awarded to projects).
2. Indicators Related to SDG 9
   • Number of projects demonstrating innovative low-carbon technologies and industrial carbon management.
   • Investment amounts in sustainable industrial infrastructure and technology upgrades.
3. Indicators Related to SDG 13
   • Reduction in greenhouse gas emissions achieved by funded projects (effectiveness of greenhouse gas emission avoidance).
   • Carbon price applied (€75/tCO₂) as a measure of emission trading system effectiveness.
4. Indicators Related to SDG 17
   • Number of partnerships and co-investments between public and private sectors.
   • Extent of knowledge sharing and dissemination of technical insights among stakeholders.

4. Table of SDGs, Targets, and Indicators

Source: cinea.ec.europa.eu