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Emissions Trading System — Innovation Fund rules



Delegated Regulation (EU) 2019/856 with regard to the operation of the Innovation Fund


The Innovation Fund introduced in Directive 2003/87/EC is designed to support innovative initiatives as part of EU emissions trading system (ETS)*, the EU’s cornerstone policy to tackle climate change by reducing greenhouse gas (GHG) emissions.This regulation sets out detailed rules about how the fund operates.


The regulation sets out detailed rules for the Innovation Fund, including

  • operational objectives;
  • forms of support provided;
  • application procedure;
  • how projects are selected;
  • how the fund is governed;
  • reporting, monitoring, evaluation, control, and publicity.

Objectives and forms of support

The fund provides financial support for projects demonstrating highly innovative technologies, processes or products with significant potential to reduce GHG emissions, while attracting additional public and private resources.

Support will be in the form of grants, or combining EU grants with financial instruments under the EU’s unified investment support instrument (InvestEU), which replaces the current European Fund for Strategic Investments for the period 2021-2027. Funding can also take any of the other forms outlined in Regulation (EU, Euratom) 2018/1046 (the ‘Financial Regulation’), in particular prizes, and procurement.

Application and selection

Applicants are invited to apply for financial support for eligible projects following a call for proposals issued by the European Commission after consultation with EU countries. Projects are selected based on criteria including:

  • the potential to avoid GHG emissions;
  • degree of innovation of the projects compared to the state of the art;
  • maturity of planning, business model, financial and legal structure; prospect of concluding the financial close of the project within a pre-defined time period of no more than 4 years;
  • technical and market potential for widespread application or future cost reductions;
  • cost efficiency of the project based on a formula balancing costs against GHG emissions avoided, energy generated, or CO2 stored (carbon capture and storage) in the first 10 years of operation.

Governance and administration

The Commission directly manages the Fund’s operation except where implementing bodies are delegated. EU countries are consulted about short-listed projects before any decisions on awards are made.

Entities receiving aid should display on their websites information about projects supported under this regulation, including explicit reference to the Innovation Fund support received, as well as ensuring that coherent, effective and targeted information on the support reaches multiple audiences, including the media and the public.


It has applied since 17 June 2019.


For more information, see:


EU Emissions Trading System (EU ETS): the first, and by far the largest, international system for trading GHG emission allowances, it covers nearly 11,000 power stations and manufacturing plants in the EU, Iceland, Norway and Liechtenstein, as well as aviation activities.


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 (OJ L 140, 28.5.2019, pp. 6-17)


Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council of 18 July 2018 on the financial rules applicable to the general budget of the Union, amending Regulations (EU) No 1296/2013, (EU) No 1301/2013, (EU) No 1303/2013, (EU) No 1304/2013, (EU) No 1309/2013, (EU) No 1316/2013, (EU) No 223/2014, (EU) No 283/2014, and Decision No 541/2014/EU and repealing Regulation (EU, Euratom) No 966/2012 (OJ L 193, 30.7.2018, pp. 1-222)

Commission Decision 2010/670/EU of 3 November 2010 laying down criteria and measures for the financing of commercial demonstration projects that aim at the environmentally safe capture and geological storage of CO2, as well as demonstration projects of innovative renewable energy technologies under the scheme for greenhouse gas emission allowance trading within the Community established by Directive 2003/87/EC of the European Parliament and of the Council (OJ L 290, 6.11.2010, pp. 39-48)

Successive amendments to Decision 2010/670/EU have been incorporated into the original text. This consolidated version is of documentary value only.

Directive 2009/31/EC of the European Parliament and of the Council of 23 April 2009 on the geological storage of carbon dioxide and amending Council Directive 85/337/EEC, European Parliament and Council Directives 2000/60/EC, 2001/80/EC, 2004/35/EC, 2006/12/EC, 2008/1/EC and Regulation (EC) No 1013/2006 (OJ L 140, 5.6.2009, pp. 114-135)

See consolidated version.

Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, pp. 32-46)

See consolidated version.

last update 07.10.2019