The EU Innovation Fund is being implemented too slowly to help the cleantech sector develop, according to a new report by the European Court of Auditors published on Thursday 19 March.
The European Court of Auditors particularly notes the uncertainty over the funding that is available – linked to the very method of financing the Fund, which is based on the EU Emissions Trading System – the shortcomings in assessing the maturity of projects, which meant they “were later cancelled or delayed”, and the allocation of resources, which “was not supported by a clear strategic analysis”.
Launched in 2020 with an estimated budget of €40 billion by 2030, the fund aims to bring clean technologies to market and support the transition to a climate-neutral economy. “However, the fund’s deployment has been limited, and its contribution to reducing greenhouse gas emissions has remained modest”, reported the Court.
The Innovation Fund supports the transition to a climate-neutral economy by funding projects in energy-intensive industries, renewable energies, energy storage and hydrogen, as well as carbon capture, use and storage. “To maximise its impact, clear strategic priorities, faster deployment of funds, and more realistic project assessments are needed”.
At the end of June 2025, actual payments to projects amounted to just €332 million, or less than 1% of the Innovation Fund’s overall budget. Many of the projects selected experience delays, “and around one in five fails before becoming operational”. By the end of 2024, only five projects (out of the 208 that had been allocated funding) had reported reductions in greenhouse gas emissions.
Of these 208 projects, 20 – having been withdrawn by the beneficiaries before the grant agreement was signed – had received support worth €1.1 billion.
“Withdrawals were most often (in 14 cases out of 20) the result of substantial changes having been made to the project since the evaluation, often linked to market conditions and to the participants’ willingness to accept the associated risks. In one case, the participant had disagreed with a proposed reduction in funding (partly because of errors in the calculations made by the participant); (...) in one further case, the participant had refused to enter into a binding commitment to complete the project”.
“The Commission needs to improve project evaluation methods and assess whether greater flexibility is needed”. The auditors also found that the Commission lacked a coherent strategy for allocating Innovation Fund resources. Since 2022, funding has been increasingly directed towards new emerging policy priorities such as hydrogen and batteries.
“However, this shift was not supported by a clear strategic analysis of the technologies’ potential for reducing greenhouse gas emissions, or their contribution to the EU’s industrial and strategic objectives”.
Link to the report: https://aeur.eu/f/l97 (Original version in French by Solenn Paulic)