European Commission allocates €3.4 billion to 77 net-zero technology projects

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EU €3.4B for net-zero tech

Highlights

European Commission allocates €3.4 billion from the EU Emissions Trading System to 77 net-zero technology projects under the second Innovation Fund call.
Selected projects span energy-intensive industries, renewables, energy storage, cleantech manufacturing, small modular nuclear, and direct air carbon capture, with six focusing on critical raw materials for Net-Zero Industry Act support.
The 77 funded projects are expected to avoid about 290 million tonnes of greenhouse gas emissions over 10 years, with agreements to be finalized by Q1 2027.

Funding scope and project pipeline

As reported by the European Commission, 77 net-zero technology projects have been selected for €3.4 billion in support under the second Innovation Fund call. The funding is sourced from revenues generated by the EU Emissions Trading System and is directed at technologies intended to reinforce Europe's industrial competitiveness while advancing the clean transition.

The selected projects cover energy-intensive industries, renewable energy, energy storage, cleantech manufacturing, net-zero mobility, critical raw materials processing and recycling, advanced alternative fuels, and industrial carbon management. The current round also includes, for the first time, a small modular nuclear reactor project and a direct air carbon capture and storage project.

Six critical raw materials projects are part of the selection, supporting policy priorities under the Net-Zero Industry Act and the RESourceEU Action Plan. The Commission says these projects are expected to strengthen supply chains for clean technology applications, including rare earth permanent magnets and batteries.

Climate impact and next steps

The Commission estimates the 77 projects have the potential to avoid about 290 million tonnes of greenhouse gas emissions over their first 10 years of operation. It says that is roughly equivalent to cutting one tonne of CO2 every second for a decade, contributing to the EU's 2050 climate neutrality goal.

The call supports five categories, large-scale, medium-scale and small-scale general decarbonisation, plus clean-tech manufacturing and pilot projects. All five were oversubscribed, indicating continued demand from industry for support in scaling clean technologies in Europe.

An additional 84 projects passed the evaluation process but did not secure funding from the available budget, and they, along with the 77 selected projects, will receive the STEP seal quality label to help attract alternative public and private financing. A further 160 proposals are not grant recipients but remain eligible for Project Development Assistance from the European Investment Bank, which provides technical and financial advisory support to help improve project readiness.

Project promoters selected for funding have now been invited to begin grant agreement preparations with the European Climate, Infrastructure and Environment Executive Agency. The Commission and promoters are due to finalize budgets, timetables, deliverables and legal responsibilities during this stage, with the outcome of that process set to be announced in the first quarter of 2027.

In our earlier article, we covered China’s stance on keeping rare earth shipments to Europe flowing even if the temporary U.S.-China trade truce is not extended beyond January. We also noted that Brussels and Beijing were continuing trade talks, including a “green channel” approach aimed at maintaining access to critical materials that underpin Europe’s industrial supply chains.

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