A European Commission staff working document published on 17 July 2026 evaluates the Innovation Fund's operation from its 2020 launch through early 2025, concluding that the fund is broadly effective but faces high application burdens, portfolio imbalances, and operational pressures. The evaluation, required under EU law, addresses effectiveness, efficiency, coherence, relevance, and EU added value, supported by an external study combining desk research, surveys, interviews, case studies, quantitative analysis, stakeholder consultations, and a late-2025 workshop.
The Innovation Fund, financed by the sale of EU ETS allowances, has awarded EUR 12.7 billion through nine calls for proposals between 2020 and 2024. Calls were consistently oversubscribed; the first large-scale call in 2020 saw requested funding about 21 times the budget. By early 2025, only 13 projects (7% of the portfolio) had entered operation. Progress varies sharply by sector: nearly half of renewable energy projects reached financial close, compared with less than one-fifth in energy-intensive industries, nine in energy storage, one in industrial carbon management, and none in mobility. The fund aligns with EU climate and industrial policies, including the European Green Deal, European Climate Law, and Clean Industrial Deal, and complements programmes such as Horizon Europe, Connecting Europe Facility, InvestEU, LIFE, Modernisation Fund, and Recovery and Resilience Facility.
Stakeholders report that application and reporting rules are complex and resource intensive, especially for smaller companies. The evaluation recommends simpler rules, better capacity building in under-represented countries, and stronger monitoring to fully deliver on climate goals. The document is an interim evaluation; the European Parliament and Council are expected to consider its findings in future legislative or budgetary discussions on the Innovation Fund's design and funding.
For EU producers, especially small and medium enterprises in energy-intensive industries, the high application burden and slow financial close rates create barriers to accessing funding, while larger renewable energy firms benefit from higher success rates. EU consumers may see delayed deployment of innovative low-carbon technologies, limiting near-term emissions reductions. EU regulatory bodies face operational pressures to streamline processes and improve monitoring. National authorities in under-represented countries may need to invest in capacity building to help local applicants navigate the fund's complexity.