The main mistakes that can undermine an Innovation Fund application

The Innovation Fund offers particularly high levels of support. However, securing this funding remains challenging.

The Innovation Fund is the European Union’s flagship programme for financing the industrial deployment of innovative low-carbon technologies. Funded by the revenues the European Union generates from the sale of CO₂ emission allowances under the EU Emissions Trading System (EU ETS), it now provides several billion euros in funding in each round of calls. The calls launched in 2025 and closed in 2026 made €5.2 billion available, including €2.9 billion in direct grants under the general decarbonisation call and €2.3 billion through auctions dedicated to hydrogen and industrial heat. The Fund can provide substantial financial support to selected projects by covering up to 60% of their net additional costs, meaning the difference between the cost of deploying the innovative technology and that of the conventional solution that could otherwise have been deployed.

This funding capacity is, however, accompanied by a high degree of selectivity. For example, the IF24 Net-Zero Technologies call initially selected only 61 projects out of 359 applications, representing a selection rate of around 17%. Of these 359 applications, 291 passed the admissibility and eligibility checks and were assessed on their merits. The elimination rates by criterion referred to below therefore relate to this pool of 291 projects. In this context, having a promising technology is not enough: an application must present a coherent combination of technological innovation, climate impact, cost efficiency, technological maturity, financial maturity, operational maturity and replicability.

Yet the most damaging mistakes do not always stem from the intrinsic quality of the project. They often arise from the way the project is prepared and presented: failing to demonstrate a sufficient degree of innovation, particularly against the state of the art; weak economic assumptions; GHG emission reduction calculations that do not comply with the Innovation Fund methodology; inconsistencies between different parts of the application; an under-resourced application team; or simply starting the preparation process too late.

Drawing on the applicant survey published by the European Commission and CINEA, as well as european economics’ experience gained from 18 applications since 2020, this article outlines the 5 most common mistakes that can weaken an Innovation Fund application and explains how to avoid them.

1. Insufficient differentiation from the state of the art

The degree of innovation compared with the European state of the art is one of the first hurdles an Innovation Fund application must clear.

The degree of innovation is assessed first under the “cascade approach”: an application that does not meet the required threshold is not assessed against the subsequent criteria. In the IF24 call, 14 of the 291 projects assessed were eliminated at this stage, notably because they had not sufficiently demonstrated how they differed from the state of the art. While the innovation criterion accounts for around 20% of the score for general decarbonisation projects, broadly in line with the weighting of the other criteria, its weighting can rise to close to 30% in certain categories, such as Cleantech Manufacturing, where it is one of the most heavily weighted dimensions alongside project maturity.

One of the most damaging mistakes is to claim that a project is innovative without clearly identifying where the innovation lies or supporting the claim with sufficient credible evidence. Feedback from Innovation Fund evaluations highlights three recurring weaknesses in particular: an insufficiently developed state-of-the-art analysis, poorly substantiated claims and inconsistencies between the different documents in the application.

To make a convincing case, a project must define the European state of the art clearly, comprehensively and transparently, and then explain precisely how it goes beyond it. This demonstration must be supported by substantial and verifiable evidence, such as performance data, technology comparisons, test results, feasibility studies or references to comparable projects.

The consistency of the application is equally important: the assumptions and arguments presented in the narrative section must be aligned with the technical annexes and, where relevant, the feasibility study. The objective is therefore not necessarily to present the project as a breakthrough innovation, but to demonstrate rigorously, consistently and with supporting evidence where the innovation lies and why it goes beyond the European state of the art.

2. Low project maturity

Project maturity is a decisive factor in an Innovation Fund application. The expected level of maturity covers technical, financial and operational aspects, each of which must be substantiated. A project that lacks the analysis required to demonstrate its robustness across all three dimensions puts its chances of success at risk.

The financial dimension nevertheless remains the most discriminating. When surveyed by the Commission, applicants identified financial maturity as the most demanding part of the application, with 45% rating it “very” or “extremely” difficult. This is reflected in the evaluation results: in the IF24 call, 92 projects out of 291 failed on the financial dimension, compared with 37 on the technical dimension and 19 on the operational dimension. The challenge is to demonstrate that the project can credibly secure financing from banks or investors in light of its expected returns. In practice, a financially coherent business plan is therefore not enough. A robust application should be supported by tangible evidence: a clear equity and debt structure, committed investors, advanced discussions with banks and agreements with offtakers, formalised through letters of intent (LOIs), memoranda of understanding (MoUs) or preliminary contracts. Innovation Fund applicants sometimes tend to underestimate the importance of these agreements, which can undermine the success of the application.

On the technical side, the challenge is different: the applicant must demonstrate the feasibility of the project. The main weaknesses observed include poorly identified technical risks, insufficient mitigation measures and weak data or supporting evidence, as well as strategies that lack sufficient detail to demonstrate how the stated performance will be achieved. A high technology readiness level (TRL) is therefore not enough: the applicant must provide evidence that the technology can credibly achieve the targeted objectives.

On the operational side, the mistake lies in overestimating the project’s level of readiness. Permitting that is not sufficiently advanced, critical suppliers that have not been secured, an overly optimistic timeline or poorly managed site dependencies can compromise the project’s ability to move into construction and commissioning within the announced timeframe. The application must therefore demonstrate that the main practical conditions required for implementation are sufficiently advanced and that operational risks have been identified and managed.

european economics’ experience shows that a project whose key parameters remain too fluid can be a sign of insufficient maturity. When parameters such as capacity, process, CAPEX or timeline continue to change during the preparation process, they weaken the consistency of the application, as it becomes more difficult to develop robust supporting arguments and substantiate them with studies, data or external commitments. Conversely, stable and well-documented assumptions strengthen the credibility of the project’s path to financial close, construction and commissioning. Across all three dimensions, the greater the project’s level of maturity, the stronger its chances of being selected.

3. Imprecise quantification of climate impact and cost efficiency

The Innovation Fund places significant emphasis on the CO₂ emission reductions documented in the application. Second only to financial maturity, this is the part of the application rated as the most demanding by applicants. This difficulty is reflected in the evaluation results: in the IF24 call, 15 of the 291 projects assessed failed on the criterion relating to the calculation of GHG emissions. Two recurring mistakes stand out:

The first is an incorrect definition of the counterfactual scenario, meaning the baseline against which the project’s emissions are compared. A counterfactual scenario that does not comply with the Innovation Fund guidelines, or that is insufficiently justified, can lead to overestimating or underestimating GHG emission reductions, directly weakening the project’s climate score.

The second concerns cost efficiency, defined as the amount of grant requested per tonne of CO₂ avoided. An excessive grant request relative to the emissions avoided makes this ratio less competitive. Conversely, overestimating the expected emission reductions can expose the project to a downward adjustment of the grant, as a significant proportion of the funding is conditional on the actual achievement of results. The level of ambition presented in the application must therefore remain realistic.

4. A team lacking the right mix of expertise and availability

An Innovation Fund application requires technical, financial, operational, environmental and regulatory expertise. The applicant should therefore put together an in-house team specifically dedicated to the project, with both the range of expertise and availability required. It is recommended that at least four people be involved in the project: a technical expert, a financial expert, an operational lead and a project manager responsible for coordinating the application. Entrusting the process to a single person, or to staff who are already fully committed to other priorities, increases the risk of required information being handled incompletely or too late.

The Commission’s data illustrate the scale of the effort involved: preparing an application requires an average of six full-time equivalents, rising to as many as eight for large-scale projects. The volume of documentation helps explain this: the application includes a highly structured form, a comprehensive narrative section, several demanding annexes, such as the financing plan and feasibility study, as well as two Excel calculators (the GHG Calculator, which quantifies the greenhouse gas emissions avoided by the project, and the Relevant Costs Calculator, which determines the eligible net additional costs associated with deploying the innovative technology). The complete application can run to several hundred pages. Resourcing the project team appropriately from the outset is therefore a key success factor.

5. Starting preparations too late

Starting the preparation process too late is a common mistake. It is advisable to begin several months before the call opens, ideally from September for the following year’s call. This lead time is justified by the scale of the work involved: preparing an application takes an average of 13 weeks, and up to 52 weeks for the most complex applications. The most critical elements require considerable preparation time and cannot realistically be dealt with under pressure.

Continuity is equally important: drafting the application in fits and starts can undermine the overall consistency of the submission and, in turn, its chances of success.

These 5 mistakes have one thing in common: they relate not to the nature of the project itself, but to the way it is prepared and substantiated. For the most part, they can therefore be avoided. In a programme where the success rate for the 2024 call stood at around 17% , the quality of preparation is therefore a key differentiating factor between applications.

How does european economics support its clients with their Innovation Fund applications?

Since 2009, european economics has supported companies in securing national and European public funding and in handling State aid notifications. Since 2020, our teams have supported 18 applications to the Innovation Fund, of which 6 were selected, representing a success rate of 33%, more than double the programme’s cumulative success rate of approximately 15.5%. The successful projects supported by european economics received an average grant of €91 million, compared with €69 million for other successful projects. Our teams are involved at every stage of the process: assessing the project’s positioning against the European state of the art, structuring the financing plan and evidence of maturity, calculating GHG emission reductions and net additional costs, drafting the application, and supporting exchanges with CINEA.

Article written by the european economics consulting team.

Jade Lasvignes

Innovation Fund application: the 5 mistakes to avoid