EU allocates 4.6 billion euros to promote sustainable energy development

On December 3rd, the new elected European Commission launched two new call-for-proposals aimed at advancing sustainable energy technologies in Europe, including lithium-ion batteries for electric vehicles, energy storage technologies, and hydrogen energy. The initiative is designed to support Europe’s carbon neutrality goals and foster industrial development across the continent.

Advancing Europe's Net-Zero Technologies and Electric Vehicle Battery Manufacturing

Under this call, the European Union will allocate a total of €2.4 billion from the EU Innovation Fund’s IF24 Auction to support decarbonisation projects of various scales, as well as projects focusing on the manufacture of components for renewable energy, energy storage, heat pumps, and hydrogen production. Proposals will be evaluated based on their potential to reduce greenhouse gas emissions, innovation level, project maturity, scalability, and cost-effectiveness. For the first time, EU member states will have the opportunity to supplement the IF24 call for net-zero emissions projects through national aid schemes, facilitating budget top-ups for countries with available financial capacity and simplifying the approval process for state aid under EU leadership.

Simultaneously, the EU has launched a €1 billion tender to support projects that manufacture innovative electric vehicle batteries or deploy innovative manufacturing technologies and processes, aimed at overcoming challenges in Europe’s battery value chain. This will help address the economic difficulties faced by several super factories within Europe, and explore solutions for scaling up large-scale industrial projects.

The European Commission and the European Investment Bank (EIB) have also initiated a new partnership to support investments in EU battery manufacturing. This collaboration will inject €200 million in loan guarantees into the InvestEU programme, aimed at supporting innovation projects along the European battery manufacturing value chain, addressing financing challenges faced by these projects.

Supporting Hydrogen Production

Under this call, the European Commission will allocate a total of €1.2 billion through the Innovation Fund (IF24 Auction) to support the second round of auctions under the European Hydrogen Bank. These funds, sourced from the EU Emissions Trading System (ETS) revenues, will support hydrogen producers located within the European Economic Area (EEA) who use non-biological sources, typically renewable energy to produce green hydrogen (excluding grey and blue hydrogen). €1 billion will be allocated to renewable hydrogen production projects across all application sectors, while €200 million will support hydrogen production projects in the maritime sector.

The Commission has also introduced an "Auction-as-a-Service" mechanism, allowing member states to provide funding for projects that have participated in the bidding process but were unable to secure support due to budgetary constraints. This allows member states to use national funds to support projects within their territories without the need for separate national auctions, reducing administrative burdens and costs. Spain, Lithuania, and Austria have recently announced their participation in this scheme, committing up to €836 million in national funds to support domestic renewable hydrogen production projects.

Application Deadlines

Applicants for the net-zero technologies and battery projects must submit their proposals via the EU funding and tender portal by 17:00 (CET) on April 24, 2025. Successful applicants will sign agreements by the first quarter of 2026.

Bidders for renewable hydrogen auctions must submit their proposals by February 20, 2025, through the EU funding and tender portal. Successful applicants will sign agreements within nine months of the auction’s conclusion.

Impact and Outlook

SMM believes that some sustainable energy projects in Europe, particularly battery cell manufacturing, are currently facing the dual pressure of insufficient external investment and weak downstream demand. On the one hand, support and financial aid from the EU and governments are essential for European companies still in the early stages of development. On the other hand, Europe should recognise that market investment and sufficient demand are key to driving the healthy development of the industry. The injection of funds through these two calls for proposals is expected to attract additional investment into the sustainable energy sector and help alleviate some of the financing challenges faced by companies.