The European Commission has earmarked £3.22 billion in funding through its Innovation Fund for projects aimed at reducing greenhouse gas emissions and expanding clean power component production. The allocation includes:

1. General Decarbonization Projects: £1.39 billion for large-scale initiatives with capital expenditure exceeding £87.3 million.

2. Medium-scale Decarbonization Projects: £328.74 million for projects with capital expenditure ranging between £17.4 million and £87.3 million.

3. Small-scale Decarbonization Projects: £131.5 million for projects with capital expenditure between £1.74 million and £17.4 million.

4. Manufacturing of Components: £1.05 billion for projects related to manufacturing components for renewable energy generation, energy storage, heat pumps, and hydrogen production.

The Innovation Fund, fueled by the European Union’s Emissions Trading System (ETS), emphasizes the importance of carbon pricing in driving the green transition. The fund supports projects that focus on reducing greenhouse gas emissions, innovation, maturity, replicability, and cost efficiency. It covers up to 60% of a project's costs and is open to proposals until April 9, 2024, for locations within the European Economic Area.

Additionally, the European Commission has initiated the first auction for the European Hydrogen Bank, another mechanism financed by the Innovation Fund. This pilot auction aims to gather data on the renewable hydrogen project pipeline, competition, production costs, and market prices. The selected projects will receive subsidies in addition to market revenues for up to 10 years, with a second round of auctions planned for 2024.

With an estimated revenue of £29.12 billion from 2020 to 2030, the Innovation Fund has already awarded £5.24 billion to over 100 projects under previous calls. The EU seeks to leverage these funds to support the transition to a low-carbon economy and advance the competitiveness of European industries.