Companies across Europe are encountering steep bureaucratic barriers as they attempt to secure funding from the EU Innovation Fund – with some spending up to 3,000 hours and averaging €85,000 per application.

Since its inception in 2021, the fund has committed €7.1 billion for clean-technology projects; yet only 4.7 per cent has been paid out.

The slow pace and complexity of the approval process have deterred many firms — especially smaller, emerging green-tech businesses.

For example, Vianode, which develops low-carbon graphite for electric-vehicle batteries, abandoned plans for a European facility despite being awarded a €90 million grant in 2023, citing import competition and the burdensome administrative environment.

The problem is systemic: as many as 77 per cent of applicants subcontract parts of the process to outside consultants just to cope with the “high burden.” The outcome: fewer than one in five applications succeed, and among successful ones only 6 per cent are operational — with 15–20 per cent delayed.

This bureaucratic overload runs counter to the stated ambition of the European Commission to accelerate green industrial growth — with the unspent funds representing a major opportunity cost, according to analysts.

Simultaneously, carmakers in Europe are growing increasingly anxious about what many consider a de facto ban on petrol- and diesel-powered new cars by 2030, via the increasingly stringent CO₂ emissions rules laid out in Regulation (EU) 2023/851.

That regulation sets binding targets for light-duty vehicles: a 55 per cent reduction in CO₂ emissions for new cars by 2030 relative to 2021, and a full 100 per cent reduction by 2035 — effectively outlawing internal-combustion engines.

Although the 2035 target remains legally binding, pressure is mounting from several EU member states and parts of industry to revisit or amend the effective 2030 de facto cutoff, due to practical challenges and concerns about industrial competitiveness.

In the face of these twin strains — heavy paperwork blocking green-tech investment and uncompromising auto-emissions rules — Europe’s industrial competitiveness and its ambition to lead the global clean-tech transition are being tested.

Without swift reforms to ease administrative burdens and provide policy clarity, many firms may abandon European plans or delay critical green investments.

Meanwhile, the Commission’s recent regulatory-simplification initiatives under the so-called Omnibus I package aim to reduce some of these burdens.

Member states have agreed on proposals to scale back mandatory sustainability reporting requirements for smaller firms and to raise thresholds for due-diligence obligations under the upcoming Corporate Sustainability Reporting Directive and Corporate Sustainability Due Diligence Directive.

Whether these reforms will meaningfully improve access to funding and ease pressures on companies — or simply shift the burden somewhere else — remains to be seen.

What is already clear is that without addressing systemic administrative friction, Europe risks undermining both its green-tech ambitions and the competitiveness of its industrial base.