Innovation support

Low Carbon Challenge Fund

Low Carbon Challenge Fund (LCCF)

LCCF Stage 2 is now closed. The successful projects will be published in early 2021.

Competitive grant funding for academic institutions, public bodies, and third-sector organisations in the Lowlands and Uplands (LUPS) area of Scotland to support initiatives that will help Scottish SMEs to unlock global opportunities of the climate emergency.

About the fund

Academic institutions, public bodies and third-sector organisations in Scotland can receive competitive grant funding to support initiatives that will help small and medium-sized enterprises (SMEs) in Scotland to unlock global opportunities of the climate emergency and in doing so contribute toward Scotland’s target of reaching net-zero emissions by 2045.

Up to £6 million of European Regional Development Fund (ERDF) grant funding is currently available. Grant funding will be awarded on a competitive basis. Its aim is to support the creation of a national network of regionally-based initiatives, to stimulate and improve innovation in SMEs.

One key element of the fund will be for initiatives to support SMEs in preparing for new market opportunities which are emerging as a result of the global climate emergency and in the drive towards net-zero emissions. Some examples of these opportunity areas include but are not limited to:

  • Low carbon transport
  • Low carbon heat
  • Water technology
  • Hydrogen
  • Energy efficiency
  • Offshore renewables
  • Local energy systems
  • Carbon capture usage and storage

The overall aim of the LCCF is for projects to be of a scale and level of ambition to enable SMEs to unlock the opportunities of the climate emergency and contribute toward achieving Scotland’s net-zero target, leading to long-term transformational change.

Project themes we're looking to support

Preparing the workforce

Developing and encouraging SME leaders, and/or senior management to:

  • Take proactive steps to develop a culture that future-proofs their business by focusing on the other themes listed
  • Increase the capacity and diversity of the workforce, creating a culture of continuous learning to foster innovation and support transition to new low carbon products and services


Supporting SMEs to be more innovative:

  • Supporting SMEs to invest in the development of new products, services and/or processes to the market or to the firm - for example, access to test laboratories or test sites
  • Helping SMEs build collaborations - for example, building consortia to apply for other funding opportunities and/or project sponsors
  • Accessing expert advice and support in developing low carbon solutions
  • Increasing business expenditure on research and development (BERD)

Supply Chains

Supporting SMEs to:

  • Identify opportunities for the creation of new supply chains for cross-sectoral opportunities within low carbon
  • Strengthen existing low carbon supply chains - for example, enhancing availability of data in terms of supply and demand and linkages with Tier 1 suppliers

Responding to new, growing or shifting markets

Supporting SMEs to access expert advice on:

  • Direction of low carbon/climate change and impact on existing markets
  • Preparing future strategies and business modelling support
  • Regulation and legislation landscape of low carbon technologies

Preparing pipeline for trade opportunities

Supporting SMEs to:

  • Take innovative services and products overseas
  • Engage with potential international investors/partnerships

The changing nature of the customer

Supporting SMEs to engage with the relevant communities to:

  • Ensure understanding and working with customers to shift behaviours when considering design and adoption of low carbon products and services

Horizontal themes

You'll also need to demonstrate and measure:

  • How you'll include positive approaches to equal opportunities and non-discrimination in the work of the project
  • Equality between men and women
  • How you'll promote sustainable development through the work of the project

How much funding can my project receive?

Intervention rate

Up to £6 million of European Regional Development Fund (ERDF) grant funding is currently available towards projects in Scotland. Grant funding will be awarded on a competitive basis. The LCCF can contribute up to a maximum of 50% of eligible project costs.

Only two cost models may be used, and projects can use one, or a combination of both:

  • Direct staff cost + 15% flat rate
  • Procurement costs

Match funding

The ERDF funding contribution must be the minimum amount required to allow the project to proceed. And the match funding you secure must be in the form of a direct cash contribution or expenditure incurred. For example, actual costs for the procurement of capital equipment and/or direct staff costs.

Match funding can't be linked to the achievement of other outputs.

The following sources of match funding are not eligible:

  • European funding of any kind
  • Corporate and private sector match funding (in other words, contributions from companies that have shareholders who are paid dividends on profits or receive direct personal benefits)
  • In-kind contributions

Who can apply?

Eligible organisations include:

  • Academic institutions: for example, Scotland’s universities, colleges, research and technology organisations (RTOs)
  • Public sector organisations: for example, public bodies funded by the Scottish Government, local authorities in Scotland and related agencies
  • Third-sector organisations: for example, charities, not for profit companies, organisations that directly or indirectly receive over 50% of core funding (excluding European funding) from the public sector, co-operatives

Applicants’ projects can only be delivered in the Lowland and Uplands (LUPS) areas of Scotland. The LUPS areas of Scotland are North Eastern Scotland, Eastern Scotland and South Western Scotland, as shown within the white circle in the map below. 

Find a breakdown of LUPS areas by local authority on the ONS website 

Applications can be individual or collaborative. Private sector organisations are not eligible to apply and can't be a member of a collaborative application.

How to apply

Applications for Stage 1 are now closed. Stage 2 is now open and applicants have been invited to submit a Stage 2 application by midnight Friday 3 July 2020.


  • Stage 1 – outline project applications: closed 21 February 2020
  • Stage 2 – full project applications: 16 March 2020 – 3 July 2020
  • Stage 2 – project assessments: July – October 2020
  • Projects approved – 6 November 2020
  • Projects start – 4 January 2021
  • Projects end – by 28 February 2023
  • Projects submit final claim and final report – by 31 March 2023

Got a question?

Get in touch to find out more about this fund