Innovation has become a guiding principle for European Union policy. Funding schemes, research, and planning across all Member States are expected to be innovative. This article provides a critical analysis of the drivers and effects of this evolution. While positive results have been achieved due to innovation policies, this article proposes that taking a wider critical perspective reveals important caveats. The article zooms in on the EU’s innovation policies by analysing policy documents, projects funded, and on-the-ground impact on three citizen initiatives. The analysis asks whether and how the EU’s self-set goals of sustainability, social inclusion, and economic growth are approached and met in them. The findings suggest a problematic funnelling process. First, an emphasis on innovation is created with the objective of systematically unblocking resistance to the development and implementation of novelties in the name of competitiveness, job creation, and economic growth. Second, the idea of innovation is very loosely defined, while, when translated into urban planning, it is interpreted narrowly in terms of efficiency and behavioural change, digitalization, and smart technologies. As a result, (narrowly defined) innovation-led economic growth begins to supersede alternative values and visions for the future of European cities and regions. This can represent a problem for EU Member States as it creates a very limited, risk-based, and divisive direction of development. To contribute to the (re-)establishment of alternatives, this article finally offers policy recommendations primarily concerned with the reinstatement of the public interest beyond innovation-centred planning perspectives.