European Commission T&Cs for €1bn industrial heat decarbonisation auction
- Budget: €1 billion funded from EU ETS revenues; bidding expected to open in early December 2026.
- Support: Fixed premium subsidy proportional to each tonne of direct CO2 abated, payable for up to five years.
- Technologies: Eligible projects include electrification (heat pumps, electric boilers), direct renewable heat, thermal storage and, for the first time, nuclear (small modular reactors).
- Scope: Open to projects of all sizes across the EEA; eligibility expanded to industrial heat ≥80°C and incentives for flexibility to reduce peak electricity demand.
Auction overview
The Commission published the final Terms and Conditions for IF26, a Europe-wide auction with a planned budget of €1 billion drawn from EU Emissions Trading System revenues. The bidding window is expected to open in early December 2026. Successful bidders will receive a fixed premium subsidy proportional to tonnes of direct CO2 abated for a maximum of five years.
Technologies and scope
The auction supports three main technology groups: electrified solutions (heat pumps, electric boilers, plasma torches, thermal storage), direct renewable heat (solar thermal, geothermal) and, for the first time, nuclear technologies such as small modular reactors. It targets continuous industrial process heat across sectors including chemicals, pulp & paper, steel, food & beverage and cement.
Eligibility and incentives
Eligibility is expanded to projects producing industrial heat above 80°C (previously >100°C). The T&Cs also provide incentives for flexibility solutions that reduce electricity use during peak hours. Member States may top up the auction via Auction-as-a-Service arrangements.
Process and context
The T&Cs follow public consultations and mirror lessons from IF25; both auctions act as pilots for the Industrial Decarbonisation Bank. National information webinars will be held throughout October to brief potential applicants. The Innovation Fund, financed by ETS revenues, has already allocated roughly €12 billion to about 200 projects.
Source: European Innovation Fund