New Funding Opportunity for
Industrial Heat Decarbonisation
The EC is launching a new Innovation Fund pilot auction focused on industrial process heat decarbonisation - A unique opportunity for industrial companies planning large-scale heat decarbonisation investments. With up to €1 billion in funding, this competitive scheme will accelerate the shift from fossil-based heat to electrified and renewable heat solutions in hard-to-abate industries.
The Scope of the IF25 Heat Auction
Following the success of the Hydrogen Auction, the first Pilot Heat Auction was announced under the Clean Industrial Deal as a pilot for the new Industrial Decarbonisation Bank and is expected to be launch at in the beginning of December 2025.
Industrial heat accounts for a large share of Europe’s industrial emissions. Therefore, the Heat Auction aims to accelerate the green industrial transformation and cut CO₂ emissions by funding innovative projects that replace fossil fuels with:
Electrified heat (e.g., high-temperature heat pumps, electric boilers, resistance / induction heating, plasma heating)
Direct renewable heat (e.g., industrial solar thermal, deep geothermal).
Projects must reach a minimum temperature of 100ºC or size of 3 MW th. Funding is awarded competitively based on the lowest bid for a subsidy per tonne of CO2 avoid-ed (Auction-as-Service mechanism).
€1 Billion in Funding Across Three Topics
The total budget of EUR 1 billion will be distributed across three heat categories. Medium-temperature heat project (100°C-400°C) can receive up to EUR 100 million:
1. Small projects (3-5 MWth)- EUR 150 million.
2. Big projects (≥5 MWth)- EUR 350 million.
3. High-temperature heat (≥ 400°C) – Maximum project grant EUR 250 million: All projects (≥3 MWth)- EUR 500 million.
More information on the IF25 Heat Auction
Key Eligibility
Projects focusing on replacing fossil-based heat with electrified or renewable heat may be eligible for funding under the IF25 Heat Auction.
This means that projects must deliver industrial process heat (not building heating), deploy innovative electrification or renewable heat technologies, demonstrate technical maturity and scalability, and verify both CO₂ abatement potential and renewable or low-carbon electricity sourcing.
Who Can Apply
THe IF25 Heat Auction is open for all types of companies in the industrial sector with projects located in the EEA (EU Member States, Iceland, and Norway) that plan to install new thermal capacity for their heat needs.
The non-eligible activities can be biomass combustion, electrolysis processes, electric arc furnaces for steelmaking, space heating and district heating.
Qualification Criteria
Companies submit bids specifying the funding they require per tonne of CO₂ reduced and the amount of heat they expect to produce.
Eligible proposals are ranked by lowest bid price (EUR/tCO2 abated) until the topic budget is exhausted; only those fitting within the budget are evaluated on a pass/fail basis for Relevance (clearly fitting the Auction objectives) and Quality (i.e. technical, financial and operational maturity).