EU Sets Rules for €1 billion Industrial Heat Auction to Slash Manufacturing Emissions
The European Commission released the final terms for a €1 billion industrial heat auction, financed by ETS revenues and open to projects across the EEA.
On 24 September the European Commission published the definitive rules for the IF26 industrial heat auction, a €1 billion programme funded by revenues from the EU Emissions Trading System and administered under the Innovation Fund. The auction will back projects that use electric heat pumps, thermal storage, plasma torches, electric boilers, solar-thermal, geothermal and, newly, small modular nuclear reactors. Successful bidders will obtain a fixed premium subsidy tied to each tonne of direct CO₂ avoided, payable for a maximum of five years.
The call for proposals is slated to open in December 2026 and close in February 2027, with informational webinars scheduled throughout October. By expanding eligibility to heat above 80 °C and adding flexibility incentives, the Commission hopes to reduce the fossil-fuel dependence of sectors such as chemicals, steel, cement and food processing, which generate about 75 % of industrial emissions. The auction is part of the broader Industrial Decarbonisation Bank, which targets €100 billion in funding for industrial climate projects.
Why it matters
It creates a major funding stream to help European industry replace fossil-fuel heat with low-carbon alternatives.
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