€5.2 billion of EU Emissions Trading revenues earmarked for clean transition technologies under the Innovation Fund

The European Commission has announced the opening of three new funding opportunities under the Innovation Fund with a total budget of €5.2 billion in EU Emissions Trading System (EU ETS) revenues. The 2025 Net-Zero Technologies call with a budget of €2.9 billion, the third auction for hydrogen production under the European Hydrogen Bank with €1.3 billion, and the first-ever auction for decarbonisation of industrial process heat under the Industrial Decarbonisation Bank with a €1 billion budget.

Together, these opportunities mark a major step forward in achieving the EU's climate and energy objectives by 2030 and climate neutrality by 2050. They will also significantly contribute to progress on the clean transition and deliver the Clean Industrial Deal, boosting the competitiveness and resilience of European industry.

Driving Europe's clean industrial transformation

The general call for net-zero technologies (IF25 NZT call) seeks to bridge investment gaps, attract public and private capital, and strengthen Europe's leadership in clean-technology manufacturing and deployment.

With an allocated budget of €2.9 billion, it supports decarbonisation projects that demonstrate highly innovative technologies and processes that are sufficiently mature and have a significant potential to reduce greenhouse gas (GHG) emissions. It involves projects of different scale, as well as those focusing on the manufacturing of components for renewable energy, energy storage, heat pumps and hydrogen production, including electric-vehicle batteries.

Projects that can apply to the call will be assessed based on their potential to reduce GHG emissions, degree of innovation, project maturity, replicability and cost efficiency. Recognising that small-scale innovations can play an important role in Europe's decarbonisation efforts, there will be a new dedicated bonus point for projects coordinated and implemented only by SMEs.

Supporting industrial transformation through hydrogen

Clean hydrogen is an important alternative to replace fossil fuels, and it is increasingly used for the decarbonisation of heavy industry and transport sectors. With €1.3 billion, the third auction under the European Hydrogen Bank (IF25 Hydrogen Auction) is designed to provide cost-efficient support for the production of renewable fuels of non-biological origin (RFNBO) hydrogen or electrolytic low-carbon hydrogen across three topics, including a new topic for producers of hydrogen with maritime or aviation off takers.

Projects selected under the auction will receive support in the form of a fixed premium payment upon verified and certified production of hydrogen for a maximum period of 10 years.

Tackling emissions with decarbonising industrial process heat

The first European-wide auction for decarbonising industrial process heat (IF25 Heat Auction) is a milestone in establishing the future Industrial Decarbonisation Bank to address one of the EU's biggest sources of GHG emissions. Up to €1 billion will be used to support electrified and direct-renewable heat production, which is currently responsible for three-quarters of industrial emissions. Support will be auctioned to projects which can deliver the most cost-effective CO₂ abatement, closing the cost gap between sustainable solutions and fossil fuel-based alternatives for industrial process heat.

Opened to different project sizes and across all industrial sectors, the auction will support the deployment of technologies such as heat pumps, electric boilers, resistance and induction heating, direct renewable heat solutions (solar thermal or geothermal) as well as hybrid projects that combine different technologies. Support is granted as an output-based fixed premium, linked to verified decarbonised heat production and paid for a maximum period of five years.

In addition, Member States have the possibility to leverage on the Innovation Fund's evaluation process and a streamlined state aid approval process. Via the 'Auctions-as-a-Service' scheme, they are able to dedicate national funds to support projects that have passed the evaluation award criteria but were not selected for Innovation Fund funding due to budgetary limitations. Germany and Spain have confirmed their participation in Auctions-as-a-Service in these auctions. Germany will dedicate a further €1.3 billion in national funds to support RFNBO hydrogen production projects nationally. Spain will alsodedicate a total of €465 million in national funds, of which €415 million will support hydrogen projects and an additional €50 million to support industrial heat decarbonisation projects.

Next steps

The IF25 NZT call is open for applications until 23 April 2026, 17:00 (CET), via the EU Funding & Tenders Portal. Applicants are strongly encouraged to attend the Info Day which will take place on 16 December. Successful applicants are expected to sign grant agreements by the first quarter of 2027.

For the IF25 Hydrogen Auction and IF25 Heat Auction, bidders have until 19 February 2026, 17:00 (CET) to apply via the EU Funding & Tenders Portal. Info Days for both auctions will take place on 10 December 2025. Successful bidders are expected to sign grant agreements within nine months after the call closure.

Background

The Innovation Fund is one of the world's largest funding programmes for the demonstration and commercialisation of innovative low-carbon technologies, financed by revenues from the EU ETS. With an estimated budget of around €40 billion between 2020 and 2030), the Fund aims to create financial incentives for companies and public authorities to invest in cutting-edge low-carbon technologies and support Europe's transition to climate neutrality.

Counting all ongoing projects and those under grant agreement preparation, the Innovation Fund has currently awarded over €15.8 billion in support to more than 275projects through its previous calls for proposals. Both Hydrogen and Heat auctions use a competitive, market-based approach and follow a pay-as-bid model. Bids are ranked by price within each topic and are awarded until the available budget is allocated. For the hydrogen auction, bids are ranked by price in euro per kilogram of hydrogen produced; for the heat auction, by price in euro per tonne of CO₂ abated.

Under the auctions, Project Development Assistance(PDA) remains available for projects wanting to improve their maturity through high-quality technical and financial advisory support provided by the European Investment Bank. Furthermore, the Strategic Technologies for Europe Platform (STEP) Sealwill be awarded to projects that meet all evaluation criteria, including both those that are selected for funding and those that are not due to budgetary limitations. The Seal aims to facilitate high-quality projects access to additional public and private funding.

For more information
Questions and answers on the IF25 NZT Call

Questions and answers on the IF25 Auctions

EU Funding and Tenders Portal

Innovation Fund projects dashboard

IF25 NZT Call

IF25 Heat Auction Call

IF25 Hydrogen Auction Call

IF25 NZT Call Info Day

IF25 Heat Auction Info Day

IF25 Hydrogen Auction Info Day

Innovation Fund