Innovation Fund 2025 auctions attract almost €10 billion of bids from European industry for decarbonisation support

Applications for the Innovation Fund 2025 auctions for industrial heat decarbonisation and hydrogen production closed on 19 February 2026. The pilot auction on industrial heat (IF25 Heat) attracted 85 bids from a variety of European industries, amounting to €1.4 billion in funding requested. The auction for hydrogen production (IF25 Hydrogen Auction) attracted 58 bids from European hydrogen producers, seeking a total of €8.4 billion in funding.

The high number of bids reflects the keen interest of industries across Europe to decarbonise industrial heat processes and produce hydrogen sustainably. Funded from EU Emissions Trading System Revenues, the winning bids will help deliver the Clean Industrial Deal, and boost the competitiveness and resilience of European industry. A total of €2.3 billion of funding will be awarded by the Commission, with an additional €1.3 billion from German national funds and €490 million from Spain via the 'auctions-as-a-service' platform.

IF25 Heat Auction

The IF25 Heat Auction is the first EU-wide auction to tap the large potential for decarbonisation of heat production in industry and acts as a pilot for the future Industrial Decarbonisation Bank. The aim of the auction is to accelerate the market uptake of electrified heat solutions and heat produced directly from renewable sources (such as solar thermal and geothermal). Industrial process heat is one of Europe's largest sources of industrial CO₂ emissions due to the continued use of fossil fuels. The auction covers technologies such as heat pumps, electric boilers and furnaces, as well as solar thermal, geothermal and thermal energy storage, and was open to projects from all industrial sectors.

The auction received 85 bids from 14 countries, resulting in its €1 billion budget being oversubscribed 1.4 times. The bids were submitted by key industries such as chemicals, food and beverage, pharmaceuticals, textiles, pulp and paper, glass, iron and steel. They represent a variety of technologies (primarily direct and indirect resistance heating) and applications (with the majority of applications implementing electric boilers). Decarbonising such a broad range of industries would not only make Europe's industry more competitive but would also enhance energy independence and economic security. This highlights that decarbonisation is not only essential for achieving climate neutrality but is also a strategic driver of industrial competitiveness and greater economic autonomy.

The auction was divided into three 'topics', based on temperature and installation capacity: 13 bids were received for the high-temperature heat topic, amounting to €519 million in support, the medium-temperature heat topic above 5 MW capacity attracted 54 bids, requesting a total of €659 million; while 18 bids requesting a total of €229 million were received for the medium-temperature heat topic with 3-5MW capacity.

Over five years of operation, it is estimated that the submitted project proposals could deliver substantial greenhouse gas emissions reductions, avoiding an estimated 3.78 million tonnes of CO2equivalent emissions and producing around 19.40 terawatt-hours (TWh) of thermal energy. The bids represent an electrified thermal capacity of 981 megawatts (MW). The successful projects will receive an output-based fixed premium linked to verified decarbonised heat production for up to five years.

IF25 Hydrogen Auction

The third European Hydrogen Bank auction implemented via the Innovation Fund (IF25 Hydrogen) continues to provide fixed-premium payments to projects, helping to bridge the gap between domestic production costs and the current market price. Increasing hydrogen production is key to securing Europe's energy security and climate neutrality goals by reducing our reliance on fossil fuels. Hydrogen can be used to replace fossil fuels in hard-to-decarbonise industries and transport sectors.

Receiving a total of 58 bids from projects in 11 countries, the auction continues to attract substantial interest from European hydrogen producers. The total amount of support requested from the Innovation Fund was €8.4 billion, which oversubscribes the €1.3 billion budget by more than 6 times.

For the first time, the auction included a topic for producers with maritime or aviation off- takers, as well as an expanded eligibility to include projects producing electrolytic low-carbon hydrogen (ie from nuclear energy) as well as renewable fuels of non-biological origin (RFNBO) hydrogen. The RFNBO hydrogen production topic attracted 50 bids and more than €7.3 billion in requested funding. Meanwhile, the requested support in the RFNBO and electrolytic low-carbon hydrogen topic received 5 bids for more than €800 million in funding, and the maritime and aviation topic collected 3 bids and €163 million of requested support.

The bids submitted could result in the installation of a total electrolyser capacity of 4.3 gigawatts electrical (GWe). The projects selected for grants will receive support in the form of a fixed premium payment upon verified and certified production of hydrogen for a maximum period of ten years.

Auctions-As-A-Service

Via the 'Auctions-as-a-Service' feature, an additional €1.3 billion from Germany and €490 million from Spain will be mobilised to support projects in these Member States. This complements the €2.3 billion already allocated from the Innovation Fund (€1.3 billion for the hydrogen auction and €1 billion for the heat auction).

The mechanism allows Member States to use the Fund's auction design and implementation framework to channel national resources to promising domestic projects. Germany will support RFNBO hydrogen production with €1.3 billion. Spain will contribute €440 million to hydrogen projects under the IF25 H₂ Auction and €50 million to industrial heat decarbonisation under the IF25 Heat Auction.

Next steps

The European Climate, Infrastructure and Environment Executive Agency (CINEA) will now proceed with the evaluation of the submitted bids. This includes admissibility and eligibility checks, followed by the assessment of applications against the qualification requirements and a price-based ranking of eligible bids, in line with the award criteria set out in the calls.

The selected heat projects will be required to reach financial close within two years of grant signature and to start operating within four years. Selected hydrogen projects will have to reach financial close within two and a half years of grant signature and start producing clean hydrogen within five years.

CINEA will communicate the first evaluation results between May-June 2026. Successful applicants will be then invited to prepare and sign corresponding Grant Agreements, with final awards expected by the fourth quarter of 2026.

Background

The Innovation Fund is one of the world's largest funding programmes for the demonstration and commercialisation of innovative net-zero and low-carbon technologies, supported by revenues from the EU Emissions Trading System. With around €12 billion awarded, the Fund supports around 200 innovative projects across the EEA.

The Innovation Fund's auctions complement its traditional calls for proposals by enabling a market-based allocation of support, helping to direct funding where it can most efficiently unlock investment in innovative low-carbon technologies.

The IF25 Heat auction is a first-of-its-kind initiative to reduce industrial heat emissions. While there is a considerable potential across all industrial sectors, the uptake of decarbonised solutions for process heat production is very slow. The initiative seeks to fast-track projects that significantly cut emissions and enhance the appeal of low-carbon heat solutions across the European industry and contribute to industrial competitiveness.

The European Hydrogen Bank was launched to support the scale-up of renewable hydrogen production in the EU through competitive bidding. The IF25 Hydrogen auction is the third edition, beginning in 2023. The first EU-wide hydrogen auction (IF23 Auction) attracted 132 bids with six projects signing their grant agreements. In 2024, the 2024 Hydrogen Auction (IF24 Auction) received 61 bids and six projects signed grant agreements.

In addition to the auctions, the Innovation Fund continues awarding project support through regular grants. With an allocated budget of €2.9 billion, the Innovation Fund 2025 Net-Zero Technologies call (IF25 NZT) is still open for applications until 23 April 2026, seeking to bridge investment gaps, attract public and private capital, and strengthen Europe's leadership in clean-technology manufacturing and deployment. The call supports decarbonisation projects of different scales, as well as projects focusing on manufacturing components for renewable energy, energy storage, heat pumps, hydrogen production, and pilots.

For more information

* the contribution from Spain into the hydrogen auction was updated before the closing of the call