On 24 September 2026, the Commission published the final Terms and Conditions (T&Cs) for its second Europe-wide auction for projects decarbonising industrial process heat (IF26 Heat Auction). Today, these processes are largely powered by fossil fuels and represent three-quarters of industrial emissions. The auction has a planned budget of €1 billion coming from EU Emissions Trading System revenues and is expected to open to bidders in early December 2026. Successful bidders will receive a fixed premium subsidy that is linked to its CO2 emissions reductions for up to five years.
Announced in the Clean Industrial Deal the auction will boost investment in homegrown clean energy solutions, strengthening resilience, and reducing energy prices. It follows the successful selection of 65 projects at the first auction, IF25. Both auctions function as pilots for the Industrial Decarbonisation Bank (IDB), that aims to provide €100 billion in funding for industrial decarbonisation.
The IF26 Heat Auction will support innovative technologies to decarbonise process heat from three main categories: electrified technologies such as heat pumps, thermal storages, plasma torches, and electric boilers; direct renewable heat from solar, thermal, or geothermal sources; and, for the first time, nuclear technologies such as small modular reactors. Process heat refers to the energy used to generate high temperatures for manufacturing activities in sectors such as chemicals, pulp & paper, steel, food & beverage, or cement.
The second auction expands eligibility to include projects producing industrial heat above 80ºC, where previously only projects producing above 100ºC were included. It also provides further incentives to implement flexibility solutions which reduce pressure on the electricity system. The final T&Cs were prepared following public consultations with industry and stakeholders. The auction may also be topped up by Member State contributions via Auction-as-a-Service, an approach that has already proven successful in previous auctions under the European Hydrogen Bank.
Publication of the final T&Cs provides interested applicants with the opportunity to review the requirements and prepare their bids ahead of the opening of the bidding window, expected in early December 2026. Any questions can be sent to CLIMA-AUCTIONS
ec [dot] europa [dot] eu (CLIMA-AUCTIONS[at]ec[dot]europa[dot]eu).
Principal features outlined in the Terms and Conditions include:
- Fixed premium subsidy: Successful bidders will receive a fixed premium subsidy that is linked and proportional to each tonne of direct CO2 emissions abated for a maximum period of five years.
- Wide scope: The IF26 Heat Auction is open to projects of all sizes from every industrial sector across the European Economic Area.
- Focus: It serves projects that use continuous industrial processes but also incentivises flexibility solutions to avoid electricity consumption in peak hours or technologies which don’t require electricity.
Find out more
Potential applicants can learn more about the heat auction and ask questions during national information webinars to be organised throughout October by the Innovation Fund National Contact Points. Attendance is open to all.
- 01 October 2026 – Ireland – Register
- 05 October 2026 – Romania – Register
- 06 October 2026 – Spain – Register
- 07 October 2026 – Norway, Sweden, Finland, Denmark – Register
- 13 October 2026 – Germany, Austria – Register
- 20 October 2026 – Netherlands, Belgium, Luxembourg – Register
- 27 October 2026 – Czechia, Slovakia – Register
- 29 October 2026 – Italy – Register
- 30 October 2026 – France – Register
Why industrial process heat?
This auction targets one of the biggest sources of EU industrial CO2 emissions: process heating. This refers to the heat used to transform raw materials into products; from melting plastics and metals to driving chemical reactions. Today, these processes are largely powered by fossil fuels and represent three-quarters of industrial emissions. All industrial sectors have such processes and can take part in the heat auction.
The IF26 Heat Auction aims to close the cost gap between direct renewable heat, nuclear heat or electrification solutions, and fossil fuel-based alternatives. By de-risking these innovative projects, it not only enhances the competitiveness of clean industries in Europe, but also reduces greenhouse gas emissions, boosts energy independence and security, makes energy prices more affordable, and brings our continent closer to achieving its climate neutrality goals by 2050.
With this auction, the Commission continues to deliver on the Clean Industrial Deal and gains important insights for the implementation of the Industrial Decarbonisation Bank.
Background:
The Innovation Fund is one of the world’s largest funding programmes for commercialising and deploying innovative low-carbon and net-zero technologies. Financed by revenues from the EU Emissions Trading System, it helps businesses invest in clean energy and bring market-ready solutions to scale – driving industrial decarbonisation and strengthening European competitiveness. The Fund has already allocated around €12 billion to around 200 innovative projects across the European Economic Area. IF25 and IF26 are implemented under the Innovation Fund.
Kurt Vandenberghe, Director-General, Directorate-General for Climate Action, said:
“This auction is a crucial stepping stone toward the implementation of the Industrial Decarbonisation Bank. It opens the door to scaling investments in industrial electrification technologies driving industrial decarbonisation. I call on industry leaders to join us in tapping into the vast potential for cost-effective emission reductions through electrification and prepare their bids for the auction that will open in early December.”
