EU sets terms for €1bn industrial heat decarbonisation auction
The European Commission has published final terms for a €1 billion auction funding projects that cut emissions from industrial process heat, opening in December 2026.
The story in focus
The European Commission published final terms for its second Europe-wide auction to decarbonise industrial process heat, with a planned €1 billion budget from EU Emissions Trading System revenues. Bidding is expected to open in early December 2026, offering fixed premium subsidies tied to emissions reductions for up to five years.
- The auction has a planned €1 billion budget funded by EU Emissions Trading System revenues.
- Successful bidders receive a fixed premium subsidy linked to CO2 abated, for up to five years.
- For the first time, nuclear technologies such as small modular reactors are eligible.
What the auction funds
The IF26 Heat Auction targets industrial process heat, the energy used to reach high temperatures for manufacturing in sectors such as chemicals, pulp and paper, steel, food and beverage, and cement. The Commission states these processes are largely fossil-fuel powered and account for three-quarters of industrial emissions.
Support covers three categories: electrified technologies including heat pumps, thermal storage, 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. Eligibility now includes projects producing heat above 80°C, previously limited to above 100°C.
Timing and next steps
The Commission published the final terms on 24 September 2026. It expects the bidding window to open in early December 2026 and is holding national information webinars through October. The scheme follows the first auction, which selected 65 projects. Both are pilots for the Industrial Decarbonisation Bank, which aims to provide €100 billion for industrial decarbonisation. The Commission also says the auction may be topped up by Member State contributions.
What does a successful bidder receive?
Winning bidders receive a fixed premium subsidy proportional to each tonne of direct CO2 emissions abated, for a maximum of five years, according to the Commission's terms.
Sources & further reading
- Commission publishes terms and conditions for €1 billion industrial heat decarbonisation auction ↗climate.ec.europa.eu
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