EU launches first wide-scale auction to fund industrial decarbonisation heating projects

The European Commission’s first EU‑wide competitive auction to decarbonise industrial process heat , the IF25 Heat Auction , represents a tangible step towards the Industrial Decarbonisation Bank envisaged under the Clean Industrial Deal, providing up to €1 billion to close the cost gap between fossil‑fuel heat and low‑carbon alternatives.

According to the original report, the auction targets industrial process heat above 100°C and will award funding to projects that deliver the most cost‑effective CO2 reductions. The scheme explicitly supports electrified solutions (such as heat pumps and electric boilers) and direct renewable heat technologies, including solar thermal and geothermal systems. Industry data shows the call is intended to accelerate commercial deployment by making higher‑temperature heat from sustainable sources financially competitive with incumbent fossil fuels.

The auction design includes two dedicated “medium‑temperature” baskets to reflect typical industrial scale needs: a €150 million tranche for projects sized 3–5 MWth, and a €350 million tranche for projects exceeding 5 MWth. A completion guarantee equal to 6% of the requested maximum grant has been included to deter speculative bids, the Commission published in its terms and conditions. The Innovation Fund calls for proposals were launched in early December 2025 and the final Terms and Conditions were published on 10 October 2025, setting out eligibility and evaluation rules.

Bidders must apply through the EU Funding & Tenders Portal by 19 February 2026, 17:00 CET. The European Climate, Infrastructure and Environment Executive Agency (CINEA) and DG CLIMA will host an online Info Day on 10 December 2025 to walk through the auction objectives, application process and evaluation criteria and to field questions from potential applicants. The Commission has also run preparatory webinars during 2025 to engage stakeholders on the auction design.

For industrial operators and project developers, solar thermal projects are explicitly eligible to the Bank, and the lead report strongly encourages Solar Heat Europe members to submit proposals. According to the announcement, the allocation mechanism will prioritise projects on the basis of cost‑effective CO2 abatement, which should favour mature, scalable solutions that can deliver demonstrable emissions reductions within the funding period.

While the IF25 Heat Auction is framed as a pilot for the broader Industrial Decarbonisation Bank, its immediate aim is pragmatic: to stimulate investment in high‑temperature electrification and renewable heat at industrial scale, reduce reliance on fossil fuels for process heat, and build supply‑chain confidence across manufacturing sectors. Government figures and Commission commentary indicate lessons from this auction will inform future competitive bidding rounds and the eventual structure of the Bank.

For prospective applicants, the practical milestones are clear: review the call fiche and Terms and Conditions; register and submit via the EU Funding & Tenders Portal by 19 February 2026; and attend the 10 December 2025 Info Day for detailed guidance. The company claims embedded in the auction documents should be treated with editorial distance until verified through project selection and implementation outcomes.

This initiative will be of immediate interest to industrial decarbonisation professionals planning capital deployment in process heat, technology suppliers seeking scale, and financial planners assessing grant‑backed business cases that narrow the cost delta with fossil heat.