European industries have shown strong interest in decarbonisation funding, with €10 billion in bids being submitted under the Innovation Fund 2025 auctions
The Innovation Fund 2025 auctions focus on industrial heat decarbonisation and hydrogen production, showing a growing commitment among businesses to transition away from fossil fuels and embrace cleaner technologies.
Applications closed in February 2026. Participation from a wide range of sectors was received. In total, 143 bids were submitted across both auctions, significantly exceeding available funding and underscoring the urgency of industrial transformation in Europe.
Industrial heat projects
The industrial heat auction attracted 85 bids from 14 countries, totalling €1.4 billion. This is the first EU-wide effort specifically targeting the decarbonisation of industrial heat, one of the largest sources of emissions due to heavy reliance on fossil fuels.
Industries including chemicals, food and beverage, and paper manufacturing were some of the most active participants. Many proposals focused on electrification technologies, such as electric boilers and resistance heating systems, alongside renewable solutions, such as solar thermal and geothermal energy.
If implemented, these projects could prevent nearly 3.8 million tonnes of carbon emissions over five years while generating significant amounts of clean thermal energy. The scale of participation suggests that businesses are ready to adopt greener processes, provided sufficient financial support is available.
Hydrogen auction oversubscribes sixfold
Interest was even stronger in the hydrogen auction, where 58 bids totalling €8.4 billion were submitted. Hydrogen is increasingly seen as a key solution for decarbonising sectors that are difficult to electrify, such as heavy industry and transport.
Most applications focused on renewable hydrogen production, though the auction also expanded eligibility to include low-carbon hydrogen produced using nuclear energy. A new category targeting maritime and aviation uses also attracted interest, reflecting the growing role of hydrogen in future transport systems.
Together, the submitted projects could deliver over 4 gigawatts of electrolyser capacity, significantly boosting Europe’s hydrogen production capabilities.
Additional support from national governments will further increase the programme’s impact. Germany and Spain have committed nearly €1.8 billion combined through a mechanism that allows countries to fund projects using the EU’s auction framework. This brings the total available funding to over €4 billion.
The approach enables member states to back promising domestic projects while benefiting from a shared, competitive system for allocating funds.
What happens next?
The evaluation process is now underway, with results expected by mid-2026. Successful projects will need to secure financing within 2 to 2.5 years and begin operations within 4 to 5 years, depending on the project type.
Final funding awards are anticipated by the end of 2026.
The strong response to these auctions signals a clear shift in the European industry. Companies are not only acknowledging the need to cut emissions but are also actively investing in solutions that enhance both sustainability and competitiveness.
