EU Commission Selects 65 Projects for €400 Million Clean Heat Decarbonisation Funding

The European Commission has selected 65 projects to receive nearly €400 million under the Innovation Fund Heat Auction, the EU's first auction designed to accelerate deployment of clean heat technologies across European industry. The selected projects are expected to avoid more than 6.6 million tonnes of CO2 emissions over 10 years and produce around 16.3 TWh of decarbonised heat in their first five years of operation.

The heat auction was launched as part of a series of cleantech funding opportunities announced by the European Commission in December 2025, financed through revenues from the EU Emissions Trading System. The 65 selected projects, chosen from 85 applicants, span projects ranging in size from 3 MWth to 45 MWth and grant awards from €444,000 to €37.1 million. Projects are located across 10 European Economic Area countries including Austria, Belgium, France, Germany, and Spain, and deploy technologies including heat pumps, solar thermal, direct and indirect resistance heating, and hybrid systems.

Sectors receiving funding include pulp and paper, glass, ceramics and construction materials, iron and steel, food and beverages, textiles, and pharmaceuticals — industries where fossil gas has historically been the dominant heat source and where electrification or alternative clean heat technologies face significant cost barriers. The Innovation Fund Heat Auction is designed to close the cost gap between clean heat technologies and conventional gas-based systems, enabling companies to invest in decarbonised heat production with reduced financial risk.

Grant agreements between the Commission and selected projects will be prepared by the European Climate, Infrastructure, and Environment Executive Agency (CINEA), with agreements expected to be signed in the second half of 2026. Selected projects must reach financial close within two years of signing and begin operations within four years. The equivalent displacement of more than 1.5 billion cubic metres of natural gas by decarbonised heat from these projects illustrates the scale of impact that sector-targeted industrial decarbonisation auctions can achieve — a model relevant to India's own consideration of public finance mechanisms for industrial clean energy transition.

Key figure — Nearly €400 million awarded to 65 projects expected to avoid 6.6 million tonnes of CO2 over 10 years