Harnessing EU Innovation Funds for Industrial Decarbonization and Green Technologies
The European Commission has announced a significant new allocation of funds from the EU Emissions Trading System (EU ETS) revenues, exceeding €5.2 billion, aimed at fostering the transition to a low-carbon economy. These funds support critical areas such as industrial decarbonization, hydrogen production, and net-zero technological innovations, reflecting a strategic push towards achieving the EU's climate neutrality by 2050.
At the core of these initiatives is the Innovation Fund, which is one of the largest global programs dedicated to demonstrating and commercializing innovative low-carbon technologies. With a projected budget of around €40 billion until 2030, the fund aims to incentivize investments from both public and private sectors in cutting-edge green solutions. The recent calls include the 2025 Net-Zero Technologies (NZT) initiative with €2.9 billion, an auction for renewable and low-carbon hydrogen production powered by €1.3 billion, and the inaugural auction targeting decarbonization of industrial process heat with a budget of €1 billion.
The Net-Zero Technologies call prioritizes projects demonstrating highly innovative, mature technologies capable of large-scale emissions reduction. It encompasses diverse sectors such as renewable energy components, energy storage, heat pumps, and hydrogen production, including electric-vehicle batteries. Projects are evaluated based on carbon mitigation potential, innovation level, maturity, cost-effectiveness, and replicability. Small and medium-sized enterprises are given a dedicated bonus to foster broader participation.
Hydrogen plays a vital role in Europe's decarbonization strategy. The European Hydrogen Bank offers €1.3 billion support for the production of renewable fuels of non-biological origin and electrolytic low-carbon hydrogen. Support is delivered through fixed premiums over a maximum of ten years based on verified production. This auction also introduces a new focus on hydrogen use for maritime and aviation sectors, aligning with the broader goal of reducing fossil fuel dependency.
The industrial heat decarbonization auction marks a historic step as it targets a significant source of greenhouse gas emissions—industrial process heat—which accounts for three-quarters of industrial emissions. It allocates up to €1 billion to support the deployment of technologies such as heat pumps, electric boilers, resistance and induction heating, and solar thermal or geothermal solutions. Projects are incentivized through fixed, output-based premiums, paid over five years, aimed at closing the current cost gap between sustainable solutions and fossil fuel alternatives.
European member states can further leverage these funds via the Auctions-as-a-Service scheme, enabling additional national financing for projects that meet key criteria but exceed budget limits. Countries like Germany and Spain have committed substantial national funds to support hydrogen and industrial heat decarbonization projects, fostering a collaborative effort across the continent.
Application deadlines for these funding calls extend into early 2026, with detailed info days scheduled to guide applicants through the process. Successful projects stand to benefit not only from financial support but also from development assistance and access to additional public and private funding channels. These initiatives exemplify the European Union approach to building a sustainable, resilient, and competitive industrial sector that aligns with its climate neutrality goals.