On 10 October 2025, the Commission published the final Terms and Conditions (T&Cs) for its first European-wide auction for decarbonising industrial process heat (IF25 Heat Auction). Process heat refers to the energy used to generate high temperatures for manufacturing activities in sectors such as chemicals, steel, or cement. Implemented via the Innovation Fund and announced in the Clean Industrial Deal

, this auction aims to support the market uptake of electrified and direct renewable heat technologies in industrial process heating, advancing the decarbonisation of the European industry.  

Funded by revenues from the EU Emissions Trading System

, the auction has a budget of €1 billion to support innovative projects that electrify industrial process heat using technologies such as heat pumps, boilers, plasma torches, resistance heating and induction heating. It can also back projects harnessing direct renewable heat - for example solar thermal or geothermal - as well as hybrid projects that combine different electrification and direct renewable heat technologies.

Building on the success of the Innovation Fund auctions for renewable hydrogen production, under the European Hydrogen Bank, the final T&Cs were prepared following collaborative public consultations with industry and stakeholders. The auction’s budget may also be topped up by national contributions via Auction-as-a-Service

, an approach that has already proven successful in previous hydrogen auctions.  

The new pilot auction is expected to open to bidders in early December 2025. The publication of the final T&Cs provides the opportunity for interested applicants to review the requirements and prepare their bids ahead of the opening of the bidding window. Any questions on the final T&C can be sent to CLIMA-AUCTIONS@ec.europa.eu  

Principal features outlined in the Terms and Conditions include:  

• Fixed premium subsidy: Successful bidders will receive a fixed premium subsidy that is linked and proportional to each tonne of direct CO2 emissions abated for a maximum period of five years.
• Wide scope: The IF25 Heat Auction is open to projects of all sizes from every industrial sector across the European Economic Area.  
• Focus: It serves projects that use continuous industrial processes but also incentivises extra flexibility solutions to avoid electricity consumption in peak hours. 

For more information visit the relevant link.