The European Commission has unveiled plans to allocate up to €5.2 billion (£4.5 billion) towards net-zero technology, clean hydrogen, and industrial decarbonisation projects. This investment will utilise funds generated through the EU Emissions Trading System (EU ETS).
The funding initiative comprises three calls for proposals. €2.9 billion is designated for the 2025 Net-Zero Technologies call, €1.3 billion for the third auction for hydrogen production under the European Hydrogen Bank, and €1 billion for the inaugural auction for decarbonising industrial process heat under the Industrial Decarbonization Bank.
These initiatives will be financed by the EU’s Innovation Fund, which is supported by revenue from the EU ETS. Established in 2005, the ETS imposes a cost on carbon emissions for sectors with high greenhouse gas emissions, including electricity and heat generation, oil refineries, steel, cement, paper, chemicals, and commercial aviation. The ETS is projected to generate approximately €40 billion between 2020 and 2030. To date, the Innovation Fund has allocated over €15.8 billion to more than 275 projects.
Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition at the EU Commission, stated: “By channelling €5.2 billion of EU ETS revenues into net-zero technologies, hydrogen and industrial heat decarbonisation, Europe is not just setting the stage for a greener future and technological leadership but investing in its own future.”
The €2.9 billion call for net-zero technologies, an increase from last year’s €2.4 billion, will support decarbonisation projects employing highly innovative technologies and processes that are sufficiently mature and have significant potential to reduce greenhouse gas emissions. Projects will be evaluated based on their ability to reduce emissions, degree of innovation, maturity, replicability, and cost efficiency. This year, extra consideration will be given to projects coordinated and implemented by SMEs.
The European Hydrogen Bank, launched in 2023, aims to develop the market for renewable hydrogen. This funding opportunity represents an increase from last year’s €1.2 billion budget and supports the production of renewable fuels of non-biological origin (RFNBO) hydrogen or electrolytic low-carbon hydrogen. It includes a dedicated budget of €300 million for hydrogen production with off-takers in the maritime and aviation sectors. Successful projects will receive a fixed premium payment for up to 10 years upon verified and certified hydrogen production.
The Innovation Fund’s first auction for decarbonising industrial process heat will allocate up to €1 billion to promote electrified and direct-renewable heat production, which accounts for three-quarters of industrial emissions. The auction will support technologies such as heat pumps, electric boilers, resistance and induction heating, and direct renewable heat solutions like solar thermal or geothermal, as well as hybrid projects combining different technologies.
Wopke Hoekstra, Commissioner for Climate, Net Zero and Clean Growth, commented: “With this new €5.2 billion call, we are backing the net-zero technologies and industries that will secure Europe’s leadership in the global clean-tech race. These investments will help scale up solutions that cut emissions, strengthen our competitiveness, and create sustainable jobs across the continent.”
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