A broad group of European industry and clean energy associations is calling on the European Commission to establish a recurring Innovation Fund Heat Auction from 2026 onwards, as part of the upcoming Electrification Action Plan.
Building on the experience of the pilot IF25 Heat Auction, the signatories highlighted the strong potential of the instrument to accelerate industrial decarbonisation, while stressing the need for improved predictability, clarity and scale to unlock greater participation.
Establish a recurring Heat Auction from 2026
The European Commission should provide an early political signal to continue and replicate the pilot auction on industrial process heat, integrating it into the Electrification Action Plan.
Improve investability through predictability
Clear and timely communication is essential. The short timeline in the pilot auction limited participation and should be addressed in future calls.
Ensure clarity on support conditions
Greater transparency is needed on whether auction support can be combined with other public funding instruments.
Increase ambition and budget
The budget should be scaled up, particularly for medium temperature applications (up to 400°C), where demand was highest.
Use ETS revenues strategically
Efficient use of ETS revenues can strengthen industrial competitiveness, energy security, and decarbonisation, in line with the announced ETS Investment Booster.
Unlock the full potential of industrial electrification
A well-designed Heat Auction can become a cost-effective tool to accelerate industrial decarbonisation across Europe.
Context:
The Innovation Fund Heat Auction pilot (IF25) marked an important step in supporting industrial electrification. Stakeholders welcomed the European Commission’s engagement and the creation of a new financing tool targeting industrial process heat.
However, as a first-of-a-kind instrument, the pilot revealed areas for improvement. In particular, limited preparation time and uncertainty around funding conditions constrained broader industry participation.
At a time of continued energy price volatility driven by fossil fuel markets, scaling up such instruments is essential to support industry in transitioning towards clean, electrified processes.
Joint Letter to establish a recurring Innovation Fund Heat Auction
Read the Joint Letter
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