The European Commission announced today plans to invest up to €5.2 billion (USD$6.1 billion) in net zero technology, clean hydrogen and industrial decarbonization projects, using funds generated through its EU Emissions Trading System (EU ETS).

The new funding opportunities consist of three calls for proposals, including €2.9 billion earmarked for the Commission’s 2025 Net-Zero Technologies call, €1.3 billion for its third auction for hydrogen production under the European Hydrogen Bank, and €1 billion for its first-ever auction for decarbonization of industrial process heat under the Industrial Decarbonization Bank.

Each of the initiatives will be financed by the EU’s Innovation Fund, from funds raised through the EU ETS. Established in 2005, the ETS puts a price on carbon emissions for key GHG intensive sectors, including electricity and heat generation, oil refineries, steel, cement, paper, chemicals, and commercial aviation, among others. The ETS is expected to generate approximately €40 billion between 2020 and 2030. To date, the Innovation Fund has awarded over €15.8 billion to more than 275 projects.

Teresa Ribera, EU Commission Executive Vice-President for Clean, Just and Competitive Transition, said:

“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.”

Under the new €2.9 billion call for net zero technologies, up from €2.4 billion last year, the fund will support decarbonization projects demonstrating highly innovative technologies and processes that are sufficiently mature and have a significant potential to reduce greenhouse gas (GHG) emissions, with projects to be assessed based on criteria including their potential to reduce GHG emissions, degree of innovation, project maturity, replicability and cost efficiency. The Commission said that this year’s assessment will include a dedicated bonus point for projects coordinated and implemented by SMEs.

The European Hydrogen Bank was launched by the Commission in 2023, to help develop the market for renewable hydrogen. The new funding opportunity marks an increase from last year’s €1.2 billion budget. The funding is designed to provide support for the production of renewable fuels of non-biological origin (RFNBO) hydrogen or electrolytic low-carbon hydrogen, and includes a dedicated budget of €300 million for hydrogen production with off-takers in the maritime and aviation sectors. Projects selected under the auction will receive support in the form of a fixed premium payment upon verified and certified production of hydrogen for up to 10 years.

The Innovation Fund’s first auction for decarbonizing industrial process heat will allocate up to €1 billion to support electrified and direct-renewable heat production, which accounts for three quarters of industrial emissions, according to the Commission. The auction will support technologies ranging from heat pumps, electric boilers, and resistance and induction heating, to direct renewable heat solutions such as solar thermal or geothermal, as well as hybrid projects that combine different technologies.

Wopke Hoekstra, Commissioner for Climate, Net Zero and Clean Growth, said:

“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.”