Key Differences in Debate The main divergence in views during the European Commission's Innovation Fund 2025 Heat Auction Info Day centered around the policy rationale and eligibility criteria for the auction. Alexandre Paquot (DG CLIMA) advocated a broad industrial process heat decarbonisation approach, stressing that auctions are the most cost-effective way to close the funding gap for electrification and renewable heat solutions. In contrast, Ewelina Daniel (DG CLIMA) and Rowan Steele (DG CLIMA) took a more restrictive stance on eligible technologies, excluding biomass heating, hydrogen, district heating, and fossil fuel use beyond narrowly justifiable safety backups. They stressed strict eligibility boundaries to ensure environmental integrity.
Context and Setting This debate took place during a technical and administrative briefing session organized by the European Commission on 10 December 2025. The meeting aimed to inform potential applicants about the structure, eligibility, evaluation, and operational requirements of the Innovation Fund's pilot auction focused on industrial heat decarbonisation across the EU and EEA.
Policy Proposals and Details Alexandre Paquot outlined the auction's overarching policy rationale, emphasizing that industrial process heat emissions are a major but under-addressed challenge. He proposed using fixed premium, price-based auctions as a pilot for a future Industrial Decarbonization Bank. By focusing on cost-effective CO₂ abatement, the auction would support electrification and renewable heat technologies.
Ewelina Daniel and Rowan Steele, on the other hand, provided detailed eligibility rules carving out which technologies qualify. They explicitly excluded biomass, hydrogen, new fossil fuel capacity, and heat sources not directly related to the industrial process (e.g., district heating or electricity generation waste heat). They also defined auction baskets by temperature level and capacity, ensuring targeted funding.
Design and Auction Mechanics The auction operates in three segments separated by heat temperature and capacity to maintain competitive balance. Bidding is strictly pay-as-bid and ranked purely on price per ton of CO₂ abated, with quality and maturity as pass/fail criteria. Flexibility mechanisms, emission factors tied to ETS benchmarks, and strict monitoring and verification systems were detailed by Rowan Steele and Jan Frederick George (Fraunhofer Institute), ensuring accountability.
Stakeholder Impact EU industrial heat consumers and producers stand to benefit from potential decarbonisation funding, but only projects fitting strict eligibility can access support, excluding some technologies like biomass and hydrogen that certain industries might favor. National authorities benefit from clear cumulation and state aid rules, while EU regulatory bodies gain stronger enforcement through detailed MRV provisions. EU taxpayers could see more targeted, cost-effective spending through the price-based auction.
Next Steps The Innovation Fund auction functions as a pilot intended to shape the future Industrial Decarbonization Bank. Given the consensus on using auctions as the preferred funding mechanism but varying on scope and eligibility, further clarifications or expansions of eligible technologies could emerge. Continued input from applicants and stakeholders may influence future calls and policy adaptations.