European Commission prepares €30 B to accelerate industrial decarbonisation

The European Commission is making progress on the design of the Investment Booster, a new funding mechanism aimed at accelerating investment in industrial decarbonisation across Europe. Conceived as the first phase of the future Industrial Decarbonisation Bank, the instrument is expected to mobilise an estimated €30 billion and will primarily target mature industrial projects that are ready to begin implementation. The initiative – whose launch will depend on the approval of the revision of the EU Emissions Trading System (EU ETS) Directive – forms part of the Clean Industrial Deal, the EU strategy to make industrial decarbonisation a driver of competitiveness, strengthen strategic autonomy and accelerate the transition towards a climate-neutral economy by 2050.

The Directorate-General for Climate Action (DG CLIMA) presented the main elements of the proposed mechanism during a stakeholder consultation session held in Brussels on 20 October 2026. The meeting brought together representatives from various industrial sectors, associations and specialist organisations, including Zabala Innovation. According to Susana Garayoa, Head of Institutional Relations at the consultancy’s Brussels office, “the meeting provided an opportunity to understand how this new mechanism could work, which technologies and projects might benefit, and what the next steps will be in defining its funding conditions”.

A new funding model for industrial investment

Under the proposal presented, the Investment Booster will mobilise 400 million EU ETS emission allowances between 2027 and 2030, equivalent to approximately €30 billion based on a reference carbon price of €75 per tonne of CO₂. One of its main innovations is that the mechanism will not rely on grants calculated directly on eligible investment costs. Instead, it will provide a fixed premium per tonne of greenhouse gas emissions avoided and verified. This premium will be determined in advance for different technologies or use cases and may be paid for up to ten years, once projects are operational and have demonstrated their emissions reductions.

Unlike traditional grants, support will take the form of EU ETS emission allowances. Beneficiary companies will be able to monetise these allowances on the market, retain them or use them to meet their regulatory obligations. The number of allowances allocated will be adjusted according to the reference carbon price, while the premium per tonne of emissions avoided will remain fixed. “This model aims to provide greater predictability for project revenues, facilitate access to private finance and help close the profitability gap that continues to hinder the deployment of many decarbonisation technologies,” explains Javier Ordoñez, consultant at Zabala Innovation.

Another distinctive feature will be the funding allocation procedure, based on the first in, first served principle. Unlike traditional competitive selection processes, the Investment Booster aims to establish a more streamlined assessment system, with simplified eligibility checks and resources allocated according to the order in which projects are accepted into the so-called Booster Registry.

However, faster access will come with significant requirements. Under the current proposal, projects will have to demonstrate technical and financial maturity, provide guarantees of implementation and begin construction within a maximum of 30 months of formal approval. The Commission is also considering requiring a bank guarantee or completion bond to ensure that selected projects are actually implemented. This guarantee could be called upon in full or in part if the deadlines for starting construction or commencing operations are not met.

Which sectors and technologies could benefit?

The new instrument will primarily target energy-intensive industries, where reducing emissions requires substantial investment and presents significant technological and economic challenges. During the session, the European Commission presented an initial overview of technologies and industrial applications that could receive support, structured around three main decarbonisation pathways.

• Industrial electrification: heat pumps, electric boilers, resistance heating and other technologies to replace fossil fuels in medium- and high-temperature industrial heating processes.
• Hydrogen: the production and use of renewable and low-carbon hydrogen in industrial processes that are difficult to electrify, as well as its integration into the production of steel, ammonia, methanol and other chemicals.
• Carbon capture and storage (CCS): particularly for hard-to-abate process emissions, such as those associated with cement and lime production and certain chemical processes.

The Commission is also considering adding a fourth pathway focused on circular solutions and material substitution, which would include new raw materials, alternative processes and technologies capable of significantly reducing industrial emissions. The analysis presented covers applications in sectors such as steel, cement, aluminium, glass, ceramics and chemicals, as well as certain waste treatment processes.

“One particularly important point for industry is that the list of technologies has not yet been finalised,” notes Garayoa. During the discussion, various industry representatives highlighted the need to consider projects combining several decarbonisation solutions, ensure technological neutrality and take account of differences between industrial processes. European Commission representatives expressed their willingness to review and expand the identified use cases, as well as to explore the possibility of grouping technologies where appropriate. They also confirmed that SMEs will be able to access the mechanism, provided they meet the requirements for implementation, monitoring and emissions verification.

Infrastructure availability will be a decisive factor for projects

Beyond technological maturity, the Commission recognises that one of the main obstacles to industrial decarbonisation is the availability of energy infrastructure and the difficulty of developing economically viable business models. Electrification projects depend on adequate electricity grid connections, while investments in hydrogen or carbon capture require supply, transport and storage infrastructure. Other challenges include high upfront investment costs, energy and low-carbon raw material prices, and uncertainty surrounding demand for decarbonised industrial products.

The Investment Booster will pay particular attention to these dependencies and could cover certain infrastructure costs borne by project developers. The European Commission also recognises the need for greater coordination between companies, network operators and national authorities to facilitate the development of integrated industrial projects and decarbonisation clusters. Therefore, “the ability to demonstrate that a project has the technical, financial and infrastructure conditions needed to be implemented within the required timeframe will be a key factor in accessing the new mechanism,” warns Ordoñez.

Funding could be combined with other European instruments

“Another aspect of particular interest to industrial project developers is the potential complementarity between the Investment Booster and other funding mechanisms,” says Garayoa. She explains that, under the Commission’s current plans, “projects that have already received support from the Innovation Fund or national public funding could also be eligible for the Investment Booster, provided that the rules on cumulation of aid are respected and overcompensation is avoided”.

Even certain projects that have already reached a Final Investment Decision (FID) could exceptionally be eligible if they demonstrate that an additional funding need remains and that support is necessary to ensure their viability. “This possibility is particularly interesting for large industrial projects that, despite having made progress in their development, face difficulties in achieving commercial viability due to energy costs, market conditions or infrastructure requirements,” explains Garayoa. However, the specific rules governing compatibility and the cumulation of aid have yet to be defined.

“The Investment Booster is intended to complement the Innovation Fund. While the latter will continue to support innovative technologies and projects with higher technological risks, the new Industrial Decarbonisation Bank aims to facilitate the large-scale deployment of more mature solutions,” adds Zabala Innovation’s Head of Institutional Relations in Brussels.

A survey to define the mechanism’s conditions

DG CLIMA plans to launch an online stakeholder survey in November 2026, which will remain open for approximately six weeks. “The consultation will be particularly important for companies developing decarbonisation projects for the 2028–2030 period,” highlights Garayoa. The European Commission wants to gather information on which technologies and industrial applications should be included, the potential emissions reductions projects could achieve and the premium levels needed to make investments viable. It will also seek feedback on the structure of the different technology pathways, eligibility criteria, the methodology for calculating premiums and implementation conditions.

The survey will combine closed-ended and open-ended questions. The contributions will help review the list of technologies, identify industrial applications not initially considered and adjust support levels to reflect actual investment needs. Garayoa is convinced that industry participation will be decisive in shaping the future funding conditions. “It is not simply a matter of providing general opinions, but of contributing technical and economic information that will make it possible to design an effective instrument tailored to the characteristics of different industrial sectors,” she says.

According to the timetable presented in Brussels, the European Commission will analyse the responses during the first quarter of 2027 and expects to publish an initial draft of the terms and conditions in the second quarter of that year.

Early preparation will be essential to access future funding opportunities

Once the regulatory framework has been established and the funding conditions approved, the European Commission plans to launch an open application system that will allow projects to be submitted continuously while resources remain available, with an initial deadline set for the end of 2030 at the latest.

“This approach represents a significant change for companies accustomed to calls for proposals with fixed deadlines and competitive selection procedures,” warns Ordoñez. “Project maturity and the ability to submit a complete application quickly could become decisive factors in securing funding,” he adds. In this context, it will be particularly important to make progress now on aspects such as technology selection, feasibility studies, investment planning, the availability of energy infrastructure and the quantification of potential emissions reductions.

Furthermore, “companies will need to assess their projects’ funding gaps and their ability to meet the planned implementation milestones, bearing in mind that support will be linked to emissions reductions that have actually been verified,” advises the consultant. At the same time, companies should closely monitor the funding opportunities that continue to emerge under the Innovation Fund, including calls for proposals and auctions targeting the decarbonisation of industrial heat and the deployment of clean technologies. “The coexistence of these instruments makes it increasingly important to develop funding strategies that take account of technological maturity, investment timetables and the specific characteristics of each mechanism,” concludes Ordoñez.