The European Commission has unveiled plans to invest €4.6 billion in decarbonization technology and clean hydrogen projects, signaling its commitment to achieving climate neutrality by 2050 and bolstering European industries in key strategic sectors. The funding will be channeled through the EU’s Innovation Fund, financed by revenues from the EU Emissions Trading System (EU ETS).

Of the total investment, €3.4 billion is earmarked for advancing decarbonization technologies, including €1 billion specifically dedicated to electric vehicle battery cell manufacturing. A further €1.2 billion will support the production of renewable hydrogen, facilitated through the European Hydrogen Bank. The funding will be distributed through a series of calls for proposals open until April 2025.

European Commission Vice President Teresa Ribera Rodriguez highlighted the initiative’s dual focus on climate action and industrial competitiveness, stating, "The commission is showing its commitment to deliver on its decarbonization objectives and to support European industries’ competitiveness in key strategic sectors."

The EU ETS, launched in 2005, is the financial backbone of this initiative. By pricing carbon emissions in greenhouse gas-intensive sectors—such as electricity and heat generation, oil refineries, steel, and aviation—the ETS incentivizes emission reductions. Recent reforms expanded its scope and increased the required emissions reductions, with revenues projected to reach €40 billion from 2020 to 2030.

The Innovation Fund, one of the world's largest funding programs for net-zero technologies, is central to the European Green Deal Industrial Plan. It provides financial incentives for companies and public authorities to invest in cutting-edge, low-carbon technologies, reinforcing the EU's leadership in sustainable industries.

The announcement also includes the selection of 85 decarbonization projects set to receive €4.8 billion in 2024. These efforts reflect the EU’s broader strategy to support innovative solutions and enhance the competitiveness of net-zero industries across Europe, ensuring the transition to climate neutrality is both environmentally and economically sustainable.