The European Union’s announced €100 billion Industrial Decarbonisation Bank (IDB) is a significant step; its ultimate success depends on how well it is designed to move projects into active operation, Clean Air Task Force said in a new report published today.

The report lands days before the European Commission’s 17 July package, which is expected to bring forward the EU ETS revision, the Electrification Action Plan and a proposal for the IDB itself. With the IDB expected to draw a share of its funds from additional ETS revenues, its design is inseparable from the wider reform: how the carbon market is revised will directly shape whether the IDB can deliver bankable, long-lived industrial projects.

“Europe already has strong industrial decarbonisation projects in the pipeline. The challenge is getting more of them to the final investment decision and into operation. The Industrial Decarbonisation Bank should be designed to close that delivery gap,” said Adriana Matić, Associate, Carbon Management, Europe at Clean Air Task Force.

The EU ETS Innovation Fund, which has been in operation since 2020, supports first-of-a-kind projects. That focus is a strength, but it leaves it less suited to large-scale deployment. According to the European Court of Auditors, of 208 signed Innovation Fund grant agreements reviewed as of June 2025, only 16 had entered into operation. The IDB should complement it, taking proven technologies into large-scale deployment.

CATF recommends the IDB:

• Fund projects that can deliver. The IDB should concentrate funding on projects with a firm commitment to build, including anchor projects that reduce cost and risk for follow-on facilities.
• Design the IDB as a coordinated system. Carbon contracts for difference should work alongside project-development support and targeted infrastructure funding to address project readiness, long-term revenue certainty and enabling infrastructure available on time.
• Coordinate infrastructure with project delivery. The IDB should fund shared infrastructure (CO₂ transport and storage, hydrogen and grid) contingent on confirmed carbon contract for difference awards from a viable user base and aligned to delivery milestones.

The Draghi report estimates that the four largest energy-intensive industries alone will require around €500 billion in capital investment over the next 15 years — before accounting for the cost of operating new plants.  Public funding cannot close that gap alone – closing it will require mobilising private capital and Member State funding alongside the IDB.

“€100 billion is a serious commitment, but Draghi put the capital expenditure bill alone at €500 billion — and that is before the cost of keeping these plants running,” said Phil Cohen, Director, Industrial Innovation, Europe at Clean Air Task Force. “The Industrial Decarbonisation Bank must be the start of the journey, not the end.”

This supply-side support should be matched by demand-side measures under the proposed Industrial Accelerator Act that can help create a market for low-carbon products.

“The EU is often criticised for operating on a patchwork of policy instruments that do not always sync up and are difficult for decarbonisation projects to navigate,” said Maja Pozvek, Senior EU Affairs Manager at CATF. “The future Industrial Decarbonisation Bank is an opportunity to be nimble and address several enablers of operating projects at the same time.”

The choices made in designing the bank will determine whether Europe delivers operating projects at scale, or repeats the gap between funding allocation and project delivery.

The report, Designing a €100bn Industrial Decarbonisation Bank to Deliver Operating Projects, sets out a practical blueprint for the IDB ahead of the European Commission’s expected proposal.