Germany allocates €5 billion for decarbonization of industry
The German government will allocate €5 billion ($5.8 billion) to financially support energy-intensive processes for the introduction of low-carbon technologies. This is reported by Bloomberg with reference to the statement of the German Ministry of Economy.
Although the amount available this year is less than the previously allocated €6 billion, it is crucial to help Europe's large economy reduce emissions by two thirds by 2030 (compared with 1990 levels). It will also allow German manufacturers to remain competitive with the industrial sectors of China and the United States. For the first time, CO2 capture and storage (CCS) technologies will be offered under the financing program.
The ministry's statement comes after a period of uncertainty about whether the conservative government of Chancellor Friedrich Merz (who has promised to review environmental subsidies) will make another round of payments under the plan. A significant €23 billion financing idea was rejected after the collapse of the previous government due to budget differences, delaying the launch of the second round.
The new assistance package is aimed at companies in the steel, cement, paper and chemical production sectors. The support mechanism is based on the so–called "climate contracts" (Carbon Contracts for Difference - CCfD). These conditions provide for compensation to enterprises for additional costs incurred during the transition to "green" technologies (for example, the use of hydrogen together with artificial fuels), compared with traditional production methods.
Germany launched the first auction under this program in 2024. At that time, 15 projects in the fields of chemical industry, metallurgy, cement and glass production received subsidies in the amount of 2.8 billion euros.
Climate contracts (renamed "CO2 price difference contracts") are designed to help energy-intensive companies that are required to buy carbon quotas switch to cleaner processes. The financing will raise additional costs for low-carbon production over a 15-year period.
In this round, less stringent control indications are provided for companies: they need to reduce emissions by 50% in four years (in the previous round, 60% was required in three years). In addition, under certain conditions, enterprises will have to return a smaller amount to the state, and it will be easier to terminate contracts if "critical external factors" arise.