EC approves €4 billion in German aid for industrial decarbonization

Support will be provided through bilateral carbon contracts for difference (CCfD)

At the end of last week, the European Commission (EC) approved a €4 billion German state aid program aimed at supporting the country’s industry in decarbonizing production. This is reported by Clean Energy Wire.

The support will be provided through bilateral carbon contracts for difference (CCfD), which compensate companies for the additional costs of transitioning to climate-neutral production processes. German Minister for Economic Affairs and Climate Protection Robert Habeck welcomed the news as «a pioneering solution for the energy-intensive industry.»

The projects to be supported under the program will range from the construction of electricity-powered glass melting tanks to the replacement of traditional steelmaking processes with direct reduction plants powered by hydrogen.

Soon, the German government will launch the first auction in which companies will be able to compete for support, after the Ministry of Finance and auditors conduct a final analysis. The €4 billion approved by the European Commission is the amount the German government intends to allocate in the first tender. The funds will be paid to the companies in installments over the 15-year term of the CCfD. The first round will have a maximum funding limit of €1 billion per application to ensure that small and medium-sized projects can participate.

In total, the relevant agency intends to allocate more than €20 billion for climate contracts in four rounds of tenders in the coming years.

As GMK Center reported earlier, the EC has approved about €4.6 billion in funding for 24 hydrogen projects in Germany under the Important Project of Common European Interest (IPCEI) Hydrogen program. Financial support is provided to projects along the entire hydrogen value chain, from production to transportation, storage, and industrial use.