Germany launches €6 billion industrial decarbonization program

The German government has announced the launch of a large-scale €6 billion program to support industrial decarbonization, including carbon capture and storage (CCS) technology in climate contracts for the first time, according to Reuters.

The initiative targets energy-intensive sectors such as the chemical industry, steel mills, cement and glass companies, amid tough climate targets and concerns about the competitiveness of German industry.

Companies have until December 1, 2025, to submit applications to participate in next year’s auction. Auctions are expected to start in mid-2026, subject to parliamentary budget approval and EU approval of state aid. The new wave of the program expands on last year’s terms by adding CCS, which allows CO2 to be captured and stored underground, reducing harmful emissions.

The government is offering 15-year contracts under which companies will receive subsidies for the implementation of clean production technologies, protecting them from fluctuations in energy prices and carbon emissions. Contracts will be awarded through competitive auctions, with preference given to projects with the lowest cost per tonne of CO2 reduction. Companies receiving support will be required to meet set emission reduction milestones.

Industry associations have welcomed the inclusion of CCS and the program’s flexible approach. They emphasize the need for a pragmatic approach that combines climate goals with economic support, given high energy prices and declining productivity in certain sectors. Experts note that the program could be an important step in maintaining the competitiveness of German industry and stimulating the transition to clean technologies.

As a reminder, German steel producer Salzgitter recently decided to postpone the next stages of its large-scale Salcos green project for three years. The project aims to reduce CO2 emissions in steel production through the use of hydrogen. The decision is explained by difficult market conditions and the slow development of the hydrogen technology market.