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Germany Launches New Subsidy Scheme to Drive Industrial Decarbonisation, New Incentives for CCS
16th March 2024
On 12 March, the Germany’s Federal Ministry for Economic Affairs and Climate Protection (BMWK) announced a new industry decarbonisation subsidy scheme, launching a funding program through Climate Protection Contracts, also known as Carbon Contracts for Difference.
This move builds on the recent European Commission’s approval of the €4 billion German State aid scheme, partially funded under the Recovery and Resilience Facility to help Germany industries reduce their production processes emissions.
The purpose of the subsidy scheme is to incentivise the development of new technologies and build the infrastructure required to support the transition of the German industry towards carbon neutrality.
As part of the Climate Protection Contracts, energy-intensive industries will receive financial support to compensate for the extra costs undertaken to move to climate-friendly processes and decarbonise their operations.
CCS/CCU projects delivering significant reduction of unavoidable process emissions are eligible for funding, as long as they can:
- Certify the long-term storage or long-term product binding of the emissions
- Deliver emission reductions within the framework of the EU ETS, and
- Ensure the connection to the transport and storage infrastructures is sufficiently secured
The first round of the auction scheme will allocate 4 billion over a period 15 year, and the total funding is expected to be in the double-digit billion range.
The subsidy scheme follows the recent German Government’s release of the key points of its upcoming national carbon management strategy, as well as the draft bill amending the Carbon Dioxide Storage Act.
The policy and financial incentives that the Federal Government has been announcing over the last month mark a crucial step in the country’s decarbonisation pathway, and have the potential to further drive the development of CCS in Germany and across the whole region.
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