Industrial decarbonisation: EUR 5 billion German aid scheme approved
A EUR 5 billion German State aid scheme to support the decarbonisation of industrial production processes for companies subject to the EU Emissions Trading Scheme (ETS) has been greenlighted by the European Commission. The scheme aims to accelerate Germany’s climate targets and strengthen sustainable competitiveness across the EU.
It covers the promotion of investments in technologies such as electrification, hydrogen, carbon capture and storage (CCS), carbon capture and use (CCU), and energy efficiency improvements. Supported projects include fuel switching in the cement and lime sectors, electrification in the chemical sector, and replacing conventional steel production with hydrogen-based processes. Beneficiaries must achieve a 60% emission reduction within three years and a 90% reduction by the end of the project, measured against ETS benchmark reference systems.
Support will be granted via 15-year Climate Protection Contracts in the form of two-way carbon contracts for difference, ensuring beneficiaries only receive compensation for the additional costs of decarbonisation compared to traditional methods. Therefore, aid will be allocated through an open, competitive bidding process, based on the lowest requested aid per tonne of avoided CO2 emissions. If the supported technology becomes more cost-effective over time, repayments will be made to the German authorities.
The non-confidential version of the decision will be made available under the case number SA.116065 in the State aid register.
For more information, see the Commission’s PR.