The European Commission has granted approval for a €5 billion German initiative aimed at reducing emissions in industries covered by the EU Emissions Trading Scheme (ETS). The program focuses on decarbonizing industrial sectors through advanced technologies such as hydrogen, carbon capture and storage (CCS), carbon capture and utilization (CCU), electrification, and enhanced energy efficiency.
This funding aligns with Germany’s climate goals and the EU’s overarching vision for sustainable growth and competitiveness. The scheme will require participating companies to cut CO2 emissions by 60% within three years and achieve a 90% reduction by the project’s end. These emissions reductions will be measured against benchmarks based on conventional ETS standards.
The aid will be distributed via a competitive bidding process, where projects are ranked by the cost-effectiveness of the CO2 reductions they deliver. Winners will receive 15-year Climate Protection Contracts, ensuring financial support while allowing for market price fluctuations of ETS allowances and energy inputs. If the supported technologies become more affordable than conventional methods, beneficiaries will repay any excess aid to the government.
The scheme is expected to significantly accelerate industrial decarbonization in Germany, supporting sectors like chemicals, glass, and plaster. It also plays a vital role in the EU’s goal to achieve climate neutrality by 2050, while minimizing any competitive distortions.
This new funding initiative follows a similar measure approved in February 2024, emphasizing the European Commission’s commitment to fostering green industrial transformation across the region.
