Germany launches a 6 billion euro industrial decarbonisation programme, including CCS technology

Katherina Reiche, German Economy Minister, announced a funding initiative of 6 billion euros ($7 billion), aimed at decarbonising industrial processes. This is the first time that CCS technology has been incorporated into climate protection contracts in the country. The program targets sectors that are energy-intensive, such as steel, glass, chemicals, and cement, while Germany tries to meet its climate targets despite concerns about industrial competitiveness. The deadline for registering projects to be included in the next year's auction is December 1.

Bidding will begin in mid-2026, pending approval of the budget by parliament and EU state aid clearance.

The program has been expanded from last year by adding CCS, which captures CO2 and stores it underground.

The government will subsidise the costs of firms that transition to cleaner production methods under 15-year contracts. This will shield them from volatile prices for energy and carbon.

Contracts will then be awarded in competitive auctions. Projects requiring the lowest amount of subsidy per tonne CO2 saved are given priority. Subsidised companies are required to achieve binding milestones for emission reduction.

Industry groups have expressed their support for CCS, and for the flexible approach. They also stressed the need to be pragmatic in balancing the climate goals and economic challenges such as high energy costs and a faltering industrial performance.

(source: Reuters)