The Federal Ministry for Economic Affairs and Energy is continuing its funding program for energy-intensive industries through so-called climate protection agreements. The ministry, headed by Katherina Reiche (CDU), launched another bidding process on Tuesday, primarily targeting companies in the chemical, metals, cement, lime, glass, paper, and ceramics sectors. The funding conditions have been adjusted in some areas to benefit the companies.
Robert Habeck (Greens), the previous Chancellor, introduced the funding instrument in 2024. Companies, for example in the energy-intensive glass or paper industries, receive money for each ton of CO2 saved by installing new equipment. The funding is allocated via an auction process: companies state how much money they need to save one ton of CO2 with a new technology. The company that can achieve the most cost-effective greenhouse gas savings wins the bid.
The amount of the payout depends on the development of the CO2 price, the electricity price, and the hydrogen supply. If the CO2 price rises sharply or if the costs for electricity and hydrogen develop better than currently expected, the subsidy will be reduced. According to reports, five billion euros have been earmarked in the federal budget for the current bidding round.
According to the Federal Ministry for Economic Affairs and Energy, the program was revised “based on feedback from industry and other stakeholders.” For example, the requirements for CO2 emission reductions were relaxed, and the use of CCS technology for carbon capture and storage was permitted. Potential repayments to the government for improved performance were limited, and other requirements for companies were eased to allow them to “better adapt to existing infrastructure.”
Furthermore, the Ministry of Economic Affairs and Energy no longer refers to “climate protection contracts” but rather as “CO2 difference contracts.”
AFP translated by Blackout News