Support will be provided through bilateral carbon contracts for difference (CCfD)
At the end of last week, the European Commission (EC) approved a €4 billion German state aid program aimed at supporting the country's industry in decarbonizing production. This is reported by Clean Energy Wire.
Support will be provided through bilateral carbon contracts for difference (CCfD), which compensate companies for the additional costs of transitioning to climate-neutral production processes. German Minister for Economic Affairs and Climate Protection Robert Habeck hailed the news as “a pioneering solution for energy-intensive industry”.
The projects to be supported under the program will range from the construction of electrically powered glass melting tanks to the replacement of traditional steel production processes with direct reduction plants powered by hydrogen.
Soon, the German government will launch the first auction in which companies will be able to compete for support, after the Ministry of Finance and auditors carry out a final analysis. The 4 billion euros approved by the European Commission are the amount that the German government intends to allocate in the first competition. The resources will be paid to companies in installments over the 15-year term of the CCfD. The first round will have a maximum funding limit of one billion euros per application, to guarantee the participation of small and medium-sized projects.
In total, the relevant agency intends to award more than 20 billion euros for climate contracts in four rounds of tenders in the coming years.
As the GMK Center previously reported, the EC approved around €4.6 billion in funding for 24 hydrogen projects in Germany under the Important Project of Common European Interest (IPCEI) Hydrogen programme. Financial support is provided to projects along the entire hydrogen value chain, from production to transportation, storage and industrial use.
