EU approved replacement €5bn German industrial decarbonisation scheme

The EU Commission has approved Germany’s replacement €5bn ($5.9bn) industrial decarbonisation scheme covering green hydrogen and carbon capture, utilisation and storage (CCUS) ventures.

Through a cost-competitive bidding process, the scheme will fund projects that deliver emissions cuts of at least 50% within four years and 85% by the end of a 15-year contract period.

Considered projects will sit in sectors under the EU Emissions Trading Scheme (ETS) – such as metals, ceramics, or chemicals – and could receive annual payments related to meeting its targets.

Approved under EU state aid rules, the agreements will assist through two-way contracts for difference (CCFD) guaranteeing producers a designated strike price for their product.

The measure only covers additional costs related to new production processes. Should operational costs drop, beneficiaries must reimburse the difference.

The new scheme follows the German authorities deciding to redesign a of the initiative approved in March 2025 which required 60% emissions reductions in three years and 90% through the end of the contract.

Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition, said the support can aid decarbonisation in a “targeted and proportionate” way while preserving a level playing field and encouraging a pragmatic competitive environment.

It follows a similar scheme undertaken in 2024 which ($3.3bn) of a €4bn ($4.6bn) EU funding budget to 15 German industrial projects across ETS encompassed sectors with the aim of removing around 17 million tonnes of emissions.