Germany Launches €6bn Bid for Cleaner Industry with 15-Year CfD Contracts
The German government has initiated the first phase of a bidding process for carbon dioxide contracts for difference (CfD), with €6bn allocated to assist heavy industries in transitioning to cleaner production methods. The 15-year contracts, to be signed in 2026, will guarantee some of the extra costs of greener technologies, with funding allocated through a competitive auction based on proposed CO2 savings and efficiency.
Some companies have already benefited from Germany's climate protection contracts. Chemical giant BASF, for example, has begun producing green ammonia at its Verbund site in Ludwigshafen, reducing natural gas consumption. Funding can be used for various green technologies such as hydrogen-based production systems, electric furnaces, industrial heat pumps, biomass, or other renewable energy sources. It can also fund carbon capture and storage plants, new low-carbon manufacturing processes, or CO2 storage technologies. Companies must reduce emissions by 60% after three years and 90% by the end of the contract. Heidelberg Materials, having launched a CCUS project in France and partnered with Linde for a large-scale CCUS facility in the cement sector, may participate in the CfD process. The tender is structured as a competitive auction to ensure efficient funding allocation and support technology market ramp-up.
The German government's CfD process aims to make low-carbon production technologies competitive despite current cost and market risks. The 15-year contracts, worth €6bn in total, will help heavy industries reduce emissions and transition to greener technologies. The first stage of the bidding process has commenced, with the final auction scheduled for 2026.
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