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Today, the Federal Ministry for Economic Affairs and Climate Action (BMWK) launched the first auction for the carbon contracts for difference funding programme. Companies from energy-intensive industries that successfully participated in the preparatory procedure in summer 2023 can apply for 15 years of funding for their largest transition projects in the next four months. The total funding volume is €4 billion.
Federal Minister for Economic Affairs and Climate Action Robert Habeck said: Today is a good day for German industry, climate action and sustainable jobs in our country. First, the carbon contracts for difference help us promote tomorrow’s modern, climate-friendly industrial facilities. This will create new technologies, value chains and infrastructure. Second, it helps industry worldwide to switch to climate-friendly production. And third, by introducing carbon contracts for difference we are setting new global standards for efficient funding with little bureaucracy.
By launching the new programme, we are ensuring that our companies will be able to cope with the transition. We will secure jobs and competitiveness, and will help to combat climate change: the installations funded in the first auction round alone will save several million tonnes of CO₂.
Germany is the first EU Member State to launch funding via carbon contracts for difference. The new and innovative funding instrument previously passed through the European Commission’s approval procedure under State aid rules.
Carbon contracts for difference are intended to trigger the introduction of modern, climate-friendly manufacturing processes in energy-intensive sectors, such as the paper, glass, steel and cement industries. In sectors where climate-friendly production processes are currently not yet competitive, carbon contracts for difference will offset the added cost involved compared with conventional procedures – for a period of 15 years. This will directly prevent the emissions of large amounts of greenhouse gases. In total, approximately 350 million tonnes of carbon emissions are to be avoided as a result of the funding programme in the period to 2045. This corresponds to up to 20 Megatonnes of greenhouse gas reductions a year, i.e. a little more than one-third of the industrial sector’s 2030 target.
Above all, however, the carbon contracts for difference are designed to initiate the urgently needed market transformation: carbon contracts for difference provide an incentive to develop and build the necessary new technologies and infrastructure in Germany already today, such as manufacturing facilities and pipelines. The expertise in the field of financing, construction and operation of climate-friendly installations and markets for climate-friendly end-products (green lead markets) will also be developed. Carbon contracts for difference will therefore boost the strength of Germany’s industry and economy.
Numerous countries inside and outside the European Union intend to set up similar funding instruments in the near future.
The bids can be submitted via the Federation’s easy-Online funding website. Companies can address specific questions to fragen@klimaschutzvertraege.info.
