Germany to expand Industrial Decarbonization Support: EUR 6 billion Initiative adds CCS

Germany has unveiled an EUR 6 billion funding initiative that expands climate protection contracts to include carbon capture and storage (CCS), adjusts renewable energy deployment, and introduces regulatory relief for energy-heavy industries, including in the fields of chemicals, pulp and paper, steel, cement and lime, as well as ceramics, glass, and gypsum.

Starting in 2026, CCS and carbon capture and utilization (CCU) projects will be eligible for state-backed 15-year climate contracts under a reverse-auction model. The preparatory phase for the 2026 bidding process launched on October 6, 2025, with participation required by December 1, 2025, to qualify for the auction, expected in mid-2026. Companies will bid based on CO₂ abatement costs, with support covering the gap between low-carbon and conventional production methods, encouraging competitiveness amid volatile energy and carbon prices.

The revised framework extends the existing Carbon Contracts for Difference (CCfD) scheme to support capital and operational expenditures for CCS, hydrogen, efficiency improvements, and fuel-switching in energy-intensive sectors. Projects must meet binding emissions milestones, achieving 60% reductions in year three and 90% in the last contract year. This expansion of the EUR 50 billion CCfD program, first launched in 2023, marks a strategic shift toward technology openness and industrial competitiveness, with budgetary and EU state-aid approval currently outstanding.