Germany plans to help energy-intensive manufacturers transition to climate-neutral technologies with roughly €50 billion ($53.4 billion) in subsidies.
The program, which still needs European Union approval, would run over 15 years and be open for companies with at least 10 kilotons of carbon emissions annually. That would include manufacturers in the steel, chemicals, cement, paper and glass sectors.
“We are targeting the most emitting companies,” Economy Minister Robert Habeck said Monday at a press conference. From the initiative, the government expects a reduction of 350 million tons by 2045 — a third of the industry’s goal.
Europe’s largest economy aims to slash carbon emissions two thirds by 2030 and reach net zero by 2045. To achieve those goals, decarbonizing industry is key, but Germany has been struggling to make headway on environmental goals. Habeck’s plan to promote heat pumps over conventional boilers has been mired in infighting.
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Germany’s steel sector alone counts for about 30% of industrial carbon emissions. With the program, the state would cover the cost difference between the production of conventional and “green” steel. The plan would be similar in other industries.
The subsidies are to be awarded based on auction. Companies would present proposals for the amount of aid needed, with the lowest offers receiving funding. Because of the structure, the exact size of the program has yet to be determined. The economy ministry said the amount would be “in the mid double-digit billion range.”
The plan is similar to instruments used by the Netherlands. The European Commission still needs to approve Germany’s initiative. Although Habeck said there’s a basic agreement in place, Brussels will have to check whether the program is aimed at operational expenditure and ensure it doesn’t lead to over-funding when combined with other programs.
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The Economy Ministry had reacted to earlier criticism of the proposal by making it more accessible to medium-sized companies, Habeck said. Details will be published on Tuesday, and the implementation of the auction takes about two months, the ministry said.
