The European Commission has approved a German alternative plan for industrial decarbonization valued at 5 billion euros (approximately 40.3 billion yuan). This plan covers green hydrogen and carbon capture, utilization, and storage (CCUS) projects.
The plan will provide funding support through a cost-competitive tendering process for projects that achieve at least a 50% reduction in emissions within four years and an 85% reduction by the end of a 15-year contract period.
Eligible projects will be located within industries covered by the EU Emissions Trading System (EU ETS), such as metals, ceramics, and chemicals, and will receive annual subsidies based on their progress toward emission reduction targets.
Approved under EU state aid rules, the plan will be supported through a "two-way contract for difference" mechanism, setting a guaranteed strike price for the producers' products.
The measure only covers the additional costs arising from new production processes. If subsequent operational costs decrease, recipients of the funding must return the difference.
This new plan was introduced following the German government's decision to redesign a previous version. The earlier version, approved in March 2025, required projects to reduce emissions by 60% within three years and achieve a 90% reduction target by the end of the contract period.
The European Commission's Executive Vice-President for the "Clean, Fair, and Competitive Transition" stated that this support measure can promote decarbonization in a "targeted and proportionate" manner, while maintaining a level playing field and encouraging pragmatic market competition.
Previously, Germany implemented a similar plan in 2024, allocating 2.8 billion euros (approximately 22.6 billion yuan) from a total EU budget of 4 billion euros (approximately 32.3 billion yuan) to 15 German industrial projects. These projects spanned multiple sectors within the ETS framework, aiming to reduce approximately 17 million tons of carbon emissions.
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