Germany Launches $53B Decarbonization Program For Struggling Industry

Germany Launches $53B Decarbonization Program For Struggling Industry - Carbon Herald
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Germany is launching a multi-billion decarbonization program to support companies struggling with high costs for raw materials, energy and labour, in a move to help finance a shift towards carbon-neutral production in the industrial sector, Reuters reported this week.

According to unnamed sources, the scheme will offer EUR50 billion (US$53.45 billion) over a period of next 15 years. The money will come from a so-called climate and transformations fund, which includes proceeds from emissions trading and other sources.

However, the ministries of economy and finance have both underlined that talks over Germany’s budget are still ongoing.

The so-called climate protection contracts are a major part of Germany’s efforts to help makers of steel, cement, paper, and chemicals decarbonize their production.

“We are in a period of prolonged recession, in an extremely challenging period economically,” Robert Habeck, Minister of Economy, was quoted as saying to journalists during the announcement of the program.

Relevant: Industry In Germany Wants Carbon Management To Be On Top Of Government’s Agenda

He said that Germany and Europe are falling behind other parts of the world, including the USA and Asia, which are offering investment incentives that are very much needed in this phase.

According to a report by German industry association BDI released on Monday, 16% of surveyed companies are in the process of actively shifting parts of production abroad, while 30% are considering it.

Under the terms of the programme, which is aimed at helping Germany achieve its goal of becoming carbon neutral by 2045, companies will have two months to express interest before the start of the auction process, in which the lowest bids will win.

Firms with annual emissions equivalent to or higher than 10 kilotons of CO2 will be eligible, opening up the scheme for thousands of mid-sized companies, including numerous players in the speciality chemicals segment, which has been most exposed to high energy costs after the spike in gas prices in 2022.

“This is an important signal for businesses and gives them the investment security they need now,” Joerg Rothermel of chemicals lobby VCI was quoted as saying in a comment, praising particularly the inclusion of small and medium-sized enterprises.

Read more: Belgium And Germany Sign Hydrogen And Carbon Capture Agreement

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