Germany has launched a €6 billion ($7 billion) program to help its heavy industries slash emissions – the first to formally include carbon capture and storage (CCS) in national climate contracts.
The initiative, announced by Economy Minister Katherina Reiche, targets high-emitting sectors such as steel, cement, chemicals, and glass, where low-carbon solutions remain expensive or technologically challenging.
Companies have until December 1 to submit proposals, with the first auction round expected in mid-2026, pending approval from the Bundestag and the European Commission.
Under the scheme, the government will offer 15-year climate protection contracts that reimburse firms for the extra costs of cleaner production. The contracts are designed to reduce exposure to volatile energy prices and carbon markets, giving companies the stability to invest in long-term decarbonization.
Winners will be chosen through a reverse auction, rewarding projects that achieve the biggest emissions cuts at the lowest public cost. Firms must meet binding reduction milestones over the contract term to ensure measurable impact.
The new program expands Germany’s industrial decarbonization push while extending eligibility to CCS, which marks a major policy turn for a country long divided over the technology. CCS captures CO2 from industrial sources and stores it underground, increasingly viewed as vital for hard-to-abate sectors that cannot fully electrify or switch to hydrogen in the near term.
Relevant: Germany Passes Fast-Track Bill To Build Out CO2 Storage Infrastructure
The rollout still hinges on EU state aid approval, as Brussels reviews similar national schemes under its Industrial Carbon Management Strategy. The upcoming EU guidance on CO2 transport and storage will be key for linking national initiatives into a cross-border carbon network.
Analysts say Germany’s approach of blending long-term policy certainty with performance-based incentives could attract private investment into technologies like hydrogen-based steel, low-carbon cement, and CCS retrofits.
If approved, contracts could begin in 2026, cementing Germany’s role as one of Europe’s industrial climate frontrunners. By embedding CCS into its policy mix, Berlin signals a pragmatic turn: balancing innovation, fiscal support, and competitiveness on the road to net zero.
Read more: New Report By BCG And DVNE Outlines How To Scale Durable CDR In Germany
