Germany clears $5.9B carbon contracts scheme backed by EU

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🗞️ Driving the news: Germany has cleared a €5 billion ($5.9 billion) Carbon Contracts for Difference scheme to help heavy industry cut emissions, with approval under EU state aid rules

🔭 The context: The program will support sectors such as steel, cement, chemicals, glass and pulp and paper through 15-year two-way contracts
• Companies will receive public funding when low-carbon production is more expensive, but repay support if cleaner technologies become cheaper
• Eligible technologies include electrification, hydrogen, carbon capture, biomethane and industrial heat recovery

🌍 Why it matters for the planet: Heavy industry is among the hardest sectors to decarbonize
• By funding deep emissions cuts and supporting carbon removal technologies such as direct air capture and bioenergy with carbon capture, the scheme could accelerate industrial climate action while reducing reliance on fossil-based production

⏭️ What’s next: Projects must begin by January 1, 2031, achieve at least 50% emissions reductions within four years, and reach 85% reductions by the end of the contract period

💬 One quote: “This scheme will help deliver substantial emissions reductions in key sectors.” — Teresa Ribera, European Commission Executive Vice-President

📈 One stat: Germany is committing €5 billion to the scheme, with funding awarded through competitive auctions based on cost per tonne of avoided emissions

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