EU approves €2.2bn German plan to decarbonise industrial processes through green hydrogen or electrification
The European Commission has given state-aid approval to a plan by Germany to hand out €2.2bn ($2.37bn) of direct grants to support investments that decarbonise industrial manufacturing processes in small and medium-sized companies.
“The measure will be open to companies relying on the use of fossil fuels as energy source or feedstock for their production processes in the industrial sector in Germany,” the Commission explained in a press release.
This decarbonisation would have to take the form of electrification or “investments enabling the substitution of fossil fuels with renewable hydrogen or renewable hydrogen-derived fuels, to foster the transition to a net-zero economy”.
Aid of up to €200m would be available to each beneficiary, and would be granted before the end of 2025.
The €2.2bn scheme is part of the German government’s new Bundesförderung Industrie und Klimaschutz (BIK) funding guidelines (which translates as Federal Promotion of Industry and Climate Protection).
“In future, BIK will support investments in all industrial sectors that reduce CO2 emissions by at least 40% compared to previous emissions by converting their processes from fossil fuels to electricity or renewable hydrogen,” said Germany’s Ministry for Economic Affairs and Climate Action in a statement.
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“For funding amounts of more than €15m, the federal states are required to co-finance 30% [of the grants].”
The ministry adds that the BIK funding is yet to clear national procedures, but will be launched “shortly after” completion of federal adoption.
Last month, Germany launched the first €4bn bidding round of its estimated €50bn Carbon Contracts for Difference (CCfD) programme, which will see heavy industry paid to switch to low-carbon processes — including those that use green hydrogen — instead of polluting fossil fuels.
The new €2.2bn scheme will “supplement” that scheme and “fill the gap for smaller-scale decarbonisation projects”, the ministry explains.
The Commission found that the German scheme is “necessary, appropriate and proportionate to accelerate the green transition and facilitate the development of certain economic activities, which are of importance for the implementation of the REPowerEU Plan and the Green Deal Industrial Plan”, it said.
“This €2.2bn scheme… will help accelerate the green transition,” said Margrethe Vestager, the Commission’s executive vice-president in charge of competition policy. “The measure will also help Germany to reduce its dependence on imported fossil fuels faster, in line with the REPowerEU Plan, while ensuring that potential competition distortions are kept to the minimum.”
This article was updated to include further details of the scheme from the German government.
