In a significant move to accelerate Europe’s transition to climate neutrality, the European Commission has approved a €5 billion German state aid scheme designed to help energy-intensive industries decarbonise their operations. This landmark measure targets companies covered by the EU Emissions Trading System (ETS) and supports the deployment of advanced clean technologies—including electrification, energy efficiency, and hydrogen solutions.
The scheme will facilitate a wide range of projects, from fuel switching in the cement and lime sectors to electrification in the chemical industry and the replacement of conventional steel production methods with hydrogen-based direct reduction processes. These technologies are expected to play a key role in reducing greenhouse gas emissions and enhancing Europe’s energy independence.
Importantly, the aid will be granted through ‘Climate Protection Contracts’—a form of carbon contract for difference lasting up to 15 years. Beneficiaries will receive annual grants based on their bid offers and relevant market prices, such as ETS allowances or energy inputs. The support is strictly limited to covering the additional costs compared to conventional methods, ensuring proportionality and fair competition. If the decarbonised processes become cheaper than traditional alternatives, recipients will be required to return the cost difference.
Projects will be selected through an open, competitive bidding process and ranked according to the lowest aid per tonne of CO₂ avoided. To qualify, projects must achieve at least a 60% emissions reduction within three years, and 90% by the end of the contract.
This approval reflects the Commission’s broader goals under the EU Green Deal and the revised EU ETS Directive, reinforcing the bloc’s ambition to lead in industrial innovation and carbon neutrality. For the hydrogen sector in particular, it sends a strong signal about the EU’s commitment to scaling up hydrogen infrastructure and technology as a viable solution for hard-to-abate sectors.
At ALCHEMHY, we welcome this development as a positive step for the adoption of electrified and hydrogen-driven processes in Europe’s chemical and industrial value chains. Initiatives such as these complement our efforts to develop zero-emission production routes for ammonia and methanol using renewable hydrogen and innovative digital tools.
Stay tuned as ALCHEMHY continues to follow key policy developments that shape the future of industrial decarbonisation in Europe. Check back soon for more insights, project updates and breakthroughs from across the sector!
source: Fuelcellworks.com