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European Commission clears €4bn German state aid for industry decarbonization

The European Commission has authorised a four-billion-euro ($4.3 billion) German state assistance programme to help companies in their efforts to decarbonising their production.

The programme intends to assist German businesses reduce greenhouse gas emissions during manufacturing processes. The initiatives financed under the scheme will vary from the installation of melting tanks for glass production using electricity to the replacement of traditional steel manufacturing methods by direct reduction hydrogen-powered facilities.

To be eligible for the measures, projects must achieve a 60% reduction in emissions in three years and a 90% reduction in emissions in fifteen years when compared to the best available conventional technologies based on the ETS benchmarks.

Companies operating in sectors subject to the EU ETS, such as chemistry, metal, glass, and paper, will also benefit from the measures.

The projects that will receive the financing support will be chosen through an open competitive bidding process and ranked based on two criteria: the lowest aid amount requested per tonne of avoided carbon dioxide (CO2) emissions, and the speed with which the projects can achieve significant CO2 emission reductions.

The financing will take the form of variable yearly payouts under two-way contracts for difference, known as ‘Climate Protection Contracts’, with a 15-year term. Beneficiaries will receive a payment or pay an amount to the State each year, based on their bids and the growth of relevant market pricing, such as carbon or energy inputs, in comparison to traditional technology. “The measure contributes to achieving Germany’s climate and energy targets, as well as the EU’s strategic objectives of the European Green Deal,” the EU competition enforcer stated

Source: Energy Ghana