The German government has allocated €2.8bn ($3bn) in funding to accelerate decarbonisation efforts, with up to five hydrogen-based projects expected to receive a share of the support.
The “climate protection contracts” will be awarded to 15 projects and have been designed to cover the cost gap between hydrogen use and fossil fuels. The selected hydrogen initiatives will use the funding to decarbonise power processes.
Each company will receive their share retroactively, meaning only after companies have achieved their annual greenhouse gas reductions. H2 View understands that the contracts have a term of 15 years and will be adapted to the development of energy and CO2 prices, making them a “hedging instrument for companies.”
The level of funding depends on how energy carrier and certificate prices develop in the EU emissions trading system. The maximum funding per project will vary and depend on the technology used and production processes in each industry.
After the initial bidding process began in March (2024), companies then had until September 30 to submit their project proposals for the second bidding process, which is expected to start later this year.
After the second round begins, which is anticipated to have a budget of over €10bn ($10.8bn), there will be several months for companies to submit final bids.
“The first climate protection contracts have been signed. As the first EU member state, we are applying climate protection contracts to efficiently promote and advance the decarbonisation of industry,” explained German Federal Minister, Robert Habeck.
“These contracts provide companies with what they need most in times of transformation and in a challenging economic environment: planning security for their investments.
“In times of tight budgets, climate protection contracts also ensure that the state pays only as much support as companies actually need to economically implement decarbonisation over the years.”
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