Carbon capture to be focus of Germany's next clean industry support auction

Technologies to capture and store or use carbon dioxide from industrial processes will become "a special focus" of the next round of Germany's pioneering subsidy scheme to help bring down emissions in energy-intensive industries, such as steelmaking or chemicals. The country's economy ministry said it launched the preparatory phase of the second auction for support through so-called "climate contracts," which would likely take place towards the end of 2024. Companies interested in placing a bid now have until the end of September to provide information, which would help the ministry design the auction. However, the auction itself still depends on the federal budget negotiations in parliament, and on the European Commission, which would have to allow it based on state aid rules, said the ministry.

Climate contracts are supposed to promote the emergence of more climate-friendly manufacturing procedures for products such as paper, glass, steel or chemicals by bridging the price gap to current CO2-intensive procedures to allow companies to compete on international markets over a period of 15 years. However, once clean production is cheaper than conventional procedures, companies will have to pay the difference to the state. In total, the government has earmarked a mid-double digit billion-euro amount for the climate contracts, but did not say how much would be available for the upcoming round.

Germany launched the first round of auctions – worth a maximum of four billion euros – in March and will announce its winners in autumn, the ministry said. About 20 bids were entered, with a total volume "significantly above" the available funds and many projects focusing on renewable hydrogen, it said. The focus on carbon capture and utilisation or storage (CCUS) in the second round is in line with the government's carbon management strategy, which aims to promote relevant technologies to help Germany reach greenhouse gas neutrality by 2045.