German government to set aside €4 billion for decarbonization subsidies of industries

BERLIN — The German government will earmark some €4 billion ($4.31 billion) for subsidies to support energy-intensive firms switching to green production, a government source told Reuters on Friday.

As part of Germany’s ambitions to become climate-neutral by 2045, Berlin plans to award companies in industries such as steel, glass, paper and chemicals 15-year subsidies in return for reducing carbon emissions in their production, the economy ministry said in a statement on Friday.

The ministry said the European Commission had approved the subsidies’ instrument, adding that it would launch the first calls for funding shortly.

The companies receiving the aid would be selected through a bidding process in which companies that can cut emissions the most with the least costs would win.

The source said the first call for funding of the first tender will take place in spring this year with €4 billion made available for it, adding that a second round of tenders would follow later this year.

Berlin had originally planned to offer companies subsidies that would total an amount in the mid double-digit billion euros.

But the whole program was at risk following last year’s constitutional court ruling that banned the government from using some €60 billion of debt for climate protection projects.

Through the so-called climate protection contracts, companies will be compensated for the additional costs of green production in industries where climate-friendly production processes cannot currently be operated competitively. —