German cement producers look to decarbonise with CCfD programme

Germany has announced the launch of Carbon Contracts for Difference (CCfD), a 15-year subsidy programme aimed at helping companies in energy-intensive industries to invest in low-carbon production processes and technologies.

According to Economy and Climate Action Minister, Robert Habeck, the budget for the new scheme is anticipated to reach the “mid double-digit billion” euro range, in line with industry estimates of up to EUR50bn.

The programme was designed to include mid-sized enterprises, with eligible bidders including companies with carbon emissions greater than 10,000tpa. Additional criteria include belonging to an emissions-intensive industry, such as steel, chemicals and cement, and investing in a system with at least 90 per cent lower emissions than current systems. 

The new programme aims to address the high costs and investment risks preventing companies from investing in decarbonised manufacturing. The programme will provide “climate protection agreements,” designed to shield companies from the “price risk” of operating the low carbon facilities compared to competitors utilising conventional fossil-based operations, while the company is responsible for capital investment and operational costs outside of the price gap. 

In addition to helping companies fund decarbonisation initiatives, the programme also acts as a response by Germany growing international competition as major economies worldwide gear up to capitalise on the opportunities to participate in the global transition to cleaner energy systems and industries, with massive energy transition investment plans recently unveiled by the USA, the EU and Canada.