Germany’s Federal Ministry for Economic Affairs and Energy announced today the launch of its 2026 contracts for difference (CCfDs) bidding process, expected to channel up to €5 billion this year to support investments aimed at decarbonizing energy-intensive industrial companies.

The announcement marks the third round of Germany’s 15-year CCfD program, launched in 2023 to help companies in energy intensive industries to invest in low carbon production processes and technologies.

The CCfD program was designed to address the high costs and investment risks preventing companies from investing in decarbonized manufacturing, providing climate protection agreements to shield companies from the price risk of operating the low carbon facilities compared to competitors utilizing conventional fossil-based operations, while the company is responsible for capital investment and operational costs outside of the price gap.

Under the auction-based program, companies submit a bid based on the amount of government support they calculate is needed to avoid a ton of CO2 emissions based on the price gap. If the bid is selected, the company is paid a variable subsidy, based on the actual additional cost relative to the bid value, with the gap expected to close over time as clean energy technologies become more competitive and the carbon price under the EU Emissions Trading System (ETS) increases. If the low-carbon production process ultimately becomes cheaper than the conventional method during the program’s timeframe, the company would be required to repay the difference.

The ministry highlighted several changes to the program for 2026, following feedback from prior rounds, that it said would make the program significantly more technology-neutral and flexible. Most notably, the requirements for the program have been eased from a requirement for CO2 emissions to be reduced by at least 50% after four years with at least an 85% reduction in the final year, compared to the more stringent prior requirement of 60% after 3 years, and 90% in the final year.

Additionally, the program now also allows funding for carbon capture, utilization and storage (CCUS) technologies, if process emissions or emissions that are difficult to avoid are predominant, and also for industrial steam projects that focus solely on generating industrial heat.