State aid: a €5 billion German scheme to support industrial decarbonisation approved by the Commission

"A €5Bn German scheme to help companies in industrial sectors decarbonise their production processes" has been approved by the European Commission on 07/05/2026.

"The aid will take the form of two-way carbon contracts for difference with a duration of 15 years. Beneficiaries will receive annual payments linked to market developments, such as EU Emissions Trading System (ETS) allowances or energy input prices, compared to conventional technologies", the Commission specifies.

Eligible projects for this State aid "must involve fundamental technological changes and replace fossil fuels or raw materials with low-carbon alternatives such as electrification, hydrogen, carbon capture and storage ('CCS'), carbon capture and use ('CCU'), the use of biomethane, as well as heat recovery and storage."

The scheme will only support sectors covered by the EU-ETS, which means steel, other metals, plaster, glass, ceramics, paper, pulp, cement, lime, or chemicals.

A competitive bidding process will be run to select projects "based on their cost efficiency, measured as the aid requested per tonne of…