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(Bloomberg) — Germany plans to help energy-intensive manufacturers switch to climate-neutral technologies with about 50 billion euros ($53.4 billion) in subsidies.
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The programme, which still needs EU approval, will run for 15 years and will be open to companies with at least 10 kilotonnes of carbon emissions per year. This will include manufacturers in the steel, chemical, cement, paper and glass sectors.
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“We’re targeting the most emitting companies,” Economy Minister Robert Habeck said Monday at a news conference. With this initiative, the government expects a reduction of 350 million tons by 2045 – a third of the industry target.
Europe’s largest economy aims to cut carbon emissions by two-thirds by 2030 and reach net zero by 2045. To achieve these goals, the decarbonization industry is key, but Germany is struggling to make progress on environmental targets. Habeck’s plan to promote heat pumps over conventional boilers is mired in infighting.
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Germany’s steel sector alone accounts for about 30% of industrial carbon emissions. With the program, the state will cover the cost difference between traditional steel production and “green” steel. The plan will be similar in other industries.
Subsidies are awarded based on the auction. Companies will submit proposals for the amount of assistance needed, with the lowest bids receiving funding. Because of the structure, the exact size of the program is yet to be determined. The economy ministry said the amount would be “in the mid-double-digit range of one billion”.
The plan is similar to the tools Holland uses. The European Commission still needs to approve Germany’s initiative. Although Habeck said there was a basic agreement in place, Brussels would have to check whether the program targets operating expenses and ensure that it does not lead to overfunding when combined with other programmes.
Read more: Germany risks overfunding green steel campaign, experts warn
Habeck said the Economy Ministry responded to previous criticisms of the proposal by making it accessible to medium-sized companies. The ministry said details would be published on Tuesday and the auction would take about two months to complete.