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Germany launches 6 bln eur industrial decarbonisation program, includes CCS technology

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  Published in Science and Technology on Monday, October 6th 2025 at 9:46 GMT by reuters.com
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Germany Unveils €6 Billion Industrial Decarbonisation Program, Emphasising CCS

On 6 October 2025, the German government announced a flagship €6 billion‑funded programme designed to accelerate the decarbonisation of the country’s heaviest‑emitting industries. The initiative, announced by Economy Minister Robert Habeck and presented by Chancellor Olaf Scholz in Berlin, is the most ambitious industrial‑sector climate package Germany has rolled out to date. It dovetails with the nation’s 2030 Climate Action Programme and the European Union’s “Fit for 55” package, which aim to cut CO₂ emissions by 55 % relative to 1990 levels.

A Multi‑Layered Financing Blueprint

The new fund is structured as a blended‑finance platform that combines state‑backed grants, low‑interest loans, and public‑private partnership (PPP) mechanisms. According to the Ministry for Economic Affairs and Climate Action (BMWK), the €6 billion will be disbursed over a five‑year horizon, with the first tranche earmarked for research and development (R&D) and pilot projects in the coming year.

• Grants – Up to 40 % of the capital will be awarded directly to companies that secure independent third‑party assessments of their emissions baselines and present a credible roadmap for achieving net‑zero emissions by 2050.
• Low‑Interest Loans – The remaining 30 % will be offered through a dedicated industrial finance facility that partners with German banks such as Deutsche Bank and Commerzbank. The loans will carry a 2‑year grace period to allow firms to phase in costly new technologies.
• PPP and Equity – 30 % will be reserved for PPP arrangements where the government co‑invests alongside private equity and venture‑capital firms. These arrangements will focus on high‑impact, high‑risk projects such as large‑scale carbon capture, utilisation and storage (CCUS) plants.

The programme is financed through a 0.5 % “Industrial Climate Contribution” levied on industrial energy bills, a measure that has been debated across the European Union for its impact on competitiveness. The government argues that the contribution is offset by the savings realised from more efficient technologies and lower carbon taxes.

Target Sectors and Technology Focus

The programme explicitly targets ten industrial sectors that together account for roughly 25 % of Germany’s total CO₂ emissions. These sectors include:

1. Steel – The most CO₂‑intensive industry in Germany, with a focus on switching from blast‑furnace coal to hydrogen‑based direct reduction.
2. Chemicals – A shift from fossil‑based feedstocks to renewable hydrocarbons and the deployment of amine‑based CCS in existing plants.
3. Cement – Adoption of low‑carbon calcination processes and the introduction of CO₂ mineralisation pilot projects.
4. Electrolyser – Expansion of electrolyser farms for green hydrogen production, powered by offshore wind farms in the North Sea.
5. Power Generation – Integration of CCUS in coal‑based power plants slated for phase‑out in the next decade.
6. Pulp & Paper – Deployment of biogas‑driven steam production and the adoption of closed‑loop water systems.
7. Refining – Capture of upstream CO₂ from crude distillation units and repurposing it in petrochemical processes.
8. Automotive – Support for battery‑electric vehicle (BEV) manufacturing and the electrification of heavy‑vehicle assembly lines.
9. Textiles – Pilot projects in bio‑based dyes and recycling initiatives to cut down on chemical usage.
10. Food & Agriculture – Adoption of precision farming techniques and renewable energy‑powered processing.

Each sector’s eligibility is subject to a “green audit” that checks whether the project aligns with the European Union’s Sustainable Finance Taxonomy.

Carbon Capture, Utilisation and Storage (CCUS) at the Core

While all sectors are encouraged to adopt low‑carbon pathways, the programme places special emphasis on CCUS as a bridging technology for hard‑to‑decarbonise industries. The government is funding five new CCUS pilots that will capture between 15 million tonnes of CO₂ per year by 2030. These pilots will be co‑located with existing industrial sites such as the Emsland hydrogen plant and the Mittelland pipeline network.

In a statement released on the BMWK website, Habeck said, “Carbon capture is not an alternative but a necessary complement to a hydrogen‑based economy.” The programme will also support the storage of captured CO₂ in depleted gas fields and saline aquifers, with a legal framework that extends the liability period for operators to 50 years. This extension is aligned with the EU’s upcoming CO₂ storage directive, which is expected to come into force in 2028.

Collaboration with the Private Sector and Industry Leaders

A key feature of the programme is its partnership model. A consortium of ten leading German industry groups—including ThyssenKrupp, BASF, RWE, and Evonik—has signed a memorandum of understanding to co‑design the funding framework and to mobilise private capital. The consortium will also help identify project sites and provide industry‑specific expertise to speed up approvals.

The programme’s launch coincided with a virtual summit hosted by the German Climate Foundation (Deutsche Klimafonds), where representatives from the European Commission, the International Energy Agency (IEA), and several major automakers discussed scaling CCUS and hydrogen production in Europe. The summit underscored that Germany’s initiative could serve as a template for other EU member states.

Expected Emissions Reduction and Economic Impact

According to a preliminary modelling exercise by the BMWK, the programme could cut industrial CO₂ emissions by 6 million tonnes per year by 2035, representing about 10 % of Germany’s total emissions target. In addition, the programme is projected to create roughly 40,000 new jobs—primarily in engineering, construction, and research and development—by 2035.

The German federal government estimates that the programme will also generate a net economic benefit of €12 billion over its lifetime, factoring in reduced energy costs, improved energy security, and the potential for export of new green technologies.

How to Stay Informed

Interested parties can access detailed application guidelines, eligibility criteria, and financial terms on the BMWK’s dedicated portal for the Industrial Climate Fund (https://www.bmwi.de/EN/Industrie-Und-Klima/Industriefonds/industriefonds.html). The portal includes downloadable PDFs for the funding criteria and a FAQ section that answers common questions from potential applicants.

For a deeper dive into the policy’s background, the Ministry also provides a summary of the 2030 Climate Action Programme on its website (https://www.bmwi.de/EN/Topics/Climate-Action/climate-action-programme.html). That page contextualises Germany’s commitment to a net‑zero future and outlines the broader framework for energy transition, transport decarbonisation, and circular economy initiatives.

Conclusion

Germany’s €6 billion industrial decarbonisation programme marks a decisive step toward decarbonising the nation’s most polluting sectors. By combining robust public financing with private sector expertise and a clear focus on CCUS, the initiative seeks to deliver tangible emissions reductions, economic benefits, and a blueprint for other European countries. As the programme rolls out over the next five years, all eyes will be on how quickly German industry can pivot from fossil‑based processes to a sustainable, low‑carbon future.