The European Commission has approved €5bn funding for Germany to reduce carbon dioxide emissions in its industrial production processes through hydrogen, carbon capture, utilisation and storage (CCUS) and electrification.
The funding, approved under EU state aid rules, aims to help companies meet EU Emissions Trading Scheme (ETS) targets and will take the form of two-way carbon contracts for difference, called ‘Climate Protection Contracts’, with a 15-year duration.
The projects supported under the scheme, which will be selected through an open bidding process, will range from the replacement of traditional steel production processes by hydrogen direct reduction processes to fuel switches in the cement and lime sector to electrification in the chemical sector.
To qualify, interventions will need to achieve a 60% emission reduction in three years and a 90% emission reduction by the end of the supported project.
The measure only covers the actual additional costs linked to the new production processes compared with conventional methods. If operating the supported projects becomes cheaper, beneficiaries will pay back the difference to the German state.
Teresa Ribera, Executive Vice-President for Clean, Just and Competitive Transition in the EU, said the scheme would support ambitious projects that significantly reduce the greenhouse gas emissions of industrial production processes in Germany and contribute to the EU’s objective of reaching climate neutrality by 2050.
European member states have until 25 April to respond to a Clean Industrial Deal consultation, ahead of its planned adoption in June.
The Europe Clean Industrial Deal aims to “turn the tide” in the production of clean energy, but so far it has received mixed industry reaction.
The European Biogas Association said it sets no clear pathway for biomethane on the continent, concentrates on electrification and favours less competitive low-carbon gases.
Harmen Dekker, the EBA’s CEO, said the EU should invest in reducing gas dependency much faster. “Biogases will play a decisive role as the most scalable and cost-effective renewable gas, [and an] enabler of much needed grid flexibility,” he said.
One project that looks a fit moved forward earlier this year.
Multinational energy company TotalEnergies recently signed an offtake agreement with German developer RWE which will supply 30,000 tonnes a year of green hydrogen to the Leuna refinery, one of the biggest chemical industrial complexes in Germany, for 15 years from 2030.
The green hydrogen will be produced by a 300 megawatt (MW) electrolyser, built and operated by RWE in Lingen with hydrogen storage provided locally.
Despoina Tsimprikidou, Policy Officer at the Carbon Capture and Storage Association, has given an update on CCUS policy across the UK and Europe, on gasworld’s CCUS: Turning Carbon into Opportunity webinar.
“There still doesn’t seem to be an holistic assessment of the value that CCU can add in terms of achieving Net Zero goals and carbon budgets, so there is further work to be done,” she said.
