Germany has launched a significant €6 billion (approximately $7 billion) funding initiative, pioneering the use of Carbon Capture and Storage (CCS) within its national industrial climate policy. The program, which marks the first time CCS is formally included in Germany's climate contracts, aims to accelerate the decarbonization of energy-intensive sectors critical to the German economy.

The initiative focuses squarely on hard-to-abate industries including steel, cement, chemicals, and glass, where switching entirely to renewable energy or green hydrogen remains technologically or economically challenging in the short term.

The core of the program involves awarding 15-year "climate protection contracts" (Klimaschutzverträge). These contracts are designed to provide crucial financial certainty by reimbursing companies for the additional operating costs of implementing cleaner production methods. This long-term certainty is intended to shield businesses from the volatility of energy prices and the European carbon market, thereby incentivizing major, durable investment in climate-neutral technologies.

Funding will be allocated through a reverse auction process. This competitive mechanism will prioritize projects that can deliver the greatest emissions reductions at the lowest public cost, ensuring taxpayer money is used efficiently. Companies must also meet legally binding reduction milestones throughout the contract duration.

The inclusion of CCS represents a significant policy shift for Germany, which has historically been hesitant about the technology. By embedding CCS into its strategy, Berlin signals a pragmatic recognition that the technology is essential for achieving net-zero goals, particularly in industrial processes where emissions are currently unavoidable.

Companies are invited to submit proposals until December 1. The first round of contracts is expected to be auctioned in mid-2026, provided the scheme receives necessary approvals from both the German Bundestag and the European Commission under EU state aid rules. This move positions Germany as a frontrunner in Europe's industrial climate transition.