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European Commission clears €4bn German state aid for industry decarbonation

The European Commission has approved a €4bn German state aid scheme to help the German industry subject to the EU Emission Trading Scheme (ETS) decarbonise its production processes, considering that the measure is in line with the European and national environmental targets and complies with EU state aid rules. 

To benefit from the scheme, decarbonation projects will have to be led by large industrial emitters subject to the EU ETS (in the chemistry, metal, glass or paper sectors) and will need to achieve a 60% emission reduction in 3 years and a 90% emission reduction in 15 years compared to the best available conventional technologies based on the ETS benchmarks. 

They will be selected through an open competitive bidding process based on the lowest aid amount requested per ton of CO2 emissions avoided, and on the emission reduction pace. Once selected, they will receive 15-year variable annual grants under two-way Contracts for Difference, so-called ‘Climate Protection Contracts'. The scheme will be partially funded through the Recovery and Resilience Facility (RRF).

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