Germany’s Federal Ministry for Economic Affairs and Energy has announced the launch of its 2026 Contracts for Difference (CCfDs) auction, which is expected to mobilize up to €5 billion this year to support the decarbonization of energy-intensive industries.
This marks the third round of Germany’s 15-year CCfD program, introduced in 2023 to help industrial companies transition to low-carbon production processes. The scheme aims to reduce the financial risks associated with switching to cleaner technologies by covering the cost gap between conventional fossil-based production and low-carbon alternatives, while companies continue to bear capital and operating costs.
Under the auction mechanism, companies bid for government support based on the estimated cost per tonne of CO₂ abatement. Successful bidders receive variable subsidies tied to actual cost differences, which are expected to decline over time as clean technologies mature and carbon prices under the EU ETS rise. If low-carbon production becomes more cost-effective than traditional methods during the contract period, companies are required to repay the difference.
For 2026, the program has been updated to become more technology-neutral and flexible. Emissions reduction targets have been adjusted, with requirements now set at at least 50% reduction after four years and 85% in the final year, compared to the earlier stricter thresholds of 60% and 90%.
The revised framework also expands eligibility to include carbon capture, utilization and storage (CCUS) for hard-to-abate emissions, as well as projects focused solely on industrial heat and steam generation.
