Berlin German industry can hope for massive state support in the near future for the transformation. As early as April, companies should be able to register their interest in the climate protection agreements with the Federal Ministry of Economics and Technology. This was announced by the house of Robert Habeck (Greens) to the Handelsblatt.
The basis for this is a funding guideline from the Ministry of Economic Affairs, which the economy has been waiting for months. This is now available to the Handelsblatt. It should now be decided quickly within the federal government.
With the climate protection agreements, companies from the energy-intensive industry are reimbursed by the state for up to 15 years for the additional costs that they incur when converting to a green production method. The contracts are considered a central building block in Habeck’s transformation plan. The federal government plans to pay an estimated 68 billion euros in this way.
The contracts are intended to make a decisive contribution to Germany achieving its climate goals and emitting no more CO2 emissions from 2045. This is particularly complex in industry because the manufacturers of basic materials such as steel, cement or glass consume a particularly large amount of energy. As a result, the costs of switching to hydrogen, for example, are particularly high. “The federal government wants to close this gap with climate protection agreements for energy-intensive industrial sectors,” says the Ministry of Economic Affairs.
The preparations for the contracts have been going on for several months. They had already appeared in the coalition agreement. It is a delicate project. Although the federal government wants climate protection, it also wants to prevent the state from paying billions to the economy that doesn’t need it at all.
A first draft of the funding guideline from the Ministry of Economic Affairs caused criticism from many quarters last autumn. The FDP in particular fears that taxpayers’ money will be wasted.
Allocation of climate protection contracts by auction
Habeck has now taken on this matter. In the revised guideline, the ministry now provides for awarding climate protection contracts in competition. Companies can’t just apply and say how much government money they need. The incentive to exaggerate the height would be great.
Instead, the contracts are now to be auctioned off: companies must bid how many euros they need from the federal government so that it is worthwhile for them to switch to green production. Only those companies that want the least money from the state receive it.
This should not only make the transformation of the industry more efficient, but also reduce bureaucracy. If there were no auction, it would have been necessary to carry out a thorough examination of the additional costs companies would incur as a result of the changeover.
With the change of plan, Habeck is reacting in particular to clear criticism from his scientific advisory board. He had recently criticized in a report that there should be no competition for climate protection agreements. The adjustment is now “in the right direction,” says the Chairman of the Advisory Board, Klaus Schmidt, to the Handelsblatt.
However, such auctions are tricky because companies can take legal action if they get nothing. And so the directive leaves several back doors open. In certain sectors, the federal government should be able to do without auctions.
>>Read here: Habeck is helping the industry with billions in the transformation
In addition, not only the cost efficiency should be decisive for the award. “The award process is so complicated and so different in the various industries that it will be interesting to see how much competition is actually left in the end,” warns Schmidt.
repayments to the state
With the expansion of renewable energies and the spread of hydrogen, green production processes are likely to become increasingly cheaper in the coming years. That is why Habeck wants to be able to adjust the amount of the agreed state aid after the climate protection agreement has been concluded.
However, the funding guideline now stipulates that a company only has to emit ten kilotons of CO2 per year so that it can apply for a climate protection agreement.
(Photo: imago images/Arnulf Hettrich)
Take the steelmaker as an example: With the price of CO2 certificates continuing to rise, the old method of production using coal is becoming more expensive. This reduces the gap to operation with hydrogen. Therefore, the amount of aid in the climate protection agreement would be reduced.
Ideas like this don’t go down well in business. “The uncertainty for companies remains high,” said Jörg Rothermel, head of energy at the German Chemical Industry Association (VCI)..
At the same time, companies have to pay money back to the state as soon as green production is cheaper than fossil fuels. “Climate protection agreements should not finance the transformation of the entire industry in Germany, but only initiate it,” says the Ministry of Economic Affairs.
>>Read here: Habeck’s consultants call for a change of strategy in industrial conversion
However, an emergency exit for the industry is likely to lead to discussions with the FDP. The directive stipulates that companies can opt out of the climate protection agreement and thus avoid repayments if at least 80 percent of the companies in the European market in which they operate rely on green production methods.
Extension to the middle class
Small and medium-sized businesses had been snubbed by Habeck’s previous plans. Originally, the Green politician had planned to align the climate protection agreements only with large-scale industry.
However, the funding guideline now stipulates that a company only has to emit ten kilotons of CO2 per year so that it can apply for a climate protection agreement. Before it was 30. For comparison: According to the German Emissions Trading Authority, the Lägerdorf cement works in Schleswig-Holstein produced 1,052 kilotons of CO2 in 2021. In addition, it is now planned that several smaller plants can apply for funding as a consortium.
Achim Dercks, Deputy General Manager at the German Chamber of Industry and Commerce (DIHK), praised the adjustments: “The new design of the climate protection agreements is a good development for larger medium-sized companies.”
Delivery rate dependent on the type of hydrogen
On the other hand, Habeck has sharpened the requirements for the energy used. According to the funding guideline, companies only receive climate protection contracts if their electricity is generated 100 percent from renewable energies.
For the Federal Minister of Economics, the climate protection agreements are the decisive element for the transformation of the industry.
(Photo: Imago Images)
The Ministry is a little more open when it comes to hydrogen. Industrial companies also have the chance of a climate protection contract if they use hydrogen produced with gas – but only if “low emissions” are produced. Specifically, the greenhouse gas emissions must be 73 percent lower than in production processes that use fossil energy directly.
Those who use hydrogen produced from renewable energy also receive a higher subsidy. The climate protection contracts can also stipulate that the companies must increase the proportion of green hydrogen during the contract period.
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