Germany to allocate €53 billion to decarbonize economy

The German government will allocate €53 billion in support for industrial enterprises as part of a program aimed at decarbonizing the country's economy.

This was reported by Reuters

Thus, Berlin is financing the transition of its industrial sector to carbon-neutral production technologies.

The financial support should primarily help steel, cement, paper, and chemical producers decarbonize their facilities. According to the Ministry of Economy, as part of this campaign, companies will be able to apply for support, which will amount to an average double-digit billion euros over the next 15 years.

The Minister of Economy and Energy Robert Habeck also noted that even though the country is "in a prolonged recession, in an extremely difficult economic period," not providing investment incentives is not the way out.

“Nevertheless, it can’t be right to not provide investment incentives and investment impulses in this phase. We’re rather observing a weakness in investment and in innovation in Europe and in Germany," the Minister said.

Robert Habeck also added that companies will have two months to submit their applications, thereby expressing their interest in fulfilling Germany's plan to become a carbon-neutral country by 2045. Firms that emit 10 kilotons of CO2 per year will be able to participate in the auction, which opens the door for thousands of medium-sized companies. The Minister also added that the company with the lowest bid will win.

While decarbonization is already starting to gain momentum in Western Europe, the Eastern European region still has a large carbon footprint due to the widespread use of oil and coal. Last year, most of the countries that still used lignite and had previously announced their intention to phase it out in the medium to long term were forced to return to using coal-fired power plants due to Russia's war in Ukraine in February 2022.

According to a report published by Gas Infrastructure Europe, after the European Union began to impose sanctions, particularly on Russian gas, EU countries began to look for alternatives. One of them was biomethane. According to EU plans, it can replace about 17 billion cubic meters of annual natural gas imports. The report also shows that some of the countries in Eastern and Central Europe have already included biomethane in their country's decarbonization prospects.

In 2021, the European Council adopted a climate law under which the EU pledged to reduce greenhouse gas emissions by 55 percent by 2030. It also agreed to set a long-term goal of achieving climate neutrality by 2050.

At the same time, there are promising centers in Eastern Europe related to the hydrogen infrastructure development. For example, Ukraine is one of the largest sources of imported green hydrogen, providing good conditions for large-scale production.

Earlier, Minister of Energy of Ukraine Herman Halushchenko and Vice Chancellor of Germany, Federal Minister for Economic Affairs and Climate Protection Robert Habeck signed a joint Statement of Intent in Kyiv that expands the areas of the German-Ukrainian Energy Partnership with a focus on green renewable energy and the restoration of Ukraine's energy sector.