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EMISSIONS: Germany’s Carbon Subsidy Targets 19% Emission Cuts by 2035

EMISSIONS
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Germany’s carbon subsidy program aims to slash industrial emissions by 19% between 2024-35, with €2.8bn of carbon credits already allocated in mid-Oct in the glassmaking and paper production sectors, BNEF data shows.

  • The first round of contracts aims to save 17 mn/t of CO2 over 15 years, with the price between €27-55/t CO2e below BNEF's forecasts.
  • Funded 15 projects in the first auction, including BASF’s industrial heat pump to produce steam using waste heat and renewables.
  • The mechanism aims to focus on other technologies including hydrogen and bioenergy, with key sectors being glass, chemical and paper industries.
  • The program is expected to prevent 350 mn/t of CO2 emissions by 2045, equivalent to three years of Germany’s industrial emissions in the EU carbon market.
  • The subsidy program was included due to the EU’s carbon price not being high enough to make green technologies cost-competitive.
  • However, free emission allowances have reduced incentives for industrial decarbonisation, according to BNEF.

 

 

 

 








 

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Germany’s carbon subsidy program aims to slash industrial emissions by 19% between 2024-35, with €2.8bn of carbon credits already allocated in mid-Oct in the glassmaking and paper production sectors, BNEF data shows.

  • The first round of contracts aims to save 17 mn/t of CO2 over 15 years, with the price between €27-55/t CO2e below BNEF's forecasts.
  • Funded 15 projects in the first auction, including BASF’s industrial heat pump to produce steam using waste heat and renewables.
  • The mechanism aims to focus on other technologies including hydrogen and bioenergy, with key sectors being glass, chemical and paper industries.
  • The program is expected to prevent 350 mn/t of CO2 emissions by 2045, equivalent to three years of Germany’s industrial emissions in the EU carbon market.
  • The subsidy program was included due to the EU’s carbon price not being high enough to make green technologies cost-competitive.
  • However, free emission allowances have reduced incentives for industrial decarbonisation, according to BNEF.