Germany has awarded support guarantees to 15 companies under the Climate Contracts for Difference (CCfD) scheme, which aims to put the country's industry sector on track towards climate neutrality, according to Clean Energy Wire.

The scheme, launched by Europe's largest economy last year, aims to prepare Germany's industry sector for decarbonisation and allow the country to achieve climate neutrality by 2045.

The contracts compensate companies for the extra costs of slashing emissions with the so-called "climate contracts," providing them with planning security regarding key transformation projects for 15 years.

The government will remain "completely technology open" regarding the ways participating producers find to meet their targets. The procedures awarded in the first round of CCfDs often used novel technologies that made it hard for companies to gauge financial risks.

However, as rising prices for emissions allowances under the European Emissions Trading System (ETS) are the main instrument for achieving industry decarbonisation across Europe, instruments to slash companies' CO2 footprints would be needed to reduce costs.

Dr Robert Habeck, Federal Minister for Economic Affairs and Climate Action stressed that the programme would close a gap for small- and medium-sized enterprises which had so far received no targeted support.

The scheme would also back technology 'Made in Germany', providing a crucial impetus for manufacturers to keep investing in the country. At the start of the subsidy programme, Habeck said climate contracts overall could save a total of 350 million tonnes of CO2 by 2045, equivalent to a third of the total industry emissions cuts needed to reach the country's climate targets.

The government hopes the contracts, which are also a reaction to green tech subsidies in the US sparked by the Inflation Reduction Act (IRA), will also boost the development of clean industry technologies.

The earmarked sum for the first round of 2.8 billion euros is unlikely to be used in full, as determining how much of it will be used depends on the price development of different energy sources and for carbon emissions allowances in the ETS. The scheme would also back technology 'Made in Germany', which could provide a crucial impetus for manufacturers to keep investing in the country.

Chemical industry association VCI said the new scheme will offer much-needed investment incentives that can help make climate-friendly production procedures competitive on international markets. However, VCI head Wolfgang Große Entrup at a conference by German industry federation BDI said that turning the CCfDs into a broader success would require a parallel drop in energy costs, a sweeping tax reform, and reduced bureaucracy.

Habeck agreed that better framework conditions for all, such as electricity grid infrastructure, are needed to achieve change at the right scale. About 130 companies have shown interest in the scheme's second round, which is supposed to be launched by the end of the year.