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Germany is set to launch a new program that will provide $53.45 billion toward the country’s industrial sector as they shift to carbon neutrality. The program, reportedly sourced from the country’s climate and transformations fund, is meant to boost a European economy that has been facing an ongoing energy crisis.
Eligible companies include those currently emitting 10 kilotons of carbon or more per year. They will be given two months to respond with interest in the program. The specialty chemical industry is expected to make up a large number of these applicants as they were most impacted by supply reduction from Russia and accompanying price spikes in 2022.
“We are in a period of prolonged recession, in an extremely challenging period economically,” said Economy Minister Robert Habeck according to a Reuters report. He also noted that Germany is currently under stricter budget requirements than other parts of the world that are currently offering clean energy investment incentives, such as the United States and Asia.
“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,” he said.
The program also aims to keep companies from leaving the continent due to similar offerings of subsidies and favorable legislation available in other countries. BDI, a German industry association, reported that 16% of surveyed companies were actively shifting to moving production abroad, and an additional 30% were considering it. Germany’s program acts as a response to such challenges, hoping to provide adequate financial support to steel, cement, paper, and chemical industries as they decarbonize production.
Germany and EU Carbon Reform and Energy Investment Policy
Germany’s Climate Action Programme rewards those who produce fewer emissions, making it a more cost-effective decision for companies to go carbon neutral. The government aims to make carbon pricing “the main protection instrument used in all sectors throughout Europe.” The EU’s climate policy works to remove free carbon permits for certain industries and with the world’s first carbon import tax, the Carbon Border Adjustment Mechanism.
These efforts, paired with Germany’s decarbonization financing, will move the country toward its pledge to be carbon-neutral by 2045.