Germany has launched a €6 billion ($7 billion) industrial decarbonization package extending its climate protection contracts to include carbon capture and storage (CCS) for the first time.

The initiative targets key heavy industries — steel, chemicals, cement, and glass — to accelerate emissions reduction while maintaining global competitiveness. Under the plan, 15-year state-backed contracts will be awarded through competitive bidding in 2026, pending EU approval.

Announced by Economy Minister Katherina Reiche, the program marks a major step in Germany’s industrial transition strategy, providing financial support for sectors where clean technologies remain expensive. Companies can submit project proposals until December 1, with the first auction round expected in mid-2026 following parliamentary and EU state aid clearance.

The contracts will help offset higher costs of low-carbon technologies and protect firms from energy and carbon market volatility. Awards will be decided through a reverse auction system, prioritizing projects that achieve the highest CO₂ reductions at the lowest cost.

Expanding on previous programs, the inclusion of CCS offers a lifeline to hard-to-abate sectors where electrification and hydrogen are not yet viable. The move aligns with the EU’s Industrial Carbon Management Strategy and upcoming guidance on CO₂ transport and storage infrastructure, paving the way for cross-border carbon management networks.

By coupling policy stability with performance-based incentives, Germany aims to attract private investment into technologies like hydrogen steelmaking, low-carbon cement, and CCS retrofits. While CCS remains controversial among environmental groups, its integration signals Germany’s pragmatic approach to balancing climate ambition with industrial competitiveness.

If approved, the initiative could become a model for other EU nations seeking to combine fiscal support with measurable decarbonization outcomes under the European Green Deal.

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