05 May 2026 | The Federal Ministry for Economic Affairs and Energy (BMWE) is launching the 2026 bidding procedure for Carbon Contracts for Difference today. More flexible funding conditions are intended to give companies greater planning certainty. Applications may be submitted up to and including 7 September 2026.

Through this funding programme, the Ministry supports investments by energy-intensive industrial companies in forward-looking, low-carbon production processes. In this way, it provides planning and investment certainty for sectors such as the paper, chemical, metal, glass and cement industries.

Compared with the tender process in 2024, the programme’s structure is significantly more technology-neutral and flexible. In future, funded companies will also be able to use technologies for carbon capture and storage (CCS) and carbon capture and utilisation (CCU) to decarbonise their production. Pure industrial steam projects are now also eligible for funding.

Emissions reduction requirements have been revised

To facilitate the implementation of the projects, the BMWE has adjusted the minimum requirements for reducing greenhouse gas emissions. By the end of the fourth full calendar year following the project’s operational start at the latest, emissions must be reduced by at least 50 per cent compared with the baseline – in the first tender process, the target was 60 per cent by the end of the third full calendar year at the latest. In the final twelve months of the contract period, an emissions reduction of at least 85 per cent (previously: 90 per cent) must be achieved.

In addition, the Ministry has made the rules on postponing the start of operations more flexible, enabling companies to better adapt their projects to technological and infrastructural conditions. A new provision governing withdrawal prior to the start of operations increases planning certainty, particularly for projects that depend on critical external factors. Furthermore, the amount of potential repayments has been capped. This improves financial predictability and facilitates business decision-making.

Companies can apply for funding up to and including 7 September 2026. To be eligible, they must have taken part in the preparatory procedure for the 2026 tender process.

Background: Carbon Contracts for Difference

Carbon Contracts for Difference protect companies against fluctuations in the price of CO2. The aim is to ensure that investments in innovative, low-carbon production processes remain economically viable even under volatile market conditions. This provides energy-intensive companies, in particular, with a reliable framework for long-term investment and location decisions in Germany.

Over a period of 15 years, the BMWE will compensate for the additional costs incurred compared with conventional reference systems. In particular, changes in the price of CO2 will be taken into account. Funding will be allocated through a competitive tendering process. The aim is to identify projects that can be implemented with the least possible use of public funds. This ensures that funds are used effectively and that only the most efficient projects are supported.

The programme is aimed at energy-intensive industries whose installations are subject to the European Emissions Trading Scheme.

Contracts for difference are a well-established approach to encouraging investment. They are based on market-based principles. The United Kingdom, France, the Netherlands and Austria also already use contracts for difference to provide security for energy producers or energy-intensive companies.

The funding guidelines for the 2026 bidding process will also be published shortly in the Federal Gazette.