19.10.2026 | Today marks the start of the preparatory procedure for the 2027 bidding procedure. Under the newly devised auction design, the focus is particularly on three technologies for decarbonising industry.

The Federal Ministry for Economic Affairs and Energy (BMWE) has today launched the preparatory procedure for the 2027 bidding procedure under the Carbon Contracts for Difference programme. Participation in the 2027 preparatory procedure is open until 14 December 2026 inclusive. The actual 2027 bidding procedure is expected to begin in May 2027. This will be open exclusively to companies that have previously taken part in the 2027 preparatory procedure. The Carbon Contracts for Difference Funding Guidelines (FRL CCfD) of 4 May 2026, which already formed the basis for the 2026 bidding procedure, also apply to the 2027 preparatory procedure.

Through this funding programme, the BMWE supports investments by energy-intensive industrial companies in forward-looking, low-carbon production processes. The aim is to encourage investment in a range of technologies designed to decarbonise industry. And there is considerable interest in the programme, as demonstrated by the high level of participation in the 2026 bidding procedure.

Changes to the auction design

The 2027 preparatory procedure has evolved in key respects compared with the 2026 bidding procedure. The main change has been to the auction design: for the first time, technology-specific funding budgets have been established, with separate budgets for hydrogen, CCU/CCS and process heat. In this way, the BMWE aims to contribute specifically to the ramp-up of these technologies.

Focus on hydrogen, CCU/CCS and process heat

For example, hydrogen projects can apply for funding from a specially earmarked budget. To do so, companies must commit to a specific minimum level of hydrogen use, for which they are granted a potentially higher strike price in the auction.

CCU/CCS projects are also to be supported in an even more targeted manner through a specific funding allocation. This will enable the CO2 avoidance costs of CCU/CCS to be taken into account more effectively and provide more targeted incentives for market ramp-up.

A separate budget is also available for the decarbonisation of process heat. Particular emphasis is placed on high-temperature processes, such as those used in brick firing, the melting of glass raw materials or the reduction of metal ores. A specific portion of the process heat budget is set aside for such projects.

The level of technology-specific funding will be determined on the basis of participation in the 2027 preparatory procedure and the results of the associated consultation. Hydrogen, CCU/CCS and process heat projects are therefore expressly encouraged to take part in the 2027 preparatory procedure. For hydrogen, at least 1.5 billion euros is earmarked, provided there is sufficient interest. In this way, the BMWE aims, during the development phase of the hydrogen market, to specifically reduce the cost gap between production costs and the price industrial customers are willing to pay, and to support so-called ‘first movers’.

Public consultation

As part of the preparatory procedure for 2027, a public consultation is being held to give businesses, trade associations and other interested parties the opportunity to provide feedback on the design of the funding programme. Participation in the consultation is open from 26 October up to and including 14 December 2026 via an online form, which will be made available on this portal shortly.

The findings from the 2027 preparatory procedure and the consultation are to be incorporated into the further development of the 2027 bidding procedure. Changes to the funding call for the 2027 bidding procedure, compared with the version applicable to the preparatory procedure, are therefore to be expected.

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.