According to the document, which still needs to be discussed with other ministries, companies which demonstrate that they are reducing emissions in their production process will qualify for upfront investment and annual funding.
The mechanism, called 'carbon contracts for difference', aims to shift the energy source used in such industries from coal, oil and natural gas to hydrogen, seen as a more practical alternative to green electricity for industries of that size. Those who ask for the lowest amount of financial assistance while saving the largest amount of greenhouse gases on the lowest energy consumption will be awarded the funds, the document said.
With the price of conventional production rising due to increasingly expensive carbon pollution payments, the state will be able to be reimbursed by companies if their carbon costs rise higher than the initially more expensive carbon-free production methods. "Climate protection contracts therefore not only lead to a reduction in emissions from the subsidized industry," Habeck's document read. "They also provide an incentive for the technologies and infrastructure required for this to be developed and implemented in Germany now."
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