The funding programme for the decarbonisation of industry will be continued with the 2026 preliminary procedure
On 6 October 2025, the German Federal Ministry for Economic Affairs and Energy (BMWE) published the "Implementation of the preparatory procedure for the 2026 bidding procedure" (in short: 2026 preliminary procedure) in the German Federal Gazette as part of the "Carbon Contracts for Difference" funding programme.
The 2026 preliminary procedure serves to prepare for the 2026 bidding procedure planned for the middle of next year, which will be organised as a competitive procedure for the granting of funding. A preparatory procedure took place last autumn for what was then referred to as the second bidding procedure (second preliminary procedure). The 2026 preliminary procedure is intended to enable additional projects to be included in the auction. This makes sense from the point of view of the BMWE, as various adjustments were made to the funding instrument compared to the first bidding procedure, on the basis of which the second preliminary procedure was carried out. Companies that took part in the second preliminary procedure have the opportunity to confirm their participation in the 2026 preliminary procedure with their previously submitted project outlines or to adapt their projects to the updated draft of the specifications in the funding guidelines for Carbon Contracts for Difference.
The first bidding procedure for the funding programme took place as a pilot round in 2024. In the course of this, the German government concluded Carbon Contracts for Difference with the 15 successfully participating companies with a total volume of up to EUR 2.8 billion.
What are Carbon Contracts for Difference?
Carbon Contracts for Difference work in a similar way to hedging instruments in the financial sector and protect companies that invest in climate-neutral production processes against price risks, e.g. in relation to energy source and CO2 prices. You can find more information on how they work in our article: Carbon Contracts for Difference – funding instrument with role model function.
One of the main changes compared to the first bidding procedure is the planned eligibility of technologies for the capture and storage or utilisation of CO2 (CCS/CCU). While the legal conditions for the use of CCS/CCU were not yet in place in the first bidding procedure, the framework conditions, in particular for the transport and storage of CO2, are now to be created by the planned amendment of the German Carbon Dioxide Storage Act (KSpG) into a Carbon Dioxide Storage and Transport Act (KSpTG).
These and other changes to the funding programme, such as lowering the minimum size of a project from 10 to 5 kt of annual GHG emissions from the relevant reference system, are intended to ensure that the Carbon Contracts for Difference are available to an even larger field of bidders in order to encourage as many players from emission-intensive industrial companies as possible to participate.
Funding programme for Carbon Contracts for Difference: German Federal Ministry for Economic Affairs and Energy reviews architecture of the funding programme by means of the 2026 preliminary procedure and consultation
German Federal Minister for Economic Affairs and Energy Katherina Reiche has announced that the new German government will look at and review the architecture of the funding programme. The new 2026 preliminary procedure will serve this purpose. Participating companies can provide feedback on the planned structure of the instrument. The 2026 preliminary procedure will be accompanied by a consultation process to ensure that the regulations of the funding programme are tailored precisely to the needs of energy-intensive industry. Through this process, the German Federal Ministry for Economic Affairs and Energy aims to ensure that the funding programme is designed to be unbureaucratic, technology-neutral and efficient.
Before the start of the 2026 bidding procedure, in which companies can apply for funding and conclude a Carbon Contract for Difference, it must go through the EU Commission's notification procedure. Once the notification procedure has concluded, the bidding procedure is expected to begin in mid-2026.
After the submission deadline for funding applications for the 2026 bidding procedure, the projects submitted will be reviewed for eligibility. The projects that prevail in the competitive procedure on the basis of the defined funding criteria will then be awarded and given the opportunity to conclude a Carbon Contract for Difference.
The Carbon Contracts for Difference from the first bidding procedure already represent a significant milestone for the promotion of decarbonisation technologies in industry. In addition to energy and emission-intensive industries in Germany, they have also attracted attention abroad. In countries such as France, Belgium, Spain and Japan, funding programmes for decarbonisation based on or incorporating elements of Contracts for Difference are in the planning stage or are in some cases even already being implemented.
