Germany wants to launch a subsidies programme in April for industries to support their switch to climate-neutral production, a document showed on Tuesday, as Europe's biggest economy examines ways to make industry carbon-neutral by 2045.

 

Economy Minister Robert Habeck last year said he was planning to set up so-called "climate protection contracts" from 2023, with 15-year subsidies for energy-intensive industries such as steel, cement and chemicals industries in exchange for reducing carbon emissions in their production.

 

Under the programme, companies can apply for subsidies through an auction process, where they show how much funding they need to switch to green production. Companies with low- cost plans would be first in line to get the subsidies, a draft of the programme's funding guideline showed.

 

"To speed up the process, companies should be asked as early as April, if possible, to express their interest and to provide initial information about their projects," the economy ministry draft read, adding that the start of the first bidding round would depend on how the plan progresses.

 

The auction process would thus cut down on bureaucracy and offer state support for industry quickly and efficiently, the draft said, adding that contracts would be modelled on hedging contracts to limit price risks.

 

The amount of subsidy is measured according to the additional costs of the climate-friendly system the companies plan to install compared with conventional production.

If climate-friendly production becomes cheaper than conventional output, subsidised companies would then repay the state, the draft said.

 

Last month, advisers to the economy ministry said the government should not implement this subsidies plan, saying they would be overly complex, affect company decisions and distort the market. (Reuters)