In the coming years, the Federal Ministry for Economic Affairs and Climate Action (BMWK) will provide a sum in the mid double-digit billions to support energy- and emission-intensive industrial companies in decarbonisation. To this end, the BMWK published the new funding guideline for climate protection contracts in June 2023.
The aim of the new funding guideline for climate protection contracts
The new funding guideline for climate protection contracts serves the goal of complying with the European Climate Law, which in turn provides for climate neutrality by 2045. By funding emission-intensive companies, the aim is, among other things, to enable a rapid, continuous and cost-efficient transformation of industry towards climate neutrality and to make climate-friendly technologies marketable.
Specifically, the aim is, for example, to kick-start climate-friendly production processes and methods that cannot yet compete economically with conventional processes. Under the BMWK’s model, climate protection contracts correspond to the hedging contracts known from the private sector and are thus risk-hedging instruments to cover price risks that are difficult to calculate.
What is eligible for funding?
To receive funding, companies must operate a reference plant that emits at least ten kilotonnes of CO2. In principle, it is also possible to combine several plants that together exceed this threshold for an application.
Eligible for funding are the construction and operation of transformative production processes that lead to high greenhouse gas savings and can establish themselves on the market through the funding. In addition, the indirect development of infrastructure, lead markets, knowledge and expertise to reduce and avoid CO2 emissions is subsidised under the new funding guideline for climate protection contracts. The same applies to processes with a high degree of value chain integration that fit into the federal government’s industrial and energy strategy and are also climate-friendly from a global perspective.
Funding is awarded through a bidding procedure
The amount of funding is paid out variably according to the additional costs of the climate-friendly plant compared with the conventional plant. As soon as climate-friendly production becomes cheaper than conventional production, however, the payment will be reversed, so that the company concerned pays additional revenue to the state or the termination of the climate protection contract may be considered.
Companies wishing to secure funding under the guideline must take part in a bidding competition for climate protection contracts. First, a preparatory procedure has to be completed, through which information for the bidding procedure is gathered and questions about the funding programme can be asked.
In the auction procedure, companies must then bid how many euros they need to save one tonne of CO2 with their transformative technology. Only the companies with particularly favourable calculations are awarded contracts. The auction procedure eliminates numerous documentation and verification obligations that usually have to be met in a regular grant procedure. This is intended to avoid bureaucratic hurdles for companies.
Participation in the bidding procedure will only be possible again in 2024
Companies wishing to apply for funding under the guideline for climate protection contracts currently need to be a little patient. This is because the deadline for submitting the required information for the first bidding procedure this year already expired on 6 August. Next year, however, it will again be possible to take part in this procedure.
For interested companies, it may therefore already make sense to prepare their own application for funding. KODEX Legal advises companies on the requirements for funding, supports them in this process and ensures that all legal requirements for a successful application are met.
