Federal Government Launches New Round of CO2 Differential Contracts

October 20, 2026

Source: E & M powernews

The Federal Ministry for Economic Affairs has launched the preliminary process for the 2027 CCfD bidding round. The focus is on hydrogen, CO2 capture, and process heat to accelerate decarbonization.

On October 19, the Federal Ministry for Economic Affairs (BMWE) launched the preliminary process for the 2027 bidding round of Carbon Contracts for Difference (CCfD). Industrial companies must participate in this preparatory process in order to be eligible to apply for funding later. The actual bidding process is scheduled to begin in May 2027.

Through the CCfDs, the ministry aims to promote investments in low-carbon production processes. The program is aimed in particular at energy-intensive companies in the chemical, steel, metals, cement, lime, glass, paper, and ceramics industries. The funding is intended to hedge against part of the cost risk arising from the cost differences that currently still exist between conventional and low-emission technologies.

Three Technology Focus Areas Planned

In the 2027 bidding round, the BMWE intends to specifically promote investments in hydrogen, carbon capture and utilization (CCU) and carbon capture and storage (CCS), as well as process heat. With regard to process heat, the focus is on high-temperature processes. Separate industry-specific funding budgets are planned for each of the three technology areas. In this way, the ministry aims to better account for the varying abatement costs and funding needs.

The size of the individual budgets will depend on the results of the preliminary process. For hydrogen, at least 1.5 billion euros has been budgeted, provided there is sufficient interest. With this funding, the BMWE aims to narrow the gap between production costs and the willingness of industrial customers to pay during the hydrogen market’s development phase. At the same time, the funding is intended to support companies that switch to hydrogen early on.

Funding Conditions Not Yet Final

The final details of the funding call will also depend on the findings from the preliminary process and the consultation process. Therefore, changes to the current draft version are still possible. In addition, the implementation of the 2027 bidding round is subject to budgetary approval. As with previous bidding rounds, approval under state aid law by the European Commission is also required.

In addition to the CCfDs, the BMWE is planning a new round of funding under the Federal Funding Program for Industry and Climate Protection (BIK) for October 2026. The program is intended to support research and development projects that develop low-carbon production technologies and processes. Innovative solutions for the capture, utilization, and storage of CO2 will also be funded.
Both programs address different aspects of industrial transformation: While the BIK supports the development of new technologies, the CCfDs are intended to facilitate their commercial implementation in energy-intensive facilities.

The preliminary application process for CCfD is available on the BMWE portal.

Author: Susanne Harmsen