The German government will provide €2.2 billion ($2.36 billion) in new financial support to the decarbonisation of industrial production processes, with a focus on hydrogen.

The measure approved by the European Commission on Wednesday under the Temporary Crisis and Transition Framework will back industrial electrification and the replacement of fossil fuels with renewable hydrogen. Investments related to renewable hydrogen-derived fuels, such as green ammonia, will also be eligible for state aid, Kallanish understands.

In a statement, the EC confirms the scheme will provide direct grants to eligible projects, which “must lead to a reduction of greenhouse gas emissions from production processes of at least 40%, compared to today.”

It’s unclear when companies will be able to start applications, but the aid will be granted no later than 31 December 2025. The maximum benefit will be €200 million per successful project.

“For investments relating to activities covered by the EU Emission Trading System (ETS), the emissions reduction must go below the relevant ETS benchmarks in force at the time of granting the aid,” the EC notes. “In addition, the beneficiaries will not be able to increase their production capacity beyond 2%.”

EC vice-president Margrethe Vestager says the new funding line will help accelerate the green transition, whilst helping Germany to reduce its dependence on imported fossil fuels faster.