BMWE launches preliminary procedure for Carbon Contracts for Difference

The Federal Ministry for Economic Affairs and Energy (BMWE) has launched the preliminary procedure for CO₂ difference contracts in 2026, marking the next step towards the tendering phase of the so-called Climate Protection Contracts.

These Climate Protection Contracts are considered a key instrument of the German government to accelerate the energy transition towards climate-neutral production. The contracts are designed to compensate for the additional costs incurred in developing and operating low-carbon production processes compared to conventional ones. The scheme will also include support for carbon capture and storage (CCS) in the future.

The goal is to create incentives for investments in new technologies whose economic viability has so far been hampered by high costs and volatile energy prices. Compared to the first round of Climate Protection Contracts in 2024, the new version aims to be more streamlined, flexible, and technology-neutral — thereby addressing the needs of small and medium-sized enterprises in particular.

As part of the preliminary procedure, interested companies can submit project outlines and provide information relevant to the design of future tenders. Based on this feedback, the structure of the Climate Protection Contracts will be refined and better tailored to the needs of industry.

According to the BMWE, the preparatory procedure offers companies early planning security and facilitates preparation for the upcoming bidding process, which is scheduled to start in mid-2026. This, however, depends on the timely allocation of funds in the 2026 federal budget.