Carbon contracts for difference (CCfDs) are a funding mechanism the German government uses to bridge the gap between the market price of carbon and the higher cost of low-carbon technologies like hydrogen or carbon capture. The idea is to give industrial emitters a guaranteed carbon price, making clean investments more predictable. A recent analysis from NGO Bellona warns that the second round of CCfD funding may disadvantage hydrogen projects. The government set base prices for hydrogen 26% higher than the first round, which Bellona says could raise companies' CO2 avoidance costs and slow the transition. The paper argues for adjustments to avoid steering funds toward less efficient CCS projects instead of hydrogen. For anyone tracking European carbon market design or industrial decarbonization, this is a concrete example of how subsidy structure directly shapes which technologies get built. The full article in Table.Briefings covers Bellona's recommendations in more detail.
