The European Commission, the top competition regulator in the European Union, approved a German state aid scheme for industry worth €2.2 billion ($2.4 billion) on Wednesday.
The German support scheme is designed to help industrial companies reduce their carbon emissions and support their transition away from fossil fuels towards renewable energy sources.
To be eligible to receive German state aid, projects must reduce carbon emissions by at least 40% compared to current levels, a statement from the commission said.
Additional conditions require companies to electrify their production process or swap out fossil fuels for renewable hydorgen energy or fuels produced from renewable hydrogen.
In the aftermath of the full-scale Russian invasion of Ukraine in 2022, the bloc's competition watchdog loosened usually strict competition rules so EU countries could help businesses with subsidies. The German scheme was approved on this basis.
EU Competition Commissioner Margarethe Vestager said the scheme will also help Germany reduce its dependence on imported fossil fuels from Russia.
According to the commission, subsidies may not exceed €200 million ($215.2 million) per recipient and must be granted by December 31, 2025.