Economic support for green commodities and fuels: Subsidies

Current status of implementation and existing gaps

Several governments aim to support the deployment of electric trucks through purchase incentives. These include large markets such as Canada, China, EU, Germany and India. In addition to or apart from direct subsidies, some countries offer tax credits.

Examples and initiatives

In the Kingdom of the Netherlands in 2023, the government launched the AanZET subsidy (Aanschafsubsidie Zero-Emissie Trucks) of up to EUR 131 900 per new electric or hydrogen truck. A EUR 30 million budget was rapidly oversubscribed, confirming strong demand. In addition, a EUR 150 million package (2024-2026) was announced to subsidise hydrogen vehicles (trucks, vans, buses) and hydrogen refuelling stations: up to EUR 300 000 per vehicle and EUR 2 million per refuelling station.

Current status of implementation and existing gaps

Policies offering financial incentive schemes for e-fuel production and direct air capture can play an important role in de-risking first movers and creating initial demand for renewable fuels. Subsidies can also extend beyond fuel production to include the development of associated infrastructure, such as bunkering facilities and onshore power supply.

Examples and initiatives

The EU, under the Alternate Fuels Infrastructure Facility, has awarded funding to nine ports and two low-emission fuel bunkering facilities (CINEA, 2025).

Current status of implementation and existing gaps

Policies offering financial incentive schemes for e-fuel production can play an important role in de-risking for first movers and creating initial demand for renewable fuels. Subsidies can also extend beyond fuel production to include the development of associated infrastructure, such as fuel infrastructure facilities and upgraded power supply.

Examples and initiatives

FAST-SAF (Fuelling Aviation’s Sustainable Transition via Sustainable Aviation Fuels) offered grants of up to USD 50 million for eligible sustainable aviation fuel (SAF) projects in the United States, including production, transportation, blending and storage (Federal Aviation Administration, 2024).

In 2025, the UK Department for Transport announced an investment of GBP 63 million under its Advanced Fuels Fund to support SAF projects.

Current status of implementation and existing gaps

Subsidies in the form of cash grants, cash awards and cost reimbursements, among other are driving the market for green steel production in various regions. Over the past two decades, from 2005 to 2021, subsidies offered to the steel industry have been significantly increasing, and there has been a stark difference in the subsidies provided in non-Organisation for Economic Co-operation and Development (OECD) countries compared with OECD countries (OECD, 2024a). In the last few years, subsidies to promote the production of low-carbon steel and its inclusion in end-use products have started to be offered in some regions.

Examples and initiatives

At the regional level, as of 2024, the EU has awarded an estimated USD 5.5 billion in public subsidies across six major green steel projects, with a median subsidy of approximately USD 385 per tonne of iron capacity (Industrious Labs and Public Citizen, 2024).

India’s National Green Hydrogen mission offers subsidies for green hydrogen production.

Recently, Japan’s Ministry of Economy, Trade and Industry unveiled a consumer subsidy of JPY 50 000 (USD 330) for purchasing electric vehicles manufactured with low-carbon steel (Reuters, 2025).

Current status of implementation and existing gaps

Supporting policies, such as subsidies and grants, for low-carbon ammonia and methanol are emerging in various parts of the world. This is happening within the broader effort to scale up hydrogen and decarbonise industrial processes.

Examples and initiatives

India offers subsidies under the National Green Hydrogen Mission for renewable ammonia production, which recently saw the announcement of a first competitive bidding round targeting a demand of 550 000 tonnes per year (AEA, 2024).

Current status of implementation and existing gaps

Heavy industries in general, including cement, have generally received more subsidies than taxation benefits since the early 2000s, and instruments such as subsidies play a crucial role in enabling the decarbonisation of the cement sector due to the high upfront costs of technologies such as carbon capture and electrification (OECD, 2023b).

Examples and initiatives

Through the Innovation Fund, the EU is committing EUR 3.6 billion to bring innovative technologies to the market in energy-intensive industries (European Commission, 2025c). The EU’s K6 program will transform one of the oldest and most strategic cement plants in the EU into a carbon-neutral plant. This project has been awarded EUR 153 million from the Innovation Fund (European Commission, 2025c)

The following projects will receive Innovation Fund support to scale up near-zero emission cement production: Calico (Spain), CemZero (Sweden), ECCO (France), LEILAC (Germany) (European Commission, 2025c)

The US 45Q tax credit – while not marketed solely as a cement subsidy – allows cement plants to claim up to USD 85/tCO₂ captured and stored. For a medium-sized cement facility capturing over a million tonnes of CO₂ annually, this effectively provides millions of dollars per year to offset project costs (ITA, 2024).