On behalf of VLAIO (Flanders Innovation & Entrepreneurship), IDEA Consult conducted the benchmark study on the use of contracts for difference (CfDs) in neighbouring countries, as well as in Denmark, Austria, the United Kingdom, and by the European Commission. This benchmark study on CfDs fits within the context of launching the first Pilot Auction “Transitiecontract Klimaatsprong 2024”, through which Flanders aims to support companies by promoting investments in climate technologies such as electric boilers and industrial-scale heat pumps. Together with the evaluation of the Pilot Auction, the study provides a basis for further development of policy advice for the Flemish Government.

The challenge

The aim of the benchmark study was to provide insight into the relevant characteristics, processes, and experiences of existing CfDs and Carbon CfDs (CCfDs) in a selection of countries with a view to the further rollout of the Flemish industrial energy and climate transition. CfDs are market-based subsidy instruments that have been used relatively recently to support companies in the transition to climate-neutral production through the use of innovative technologies. Through CfDs, the government takes on part of the project risk by offering a subsidy in a market- compliant manner. This increases the likelihood that companies will implement CO₂-reducing technologies more quickly, thereby promoting the transition to climate neutrality. However, effective implementation requires a good understanding of numerous parameters and possibilities of CfDs and CCfDs.

Approach & results

The benchmark study made a selection of contracts for difference abroad that are relevant to Flanders, with an emphasis on CfDs and Carbon Contracts for Difference (CCfDs) and on their applicability for energy-intensive industries, in particular iron and steel, chemicals, and refineries. Crucial parameters of the contracts were identified, such as contract duration, maximum amount of support, financing, pricing, eligibility criteria, technologies, bidding procedures, reporting requirements, and recovery mechanisms. The broader policy context was also highlighted, as well as the obstacles and solutions. For each benchmark country, the potential transferability to Flanders was assessed, including lessons learned and points of attention. For each of the programme parameters, a matrix analysis was used to compare the programmes, identifying the main differences and similarities. The study concludes with an overview of the key lessons and insights. The study includes the properties and data of the selected programmes as these were before the end of May 2025.

The study report can be retrieved via the VLAIO website (in Dutch): Studierapport: Hoe zetten onze buurlanden bijpascontracten in? | VLAIO