Clean Industrial Deal: Europe unveils its business plan to reconcile decarbonization and competitiveness
It was eagerly awaited. What is it? The Clean Industrial Deal: the European Union’s competitiveness and decarbonization plan.
Presented on February 26, this pact is based on a strong observation. A solid industrial base is essential to Europe’s competitiveness. But European industries are currently facing a double challenge:
There has been lively debate at European level about whether or not to pursue increasingly ambitious decarbonization targets. The European Commission has made up its mind:
An overview of the most emblematic measures.
Two sectors are at the heart of the Clean Industrial Deal’s challenges
The Clean Industrial Deal proposes a package of measures to support production in two sectors in particular:
- Energy-intensive industries. These include steel, metals and chemicals, all of which require urgent support. The European Commission considers that they are currently subject to “unfair” competition.
- The cleantech sector is essential to support the decarbonization effort.
The Clean Industrial Deal also focuses on the notion of circularity, in particular to optimize the European Union’s limited resources of certain raw materials and thus reduce its dependence.
The most concrete measure: the creation of a 100-billion-euro Decarbonization Bank.
This is the most concrete measure in the Clean Industrial Deal. Europe will mobilize 100 billion euros to finance what it calls the green transition, i.e. to support “clean” manufacturing in the European Union.
In detail, three major measures will be adopted:
- Strengthen the Innovation Fund and create a Decarbonization Bank for Industry, with a funding target of €100 billion from the Innovation Fund, revenues from the sale of CO2 quotas and the InvestEU program (whose support would be increased to €50 billion).
- Simplify state aid to speed up approval of aid measures for renewable energies, decarbonization technologies, etc. This measure should be adopted by June 2025.
- Stimulate research and innovation by launching a specific call for projects via the European Horizon Europe program.
400 to 500 billion euros in total
The European Commission estimates that this injection of public money (100 billion euros) should enable three to four times as much private funding to be raised.
The most eagerly awaited measure: the future action plan for affordable energy
In parallel with the Clean Industrial Deal, the European Commission has presented its future Affordable Energy Action Plan. As the name suggests, the aim is clear and ambitious: to reduce the energy bills of industry, businesses and households.
Once again, this plan is based on an observation that this time covers three dimensions. Firstly, the Commission estimates that energy poverty affects more than 46 million Europeans, while electricity prices for industry were still twice as high in 2023 as the average observed over the 2014-2020 period. In addition, the energy price gap between Europe and its main competitors is widening, with a high risk of relocation.
694 billion euros
The European Union’s energy import bill in 2022.
Source: European Commission
Secondly, the European Commission considers theintegration of European electricity systems to beboth incomplete and inefficient, not least because of the lengthy authorization procedures.
Thirdly, network charges, taxes and levies have pushed up electricity prices. This situation is likely to worsen, given the high level of network investment required over the coming years. By way of illustration, in early April 2025, the European Court of Auditors estimated that over €1,800 billion would have to be invested in the electricity networks of the 27 member states by 2050.
Consequently, the Clean Industrial Deal’s future action plan for affordable energy is based on a number of key levers.
1. Complete the internal energy market, notably by creating new interconnections between countries. The European Commission estimates that the current integration of European energy markets brings benefits to European consumers in the order of 34 billion euros per year. Further integration could increase these benefits to 40 or 43 billion euros a year by 2030. To achieve this, in addition to better optimization of network investments, the European Commission suggests that member states could subsidize network charges from their public budgets and reduce energy-related taxes. While this is a directly effective proposal, it could, for some countries, come up against the realities of balancing budgets.
European public guarantees to stimulate the market
The European Commission plans to launch two guarantee programs with the European Investment Bank:
- one to promote power purchase agreements (PPAs), i.e. long-term contracts for the direct purchase of electricity production, with a budget of 500 million euros
- the other to boost the manufacture of equipment for power grids, with a budget of 1.5 billion euros.
2. Accelerate the deployment of clean energies and promote theelectrification of applications. The European Commission wants member states to speed up authorization and regulatory procedures considerably. A legislative proposal to this effect is expected in the 1st half of 2025. However, the long-awaited electrification action plan has been postponed until the 1st quarter of 2026. The European Commission estimates that a 40% acceleration in electrification (in the heat, transport and hydrogen sectors) would generate savings of 32 billion euros by 2030.
3. Use energy more efficiently and reduce dependence on imported fossil fuels. Here, the European Commission is considering improving access to finance and providing financial incentives to further supportenergy efficiency solutions for businesses.
The European Commission estimates potential savings of around €45 billion in 2025 (mainly due to lower fossil fuel imports), rising to €130 billion a year by 2030 and €260 billion a year by 2040.
The most consensual measure: supporting demand for clean products
For the sake of completeness, the European Commission will be working not only on the production of clean technologies and production, but also on supporting demand.
The idea here is to propose a future legislative act to introduce sustainability, resilience and even European preference criteria into public and even private tenders.
One of the most difficult measures to implement: reducing Europe’s dependence on critical raw materials
To try to reduce its dependence, Europe wants to leverage three major levers through the Clean Industrial Deal:
- Set up a mechanism enabling European companies to pool their demand for critical raw materials.
- Create a European center dedicated to critical raw materials to carry out joint purchasing on behalf of interested companies, in order to increase negotiating power and obtain better financial terms.
- Developing the circular economy to capitalize on the reuse of raw materials. The European Commission plans to adopt a law on the circular economy in 2026.
24%
Circular use of materials targeted in 2030 (compared with 11.8% in 2023).
Source: European Commission, European Environment Agency
The European Clean Industrial Deal was eagerly awaited by many stakeholders. And for some of them, it has been a partial disappointment, not least because of the limited number of concrete measures with an immediate impact.
The Clean Industrial Deal is in effect a kind of business plan for the European Union, to be implemented over a two-year period via the publication of several dozen proposals for European directives and regulations. One thing is certain, however: the question of European competitiveness, in relation to energy prices and decarbonization objectives, is indeed at the heart of the European agenda.
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