Climate, competitiveness, resilience: three challenges for our economy that the European Commission hopes to tackle through its Clean Industrial Deal, unveiled at the end of February. So what does the Deal really entail? What does it aim to achieve, and how? Here are the key takeaways.
Addressing EU competitiveness and decarbonisation
During its presentation on 26 February, the Commission described the Clean Industrial Deal as a “transformational business plan that brings together climate action and competitiveness under one overarching growth strategy.” This “commitment to accelerate decarbonisation, re-industrialisation and reinforcing Europe’s resilience” took its cue from Mario Draghi’s report published in September 2024 and the Competitiveness Compass strategy adopted since.
This new Deal proposes measures to enhance every step of the production process. It focuses on energy-intensive industries (such as steel, metals, chemicals), which urgently require support both to decarbonise and transition to clean energy, while tackling high costs, global competition and complex regulations. The Deal also focuses on the clean-tech sector which is “at the heart of future competitiveness and necessary for industrial transformation, circularity and decarbonisation.” It also emphasises circularity (recycling, re-use and sustainable production) as a priority, maximising the EU’s limited resources, and reducing dependencies.
Six Business Drivers
The Clean Industrial Deal relies on six business drivers: affordable energy; boosting demand for clean products; financing the transition; circularity and access to materials; acting on a global scale; skills and quality jobs.
The EU Commission also adopted an Action Plan for Affordable Energy which includes measures to lower energy bills in the short term, while speeding up necessary structural reforms. The aim is to boost the roll-out of clean energy by speeding up electrification, achieving an internal energy market and using energy more efficiently, all while reducing dependence on imported fossil fuels. This will be achieved by increasing Power-Purchase Agreements (PPAs), introducing a European Grid Package to simplify Trans-European networks for energy, reducing project permitting times (networks, renewables, storage, etc.), developing an Industrial Decarbonisation Accelerator Act and ensuring well-functioning gas markets.
The Clean Industrial Deal wants to strengthen demand for EU-made clean products by introducing resilience, sustainability and Made in Europe criteria to public and private procurement. Regulations surrounding public procurement, for example, are set to be revised in 2026.
Increasing support for a clean transition within the EU requires appropriate funding. The new Deal aims to provide €100 billion in funding through an Industrial Decarbonisation Bank, based on the funds available in the Innovation Fund, additional revenues resulting from the EU Emissions Trading System (ETS) and the revision of InvestEU (in particular by increasing risk bearing capacity). In addition, a new State aid framework is in the works to speed up the approval of aid for renewable energies, industrial decarbonisation and ensuring sufficient production capacity for clean tech. A new Horizon Europe call for tender is also due to be launched in late 2025 to boost research and innovation in these areas.
Regarding access to critical raw materials, the Commission wants to speed up the introduction of the Critical Raw Materials Act (CRMA), one of the key pillars of the European Green Deal. As part of this, and in addition to the list of strategic projects currently being drawn up, an EU critical raw materials centre is to be set up for the joint purchase of materials, and a new Circular Economy Act is to be adopted in 2026 in order to achieve the 25% recycling target.
Mindful that it needs reliable global partners more than ever, particularly in the field of critical materials and clean energy technologies, the EU will be launching international partnerships in clean trade and investment to diversify its supply chains, and sign new cooperation agreements. The aim is to better manage strategic dependencies and secure the EU’s place in global value chains. It will also put in place a number of trade defence measures and instruments, such as the Guidelines on Foreign Subsidies Regulation, planned for 2026. It will also simplify and improve the Carbon Border Adjustment Mechanism (CBAM), which ensures that European Industry’s emission reduction efforts are not undermined by imports of carbon-intensive goods produced outside the EU, and encourages decarbonisation and carbon pricing on a global scale.
But ultimately, supporting the transition to a low-carbon economy relies on having the necessary skills. It’s with this in mind that the EU will be launching its Union of Skills, to impart workers with the relevant skills and ease employers’ concerns about sourcing the expertise they need. For this, a number of initiatives are in the pipeline (Quality Jobs Roadmap, Skills Portability Initiative, European Fair Transition Observatory, improvement of the Just Transition Fund, etc.), in addition to funding of up to €90 million granted to Erasmus+ to bolster its programmes, particularly in the areas of clean tech and digitisation.
Other initiatives in the pipeline
Beyond these six business drivers, the Clean Industrial Deal proposes multiple horizontal enablers, such as cutting red tape, fully exploiting the scale of the Single Market (through the targeted integration of new candidates, a strong focus on digitisation and an accelerated roll-out of innovation), promoting quality jobs and better coordinating policies at the EU and national levels.
A number of sector-specific plans are already in the works (for example, in the automotive, steel and metal, chemical sectors), as well as an investment plan for sustainable transport. Additionally, a Bioeconomy strategy and a European Oceans Pact are due to be proposed in the coming months. The Bioeconomy strategy, aimed at improving resource efficacy and leveraging the significant growth potential of bio-based materials to replace fossil-based materials, all while boosting related industries, is intended to help reduce dependency on imported raw materials. The European Oceans Pact will encourage innovation in blue technology, offshore renewable energy, and circular economy practices across the maritime sector.
Does the new Clean Industrial Deal really mark a “new chapter in Europe’s industrial history”, as some believe? Only time will tell.
Two omnibus laws to streamline the rules for businesses
In addition to the Clean Industrial Deal, on 26 February the European Commission announced two omnibus packages of measures* aimed at cutting red tape and simplifying the business environment. The intention is to lower administrative burdens by at least 25%, and up to 35% for SMEs.
These two packages encompass the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CS3D), EU Taxonomy, the Carbon Border Adjustment Mechanism (CBAM), and investment programmes. Reporting and taxonomy declaration obligations are to be focused more on large companies (which represent 20% of the companies initially targeted) and the set deadlines are to be postponed. Where environmental due diligence is concerned, such requirements are also expected to be simplified and deadlines postponed. CBAM obligations will only apply to shipments weighing 50 tonnes or more, thus exempting 90% of importers. Additionally, a series of amendments should open up investment opportunities. One example is the increase in InvestEU’s capacity to support up to €50bn of additional public and private investment, and other proposed simplifying measures that could generate savings of up to €350m.
Any amendments regarding CSRD, CS3D or CBAM must be submitted to the European Parliament and the European Council. As for the draft delegated act amending the Taxonomy Regulation, this will be adopted subject to public consultation and will only apply after scrutiny by the Parliament and the Council.
Note: A third omnibus package will clarify the requirements for mid-market companies.
*Under European legislation, an omnibus law refers to proposed legislation that combines amendments or revisions to existing texts under a single proposal.
As a reminder
- PPA: Power-purchase agreements.
- ETS: Emissions trading system. Adopted in 2003, this system is now in its fourth phase (2021-2030).
- InvestEU: An investment support programme from 2021-2027. It brings together different forms of financing.
- CRMA: Critical Raw Materials Act (16/03/2023)
- CSRD: Corporate Sustainability Reporting Directive (12/12/2022)
- CS3D: Corporate Sustainability Due Diligence Directive (13/06/2024)
- The Taxonomy Regulation aims to encourage sustainable investment (15/06/2020)
- CBAM: Carbon Border Adjustment Mechanism (10/05/2023) The CBAM puts a price on the carbon emitted during the production of carbon intensive goods entering the EU (steel, aluminium, nitrogen fertilisers, cement, hydrogen, electricity). It is due to be extended to other sectors in 2026.
