EU Clean Industrial Deal seeks to juggle green goals and competitiveness

The European Commission has presented its Clean Industrial Deal, a plan to reconcile climate protection with industrial “competitiveness in an overarching growth strategy” in a bid to speed up decarbonisation and re-industrialisation simultaneously.

The new plan is intended to expand initiatives kick-started under the European Green Deal to include measures to simultaneously support clean tech industries while relieving burdens on traditional energy-intensive sectors. The Commission has included an intermediate 2040 target of 90% net greenhouse gas emissions reduction in the plan.

It is accompanied by the Affordable Energy Action Plan, a myriad of measures and guidance to push down energy prices.

Faced with high energy costs and fierce and often unfair global competition, European industries need urgent support, the European Commission said, adding that the deal sees decarbonisation as a powerful driver of growth for European industries.

"Europe is not only a continent of industrial innovation, but also a continent of industrial production. However, the demand for clean products has slowed down, and some investments have moved to other regions," Commission President Ursula von der Leyen cautioned.

"We know that too many obstacles still stand in the way of our European companies from high energy prices to excessive regulatory burden.

"The Clean Industrial Deal is to cut the ties that still hold our companies back and make a clear business case for Europe.”

While shifting attention to competitiveness and keeping industries in Europe in times of multiple crises, the Clean Industrial Deal nevertheless has the ambition to salvage essential parts of the Green Deal and reach decarbonisation goals.

Energy-intensive industries are supposed to be supported through less regulation and lower energy prices, and the Commission also wants to boost Europe’s clean tech sector.

For that purpose, the Deal identifies six “business drivers” – affordable energy, boosting demand for clean products, financing the clean transition, circularity and access to materials, global markets and international partnerships, as well as ensuring access to a skilled workforce.

On the financing side, the Commission said it will mobilise over €100bn ($105bn) to support EU-made clean manufacturing through strengthening an already existing Innovation Fund and proposing an Industrial Decarbonisation Bank, based on available funds in the Innovation Fund, additional revenues resulting from parts of the ETS (emission trading system) as well as the revision of the InvestEU programme.

To boost the demand for cleantech products manufactured in Europe, the Commission wants to introduce a ‘buy European’ clause dubbed the “European preference principle” for public procurement at all levels, even down to municipalities.

The mandate of a minimum share of purchases in Europe could increase trade tension with the US and China.

The requirement could “align national spending with the EU's overarching decarbonisation and competitiveness agenda”, the text reads.

A yet-to-be-drafted “Industrial Decarbonisation Accelerator Act” should also help boost demand for products made in the EU.

Affordable Energy Action Plan

The European Commission concluded that energy prices in Europe are higher than internationally due to an ongoing dependency on imported fossil fuels, which is harming industry.

The Affordable Energy Action Plan is supposed to remedy that through a series of measures, which the Commission believes can bring estimated overall savings of €45bn in 2025 to households and industry, which will progressively increase to €130bn in annual savings by 2030 and €260 billion by 2040.

"We're driving energy prices down and competitiveness up. We have already significantly reduced energy prices in Europe by doubling down on renewables," von der Leyen said.

"Now, we are going a step further with the Affordable Energy Action Plan as part of our Clean Industrial Deal.

"With it, we will achieve more predictable prices, stronger connections across Europe, and increased energy offtake. We will systematically remove remaining obstacles so that we can build a true Energy Union."

As well as more interconnectors between countries and a faster grid expansion, member states are asked to lower taxes and levies on electricity to a legal minimum. In Europe’s biggest economy, Germany, those make up about 30% of the power price for consumers.

A further reduction of permitting times for renewables and energy infrastructure will also help lowering power production costs, the Commission believes.

It intends to make CfD’s the support mechanism of choice, and boost corporate power purchase agreements (PPAs), also with the help of the European Investment Bank (EIB), which is launching a pilot programme for corporate PPAs with the indicative amount of €500bn. Guidance on CfDs and PPAs is expected to be issued in the last quarter of this year.

State aid guidelines are planned to be simplified by June 2025 in order to speed up the approval of support for clean tech projects.

The idea is that member states will be able to choose "turnkey" support models from the Commission that are already in harmony with a new "aid framework for the clean industry”.

Security Threats

The Green Deal won’t be officially repealed, but the Commission plans to relieve bureaucratic burdens from companies, for example by axing the EU supply chain law and sustainability reporting requirements, as part of two ‘omnibus packages’.

The Commission said it will also update the EU energy security framework to address emerging threats such as cyber-attacks, critical infrastructure sabotage and risks from reliance on imports.

And it will step up preparedness for potential price crises, among others, by issuing guidance to member states on how to reward consumers to reduce consumption at peak times and keep energy bills in check.

'Implementation and investment incentives key'

Germany’s Federation of Water and Energy Industries (BDEW) said it makes a lot of sense for the EU Commission to think about climate protection and industrial policy together.

“We need clear priorities and decisive measures from the EU and implementation in the member states,” BDEW chair Kerstin Andreae said, adding on the de-bureaucratisation attempts that “it is important that the EU remains big on the big things and small on the small things.

“It must set the guard rails and not get lost in the minutiae of regulation. It is positive that the first two omnibus packages are aimed at reducing bureaucracy, which has also been repeatedly called for by the BDEW.”

But Andreae cautioned that new reporting obligations mustn’t be created elsewhere as this would counteract the goal of reducing bureaucracy.

“In order to maintain the ambitious climate goals of the Green Deal, the Clean Industrial Deal must create efficient implementation strategies and investment incentives,” she said.

“At the same time, accelerating the expansion of renewable energies, energy infrastructure and storage capacities is essential in order to keep energy prices stable in the long term and to strengthen the resilience of the EU.”