The EU’s Clean Industrial Deal: Can Europe Align its Competitiveness & Decarbonisation Goals?

With a new strategy unveiled in 2025, the European Commission is putting its weight behind the Clean Industrial Deal. It’s an ambitious plan to decarbonise industry, strengthen energy security, and spark innovation across the EU.

From affordable clean energy to securing critical raw materials, the Deal outlines a powerful roadmap to make Europe’s industry greener and more globally competitive. Here's what’s been achieved so far, and what’s coming next.

Access to Affordable Energy 

To address the EU’s high energy costs, which are exacerbated by geopolitical instability, the Commission introduced the Affordable Energy Prices Action Plan. 

The plan aims to accelerate the transition to clean and domestically produced energy, complete the internal energy market, integrate decarbonised energy sources, and expedite necessary structural reforms. 

In this context, the Industrial Decarbonisation Accelerator Act, scheduled to be presented by the end of 2025, would aim to address obstacles and eliminate administrative burdens for energy-intensive industries by reducing permitting times for the deployment of electricity grids, energy storage, and renewable projects. 

One of the most significant proposals put forward by the Commission in the first semester of 2025 was the extension of the Gas Storage Regulation until December 31, 2027. 

Member States will have additional flexibility to achieve the 90 percent of gas storage filling target every year, taking into account developments on the gas market. In particular, they can achieve the storage target over a period between October 1and December 1 each year, instead of November 1 and December 1 that is currently in force. Co-legislators have already reached a provisional agreement on the file, and it is expected to take effect in the coming weeks. 

Creating Lead Markets for Clean Tech and Low-Carbon Products

The Clean Industrial Deal emphasises stimulating demand for climate-neutral technologies.. This means implementing the Industrial Carbon Management Strategy is a key priority, alongside the revision of the EU ETS Directive. This would create lead markets for clean technologies and products, facilitating the development of a market for captured carbon. 

The Commission adopted a delegated act on July 8, 2025, to clarify the legal framework for low-carbon hydrogen by adopting a delegated act that sets out a methodology to determine the greenhouse gas (GHG) emission savings of low-carbon fuels. 

A significant issue is the application of sustainability, resilience, and minimum EU content requirements in public and private procurement within strategic sectors. The revision of the Public Procurement Directive is expected to be published by 2026. 

This would ensure that public procurement serves as a lever for developing innovative and environmentally friendly goods, simplifying procurement rules, and granting preference to European products in certain strategic sectors.

Mobilising €480 Billion in Green Public and Private Investment

To meet its 2030 and 2050 goals, the EU aims to boost green industrial investment through a mix of state aid, tax incentives, and new financing tools. The Communication emphasises the need for the EU to invest an additional €480 billion compared to the previous decade. This goal is set to be achieved through the next Multiannual Financial Framework (MFF) and the EU Competitiveness Fund. 

Among the key initiatives is the Clean Industrial Deal State Aid Framework, presented on July 4, which simplifies and accelerates the process for Member States to provide aid.

The framework would also aim to incentivise industry investment in upskilling, reskilling, and quality job creation for a just transition. Consequently, tax incentives will encourage investments in clean technologies and decarbonisation, lowering financial barriers for sustainable investments and boosting markets for decarbonised products.

Among the key initiatives is the launch of the Industrial Decarbonisation Bank, with a target of €100 billion in funding. It aims to maximise emissions reduction by ensuring a competitive selection and fair distribution of support across Member States, and is expected to be launched by the second quarter of 2026.

Advancing the Circular Economy and Securing Critical Raw Materials

To ensure supply chain resilience, the Clean Industrial Deal prioritises raw material access, circularity, and recycling infrastructure.

The Clean Industrial Deal promotes the swift implementation of the Critical Raw Materials Act, including the recognition of the first list of projects and facilitating access to private and public support. Additionally, the Commission established a platform for demand aggregation of strategic raw materials on July 2, alongside the creation of a special EU Critical Raw Material Centre. 

The Circular Economy Act also aims to create market demand for secondary materials and a single market for waste, notably regarding critical raw materials, which is scheduled to be presented by the fourth quarter of 2026. This measure aims to foster investment in recycling as well as creating a market for waste, secondary, and reusable materials.

Global Competitiveness Through Smarter Trade and Carbon Controls

Recognising that decarbonisation must be economically viable, the EU is adapting trade mechanisms and global partnerships to avoid carbon leakage while promoting climate goals.

Among the key actions is the simplification of the Carbon Border Adjustment Mechanism, set to enter into force in the autumn of 2025. This includes a broader 'de minimis' exemption from CBAM obligations for importers not exceeding a mass-based threshold of 50 tonnes of imported goods per year. This new threshold is expected to exempt most SMEs and individuals importing small quantities of goods.

Regarding CBAM, additional flagship actions are expected to be implemented in the coming months. These include a comprehensive review of the CBAM, which will assess the feasibility of extending the CBAM scope to other EU ETS sectors at risk of carbon leakage, downstream sectors, and indirect emissions. The review will also examine providing support to exporters and addressing any existing gaps. Furthermore, a legislative proposal for the extension of CBAM is expected to be published by the first quarter of 2026.

Skills, Jobs, and a Just Transition

To ensure the shift to green industry supports people, the EU is investing in education, workforce mobility, and job quality.

To this end, the Commission introduced the Union of Skills on March 6, 2025, aimed at raising the level of basic skills in the EU. It seeks to provide opportunities for adults to upskill and reskill, attract skills and talents from outside the EU, and facilitate businesses in recruiting talent across the EU.

To support workers in transition, the Commission will present a Quality Jobs Roadmap, which aims to support fair wages, good working conditions, training, and fair job transitions for workers and self-employed individuals. This initiative is expected to be presented by the end of the fourth quarter of 2025.

What’s Next: 2040 Target and Sector-Wide Implementation

The Clean Industrial Deal ties closely to the EU’s recently proposed 2040 climate target, aiming to achieve its goals for full climate-neutrality by 2050.  

The Commission Communication on the implementation of the Clean Industrial Deal, published on July 2, concludes that the Commission plans to deliver the remaining Clean Industrial Deal actions through a series of packages scheduled for the second half of 2025. Each package, such as the Circular Raw Materials Act, the Sustainable Transport Investment Plan, and the Bioeconomy Strategy, would address specific aspects of the Clean Industrial Deal objectives.

All zero and low-carbon energy solutions, as well as improving grid and storage capacity, are necessary to decarbonise the energy system by 2040. The Commission is also considering introducing measures to address carbon leakage in export markets. It further aims to work closely with Member States, co-legislators, and stakeholders to monitor its progress through the Annual Single Market Competitiveness Report.

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