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Questions and answers on the Clean Industrial Deal
The EU must urgently address three challenges at once: the climate change, competitiveness and dependency on critical raw materials.
Decarbonisation is crucial to address these challenges. As the Draghi Report highlights, decarbonisation policies are a powerful driver of growth when they are well integrated with industrial, competition, economic and trade policies. This is why Europe needs a transformational business plan bringing together climate, circularity and competitiveness under one overarching growth strategy.
Competitive manufacturers drive innovation, quality-job creation and open strategic autonomy, but businesses need to be certain that large climate neutral investments in energy intensive industries and clean tech will be profitable. This is why the Clean Industrial Deal aims at creating the right conditions for the industry to invest and produce in the EU, namely by driving down energy prices and boosting demand for clean products.
- What is the Clean Industrial Deal, and what does it aim to achieve?
The Clean Industrial Deal is a business plan that makes decarbonisation achievable and profitable for industry in Europe. It commits to accelerate decarbonisation, promote the circular economy and support re-industrialisation, as sources of growth and prosperity across the entire continent. The Deal offers companies long-term predictability on our climate ambition, so that they can invest and minimise investment risks.
The Deal focuses mainly on two interlinked sectors:
- Energy-intensive industries as they require urgent support to face high energy costs, unfair global competition and complex regulations.
- Clean-tech as this sector will drive industrial transformation, competitiveness and decarbonisation. The Deal aims at boosting demand and uptake of clean products and solutions in the EU.
The Deal makes circularity a priority. It is key to make the best possible use of the EU's limited resources, reduce dependencies on scarce materials and enhance resilience. It reduces waste, production costs, and CO2 emissions while creating a more sustainable and competitive industrial model that benefits the environment.
- Is the Clean Industrial Deal lowering the ambitions of the Green Deal?
Europe has set the ambitious target to become a decarbonised economy by 2050. It will stay the course on the objectives of the European Green Deal, with the achievement of the 55% net greenhouse gas (GHG) emissions reduction agreed for 2030, and through an intermediate 2040 target of 90%.
Especially in an unstable world, the EU's regulatory certainty and predictability, in combination with simplified rules, is a great asset to attract investments. The actions we have taken so far are already yielding results: we are decarbonising rapidly, reducing our dependence on imported fossil fuels and tackling pollution of the environment. This Deal positions decarbonisation as a powerful driver of growth and prosperity for Europeans.
- How will the Clean Industrial Deal help the EU industry?
The Clean Industrial Deal supports industry to growth and prosper, looking at the entire value chain. It focuses on:
- Making energy more affordable as this is a key condition for the competitiveness of our industry.
- Facilitating supply and creating demand for clean products and materials as companies need a market to make investments.
- Making financial resources available to invest in decarbonisation and competitiveness to support industry as well as leveraging private investments. Without financial support, there will not be investments.
- Securing access to raw materials and resources in the EU to reduce its exposure to unreliable suppliers. Putting circularity at the core of our strategy as the EU needs to secure resources, lower emissions and become more sustainable.
- Creating partnerships to get access to global markets, setting fair conditions for companies in the EU market. Protecting the industries again unfair global competition and overcapacities.
- Building a workforce that fits the decarbonised industry, deliver quality jobs and promote social fairness.
- What are the main legislative and regulatory initiatives?
The Clean Industrial Deal sets out several legislative and regulatory initiatives to support European industries, such as:
- The Industrial Decarbonisation Accelerator Act: it will speed-up permitting for industrial access to energy and industrial decarbonisation, such as the modernisation of steel production sites. It will also establish a low-carbon product label for steel and later cement, which will allow companies to reap the green premium and provide with information to consumers on carbon intensity of products. The Act also introduces resilience and sustainability criteria to foster clean European supply for energy-intensive sectors. These criteria (e.g. clean, resilient, circular, cybersecure) will strengthen demand for EU-made clean products.
- The revision of the Public Procurement Directive: it will allow for sustainability, resilience and European preference criteria in EU public procurement for strategic sectors. These criteria will also be extended to incentivise private procurement, through measures such as life cycle-based CO2 emission performance standards.
- The Circular Economy Act: it will shape a Single Market for waste and reusable materials. It will help making best use of the EU's limited resources, reduce dependencies on scarce materials coming from unreliable supplier and enhance resilience. It will lower production costs, reduce waste and CO2 emissions and create a more sustainable industrial model that benefits the environment while enhancing economic competitiveness.
- A new Clean Industrial Deal State Aid Framework: it will allow for a quicker approval of State aid measures for the roll-out of renewable energy, deploy industrial decarbonisation and ensure sufficient manufacturing capacity of clean tech decarbonization.
- The delegated act on low carbon hydrogen: it will set out the conditions to produce low carbon in a pragmatic way. This completes our comprehensive regulatory framework on hydrogen, enhancing certainty and predictability for industry, which are key preconditions for companies to invest.
- The strengthening and extension of the Carbon Border Adjustment Mechanism: it will follow a thorough review on the need to extend it to other ETS sectors and downstream products as well on the problems faced by exporters of CBAM goods. As a first but necessary step we are also today simplifying CBAM.
- How will the Clean Industrial Deal speed-up permitting?
Wind projects can last up to 7-10 years, distribution grid projects up to 8-10 years and transmission grid projects up to 17 years for. However, only 7 Member States use the more flexible permitting rules of the Renewable Energy Directive. The Commission calls on Member States to urgently use these new rules. The Commission will reinforce its support to Member States by sharing best practices and recommendations and launching an implementation dialogue on energy permitting.
The upcoming Industrial Decarbonisation Accelerator Act will propose concrete measures to address permitting bottlenecks related to industrial access to energy and industrial decarbonisation, while maintaining environmental safeguards and protecting human health. Shorter deadlines for energy infrastructure will also lower energy costs.
- How will the Clean Industrial Deal help secure critical raw materials for the EU industry?
It is important to ensure that the EU industry has better access to critical raw materials as they are essential for our industry to the clean and digital transitions. To do so, the Commission will prioritise the implementation of the Critical Raw Materials Act and identify a first list of Strategic Projects in March 2025 to increase EU capacity to extract, process and recycle strategic raw materials and diversify EU supplies from third countries. The Commission also proposes the creation of an EU Critical Raw Material Centre to jointly purchase raw materials with increased market power and to coordinate strategic stockpiles.
Moreover, by placing circularity at the core of our decarbonisation strategy, including with the future Circular Economy Act, the EU not only makes essential materials more affordable and accessible, but also reduces our dependencies, as materials are recovered, reused, recycled, and kept longer in the economy. The Commission will make sure that products containing valuable and scarce materials are (re-)used efficiently and as long as possible before they become waste, including through the full roll out of Ecodesign requirements.
- How will the Clean Industrial Deal ensure more investments?
EU industry needs immediate access to capital. That is why the Clean Industrial Deal provides for (1) more EU-level funding, (2) leverage private investments and (3) enhance the effectiveness of State aid in support to the Deal objectives.
To provide short-term relief the Clean Industrial Deal will mobilise over €100 billion for EU-made clean manufacturing, including an additional €1 billion guarantees under the current Multiannual Financial Framework (MFF). In the next EU budget, the Competitiveness Fund plans to establish an investment capacity for European projects with the most EU added value along the entire investment journey - from research and innovation, through scale-up, industrial deployment, to manufacturing, including clean tech and industrial decarbonisation.
The Commission will propose an Industrial Decarbonisation Bank, aiming for €100 billion in funding, based on available funds in the Innovation Fund, additional revenues resulting from parts of the ETS as well as the revision of InvestEU.
Prior to the revision of the ETS Directive in 2026, the Commission will launch in 2025 a pilot with a €1 billion auction on the decarbonisation of key industrial processes across various sectors supporting industrial decarbonisation and electrification, using a combination of existing resources under the Innovation Fund and auctions-as-a-service.
Public funding will also come from national tax incentives for which the Commission will issue recommendations on common guidelines.
In addition, a flagship Horizon Europe call of ca. €600 million will be launched under the 2026-2027 work programme to support fit-for-deployment projects.
Public funds, however, will not suffice. The Commission will soon propose a European Savings and Investments Union, including banking and capital markets. This will help leverage the enormous wealth of private savings in Europe to invest in innovation and the clean and digital transitions.
- How will State aid support the objectives of the Clean Industrial Deal?
As part of the Clean Industrial Deal, the Commission will adopt a new Clean Industrial Deal State aid framework by June 2025 to accelerate the roll-out of renewable energy, deploy industrial decarbonisation and ensure sufficient manufacturing capacity of clean tech. A survey conducted by the Commission showed that the Member States need more flexibility to support decarbonisation.
The new Framework will make it easier for Member States to give aid, by simplifying State aid rules while preserving a level playing field.
The Commission will also reflect on a further simplification of the State aid rules to prioritise work on the most distortive aid measures and accelerate authorisations of compatible aid. This includes the speeding up of proposals for new Important Projects of Common European Interest, and a revision of the General Block Exemption Regulation by 2027.
For More Information
The Clean Industrial Deal: A joint roadmap for decarbonisation and competitiveness
Questions and answers on the Action Plan on Affordable Energy