The Clean Industrial Deal: A joint roadmap for competitiveness and decarbonisation

On February 26, 2025, the European Commission released the "Clean Industry Deal," focusing on energy-intensive industries and clean technology sectors. The deal aims to accelerate the decarbonization and competitiveness of EU industries by promoting innovation and enhancing industry resilience.

Previously, the European Commission released the "Competitiveness Guidelines," which outlined the EU's ambitious goal of achieving carbon neutrality by 2050. The introduction of the "Clean Industry Deal" establishes decarbonization as a powerful driver of European industrial growth, ensuring Europe's unwavering progress towards its carbon-neutral economic goals. It sends a clear signal to businesses and investors, helping to reshape EU competitiveness and opening a new chapter in the development of EU industries.

Focusing on two key areas: accelerating decarbonization, reindustrialization, and business innovation

Currently, the EU must address three major challenges: the climate crisis and its consequences, competitiveness issues, and economic resilience. As outlined in the "Draghi Report" and "Competitiveness Guidelines," decarbonization policies need to be closely integrated with industrial, competition, economic, and trade policies to become a strong driver of growth. The "Clean Industry Deal" combines climate action with competitiveness, committing to accelerating decarbonization, reindustrialization, and innovation, while enhancing the EU's resilience. The deal focuses on two closely related areas: energy-intensive industries and clean technology industries.

• Energy-Intensive Industries: These industries urgently need support to achieve decarbonization and electrification. At the same time, they face high energy costs, unfair global competition, and complex regulations, all of which undermine their competitiveness.

• Clean Technology Industry: Clean technology is the core of future competitiveness and growth, as well as the key to industrial transformation.

• Additionally, circularity will become a priority, as it is crucial for maximizing Europe's limited resources, reducing dependence, and enhancing resilience. Circularity can reduce waste, lower production costs and CO2 emissions, and drive the construction of a more sustainable industrial model, benefiting both the environment and economic competitiveness. The "Clean Industry Deal" aims to make the EU a global leader in the circular economy by 2030.

Six core drivers pushing the EU towards climate goals

To achieve a prosperous and developed new EU industrial ecosystem, traditional isolated solutions must be broken, and the entire value chain must be considered. The "Clean Industry Deal" reaffirms the EU's commitment to climate goals by providing clear business incentives for industrial decarbonization within the EU. The following are the six core driving factors for EU success:

Act Globally and Improve Carbon Border Adjustment Mechanism (CBAM)

The success of the new "Clean Industry Deal" is closely related to the EU's ability to act on the international stage. Without global partnerships, the EU cannot achieve its clean industrial goals. Many key raw materials vital for green transformation and EU resilience and security need to be sourced from outside the EU. At the same time, transforming to sustainable, diversified, and resilient industrial value chains is a shared benefit for both the EU and its partners. In addition to ongoing and new trade agreements, the European Commission will launch the first Clean Trade and Investment Partnership (CTIP), diversifying supply chains and reaching mutually beneficial agreements.

The Carbon Border Adjustment Mechanism (CBAM) ensures that the EU's industrial emission reduction efforts are not undermined by carbon-intensive imports from outside the EU, while encouraging decarbonization and carbon pricing globally. The European Commission proposes significantly simplifying CBAM to reduce the administrative burden on industries and their supply chains while continuing to incentivize global carbon pricing. This is the first and necessary step to making CBAM more effective.

In the second half of 2025, the European Commission will submit a comprehensive CBAM assessment report, which will extend the evaluation of CBAM to more EU Emissions Trading System (EU ETS) sectors and downstream products. The report will also evaluate whether indirect emissions from CBAM sectors should be considered, especially given the indirect costs of electricity for EU producers. The report will propose strategies to address potential evasion risks. After this assessment report, legislative proposals will be presented in the first half of 2026.

Promote Clean Energy Demand, Introduce Green Procurement Standards, and Allow Green Premiums

The "Industrial Decarbonization Accelerator Act" will introduce sustainability, resilience, and EU manufacturing standards into public and private procurement, increasing demand for clean EU-made products. The European Commission will propose revisions to the "Public Procurement Framework" in 2026, introducing sustainability, resilience, and EU priority standards into public procurement in strategic EU sectors. The "Industrial Decarbonization Accelerator Act" will use EU ETS data and adopt CBAM methods to develop a voluntary labeling system for industrial product carbon intensity. Starting in 2025, steel will be labeled, and cement labels will also be created under the "Construction Products Regulation," helping industrial producers distinguish the carbon intensity of their production processes and allowing businesses to earn green premiums.

Empower Circular Economy, Accelerate Implementation of Critical Raw Materials Act

Critical raw materials are vital for industries. Therefore, the EU must ensure access to such materials and reduce dependence on unreliable suppliers. Placing circularity at the heart of decarbonization strategies helps maximize the EU's limited resources. The European Commission will accelerate the implementation of the "Critical Raw Materials Act," confirming the first list of strategic projects by March 2025 to ensure the diversification of supply chains across the value chain.

Accelerate Affordable Energy Access to Boost Competitiveness

Affordable energy is the foundation of competitiveness. Therefore, the European Commission has introduced an "Affordable Energy Action Plan" to reduce energy costs for industries, businesses, and households. This plan will accelerate the promotion of clean energy, speed up electrification, and improve energy efficiency through physical interconnections in the internal energy market, reducing dependence on imported fossil fuels.

Clean Transition Funds to Support Clean Technology and Industrial Decarbonization

In the short term, the Clean Industry Deal will mobilize more than 100 billion euros to support clean manufacturing in the EU. This funding includes an additional 1 billion euros under the current multi-year financial framework. The European Commission will adopt a new "Clean Industry Deal State Aid Framework," which will simplify and expedite the approval of state aid measures for renewable energy promotion, industrial decarbonization, and ensuring sufficient manufacturing capacity for clean technologies.

Enhance Workforce Skills and Create Skills Alliances

The European Commission will establish a "Union of Skills" to invest in workers, develop skills, and create quality job opportunities. With up to 90 million euros from Erasmus+, this agreement will strengthen the skills of strategic industries related to the Clean Industry Deal. It also supports quality employment, promotes social conditions, and offers further support for workers in transition.