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On 26 February 2025, the European Commission (EC) unveiled the Clean Industrial Deal (CID), a comprehensive strategy aimed at enhancing the competitiveness and resilience of European industry while accelerating decarbonisation. In response to high energy costs and increasing global competition, the CID positions decarbonisation as a key driver of growth, ensuring that Europe remains a hub for industrial innovation and production. By reducing bureaucratic hurdles, promoting clean technology and securing financing for the green transition, the initiative strengthens critical sectors such as energy-intensive industries and clean tech.
Ensuring access to affordable energy is a fundamental pillar of the CID. According to the EC, structural inefficiencies in the energy market, including inadequate grid infrastructure and limited system integration, contribute to elevated costs. To address these challenges, the EU aims to accelerate electrification, enhance energy efficiency and complete the internal energy market through stronger interconnections. The newly adopted Action Plan for Affordable Energy introduces measures to lower energy costs for businesses and households while advancing structural reforms. Key initiatives include financial incentives for clean energy production, improved regulatory frameworks, and increased digitalisation of energy systems to enhance grid management and flexibility.
A central focus of the plan is to lower electricity costs by introducing tariff methodologies that support flexible grid usage, expanding Power Purchase Agreements (PPAs) and implementing Contracts for Difference. The European Investment Bank will launch a EUR 500m pilot programme to counter-guarantee corporate PPAs, ensuring long-term energy security for industrial users. Additionally, the EU will streamline permitting processes for renewable energy projects via the upcoming Industrial Decarbonisation Accelerator Act (IDAA) (including tacit approvals in so-called acceleration areas) and introduce a European Grid Package to strengthen infrastructure and support Member States in decoupling the translation of gas into electricity prices. Measures will also be taken to ensure a well-functioning gas market, preventing price manipulation and improving regulatory oversight by aligning and strengthening MiFID/REMIT.
The CID aims to create strong lead markets for European clean technologies and decarbonised products, ensuring a solid business case for investment in sustainable industries. Measures such as the implementation of the Industrial Carbon Management Strategy will support the creation of a market for captured carbon, ensuring its integration into a broader range of products and facilitating permanent carbon removals.
Public and private procurement policies will be key drivers of demand, with the IDAA introducing sustainability and resilience criteria. Following the same line, the EC plans to revise the EU's Public Procurement Framework in 2026, integrating non-price criteria to prioritise sustainability and European production. A voluntary carbon intensity label for industrial products will be developed, starting with steel in 2025, ensuring transparency and enabling targeted incentives.
Moreover, to accelerate the decarbonisation of the energy system, the EC will adopt the delegated act on low carbon hydrogen in Q1 2025, clarifying the rules for producing low carbon hydrogen. Beyond that, the EC will launch a third call under the European Hydrogen Bank in Q3 2025 with a budget of up to EUR 1bln and a Hydrogen Mechanism in Q2 2025 linking participants with financing.
According to the EC, the clean transition of the EU economy requires significant investment. Mobilising private capital will be crucial, necessitating long-term regulatory stability, public incentives and effective policy coordination. Building on the EU budget's role in supporting the Green Deal, the next Multi-annual Financial Framework (MFF) is determined to play a key role, with the planned Competitiveness Fund streamlining access to funding and prioritising high-impact projects such as clean tech and industrial decarbonisation. To provide immediate capital, the CID will mobilise over EUR 100bln, including an additional EUR 1bln in guarantees under the current MFF. The EU will also enhance financing tools, such as the Innovation Fund and the yet to be proposed Industrial Decarbonisation Bank, to maximise emission reductions and attract private investment. Additionally, the new Clean Industrial Deal State Aid Framework plans on simplifying approval processes and offering long-term predictability for sustainable projects, while tax incentives would encourage businesses to invest in decarbonisation.
To strengthen Europe's resource security and reduce reliance on unstable suppliers, the CID plans on strategically procuring raw and secondary materials while prioritising circularity. Key measures are the swift implementation of the Critical Raw Materials Act and the forthcoming Circular Economy Act (2026), which is expected to harmonise markets for secondary materials, improve waste-to-resource conversion, and mandate recycled and bio-based material use. Cooperation through Trans-Regional Circularity Hubs would enhance recycling capacity, while regulatory reviews would support market incentives.
Clean Trade and Investment Partnerships are set to complement existing Free Trade Agreements, facilitating access to critical resources, clean technologies and investment opportunities. The EC also plans to launch a Trans‑Mediterranean Energy and Clean Tech Cooperation initiative, fostering large-scale renewable energy investments. To enhance carbon pricing and global decarbonisation efforts, the CID envisages refining the Carbon Border Adjustment Mechanism (CBAM), reducing administrative burdens while considering its expansion to additional sectors and emissions.
The CID aims to establish a structured dialogue with industries to develop sector-specific transition pathways that guide investment decisions and mobilise capital for a cleaner, more competitive industrial landscape. The Industrial Action Plan for the Automotive Sector, scheduled for adoption on 5 March 2025, and the Steel and Metals Action Plan, set to launch on 4 March 2025, should be mentioned here. Additionally, the Chemicals Industry Package, expected by late 2025, and a Sustainable Transport Investment Plan, aimed at accelerating the shift to renewable and low-carbon fuels while expanding recharging infrastructure, should also be included. Furthermore, a Bioeconomy Strategy will promote bio-based materials to reduce fossil dependencies. The European Ocean Pact will drive innovation in blue clean tech and circular economy practices.
Affordable energy access: Measures such as market reforms, renewable energy expansion and a EUR 500m pilot programme for Power Purchase Agreements (PPAs) should lower energy costs and improve energy security.
Boosting clean lead markets: Policies like the Industrial Carbon Management Strategy, the Hydrogen Bank expansion and revised public procurement rules should drive demand for sustainable products and technologies.
Mobilising public and private investment: Over EUR 100bln in immediate funding and streamlined state aid rules should accelerate industrial decarbonisation and innovation, with tax incentives supporting long-term investments.
Advancing the circular economy: New regulations, including the Critical Raw Materials Act and Circular Economy Act (2026), should enhance recycling, reduce material dependencies and promote sustainable manufacturing.
Global market integration: Trade partnerships, the Trans-Mediterranean Energy and Clean Tech Cooperation Initiative and a refined Carbon Border Adjustment Mechanism (CBAM) should ensure fair competition and secure critical supply chains.
Sector-specific transition plans: Tailored strategies for industries such as automotive, steel, chemicals and transport should align industrial transformation with Europe's climate and economic goals.
authors: Bernd Rajal, Patrick Barabas, Moritz Üblagger, Maximilian Klein
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