The European Commissions new Clean Industrial deal aims to revitalise the EU's industrial base and address the continent's slow economic growth in response to global competition.
As Europe grapples with high energy prices and deindustrialisation risks, the need for the new industrial strategy to unlock investments in clean energy and boost manufacturing capacity is evident. The initiative, together with the simultaneously published Action Plan for Affordable Energy, reveals European Commission President Ursula von der Leyen’s strategy to support European energy-intensive industries and the clean tech sector during the current mandate.
At stake is Europe’s ability to maintain industrial competitiveness while decarbonising its economy. The Clean Industrial Deal sets out measures to support the supply and demand of clean technologies, accelerate the transition to a circular economy and strengthen supply chains. The Action Plan complements these efforts with proposals to lower energy prices and improve cross-border integration in the energy system. Together, they form a strategy designed to boost investment, modernise European industry and secure long-term energy affordability. However, their implementation will depend on the effectiveness of financial support mechanisms, streamlining efforts and political will.
A Roadmap for a Competitive and Resilient European Industry
The Commission envisions the Clean Industrial Deal as a roadmap for reindustrialisation through the green transition. The EU executive is keen to demonstrate that it means business – instead of “policy measures” and “targets,” the strategy emphasises “business drivers” and “KPIs.” Key policy measures set out in the document include the Industrial Decarbonisation Accelerator Act to support low-carbon industrial products, a Circular Economy Act to reduce single market barriers for secondary raw materials and Clean Trade and Investment Partnerships to secure supply chains for critical materials and clean technologies.
In addition to sustainable competitiveness, the Clean Industrial Deal aims to enhance the resilience of European industries by reducing dependencies on imported fossil fuels and external suppliers, particularly for clean transition technologies and critical raw materials.
The Affordable Energy Action Plan complements these efforts by promoting measures such as streamlined permitting for renewables, batteries and grid infrastructure; joint gas purchasing mechanisms for cost-competitive imports; and demand response initiatives to enhance market efficiency. In the short term, a major element of the Affordable Energy Action Plan is encouraging Member States to lower electricity taxes and revamp network tariffs to incentivise flexibility, though these measures rely on voluntary national implementation rather than binding EU-wide policies.
“Made in Europe” Makes a Comeback
Implementing the Clean Industrial Deal will require balancing the “buy European” provisions to support EU industries with open trade policies to ensure access to global markets for goods and capital. The EU must also find ways to reconcile its commitment to a cost-effective clean transition with the binding target to cover 40% of its clean technology needs with domestic manufacturing capacity by 2030.
To boost European manufacturing capacity, the Commission plans to revise the EU’s Public Procurement Framework and propose a “European preference criteria” as a non-price metric for tendering in strategic sectors, including clean technologies. The Commission has thus far used “European” and “EU-made” interchangeably when referring to the planned measures, but the expectation is that these new initiatives would support European-manufactured goods rather than just those made by EU companies. To avoid excessive cost increases and delays in the clean transition, the Commission is likely to consider a disproportionality threshold on project costs to allow for exceptions to the preference criteria.
Show Me the Money: The Challenge of Financing the Deal
Achieving transformative change across complex value chains is costly. While the ambition of the Clean Industrial Deal is clear, securing sufficient financing remains a critical issue. To meet its objectives, the Commission will need sustained investment from both public and private sources—upwards of €480 billion per year, according to the CID.
To bring in new funding for the EU’s long-term budget, the Commission will need the unanimous approval of Member States. As such, there is a risk that the planned Competitiveness Fund may suffer the same fate as the Strategic Technologies for Europe Platform, which was reduced from a proposed €10 billion investment in strategic clean transition technologies to a €1.5 billion funding tool for defence capabilities in the Council. Even if the Commission successfully conveys the necessity and urgency of joint funding mechanisms to national governments, the next EU budget will not take effect until 2028.
This makes the efficient use of existing EU funding tools—such as the Emissions Trading System (ETS) revenues, Horizon Europe research programme and reallocated cohesion funds—particularly important. Similarly, the Commission is banking on unlocking private investment through a revision of the InvestEU Regulation to increase the risk tolerance of the European Investment Bank’s investment programmes and proposing a Savings and Investment Union to remove single market barriers to capital movement. The Commission is on the right track, but these provisions must succeed to prevent budget constraints from limiting the impact of the Clean Industrial Deal.
The Road Ahead
The effectiveness of the Clean Industrial Deal also hinges on buy-in from the Member States. Many measures, particularly those in the Action Plan for Affordable Energy, rely on national implementation rather than legally binding EU-wide policies. This raises the possibility of uneven adoption, which could undermine the Commission’s goal of creating a unified, more affordable energy market. On EU-level policies, the Commission will need to navigate conflicting political interests in the European Parliament and Council.
Despite these challenges, the Clean Industrial Deal and Affordable Energy Action Plan could be important steps in positioning Europe as a global leader in clean industry. If effectively implemented, they could help stabilise energy prices in the long term, drive industrial competitiveness and create a more sustainable economic foundation. However, ensuring success will require overcoming major structural and financial obstacles over the next four years.
Clean Industrial Deal: Timeline of Initiatives
