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Clean Industrial Deal: Decarbonising to Enhance the Competitiveness of European BusinessesThe policies set out in the European Commission’s pact aim to transform the EU’s industry into a global model of sustainability and innovation.
Turning decarbonisation into a powerful engine of growth and prosperity for European industries: this is the core principle behind the Clean Industrial Deal (CID), designed to align EU businesses with sustainability criteria and further strengthen their global competitiveness. Presented by the European Commission on February 26, the plan seeks to cut emissions by 90% by 2040, with the ultimate goal of achieving climate neutrality by 2050. The CID outlines a series of actions aimed at turning these ambitious goals into reality—ranging from lowering energy prices to creating quality jobs—all designed to establish the ideal conditions for businesses to thrive.
Context and Objectives
Climate change, competitiveness, and dependency on critical raw materials are among the top priorities the European Union must urgently address. Decarbonisation plays a crucial role across all these areas. Policies that foster decarbonisation could prove decisive for the EU’s economic growth, provided they are effectively integrated with industrial, economic, trade, and competition strategies. For this reason, the EU urgently needs an operational plan that combines serious climate action, circularity, and competitiveness into a universal growth strategy.
The agreement reached under the CID introduces measures aimed at stimulating all stages of production, with a particular focus on energy-intensive sectors like steelmaking, metallurgy, and chemicals—industries that urgently need support in their decarbonisation processes, shifting to clean energy sources while tackling high costs, unfair international competition, and complex regulatory frameworks. In this context, the clean technology sector will be central to future competitiveness, as well as essential for industrial transformation, economic circularity, and ultimately decarbonisation.
Circularity, in particular, is a cornerstone of the European Commission's plan. It promotes the optimal use of the EU’s limited resources, focusing on reducing waste and extending material lifecycles through recycling, reuse, and sustainable production. Additionally, the agreement emphasises a range of cross-cutting elements vital for a competitive economy:
- reducing bureaucratic burdens;
- leveraging the scale of the single market;
- promoting quality employment;
- improving policy coordination at national and EU levels.
The CID aligns with the European Green Deal roadmap, reaffirming its ambitious targets: a 55% reduction in net greenhouse gas emissions by 2030, a 90% reduction by 2040, and full decarbonisation of the EU economy by 2050.
Timeline and Funding
The Clean Industrial Deal is an implementation plan that makes decarbonisation both achievable and, crucially, profitable for European businesses. The agreement includes a series of measures aimed at strengthening the entire industrial value chain and serves as a framework to tailor actions to specific sectors (steel, metallurgy, chemicals, automotive, and clean technologies). The CID will mobilise over €100 billion to support clean manufacturing across the EU. By 2030, the European clean market is expected to grow by €100 billion, creating around 500,000 new jobs.
Specifically, the European Commission intends to reinforce the Innovation Fund and propose the creation of an Industrial Decarbonisation Bank with the goal of securing €100 billion in financing. One of its top priorities is to adopt a new state aid framework for the Clean Industrial Deal, aiming to speed up approvals for state aid supporting renewable energy deployment, industrial decarbonisation, and ensuring sufficient production capacity for clean technologies. By next summer, the Council and the European Parliament are expected to approve a set of regulatory simplifications to facilitate state aid processes.
Among other secondary actions, the European Commission plans to launch a dedicated Horizon Europe call to stimulate research and innovation in these sectors. Additionally, the Commission intends to amend the InvestEU regulation to increase the amount of financial guarantees available to support investments. This move will enable the mobilisation of up to €50 billion for the roll-out of clean technologies, clean mobility, and waste reduction. Lastly, the next EU budget will include a Competitiveness Fund, designed to create investment capacity for high value-added European projects, covering all stages of the investment cycle (from research and innovation to scaling up, industrial application, and manufacturing), with a focus on clean technologies and industrial decarbonisation.
Inside the CID: The Six Pillars
How will the Clean Industrial Deal support European industry? Here are the six pillars defined by the European Commission to foster growth and prosperity across the entire industrial value chain:
Affordable Energy → The European Commission has adopted an Affordable Energy Action Plan to accelerate the deployment of clean energy and electrification; complete the internal energy market with physical interconnections; use energy more efficiently; and reduce dependence on fossil fuels. The goal is to lower energy bills for industries, businesses, and households while promoting the transition to a low-carbon economy.
Boosting Demand for Clean Products → The Industrial Decarbonisation Acceleration Act will stimulate demand for clean products manufactured within the EU by introducing sustainability, resilience, and “Made in Europe” criteria into both public and private procurement processes.
Financing the Clean Transition → The CID will mobilise over €100 billion to support clean production within the EU. The Commission plans to:
adopt a new state aid framework to speed up approvals, encouraging the roll-out of renewable energy, industrial decarbonisation, and sufficient manufacturing capacity for clean technologies;
strengthen the Innovation Fund and propose the creation of an Industrial Decarbonisation Bank to provide €100 billion in financing;
launch a dedicated Horizon Europe call to stimulate research and innovation in these fields;
amend the InvestEU regulation to increase the financial guarantees it can offer, aiming to mobilise up to €50 billion for the deployment of clean technologies, clean mobility, and waste reduction.
Circularity and Access to Materials → Critical raw materials are essential for European industry. The EU must secure reliable access to these resources and reduce dependence on untrustworthy suppliers. Integrating circularity into the decarbonisation strategy is crucial for making the most of the EU’s limited resources. To this end, the Commission intends to:
establish a mechanism allowing European businesses to pool demand for critical raw materials;
create a European Critical Raw Materials Hub to enable joint purchasing on behalf of interested businesses;
adopt, by 2026, a Circular Economy Act to accelerate the transition toward circularity, ensuring that scarce materials are efficiently used and reused, reducing global dependencies, and creating high-quality jobs. The target is to achieve 24% circular materials by 2030.
Global Action → The EU needs reliable global partners. The Commission plans to:
launch the first Clean Trade and Investment Partnerships to diversify supply chains and establish mutually beneficial agreements;
ensure economic security and the resilience of EU industry in the face of global competition and geopolitical uncertainties through trade defence instruments;
simplify and enhance the Carbon Border Adjustment Mechanism (CBAM), the tool designed to prevent carbon leakage (relocation of production to countries with less stringent environmental regulations) by assigning a fair carbon price to emissions from the production of carbon-intensive goods (e.g., steel, cement, aluminium, fertilisers).
Skills and Quality Jobs → The EU workforce must acquire the skills needed to support the transition to a low-carbon economy, particularly in clean technologies, digitalisation, and entrepreneurship. A Skills Union will be established to invest in workers, develop skills, and create quality jobs. Additionally, Erasmus+ will expand its education and training programmes to develop a qualified workforce capable of adapting and addressing skills shortages in key sectors, with funding of up to €90 million.
Regulatory Framework
The regulatory framework underpinning the Clean Industrial Deal provides strong incentives for competitiveness, offering certainty and predictability to businesses and investors, and reassuring the industrial sectors involved that Europe is fully committed to becoming a decarbonised economy by 2050. As highlighted throughout this analysis, the Commission is committed to adopting measures that make the regulatory environment leaner and more efficient, simplifying rules on sustainability and investment while reducing administrative costs and bureaucratic burdens for businesses.
The measures adopted under the CID result from the active engagement of industry leaders, social partners, and civil society, and have matured within the context of the Antwerp Declaration for a European Industrial Deal and the Clean Transition Dialogues launched by the European Commission in early 2024. In her 2024-2029 Political Guidelines, President Ursula von der Leyen announced a Clean Industrial Deal as one of her top priorities to ensure competitiveness and prosperity within the Union:
"Europe is not only a continent of industrial innovation but also of industrial production," she stated. "However, demand for clean products has slowed, and some investments have shifted to other regions. We know there are still too many obstacles facing European businesses—from high energy prices to excessive regulatory burdens. The Clean Industrial Deal aims to remove the barriers that continue to hold back European companies and to present strong economic arguments in favour of Europe."
A recent European Commission survey revealed that Member States need greater flexibility to support decarbonisation. By next summer, the Commission will adopt a new state aid framework under the Clean Industrial Deal to accelerate the deployment of renewable energy, achieve industrial decarbonisation, and ensure sufficient manufacturing capacity for clean technologies. The new framework will simplify state aid rules while maintaining fair competition conditions.
Socioeconomic Impacts and Real-World Applications
The adoption of concrete measures under the Clean Industrial Deal will generate wide-ranging socioeconomic benefits, starting with green economic growth and sustainable development that align with the protection of the environment and biodiversity. Investments in renewable energy, green technologies, and sustainable production methods will not only create quality jobs and strengthen the European economy, but also enhance the health of the planet and the society that inhabits it. The shift toward cleaner industry stimulates innovation and creates new economic opportunities. Companies that adopt sustainable industrial practices can benefit from rising demand for eco-friendly products as well as access to tax incentives and government subsidies. This positions them more competitively in anticipation of increasingly stringent environmental regulations.
A critical outcome of this sustainable shift is the improvement of public health. Reducing air pollution and industrial emissions directly benefits people's health, lowering the incidence of respiratory diseases and other pollution-related conditions, while also reducing public healthcare costs. A healthier environment means fewer illnesses and stronger communities.
Additionally, resilience is a key advantage. In an era marked by the tangible effects of climate change, companies that invest in sustainability are better prepared to withstand extreme weather events and resource scarcity. This resilience could be a decisive factor for their long-term viability.
But how does this translate into real-world applications for businesses? Which sectors stand to benefit the most? The Clean Industrial Deal places a strong emphasis on electrification and the production of clean energy, meaning greater incentives for companies operating in sectors such as green hydrogen, carbon capture and storage (CCS), advanced batteries, and smart grids. More broadly, one of the CID’s key objectives is to reward businesses that invest in cleaner technologies. Companies that modernise their production processes accordingly will gain access to decarbonisation funding, benefit from preferential treatment in public and private procurement, and unlock new market opportunities.
Moreover, businesses that leverage digitalisation and invest in green technologies—whether to optimise production across their value chains or to explore new business models—will play a key role in shaping the new sustainable, low-emission European industry that prioritises environmental protection.