The European Union (EU) is at a crossroads vis-á-vis competitiveness, decarbonisation and security, with a clear need to act. High energy costs, fierce global competition and complex regulations have adversely impacted EU industries, which now require urgent support. Recognising this, on February 26, 2025, the European Commission (EC) presented the Clean Industrial Deal (CID), which is a bold business plan to support competitiveness and resiliency of the EU industry. It positions decarbonisation as a powerful growth driver for European industries and gives certainty and predictability to companies and investors that Europe remains committed to become a decarbonised economy by 2050.
CID focuses mainly on two closely linked sectors – energy-intensive industries and cleantech. The latter is at the heart of future competitiveness and growth, while being crucial for industrial transformation. The EC has identified six “business drivers” for the EU industry to succeed – affordable energy, boosting demand for clean products, financing, circularity, global markets and a skilled workforce. CID presents measures for strengthening the entire value chain. It is indicative of future actions that the EC proposes to take in specific sectors over the next 18 months. To begin with, the EC has announced the Action Plan for Affordable Energy, addressing the first business driver. Moving ahead, it will present action plans for the automotive industry as well as steel and metals in March 2025 respectively. Other tailored actions are planned for the chemical and clean tech industries. Notably, under financing, it proposes a “grids manufacturing package”, which will be announced in the first quarter of 2026, to provide counter-guarantees and other derisking support to manufacturers of grid components.
Key elements of CID
Lower energy costs: The EC’s Action Plan for Affordable Energy contains short-term measures to lower energy costs. It seeks to aid the EU by frontloading the benefits of more renewable energy sources (RESs), higher energy savings, deeper market integration and better interconnections. It builds on the recent reform of the EU’s electricity market design; the REPowerEU Plan; sector-specific blueprints for wind, solar and grids; and revised energy and climate legislation under the “Fit for 55” package. Its implementation is expected to result in an estimated overall savings of EUR45 billion in 2025, which will progressively increase to EUR130 billion in annual savings by 2030 and EUR260 billion by 2040.
Energy can be made more affordable by accelerating investments in clean energy and infrastructure and by bringing transparency and fairness to gas markets. A further reduction of the time needed for renewables and energy infrastructure to gain permissions will help reduce the power production cost. Consumers already benefit from around EUR34 billion every year, thanks to the EU’s internal energy market. Further integration could raise such benefits up to EUR40 billion-EUR43 billion per year by 2030.
Boosting demand for clean products: The Industrial Decarbonisation Accelerator Act (expected by the fourth quarter of 2025) will increase the demand for EU-made clean products by introducing sustainability, resilience and “made in Europe” criteria in public and private procurements. The EC will also review the Public Procurement Framework in 2026 to introduce sustainability, resilience and a European preference criteria in public procurement for strategic sectors. Moreover, the act will launch a voluntary carbon intensity label for industrial products, starting with steel in 2025, followed by cement.
Financing the clean transition: CID will mobilise over EUR100 billion to support EU-made clean manufacturing. This includes an additional EUR1 billion in guarantees under the EC’s current Multiannual Financial Framework (which is a seven-year plan regulating the EU’s annual budget). The EC will adopt a new CID State Aid Framework to accelerate the approval of state aid to roll out RES, decarbonise industry and ensure sufficient manufacturing capacity of cleantech; strengthen the Innovation Fund and propose an Industrial Decarbonisation Bank, aiming for EUR100 billion in funding; launch a dedicated call under Horizon Europe to stimulate research and innovation in these areas; and amend the InvestEU Regulation to increase the amount of financial guarantees that InvestEU can provide to support investments and mobilise up to EUR50 billion for the deployment of clean tech, clean mobility and waste reduction.
To support CID, the European Investment Bank (EIB) will launch new financing instruments – a “grids manufacturing package” to provide counter-guarantees and other derisking support to manufacturers of grid components; a joint EC-EIB pilot programme of counter-guarantees for power purchase agreements undertaken by energy-intensive industries; and a CleanTech guarantee facility under the Tech EU programme powered by InvestEU.
Circularity and access to materials: In a bid to securing access to critical raw materials and reducing dependence on unreliable suppliers, the EU plans to integrate circularity in its decarbonisation strategy. For this, the EC will set up a mechanism enabling European companies to aggregate demand for critical raw materials, create an EU Critical Raw Material Centre to jointly purchase raw materials on behalf of interested companies and adopt the Circular Economy Act in 2026 to accelerate the circular transition and ensure that scarce materials are used and reused efficiently, with an objective of making 24 per cent of materials circular by 2030.
Acting on a global scale: To build reliable global partnerships, in addition to ongoing and new trade agreements, the EC will launch the first Clean Trade and Investment Partnerships to diversify supply chains and forge mutually beneficial deals, ensure the EU industry is economically secure and resilient through a range of trade defence and other instruments, and simplify and strengthen the Carbon Border Adjustment Mechanism, which is the EU’s tool to put a fair price on the carbon emitted during the production of carbon-intensive goods.
Ensuring access to a skilled workforce: The EC will establish a Union of Skills to invest in workers, develop skills and create quality jobs. With up to EUR90 million from Erasmus+ (a new programme combining all the EU’s current schemes for education, training, youth and sports), sectoral skills for strategic industries linked to CID will be reinforced.
CID will also focus on the horizontal enablers necessary for a competitive economy, including cutting red tape, fully exploiting the scale of the single EU market, promoting quality jobs and better coordination of policies at the EU and national levels.
As the key initiatives under CID shape EU’s action for the industry over the next five years, it will have a significant impact on the region’s industrial and energy sectors.