EU: Commission publishes Clean Industrial Deal with a roadmap for marrying up competitiveness with decarbonisation

On 26 February 2025, the European Commission published a Communication entitled “The Clean Industrial Deal: a joint roadmap for competitiveness and decarbonisation” (“CID”). It is accompanied by a press release, Q&A and factsheet. 

The Commission also published the Action Plan for Affordable Energy aimed at reducing the energy bills for industries, business and households while speeding up necessary structural reforms (see also press release, Q&A and factsheet). 

The CID is a non-legislative initiative that outlines the Commission’s roadmap to enhance competitiveness and accelerate the decarbonisation of industry in Europe, with the focus on energy-intensive industries and the clean-tech sector. Circularity is also put the centre of the CID with the aim to maximise the EU’s limited resources and reduce overdependencies on third country suppliers for raw materials. It aims to make the EU the world leader in the circular economy by 2030. 

With EU industries facing high energy prices, complex regulations and fierce global competition, they risk being outpaced by others outside the bloc. The CID seeks to address that urgent call to action. The CID positions decarbonisation as a powerful driver for growth. 

The CID confirms the EU’s commitment to its decarbonisation goals. The Commission is expected to propose an amendment to its existing Climate Law to include a new target of 90% reduction in greenhouse gas emissions by 2040 (from 1990 levels). The current EU target is a 55% reduction by 2030 and net zero by 2050. At one point, it was thought that that proposal would be published alongside the CID but this will now follow a bit later this year. The Commission wants to give companies and investors certainty that the EU remains committed to becoming a decarbonised economy by 2050. 

We outline below the key aspects of the CID. For a deeper dive on certain aspects of the CID, see our separate client briefing: Clean Industrial Deal Deep Dive: The Role of Carbon Capture, Storage, and Utilisation in Enhancing Competitiveness and Achieving Decarbonisation Goals.

Access to affordable energy

The Commission suggests accelerating the transition to clean, domestically generated energy, completing the EU internal energy market with physical interconnections, and using energy more efficiently. The Action Plan for Affordable Energy aims to lower energy bills in the short term while fast-tracking cost-saving structural reforms and reinforcing energy systems to mitigate future price shocks. Most of the components of the Action Plan will be delivered in 2025. Key focus areas of the Plan: 

1. Lowering energy bills: Implementation of reforms from the recently adopted Electricity Market Design will be prioritised. Additional measures will include:
   • Pilot programme for corporate PPAs: A fast increase of Power-Purchase Agreements (PPAs) and Contracts for Difference (CfDs), which are crucial in making clean energy more financially feasible. The Commission, alongside the European Investment Bank (EIB), will launch a pilot programme for corporate PPAs estimated at EUR 500 million to promote PPAs in a technologically neutral way. 
   • Grids Manufacturing Package and European Grid Package: EIB plans to introduce a Grids Manufacturing Package valued at least EUR 1.5 billion with the aim of providing counter-guarantees and other de-risking supports to manufacturers of grid components within the EU. Moreover, the Commission will put forward a European Grid Package to simplify Trans-European Networks for Energy to ensure cross-border integrated planning and delivery of projects, especially on interconnectors, streamline permitting, enhance distribution grid planning.
   • Guidance and simplification on state aid: By June 2025, the Commission intends to simplify state aid rules to better align with PPAs and CfDs. New cross-border forward capacity allocation rules will be established by 2026 to support industrial consumers in securing necessary electricity production.
2. Accelerating the roll-out of clean energy and manufacturing: In the upcoming Industrial Decarbonisation Accelerator Act, the Commission will address permitting bottlenecks related to energy and industrial decarbonisation.
3. Ensuring well-functioning gas markets: The Commission recently established a Gas Market Task Force to examine the EU natural gas markets and take actions to prevent pricing distortions. A stakeholder consultation will be launched to evaluate the need for legislative changes), with report being delivered by Q4 2025.

Boosting Clean Supply and Demand

Measures to increase demand for clean technologies and products will include:

1. Non-price criteria in public procurement and incentives for private purchases: The forthcoming Industrial Decarbonisation Accelerator Act will introduce sustainability and resilience criteria in public and private procurement to increase demand for EU-made clean products. The Commission will also propose to revise the Public Procurement Framework in 2026 in order to introduce sustainability, resilience and European preference criteria in public procurement for strategic sectors. 
2. The Industrial Decarbonisation Accelerator Act will also develop a voluntary carbon intensity label for industrial products, starting with steel in 2025, followed by cement. The label will indicate how much carbon dioxide was emitted in the manufacturing process and allow manufacturers to reap a premium on their decarbonisation efforts. The label will be derived from existing carbon market data. The Commission will also simplify and harmonise carbon accounting methodologies. 
3. Promoting the uptake of renewable and low-carbon hydrogen: The Commission believes that hydrogen has a central role to play in decarbonising the EU energy system, particularly in hard-to-abate sectors. The Commission will adopt on Q1 2025 a delegated act on low carbon hydrogen to clarify the rules for producing low carbon hydrogen. It will also launch a third call under the Hydrogen Bank in Q3 2025 with a budget of EUR 1 billion.
4. the Commission will promote the development and deployment of small modular reactors (SMRs). 

Public and Private Investments

According to the Commission, the EU needs to increase its annual investments in energy, industry, and the transport system by around EUR 480 billion compared to the previous decade. Mobilising and leveraging private capital are key to achieving this. 

The CID will mobilise EUR 100 billion in the short-term to support EU-made clean manufacturing, including additional EUR 1 billion guarantees under the current Multi-annual Financial Framework (MFF). 

Suggested measures include:

1. EU level funding: the Commission will propose an Industrial Decarbonisation Bank, aiming for EUR 100 billion in funding, based on funds in the Innovation Fund, additional revenues resulting from parts of the Emissions Trading System (ETS) as well as the revision of InvestEU. 
2. Leveraging private investment: The Commission is putting forward an amendment to increase InvestEU’s risk-bearing capacity. This will mobilise up to EUR 50 billion in additional private and public investment, including in clean tech, clean mobility and waste reduction and recycling. The European Investment Bank (EIB) Group will also launch new financing instruments, including counter-guarantees and other de-risking support to support the sectors targeted by the CID.
3. State Aid: Detailed provisions will be provided in the upcoming Clean Industrial Deal State Aid Framework. It will allow for quicker approval of state aid measures for decarbonisation and clean tech projects. The Framework will also aim to provide Member States with a longer planning horizon of five years and businesses with more investment predictability for projects contributing to the objectives of the CID. 
4. Taxation: The Commission will recommend to Member States that their corporate tax systems support a clean business case and not give fossil fuels advantage over clean energy. This could include shorter depreciation periods for clean technology assets and the use of tax credits. The tax related measures will be paired with further actions to scale down and phase out fossil fuel subsidies. 

Circular Economy

The Commission wants the EU to be more strategic about how it procures critical raw materials, with circularity as a driver for innovation as materials are recovered, reused and recycled. 

Measures suggested in this area include:

1. Fast implementation of the existing Critical Raw Materials Act (see our previous client briefing): This will include recognition of the first list of Strategic Projects in March 2025 and establishing an EU Critical Raw Material Centre to jointly purchase new materials on behalf of interested companies.
2. A Circular Economy Act will be adopted in 2026 to enable the free movement of circular products, secondary raw materials and waste, and the supply of high quality recyclates. It will revise rules on e-waste and “end of waste” criteria and will consider additional measures to make recycling of critical raw materials waste within the EU more attractive than export. The Commission will also review the rules on the second-hand scheme contained in the VAT Directive to address the issue of embedded VAT in second-hand products.

Global Markets

Measures in this area include changes to the Carbon Border Adjustment Mechanism (CBAM). On 26 February 2026, the Commission proposed, as part of the first Omnibus package, first set of amendments to the CBAM in order to reduce administrative burden on industries (see also the Commission’s press release). The changes will exempt small importers from CBAM obligations and will simplify the rules for companies that remain in CBAM scope. We will analyse the proposed changes in a separate blog post. 

In the second half of 2025, the Commission will also present a comprehensive CBAM review report, assessing the extension of the CBAM to other EU ETS sectors and downstream products, as well as indirect emissions. This review will be followed by a legislative proposal in Q1 2026.

Promoting and Protecting EU Industry

The Commission will propose measures to ensure that foreign investments in the EU better contribute to the long-term competitiveness of EU industry, its technological edge, and economic resilience. The Commission suggests that for projects involving foreign investment, Member States could consider conditions such as equipment ownership, EU-sourced inputs, EU-based staff recruitment, the need for joint ventures, or intellectual property transfers.

The Commission will adopt guidelines by January 2026 on key concepts underpinning the Foreign Subsidies Regulation, including ways of assessment by the Commission of the distortive effects of foreign subsidies. The guidelines will also clarify under which circumstances the Commission may decide to review mergers under foreign subsidy rules that do not meet thresholds but pose a risk to the level playing field in the single market. 

The Commission will continue to make fast and efficient use of Trade Defence Instruments (TDIs), such as anti-dumping and anti-subsidy duties where necessary.

Implementation Across Sectors

The CID will serve as a framework for dialogue with industries to develop sectoral transition pathways. 

The following sector-specific actions are planned for 2025: 

1. An Industrial Action Plan for the Automotive Sector will be adopted on 5 March 2025. Update added on 19/03/2025: The Commission published the Industrial Action Plan for the European automotive sector on 5 March 2025. 
2. A Steel and Metals Action Plan will be presented by the Commission in Spring 2025. It will propose actions for both ferrous and non-ferrous metals industries, as well as steel and metals, for the clean and digital transition. While the Action Plan will likely be a non-legislative initiative, it will be important since it will inform about the Commissions’ future plans for the industry. On 4 March, the Commission President Von der Leyen will chair the first meeting of the Strategic Dialogue on Steel, a strategic stakeholder forum with representatives from across the steel value chain including manufacturers, suppliers, off-takers, social partners and civil society. Update added on 19/03/2025: The Commission published the European Steel and Metals Action Plan and a Transition Pathway for the European Metals Sectors on 19 March 2025. 
3. The Chemical Industry Package will be adopted in late 2025 and will propose targeted initiatives to enhance the sector’s competitiveness.
4. The Sustainable Transport Investment Plan will outline short-term measures to support renewable and low-carbon fuels for aviation and waterborne transport. The timing for the release of this plan is not indicated by the Commission. 
5. The Bioeconomy Strategy will lay down priorities for manufacturing and using biomaterials, and for retaining them in the economy as long as possible. The timing for the release of this strategy is also unclear.

Overview of key initiatives and timelines

Further reading

For more information on other aspects of the CID, see our separate client briefing: Clean Industrial Deal Deep Dive: The Role of Carbon Capture, Storage, and Utilisation in Enhancing Competitiveness and Achieving Decarbonisation Goals. 

For more information on the new Commission’s general direction of travel on sustainability matters, see our blog posts:

• What does the new European Commission have in store for sustainability?
• EU Competitiveness Compass: key sustainability issues
• EU: Commission’s Work Programme sets out key ESG / sustainability initiatives for 2025
• EU: Commission publishes first Omnibus package with changes to CSRD and CSDDD
• EU: European Commission sets out proposals to simplify Taxonomy Delegated Acts