All You Need to Know About the EU’s Clean Industrial Deal
The European Commission has unveiled its ambitious Clean Industrial Deal (CID), a sweeping strategy designed to transform Europe’s industrial landscape while reinforcing its economic competitiveness.
With the strategy, the commission is aiming to align industrial policy with the EU’s climate objectives, ensuring that all stakeholders are on the same page for years to come.
At the heart of the deal is a dual focus on energy-intensive industries and the clean tech sector.
Both are seen as essential to achieving the EU’s 2040 target of reducing net greenhouse gas emissions by 90% and reaching climate neutrality by 2050.
Speaking at the unveiling of the CID, President of the European Commission Ursula von der Leyen emphasised the importance of nurturing innovation, as well as driving the adoption of innovative technologies.
“Innovation, innovation, innovation,” she said.
“I know that too often these companies struggle to grow and bring their solutions to industrial scale. So, what do they need? They need access to capital.”
The deal will allow innovative companies just that.
The plan seeks to create an industrial environment that favours sustainable production, circularity and innovation while tackling Europe’s exposure to geopolitical instability and rising global competition.
Clean, affordable energy
In 2025, one of the core challenges facing European industry is the cost and security of energy supply.
According to the European Commission, access to affordable energy is an absolutely fundamental condition for maintaining industrial competitiveness, particularly in energy-intensive sectors like steel, chemicals and cement.
The CID energy strategy looks to address this with an Action Plan for Affordable Energy.
To execute this plan, the European Commission wants to create an internal energy market in Europe, so European nations are less reliant on imported power.
There are also plans to increase electrification and deploy more digital technologies into the energy ecosystem, such as AI-driven smart grids.
The European Investment Bank additionally intends to launch a pilot programme, offering US$540m in financial guarantees for corporate power purchase agreements, ensuring businesses can access stable, cost-effective renewable energy.
“We want to cut the ties that hold you back so that Europe can not only be a continent of industrial innovation, but a continent of industrial production,” Ursula explains.
I know that too often [climate tech] companies struggle to grow and bring their solutions to industrial scale. So, what do they need? They need access to capital.
Boosting demand for clean industrial products
If innovation is one side of the coin, then demand must be the other.
This is an important part of the Clean Industrial Deal — creating strong demand for low-carbon industrial goods.
The European Commission believes that businesses are only inclined to invest in decarbonisation if there is a viable market for their products.
The Clean Industrial Deal plans to introduce new sustainability and resilience criteria in public procurement, designed to encourage investment in low-carbon manufacturing.
A voluntary carbon intensity label will be rolled out initially for steel in 2025, helping to differentiate clean products and incentivise sustainable production.
The deal also supports the continued development of the Industrial Carbon Management Strategy, which is designed to better integrate carbon capture into industrial operations.
Then, of course, there is hydrogen.
According to the European Commission, hydrogen will play a major role in the future of Europe’s energy landscape, particularly for hard-to-abate industries where electrification is not yet viable.
Often, these are heavy industries.
A third round of funding from the European Hydrogen Bank, worth up to US$1.08bn, is scheduled for later in 2025, alongside regulatory measures to support hydrogen market growth and infrastructure.
We want to cut the ties that hold you back so that Europe can not only be a continent of industrial innovation, but a continent of industrial production.
How Europe plans to finance its clean transition
The Commission estimates that an additional US$520bn per year in investment will be needed to meet Europe’s energy and industrial transformation goals.
This is not a small number. As such, mobilising private capital is a priority point for the CID, alongside strengthening EU-level funding.
A new Industrial Decarbonisation Bank is set to be established, aiming to deploy US$108bn in financing, drawn from the EU’s Innovation Fund and emissions trading revenues.
The Commission also plans to explore new mechanisms under the InvestEU programme, leveraging private investment in clean tech and industrial decarbonisation projects.
State aid rules will be reformed under the Clean Industrial Deal State Aid Framework, giving businesses and governments a more predictable five-year planning horizon.
The predictability of carbon reductions is also an important stabilising factor when it comes to the investment market, which President von der Leyen was at pains to address during her announcement speech.
“We are on track to achieve our 55% emissions reduction target for 2030, and this gives you the predictability you need to plan your investments,” she says.
A simplified approval process for industrial decarbonisation projects is also expected to speed up investment in clean manufacturing and renewable energy infrastructure across the continent.
We are on track to achieve our 55% emissions reduction target for 2030, and this gives you the predictability you need to plan your investments.
Circularity and raw materials security
Another of the key points in the Clean Industrial Deal is circularity.
The European Commission sees the establishment of a circular economy as a strategic priority, both to reduce Europe’s dependency on imported raw materials and to create new economic opportunities in the bloc.
The EU wants to become a global leader in circular manufacturing by 2030, with industrial waste reduction and recycling playing a central role in that aim.
The upcoming Circular Economy Act, set for rollout in 2026, should streamline regulations and facilitate the cross-border trade of secondary raw materials.
That, in turn, should harmonise waste classification standards and promote material recovery from end-of-life products.
The EU will also establish a Critical Raw Materials Centre to coordinate joint procurement and stockpiling, reducing exposure to global supply chain disruptions.
How the EU will address international competition
A simple but crucial economic observation: Europe’s clean transition doesn’t exist in a vacuum.
In many senses, Europe remains reliant on international trade if it is to achieve climate neutrality.
The commission knows that it needs to strengthen global partnerships and trade agreements to secure access to key raw materials and export markets for European clean tech.
The Clean Industrial Deal introduces the concept of Clean Trade and Investment Partnerships, designed to align trade policy with the EU’s climate and industrial strategy.
The Carbon Border Adjustment Mechanism (CBAM) is set to be reviewed in 2025, with plans to expand its scope to cover additional products and indirect emissions.
This is intended to prevent carbon leakage while encouraging global partners to adopt carbon pricing mechanisms.
At the same time, the Commission will look to tighten trade defence measures to address the risk of subsidised foreign goods flooding the European market.
Making the Clean Industrial Deal work
All in all, the Clean Industrial Deal represents a huge turning point in Europe’s approach to industrial policy.
It acknowledges that decarbonisation and competitiveness must go hand in hand, whereas the two are often seen as opposing forces.
By addressing energy affordability, raw material security, financing, international trade and labour market transitions, the European Commission hopes the deal can position the EU as the global leader.
However, success will depend on rapid implementation and the ability to navigate political and economic challenges.
One thing is clear: the EU’s current leadership are headstrong in their belief in the process.
“Europe has a clear roadmap — and we stay the course,” Ursula says.
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