Overview
This report analyzes the European Union's clean industry competitiveness enhancement policies from 2025 onward, examining the policy evolution from the Green Deal Industrial Plan to the Clean Industrial Deal.
A significant shift in EU policy priorities has occurred following the 2024 European Parliament elections, with the focus moving from "climate neutrality" to "competitiveness enhancement." While the 2019-2024 Strategic Agenda emphasized a "climate-neutral, green, fair and social Europe," the 2024-2029 version has shifted emphasis to a "prosperous and competitive Europe." This transition has been driven by concerns about subsidy competition from the U.S. Inflation Reduction Act (IRA) and risks of domestic companies relocating production facilities abroad, along with the negative impact on industrial competitiveness from energy price spikes following the Ukraine war.
The implementation of the Net Zero Industry Act and Critical Raw Materials Act establishes ambitious targets. The goal is to secure at least 40% of the EU's annual deployment needs for net-zero technologies through domestic manufacturing capacity by 2030. The legislation legally positions 34 critical raw materials (including 17 strategic materials) with 2030 benchmarks: 10% domestic extraction, 40% domestic processing, and 25% recycling. Current import dependencies present extreme concentration risks, with 99% of magnesium and 79% of gallium sourced from China. The acts promote supply source diversification through streamlined permitting processes and resilience criteria in public procurement.
The Clean Industrial Deal focuses on six key elements. Energy price reduction targets include 32% electrification by 2030 and 100 GW annual renewable energy capacity additions. Demand stimulation involves introducing public and private procurement standards through the Industrial Decarbonization Promotion Act and carbon intensity labeling (starting with steel). Financing proposals include an Industrial Decarbonization Bank with a €100 billion investment target and simplification of state aid measures. Raw materials access improvements include establishing an EU Critical Raw Materials Center, adopting the 2026 Circular Economy Act, and targeting 24% circular material usage by 2030. International cooperation involves early conclusion of existing and new FTAs and simplification of the Carbon Border Adjustment Mechanism (CBAM).
The affordable energy policy outlines eight action plans. Energy cost reduction measures include lowering network fees and electricity taxes while promoting long-term power purchase agreements. Power market integration involves producing a white paper on deepening electricity market integration by mid-2027 and developing an electrification action plan. Gas market improvements include establishing a Gas Market Task Force and securing favorable gas import conditions through demand aggregation and long-term contracts. Energy security measures involve revising the energy security regulatory framework to prepare for price crises.
The Competitiveness Compass provides a five-year roadmap with three critical pillars: closing the innovation gap, joint decarbonization and competitiveness roadmaps, and reducing over-dependencies while strengthening security. Five cross-cutting measures include regulatory simplification, leveraging single market scale benefits, financing facilitation, skills and employment promotion, and strengthening EU-member state policy coordination. Based on the Draghi Report, additional investments of €750-800 billion annually (4.4-4.7% of GDP) are needed for the 2025-2030 period, with competitiveness budget allocation in the next Multiannual Financial Framework (2028-2034) and construction of an industrial policy coordination framework.
The report concludes that while the EU maintains its decarbonization goals, it is deploying a comprehensive industrial policy package centered on strengthening domestic manufacturing capabilities and supply source diversification, emphasizing technology neutrality principles to address the practical challenges of high energy prices and declining industrial competitiveness.
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This report analyzes the European Union's clean industry competitiveness enhancement policies from 2025 onward, examining the policy evolution from the Green Deal Industrial Plan to the Clean Industrial Deal.
A significant shift in EU policy priorities has occurred following the 2024 European Parliament elections, with the focus moving from "climate neutrality" to "competitiveness enhancement." While the 2019-2024 Strategic Agenda emphasized a "climate-neutral, green, fair and social Europe," the 2024-2029 version has shifted emphasis to a "prosperous and competitive Europe." This transition has been driven by concerns about subsidy competition from the U.S. Inflation Reduction Act (IRA) and risks of domestic companies relocating production facilities abroad, along with the negative impact on industrial competitiveness from energy price spikes following the Ukraine war.
The implementation of the Net Zero Industry Act and Critical Raw Materials Act establishes ambitious targets. The goal is to secure at least 40% of the EU's annual deployment needs for net-zero technologies through domestic manufacturing capacity by 2030. The legislation legally positions 34 critical raw materials (including 17 strategic materials) with 2030 benchmarks: 10% domestic extraction, 40% domestic processing, and 25% recycling. Current import dependencies present extreme concentration risks, with 99% of magnesium and 79% of gallium sourced from China. The acts promote supply source diversification through streamlined permitting processes and resilience criteria in public procurement.
The Clean Industrial Deal focuses on six key elements. Energy price reduction targets include 32% electrification by 2030 and 100 GW annual renewable energy capacity additions. Demand stimulation involves introducing public and private procurement standards through the Industrial Decarbonization Promotion Act and carbon intensity labeling (starting with steel). Financing proposals include an Industrial Decarbonization Bank with a €100 billion investment target and simplification of state aid measures. Raw materials access improvements include establishing an EU Critical Raw Materials Center, adopting the 2026 Circular Economy Act, and targeting 24% circular material usage by 2030. International cooperation involves early conclusion of existing and new FTAs and simplification of the Carbon Border Adjustment Mechanism (CBAM).
The affordable energy policy outlines eight action plans. Energy cost reduction measures include lowering network fees and electricity taxes while promoting long-term power purchase agreements. Power market integration involves producing a white paper on deepening electricity market integration by mid-2027 and developing an electrification action plan. Gas market improvements include establishing a Gas Market Task Force and securing favorable gas import conditions through demand aggregation and long-term contracts. Energy security measures involve revising the energy security regulatory framework to prepare for price crises.
The Competitiveness Compass provides a five-year roadmap with three critical pillars: closing the innovation gap, joint decarbonization and competitiveness roadmaps, and reducing over-dependencies while strengthening security. Five cross-cutting measures include regulatory simplification, leveraging single market scale benefits, financing facilitation, skills and employment promotion, and strengthening EU-member state policy coordination. Based on the Draghi Report, additional investments of €750-800 billion annually (4.4-4.7% of GDP) are needed for the 2025-2030 period, with competitiveness budget allocation in the next Multiannual Financial Framework (2028-2034) and construction of an industrial policy coordination framework.
The report concludes that while the EU maintains its decarbonization goals, it is deploying a comprehensive industrial policy package centered on strengthening domestic manufacturing capabilities and supply source diversification, emphasizing technology neutrality principles to address the practical challenges of high energy prices and declining industrial competitiveness.