On 26 February 2025, the European Commission presented the Green Deal’s successor: the Clean Industrial Deal. It includes measures to strengthen the EU’s competitiveness and improve climate protection and aims to accelerate the decarbonisation of the economy and expand production capacities. The new roadmap will go hand in hand with the Commission’s Action Plan for Affordable Energy, which seeks to reduce energy costs for businesses and consumers. The package aims to give the EU the tools it needs to effectively address geopolitical crises and tensions, the current slow economic growth and technology competition.
The key objectives of the Clean Industrial Deal include reliable and simplified regulations, faster access to funding, the enhancement of skills and open trade for resilient supply chains, and focus on strengthening energy-intensive industries and the clean-tech sector.
I. Approaches and focus areas
The Clean Industrial Deal identifies six drivers for the European economy. First, it emphasises the importance of affordable energy (1.). The European Commission adopted its Action Plan for Affordable Energy to address this on 26 February 2025.
Other drivers include lead markets (2.) and financing (3.). Circularity – seen as the key to maximising the EU’s limited resources – is also identified as a priority (4.), with the aim being to reduce dependencies, increase resilience, reduce waste and lower production costs and CO2 emissions by improving the circular economy. The last two drivers identified by the Commission are international partnerships (5.) and a skilled workforce (6.).
All of this is to be complemented by measures aimed at cutting red tape, fully exploiting the scale of the single market, promoting quality jobs and improving the coordination of policies at EU and national level in order to accelerate the transition to a competitive and decarbonised European economy.
1. Access to affordable energy
Energy prices in Europe, which are significantly higher than those of its main global competitors, put European businesses at a considerable competitive disadvantage – especially those in the key energy-intensive industries. Two of the main reasons for this are the EU’s dependence on energy imports with the associated price volatility, and the insufficient infrastructure, inadequate energy system integration and limited flexibility of the European grid. These issues are to be addressed by the European Commission’s Action Plan for Affordable Energy, which accompanies the Clean Industrial Deal.
This Action Plan aims to reduce high energy prices in the EU through a range of measures. It is based on four pillars: lowering energy costs, completing the Energy Union, being ready for potential energy crises and attracting investments. Measures include improving grid infrastructure, promoting renewable energies, simplifying permitting procedures and introducing long-term contracts between suppliers and purchasers.
2. Lead markets
Because clean-tech companies will only make the necessary investments if they can expect a sufficient demand for decarbonised products, the Clean Industrial Deal includes initiatives to increase demand for sustainable product or technology alternatives for both companies and consumers, with a focus on establishing lead markets for clean technologies and products. The aim is to position the EU as a leader in the clean transition, even if the draft does not provide a clear definition of what constitutes clean tech.
These lead markets will complement the roll-out of the EU’s long-standing objective to create a market for captured carbon and implement the Industrial Carbon Management Strategy.
Public procurement policies are also to be used as an instrument to help overcome barriers to market entry and to promote and preserve resilient industrial ecosystems and jobs. To this end, the Commission had already announced in January of this year that it intended to introduce European preference criteria in the Public Procurement Directive (Directive 2014/24/EU) (see COM(2025) 30 final).
Another measure to boost demand for green products is the planned Industrial Decarbonisation Accelerator Act. This will incorporate resilience and sustainability criteria (clean, resilient, circular, cybersecure) and, in doing so, help stimulate greater demand. The Act is also to establish a voluntary product label indicating the carbon intensity of a product.
The Commission also wants to include non-price requirements in product legislation to create a clear link between decarbonisation incentives and circularity efforts. These could, for example, be requirements for the use of low-carbon steel or sustainable batteries for electric vehicles as well as comparable requirements in building codes.
The hydrogen market is to continue playing a key role, which is why the Commission wants to adopt delegated acts on the production of low-carbon hydrogen in order to provide legal certainty for investors in this sector. Parallel measures include making it possible to reallocate unspent EU funds and initiating a pilot programme to counter-guarantee power purchase agreements with the aim of reducing the risk for hydrogen producers under long-term contracts for new renewable electricity capacity. The launch of the EU’s hydrogen mechanism will mobilise suppliers and offtakers and facilitate aggregation of demand for hydrogen, which will be particularly relevant for the maritime and aviation sectors.
3. Public and private investment
The major investments required for the transition of the European economy are to be stimulated by strengthening EU-level financing, leveraging private investment, introducing the Clean Industrial Deal State Aid Framework and enhancing other forms of support.
To this end, it will be necessary to increase the impact of the EU’s Innovation Fund by making additional financing options available for selected projects. Financing criteria for the Innovation Fund and those of national financing are to be aligned to simplify State aid approval for Member States wanting to support projects with a STEP seal. This seal has already been awarded to strategic technologies in Europe.
Private investments are to be mobilised by strengthening the InvestEU Regulation (Regulation (EU) 2021/523). To this end, the Commission intends to put forward an amendment that will increase InvestEU’s risk-bearing capacity. InvestEU promotes sustainable investment and innovation through financial support, including via the European Investment Bank (EIB) and national promotional banks.
The new Clean Industrial Deal State Aid Framework will enable necessary State aid that attracts private investment and ensures a level playing field in the EU. To achieve this, it sets out both positive conditions (promoting the development of certain economic sectors) and negative conditions (not changing trade terms that run counter to common interests) for determining whether State aid is compatible with the single market. State aid measures are to support the objectives of the Clean Industrial Deal in this regard.
4. Strengthening circularity and securing access to materials
The focus on strengthening circularity is intended to improve access to affordable materials, promote sustainability, reduce dependencies and create jobs. The Critical Raw Materials Act (Regulation (EU) 2024/1252) is to be implemented as quickly as possible to support this process.
As part of this implementation, an EU Critical Raw Material Centre will be established to jointly purchase raw materials on behalf of interested companies.
The Commission also aims to strengthen the single market for waste, secondary raw materials and reusable materials. One of the planned measures is the full roll-out of the requirements of the Ecodesign Directive to ensure that products containing valuable and scarce materials are reused efficiently and for as long as possible. And the Commission plans to adopt a Circular Economy Act in 2026 to enable the free movement of circular products, recyclates and waste and stimulate supply and demand for high-quality recyclates and circular products. All of this should ultimately lead to lower prices for raw materials. Trans-regional circularity hubs are also to be created to foster cooperation between neighbouring Member States, for example by identifying strategic projects for the recycling economy.
5. International partnerships
Many of the raw materials required for the transformation of the European energy supply originate in third countries. For this reason, the Commission plans to create sustainable and diversified international partnerships to facilitate access to these markets.
One key instrument here will be Clean Trade and Investment Partnerships (“CTIPs”), accompanied by the continuance of existing free trade agreements and the negotiation of new ones. The CTIPs are intended to create an environment conducive to investment in green technologies and equal business opportunities. The first CTIP is already planned for March 2025, though the name of the country in question has not yet been disclosed.
In addition, improvements are to be made to the Carbon Border Adjustment Mechanism (“CBAM”; Regulation (EU) 2023/956) to avoid disadvantages that carbon-intensive goods produced in the EU may face – compared to those produced outside the EU – owing to European carbon pricing. The Commission is proposing to simplify CBAM, reducing administrative burden on industries and their supply chains. The Commission will present a comprehensive CBAM review report in the second half of 2025 assessing the extension of the CBAM’s scope to further sectors of the EU Emissions Trading System (ETS), downstream products and indirect emissions.
To promote the EU as a place to do business and protect European industries, the Commission plans – among a number of measures – to develop guidelines on key concepts underpinning the Foreign Subsidies Regulation (Regulation (EU) 2022/2560), such as how the Commission will assess distortive effects of these subsidies. The Commission would also like to continue to make fast and efficient use of trade defence instruments, such as anti-dumping or anti-subsidy duties, to protect European industry against unfair competition. Shortened investigation timelines or greater use of ex officio procedures are intended to ensure that the European market does not serve as an export destination for state-induced excess capacity. Raising tariffs is to remain an option in tackling unfair trading practices.
6. Quality jobs and a just transition
The Clean Industrial Deal also identifies attractive quality jobs and the enhancement of skills and qualifications as important factors in the just transition of the European economy. The Commission therefore intends to launch a Union of Skills to promote the development of resilient and adaptable education and training in the EU.
As part of the just transition, workers are to receive support. A European Fair Transition Observatory will develop indicators and facilitate data sharing to measure outcomes related to workforce reskilling and investment and enable a dialogue with stakeholders, public authorities and civil society on a just transition to a green economy.
The Commission also plans to provide Member States with guidance on how the social leasing of electric vehicles, heat pumps and other clean technology can be realised. While the exact framework of this social leasing scheme is not yet known, it will be financed through the Social Climate Fund.
II. Implementing the Clean Industrial Deal across sectors
To support the transition to clean industry with coordinated measures, the Commission intends to develop various sector-specific plans. These will apply to sectors including the automotive industry, the steel and metals industry, the chemicals industry, the transport sector and the bioeconomy. The Industrial Action Plan for an Automotive Sector, for instance, will address supply chain needs and focus in particular on innovation in future technologies.
III. Outlook
The Clean Industry Deal was presented together with the Action Plan for Affordable Energy on 26 February 2025, and emphasises the connection between European competitiveness and a decarbonised European industrial sector. To this end, the Commission intends to introduce a large number of guidelines, revised or new legal provisions and sector-specific plans covering wide areas of the economy. These measures also aim to achieve a just transition for workers. But as the Clean Industrial Deal itself states, strategies are only as good as their implementation. It remains to be seen whether the envisaged simplifications (of the CBAM, for example), the dismantling of bureaucratic obstacles, and, above all, lower energy prices will help these strategies succeed.
Forward
