Europe’s Clean Industrial Deal: 5 Takeaways from FSR’s Policy Workshop

The EU’s Clean Industrial Deal promises a transformative framework for the future of European industry, ensuring that decarbonisation, competitiveness and security are fully aligned. One week after its publication, a high-level workshop was convened by the FSR to examine its key measures and their implications for industry, finance, and policy.

The discussions emphasised the importance of infrastructure, flexibility in planning, and a coordinated global value chain to support the clean industrial transition. Participants also debated simplification in governance and the need to address cross-border regulatory and logistical challenges to enable the efficient movement, reuse, and recycling of resources across regions, fostering a more integrated and sustainable industrial system.

1. A Competitive Industry Through Local Clean Energy

One of the main messages from the workshop was that Europe’s reliance on imported fossil fuels undermines its industrial competitiveness. A shift towards clean, local energy sources was seen as essential to reducing costs and ensuring long-term stability. However, to facilitate this, participants stressed the importance of simplifying regulation and permitting, particularly in relation to governance processes that currently add complexity and risk. This process is already underway as part of the EU’s ‘Omnibus Package’ which accompanies the Clean Industrial Deal.

The workshop examined how decarbonisation should be shaped into a driver for renewing Europe’s industrial strength. The development of lead markets for clean technologies was seen as a priority, alongside clearer non-price criteria for public procurement and product labelling. There were also discussions on the establishment of an Industrial Decarbonisation Bank and increased financing from the Innovation Fund, with an aim to raise €100 billion for industrial transformation. The design will likely take some inspiration from the Innovation Fund Hydrogen Bank auctions, and potentially benefit from the flexible reorientation of unused funds from elsewhere. State aid was also a major focus of discussion, with a public consultation on the renewal/revision of the Temporary Crisis and Transition Framework open until 25.04.25.

2. Energy Pricing and Market Design

A recurring concern was the need for affordable and predictable energy prices. The revision of the electricity market design and the decoupling of consumer electricity prices from volatile gas prices were identified as key steps towards stability. Infrastructure investment was highlighted as another priority, with discussions focusing on grid fees, energy flexibility and the effectiveness of Europe’s Energy Union in ensuring security and efficiency.

The systemic role of flexibility was also widely discussed. Flexibility affects price formation, impacts industrial competitiveness, and determines how effectively the energy system can integrate renewables. Participants highlighted the need for planning to align infrastructure investments with market needs, including between electricity and gas systems. Finally, there was widespread recognition of the need to expand corporate Power Purchase Agreements and Contracts for Difference to incentivise investment in clean energy and stabilise prices. Participants emphasised the importance of implementing the new Electricity Market Design rather than reopening discussions.

3. Global Trade and Competition

Concerns were raised about global trade distortions, particularly the risk of excess capacity and price dumping in key sectors such as steel, chemicals, and plastic. Many participants called for stronger trade defence measures and updates to foreign investment regulations to ensure European industries remain competitive. At the same time, it was acknowledged that a balance should be struck between preferencing local suppliers and maintaining a sustainable cost of decarbonisation.

While trade measures like the Carbon Border Adjustment Mechanism (CBAM) were considered vital for protecting European industries from unfair competition, some participants warned that they could inadvertently create new barriers and administrative burdens.  Participants also called for greater certainty in carbon pricing mechanisms (ETS), stressing that CBAM and ETS reforms should go hand in hand to avoid unintended distortions. Finally, trans-regional circularity was discussed, pointing out the need for policies that facilitate cross-border industrial cooperation and supply chain resilience.

4. Infrastructure and Energy Transition Challenges

Electrification is central to the Clean Industrial Deal, however, several speakers noted that its progress has stagnated in Europe, whilst China has made rapid gains in recent years. Permitting challenges and grid constraints were seen as major barriers to further expansion. Some advocated for the introduction of default approvals after review deadlines have lapsed, or the formalisation of the principle of an ‘overriding public interest’ for key renewable infrastructure established in REPowerEU.

It was also stressed that energy transition is not just about electrons but also molecules. The role of hydrogen and carbon capture, utilisation and storage were widely debated. Stakeholders stressed the need for clearer business cases and funding mechanisms to support both technologies, as well as clearer integration within the Clean Industrial Deal’s financial framework.

5. The Challenge of Implementation and the Role of Member States

Despite numerous EU strategies and action plans developed in recent years, there are growing concerns that implementation at the Member State level remains inconsistent. While regulatory frameworks have been established at the EU level, their success depends on strong national commitments and enforcement mechanisms. Industry representatives expressed frustration over slow permitting processes, regulatory uncertainty, and inconsistent or incomplete application of policies across Member States.

One key concern raised was that while clean hydrogen’s market growth is expected to be driven by regulated demand (i.e. through obligations in EU regulation), there are doubts about whether Member States intend to deliver on their obligations. There were also doubts about whether the European Commission would effectively enforce these targets. Without strong oversight and accountability, there is a risk that the ambitious goals set out in legislation could fall short in practice.

The Path Forward for European Industry

The success of the Clean Industrial Deal hinges on the close cooperation between industry and policymakers. While businesses will need to take the lead in the transition, they will rely on clear incentives and regulatory certainty to make long-term investments. Equal commitment and a shared vision between the national and EU levels will be essential to aligning security, competitiveness, and sustainability to deliver a durable, clean industrial revolution in Europe.