The EU Clean Industrial Deal
What is the Clean Industrial Deal? Which policy areas does the Clean Industrial Deal cover? Which are the six pillars of the Clean Industrial Deal?
In this article, we give a brief overview of the main features of the Clean Industrial Deal, one of the key initiatives of the second Von der Leyen mandate, aimed at ensuring that the European industry can decarbonize its processes while regaining and maintaining competitiveness on the global stage. We do so by answering the following questions: What is the Clean Industrial Deal? Which policy areas does it cover? What are its six pillars?
What is the Clean Industrial Deal?
On February 26th 2025, the European Commission (EC) published the Clean Industrial Deal, outlining concrete actions to transform the decarbonization process into a growth driver for the European industry. The Plan includes measures to reduce energy costs, create jobs and foster favourable conditions for business success.
In line with the Draghi Report, the Plan pays particular attention to two key elements:
- Energy-intensive industries such as steel, metals, and chemicals, which urgently need support to decarbonize their production processes and address global competition;
- The green technology sector, which is central to Europe’s future competitiveness.
Besides these two elements, the Plan has a focus on circularity, aiming at reducing waste and extending the lifespan of goods and materials by promoting reuse, recycling, and sustainable production. Maximizing the use of currently limited productive resources within the European Union (EU) and reducing excessive reliance on raw material suppliers from non-EU countries is crucial for a competitive and resilient EU market.
Which policy areas does the Clean Industrial Deal cover?
The document about the Deal highlights six pillars of action:
- Affordable energy;
- Lead markets for clean industry;
- Public and private investments;
- Circular economy;
- Global markets and international partnerships;
- Skills and jobs for a just transition.
These areas of intervention need to be complemented by horizontal actions, such as reducing bureaucracy, leveraging the potential of the single market (including the gradual integration of EU candidate countries), promoting digitalization, accelerating innovation, and improving policy coordination at both national and EU levels.
Which are the six pillars of the Clean Industrial Deal?
Pillar I – Access to affordable energy: how to ensure it?
Energy prices in Europe are significantly higher than those faced by industries in the United States and China; providing affordable energy is a fundamental condition for competitiveness, especially for energy-intensive sectors. To address this, along with the Clean Industrial Deal, an Action Plan for Affordable Energy was adopted, encompassing measures aimed at reducing costs for industries, businesses, and households. The plan includes the following three lines of intervention:
- Lowering energy bills
The starting point must be the full implementation of the measures introduced through the 2024 Electricity Market Design Reform and the promotion of energy efficiency. The 2024 reform encourages the adoption of long-term electricity power purchase agreements (PPAs) and contracts for difference (CfDs), which are essential for making clean energy production more accessible to industrial players. Furthermore, the Commission intends to simplify state aid rules to accelerate the deployment of renewable energy installations and ensure sufficient production capacity for clean technologies within Europe. Lastly, the European Grid Package is expected to simplify the construction and operation of trans-European energy networks, foster collaboration in planning and implementing cross-border projects, reduce the time needed to get permitting done, and promote network digitalization and innovation; - Accelerating the roll-out of renewables, energy storage, grids and clean manufacturing
The Commission will support Member States in this process of transposition and implementation of the Renewable Energy Directive and, through the Industrial Decarbonisation Accelerator Act, will propose concrete measures to address bottlenecks caused by lengthy authorization procedures for renewable energy production for industrial uses while maintaining high environmental standards. An increased use of digital technologies to speed up procedures and increase time predictability will be promoted; - Ensuring well-functioning gas markets
In February 2025, the Commission established a Gas Market Task Force to examine the functioning of the EU’s natural gas market and, if necessary, adopt measures to optimize its functioning and prevent commercial practices that could distort prices based on demand-supply dynamics, drawing from the experience of the 2022 energy crisis.
Pillar II – Lead markets: how to boost clean supply and demand?
To ensure the attractiveness of the investments necessary for the green transition of the industrial sector, it is essential to promote the demand for decarbonized products and low-carbon technologies, creating a market for them. In this direction, the Commission aims, via the Industrial Decarbonisation Accelerator Act, to boost the demand for decarbonised products manufactured in the EU by introducing sustainability, circularity, and cybersecurity criteria into public and private procurement processes for energy-intensive economic sectors. The revision of the Public Procurement Framework will strengthen the attention to sustainability, resilience, and preference for European products in the EU’s public procurement for strategic sectors, while also clarifying and consolidating interactions between related provisions in various legislative acts.
Finally, addressing the proliferation of different carbon accounting methodologies in the EU and internationally is necessary to avoid confusion for EU companies leading the development of cleaner products. In this direction, the Commission intends to simplify and harmonise carbon accounting methodologies as well as point out priority areas and the potential for simplification, harmonisation and robust verification.
Pillar III – Public and private investments: which measures to incentivise them?
The green transition of the European economy requires significant investments, both public and private, which in turn depend on long-term regulatory stability and effective coordination of national and European policies. The EU Multiannual Financial Framework (MFF 2028–2034) plays a key role in this regard.
Additionally, the Competitiveness Fund is seen by the EC as a tool providing support for innovation in the European industry, while other EU funding programs will enable substantial investments in infrastructure and connectivity necessary to complete the Energy Union. Furthermore, the Commission intends to adopt a Strategy for the Union of Savings and Investments to mobilize private capital and position Europe as a preferred destination for investments in industrial decarbonization and clean technologies.
Additionally, a proposal will be made to establish an Industrial Decarbonization Bank to provide €100 billion in funding through the Innovation Fund, additional revenues from the Emissions Trading System (EU ETS), whose Directive will be revised in 2026, and a revision of the InvestEU Program to mobilize up to €50 billion in further public and private investments. The Commission will also propose an amendment to the InvestEU Regulation to repurpose surpluses from the European Fund for Strategic Investments and unlock additional funds for major EU strategic priorities, such as modernizing industrial processes, producing and deploying clean technologies, financing energy infrastructure projects, green mobility, and reducing and recycling waste.
Lastly, the Commission aims at adopting a new State Aid Framework in the context of the Clean Industrial Deal, providing greater investment certainty for projects that contribute to its objectives while avoiding distortions of competition within the single market. It will also closely collaborate with Member States to facilitate the preparation of new European Projects of Common Interest that support industrial decarbonization.
Pillar IV – Powering the circular economy: which way to secure access to materials and resources?
According to the Deal, the EU should adopt a more strategic approach to sourcing raw materials and secondary materials in order to drastically reduce its reliance on unreliable third-country suppliers and avoid the risk of supply disruptions.
In March 2025, the Commission approved, under the Critical Raw Materials Regulation, an initial list of strategic projects to ensure the diversification of supplies across the entire production chain of specific technologies and to facilitate access to public and private financial support for these projects. An EU Critical Raw Material Centre will also be established to facilitate joint procurement on behalf of interested businesses, in collaboration with Member States.
Furthermore, although the EU industry proved a front runner in circularity, this leading role is currently hampered by a lack of scale and of a well-structured, operational single market for waste, secondary raw materials, reusable materials. Therefore, in 2026, a Circular Economy Act will be proposed to promote the free movement of reusable and recyclable products, secondary materials, and waste, while simultaneously boosting demand for them. One of the measures in the proposal will be a revision of the existing legal framework for waste from electrical and electronic equipment to simplify it and enhance the recovery of critical raw materials contained in it. Additionally, the responsibility of manufacturers regarding the disposal of their electronic products will be expanded and streamlined. In this context, the Commission also intends to initiate an Industrial Dialogue on Circularity to support the well-informed preparation of the legislative proposal.
Pillar V – Global markets and international partnerships: how to make the most out of them?
The EU’s extensive network of trade agreements provides European businesses with privileged access to third-country markets and, consequently, to a broader choice of essential goods for production processes. It is, therefore, crucial for the Union to finalize and implement pending free trade agreements and continue negotiations for new ones. Green trade and investment partnerships will complement these agreements, being more tailored to the EU’s and its partners’ priority commercial interests. These efforts aim to better manage strategic dependencies and secure a prominent position for the EU in global supply chains which are critical to the energy transition.
Moreover, the Commission proposes to simplify the Carbon Border Adjustment Mechanism (CBAM) to reduce administrative burdens for industries and their supply chains while continuing to encourage global carbon pricing; additionally, the Commission aims at presenting a review report on CBAM, assessing its scope of application and a potential extension.
Regarding foreign investments in the Union, measures will be proposed to ensure these contribute more effectively to the EU industry’s long-term competitiveness, economic resilience, and local job creation. For instance, for projects involving foreign investments in strategic sectors like the automotive industry or renewable energy, Member States will be encouraged to carefully consider conditions such as the EU origin of production factors, employment of EU-based personnel, and potential intellectual property transfers. Lastly, a guidance document clarifying key concepts under the Foreign Subsidies Regulation, detailing how the distortive effects of such subsidies on competition will be assessed, will be put forward by the European Commission.
Pillar VI – Skills and quality jobs: which actions to ensure social fairness and a just transition?
The European industry requires a skilled workforce and must offer adequate working conditions to attract it. Keeping workers and local communities at the centre of the industrial transformation while harnessing and further developing the necessary skills is crucial for the success of the green transition.
The Commission has introduced the Union of Skills as a comprehensive strategy to equip workers with the skills they need to enter and remain in the labour market, while ensuring employers have access to the profiles they require. EU’s support models via sector-specific skills initiatives (including the Academies, the Pact for Skills, the Alliance for Apprenticeships and Centres of Vocational Excellence) will be reviewed to optimize the European landscape for strengthening sectoral skills in strategic industries tied to the Clean Industrial Deal. Additionally, a Quality Jobs Roadmap will be developed to assist Member States and industries in ensuring decent working conditions, high standards of health and safety, access to continuous training, and fair occupational transitions for both employed and self-employed workers.
Do you want to know more?
If you want to know more about this topic and get in touch with the FSR electricity team, please contact Chiara Canestrini.
This Cover the Basics benefited from the contribution of Sofia Nicolai and Nicolò Rossetto.
Useful Links
FSR Debate – The Clean Industrial Deal: turning strategy into impact
Europe’s Clean Industrial Deal: 5 Takeaways from FSR’s Policy Workshop
