On February 26, the European Commission is set to announce its Clean Industrial Deal to secure the future of Europe’s energy-intensive industries
Although the full details have not yet been announced, the new Clean Industrial Deal is expected to address the challenges facing sectors crucial to the EU economy. It is designed to balance the need for short-term relief with the long-term goal of decarbonising industrial processes.
Energy-intensive industries, responsible for around 21% of EU emissions, are at a crossroads.
These sectors are under a lot of pressure because of rising production costs, particularly worsened by the Russian invasion of Ukraine and an increasingly complex global trade environment.
There is also growing speed in the EU toward industrial decarbonisation, with several green tech initiatives already underway.
Green infrastructure tech
The EU has long been a global leader in green industrial projects, and its technological and engineering expertise enables it to be ahead of other regions.
Also, the rapid deployment of renewable energy sources gives Europe a competitive edge in the electrification of manufacturing processes. However, the ongoing energy price crisis and the rise of cheaper exports from China create considerable challenges for EU industries.
Challenges from rising energy prices and global trade tensions
The threat of new tariffs from the United States also adds another layer of complexity to an already difficult trade landscape.
An ageing industrial base further complicates the situation. Many European plants are approaching a crucial juncture, with significant reinvestment decisions to be made by 2030.
Factory owners need to start deciding whether to continue operating with intensive technologies or invest in clean alternatives, which will be more costly. Despite significant public funding, recent setbacks in green steel projects have raised doubts about the feasibility of this transition.
Key measures in the Clean Industrial deal
The Clean Industrial Deal hopes to address these issues by providing a clear roadmap for the future of energy-intensive manufacturing in Europe.
One of the main elements of the proposal is to support businesses with high energy costs, which are currently up to three times higher than competitors in the U.S.
A key measure is establishing a European Investment Bank scheme, which is planned to launch by the end of March. This scheme will offer guarantees to smaller companies, enabling them to enter power purchase agreements with renewable electricity suppliers and stabilise energy prices.
Future clean industrial projects
The European Commission also plans to improve the permitting process for clean industrial projects.
A proposal later this year will introduce fast-tracked permits for energy-intensive industries, simplifying the path to investment in green technologies.
Brussels will recommend that EU member states lower electricity taxes to the legal minimum to provide quicker relief, potentially reducing consumer energy bills. A proposed revision to the EU’s gas storage targets will also alleviate some of the pressure on energy prices, responding to concerns from member countries such as Germany.
State aid
The Clean Industrial Deal is also expected to focus on state aid. EU governments will be encouraged to offer tax breaks and financial incentives to businesses investing in clean technologies.
Simplified state aid rules, expected to be published in July, will make it easier for companies to access these benefits. The Commission is also exploring ways to help national governments protect consumers from rising gas prices, possibly through subsidies.
Overall, the Clean Industrial Deal shows the attempts to navigate the intersection of industrial competitiveness and environmental responsibility.
The European Commission hopes to create a greener, more competitive future for Europe’s industrial sectors by addressing immediate energy price concerns while creating a long-term strategy for industrial decarbonisation.
