An Analysis of the Clean Industrial Deal.

On 26 February 2025, Ursula von der Leyen, together with European Commissioners Teresa Ribera, Stéphane Séjourné and Wopke Hoekstra, presented the Clean Industrial Deal in Antwerp: a plan that combines climate and competitiveness in one single growth strategy. The European Commission Von der Leyen II, which was installed on 1 December 2024, had announced to present this major plan within the first 100 days of its term. The Clean Industrial Deal (CID) is the successor to the Green Deal, the showpiece of Von der Leyen I. However, this new deal has a different emphasis. This article discusses the reasons for the CID, its key points, and its implications in practice. 

Reasons for the Clean Industrial Deal

During Ursula von der Leyen’s first term as President of the European Commission, climate was one of the most important priorities. The ambitious Green Deal, led by Dutch Commissioner Frans Timmermans, symbolised the European view on climate action. An important objective of the Green Deal was to achieve climate neutrality by 2050. One of the means to accomplish this was the implementation of stricter European environmental rules. In recent years, however, resistance to these stricter rules has grown. For instance, in almost all of Europe, farmers took to the streets to protest. Mainly right-wing parties voiced their criticism, seeking to overturn the strict green policies. Nevertheless, climate and sustainability remain high on the European agenda, and the new European Commission is also committed to working on this issue.

However, the European Union (EU) currently seems to pay more attention to another issue: European competitiveness. The report by former President of the European Central Bank Mario Draghi, published in September 2024, showed that the EU is, among other things, economically falling behind its competitors China and the United States. Draghi proposed various solutions, such as investing more in innovation. He also identified the high energy price as an important challenge for the EU. Regarding fossil fuels, Europe is largely dependent on imports. Geopolitical tensions and the use of gas as a geopolitical weapon by Russia worsened the situation. There are also several inefficiencies in the functioning of the European energy market, which have contributed to the higher prices.

These two issues may seem difficult to reconcile. Meeting stricter environmental regulations is challenging for European companies, which can hamper their economic position. However, the results of the Draghi report contribute to the European Commission’s mission to simultaneously achieve sustainable prosperity and improve the EU’s competitiveness. The Draghi report already advocated a common plan for decarbonisation (reducing carbon emissions) and competitiveness. Draghi stated that the global drive for decarbonisation is a growth opportunity for the European industry. Although Chinese competition in, for example, clean tech and electric vehicles is fierce, the EU is still the world leader in clean technologies. Therefore, if Europe wants to maintain this leading role, it is important to continue focusing on these sectors.

Both strengthening European industry and achieving a sustainable future are high on the political agenda. European politics is divided over what is most important. One side wants to fully focus on economic growth and distance itself from the agreements in the Green Deal. Another side argues that greening is especially necessary now for European industries to enhance their global position. The European Commission is currently advocating a combination: a type of ‘green European industrial policy.’ This emphasises both enhancing the global position of European industries and making the European industry more sustainable – which ultimately contributes to Europe’s competitive position as well.

The CID consists of proposals that combine these two objectives – greening industry and strengthening European competitiveness. In her political guidelines, von der Leyen emphasised that it is just as urgent to achieve decarbonisation as it is to industrialise our economy. In January, the European Commission presented the Competitiveness Compass, in which the CID plays an important role. Based on the Draghi report, the Compass is divided into three objectives to strengthen European competitiveness: (1) closing the innovation gap, (2) a joint roadmap towards decarbonisation and competitiveness, and (3) reducing excessive dependencies and increasing security. The CID is part of the second objective.

Proposals in the Clean Industrial Deal

The Clean Industrial Deal aims to bring together climate and competitiveness under “one overarching growth strategy”. It should accelerate decarbonisation, reindustrialisation and innovation. While stating that Europe’s industrial base is “central to our identity and essential for our competitiveness”, the CID recognises that Europe is struggling with “geopolitical tensions, slow economic growth, and technological competition”. The CID aims to address three challenges the EU is currently facing: (1) the climate crisis and its consequences, (2) competitiveness, and (3) economic resilience. While the objective of climate neutrality by 2050 remains, the CID can be seen as a concession to business.

The CID focuses on two sectors, one being the energy-intensive industries, such as steel, metals and chemicals. High energy costs, unfair competition and complex regulations are hampering their competitiveness. The clean tech sector is prioritised as well. This sector plays a key role in the EU’s future competitiveness. The sector is important for “industrial transformation, circularity and decarbonisation”. Furthermore, circularity is emphasised, and the EU aims to be the world’s circular economy leader by 2030. The CID presents six ‘business drivers’ that should ensure “a thriving new European industrial ecosystem of growth and prosperity”.

The first ‘business driver’ is access to affordable energy. As mentioned above, high energy prices are a major challenge for the European industry. The Draghi report showed that electricity in the EU is two to three times more expensive than in the United States, and gas even four to five times. To reduce these energy prices in the EU, the CID states that Europe must be able to generate clean energy domestically. This will give the EU greater energy certainty in the future and reduce its dependence on imports from other countries. Energy prices will then fall due to a higher supply of (green) energy. The CID also advocates completing the internal energy market and a more efficient use of energy. In order to achieve these objectives, the Commission is introducing an Action Plan for Affordable Energy.

Secondly, the CID focuses on lead markets and wants to stimulate ‘clean’ supply and demand. After all, companies will only make green investments if an actual market for their products is assured. For example, if there is demand for green steel, the European steel industry will invest in greening. The Commission wants to create conditions in the market to create demand for green products. According to the CID, creating lead markets for clean technologies and products contributes to the EU’s position as a “global leader in the clean transition”. The Industrial Decarbonisation Accelerator Act, which will be presented later this year, will increase the demand for ‘made in Europe’ products by introducing criteria related to sustainability, resilience and ‘made in Europe’ in public and private procurement.

The third ‘business driver’ concerns financing this clean transition. The clean transition of the economy requires major public and private investments. The CID states that the Commission will “strengthen EU-level financing, stimulate private investment, and increase the effectiveness of State aid in support of the CID objectives and other national support schemes”. In the short term, the CID can mobilise €100 billion, but it also makes a major appeal to the private sector.

Next, the CID focuses on circular economy and ensuring access to critical raw materials. Reusing these raw materials reduces dependency. It also announces a Circular Economy Act for 2026, which aims to “accelerate the circular transition, building on the principles of the internal market”.

The last two themes focus on different kinds of factors. ‘Global markets and international partnerships’ are also necessary for the EU’s growth strategy. The EU will, therefore, work on a Clean Trade and Investment Partnership, among other things. ‘Skills and quality jobs for social justice and a just transition’ need to be worked on as well. After all, the EU needs the skills to achieve the transition to a low-carbon economy. This last issue also aims to ensure that society as a whole benefits from the clean transition.

These extensive and ambitious plans in the CID show the urgency Brussels sees in improving European competitiveness. Although climate and greening are still prominent in the plans, it is clear that – especially the first three – objectives focus on supporting companies.

Implementation of the Clean Industrial Deal in practice

Presenting these plans in the first 100 days of the term proves that the European Commission realises that changes are needed quickly. The CID is introduced in times of turbulent global developments. There is a great opportunity for Europe to strengthen its leading role in sustainability, especially since the United States under President Trump has taken sustainability off the political agenda. Trump repeatedly mentioned his “drill, baby, drill” promise, by which he refers to pumping up fossil fuels. In addition, immediately upon taking office, he signed his energy decree, ‘Unleashing American Energy’. This means, among other things, that the US will focus strongly on fossil energy and will reverse the Inflation Reduction Act of his predecessor Joe Biden – in which a lot of money was made available for sustainable energy and greening of the infrastructure. The CID arrives at an important time for the EU. But how realistic is it to convert all the ambitious plans of the CID into concrete actions? 

There are several concerns about the proposals. Firstly, the proposals are very long-term focused, while the European industry needs relief quickly. For example, by focusing on clean energy, Europe will become less dependent on other countries in the long term and future energy prices will be more stable. However, it will still take years to bridge and this raises concerns. For now, the EU seems to be focusing on liquefied natural gas (LNG). Although this is a slightly ‘cleaner’ fossil fuel, it does show that the EU, despite great ambitions, cannot do without fossil fuels in the near future. Another example is the relaxation of state aid rules in order for Member States to invest more, for example in energy networks. This will not be achieved in the short term either.

Furthermore, implementation of the CID relies on the commitment of the Member States. This is particularly relevant to the reduction of energy prices. In this context, the CID directly addresses the Member States, which can lower energy prices promptly by decreasing the high energy tax. The question remains whether and how swiftly the Member States will act on this suggestion.

The finances raise questions as well. Although there is a lot of potential to develop the CID into concrete constructive plans, there is a chance these will not be implemented in practice. Actual plans must, of course, be financed, and the Member States play a role in this too. Draghi calculated that an additional €800 billion per year must be invested to improve European competitiveness. The CID now indicates it will “mobilise more than €100 billion” in the short term for clean production in the EU. According to European Commissioner Wopke Hoekstra, there will be €400 billion if the private sector also participates. However, it is still uncertain how the Member States will respond because the call for ‘more money to Brussels’ will not be received positively by all Member States.

Despite the EU’s emphasis on climate, the CID marks a break with the previous Commission’s Green Deal. Unlike the Green Deal, which focused on climate goals, the CID focuses on the European industry. The criticism that European companies have to comply with too many rules has also been clearly incorporated into the new political line announced by the CID. In her introductory speech to the CID, von der Leyen stated that ‘simplification’ is an important pillar. This is also reflected in the Omnibus proposals presented simultaneously, which relax sustainability reporting obligations. This will exempt 80% of the companies from the reporting obligation. It is striking that the Commission already wants to change this legislation, as the reporting obligation has only been in effect since this year – and solely for large companies. Simplifying this legislation shows the shift of focus of the new Commission to businesses. Although the complexity of European regulations is frequently criticised and simplification of European rules is generally welcomed, there are also concerns about too much deregulation. In order to achieve the objective of the CID, namely to unite climate and competitiveness, the focus will have to remain on both elements.

Unlike the presentation of the Green Deal, in which actual legislation was announced, the CID only consists of proposals and ambitious plans. Hence, the actual impact of the CID will depend on the specific legislative proposals. There are opportunities for the EU to strengthen its global position if it succeeds in achieving the ambition of “bringing together climate action and competitiveness under one overarching growth strategy”. Therefore, European politics and the responsible European Commissioners Teresa Ribera, Wopke Hoekstra and Stéphane Séjourné await an important task. In short, many concrete plans will have to be made shortly to realise the ambitions of the CID.

Hanna Krijgsman van Spangenberg holds a master’s degree in Political Science from Vrije Universiteit Amsterdam and a bachelor’s degree in European Studies from the University of Amsterdam with a major in European history.

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