The EU’s new Clean Industrial Deal explained

The European Commission’s new plan to simultaneously revitalise and decarbonise the bloc’s industries mostly hits the right notes, but it’s not perfect, analysts say.

The background: Europe’s manufacturers are struggling to compete on the global stage due to high energy costs — gas prices have surged since Russia invaded Ukraine, triggering sanctions — as well as tightening regulations and rising competition from emerging markets with lower input costs, among other factors.

What the strategy entails: The Clean Industrial Deal, announced in late February 2025, includes plans to trim energy prices, lift demand for low-carbon products, provide finance for a move to cleaner production methods, and boost circularity rates.

On energy prices, the supplementary Action Plan for Affordable Energy says the shift to a more connected EU electricity market — with more links between member states and higher levels of renewable generation, flexibility and storage —will drive wholesale power prices down by an estimated 40%, on average. That’ll be complemented by reduced taxes on electricity, alongside energy efficiency measures that will yield annual cost savings for households and businesses of around €162 billion by 2030.

On adopting new technologies, the Clean Industrial Deal states that more than €100 billion euros should be invested in cleaner manufacturing processes, alongside efforts to boost demand for low-carbon products, like using public procurement and a voluntary label on the carbon intensity of industrial products. This will be established through the Industrial Accelerator Act, which the commission aims to present at the end of 2025.

To help finance low-carbon tech upgrades, the EU will create an industrial decarbonisation bank with €100 billion in funding partly derived from the bloc’s carbon market, or Emissions Trading System.

Meanwhile, the commission said it’ll put forward the Circular Economy Act in 2026 to ensure that scarce materials are used more efficiently, and to accelerate the move to a circular economy.

Other elements of the strategy include targets to raise the EU’s electrification rate from 21% to 32% by 2030 and install 100GW of renewable energy capacity per year through the end of the decade.

Cautious optimism: The plan to make energy more affordable “correctly diagnoses the root cause” of the problem, which is the bloc’s dependence on imported fossil fuels, says Ember analyst Chris Rosslowe.

“The proposed measures find a good balance between short-term relief for consumers and structural fixes to Europe’s fossil dependence… It’s positive to see concrete actions that will accelerate low-cost renewables, while at the same time putting Europe’s increasingly clean power to work towards electrification.”

However, it’s concerning that the strategy contains measures to support gas projects abroad to shore up European supplies, as this could undermine certainty of demand for clean energy groups, according to Rosslowe.

The Institute for Energy Economics and Financial Analysis, which otherwise welcomed the Clean Industrial Deal, said continued support for imported gas and carbon capture technologies “could ultimately cost Europe in competitiveness, jobs and climate leadership.”

German industry associations also supported the proposals, but Peter Leibinger, director of industry association BDI, said: “A comprehensive reduction in regulatory burden must be an absolute priority so that Europe can once again become a robust international competitor.”

Environmental network Zero Waste Europe said the plan doesn’t go far enough to unlock the potential of the circular economy, even though it seeks to increase the circular material use rate to 24% by 2030.

“Without strong economic incentives to drive the use of secondary raw materials over virgin ones, it remains unclear how this target can be achieved,” said Theresa Mörsen, waste and resources policy officer at the Brussels-based organisation.

The Netherlands is currently leading the way in the shift to a circular economy, thanks in part to its support for “circular craft centres and repair cafés”.

• With assistance from Clean Energy Wire.