The Europe Clean Industrial Deal, released yesterday, aims to “turn the tide” in the production of clean energy, according to the European Commission President Ursula von der Leyen.
She said the European Union is already in a good place, producing a quarter of all clean tech patents in the world – more than both the US and China – as well as 30% of electrolysers and 20% of carbon capture and storage technology.
Addressing delegates at the European Industry Summit in Antwerp, von der Leyen said final investment decisions (FID) on electrolysers in Europe have quadrupled in a year, and it has seen the fastest growth worldwide – though that strong performance belies the reality of an industry that is hampered by ongoing regulatory, financial and project delivery challenges.
With the new US administration advocating a fossil-fuel-first strategy, Europe has an opportunity to cement its clean energy credentials while continuing to grapple with the commercial realities relating to production and scaling. The President referred to four make-or-break areas in particular which will determine whether Europe’s clean industry sector can succeed.
Innovation and funding
Europe needs to invest more than ever in innovation, and closing the innovation gap is one of the central demands outlined in the Draghi report, which analysed the future of Europe’s competitiveness. But bringing products to scale requires capital.
The Commission wants to make EU financing instruments even more impactful. Its Innovation Fund has financed many projects, including in the Port of Antwerp, but every call for large-scale projects has to date been heavily oversubscribed.
A huge sum, €100bn, will now be allocated to the Decarbonisation Bank to support more clean energy projects. It will soon launch new auctions on industrial decarbonisation, building on the Hydrogen Bank.
The banks aim to operate under a market-based system that reward the most innovative and most competitive companies. Finance will be raised from the Emissions Trading System. Other changes will see a new State aid framework, in a bid to make state aid for decarbonisation and clean tech approved faster, last longer, and provide more predictability to speed up innovation.
Circularity is another key focus area, and one where Europe believes is has a first-mover advantage, with a third of all circular technology companies based on the continent.
More than 50% of its steel, iron, zinc, or platinum is made from scrap, covering over 25% of European consumption. But it needs to go further, especially considering China controls 80% of global battery recycling capacity.
Europe still sends huge volumes of waste back to China. Instead, end-of-life batteries could provide almost 15% of the lithium Europe needs already by 2030. That is enough to produce two million batteries for electric vehicles. A Circular Economy Act will aim to spur a step-change in this area.
Simplifying the offer while meeting climate goals
The second pillar of the Clean Industrial Deal is simplification. Currently there is a complex web of legislation to be followed and calculations to be applied, including the Corporate Sustainability Reporting Directive (CRSD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the Carbon Border Adjustment Mechanism (CBAM).
An ‘omnibus’ package has been set up to address the overlapping rules and thereby to cut reporting obligations on this tricky quartet. This could save up to €6bn every year for European companies.
And the President referred to “a fleet of omnibuses” coming which will target red tape and administrative burdens – but insisted its climate and social goals do not change.
Carbon Market Watch said it was disappointed that a concrete legislative proposal for a 2040 climate target was not part of the published package. To lend credibility to positive intentions, it said the Commission must publish a proposal to reach climate neutrality by 2040 as soon as possible.
“The Commission has delivered its plan for a Clean Industrial Deal today. Although it is certainly industrial, it is far from clean,” said Carbon Market Watch’s Executive Director Sabine Frank.
Reducing energy prices
The third priority of the Clean Industrial Deal is to bring energy prices down, which are structurally too high.
Europe’s dependence on imported fossil fuels is the main cause of these higher and more volatile energy prices; the more it imports, the more dependent it becomes on the global market.
Since the launch of the European Green Deal, it has saved €60bn of fossil fuel imports, mainly through affordable, homegrown renewables plus nuclear.
But it needs more predictable prices and structurally lower prices, with more connections across Europe, more energy offtake and more energy efficiency.
All of this lies at the heart of the Affordable Energy Action Plan – presented yesterday alongside the Clean Industrial Deal – which aims to accelerate the roll-out of clean energy and electrification, and ensure well-functioning gas markets, completing interconnections and grids.
Danish Commissioner Dan Jorgensen said Europe is paying two-to-three times more for industrial energy than its US and Chinese competitors.
He said the plan could potentially save €45bn in 2025 alone, and up to €130bn annually from 2030, doubling to €260bn by 2040.
“It’s about faster deployment of new energy – more renewable energy, more energy efficiency. So there will be no back tracking – instead we will fast track.”
Unblocking permitting will be a key area. He said it should not take longer than six months for a project to receive a permit, and no longer than two years for complicated ones.
Alongside doubling the utilisation of grids, gas markets need more transparency. “There needs to be connection between supply and demand and actual prices,” he said.
Global competition
At times of heightened tension with the US – President Trump said the US will impose tariffs on Europe in the region of 25%, speaking to reporters yesterday – both Europe’s place in the world, and its trade relationships, have never been under more scrutiny.
Europe has said it wants to remain “open” to the world, and seize new opportunities by connecting to growth centres.
The political shift in Washington is understandably heralding a frenetic period of inter-country negotiations.
Europe has finished trade negotiations with Mexico, launched talks with Malaysia, finalised a partnership agreement with Mercosur, and concluded one with Switzerland – all in the last two months. It is also negotiating a Free Trade Agreement with India in a bid to strengthen ties and expand trade with the world’s largest democracy.
President von der Leyen said Europe has been an industrial leader for centuries, “because we have always managed to ride the wave of change.” How well it rides the next wave could be the most fascinating journey of all.
