Lost in Implementation? The Clean Industrial Deal demands urgent and bold delivery

The EU’s Clean Industrial Deal (CID) finally offers a coherent strategy to make clean-tech manufacturing and energy-intensive industries competitive while cutting emissions. But being a high-level document, the CID’s success hinges on the still-missing implementation details. The first action plans, for cars and metals, are not encouraging indicators, revealing that measures run the risk of having limited heft, speed and scope. To avoid the CID becoming an empty promise, Brussels must wield its policy tools more forcefully, accelerate key legislation, broaden support to other priority sectors, and provide more clarity on the limits of EU-level policies. 

1. EU clean industrial policy now has a coherent strategy, but still needs teeth 

As a strategy, the Clean Industrial Deal (CID) is a leap forward for EU clean tech and heavy industry. Despite declaring them a priority years ago, the EU has struggled to boost domestic clean tech manufacturing and keep energy-intensive industries, like steel and chemicals, internationally competitive while decarbonising them. The CID, published by the Commission in February 2025, aims to accomplish this now. By considering key competitiveness drivers jointly with the intent to create a business case, the CID is the EU’s first serious attempt at designing an industrial strategy. It identifies key impediments and proposes an array of suitable EU tools to tackle them. Moreover, it mostly succeeds in threading the needle when it comes to improving competitiveness while sticking to ambitious climate targets. 

However, being a high-level strategy paper, the CID’s success hinges entirely on how policymakers fill in the blanks over the next two years. The CID contains few details on implementation and does not specify how instruments like lead markets, subsidies and trade defence will be applied and tailored to the various sectors. All this will have to be spelled out in subsequent, more granular strategies and ultimately legislation over the next two years. To achieve true success, getting the CID’s implementation right is therefore crucial, and the policy ambition must be commensurate with the enormous challenges these sectors face.  

Early evidence for sectoral policy is not encouraging. Where details about the envisaged implementation are emerging, the level of ambition seems insufficient. While only a few pieces of new legislation have been proposed so far, the Commission has released the sectoral ‘action plans’ for automotives, and for metals and steel. Through them, the contours of sectoral industrial policy measures are becoming clearer, revealing measures that have limited heft, speed and scope. If this cautious approach sets the tone for upcoming dossiers, the CID will fall short, resulting not just in missed climate targets but in a permanent loss of EU industrial capacity, technological know-how and strategic autonomy. 

The EU level should therefore ratchet up its clean industrial policy trajectory in four ways. The EU has potent tools for doing industrial policy (as argued in a recent JDC policy brief) and can implement the Clean Industrial Deal with a sufficiently high level of ambition. Beyond the question of additional EU financing (which must be tackled with urgency in the upcoming MFF negotiation), this policy brief argues that the Commission should strengthen clean industrial policy over the next months by: 

• implementing proposed policies and instruments forcefully; 

• increasing the speed of implementation;  

• widening the coverage of sectoral policy to additional prioritised sectors; 

• being more explicit about what the EU level can – and cannot – realistically deliver. 

  2. What does the Clean Industrial Deal promise? 

Previous EU policy packages were industrial strategies in name only. The 2023 ‘Green Deal Industrial Plan’ (GDIP), published in early 2023, offered little strategic orientation. The plan itself did not outline a comprehensive package of actions capable of creating a business case for the industries covered. And the legislation the GDIP spawned, like the Net-Zero Industry Act and the Critical Raw Materials Act, did not unleash the industrial policy potential the EU level possesses, which would involve strategically setting new regulations and standards, deploying trade instruments and shaping state aid rules, all in a coherent manner. Moreover, the GDIP did not provide much additional financing for clean industry objectives and has not managed to incentivise national financial support, which has remained low.  

The CID now presents a coherent strategy, remedying some of the previous shortcomings. Inspired by the analyses in the Draghi Report, the second von der Leyen Commission developed the ‘Competitiveness Compass’ in early 2025, its economic doctrine that aligns industrial policy and climate action more closely with the current political imperatives of competitiveness, productivity and sovereignty. Published shortly after the ‘Compass’, the CID is one of the main building blocks of this agenda. It offers an analytically robust description of the problems facing clean tech manufacturing and energy-intensive industries, and is structured around six business drivers – affordable energy, lead markets, financing, circularity and access to materials, trade, and skills. In addition, it aims to improve cross-cutting economic conditions, such as cutting red tape and coordinating national policies more effectively. Overall, implementing these action areas with the resoluteness and urgency that the CID narrative conveys would indeed be a game-changer for EU clean industries. 

However, the CID itself remains a high-level endeavour, kicking the can down the road in many respects. While the CID identifies suitable levers, it mostly does not pin down their specifics. Instead, it announces the publication of additional strategies, in particular ‘action plans’, to flesh out the announced instruments in more granular detail (see Figure 1 below). Actual implementation through initiatives and legislative proposals is slated for the next two years, with adoption and member state implementation of some files likely taking until the end of the decade. In sum, the landing zone of the CID’s implementation remains wide, from low- to high-ambition objectives. This keeps many businesses and their final investment decisions in a ‘wait and see’ mode, until they can more clearly discern the future economic landscape within which they will be operating.  

Moreover, the CID does not provide a new public financing impetus for clean industries. Given the scarcity of EU funds, the CID – like the GDIP before it – does not propose much at the EU level for the short term. For the next Multiannual Financial Framework (MFF) the Commission envisages a ‘Competitiveness Fund’ and a ‘Industrial Decarbonisation Bank’ for supporting clean industries – but the MFF will start only in 2028. There will be some streamlining and reshuffling of existing funds until then, as well as increases in the risk capacity of the existing programme InvestEU, and more reliance on EIB lending. While these are helpful steps, they will do little to move the needle in the shorter term at the EU level. Member states hence represent the only level that could shoulder the financial burden. The Commission aims to facilitate this with the new ‘Clean Industrial Deal State Aid Framework’(CISAF), to be adopted by the end of June 2025. However, judging by the draft of the CISAF that was made available for consultation, rules will only be changed cautiously relative to the status quo, and may even lead to the permissible aid ceilings for clean tech manufacturing being cut in half, compared to the levels accepted since last year under the CISAF’s predecessor, the ‘Temporary Crisis and Transition Framework’ (TCTF).

3. CID implementation must be commensurate with the sector’s challenges 

Overcoming the challenges that beleaguer EU clean tech manufacturing and heavy industry will be no easy feat. Global competitors, above all China, have been deploying massive subsidy packages and other industrial policies that are siphoning clean tech and some basic material production out of Europe, and decarbonising heavy industry still faces a huge cost gap. As the CID policy measures are becoming more concrete, they seem increasingly to be mostly ‘business as usual’. Both horizontal and sector-specific policies, where discernible, are to be implemented in a rather timid manner, running the risk of being ‘too little, too late’ for the two prioritised areas, discussed in turn below. 

3.1 Domestic manufacturing for clean technologies 

Past EU policies for clean tech manufacturing have been mostly toothless. The Net-Zero Industry Act (proposed in 2023 and adopted in June 2024), set ambitious targets, reiterated in the CID: 40% of the EU’s clean tech deployment needs in 2030 are to be covered by EU-based production. However, the NZIA lacks stringent regulation, proper sectoral strategies and large-scale financial backing (for analyses, see here, here or here). Governments so far do not seem to be relying much on the resilience criteria the NZIA introduced. Their usage could increase in 2026, when member states will be mandated to use them – unless cost rise by more than 15%, which will often be the case, allowing reluctant administrations to stick with old procedures. The Innovation Fund has made some EU monies available for subsidising clean tech manufacturing, but the total subsidy volumes at both the EU and the member state level have remained very limited compared to needs.1 And while the EU has started to wield trade defence tools in a strategic manner, their overall effect has been limited for clean tech manufacturing, in part because the EU (for good reason) restricts these instruments to tackling unfair policies by foreign countries. 

Consequently, the tide for EU clean tech manufacturing has yet to turn. For many technologies, EU-based producers continue to lose global market share, as shown in the first column of Figure 2 below. Because global markets for clean tech are expanding quickly (forecast to triple by 2030), EU producers could still grow in absolute terms. But EU producers are also under pressure in the crucial EU market, as shown in the second column, with foreign manufacturers already capturing large parts of the EU market, or increasing their market share, for many technologies. Higher costs are the main problem, shown in the third column, with foreign (typically Chinese) companies offering substantially cheaper goods. In fact, the cost gap with respect to China for most clean technologies has been widening. Closing it will be a huge challenge, given that China has often has structurally lower manufacturing costs, partly as a result of its intensive industrial policy support. Given the importance of the EU market for EU-based producers, the last column shows the projected market demand in Europe, revealing heterogenous developments for the various technologies. 

For instance, the EU-based wind component industry, one of the EU strongholds, is quickly losing global market share to Chinese companies. While still capturing most of the EU market, recent dynamics are worrisome, due to growing pressure from cheaper foreign wind energy manufacturers that have recently gained a foothold in the EU market. Many parts of the solar value chain are now a lost cause for EU producers, at least with the current generation of technologies. And while industrial policy support for battery manufacturing has been increasing EU manufacturing capacity, the many insolvencies in this sector cast doubt on the EU’s ability to compete internationally in the medium term. When it comes to EVs, the EU is likewise under immense pressure, with Chinese manufacturers able to undercut EU producers on price especially in lower- and mid-price segments, against the backdrop of uncertainties surrounding future EU demand.

Table 1: EU manufacturing competitiveness for selected clean technologies

Source: Commission Progress Report on Clean Energy Technologies 2025, unless otherwise specified. 

The CID recognises the need for additional efforts on clean tech, but offers little for clean tech manufacturing beyond EVs  

On clean tech, the CID only commits the EU to actions on EVs and its value chain.  The action plan for the automotive industry, published in March 2025, clearly identifies the problems impeding the sector and outlines a mostly convincing strategy for its future competitiveness. But while the plan mentions the right levers that could be used, it generally does not yet commit the EU to game-changing measures; instead, often the Commission will first ‘assess further’ to what extent measures are feasible – leaving the ultimate scope of ambition open. Yet, despite this lingering uncertainty and some controversial aspects of the strategy, the plan has created a policy trajectory with the potential to introduce impactful measures at the EU level for the automotive industry, encompassing battery production and EVs. The same, however, cannot be said for other clean tech sectors. 

For clean tech beyond the transport value chain, the CID has not announced any action plans or sector-specific initiatives. Despite the situation and likely trajectory of clean tech manufacturing under the current level of policy support, the Commission has offered little. For manufacturing industries like wind energy, solar energy, electrolysers, heat pumps, and for the most part even batteries, the CID leaves important strategic questions unanswered. While this likely will not cause problems for sectors that are not, when the chips are down, major EU priorities, like solar PV manufacturing, it is a potentially fatal flaw for those sectors that the EU in principle wants to retain or strengthen. Without sectoral plans, and central coordination of member states’ actions, the mistakes of the past – incoherent and even inconsistent EU policies – are likely to repeat themselves. 

Slated legislation is unlikely to deliver the required boost for left-out clean tech. Some of the announced legislation has the potential to support clean tech manufacturing. However, as of now, it remains often unclear which technologies this legislation will cover, and how large the potential boost from it would be. The Industrial Decarbonisation Accelerator Act (IDAA), to be proposed later this year, will introduce lead markets through standard setting and some form of ‘EU preference’ provisions. But it is not yet decided which clean tech the IDAA will cover (the CID declared the IDAA’s focus to be on energy-intensive industry, but now it seems possible that the IDAA will also include measures for the EV value chain, and possibly other clean tech). Other legislation might come too late, such as the revision of the public procurement directive, which will widen the use of non-price criteria, likely also supporting EU-based clean tech manufacturing by improving on the NZIA provisions. Even if it ultimately becomes a powerful tool, the directive will not be implemented by member states much before the end of this decade. Overall, it remains unclear what EU-level legislation could help kick-start the turnaround for most clean tech manufacturing.  

3.2 Heavy industry is struggling, and lacks the business case for decarbonisation 

Energy-intensive industries continue to struggle amid high energy prices and challenging international markets. Energy-intensive industries (EII) are typically defined as encompassing basic metals, chemicals, paper, and certain other mineral-based products, like glass and cement. These industries make up around 2% of the economy, 2% of jobs and about 14% of emissions in the EU. While energy costs were substantially cushioned by public subsidies during the recent energy crisis, and wholesale prices have come down from their peak in 2022, they remain high compared to competitor regions, and are one important factor behind reduced EU production, plant closures, and widespread concerns about unchecked deindustrialisation. In some sectors, international markets further complicate the business outlook. For steel, for instance, global overcapacities are increasing again and could reach five times as much as European steel production by 2027, and tariffs, like the 50% tariff recently announced by the Trump administration, now pose a major problem for exporters. Exporters also face potential problems from CBAM, the Carbon Border Adjustment Mechanism, whose introduction will be accompanied by a phase-out of free ETS allowances, disadvantaging companies that export from the EU to third countries with no or lower emissions-related pricing. 

Decarbonisation poses an additional challenge for EII and requires more active industrial policy support. Climate targets require rapid transformation of EII, with new emission certificates under the EU’s Emissions Trading System (ETS 1) scheduled to approach zero by 2040. Despite the expectation of rising ETS 1 prices, transforming to climate-neutral production is not yet profitable in many EII, and requires large amounts of state aid, which are not available at either the EU or member state level. Moreover, uncertainty over future demand for carbon-neutral materials, over input costs for clean energy, and over infrastructure availability further impede the decarbonising of EII. Clean hydrogen, a central pillar for decarbonising some industrial processes, has suffered particularly noticeable setbacks, with costs expected to remain significantly higher than anticipated two or three years ago, with many projects therefore not reaching final investment decisions.  

The Clean Industrial Deal aims to address the dual challenge of short-term competitiveness and long-term transformation 

The CID aims to lower energy costs, but its short-term impact for EII is limited, and uncertainties around permissible state aid persist. The Commission’s ‘Action Plan for Affordable Energy’, published alongside the CID, outlines how the EU will go about lowering energy costs. This has been an EU priority for years, however, and most measures to structurally reduce energy prices had already been introduced by previous initiatives, and are merely re-hashed in the action plan. Further, most measures will have an effect only in the medium or longer term, such as building more renewable capacity and improving electricity grids. In the short term, member states could reduce energy costs for EII by subsidising these even more, either from public budgets or by shifting costs to other energy consumers like households. However, these types of subsidy risk distorting the single market, and increase the already high burden on taxpayers or other energy consumers. The action plan provides little guidance on how member states should – or are allowed to – navigate this trade-off. For instance, Germany’s new government plans to introduce an electricity subsidy specifically for EII, but it is unclear under what conditions the Commission will deem this compatible with state aid rules. Overall, the affordable energy action plan has not materially improved the energy-cost outlook for EII. 

The ‘action plan for steel and metals’ outlines intended policy support for EII, but its limitations cast doubt on whether current political ambition is sufficient. For EEI, the CID announced an action plan for steel and metals, which was published in March, and a ‘Chemicals Industry Package’ for late 2025. Apart from these, no additional energy-intensive industries are expected to be covered by an action plan. The steel plan is similar in its strength and weaknesses to the other strategy documents of the CID. It clearly identifies the sector’s problems – particularly energy prices, overcapacities, CBAM’s export issues, low circularity rates – but many of the measures announced to address these were already on the EU agenda, and are therefore unlikely candidates for bringing about a sea change now. A notable exception could be the creation of lead markets, by introducing sustainability and resilience criteria. Examples for lead markets are to mandate that cars must be built with a certain percentage of decarbonised steel, or that public buildings must be constructed with clean materials. However, the scope of lead markets remains uncertain, and will be defined in the IDAA by “building on the experience of the Net-Zero Industry Act”. To make a noticeable difference, though, the provisions would need to go substantially beyond those the NZIA introduced for clean tech.  

4. Four ways in which EU clean industrial policy should improve 

The Clean Industrial Deal sets the right objectives, outlines a coherent strategy to reach them, and identifies suitable tools to be introduced or strengthened at the EU level. However, it needs continued political will and bold execution over the next two years by co-legislators and member states. By heeding the four recommendations set out below, the EU Commission can set the right trajectory in its upcoming initiatives and legislative proposals over the coming months.  

4.1 Implementing proposed instruments forcefully 

When adopting the initiatives and legislation already announced, EU policymakers will face countless choices for how to design policy instruments. Making tools ambitious and getting their specifics right matters greatly, as illustrated by the three examples below. 

One key example is lead markets, for which the Commission should make ambitious proposals. Lead markets can be designed in a myriad ways – and only when they are ambitious in scope will they provide the demand predictability that can finally turn things around. The IDAA, and later the public procurement directive, should therefore introduce binding and extensive criteria and thresholds for lead markets. An ambitious approach for this can include creating lead markets not just via public procurement, but also through minimum standards for private projects. Environmental criteria are essential to accelerate the deployment of clean products, but for products where it makes economic sense to increase EU-based production, relying on environmental criteria likely will not suffice, at least for some technologies. Therefore, they should be complemented by EU-preference clauses (although the higher product costs induced by EU-preference clauses can slow down deployment, which need to be weighed against the benefits of EU-based production).  

Another example is state aid rules for clean tech manufacturing, which the Commission should make more rather than less flexible. The US Inflation Reduction Act offered sizeable subsidies for each wind turbine or solar panel, for example, that a company produces. Such production subsidies carry fiscal risks (they are typically uncapped) and can lead to windfall profits. But they are also highly effective and administratively leaner, compared to the EU approach focused on subsidising capital costs. Before being rolled back by the Trump administration, the IRA and especially its production tax credits created a massive increase in manufacturing investment. Yet the draft of the EU’s new state aid rules (CISAF) continues the current approach that focuses on subsidising investment costs and will not allow member states to offer production tax credits per unit produced. The risk of subsidy-fuelled divergences in the single market is currently still small for these technologies, while the boost for clean tech manufacturing from IRA-style production support is potentially massive. The Commission should therefore allow output-based state aid, as the Commission President has mulled over before and which is now being debated by her Commissioners. 

Incentive schemes for EV purchasing are another example. The automotive action plan recognises that current schemes, which differ widely across member states, result in inefficiencies. The Commission therefore wants to “identify a toolbox with options for incentive schemes […] and look into avenues for possible EU-level incentive schemes”. The Commission should work with vigour on the latter and develop an EU-wide scheme with a multi-year timeframe and resilience and sustainability criteria. The scheme would still be implemented and financed at national level but would ensure that eligibility criteria are the same across the EU, increasing predictability for car manufacturers. The Commission, with its wide-ranging power over state aid rules, has various sticks and carrots to encourage member states to use such an EU scheme instead of continuing to rely on their own programmes.  

4.2 Widening the coverage of sector-specific policies to additional key industries 

The CID’s sectoral implementation is currently focused on automotives, steel and metals, and later chemicals (a strategy for ‘bioeconomy’ has also been tabled, though less prominently). These sectors are a good start, but a strategy and sector-specific actions are needed in a small number of additional, prioritised sectors – including those with lobbyists less vocal than those of the heavyweight industries already covered. 

For clean tech manufacturing, the NZIA does not provide a sufficient boost, and sector-specific strategies are needed. The Commission should develop additional action plans for crucial clean technologies that set clear objectives, identify sector-specific bottlenecks, and propose a coherent set of instruments to tackle them. Wind energy manufacturing is a key sector where an action plan would help align upcoming legislation with objectives, by improving upon and updating the 2023 ‘European Wind Power Action Plan’. Likewise, boosting heat pump demand would benefit from an EU-wide strategy that outlines a coherent set of actions, while the roadmap for batteries and the ‘battery booster package’ also need more strategic clarity.  

The Commission should develop action plans for additional energy-intensive industries, such as paper and other non-metallic mineral products. These two sectors (NACE C17 and C23) emit about 75% as much carbon dioxide as basic metals and chemicals (NACE C20 and C24, respectively). For many of their products, horizontal measures like ETS 1 are insufficient for creating a business case for decarbonisation, similar to the situation for metals. Some of these products should therefore be covered in future legislation – notably relating to lead markets – but how likely this is to happen  remains an open question. The Commission should hence develop action plans that define objectives and outline which instruments can tackle sector-specific bottlenecks. 

3. Increasing speed of implementation 

Doing industrial policy is complicated, and rushing it has risks – but so too does being slow. The Commission already considers its CID work programme to be high-paced, also with a view to its own administrative capacity, which is stretched thin over many political priorities. On some files, such as the Public Procurement Directive, it should nonetheless attempt to speed up the process. Regarding lead markets, for instance, this should be possible, given that the Commission has been mulling these for the best part of two decade; the EU Lead Market Initiative was already aiming to leverage standards and public procurement for sustainable construction and other areas in 2008. There is also no shortage of white papers and policy briefs on how to design instruments that can be relied upon. The Commission should therefore introduce as many levers as possible already in earlier legislative proposals, especially the IDAA, or even propose additional legislation soon, if necessary. Following the Commission’s proposals, Council and Parliament should likewise aim to adopt legislation quickly; clean tech competitors in China certainly won’t wait for the EU, and the decarbonisation of industry must accelerate soon if climate targets are still to be adhered to. 

4.4 Being explicit about what EU industrial policies can realistically deliver 

The EU Commission should spell out a clearer division of labour between the EU level, member states, and the private sector. Implementing any industrial policy requires clarity on who does what. The CID and the action plans generally do not provide this, likely because the EU Commission has been careful not to overstep its remit. But some entity needs to propose a division of work that can be used as a basis for discussion, and the Commission is best placed to provide this guidance. Doing so will reveal areas where the EU level, with its current funding and competences, cannot deliver the policies that member states might expect it to.  

Clean hydrogen subsidies are a case in point. The EU aims to massively ramp up production quickly, supported financially at the EU level by the Hydrogen Bank. However, the volumes enabled by the Hydrogen Bank are only a small fraction of total clean hydrogen needs. The Commission should explicitly state its estimation for how much financial support is needed to incentivise sufficient volumes of clean hydrogen – both how much of this the EU level can provide, and how much member states must come up with. In the case of the Hydrogen Bank, this division of labour can be easily operationalised, since member states can use so-called ‘auctions as a service’ to channel national funds through the bank, increasing overall volumes available.  

The Commission should also be more explicit about the limits of some industrial policies. Achieving the 40% domestic manufacturing objective set out in the NZIA, for instance, is neither realistic nor desirable for some technologies given the extensive public support this would require. Another example is energy-intensive industry, where the Commission’s strategy should not pretend that all industrial plants ought to stay where they are. With the clean energy transformation, only regions rich in renewables can produce goods like ammonia or iron sponge competitively; ignoring this fact drains public funds and erodes competitiveness. The EU should instead back a strategic relocation of selected industries to low-cost clean-power hubs. Overall, by drawing these lines publicly, the Commission would provide a more credible roadmap, avoid spreading scarce funds too thinly and set realistic expectations for national governments and industry. 

Conclusion  

An ambitious and timely implementation of the Clean Industrial Deal is essential for achieving the EU's competitiveness, sovereignty and climate objectives. The CID, while strategically sound, currently risks being undermined by cautious implementation measures that fail to match the scale and urgency of the challenges faced by both clean tech manufacturing and energy-intensive industries. To prevent further erosion of the EU’s industrial base and credibility on climate policy, the EU must now get serious in turning its roadmaps into hard-edged industrial policy – as much of the rest of the world already has.

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