The European Commission has unveiled its Clean Industrial Deal, a new plan that aims to increase decarbonisation across industry, while supporting businesses hit by high energy prices.
The aim is to bring together climate, circularity and competitiveness in a single strategy which can boost demand for clean products and drive down energy prices.
“Faced with high energy costs and fierce and often unfair global competition, our industries need urgent support,” the EC said.
It plans to make decarbonisation a driver of growth for European industries; Europe has committed to becoming a decarbonised economy by 2050. But Europe's industrial sector has been struggling with high energy prices and critics have warned that efforts to decarbonise industry have actually resulted in deindustrialisation instead as those industries have either been closed or moved elsewhere.
EC President Ursula von der Leyen acknowledged that demand for clean products has slowed down, and investments have moved to other regions - and that currently European companies face obstacles including high energy prices to excessive regulatory burden. “The Clean Industrial Deal is to cut the ties that still hold our companies back and make a clear business case for Europe,” she said.
The deal focuses mainly on energy-intensive industries and clean tech. The EC said energy-intensive industries require “urgent support” to decarbonise and electrify, as they faces high energy costs, “unfair global competition” and complex regulations, all of which harm competitiveness. Meanwhile, the rise of clean tech is at the heart of future growth.
“Competitive manufacturers drive innovation, quality-job creation and open strategic autonomy, but businesses need to be certain that large climate neutral investments in energy intensive industries and clean tech will be profitable,” the EC said.
Business leaders said it was now "urgent" to implement the Clean Industrial Deal. Ilham Kadri, President of ICCA and Cefic said: "We need to transform Europe’s ambition ‘to be’, into a determination ‘to do’. Every day, Europe is falling behind its goals, and is losing quality jobs for our current and future generations of workers. In the turbulent times we are in we need bold action from the European leadership.”
The Clean Industrial Deal sets out a number of legislative and regulatory plans.
The EC said its new Action Plan on Affordable Energy would help lower energy bills for industry by speeding up the roll-out of clean energy, accelerating electrification, encouraging efficient energy use and reducing dependence on imported fossil fuels. It will do this by focusing on energy supply costs, network charges, and taxes and levies; in particular it will aim at reducing barriers for energy-intensive industries to conclude long-term energy contracts and better cooperation between the public sector, including financial institutions, energy-consuming industries and clean energy developers.
It said the Industrial Decarbonisation Accelerator Act will increase demand for EU-made clean products, by adding sustainability, resilience, and made-in-Europe criteria to public and private procurements. It aims to speed-up permitting for industrial access to energy and industrial decarbonisation, such as the modernisation of steel production sites. It will also establish a low-carbon product label which will provide information to consumers on carbon intensity of products. This will start with steel in 2025, followed by cement, and the EC said it will simplify carbon accounting methodologies so that manufacturers can “reap a premium” on their decarbonisation efforts.
The EC will also adopt a new Clean Industrial Deal State Aid Framework which will allow for quicker approval of state aid measures for the roll-out of renewable energy and the deployment of industrial decarbonisation. It is also proposing an Industrial Decarbonisation Bank, and aiming for €100 billion in funding, based on available funds in the Innovation Fund and changes to increase InvestEU's risk bearing capacity which could provide up to €50 billion in additional private and public investment for clean tech, clean mobility and waste reduction.
The European Investment Bank will offer new financing instruments to support the Clean Industrial Deal including a “Grids manufacturing package” to support manufacturers of grid components. To secure access to critical raw materials, the EC said it will set up a system to allow European companies to come together and aggregate their demand for critical raw materials. It will create an EU Critical Raw Material Centre to jointly purchase raw materials on behalf of interested companies – potentially creating economies of scale. And a forthcoming Circular Economy Act aims to ensure that scarce materials are reused efficiently with the aim to have 24% of materials circular by 2030.
The Commission will also simplify and strengthen the Carbon Border Adjustment Mechanism - CBAM. Revisions to the Public Procurement Directive will allow for sustainability, resilience and European preference criteria in EU public procurement for strategic sectors. These criteria will also be extended to incentivise private procurement, through measures such as life cycle-based CO2 emission performance standards.
In addition the EC said the delegated act on low carbon hydrogen will set out the conditions to produce low carbon “in a pragmatic” way which will complete its comprehensive regulatory framework on hydrogen, “enhancing certainty and predictability for industry, which are key preconditions for companies to invest,” it said.
Get the more science and innovation news every month in Chemistry & Industry magazine. You can subscribe to C&I here.
Visit Blog