The Clean Industrial Deal, yet to be unveiled by the European Commission, looks poised to become the centrepiece of President Ursula von der Leyen’s second mandate. Its name evokes historic parallels, like Roosevelt’s New Deal. But what makes something a ‘deal’?
At its core, a deal is an exchange – a mutual agreement where both sides commit to responsibilities and expect benefits in return. This sets it apart from a one-sided mandate. Roosevelt’s New Deal was built on this principle: The government intervened to stabilise the economy, but businesses and workers were integral to its success. The Clean Industrial Deal must follow the same logic, fostering collaboration between policymakers and industry. Both parties must commit to shared goals and deliver on their obligations, otherwise it risks being just another policy package.
The Clean Industrial Deal must take a more balanced approach than the Green Deal, which, though ambitious and necessary, placed most of the responsibility on industry through stringent regulations.
This new deal cannot be limited to clean technology or emerging green industries; traditional heavy industries must also be on the table. Sectors like steel, cement, chemicals and mining are the backbone of Europe’s economy, employing millions and underpinning its strategic autonomy. Excluding them from the deal would leave Europe’s economy vulnerable in an era of global uncertainty.
European industries face immense expectations. Policymakers have already laid down heavy obligations through Green Deal legislation, requiring businesses to reduce emissions, adopt advanced technologies and deliver affordable, high-quality goods – all while competing Chinese and the United States producers who often benefit from more favourable operating environments.
Two-way street
For this ‘deal’ to work, policymakers must meet businesses halfway. They must tackle three critical issues: permitting, energy and financing. These are the foundations of a credible industrial strategy.
Permitting delays have long plagued European industry. Projects essential for decarbonisation – whether renewable energy installations or modernised factories – can be stalled for years. Simplifying these processes is not a favour to industry; it’s a necessity for achieving Europe’s climate goals. Similarly, energy costs in Europe are among the highest globally, a burden that directly affects competitiveness. Policymakers must address this imbalance, ensuring reliable and affordable energy for industries to thrive.
Then, there’s financing. Are the EU and its member states ready and willing to provide lavish subsidies and tax cuts, as seen in the approaches of global competitors like the US and China? So far, the answer seems to be an implicit but strong ‘no’. The Clean Industrial Deal is unlikely to include a large-scale centralised borrowing programme similar to Next Generation EU, and new joint borrowing seems improbable. High levels of state aid are also off the table, as national budgets across the EU remain constrained, with markets closely monitoring fiscal pressures in France and the German debt brake. While significant new public funding appears unrealistic, this does not mean the deal will be underfunded.
Instead, existing funding – at both the EU and national levels – must be used more wisely. Financial instruments like loans and guarantees need to replace inefficient grants, ensuring every euro spent supports impactful industrial transformation. The dilemma of whether to prioritise demand-side or supply-side incentives must give way to targeted measures that foster effective industrial transactions and maximise competitiveness.
Carbon capture and storage (CCS) and carbon capture and utilisation (CCU) technologies illustrate the potential of this approach. Beyond the obvious applications in steel and cement, CCS and CCU in mining offer untapped opportunities to cut emissions, reduce carbon costs under the Emissions Trading System, and secure Europe’s supply of critical raw materials. These benefits align perfectly with the deal’s dual objectives: decarbonisation and competitiveness.
But even the smartest financing will fail without robust action on permitting and energy. CCS projects, like all industrial innovations, require fast approvals and affordable power to succeed. Policymakers must honour their side of the deal for businesses to deliver on theirs.
The concept of a deal isn’t just economic – it’s philosophical. It reflects a recognition that no party can solve Europe’s challenges alone. Industry cannot decarbonise and compete globally without supportive policies, just as governments cannot achieve their climate ambitions without the ingenuity and productivity of the private sector. A true Clean Industrial Deal must embrace this interdependence, creating a framework where both sides can thrive.
If policymakers and industry can rise to this challenge, the Clean Industrial Deal has the potential to reshape Europe’s industrial landscape, balancing sustainability with competitiveness. More than a buzzword, it could become a genuine contract for Europe’s future.