EU’s Clean Industrial Deal: What It Means for Manufacturing
The European Commission has launched the Clean Industrial Deal (CID), a far-reaching strategy designed to transform manufacturing across Europe while maintaining economic competitiveness.
By aligning industrial policy with climate objectives, the CID aims to support manufacturers through a clean transition that strengthens supply chains, safeguards jobs and ensures a thriving market for low-carbon products.
Central to the plan is a dual focus on energy-intensive industries and clean technology. Both are essential to meeting the EU’s goal of cutting net greenhouse gas emissions by 90% by 2040 and achieving full climate neutrality by 2050.
European Commission President Ursula von der Leyen underscores the need for innovation to be at the heart of this transformation.
“Innovation, innovation, innovation,” she states.
“I know that too often these companies struggle to grow and bring their solutions to industrial scale. So, what do they need? They need access to capital.”
The CID aims to provide exactly that, ensuring that manufacturers investing in sustainability have the financial support and policy backing they need to succeed.
Energy: The key to industrial competitiveness
One of the biggest challenges facing European manufacturers is energy security and affordability. Many industries, particularly steel, chemicals and cement, rely on stable, cost-effective energy supplies to remain competitive in a global market.
The CID tackles this issue through an Action Plan for Affordable Energy. This initiative aims to create a more integrated European energy market, reducing reliance on imported energy and cutting costs for businesses.
A major part of the strategy involves increasing electrification and deploying smart energy technologies, including AI-driven grids to improve efficiency. The European Investment Bank will also launch a US$540m pilot programme, offering financial guarantees for corporate power purchase agreements, helping manufacturers secure stable, cost-effective renewable energy.
“We want to cut the ties that hold you back so that Europe can not only be a continent of industrial innovation, but a continent of industrial production,” Ursula explains.
By ensuring that energy-intensive industries have access to clean and affordable power, the CID hopes to strengthen Europe’s manufacturing base while meeting emissions targets.
Driving demand for low-carbon manufacturing
Encouraging innovation is only part of the equation. The CID aims to create a strong market for sustainable industrial goods, ensuring that companies investing in low-carbon technologies see real returns.
One key measure is the introduction of new sustainability and resilience criteria in public procurement. This move is designed to incentivise investment in clean manufacturing, ensuring that companies producing low-carbon materials have guaranteed buyers.
Additionally, a voluntary carbon intensity label will launch in 2025, starting with steel. This labelling system will help differentiate cleaner products, encouraging manufacturers to adopt greener processes.
Carbon capture and storage also play a role in the CID’s vision. The Industrial Carbon Management Strategy will support companies in integrating carbon capture into their operations, ensuring that emissions from heavy industry are minimised.
Hydrogen is another key element of the plan. Many manufacturing processes, especially in hard-to-decarbonise sectors, cannot fully electrify. Hydrogen provides an alternative and the CID includes a third funding round from the European Hydrogen Bank, worth up to US$1.08bn, to support its development.
By ensuring strong demand for sustainable industrial goods, the CID aims to make green manufacturing financially viable and globally competitive.
Financing Europe’s industrial transformation
Manufacturers will need significant investment to make the clean transition a reality. The European Commission estimates that an additional US$520bn per year is required to fund energy and industrial transformation goals.
To bridge this gap, the CID prioritises mobilising private capital while strengthening EU-level funding mechanisms.
A new Industrial Decarbonisation Bank is set to launch, deploying US$108bn in financing from the EU’s Innovation Fund and emissions trading revenues. Meanwhile, the InvestEU programme will expand its support for industrial decarbonisation projects, leveraging private investment to accelerate clean tech adoption.
The CID also introduces a revised State Aid Framework, ensuring businesses and governments have a predictable five-year planning horizon for investment in industrial decarbonisation.
Ursula highlights the importance of stability in attracting investment.
“We are on track to achieve our 55% emissions reduction target for 2030 and this gives you the predictability you need to plan your investments,” she says.
Simplified approval processes for industrial decarbonisation projects will help speed up investment in clean manufacturing and renewable energy infrastructure across the EU.
We are on track to achieve our 55% emissions reduction target for 2030 and this gives you the predictability you need to plan your investments.
Circularity and raw material security
The EU’s reliance on imported raw materials is a key vulnerability in its manufacturing sector. The CID seeks to reduce this dependency by building a circular economy that maximises resource efficiency.
By 2030, the EU aims to be a global leader in circular manufacturing, with industrial waste reduction and recycling at the centre of this transformation.
The upcoming Circular Economy Act, set for introduction in 2026, will harmonise waste classification standards, streamline regulations and facilitate the cross-border trade of secondary raw materials.
To further reduce supply chain risks, the EU will establish a Critical Raw Materials Centre, coordinating joint procurement and stockpiling of key materials. This move is designed to protect manufacturers from global market fluctuations and supply disruptions.
Competing on the global stage
While the CID focuses on strengthening European manufacturing, it recognises that Europe’s clean transition cannot happen in isolation. Trade policy will play a crucial role in ensuring access to both raw materials and export markets.
The CID introduces Clean Trade and Investment Partnerships to align trade policy with the EU’s climate and industrial goals. Additionally, the Carbon Border Adjustment Mechanism (CBAM) is set for review in 2025, with potential expansion to cover more products and indirect emissions.
CBAM is designed to prevent carbon leakage — where companies move production to countries with weaker environmental regulations — while also encouraging international partners to adopt carbon pricing.
The Commission will also strengthen trade defence measures to protect European manufacturers from subsidised foreign competition, ensuring that the transition to clean industry does not come at the cost of economic stability.
Making the clean industrial deal work
The CID represents a major shift in how Europe approaches industrial policy. Rather than treating decarbonisation and competitiveness as conflicting priorities, the deal integrates them into a single strategy.
By addressing energy security, raw material supply, financing and international trade, the EU aims to position itself as a global leader in sustainable manufacturing.
However, success depends on rapid implementation and the ability to navigate political and economic challenges. The transition will require significant investment, regulatory coordination and industry-wide commitment.
Yet the Commission remains steadfast in its belief that this is the right course for Europe.
“Europe has a clear roadmap — and we stay the course,” Ursula says.
For manufacturers, the message is clear: the shift towards clean industry is no longer an option but a necessity. The CID is setting the framework for the future and businesses that adapt early stand to benefit the most.
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