10 Years After the Paris Agreement: A Conversation with Todd Stern
27 February 2025
By Marc Ringel, Chairholder, and Sarah Thompson, Senior Research Programme Manager, European Chair for Sustainable Development and Climate Transition
From the Green Deal to the Clean Industrial Deal
The European Union has long championed the idea that economic competitiveness and green transformation go hand in hand. The 2019 European Green Deal[1] strategy of the European Commission and the 2023 Green Deal Industrial Plan[2] maintained this vision, following a model of green growth or green sustainability[3]. While the narratives surrounding the Green Deal largely prioritised the aim of climate neutrality by 2050, the new strategic framework of the current Commission’s mandate shifts the focus to the area of competitiveness, resilience, and growth. This framework has been pushed even further with the new Clean Industrial Deal[4], presented on 26 February 2025.
The Clean Industrial Deal is presented as “a transformational business plan” that combines climate action and competitiveness into an overarching growth strategy for Europe. It acknowledges Europe’s rich industrial heritage and its vital role in technological progress, economic growth, and social well-being. Faced with rising geopolitical tensions, slow economic growth, and technological competition, the EU aims to reinforce its resilience and security by accelerating decarbonisation, reindustrialisation, and innovation across the continent. Overall, this will be accomplished by focusing on a clear set of themes and objectives, which in turn are articulated in action areas and key initiatives.
Key themes and objectives
The Clean Industrial Deal follows three overall objectives:
- Climate Neutrality by 2050: The EU reconfirms its commitment to becoming a decarbonised economy by 2050, maintaining the intermediate targets of a 55% net reduction in greenhouse gas emissions by 2030 and a 90% net reduction by 2040.
- Global Leadership in Circular Economy: Europe already has a strong foundation in circularity: one-third of all circular technology companies are European and more than 50% of the EU’s steel, iron, zinc, and platinum coming from recycled materials, covering more than 25% of European consumption. The Clean Industrial Deal aims to strengthen this progress and make the EU the world leader in the circular economy by 2030.
- Boosting EU Competitiveness: To increase sustainable and resilient production in Europe. For example, the EU remains a leader in clean tech innovation, accounting for 25% of global clean tech patents, 30% of the world’s electrolyser companies, 20% of carbon capture and storage firms, and 40% of wind and heat pump technology companies. However, many of these companies struggle to scale industrial production. This new deal aims to close this gap by ensuring faster access to capital and stronger public investment tools.
Interestingly, the main objectives of the Clean Industrial Deal either closely align with, or build upon, the core philosophy of the Green Deal, but are now reframed as means to increase resilience and allow for economic growth. This relates to (1) Decarbonisation and reindustrialisation with the aim to provide European industry with a stronger business case for large climate-neutral investments in energy-intensive industries and clean tech. Further, it relates to (2) Energy-intensive industries and the clean-tech sector. Here, the focus is directed towards energy-intensive industries needing support to decarbonise and manage high energy costs, and to the clean-tech sector, which is central to future competitiveness, industrial transformation, circularity, and decarbonisation. Along these lines, the European Commission aims to become a leader in building a (3) Circular economy. While the concept is typically seen as part of an environmental strategy, the focus again shifts to the aspects of resilience, independence, and economic gains. The idea is to prioritise circularity to maximise the EU’s limited resources, reduce dependencies, enhance resilience, reduce waste, lower production costs, and lower CO2 emissions.
Action Areas
The Clean Industrial Deal focuses on six key action areas to achieve its objectives. These include: affordable energy, establishing lead markets, financing, circularity and access to materials, global markets and international partnerships, as well as skills – all seen as “lead drivers” for clean competitiveness. These areas are complemented by actions on horizontal enablers necessary for a competitive economy, such as cutting red tape, fully exploiting the scale of the Single Market, boosting digitalisation, accelerating the deployment of innovation, promoting quality jobs, and better coordinating policies at the EU and national level.
As part of these efforts, the European Commission has introduced two Omnibus packages[5], aiming to substantially reduce administrative burdens for businesses. These changes are projected to save EU companies up to €6 billion annually, exceeding the annual budget reduction target. Additionally, regulatory simplifications will exempt around 80% of the companies under the CSRD (Corporate Sustainability Reporting Directive) and CSDDD (Corporate Sustainability Due Diligence Directive) and exempt 90% of SMEs from mandatory taxonomy requirements. Importantly, these exemptions will have a minimal impact on climate goals, as the companies excluded from CBAM account for less than 1% of total import volumes and emissions. This initiative reflects the Clean Industrial Deal’s broader goal of balancing ambitious climate action with reduced compliance burdens, ensuring that European businesses – particularly SMEs – remain competitive in the green transition.
Energy:
- Affordable Energy Action Plan[6]: Since the launch of the European Green Deal, the EU has saved €60 billion in fossil fuel imports thanks to increased renewable energy use. However, structurally high energy prices remain a major burden on industry. The Affordable Energy Action Plan, adopted in parallel to the Clean Industrial Deal, aims to lower energy bills for industries, businesses, and households while promoting the transition to a low-carbon economy. It aims to save €45 billion in 2025 alone, with annual savings aimed to progressively increase until €130 billion by 2030 and €260 billion. The Action Plan will focus on accelerating clean energy deployment, improving gas markets, and enhancing interconnections across Europe. Lithuania’s recent energy decoupling from Russia serves as a model for broader European energy independence.
- Electrification and Clean Energy: Accelerating the roll-out of clean energy, accelerating electrification, completing the internal energy market with physical interconnections, and using energy more efficiently.
- Power Purchase Agreements (PPAs): Promoting the uptake of PPAs, including cross-border PPAs, and Contracts for Difference (CfDs) to make clean energy production more attractive. The Commission is launching a pilot programme with the European Investment Bank (EIB) for corporate PPAs for an indicative amount of €500 million.
- European Grid Package: Simplify Trans-European Networks for Energy, ensure cross-border integrated planning and delivery of projects, streamline permitting, enhance distribution grid planning, boost digitalisation and innovation, as well as increase visibility and prioritisation of manufacturing supply needs.
Climate Protection:
- Industrial Decarbonisation Accelerator Act: Increase demand for EU-made clean products by introducing sustainability, resilience, and ‘made in Europe’ criteria in public and private procurements.
- Carbon Border Adjustment Mechanism (CBAM): Simplifying and strengthening the CBAM to put a fair price on the carbon emitted during the production of carbon-intensive goods. The Commission will present a comprehensive CBAM review report in the second half of 2025 and a legislative proposal in the first half of 2026.
- Industrial Carbon Management Strategy: Implementation will build the business case for permanent carbon removals to compensate for residual emissions from hard to abate sectors.
Circularity:
- Circularity as a Priority: Reduce waste and extend the life of materials by promoting recycling, reuse, and sustainable production.
- EU Critical Raw Material Centre: Create an EU Critical Raw Material Centre to jointly purchase raw materials on behalf of interested companies to create economies of scale and offer more leverage to negotiate better prices and conditions.
- Circular Economy Act: Adopt a Circular Economy Act in 2026 to accelerate the circular transition and ensure that scarce materials are used and reused efficiently, reduce global dependencies and create high-quality jobs. The aim is for 24% of materials to be circular by 2030.
Financing the Clean Transition:
- Mobilising Investments: The Clean Industrial Deal will mobilise over €100 billion to support clean manufacturing made in the EU.
- Clean Industrial Deal State Aid Framework: A new framework will accelerate the approval of state aid to roll out renewable energy, decarbonise industry, and ensure sufficient manufacturing capacity of clean tech.
- Industrial Decarbonisation Bank: A proposed Industrial Decarbonisation Bank, aiming for €100 billion in funding, drawing from the Innovation Fund, additional revenues resulting from parts of the ETS, as well as a revised InvestEU programme. The existing Innovation Fund, which has already financed breakthrough projects, is heavily oversubscribed, meaning many promising projects are currently left unfunded. The new Industrial Decarbonisation Bank will expand financial resources, ensuring EU industries can scale up clean manufacturing without being outpaced by global competitors.
- InvestEU Regulation: The InvestEU Regulation will increase the financial guarantees that InvestEU can provide to support investments, mobilising up to €50 billion for the deployment of clean tech, clean mobility and waste reduction.
Detailed Initiatives
The Clean Industrial Deal argues that only swift action will allow the EU to (re)establish its competitiveness at global scale. Apart from setting up supporting infrastructure, many of the initiatives aim at simplifying regulatory red tape or putting financing structures in place. To illustrate this, the table below maps out the key action areas and the scheduled timeline for initiatives running from 2025 to 2027.
| Action Area | Timeline | Initiative |
|---|---|---|
| Access to affordable energy | Q1 2025 | Action Plan on Affordable Energy |
| Q2 2025 | EIB pilot offering financial guarantees for PPA offtakers, with a focus on SMEs and energy-intensive industries | |
| Q1 2025 | Legislative proposal on the extension of the Gas Storage Regulation | |
| Q2 2025 | Clean Industrial Deal State aid framework | |
| Q2 2025 | Recommendation on network charges | |
| Q4 2025 | Industrial Decarbonisation Accelerator Act: Speed-up permitting for industrial access to energy and industrial decarbonisation | |
| Q4 2025 | Recommendation on energy taxation | |
| Q4 2025 | Guidance on CfD design, including on combining CfDs and PPAs | |
| Q4 2025 | Guidance on promoting remuneration of flexibility in retail contracts | |
| Q1 2026 | European Grids Package | |
| Lead markets: boosting clean supply and demand | Q1 2025 | Delegated act on low carbon hydrogen, providing regulatory certainty to producers of low carbon hydrogen |
| Q4 2025 | Industrial Decarbonisation Accelerator Act: Establish a low-carbon product label; Apply sustainability, resilience and minimum EU content requirement | |
| 2025/2026 | Communication and legislative proposal on greening corporate fleets | |
| Q4 2026 | Revision of Public Procurement Directives to mainstream the use of non-price criteria | |
| Public and private investments | Q1 2025 | Increase InvestEU’s risk-bearing capacity |
| 2025 | IPCEI Design Support Hub | |
| Q2 2025 | Clean Industrial Deal State aid framework | |
| Q2 2025 | Recommendation to Member States to adopt tax incentives to support the Clean Industrial Deal | |
| Q4 2025 | Flagship call under Horizon Europe | |
| 2025 | Pilot auction under the Innovation Fund | |
| Q2 2026 | Industrial Decarbonisation Bank | |
| 2026 | TechEU investment programme on scale-ups with the EIB Group and private sector | |
| Powering the circular economy: a secure access to materials and resources | Q1 2025 | First list of Strategic Projects under the Critical Raw Materials Act |
| Q2 2025 | Ecodesign Work Plan adoption | |
| Q4 2026 | EU Critical Raw Materials Centre for joint purchases and management of strategic stockpiles | |
| Q4 2026 | Circular Economy Act | |
| Q4 2026 | Green VAT initiative | |
| Q4 2026 | Trans-Regional Circularity Hubs | |
| Global markets and international partnerships | Q1 2025 | Launch negotiations for the first Clean Trade and Investment Partnership |
| Q1 2025 | Simplification of the Carbon Border Adjustment Mechanism (CBAM) | |
| Q3 2025 | Comprehensive CBAM review assessing the feasibility of extending the CBAM scope to other EU ETS sectors at risk of carbon leakage, to downstream sectors and to indirect emissions and support to exporters, closing loopholes | |
| Q4 2025 | Trans-mediterranean Energy and Clean tech cooperation initiative | |
| Q1 2026 | Legislative proposal on an extension of CBAM | |
| Q1 2026 | Guidelines on Foreign Subsidies Regulation | |
| Skills and quality jobs for social fairness | Q1 2025 | Union of Skills |
| Q4 2025 | Quality Jobs Roadmap | |
| 2025 | Guidance on social leasing for clean products | |
| Q1 2026 | European Fair Transition Observatory | |
| 2026 | Skills Portability Initiative | |
| Q4 2027 | Review of State aid GBER rules for social enterprises and recruitment of disadvantaged workers | |
Outlook: Next Steps and Further Initiatives
The European Commission asserts that the Clean Industrial Deal will serve as a framework for engaging in a dialogue with industries, including SMEs, to develop sectoral transition pathways. Following discussions with the Member States and the European Parliament, the strategy foresees the development of several sector specific plans, all to be presented in 2025:
- Industrial Action Plan for an Automotive Sector: Due for adoption on 5 March, addressing the needs of the automotive value chain, with a focus on innovation in future technologies and capabilities.
- Steel and Metals Action Plan: Based on the Strategic Dialogue, proposing concrete actions for both ferrous and non-ferrous metals industries.
- Chemicals Industry Package: Set for adoption in late 2025, recognising the strategic role of the chemicals sector and proposing targeted initiatives to enhance the sector’s competitiveness and modernisation.
- Sustainable Transport Investment Plan: Outlining short- and medium-term measures to prioritise support to specific renewable and low-carbon fuels for aviation and waterborne transport.
- Bioeconomy Strategy: Proposing a Bioeconomy Strategy, to improve resource efficiency and to tap the significant growth potential of bio-based materials substituting fossil-based materials, and related industries.
- European Ocean Pact: Promoting innovation in blue clean tech, offshore renewables and circular economy practices.
Speaking at the European Industry Summit on 26 February 2025 during the Clean Industrial Deal’s unveiling, European Commission President Ursula von der Leyen stated:
“We must turn the tide. And this is the central goal of the Clean Industrial Deal. We want to cut the ties that still hold you back. So that Europe can not only be a continent of industrial innovation but also a continent of industrial production.”[7]
With this approach, the European Commission clearly takes the stance of further developing its industrial policy, in line with the single market reports presented by Mario Draghi[8] and Enrico Letta.[9] Nevertheless, President von der Leyen reiterated the EU’s commitment to their climate and social goals, pointing to the social market economy as the foundation of the European Single Market.
As such, the Clean Industrial Deal can be interpreted as the next phase of the Green Deal[10], which remains as the underlying concept of this Commission’s mandate, aligning ecological and economic priorities into a mutually beneficial synthesis. However, the success of this strategy depends on its implementation. It remains to be seen whether the more than 40 initiatives (including those from the Affordable Energy Plan) can be legislated quickly enough and effectively implemented across the member states.
[1] https://commission.europa.eu/strategy-and-policy/priorities-2019-2024/european-green-deal_en
[2] https://ec.europa.eu/commission/presscorner/api/files/attachment/874428/Factsheet.pdf
[3] Capasso et al. (2019): Green growth – A synthesis of scientific findings. Technological Forecasting & Social Change 146 (2019) 390-402
[4] https://commission.europa.eu/document/download/9db1c5c8-9e82-467b-ab6a-905feeb4b6b0_en?filename=Communication%20-%20Clean%20Industrial%20Deal_en.pdf
[5] https://ec.europa.eu/commission/presscorner/detail/en/ip_25_614
[6] https://energy.ec.europa.eu/document/download/7e2e6198-b6b8-46fe-b263-984b437da3ab_en?filename=Communication%20-%20Action%20Plan%20for%20Affordable%20Energy.pdf
[7] https://ec.europa.eu/commission/presscorner/detail/en/speech_25_628
[8] https://commission.europa.eu/topics/eu-competitiveness/draghi-report_en
[9] https://www.consilium.europa.eu/media/ny3j24sm/much-more-than-a-market-report-by-enrico-letta.pdf
[10] Ringel and Thompson (2025); https://journals.sagepub.com/doi/abs/10.1177/14680181241311995