EU Clean Deal Seeks to Bolster Industry in Race With US, China

(Bloomberg) -- The European Union unveiled a plan that preserves its ambitious climate goals while trying to improve industrial competitiveness in the face of increasing rivalry from the US and China.

The European Commission, which has repeatedly vowed to stay the course on its goal to zero-out emissions by the middle of the century, is offering support to industries that face persistently high energy costs and investment barriers. It also outlined a set of tools to reduce power bills, including measures to accelerate the roll-out of renewables.

In the coming weeks, the commission is expected to propose a draft law setting an intermediate target to reduce greenhouse gases by 90% by 2040 after floating the objective last year. The vision outlined Wednesday shows how the EU aims to help its manufacturers cut emissions without losing out to competitors abroad.

The plan includes fresh financial commitments from the European Investment Bank.

The bloc’s executive and national governments face pressure from companies to lower energy costs and cut regulatory red tape. President Donald Trump’s reversal on US climate goals and the risk of a tariffs-driven trade war have added urgency to the calls for EU action.

“We know that too many obstacles still stand in the way of our European companies from high energy prices to excessive regulatory burden,” said European Commission’s President Ursula von der Leyen. “The Clean Industrial Deal is to cut the ties that still hold our companies back and make a clear business case for Europe.”

The strategy hasn’t alleviated concerns from energy-intensive industries. The commission needs to reassess its energy transition policy and approach to nuclear energy and domestic production of hydrocarbons, said Peter R. Huntsman, chief executive office of chemicals giant Huntsman Corp.

“While we remain hopeful, we do not see anything that will address the immediate needs for Europe to regain its industrial competitiveness,” he said. 

The strategy maps out measures for the next few months and years, including a more flexible state aid framework due in the second quarter of this year, a new law on faster renewables permitting coming in the fourth quarter and a package for European grids in the first three months of 2026.

The EU’s executive flagged an update of its rules on low-carbon hydrogen to provide producers with more regulatory certainty. It also proposed updating a regulation to leverage private funding for priority areas like modernizing of industrial processes and the deployment of clean tech. There is a pledge of guarantees within its budget to improve the business case for clean manufacturing.

“Amid the geopolitical shock unleashed by President Trump, the European Commission has reaffirmed its commitment to climate action,” said Simone Tagliapietra, a senior researcher at the Bruegel think-tank. “This is good news for Europe, as decarbonization represents the only structural way to reduce its energy costs and increase its energy security in an increasingly volatile international context.”

Affordable Energy 

In an accompanying document on how to ensure affordable energy, the commission said it wants to outline measures to cut power bills for households and businesses in the short term while accelerating reforms that will help ease the burden in the longer term.

The tools include accelerated uptake of Power-Purchase Agreements and Contracts for Difference to make clean energy generation more attractive for industry and reducing the dependence of energy prices on fossil fuels.

Von der Leyen is scheduled to meet industry leaders on Wednesday in Antwerp, where a year ago they signed a landmark declaration urging the EU to cut energy costs and the regulatory burden of green rules.

The commission’s president has made competitiveness of Europe’s industry a key policy priority during her second term leading the commission. As the EU continues pursuing its ambitious emissions-reduction goals, high energy costs and Chinese subsidies have raised fears over the future of its manufacturers.

But a year after signing the Antwerp Declaration, the EU hasn’t taken the action necessary to stem the decline of its industry, according to Jim Ratcliffe, chief executive officer of Ineos Group The chemical industry in Europe, with turnover of a trillion euros, is facing extinction, he said in an open letter before the publication of the Clean Industrial Deal earlier on Wednesday.

“All our major competitors are planning for withdrawal from Europe as government has failed to act time after time,” Ratcliffe said. “The consequence of this policy is that Europe will import all its raw materials from the USA and China, who will benefit enormously.”

(Updates with details of the strategy)

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