Climate | ~ 4 min read

Europe: leading the clean revolution?

In February, the European Commission unveiled a new strategy for transitioning to a lower-carbon world. The Clean Industrial Deal is expected to accelerate industrial decarbonisation, strengthen clean technology manufacturing, and enhance Europe’s economic resilience.

Decarbonisation as a driver of both economic growth and Europe’s energy security is the focus of the Clean Industrial Deal. To make climate action key to Europe’s competitive positioning the deal’s main priorities are the following:

  • Reducing fossil fuel dependency through accelerated electrification
  • Increasing demand for EU-made clean products
  • Financially supporting energy-intensive industries in their transition to clean energy
  • Boosting production of key clean technologies
  • Streamlining permitting for grid, energy storage and renewables projects to accelerate the transition.

How it will work

The Clean Industrial Deal will mobilise more than EUR 100 billion to strengthen Europe’s clean manufacturing base. This year, EUR 6 billion of the total will be committed to clean tech, battery manufacturing, industrial decarbonisation and the European Hydrogen Bank which was set up to drive funding of hydrogen value chains. Moreover, guarantees from the InvestEU EUR 26.2 billion fund could unlock up to EUR 50 billion of private investment.

To achieve Europe’s ambitions, the Clean Industrial Deal includes multiple elements, two of which are planned for 2025:

The Industrial Decarbonisation Accelerator Act: this will stimulate demand for EU-made clean products, with procurement reforms to favour sustainable materials and European-made goods. The hope is this will boost stakeholder confidence to invest in decarbonisation.

The Affordable Energy Action Plan: already enacted, the aim is to lower energy prices by expanding clean energy deployment, accelerating electrification, and enabling collective procurement of renewables.

What does this mean for investors?

We view this deal as a clear policy signal that the Europe Union is committed to industrial decarbonisation and clean tech growth. The potential for direct financial support, state aid reforms, and regulatory incentives for companies involved in clean manufacturing, industrial electrification, hydrogen and circular materials is a positive.

However, uncertainties remain. The split between new and repurposed capital is unclear, and state aid rules for clean industry are still evolving. The speed and effectiveness of implementation will determine how quickly companies can seize these opportunities.

As investors, we see a significant opportunity for the investment and regulatory communities to align and drive structural growth around Europe’s industrial transition to a cleaner and more competitive positioning.

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