Overview
On February 26, 2025, the European Commission introduced the Clean Industrial Deal, a package of measures designed to accelerate the transition to a green economy. The Clean Industrial Deal underscores the EU's dedication to meeting its climate targets under the European Green Deal and positions Europe as a global leader in sustainable industrial transformation.
This comprehensive initiative brings significant changes to environmental and chemical regulations, aiming to reduce pollution and promote the use of sustainable materials. Additionally, it introduces new trade policies that encourage the adoption of green technologies and sustainable practices globally. The deal also revises competition laws to foster innovation and prevent market monopolies, ensuring a fair and dynamic marketplace.
This client alert highlights the critical aspects of the Clean Industrial Deal, offering essential insights for businesses adapting to this new regulatory environment.
Environmental and Chemicals Measures
Accelerating the roll-out of clean energy and manufacturing
A first set of measures focuses on energy-intensive industries. The Commission will publish an Industrial Decarbonisation Accelerator Act in Q4 2025 to speed-up permitting for industrial access to energy and industrial decarbonization.
On the permitting front, the Commission will offer support to Member States in transposition and implementation of existing energy permitting legislation under the new Renewable Energy Directive. Measures to address permitting bottlenecks will build on existing regulations, including the Emergency Regulation on Permitting, the Renewable Energy Directive, the TEN-E Regulation, the Critical Raw Material Act, and the Net Zero Industry Act. Additional measures such as tacit approvals for permit and one-stop shops will be considered for predefined acceleration areas.
Finally, hydrogen has been recognized as crucial for decarbonizing the EU energy system. The Commission will adopt a delegated act on low-carbon hydrogen in Q1 2025 to support investor certainty. The Commission will also review the delegated act on renewable fuels of non-biological origin, launching a study to assess the hydrogen framework and identify upscaling barriers.
Boosting demand for clean EU products
The Industrial Decarbonisation Accelerator Act will also seek to boost demand for "EU-made clean products”, namely by:
- establishing a voluntary carbon intensity label for steel (work to start in 2025) and later cement, and
- introducing resilience and sustainability criteria ("e.g. clean, resilient, circular, cybersecure") as well as "European preference" criteria into both public and private procurement processes to foster clean European supply for energy-intensive sectors.
This will complement measures aimed at creating a market for captured carbon, including in the context of the review of the Emissions Trading System (ETS) Directive in 2026.
To address the proliferation of different carbon accounting methodologies, the Commission will identify by Q4 2025 priority areas and possible avenues for simplification, harmonization and verification of carbon accounting.
Circularity and access to materials
A key objective of the Clean Industrial Deal is to integrate circularity into the new decarbonization strategy to help maximize the EU's limited resources. The Commission intends to address this under two lines of initiative:
- Fast implementation of the Critical Raw Materials Act: The Commission will prioritize implementing the Critical Raw Materials Act. This includes identifying a first list of Strategic Projects in March 2025, aimed at diversifying supplies across the value chain and facilitating access to financial support. The Commission will also establish a mechanism for European companies to aggregate their demand for critical raw materials, creating an ad hoc Additionally, the Commission plans to create, by Q4 2026, an EU Critical Raw Material Centre. This Centre will allow the Commission and Member States to jointly purchase raw materials for interested companies, coordinate strategic stockpiles, monitor supply chains, and design financial products for investment in upstream supply within the EU and third countries.
- Circular economy: The Commission will put forward a Circular Economy Act in Q4 2026 to accelerate the transition to circularity, ensuring the efficient use and reuse of scarce materials, reducing global dependencies, and creating high-quality jobs. The goal is to achieve 25% circular materials by 2030. The Circular Economy Act will seek to:
- Enable the free movement of circular products and secondary materials;
- Increase the supply of high-quality recyclates and stimulate demand for secondary materials;
- Revise e-waste rules to make them simpler and more effective at recovering critical raw materials;
- Harmonize "end of waste" criteria to transform waste into valuable secondary materials;
- Simplify and expand extended producer responsibility (EPR);
- Boost demand for circular products through public procurement criteria;
- Incentivize the use of metal scrap and mandate digitalization of demolition permits and pre-demolition audits;
- Mandate the use of recycled and bio-based materials to replace virgin fossil materials in plastics.
The intention is for this Circular Economy Act to complement and facilitate the rolling out of the Ecodesign for Sustainable Product Regulation (ESPR). The Clean Industrial Deal communication indicates that the work plan under the ESPR will be adopted in April 2025.
The Commission will also consider additional measures to make recycling of critical raw materials waste within the EU more attractive than their export, including possible export fees.
Sectoral transition pathways
The Commission is working on several tailored sector plans:
- Steel and Metals: A Steel and Metals Action Plan will outline concrete actions for ferrous and non-ferrous metals industries to support their clean and digital transitions.
- Chemicals Industry: The eagerly-awaited Chemicals Industry Package, set for adoption in late 2025, will highlight the strategic role of the chemicals sector and propose initiatives to enhance its competitiveness, modernization, and innovation in Europe. This has been previously announced to include the revision of the REACH Regulation and "clarification" on PFAS.
- Sustainable Transport: A Sustainable Transport Investment Plan will detail measures to support renewable and low-carbon fuels for aviation and waterborne transport, and accelerate the rollout of recharging infrastructure. It will also introduce new rules to facilitate aid for sustainable land transport modes, enabling the rail sector to transition to clean and digital technologies.
- Bioeconomy: The Commission will propose a Bioeconomy Strategy to improve resource efficiency and leverage the growth potential of bio-based materials. This strategy aims to reduce dependencies on imported raw materials and establish priorities for manufacturing and using biomaterials.
- European Ocean Pact: This pact will promote innovation in blue clean tech, offshore renewables, and circular economy practices.
Tailored plans for other sectors may follow "as appropriate."
Further Trade Measures
Actions aimed at ensuring a level-playing field
In its Communication, the Commission has expressed its intention to consider measures such as raising applied tariffs within bound levels and relying on exceptions – including those for environmental protection – to implement such measures.
The Commission also aims to make use of Trade Defence Instruments (TDIs) in a faster and more efficient manner, shortening investigation timelines and making greater use of ex officio procedures. Ex officio procedures, where the Commission initiates investigations on its own without a complaint from the EU industry, have been rare and were practically never used until the investigation concerning Chinese electric vehicles initiated at the end of 2023. The Commission's statements indicate a desire to make the use of TDIs more automatic, thereby reducing time and resources spent on investigations.
Additionally, the Commission will consult with Member States and stakeholders on instruments to complete and reform the TDI toolbox.
Other aspects of the Communication are notable in terms of the actions that the EU intends to take to address foreign competition:
- The Commission is considering proposing conditions on foreign direct investment (FDI) that Member States can impose. These conditions may include requiring ownership of the equipment, sourcing inputs from within the EU, recruiting EU-based staff, forming joint ventures, or transferring intellectual property – practices that the EU has often criticized China for.
- With the planned Industrial Decarbonisation Accelerator Act, the Commission is planning to introduce sustainability, resilience, and made-in-Europe criteria in public and private procurements. The Commission also plans to review the Public Procurement Framework in 2026 to introduce such criteria for strategic sectors. All this indicates that the EU is adopting a broader approach and intends to use public procurement as a tool to promote European products over those from third countries.
- With respect to the Foreign Subsidies Regulation (FSR), along with adopting new guidelines clarifying key concepts by January 2026, the Commission has signalled its intent to make greater use of FSR ex officio investigations in strategic sectors.
Improving the Carbon Border Adjustment Mechanism (CBAM)
To prevent emissions reductions in European industries from being undermined by high-polluting goods produced outside the EU and to incentivize global decarbonization, the EU aims to simplify CBAM by reducing administrative burdens on industries and their supply chains. A comprehensive CBAM review report will be presented in the second half of 2025 to assess the extension of CBAM to other EU ETS sectors, downstream products, and indirect emissions. This report will develop a strategy to tackle circumvention risks and support exporters of CBAM products, followed by a legislative proposal in the first half of 2026.
Clean Trade and Investment Partnerships
Finally, the Commission has also expressed its commitment to continue to negotiate new Free Trade Agreements (FTAs) and, sign, conclude and fully implement pending FTAs.
Of note, the EU intends to complement such FTAs with newly established "Clean Trade and Investment Partnerships" (CTIPs), focusing on helping the EU manage its strategic dependencies by diversifying supply chains and securing better access to raw materials, clean technologies, and clean energy. The objective of this new investment instrument is also to foster cooperation on decarbonization efforts and policies related to the clean transition with partner countries. The Commission aims to launch the first CTIP in March 2025.
Competition Measures
- The aim of the Clean Industrial Deal is “to accelerate the rollout of renewable energy, deploy industrial decarbonization and ensure sufficient manufacturing capacity of clean tech”, according to the European Commission. All major pillars of competition policy, i.e. antitrust, merger control and State aid/foreign subsidy review are important tools to achieve this objective, with a clear focus being placed on State aid and foreign subsidies. Only those areas of competition law are explicitly mentioned in the Commission's press release and Q&A of February 26, 2025, while antitrust and merger control only play a secondary role within the Clean Industrial Deal.
State Aid Rules
- National support measures, including tax incentives, play a crucial role for decarbonization and circularity efforts, both by providing financial backing and reducing barriers to investment. Such measures can strengthen the economic viability of sustainable projects and leverage private sector participation. To that end, the Commission will simplify the State aid rules by June 2025 to accelerate the roll-out of renewable energy, deploy industrial decarbonization and ensure sufficient capacity of clean tech manufacturing in Europe. While recognizing the Member States’ right to decide on the energy mix, the Commission will assess State aid for nuclear supply chains and technologies with respect to technological neutrality and provide guidance to Member States on how to design contracts for difference, including their potential combination with Power Purchase Agreements (PPAs).
This new "Clean Industrial Deal State Aid Framework" shall enable necessary and proportionate State aid to attract private investment. Member States will get a longer planning horizon of five years and market players will get more investment predictability for their projects contributing to the objectives of the Clean Industrial Deal. Simplified and more flexible rules shall allow quick approval of State aid measures for decarbonization and clean tech projects while avoiding undue competition distortions. The Framework will introduce options for Member States to easily demonstrate compatibility of aid and simplified methods to set aid amounts, building on the experience of the Temporary Crisis and Transition Framework. It will also allow separate support schemes for specific technologies, such as wind and solar, and further facilitate support to non-fossil flexibility measures and capacity mechanisms.
- This simplification of the existing State aid rules is seen as essential. The upcoming review of the General Block Exemption Regulation shall significantly reduce the bureaucratic burden for undertakings and Member States. In parallel, the Commission is evaluating the Guarantee Notice, to assess if it remains a suited framework for such support measures to leverage private financing with a lesser burden on public resources than direct grants. The Commission will also work closely with the Member States to speed-up the design of new Important Projects of Common European Interest (IPCEIs), strengthening their efficiency to support industrial decarbonization and clean tech manufacturing in the EU. This shall be achieved with a new support hub to accelerate getting IPCEI projects off the ground.
In addition, the Commission intends to adopt new rules on cross-border forward capacity allocation by 2026, empowering large industrial consumers to better secure the electricity production they need to operate. The Commission will also seek Member States’ views on a clean flexibility instrument based on PPAs and industry committing to consume clean electricity, while designing it in a way that sufficiently limits the risks of competition distortions and subsidy races in the Single Market, as required by State aid rules.
Antitrust and Merger Control
Beyond the State aid rules, the proposed measures are less far-reaching. In the area of antitrust, the Commission stresses the improved access to informal guidance to companies on the compatibility of cooperation projects contributing to the achievement of EU priorities related to innovation, decarbonization and economic security, with Article 101 of the Treaty on the Functioning of the European Union (TFEU) and the Commission’s 2023 Horizontal Guidelines. However, this option already exists and has not yet produced significant outcomes for companies. One specific aspect mentioned in the Commission’s Press Release on the Clean Industrial Deal may trigger specific attention in this regard. The Commission intends to set up a mechanism enabling European companies to aggregate their demand for critical raw materials. Such joint purchases would need to be assessed under the relevant criteria of the above-mentioned Horizontal Guidelines, unless being superseded by joint purchases on behalf of the companies, by a new EU Critical Raw Material Centre.
In the area of merger control, the Clean Industrial Deal does not contain any specific suggestions. However, the Commission has recently signaled its willingness to take into consideration a broader set of factors for vetting notified mergers, beyond those under the Significant Impediment of Effective Competition (SIEC) test as interpreted by the EU Courts under the EU Merger Regulation .. To that end, the horizontal and/or non-horizontal merger guidelines of 2004 and 2008 could be revised, to ensure that the impact on the affordability of sustainable products, clean innovation, efficiencies with sustainable benefits, resilience, and investment intensity in strategic sectors are better integrated in the merger analysis.
Overall, the proposed competition law measures in the Clean Industrial Deal appear to be limited in scope, except in the area of State aid, where new rules facilitating public funding are expected to trigger more private investment. Beyond this, most other measures outlined in this brief overview are either not very significant or were already in progress prior to the announcement of the Clean Industrial Deal.
We are closely monitoring all developments and will keep you informed of any significant changes. This will ensure your business remains prepared, compliant, and capable of leveraging competitive advantages to support your growth strategy within Europe.
