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The European Commission has reaffirmed its commitment to a 90% emissions reduction by 2040. Its new Clean Industrial Deal (CID) aims to aid high-emission industries, such as steel and cement, transition to net zero. The plan includes a commitment of €100bn ($103bn) in public funds to leverage €400bn in private investment, alongside regulatory changes to accelerate renewable energy and infrastructure projects. The package also includes the Affordable Energy Action Plan which seeks to save €260bn annually by 2040. Simultaneously, the EU proposed to relax reporting and due diligence rules for small companies and a postponement of the Corporate Sustainability Reporting Directive (CRSD). (The Guardian)
Why does this matter? The CID has been designed in response to unfair global competition and high energy costs that are hurting European industries. It positions decarbonisation as a growth driver while providing certainty to companies and investors that the bloc remains committed to becoming fully decarbonised by 2050, as laid out in the European Green Deal. It aims to foster competitiveness and build economic resilience while also addressing climate change, focusing on energy-intensive industries and clean tech.
The plan introduces legislative and regulatory measures to achieve these goals, such as expediting permitting for industrial access to energy and decarbonisation. It will also revise the Public Procurement Directive to incorporate sustainability and European preference criteria. Meanwhile, a circular economy act will seek to create a unified market for waste and reusable materials to reduce costs and CO2 emissions. Other measures include voluntary carbon intensity labelling for steel and cement, a framework for faster renewable energy deployment, a delegated act on low-carbon hydrogen and a simplified/strengthened Carbon Border Adjustment Mechanism (CBAM).
The Affordable Energy Plan, which targets both industry and citizens, is a key component of the CID. It targets €45bn in savings by 2025, €130bn annually by 2030 and €260bn annually by 2040 through efficiency measures and structural reforms. Initiatives include expanding renewable energy, strengthening grid infrastructure and adjusting all energy bill components – supply costs, network charges and taxes. It also aims to improve crisis preparedness against extreme weather events or cyber attacks, while building resilience to external price shocks and increasing the domestic share of renewables.
The Commission has also adopted a package of proposals aimed at reducing administrative burdens by 25% or by 35% for SMEs and boosting investment. Key changes include reducing sustainability reporting requirements for 80% of companies and postponing CSRD obligations for two years. The CBAM could also be simplified to exempt 90% of importers, which are mostly SMEs, while still covering 99% of emissions. Measures also target a streamlining of EU investment programmes, such as InvestEU, to bolster competitiveness. If implemented, these proposals could generate €6.3bn in annual cost savings and unlock €50bn in public and private investments.
Business groups, such as the World Shipping Council and Metal Packaging Europe, broadly welcomed the CID viewing it as an opportunity drive the transition and bring down energy prices. However, others were more critical with the European Environmental Bureau (EEB) arguing that it “overlooks the broader pollution and environmental responsibility”. Meanwhile, investors contend that loosening sustainability rules will make it harder to access the information they need for determining which companies to finance to help the EU meet its climate targets.