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Decarbonisation as Industrial Strategy

Kelsey Paulding Horizontal

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Maya Lameche

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Berlaymont

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Florian-Schneider

Driving EU Leadership in the Clean Energy Transatlantic Market

Catherine-Grossman

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Cover photo-min

Kelsey Paulding

EU Government Affairs Director

Blog

Memo

Policy Associate, Boundary Stone Partners

Florian A. Schneider, PhD.

Senior Research Advisor

Report

Position

Catherine Grossman

Special Advisor

Carbon Free Europe

Current tools like the NZIA and policy of the CID show strong promise, but key legislation remains for adoption and gaps persist in implementation, infrastructure and financing, that the EU must address to deliver a truly transformative industrial decarbonisation strategy.
Industrial clusters can be <a href="https://www.weforum.org/stories/2020/10/industrial-clusters-can-be-a-key-lever-for-decarbonization-heres-why/">defined</a> as geographically concentrated groups of interconnected firms, specialised suppliers, service providers, and associated institutions within a particular field. The European Union has over 1,500 industrial clusters, spanning more than 200 regions and <a href="https://single-market-economy.ec.europa.eu/industry/cluster-policy_en">contributing</a> to nearly 25% of total EU employment. These hubs constitute collaborative networks that enhance productivity through shared knowledge and infrastructure, and they have progressively become critical to the EU’s economic strength and innovation capacity. However, industrial clusters in energy-intensive industries such as steel, cement, and chemicals, often concentrate hard-to-abate greenhouse gas emissions accounting for around 20% of Europe’s industrial CO2 output (<a href="https://www.weforum.org/stories/2020/10/industrial-clusters-can-be-a-key-lever-for-decarbonization-heres-why/">2020</a>). This makes them a critical target to meet the EU’s ongoing target of 90% emissions reduction by 2040 while preserving industrial competitiveness, in alignment with the recent policy provided for in the Competitiveness Compass and Clean Industrial Deal (CID). 
 Yet, decarbonising these clusters presents significant structural and financial challenges. Most clusters are <a href="https://climate.ec.europa.eu/system/files/2019-03/industrial_innovation_part_1_en.pdf">built around legacy assets</a> such as blast furnaces, steam crackers, or fossil-based heat systems that are capital-intensive and <a href="https://www.eesi.org/files/LOW-CARBON_HEAT_SOLUTIONS.pdf">complex to retrofit or replace</a> with low-carbon alternatives. Deploying solutions using clean technologies typically entails multi-billion euro investments, long lead times, and significant coordination across firms and infrastructure providers (<a href="https://www.iea.org/reports/energy-technology-perspectives-2023">IEA, 2023</a>). As a result, these clusters demand particular policy responses from the EU. 
<h3>
How do existing tools, and how might upcoming tools, contribute to the EU’s industrial decarbonisation strategy? 
</h3>
The Net Zero Industry Act (NZIA) has become the EU’s cornerstone legislative tool to accelerate clean energy technology manufacturing and decarbonise industrial production. It sets a binding target for the EU to domestically manufacture at least 40% of its annual net-zero technology needs by 2030, covering technologies such as solar PV, wind turbines, batteries, heat pumps, electrolysers, nuclear fission and carbon capture and storage (CCS) systems (<a href="https://single-market-economy.ec.europa.eu/industry/sustainability/net-zero-industry-act_en">European Commission</a>). A key innovation of the NZIA is the creation of Net-Zero Strategic Projects, which receive priority access to permitting, funding and offtake support. These projects may be located within Net-Zero Valleys—geographic zones often overlapping with existing industrial clusters—where permitting procedures are fast tracked and infrastructure planning is integrated to support shared clean technologies. 
The <a href="https://climate.ec.europa.eu/eu-action/eu-funding-climate-action/innovation-fund_en">EU Innovation Fund</a> is also a critical tool to support decarbonisation. It provides funding for the demonstration of innovative low-carbon technologies, therefore supporting the decarbonisation of industrial clusters by financing large-scale and breakthrough projects that reduce greenhouse gas reductions. By targeting a wide set of new technologies, the fund accelerates the deployment of climate solutions within industrial hubs, helping the EU meet its climate targets and strengthen its industrial competitiveness. 
The CID, unveiled in February 2025, provides a broader investment and policy strategy to support industrial decarbonisation and competitiveness in the EU. Outlining concrete actions to be taken at EU level, it introduces new financing programmes of significant importance to advance industrial decarbonisation. This includes a new Industrial Decarbonisation Bank, tasked with mobilising EUR 100 billion from public and private sources from 2026 and a European Competitiveness Fund, which could finance the clean transition and industrial decarbonisation up to EUR 26 billion between 2028 and 2034 and in alignment with the NZIA, according to a proposal adopted by the Commission on 16 July. In parallel, State Aid rules <a href="https://competition-policy.ec.europa.eu/about/contribution-clean-just-and-competitive-transition/clean-industrial-deal-state-aid-framework-cisaf_en">have been relaxed</a> under the revised Clean Industrial Deal State Aid Framework (CISAF) to enable faster approval from the Commission and allow Member States to provide up to EUR 200 million for industrial decarbonisation projects in grants, subsidies, or tax relief; aiming at closing the competitiveness gap with the U.S. Inflation Reduction Act (IRA). Importantly, the CID introduced the adoption of a proposal for an Industrial Decarbonisation Accelerator Act (IDAA) by the end of 2025. The adoption and implementation of this Act could become a critical enabler of industrial decarbonisation, as it will aim at speeding up permitting procedure for industrial access to clean energy, identifying and promoting priority projects and clusters and introducing instruments to stimulate demand and create lead markets for EU-made green products, notably via public procurement and strategic contracting. 
However, while these tools and upcoming policies mark a significant step forward, their success ultimately depends on rapid adoption, followed by Member State implementation, especially in industrial clusters. Regional authorities must build permitting capacity, coordinate infrastructure planning, and ensure alignment between industrial actors and public agencies. In this context, the ambition of EU-level regulation must be matched by place-based execution, or the EU risks underdelivering on its industrial decarbonisation goals. 
<h3>How these tools translate at the Member State and Industrial Cluster Level </h3>
Net-Zero Valleys have been at the center of Member States’ strategy to decarbonise industrial clusters, and are selected by national governments based on industrial potential, workforce capacity, and energy infrastructure. Within each valley, the regulatory burden is significantly reduced: a single point of contact coordinates all permitting processes, and Environmental Impact Assessments (EIAs) are proactively completed at the regional level. If a project is designated a Net-Zero Strategic Project, it receives priority administrative treatment, reducing permitting timelines to 9 months for small sites and 12 months for large installations; a major departure from the multi-year processes typical in industrial permitting (<a href="https://single-market-economy.ec.europa.eu/industry/sustainability/net-zero-industry-act_en">European Commission</a>, 2024). 
 Among Member States, Germany has emerged as the leading example of early implementation. The country has leveraged NZIA provisions to establish Net-Zero Valleys in <a href="https://mission-innovation.net/wp-content/uploads/2022/09/H2RDD-Germany-FINAL.pdf">North Rhine-Westphalia and Baden-Wurttemberg</a>, focusing in particular on scaling green hydrogen production and electrolyser manufacturing. These regions benefit from advanced energy infrastructure including high-voltage electricity grids, hydrogen-ready pipelines, and proximity to industrial demand centers. They also host dense networks of skilled labor, research institutions, and clean-tech firms. 
However, while some regions such as Germany have successfully leveraged these policy tools, some have been less successful. For instance, Poland has struggled to decarbonise its industrial clusters particularly in <a href="https://poweringpastcoal.org/news/heart-of-polands-largest-coal-region-joins-the-global-push-for-coal-phase-out/">coal-dependent regions like Upper Silesia</a>, due to continued reliance on coal, limited clean infrastructure and political resistance. As such, a region’s ability to benefit from them depends on its cluster readiness.  This entails several key conditions: the presence of strong local governance and inter-agency coordination and resources, shovel-ready decarbonisation projects with local stakeholder backing, access to clean energy and transport infrastructure, and availability of a skilled workforce. Member States or regions that can meet these thresholds are more likely to attract net-zero investment and strategic project status. In contrast, jurisdictions that suffer from fragmented governance or underdeveloped energy systems risk being left behind, even as EU-level tools become more robust. As such, while the NZIA offers a strong policy foundation, their success ultimately rests on the capacity of Member States to implement them effectively at the regional level. 
 It is however crucial for these regional hubs to keep some flexibility to implement frameworks accordingly based on their resources, finances and available means. A one-size-fits-all approach would not work otherwise. 
<h3>Gaps and Challenges</h3>
Despite the ambitious goals set within the NZIA, significant implementation gaps remain that risk undermining the decarbonisation of Europe’s industrial clusters. While the NZIA sets clear objectives, such as scaling clean energy manufacturing and fast-tracking permitting; implementation is still at initial stages. In addition, a significant part of the EU's industrial decarbonisation policy remains at the strategic planning phase, awaiting concrete legislative proposals from the Commission and subsequent institutional adoption. Timely delivery remains a major concern. For instance, Member States' delayed implementation of the Renewable Energy Directive (RED III, recast) poses a significant challenge to industrial decarbonisation. Most failed to meet the May 2025 deadline for implementing key RED III provisions, including the 42% renewable hydrogen target for industry. This delay creates uncertainty for investors, hampering crucial investments and ultimately slowing down the industrial decarbonisation process.
Infrastructure constraints are another core challenge. While the EU has made considerable progress in power decarbonisation and regional interconnection–especially in electricity–industrial decarbonisation will require parallel deployment of dedicated infrastructure for hydrogen, CO2 transport and storage, and industrial interconnections. According to the European Commission, the EU will need over <a href="https://www.pv-tech.org/industry-lobby-group-ert-says-eu-requires-e800-billion-in-grid-investment-by-2030/">EUR 800 billion</a> in public and private investment to meet infrastructure needs. Gaps persist in the strategic coordination of cross-border infrastructure, especially for sectors like steel, cement, and chemicals that require shared access to clean energy, CCS, or hydrogen infrastructure across multiple regions. Furthermore, cross-border electricity infrastructure would also benefit from additional effectiveness and more consistent implementation. The ongoing Multiannual Financial Framework (MFF) negotiations must maintain and secure its Connecting Europe Facility (CEF) energy budget, and implement the proposal to scale up from EUR 5 billion to EUR 30 billion for the 2028-2034 period. Permitting delays and fragmented procedures continue to hinder the rollout of clean industrial projects, even under the NZIA’s streamlined framework. Demand side factors are key for clean industry growth, as downstream sectors have major potential to roll out the market for low-carbon products through the use of materials such as steel, glass and cement. 
Looking ahead, the IDAA and the forthcoming 2040 climate targets provide an opportunity to align clean energy deployment with industrial decarbonisation. Notably, the IDAA proposes the creation of “infrastructure-ready zones” to co-locate clean energy and industrial activity. CFE’s 2024 ADP highlights regions where clean power buildout overlaps with industrial production. Enabling co-location can reduce transport inefficiencies, enhance system integration, and lower deployment costs, thus making it a key lever for the decarbonisation of industrial clusters. 
<h3>Policy Recommendations </h3>
Ensure Effective and Timely Implementation of Key Enablers: To advance industrial decarbonisation in Europe, timely and effective implementation of EU legislation by Member States is essential. Swift adoption is necessary to prevent delays that create uncertainties for investors and slow progress. The European Commission's support and coordination are vital in this process, as is ensuring accountability for any late transposition. 
Align EU Budget Instruments with Industrial Cluster Needs: Given the scale and urgency of the industrial transition, the MFF must reflect the prioritisation of industrial cluster decarbonisation. This includes ensuring that the CEF, Innovation Fund, and future competitiveness mechanisms like the Competitiveness Fund are equipped to target high-impact infrastructure and clean technology deployment. In particular, funding from the Innovation Fund should be better aligned with the specific decarbonisation needs of industrial clusters, including shared infrastructure, technology adoption and demand side incentives. 
Accelerate the Launch of the Industrial Decarbonisation Bank and Competitiveness Fund: Timely decarbonisation of industrial clusters hinges on access to large-scale, de-risked financing. The EU should fast track the operational launch of the Industrial Decarbonisation Bank proposed under the CID and ensure it is capitalised with at least EUR 100 billion from public and private sources by 2026. Furthermore, the EU should also proceed with the adoption of an ambitious clean transition and industrial decarbonisation pillar under the future European Competitiveness Fund to ensure streamlined and effective access to funding. 
Invest in Cross-Border Infrastructure and Secure Critical Supply Chains: The EU must address infrastructure bottlenecks that limit industrial integration and clean technology deployment. This includes investing in cross-border electricity grids, hydrogen corridors, and CO2 transport networks, supported by EU-wide planning and permitting coordination. Accordingly, the co-legislators should ensure the timely adoption of the more ambitious CEF proposed under the MFF for 2028-2034.
Ensure the timely adoption and implementation of an ambitious Industrial Decarbonisation Accelerator Act: The IDAA should simplify industrial access to clean energy and focus support on strategic clean tech manufacturing, providing transition funding for high-emission regions undergoing restructuring. It should prioritise infrastructure-ready zones with high energy demand to maximise emissions reduction and cost-effectiveness. Additionally, the Act must allow Member States flexibility to pursue technology-neutral strategies, while implementing emissions-based product standards. Stimulating downstream demand through strategic procurement and partnerships is also essential.

 Does the EU have effective tools to decarbonise its industrial clusters?  

We have Carbon-Free Europe joined 62 other businesses and civil society organisations in signing a letter calling for the Commission to maintain at least 30% horizontal spending target for investments in climate and the environment in the post‑2027 Multiannual Financial Framework. 
Dedicating at least 30% of the overall EU budget to the climate and 10% to biodiversity is a sustainable and urgent investment, which protects European communities from existential threats like the climate crisis, biodiversity loss, pollution, and related health impacts.
The signatories represent a diverse range of voices including transnational civil society organizations, companies, clean tech start-ups, multinationals, and business associations, with the likes of WWF, The Climate Group, ClientEarth, and E3G joining our call.
Please find the letter, along with the full list of signatories, below.
<h2>European Commission should maintain a horizontal target for climate and environmental investments in the post-2027 MFF</h2>
Dear President Von der Leyen, Dear Executive Vice‑Presidents and Commissioners,
On behalf of 63 businesses, associations, think tanks and civil‑society organisations across Europe, we urge you to maintain a horizontal spending target for investments in climate and the environment in the post‑2027 Multiannual Financial Framework.
In its February 2025 <a href="https://commission.europa.eu/document/download/6d47acb4-9206-4d0f-8f9b-3b10cad7b1ed_en?filename=Communication%20on%20the%20road%20to%20the%20next%20MFF_en.pdf">Communication</a>, the Commission emphasised the need for a simpler, more focused and more impactful EU budget. The publication of the <a href="https://commission.europa.eu/topics/eu-competitiveness/clean-industrial-deal_en">Clean Industrial Deal</a> and the announcement of a European Competitiveness Fund are also promising signals that the EU prioritises investments for a decarbonised economy to regain global competitiveness.
A horizontal spending target for climate and the environment is the simplest yet most powerful way to ensure that the EU continues to channel funds into projects that drive the clean industrial transition and strengthen Europe’s resilience.
The current MFF sets important benchmarks: at least 30% of overall spending is dedicated to climate action, with a complementary biodiversity target. Thanks to this commitment, the EU budget has co-funded more than <a href="https://kohesio.ec.europa.eu/en/projects?theme=Low-carbon-economy&amp;policyObjective=Greener,-carbon-free-Europe&amp;mapRegion=Romania,Bucure%C5%9Fti---Ilfov,Q2576733&amp;coords=26.0757644,44.4104247&amp;page=2&amp;projectStart=01-01-2021&amp;sort=Start-Date-(ascending)">11,000 projects</a> promoting a low-carbon economy since 2021. Those projects range from investments into energy efficiency to the EU's circular economy or electrification of transport modes and drive business innovation across the EU.
The rollout of clean energy - including renewables, smart grids, and energy-efficient infrastructure - requires <a href="https://www.i4ce.org/en/publication/state-europe-climate-investment-2025-edition/">sustained investments</a> to reduce price volatility and security risks caused by oil and gas imports. At the same time, public investments must also safeguard biodiversity and the ecosystem services on which European businesses and communities depend. Europe’s companies and investors need certainty that the financing landscape will continue to support these priorities. By maintaining and reinforcing horizontal targets for climate and the environment, the EU can ensure that every euro delivers maximum impact.
Climate investments underpin Europe’s competitiveness and growth. Green investments have a <a href="https://hal.science/hal-04960627v1/file/Green_multiplier.pdf">higher return on investment</a> than non-green expenditure. They yield faster, more sustainable productivity growth while enhancing economic and physical climate resilience. Strong horizontal spending targets would also enable the European Commission to leverage the EU budget to attract more private capital and attract innovators and talent from other parts of the world as Europe continues the transition.
Europe is the fastest-warming continent in the world and shifting resources away from climate mitigation and adaptation at this stage would further increase our vulnerabilities from the climate and security nexus. Without decisive action, climate risks, exacerbated by biodiversity loss, will raise the <a href="https://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:52024DC0063">cost of inaction</a> and severely impact European businesses, jeopardising long-term prosperity, employment, and working conditions.
For all these reasons, we respectfully call on the Commission to maintain and strengthen a horizontal spending target for climate and the environment in the next EU budget. Doing so will send a clear, unambiguous signal that Europe remains committed to leading the global transition to a climate-neutral and nature-positive economy.
Yours sincerely,
The undersigned
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</li>
<li data-start="2660" data-end="2734">
<a class="" href="https://www.sefaeu.org/" target="_new" rel="noopener" data-start="2662" data-end="2734">SEFA – Sustainable Energy Finance Association</a>
</li>
<li data-start="2735" data-end="2785">
<a class="" href="https://solarheateurope.eu/" target="_new" rel="noopener" data-start="2737" data-end="2785">Solar Heat Europe</a>
</li>
<li data-start="2786" data-end="2842">
<a class="" href="https://www.solarpowereurope.org/" target="_new" rel="noopener" data-start="2788" data-end="2842">SolarPower Europe</a>
</li>
<li data-start="2843" data-end="2880">
<a class="" href="https://www.soliday.org/" target="_new" rel="noopener" data-start="2845" data-end="2880">Soliday</a>
</li>
<li data-start="2881" data-end="2929">
<a class="" href="https://www.spark-e-fuels.de/" target="_new" rel="noopener" data-start="2883" data-end="2929">Spark e-Fuels</a>
</li>
<li data-start="2930" data-end="2992">
<a class="" href="https://www.klimawirtschaft.org/" target="_new" rel="noopener" data-start="2932" data-end="2992">Stiftung Klimawirtschaft</a>
</li>
<li data-start="2993" data-end="3066">
<a class="" href="http://sustainablebankingcoalition.eu/" target="_new" rel="noopener" data-start="2995" data-end="3066">Sustainable Banking Coalition</a>
</li>
<li data-start="3067" data-end="3102">
<a class="" href="https://www.swisox.com/" target="_new" rel="noopener" data-start="3069" data-end="3102">Swisox</a>
</li>
<li data-start="3103" data-end="3153">
<a class="" href="https://techfornetzero.org/" target="_new" rel="noopener" data-start="3105" data-end="3153">Tech for Net Zero</a>
</li>
<li data-start="3154" data-end="3233">
<a class="" href="https://www.transportenvironment.org/" target="_new" rel="noopener" data-start="3156" data-end="3233">Transport &amp; Environment (T&amp;E) Europe</a>
</li>
<li data-start="3234" data-end="3272">
<a class="" href="https://www.uitp.org/" target="_new" rel="noopener" data-start="3236" data-end="3272">UITP Europe</a>
</li>
<li data-start="3273" data-end="3310">
<a class="" href="https://www.velocys.com/" target="_new" rel="noopener" data-start="3275" data-end="3310">Velocys</a>
</li>
<li data-start="3311" data-end="3371">
<a class="" href="https://www.veronica.cz/" target="_new" rel="noopener" data-start="3313" data-end="3371">Veronica – Ekologický Institut</a>
</li>
<li data-start="3372" data-end="3411">
<a class="" href="https://www.worldwildlife.org/" target="_new" rel="noopener" data-start="3374" data-end="3411">WWF</a>
</li>
</ul>

Open Letter: Preserve and Strengthen EU Climate and Environment Spending in the Post-2027 Budget

In July 2025, Carbon-Free Europe submitted input to the European Commission on the proposed Industrial Decarbonisation Accelerator Act (IDAA). Our evidence highlights how early action, flexible pathways, and technology-inclusive policies can drive cost-effective decarbonisation and industrial competitiveness across the EU.
Read the full submission and supporting materials below.
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Carbon-Free Europe (CFE) welcomes the opportunity to provide input to the forthcoming Industrial Decarbonisation Accelerator Act (IDAA). CFE supports the EU’s 2050 net-zero target using a technology-inclusive approach combining renewables, nuclear, hydrogen, and carbon management. Our modelling and analysis demonstrate that a diverse energy mix enables cost-effective, resilient, and secure decarbonisation while allowing Member States (MS) to build on their strengths.
This feedback draws on findings from the Annual Decarbonisation Perspective (ADP) and CFE’s 2025 Jobs Report.
Decarbonisation as Industrial Strategy
CFE’s 2025 Jobs Report shows that aligning decarbonisation and industrial competitiveness leads to net employment gains. Our Core scenario projects a gain of 4.65 million net jobs EU-wide by 2050, with strong growth in construction (1.2m) supply chains and manufacturing (1.0m). All EU MS have a net labour growth by 2050 for clean energy jobs.
Recommendation: Target support for strategic clean technology manufacturing and allocate transition funding to regions with high emissions and industrial restructuring needs.
Identifying clusters through infrastructure ready zones: 
CFE’s downscaled infrastructure maps highlight regions where clean energy buildout overlaps with industrial activity, supporting the co-location of clean energy supply and energy-intensive industries. Such co-location can reduce transport inefficiencies, improve system integration, and lower overall costs. 
Recommendation: Focus IDAA support on infrastructure-ready zones with high energy demand to optimise both emissions reduction potential and cost-effectiveness. 
Early action and flexibility for cost-effective support: 
CFE modelling demonstrates substantial cost benefits of early clean infrastructure investments. Our Core net-zero 2050 scenario reduces investments by €4.5 trillion compared to delayed-action pathways, while technology-diverse approaches save €500 billion versus business-as-usual scenarios that miss net-zero targets. These savings are particularly enabled through flexible technology approaches and country-specific implementation pathways allowing early investments.
Recommendation: Design the IDAA to enable MS to pursue country-specific, technology-neutral pathways, supported by accelerated permitting procedures for essential infrastructure. 
Low-Carbon Industrial Products and Lead Markets
While well designed voluntary carbon labels–including all clean inputs and based on actual emissions performance–are essential to support product differentiation, they must be supported by broader market measures.
CFE’s jobs analysis reveals that initial clean industry growth occurs in demand side sectors—retrofits, electrification, and energy efficiency—subsequently driving longer-term supply-side job creation. As major consumers of basic materials (cement, steel, and glass), downstream sectors can accelerate the development of low-carbon markets through public procurement, project pipelines, and industrial partnerships.
Recommendation: Establish technology-neutral emissions-based product standards while activating downstream sector demand through strategic procurement and partnership programmes.
Conclusion
We encourage the Commission to consider strategic support for transition regions, targeted infrastructure deployment, flexible &amp; technology-neutral implementation pathways and robust market creation measures to ensure that the IDAA successfully drives EU industrial decarbonisation. 
We attach the ADP reports, downscaled infrastructure maps, and CFE’s Jobs Report as supporting evidence.
ADP 2024 – <a href="https://www.carbonfreeeurope.org/modelling">https://www.carbonfreeeurope.org/modelling </a>ADP 2024 Downscaled Infrastructure Maps (interactive) – <a href="https://public.tableau.com/app/profile/cfe2024/viz/DownscaledMaps/MAP">https://public.tableau.com/app/profile/cfe2024/viz/DownscaledMaps/MAP </a>ADP 2023 archive – <a href="https://www.carbonfreeeurope.org/modelling/archive/2023">https://www.carbonfreeeurope.org/modelling/archive/2023 </a>Jobs Report - <a href="https://www.carbonfreeeurope.org/product/decarbonisation-as-industrial-strategy">https://www.carbonfreeeurope.org/product/decarbonisation-as-industrial-strategy</a>

CFE Submission to the European Commission on the Industrial Decarbonisation Accelerator Act

Europe’s renewed embrace of nuclear energy seems to mark a turning point in the Union’s energy strategy, marking a clear shift toward pragmatic, tech-inclusive decarbonisation strategy.
 
Why are we writing this at CFE? CFE supports a tech-inclusive decarbonisation strategy, which translates into an EU energy mix that includes nuclear among a set of other solutions. The goal with this memo is to demonstrate that the renewed interest in nuclear energy highlights how tech-inclusivity is crucial to Europe’s energy future, and how nuclear can and should be a part of the solution.
Key Definitions: 
<ul class="boldList">
<li>
Conventional nuclear reactors: The term typically <a href="https://www.amacad.org/publication/nuclear-reactors-generation-generation/section/5%26lang%3Den?utm">designates</a> large-scale nuclear power plants (Generation II reactors) with a power output ranging from 500 to 1,300 MWe, characterized by their use of water as both a coolant and a neutron moderator. Typically, these consist of pressurized water reactors (PWRs) or boiling water reactors (BWRs). They have been in operation since the 1970s and are the most common type found worldwide. 
</li>
<li>
Advanced nuclear reactors: These are <a href="https://www.everycrsreport.com/files/20190418_R45706_0cba3b215867305957ac6b67a4c4cb79c73ecc70.html?utm">reactors</a> that incorporate significant improvements over current commercial reactors, encompassing enhanced safety features, greater efficiency and the use of alternative coolants and fuels. They typically include Generation III+ and IV reactors. 
</li>
<li>
AP1000 reactor: The AP1000 is a <a href="https://westinghousenuclear.com/energy-systems/ap1000-pwr/#:~:text=AP1000%C2%AE%20Pressurized%20Water%20Reactor%20%7C%20Westinghouse%20Nuclear">Generation III+ PWR</a> developed by Westinghouse. It is designed to produce a power output of approximately 1,117 MWe and features advanced passive safety systems that reduce the number of components required, making it a more compact and cost-effective reactor. 
</li>
<li>
Small Modular Reactors (SMRs): SMRs are a type <a href="https://www.iaea.org/newscenter/news/what-are-small-modular-reactors-smrs?utm"> of advanced nuclear reactors</a> characterized by their small size and modular design, with a typical power output of up to 300 MWe. SMRs are designed to be factory-built and transported to installation sites. As of 2025, China and Russia are the only countries with operational SMRs, though 80 reactor designs are in development across 19 countries.
</li>
</ul>
From a splurge of Member States announcements to wider EU policies, the introduction of nuclear power as a pillar of decarbonisation seems to be on its way. However, its long-standing controversial position in EU and national politics bears the question of the implications of this new stance on nuclear energy. This piece seeks to understand how and why this change underscores the EU’s embracement of a tech-inclusive approach to decarbonisation, and what policies can support this approach.
<h2>A Nuclear Revival on Multiple Fronts</h2>
The EU’s nuclear renaissance is materialising through multiple avenues—new reactor builds, lifetime or restart of existing reactors, and political openness—and on two-levels—institutional, at the EU level; and operational, at the Member State level.
Institutionally, recent EU initiatives are reflecting a clear strategic commitment to integrating nuclear energy into the EU’s broader energy and industrial strategy. First, the launch of the <a href="https://single-market-economy.ec.europa.eu/industry/industrial-alliances/european-industrial-alliance-small-modular-reactors_en">EU SMR Alliance</a> in February 2024, composed of 12 EU Member States, marked a significant milestone. The initiative aims to accelerate the development, demonstration and deployment of European SMRs by the early 2030s. It seeks to reduce dependence on foreign energy technologies by focusing on the deployment of advanced reactors modeled by European companies, while contributing to decarbonising Europe’s power supply with reliable baseload sources through SMRs. In parallel, EU policy shifts have also demonstrated a step forward towards including more nuclear power as part of the suite of all decarbonisation solutions. In 2024, the Net-Zero Industry Act (NZIA) recognised nuclear technologies as part of the list of strategic net-zero technologies, <a href="https://eur-lex.europa.eu/eli/reg/2024/1735/oj#d1e355-1-1">explicitly listed</a> in Article 4 of the Regulation. Additionally, reforms to the EU electricity market design now allow for mechanisms like contracts for difference (CfDs) to support both the lifetime extension of existing reactors and investment in new nuclear capacity—tools that create greater investment certainty. The recent adoption of the Nuclear Illustrative Programme (<a href="https://energy.ec.europa.eu/document/download/8fe867fd-6e70-4bc3-9621-c3fef5f0e834_en?filename=COM_2025_315_2_EN_ACT_part1_v3.pdf">PINC report</a>) on investment needs by the Commission (June 13) further illustrates the growing policy momentum in the sector. While introducing no new policy or financing commitments, this update - the first since 2017 - signals renewed recognition of the nuclear sector's strategic importance, contrasting with the Commission's previous lack of engagement with nuclear energy. 
At the Member State level, a growing number of countries who have been historically against nuclear energy are taking concrete steps on three fronts: postponing nuclear phaseout through lifetime expansion of reactors or the restart of already existing ones, increasing political openness to nuclear power and affirming commitment to building new reactors. Earlier this year, Belgium’s new coalition government <a href="https://www.world-nuclear-news.org/articles/belgian-government-seeks-to-reverse-nuclear-phase-out-policy?utm">announced plans</a> to extend the operation of two nuclear reactors for an additional 10 years until 2036, beyond the previously agreed extension. Denmark <a href="https://www.theguardian.com/world/2025/may/14/denmark-rethinking-40-year-nuclear-power-ban-amid-europe-wide-shift?utm">is planning</a> to reassess its 40-year ban on nuclear energy, citing interest in SMRs and Italy is <a href="https://www.iene.eu/energy-news/italys-government-adopts-plan-for-return-to-nuclear-power-p7657.html?utm">also revisiting</a> its stance on nuclear energy by evaluating the feasibility of reintroducing nuclear power into its energy mix. Meanwhile, Finland <a href="https://www.world-nuclear-news.org/articles/finnish-energy-firm-helen-launches-nuclear-programme?utm">launched</a> the first phase of its nuclear programme in 2024 aimed at constructing an SMR for district heating in Helsinki, and Slovakia’s government <a href="https://apnews.com/article/slovakia-new-nuclear-reactor-jaslovske-bohunice-48b8cc3bd20bbf851133325357071524">approved plans </a>to construct a new nuclear reactor at the Jaslovske Bohunice nuclear plant in 2023. Together, these recent developments indicate a broad and growing consensus across the EU that nuclear energy in addition to renewables, hydrogen, and carbon management will play a critical role in achieving energy security and climate neutrality.
<h2>How Nuclear Contributes to the EU’s decarbonisation goals </h2>
If Member States are increasingly looking to nuclear as a part of their decarbonised energy mix, it is primarily because of its ability to provide a stable, dispatchable source of low carbon electricity. Nuclear power is not subject to intermittency, can support grid reliability, and has an enormous potential to contribute to EU-wide decarbonisation. <a href="https://www.carbonfreeeurope.org/modelling">CFE’s 2024 Annual Decarbonisation Perspectives (ADP</a>) modelling demonstrates that in the fastest and most economic energy transition scenario (Core) for the EU to reach net-zero by 2050, nuclear power capacity would increase from 100 GW today to 186 GW by 2050 (77GW over what the <a href="https://energy.ec.europa.eu/document/download/8fe867fd-6e70-4bc3-9621-c3fef5f0e834_en?filename=COM_2025_315_2_EN_ACT_part1_v3.pdf">PINC report shows</a>), accounting for 5.4% of total electric capacity but generating 16% of all the EU’s electricity supply.  
In Europe, countries like France offer a compelling case study regarding the contribution of nuclear to decarbonisation: around <a href="https://climate-diplomacy.org/magazine/environment/carbon-brief-profile-france?utm">70%</a> of the country’s electricity mix comes from nuclear, and the country has one of the <a href="https://www.ebsco.com/research-starters/power-and-energy/france-and-nuclear-power#:~:text=The%20French%20have%20one%20of,of%20nuclear%20power%20in%20Europe.">lowest GHG emissions per capita</a> in the EU largely due to its high reliance on nuclear power. While it can be argued that France’s success story mostly hinges on its early commitment to nuclear energy <a href="https://inis.iaea.org/records/czje0-6cv23">in the 1970s</a> with the Messmer Plan, and that it would be very hard to reach such levels of nuclear power in any country’s mix today, France’s story demonstrates how large reactors can serve as decarbonisation tools, beyond the promise of SMRs that a lot of EU countries are looking at. It should be acknowledged by EU Member States that until SMRs are developed and deployed in the EU, large nuclear reactors will continue to play a  significant role in decarbonisation efforts until 2040 at least. 
Poland exemplifies this process well. As highlighted by <a href="https://www.carbonfreeeurope.org/modelling">CFE’s 2024 ADP</a>, Poland is among several Central and Eastern European countries for which nuclear energy is essential to meeting climate targets and reducing reliance on coal, which represents <a href="https://world-nuclear.org/information-library/country-profiles/countries-o-s/poland">70%</a> of its electricity generation, making decarbonisation particularly challenging. Central to Poland’s plans to decarbonise is its partnership with Westinghouse and Bechtel to advance its first nuclear power plant at the Lubiatowo-Kopalino site. The project will deploy three AP1000 reactors delivering up to 3.75GW of clean electricity. Construction for the project is expected to begin in 2026 with operations set to begin in 2040. Once operational, the plant is expected to generate approximately <a href="https://www.enerdata.net/publications/daily-energy-news/poland-issues-approval-second-large-nuclear-plant-project-28-gw.html">22 TWh</a> annually, representing around 13% of the <a href="https://www.iea.org/countries/poland/electricity">national electricity demand from 2023</a> (166 TWh). This output could replace up to 25% of coal-fired generation (<a href="https://ember-energy.org/countries-and-regions/poland/">Ember data</a> from 2024), which would substantially reduce emissions while enhancing energy independence.
<h2>A clear change in nuclear’s perception in the EU </h2>
Cognizant of the benefits of nuclear energy, it is now clear how nuclear's perception is shifting within the EU. Once treated with skepticism, notably following the Tchernobyl and Fukushima incidents, nuclear is increasingly becoming a vital component of the EU’s decarbonisation, affordability and energy security strategy. It is a reliable, low-carbon and mature technology that can provide large-scale electricity without the emissions associated with fossil fuels. SMRs are showing promise of a more dispatchable reactor design, with the volume of waste generated remaining relatively small and manageable through advanced storage and potential recycling solutions. 
This means that EU policymakers, institutions and stakeholders can and should speak more openly—and holistically—about the benefits of nuclear alongside renewables, especially as Member States, even those with a historic reluctance to nuclear, seek to incorporate more nuclear power in their mix. Germany, a country long associated with its anti-nuclear stance, has seen renewed debate about the role of nuclear energy in energy security. Recent developments indicate a shift in the German government's position toward endorsing the principle of technological neutrality, ensuring non-discriminatory treatment of nuclear energy within EU energy policy and equal treatment with renewables. Such changes will require a holistic understanding of how nuclear power can be deployed and incorporated into EU and national frameworks. 
Beyond climate considerations, nuclear power can also help counteract the effects of the energy security crisis triggered by Russia’s invasion of Ukraine in 2022. For countries heavily reliant on imported fossil fuels, nuclear energy can serve as a more viable alternative to  enhance resilience against price shocks and geopolitical pressure. The majority of uranium that powers reactors comes from places outside of Russia1, and as such, nuclear’s firm power potential offers an essential hedge against volatility. Moreover, nuclear development can strengthen the EU’s competitive position globally. By fostering innovation and scaling up domestic nuclear capacity, particularly through the development of SMRs, the EU can avoid overreliance on U.S. or Chinese suppliers and develop its own nuclear projects. It can also leverage its leadership to export European reactors to its partners in Africa and beyond. 
As such, by adding nuclear to the core clean energy technologies including renewables, hydrogen, and carbon management, the EU has the opportunity to remain competitive in the global energy race while reducing its strategic dependencies. This clearly aligns with the goals laid out in the <a href="https://commission.europa.eu/topics/eu-competitiveness/clean-industrial-deal_en">Clean Industrial Deal</a> and the <a href="https://commission.europa.eu/topics/eu-competitiveness/competitiveness-compass_en">Competitiveness Compass</a>, both tying back to the need of engaging in a tech-inclusive approach to decarbonisation—one that leverages nuclear alongside all other carbon-free technologies—to achieve the EU’s climate targets while ensuring economic growth and security.
<a href="https://www.statista.com/chart/30538/share-of-uranium-delivered-to-eu-utilities/#:~:text=The%20issue%20had%20raised%20debate,was%20produced%20in%202021%20worldwide.&amp;text=This%20chart%20shows%20the%20share,in%202022%2C%20by%20origin%20country">1</a>
<h2>Policy Recommendations 
</h2>
If allocated the right resources, nuclear power can play a significant role alongside other energy sources to reinforce the EU’s sovereignty, economic strength and climate leadership. 
<div class="Highlight">
<div class="content">
<h2>Policy 1: Expand access to financing across all strategic net-zero technologies listed in the NZIA</h2>
Despite its acknowledged benefits, nuclear energy, similarly to many new low-carbon technologies, continues to face high upfront capital costs, which can deter investment. Yet, it is listed in the list of net-zero technologies as part of the NZIA, and therefore should benefit from proper support. As such, the EU should enhance the accessibility and flexibility of financing mechanisms such as the <a href="https://climate.ec.europa.eu/eu-action/eu-funding-climate-action/innovation-fund_en">Innovation Fund</a>, the <a href="https://investeu.europa.eu/investeu-programme_en">InvestEU Programme</a> or the European Investment Bank to all strategic net-zero technologies, not just select ones. 
</div>
</div>
<div class="Highlight">
<div class="content">
<h2>Policy 2: Increase EU support and collaboration to build technical and planning capacity for a tech-inclusive energy transition</h2>
Though an increasing number of countries are looking to diversify their energy mix by integrating emerging technologies into their energy strategies, many struggle due to limited regulatory experience, technical expertise or infrastructure planning.  The EU could offer targeted technical assistance, on siting, permitting, workforce development, regulatory alignment or grid integration. For nuclear specifically, sharing best practices from countries like France, Finland or Poland can also support more consistent and informed national strategies, and member states should work together to incorporate nuclear energy in their mix. The Commission should facilitate cross-border collaboration on technology and supply chain development—such as joint ventures for component manufacturing or workforce training. This would not only reduce dependency on non-EU suppliers but also create a competitive internal market for technologies such as nuclear. Initiatives like the SMR Alliance should be matched by parallel investment in research, permitting harmonisation and long-term infrastructure planning. 
</div>
</div>
<div class="Highlight">
<div class="content">
<h2>Policy 3: Ensure a fast and coordinated implementation of tech-inclusivity as a central pillar of the EU’s industrial strategy</h2>
In alignment with Member States' right to determine their energy mix, enshrined in the European Treaties (Article 194(2) TFEU), the EU should ensure that technology neutrality principles are genuinely reflected in the implementation of its industrial and energy policy. While nuclear technologies remain eligible for funding programmes such as the Innovation Fund and EIB financing, they face substantial practical barriers and receive disproportionately less support compared to other clean technologies. To address this de facto bias, the Commission should prioritize technology neutrality at the heart of its energy and industrial policy implementation, as well as its funding programmes. This would ensure that nuclear energy can fulfill its essential role alongside renewable technologies in achieving climate neutrality.
</div>
</div>

What does a nuclear revival mean for the EU’s decarbonisation perspectives? 

<h2 class="p1">Executive Summary - <a href="https://downloads.ctfassets.net/228txxvb8tt7/11sCzlJShyj5B8NeCehRAQ/dd02163fb0eb0b46b567388408b6bbc1/Decarbonisation_as_Industrial_Strategy.pdf">Report</a>
</h2>
Europe’s Decarbonisation as a Driver of Jobs, Competitiveness, and Economic Resilience
The EU’s clean energy transition is not just about climate. It is a strategic opportunity to revitalise its industrial base, create millions of high-quality jobs, and reinforce Europe’s global competitiveness. With major frameworks like the Clean Industrial Deal (CID) and the Competitiveness Compass, the European Commission is now explicitly linking decarbonisation to industrial strength, energy security, and long-term economic stability. This report advances that vision by quantifying the labour market impacts of a technology-inclusive pathway to net-zero by 2050.
Based on the data from the 2024 Annual Decarbonisation Perspective (ADP), this Job Impact Analysis shows that a full-scale transition to net-zero emissions by 2050 could generate 4.65 million net new jobs across the EU. Crucially, this twice as many jobs as would be created under a business-as-usual scenario—an additional 2.32 million jobs made possible by adopting a technology-inclusive approach that accelerates and diversifies decarbonisation. These jobs will be anchored in clean energy manufacturing, infrastructure construction, and industrial supply chains, providing economic benefits well beyond emissions reduction.
<h3 class="p1">A Technology-Inclusive Strategy Maximises Jobs and Industrial Output</h3>
The pathway to 4.65 million new jobs is clear, but only if the EU leverages all available technologies. A technology-inclusive approach, using a full mix of renewables, nuclear, hydrogen, and carbon management, is the most cost-effective and resilient strategy. It prevents over-reliance on any single technology, smooths price fluctuations, and allows each Member State to build flexibly on its strengths.
This approach avoids the structural and financial risks of narrow or delayed electrification. It distributes job creation across Europe and strengthens clean energy supply chains in manufacturing, construction, and services.
<h3 class="p1">Clean Energy is Already Creating Jobs But Workforce Policy Must Catch Up</h3>
Decarbonisation does not eliminate jobs, it transforms them. Construction is the single largest driver of new employment, supporting both supply-side (generation, infrastructure) and demand-side (efficiency, electrification) deployment. Industrial manufacturing and clean energy supply chains will see sustained job growth. Emerging technologies like hydrogen electrolysis and direct air capture (DAC) will together add over half a million jobs by 2050, especially in infrastructure, engineering, and professional services.
However, job creation will not be evenly distributed over time, space, or sectors. Demand-side jobs ramp up faster, while supply-side investments create more total employment in the long run. Anticipating these shifts and training workers accordingly will be essential.
Moreover, while fossil fuel job losses will be offset by clean energy investments, this transition must be managed. Job displacement will occur mainly in fossil fuel-producing countries outside the EU, but Europe’s own fossil-based workers must be supported through targeted reskilling. Without intervention, labour shortages, especially in construction, grid expansion, and manufacturing, will undermine the economic and emissions benefits of the transition.
<h3 class="p1">Decarbonisation is a Competitiveness Strategy</h3>
Europe’s industrial future depends on its ability to deliver clean energy at scale, supported by secure supply chains and a trained workforce. Smart policy design and effective, on time implementation will determine whether Europe captures or loses these economic benefits.
<ul class="boldList">
<li class="p5">Clean energy manufacturing, especially in wind, solar, batteries, and electric vehicles, must be scaled to prevent job leakage and supply vulnerabilities.</li>
<li class="p5">Strategic investment in public-private partnerships can bridge financing gaps and support workforce development at scale.</li>
<li class="p5">
Regulatory reforms are needed to accelerate market access for new technologies like hydrogen and carbon removal.</li>
<li class="p5">
A unified EU innovation strategy, tied to employment outcomes, can outline the path to streamlining R&amp;D funding and accelerating cleantech deployment and skills development together.</li>
</ul>
Europe has already taken important steps, but implementation momentum must accelerate. The CID, Net-Zero Industry Act, and Action Plan for Affordable Energy offer the right building blocks, but their success will depend on effective, timely implementation that actively links climate targets with industrial scale-up and labour market readiness.
<h3 class="p7">A Strategic Window for Action</h3>
The next few years will determine whether Europe leads the global clean energy race or falls behind faster-moving economies.To ensure success, the EU must:
<ol class="boldList">
<li class="p5">
Scale all clean energy industries to secure long-term competitiveness.</li>
<li class="p5">
Invest in workforce development to match labour supply with job demand.</li>
<li class="p5">
Align industrial, climate, and labour policy to deliver on the promise of the CID and unlock job growth and competitiveness in parallel.</li>
</ol>
The energy transition is already underway. With the right decisions now, Europe can turn decarbonisation into the foundation of its next industrial era. But without a skilled, ready, and supported workforce, even the best clean energy and industry plans will fall short.
<div class="Highlight">
<div class="content">
This report provides a clear, evidence-based roadmap.It quantifies job creation potential by year, sector, and Member States, and offers targeted policy actions to turn modelling into measurable economic impact in Europe.
</div>
</div>

The race to secure energy independence and lead the global clean energy economy is intensifying. In an increasingly uncertain geopolitical context, EU leadership on clean energy technologies is crucial to delivering a decarbonised, competitive and secure energy future.
Building on Breakthrough Energy and Cleantech Group’s 2023 report, which underscored the rising momentum for a Green Transatlantic Marketplace, this report advances that conversation by offering actionable, private sector-driven strategies to preserve and expand collaboration despite shifting political priorities, and to grow a dynamic, secure, and competitive clean energy ecosystem across the EU, UK, and US. While these regions each face diverging domestic pressures and political uncertainties, the EU is uniquely placed to lead independently in advancing clean energy solutions and ensuring its place at the forefront of the global clean energy economy.
There remains a critical opportunity for businesses across the EU, UK and US to lead in shaping a resilient and thriving clean technology (cleantech) marketplace. The EU, in particular, is well-positioned to chart an independent course—strengthening its global position in cleantech while advancing its climate, competitiveness, and energy security goals. With the transatlantic cleantech market still in its early stages, fragmentation remains an urgent risk. But through strategic private-sector investment, policy consistency, and a focus on regulatory alignment within Europe, businesses can help ensure the development of a stable and competitive cleantech ecosystem.
This report explores the structural and policy barriers preventing deeper cleantech collaboration across the Atlantic. Drawing on insights from companies operating across the EU, UK, and US, we identify cross-cutting challenges, ranging from supply chain vulnerabilities and technology deployment hurdles to inconsistent policy environments and complex permitting processes. Despite political uncertainty, businesses can, and must, play a key role in advancing the cleantech marketplace.
While trade disruptions and barriers such as tariffs pose immense challenges, there remain other areas where meaningful progress is still possible. Due to evolving trade dynamics, while we recognize that tariffs are harmful to transatlantic cooperation on clean tech, this report does not delve into the impact of trade policy and instead prioritises areas where actionable progress can be made.
Strategic recommendations include:
1. Capitalising on Near-Term Opportunities Despite Political Uncertainty: Even as transatlantic political alignment weakens, the EU and UK each retain the ability to act independently—and need to do so urgently–to strengthen their energy security and improve their competitive standing in the global cleantech market. By accelerating the development and integration of clean technologies, these regions can reduce dependency on external energy sources while building industrial competitiveness, and mitigating exposure to geopolitical risks. Delaying action while awaiting political alignment risks ceding leadership in the global cleantech and increases delivery risk of achieving net-zero
2. Private Sector Leadership: The private sector plays a central role in driving the growth of the transatlantic cleantech marketplace. While political prioritisation may fluctuate, businesses have an opportunity to lead innovation and develop scalable solutions. Through continuous dialogue with policymakers on addressing operational hurdles such as standards or financing rules, companies can help Europe maintain competitiveness in the global market and ensure that energy security goals are met through sustainable, homegrown technologies.
3. Leveraging the UK’s Position: The UK is uniquely positioned to act as a geostrategic bridge, accelerating collaboration between the EU and the US, helping to foster stronger connections between policymakers and businesses. By facilitating cross-border dialogue and collaboration where possible, the UK can strengthen energy security and competitiveness on both sides of the Atlantic, ensuring that the transatlantic cleantech marketplace develops with shared objectives. Through these channels, the UK can help drive investment, promote innovation, and be a thought leader.
By adopting a multifaceted and cooperative approach, European stakeholders can overcome barriers, scale innovation, and build a cleaner, more competitive transatlantic economy for the future.
Read the full report <a href="https://assets.ctfassets.net/228txxvb8tt7/5VjDfAfJvZyGIR9sdgpnXt/5b8f0d73516b20e2cc758e5a50996eb0/Driving_EU_Leadership_in_the_Clean_Energy_Transatlantic_Market.pdf">here</a>.

Driving EU Leadership  in the  Clean Energy Transatlantic Market

A targeted European Competitiveness Fund to deliver climate and energy security for European citizens and SMEs: Four principles for impactful simplification, efficiency and flexibility.

Europe’s Industrial Future is on the line –  The Clean Industrial Deal must deliver

Carbon-Free Europe welcomes the European Commission’s 2025 Work Programme and its commitment to strengthening Europe’s energy security, industrial competitiveness, and decarbonisation efforts. With the Clean Industrial Deal, the Action Plan on Affordable Energy, and the Roadmap to End Russian Energy Imports, the Commission has set a clear direction. It is critical that these commitments translate into tangible actions that deliver a secure, affordable, and competitive clean energy system for Europe.
<h2>A Strong Start, but Speed and Scale Are Critical</h2>
CFE supports the Commission’s recognition that energy availability and affordability is the foundation of industrial competitiveness. Europe's ability to lead in clean industrial innovation hinges on its capacity to turn policy ambition into real-world deployment. High energy costs and slow project approvals are eroding competitiveness, while global rivals move quickly to capture market share in clean technology. The Industrial Decarbonisation Accelerator Act and Fitness Check on Energy Security must do more than assess challenges—they must remove private investment barriers, and create the conditions for industries to scale clean solutions at pace. Without urgent reform, Europe risks not just higher costs but a shrinking role in the industries of the future. 
Removing barriers to clean hydrogen, carbon capture and storage (CCS), and low-carbon fuels is critical to ensuring that decarbonisation strengthens, rather than weakens, industrial competitiveness. Delays in clean energy investment and continued reliance on external energy sources expose Europe to supply shocks and rising industrial costs. Failing to accelerate clean technology deployment will only increase economic risk and undermine long-term energy security. 
Without decisive action, Europe risks losing its competitive edge to regions like the U.S. and China, which are rapidly scaling up clean energy but also benefiting from lower energy costs due to continued reliance on fossil fuels and less stringent climate commitments. While Europe has set the standard for ambitious decarbonisation, its ability to compete globally depends on making clean energy an economic advantage rather than a cost burden. By accelerating clean technology deployment, streamlining permitting, and ensuring affordable access to low-carbon energy, Europe can enhance its industrial competitiveness while maintaining its leadership in the net-zero transition.
<h2>Decarbonisation as an Economic Strategy</h2>
CFE recognises the ambition of the proposed 90% reduction target by 2040, as outlined in the amendment of the European Climate Law, and the EU’s ongoing efforts to phase out fossil fuel dependencies. However, ambition alone is not enough. To be credible, the EU must provide the right market signals, including unlocking private financing barriers, to ensure that European industries can decarbonise while remaining competitive. Technology inclusivity is key—all clean energy solutions, including renewables, nuclear, hydrogen, and CCS, must be fully leveraged to maximise Europe’s trajectory to achieving climate targets in the fastest and most economically beneficial way.
<h2>Where More Action is Needed</h2>
Further action is needed to ensure the success of Europe’s clean energy and industrial strategy. As part of the next Multiannual Financial Framework (MFF), the European Competitiveness Fund should guarantee robust investment capacity to support key technologies and strategic sectors vital to the EU’s competitiveness and decarbonisation pathway. The EU’s financing framework must provide clear mechanisms for Power Purchase Agreements (PPAs), investment de-risking, and infrastructure expansion to attract global capital. Expanding the <a href="https://climate.ec.europa.eu/eu-action/eu-funding-climate-action/innovation-fund_en">Innovation Fund</a> and introducing cleantech investment guarantees will help bridge the gap between policy ambition and market realities. 
However, achieving Europe’s climate and competitiveness goals cannot rely solely on public finances, it requires greater private investment. Therefore it remains key to further build out one of the EU’s greatest asset, its Single Market, and make significant progress on the integration of EU’s capital markets. While the upcoming communication on the Savings and Investments Union shows the recognition of this objective, it will be key to follow through on this project with ambitious initiatives to facilitate investments and promote the use of private capital to  scale clean technologies and drive industrial decarbonisation.
Permitting delays remain one of the biggest obstacles to clean energy deployment. Without meaningful reform, Europe risks losing momentum in building the infrastructure needed to meet its climate and competitiveness goals (see Figure 1). A technology-inclusive approach is also essential in driving deep industrial decarbonisation. Nuclear power derived hydrogen must be fully-recognised under EU policies, and CCS must be integrated into industrial decarbonisation strategies to provide viable pathways for hard-to-abate sectors.
<h2>Our Call to Action</h2>
The EU’s 2025 Work Programme sets the right direction, but now words must be followed by actions. Delivering a secure, decarbonised, and competitive Europe requires pragmatic, investment-driven policies that remove regulatory bottlenecks, provide clear financial incentives, and create a level playing field for all clean energy solutions.
Figure 1: A snapshot of CFE’s downscaled infrastructure map that provides a more granular picture of the deployment of clean energy for a variety of decarbonisation scenarios. Click on image to get to our downscaled infrastructure map tool and check out your area of interest. On the website, hover over the map to see just how much buildout is needed to reach net-zero.
<a href="https://public.tableau.com/app/profile/cfe2024/viz/DownscaledMaps/MAP"><img src="//images.ctfassets.net/228txxvb8tt7/2aFpNby6TKLARMhtkmgQGD/cae9bdc4876b34afbf82078d6706fe0a/CFE-Infrastructure_.png" alt="" width="2407" height="1080"></a>

Ambition Must Translate into Action: 2025 Commission Work Programme

As energy security becomes the new battleground for global influence, the US and EU must decide—will they lead together or fall behind? 
At the World Economic Forum in January 2025, Ursula Von Der Leyen <a href="https://ec.europa.eu/commission/presscorner/detail/en/speech_25_285">highlighted</a> the European Union’s (EU) plans to strengthen its international cooperation in response to “rising global competition.” Von Der Leyen singled out the United States (US): “No other economies in the world are as integrated as we are.” As energy security has become the driver of many Western democracies, as shown by President Trump’s immediate announcement of a <a href="https://www.whitehouse.gov/presidential-actions/2025/01/declaring-a-national-energy-emergency/">National Energy Emergency</a>, cooperation and competitiveness are now key to advancing clean energy and industrial policies. This reality is exacerbated by a shifting geopolitical landscape, threatened by a potential dependence on and direct competition with strategic adversaries such as Russia and China. As fossil fuel dependence is a geopolitical risk, decarbonisation should be seen as a strategic opportunity for energy security. Decarbonisation strengthens energy independence and resilience, making the US and EU less vulnerable to external pressures. As such, transatlantic allies must strengthen their collaboration on clean energy development to ensure long-term energy security and affordability while strengthening their competitive edge and economic growth.
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<h2>Key Takeaways:</h2>
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Transatlantic cooperation is essential for clean energy security and economic resilience for both the US and the EU amid rising global competition.
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Tariffs and trade tensions risk undermining US-EU collaboration, benefiting geopolitical competitors.
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Decarbonisation is a strategic advantage—aligning policies can enhance competitiveness while reducing reliance on hostile nations.
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Joint investment and regulatory alignment in clean energy can secure supply chains, drive innovation, and create jobs.
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A coordinated EU-US approach will strengthen industrial leadership and ensure long-term energy security for both.
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<h2>Facing the Challenge: US and EU Leadership Amid Rising Global Tensions</h2>
There have been continuous efforts over time to strengthen transatlantic cooperation and facilitate trade in the clean energy sector. Initiatives such as the Clean Energy Ministerial (CEM) and the US-EU Energy Council have played a key role in advancing collaboration, fostering policy alignment, and promoting innovation between the US and Europe to achieve decarbonisation. However, while the EU has historically had an ambitious commitment to climate action—as seen in the Green Deal and climate targets—a recent shift to a more tech-inclusive approach has made it more prone to cooperation with the US.
Indeed, Mario Draghi’s report, titled <a href="https://commission.europa.eu/document/download/97e481fd-2dc3-412d-be4c-f152a8232961_en">The Future of European Competitiveness</a>, emphasizes the EU’s new commitment to a more flexible energy strategy—balancing decarbonisation with business-friendly practices—bringing it closer to the US’ historical stance on energy policy. While this approach is relatively new for the EU, who’s been traditionally focused more on regulatory-driven solutions, Carbon-Free Europe (CFE) has long been <a href="https://www.carbonfreeeurope.org/publications">its advocate</a>, and such a change marks a key opportunity for cross-atlantic energy industry cooperation. Both the US and the EU are now aligned on the need to deploy flexible technologies and boost the competitiveness of their energy industries to strengthen their global leadership. 
Decarbonisation as an industrial strategy is key to increasing competitiveness in a rapidly evolving global energy market. However, a core takeaway of the <a href="https://commission.europa.eu/topics/eu-competitiveness/draghi-report_en">Draghi report</a> is that no single region can secure supply chains or outcompete global competitors like China and Russia. Instead, the US and EU must work together to strengthen the clean energy economy to ensure it is competitive, secure, and innovation-driven.
Existing trade agreements and strategic alliances, such as NATO and the US-EU Trade and Technology Council (TTC), already provide a framework for stability, secure supply chains, and economic resilience. In an era of geopolitical uncertainty, it will be crucial to keep this safe transatlantic environment—one that fosters secure trade, manufacturing, and investment without the disruptions posed by external geopolitical competitors. Existing joint projects, such as shared renewable energy infrastructure and the development of nuclear power plants, are a proof of the success of this framework, as they boost energy security by reducing dependence on external competitors such as China which has been expanding its influence in the global energy market. Chinese investments alone account for <a href="https://www.iea.org/reports/world-energy-investment-2024/china">one-third</a> of clean energy investments worldwide. These partnerships enhance energy security while driving job creation and technological exchange in clean energy.
Cooperation also promotes economic growth by <a href="https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/countries-and-regions/united-states_en#:~:text=Bilateral%20trade%20and%20investment%20support,of%20the%20Atlantic%20are%20supported.">fostering job creation</a> in the clean energy sector through a mutual exchange of technology, skills, and knowledge, as seen through the DOE-led initiative,<a href="https://www.energy.gov/ia/partnership-transatlantic-energy-and-climate-cooperation-p-tecc"> Partnership for Transatlantic Energy and Climate Cooperation</a> (P-TECC). P-TECC aims to boost energy cooperation between the US and Central and Eastern European countries by reducing reliance on Russian energy, as the Commission is set to further its efforts on this topic through the upcoming Roadmap Towards Ending Dependence on Russian Fuel in March 2025, creating economic opportunities, and accelerating clean energy adoption. Such a framework also ensures that workers are trained for the right technologies, which facilitates the development of transatlantic projects, either in the US or in the EU, as an alternative to initiatives led by competitors. 
A key issue at stake: Under the Trump administration, US tariffs on Chinese goods may drive China to offload its overproduction in Europe, disrupting markets, including the potential for unfair competition and undermining pricing structures. In this context, a EU-US partnership must collaborate and lead on the deployment of mutually beneficial clean energy projects and technologies through joint policies, regulations, trade agreements, and other commercial initiatives facilitating fair access to the US and European markets.  
<h2>Protecting Transatlantic Prosperity: US-EU Cooperation Amid Trade Challenges </h2>
During his campaign, Trump had signaled his intention to impose tariffs on the EU, which he <a href="https://www.politico.eu/article/eu-warned-to-prepare-for-early-donald-trump-tariff-action-us/">confirmed</a> after taking office. Following his decision to impose tariffs on Canada and Mexico, President Trump cited concerns over the significant US trade deficit with the region. In response, the EU, though it has repeatedly mentioned it would collaborate with its transatlantic partner, is preparing for a potential retaliation.
However, the start of a transatlantic trade war will likely benefit China, as EU Foreign Policy Chief Kaja Kallas pointed out. “We need America, and America needs us as well,” she <a href="https://www.cbc.ca/news/world/eu-trump-tariffs-1.7448782">said</a> last week. Indeed, such protectionist measures risk undermining the broader economic and security cooperation between the US and EU—particularly in the context of shared challenges from Russia and China. Russia remains the most immediate security risk—especially after its invasion of Ukraine—while China continues to pose a long-term strategic challenge in technology, critical minerals, and economic influence. 
To address these challenges and counter the threats to industries and economic competitiveness, the US and EU must balance their national interests with the need for cooperation on strategic issues. Divisions on trade would only undermine their shared goals; instead, aligning policies to secure supply chains, invest in clean energy, and reduce reliance on hostile nations is essential. By presenting a united front both regions can enhance economic resilience and strengthen their position against geopolitical threats. In clean energy, a united US-EU front is more cost-effective and impactful than fragmented efforts, both for securing jobs and leading the global market. They can secure critical supply chains through mutually beneficial agreements and maintain a competitive edge in emerging industries, thus ensuring energy security and leadership. 
<img src="//images.ctfassets.net/228txxvb8tt7/3XPXJtejuxSqBFhTKXvste/1c94124427869c86d240de5433a51b09/Trump_vdl.jpg" alt="" width="754" height="425">
Given that demand for clean energy is rising globally, the EU and the US have a strategic opportunity to lead the global clean energy economy. As Ursula von der Leyen <a href="https://ec.europa.eu/commission/presscorner/detail/en/speech_25_404">noted</a>, millions of American jobs depend on European trade and companies, underscoring the deep economic interdependence between these markets. Additionally, developing nations require vast amounts of steel and cement to build essential infrastructure, including electrical grids, transportation networks and urban developments. The EU and US should strive to be the main providers of these key infrastructures and technologies, and this can only be done through joint collaboration. The EU’s recent <a href="https://commission.europa.eu/document/download/10017eb1-4722-4333-add2-e0ed18105a34_en">Competitiveness Compass</a> highlights the crucial role of governments, noting that key policy levers—such as taxation, labor markets, and industrial policies—are largely controlled by EU member states. To drive progress, it calls for coordinated national reforms and investment through a Competitiveness Coordination Tool. The Compass makes the goal clear: Europe must become more business-friendly to keep pace with the US and China while maintaining its climate commitments.
Harmonising policies—such as coordinating <a href="https://taxation-customs.ec.europa.eu/taxation/excise-taxes/revision-energy-taxation-directive_en">tax incentives</a>, <a href="https://fsr.eui.eu/contracts-for-difference/#:~:text=What%20are%20Contracts-for-Difference%20%28CfDs%29%3F%20Contract-for-Difference%20%28CfD%29%20is%20a,used%20to%20protect%20consumers%20against%20high%20electricity%20prices.">Contracts for Difference (CFDs)</a>, and integrating the EU’s <a href="https://www.carbonfreeeurope.org/product/what-american-manufacturers-need-to-know-about-the-eu-cbam">CBAM</a> with US and UK frameworks—would strengthen transatlantic industrial leadership. Without coordination, fragmented policies could weaken market leadership, allowing China’s cheaper, <a href="https://www.iea.org/reports/co2-emissions-in-2023/the-changing-landscape-of-global-emissions">high-emission</a> alternatives to dominate. A cohesive transatlantic strategy will strengthen supply chains, accelerate innovation, safeguard jobs, and enhance long-term economic resilience in the clean energy sector.
<h2>Competitive Strength Through Cooperation: A Transatlantic Path to Energy Security</h2>
With impending threats to their energy markets, the US and EU must coordinate to maintain their leadership on the global stage, in line with their recent alignment on competitiveness strategies. Building on the momentum of its Competitiveness Compass and its upcoming Clean Industrial Deal, the next EU mandate should focus its transatlantic efforts on the following areas: 
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Harmonise Regulations and Market Standards for Clean Energy Technologies: As the EU has reaffirmed in its Competitiveness Compass, it should aim to harmonise its single market and simplify its regulations across member states. The goal is to facilitate access to its market and boost its competitiveness. This would entail a clear alignment on standards and certification processes for clean energy technologies to facilitate transatlantic trade and deployment. 
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Deploy Effective Financing Mechanisms: The EU and the US should establish a transatlantic clean energy investment fund to support companies working on emerging technologies, and promote mechanisms to de-risk project costs. Additionally, they should encourage joint ventures between EU and U.S. based companies through tax incentives and investment guarantees. 
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Leverage and Align Trade Agreements Across Member States: Since the effectiveness of EU-US trade agreements will be heavily tied to the tariff policy, the EU should focus on leveraging existing bilateral agreements between individual Member States and the US and harmonise them across the EU. This would entail ensuring that Member States follow specific EU guidelines that favor secure supply chains for clean energy deployments when engaging in bilateral trade agreements with the US. 
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The EU-US relationship is set to evolve significantly in the coming months as the Commission and the second Trump administration establish new norms for cooperation. Both the EU and the US are striving to be more competitive on the global stage, but instead of vying for individual dominance, they can use this as an opportunity for transatlantic cooperation. As both regions are converging on industrial growth, supply chain resilience, and economic security, it is vital that the US and EU partner in establishing a competitive edge over foreign adversaries. In the race for geopolitical influence via energy and its industries, Carbon-Free Europe will continue to support opportunities for transatlantic leadership in energy security, competitiveness, and economic innovation through the deployment of all clean energy technologies.

Power, Policy, and Partnerships: EU-US Energy Security in a Changing Geopolitical Landscape

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