A document titled "How to build and finance a better EU green industrial policy" by Sander Tordoir and Elisabetta Cornago from February 2025 looks at the challenges and opportunities for the industry EU in the field of clean technologies. Stresses the need for a common EU green industrial policy to ensure the survival of this sector.

Key points of the document:

• The EU has been a pioneer in climate action, relying on regulation and carbon pricing to encourage investments in decarbonization.
• The EU cleantech industry is a rare growth sector, which is expanding twice as fast as EU GDP growth between 2010 and 2021. Germany already exports cleantech products worth 4 % of its GDP, and electric cars account for a quarter of its car exports.
• The EU faces several geopolitical challengesthat threaten its clean technology advantages:
  • High energy prices in Europe threaten the future of essential industries.
  • China is investing in its manufacturing capacity and rapidly expanding clean technology exports.
  • The Trump administration will impose tariffs, eliminate subsidies under the Inflation Reduction Act, and halt construction of wind farms, which will hit German exports of electric cars and European wind turbine manufacturers hard.
• Existing EU policies are not fit for purpose for current challenges:
  • EU funding programs are horizontal and generic, lacking policies that would direct demand to specific sectors.
  • EU programs are focused on the early stages of technology development or on final deployment and use, lacking support for the production phase.
  • Most state aid in 2022-2023 was aimed at rescuing established businesses in energy-intensive industries, not at investing in emerging cleantech sectors.
  • The scale of EU funding falls far short of the estimated investments needed to achieve net-zero emissions targets.
• Principles for shaping new EU industrial policies in the field of clean technologies:
  • Selectivity: industrial policy requires public money and tariffs can raise prices for consumers in the short term, which only makes sense in sectors whose competitiveness can realistically be defended or restored.
  • Firm neutrality: The EU should introduce sector-wide interventions that apply equally to all cleantech firms.
  • Market structures: creating larger firms to capture economies of scale is less risky in manufacturing than in services.
  • Enforcement: Member States should insist on profit sharing if firm-specific support is necessary.
• Channeling European demand into European production of clean technologies is essential:
  • Public procurement should be guided by the "buy European" approach.
  • The EU should incorporate environmental, labour and national security conditions into subsidy schemes.
  • A joint EU fund for strategic investments could help mitigate the risk of subsidy races between Member States.
• The EU can become a powerhouse in clean technology production, especially if the US limits green subsidies. Brussels can do this more cheaply than Washington by using carbon pricing and regulation and more targeted support than in the case of large-scale US subsidies.
• High energy prices threaten essential industriesThe energy crisis caused by the Russian invasion of Ukraine has significantly affected energy-intensive EU sectors.
• China shock has an impact on global goods markets. China is reducing imports of low-carbon technologies while its exports are growing rapidly.
• The EU needs a strategy for its industrial policyto maintain leadership in its strongest manufacturing sectors and build leadership in clean technology sectors.
• An effective industrial policy requires a reasonable sum of moneyUrsula von der Leyen has promised a new European Competitiveness Fund to invest in strategic technologies produced in the EU.
• EU programmes are largely horizontal and generic, with the exception of the hydrogen bank. They are aimed at the early stages of technology development or at final deployment and use, lacking support for the production phase.
• The EU should tailor your approach to the unique characteristics, prospects, and strategic value of each industry.
• The EU's green industrial policy should be selective and neutral towards companies.
• The EU must consider how complete its own internal market and global competitive dynamics are.

The document also provides recommendations for sector-specific industrial policy, coordination of national policies and addressing the financing problem in the EU. Spring

Glossary of Key Terms

• Clean Tech: Technologies related to the transition to a low-carbon economy, including wind turbines, electrolyzers and others.
• Green Industrial Policy: A set of government measures aimed at supporting the development and competitiveness of sectors that contribute to environmental protection and emission reduction.
• NZIA (Net Zero Industry Act): EU regulation aimed at supporting domestic production capacity in the field of zero-emission technologies.
• IRA (Inflation Reduction Act): US legislation aimed at investing in green energy and reducing inflation.
• ETS (EU Emissions Trading System): The EU emissions trading system, which sets price signals for decarbonisation.
• CBAM (Carbon Border Adjustment Mechanism): A carbon offset mechanism at EU borders to prevent carbon leakage.
• IPCEI (Important Projects of Common European Interest): Projects of Common European Interest, which allow state aid for projects with EU benefits.
• Horizontal policy: A policy that applies to a wide range of industries or activities, rather than being targeted at a specific sector or group.
• Tariffs: Taxes or duties imposed on imported or exported goods.
• Subsidies: Financial assistance provided by a government or other organization to support a business or other activity.