For industrial sector (specifically for additional sectors, especially industry not covered by the ETS1) under ETS2, measures are proposed that combine financial and technical support with initiatives on education and capacity buildingThese measures aim to address the main challenges faced by smaller companies in the decarbonisation process and include support for innovation, both for quasi-mature solutions and for the early stage of development of new technologies.

Identified five key support measures for the industrial sector, divided into three areas: Willingness, Feasibility and Regulation:

1. Financial schemes to support investments in energy efficiency

(Financing schemes supporting energy efficiency investment)

• Category/Type of measure: Financing – grants/subsidies/Soft loans/loans.
• Focus: These schemes aim to stimulate private investment in energy efficiency (EE) a renewable energy sources (RE) by the fact that reduce the financial burden such improvements. They are particularly beneficial for small and medium-sized enterprises (SMEs), which may not have sufficient financial capacity for large-scale investments.
• Mechanisms: The schemes use a mix of tools including investment grants (e.g. Domestic Environmental Support Program – UFI in Austria), tax credits (e.g. Hungary) and soft loans (e.g. ALTUM program in Latvia).
• Barriers addressed: They solve high initial costs, long payback periods a insufficient incentives for investments.

2. Voluntary energy efficiency agreements

(Voluntary Energy Efficiency Agreements)

• Category/Type of measure: Voluntary agreements, Financing – grants/subsidies.
• Focus: These agreements are a flexible alternative to mandatory measures that support companies in decarbonisation through energy audits, implementations energy management systems and formal commitments to improve energy efficiency.
• Mechanisms: Participants set quantitative EE targets, implement action plans and in some cases receive support in the form of guidelines, advisory services and subsidies. For example, an agreement in the Flemish region (Belgium) sets internal rate of return (IRR) thresholds for profitable/potentially profitable investments, which incentivises the implementation of additional savings that would otherwise not be mandatory.
• Barriers addressed: Lack of Willingness to invest and costly downtime.

3. Energy audits

(Energy audits)

• Category/Type of measure: Awareness, technical support and training.
• Focus: Audits are a key tool for providing accurate information about energy consumption and processes.
• Mechanisms: Support schemes (e.g. in Ireland) offer SMEs vouchers covering most of the audit costs. Audits identify and quantify opportunities for cost-effective energy savings and provide guidance on how to move towards implementing the recommendations.
• Barriers addressed: Lack of internal skills and awareness of energy saving potential.

4. Providing external support

(Provision of external support)

• Category/Type of measure: Awareness, technical support and training.
• Focus: These programs are intended to help companies overcome the barrier of shortage internal expertise and technical knowledge.
• Mechanisms: Support is provided through awareness campaigns, technical training, consultancy and support for strategic planning (e.g. the PACTE Industrie programme in France, which combines subsidised training and audits). The aim is to strengthen companies' internal capacities to identify, plan and implement energy-saving measures.
• Barriers addressed: Lack of internal skills and awareness.

5. National investment funds supporting research and innovation (R&I) and demonstration projects

(National Investment Funds supporting R&I and demonstration projects)

• Category/Type of measure: Financing – grants/subsidies.
• Focus: These funds provide financial support for development and deployment of innovative technologies to reduce emissions, from the initial phase to the demonstration phase.
• Mechanisms: Funds (e.g. Federal Financing for Industry and Climate Protection – BIK in Germany or the France 2030 plan) focus on de-risking investments and accelerating the deployment of solutions such as low-carbon hydrogen, electrification of industrial processes or carbon capture and storage (CCUS).
• Barriers addressed: Lack of technical readiness and high investment requirements for technologies at advanced readiness level (TRL).

Access overview

The proposed policy mix for industrial sectors combines different instruments:

• Economic instruments (subsidies, loans, tax breaks) to overcome financial obstacles, especially for SMEs.
• Information tools (audits, external support) to address knowledge and capacity gaps.
• Regulatory/framework instruments (voluntary agreements) to ensure long-term commitment and an orderly transition.

These measures are considered to be cost-effective, scalable and replicable in other EU Member States, while seeking to mitigate the impact on vulnerable groups and businesses during the implementation of ETS2. JRi