The European Commission presented the Clean Industrial Deal (CID) on 26 February, a comprehensive strategy aimed at enhancing the competitiveness of EU industries while advancing decarbonization efforts. According to the Commission’s statement, the CID will mobilize over 100 billion euros to support EU-made clean manufacturing, as well as address the need to reduce energy costs across Europe through the Affordable Energy Action Plan. The CID also aims to tackle the ever-growing administrative burden on European companies, widely viewed as one of the main reasons behind the EU’s declining competitiveness.
The Clean Industrial Deal is essentially intended to facilitate a green transition that is actually viable for companies and industrial actors, enabling them to embrace sustainability without being financially ruined in the process. The deal is influenced by, and seeks to implement, the key points of the Budapest Declaration, adopted by EU leaders in November 2024 in the Hungarian capital. Hungary’s EU Presidency, which ran from July to December 2024, prioritized enhancing the EU’s competitiveness in order to catch up with the United States, China, and other major powers. It sought to address obstacles hindering this objective, such as excessive regulation in many sectors, high administrative costs, and the absence of a coordinated investment strategy in critical industries.
CID Falling Short
However, a closer look at the CID reveals that the Commission has not fully adhered to the direction set by the Budapest Declaration. In fact, the deal falls short in several areas. Consider, for example, the scale of investment mobilization, one of the CID’s flagship elements. The Commission has pledged to mobilize over 100 billion euros, which, while significant, represents only a fraction of the investment scale outlined in the Budapest Declaration. The document states that up to 800 billion euros would be required to bridge the competitiveness gap with global rivals. The European Environmental Bureau (EEB) highlights a ‘massive investment gap for industrial transformation’, noting that the proposed funding commitments are also insufficient to meet the long-term annual investment of 480 billion euros required for a genuine green industrial transformation.
Moreover, the Budapest Declaration underscores the necessity of a robust industrial strategy that ensures the development of critical technologies and the transformation of existing industries towards sustainability. While the CID proposes measures to support energy-intensive sectors and the clean-tech industry, it lacks a detailed roadmap outlining how these objectives will be achieved. A more granular plan is essential to provide clarity on the pathways for industrial renewal and decarbonization.
‘800 billion euros would be required to bridge the competitiveness gap with global rivals’
Although the Clean Industrial Deal includes a 25 per cent reduction in administrative burdens—which, according to the Commission, could save EU companies up to 40 billion euros—, critics, including industry leaders, argue that a far more comprehensive reduction in regulatory burdens is necessary. Head of the German industry association BDI Peter Leibinger stated that such a reduction ‘must be an absolute priority so that Europe can once again become a robust international competitor.’
BusinessEurope, the main European business association, reported that over 60 per cent of EU companies perceive regulation as an obstacle to investment, with 55 per cent of SMEs identifying regulatory hurdles and administrative burdens as their greatest challenges. Although the CID outlines measures to streamline permitting and public procurement processes, many business leaders remain sceptical about how these will be implemented in practice. The concern is that the intended administrative relief may not translate into tangible improvements, particularly for SMEs facing complex compliance demands.
Hungary’s Energy Strategy in Danger
The CID also introduces the Affordable Energy Action Plan (AEAP), which aims to lower energy bills for industries, businesses, and households while promoting the transition to a low-carbon economy. It includes efforts to accelerate the rollout of clean energy, advance electrification, complete the internal energy market through physical interconnections, improve energy efficiency, and reduce dependence on imported fossil fuels. Specific measures include recommending reductions in electricity taxes, aggregating EU demand for liquefied natural gas (LNG) to secure favourable contracts, and accelerating the integration of renewable energy sources.
While lowering energy prices may seem beneficial, the AEAP contradicts Hungary’s efforts to protect consumers from rising energy costs through a regulated pricing system. Hungary’s National Energy Strategy to 2030 prioritizes energy security, affordability, and sustainability, focusing on diversifying energy sources, increasing domestic production, and maintaining regulated energy prices to protect consumers. Certain AEAP provisions, such as the aggregation of LNG demand, electricity tax recommendations, and enhanced gas market oversight undermine Hungary’s strategy by threatening its regulated pricing system and energy sovereignty.
‘AEAP contradicts Hungary’s efforts to protect consumers from rising energy costs through a regulated pricing system’
Although the European Commission seeks to present the CID as an innovative and groundbreaking initiative, a closer examination reveals that it falls far short of the decisive action needed to restore Europe’s competitiveness, drive innovation, and stimulate economic growth. Meanwhile, some of its provisions, such as the AEAP, infringe upon member states’ national sovereignty in ways that cannot be accepted. In its current form, the CID is nowhere near addressing the challenges Europe faces, as outlined by EU leaders in the Budapest Declaration.
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