On February 26th, the European Commission unveiled The Clean Industrial Deal (CID), setting out Europe’s shared roadmap to tackle the challenges facing European energy-intensive industries today: unfair global competition and the urgent need for rapid decarbonization. We welcome its additional focus on scaling up the clean-tech sector, recognizing that clean/low-carbon technologies are not only key enablers of industrial decarbonization but also essential pillars of Europe’s net-zero economy.  

Despite delaying the amendment to the European Climate Law, the CID reaffirms the EU’s commitment to reducing net emissions by 90% by 2040, ensuring the EU ‘stays the course’ towards climate neutrality.  

We support the European Commission’s move to mobilise €100 Billion through the Industrial Decarbonization Bank. However, in addition to drawing from existing funding instruments such as the Innovation Fund and ETS revenues, it is important to also make available additional funding for the Bank to deliver. To ensure its effectiveness this Fund must be safeguarded in line with appropriate criteria and directed towards hardest-to-decarbonize sectors as a priority to accelerate the transition to climate neutrality and maximise emissions reductions. 

The CID crucially reaffirms the Commission’s commitment to the Industrial Carbon Management (ICM) Strategy calling for its implementation, which will be key to decarbonizing energy-intensive industries. However, it is crucial that a consistent and accurate terminology is used in relation to ICM technologies across all EU communications, and this is currently inconsistent in the CID. As the EU moves forward on increasing legislation that covers CCS, CCU and CDR technologies, a harmonised understanding of the different terminologies and their climate impacts will be crucial in realising the potential of the technologies as well as ensuring the effectiveness of the legislation.

The possible integration of CDR into the EU ETS is a risky endeavour which must be carefully evaluated, and alternatives explored, to ensure it continues to function effectively as the EU’s primary driver of industrial decarbonization. Finally, CCU products should only be incentivised or acknowledged through the EU ETS if the CO₂ is permanently and chemically bound in the product under normal use and end-of-life conditions. For products that do not meet these criteria outlined in the ETS Directive, the eventual release of CO₂ must be fully accounted for. 

Creating demand for clean industrial products is paramount and the CID aims to do just that. However, to achieve this objective, the right conditions must be set in place. The inclusion of non-price criteria, particularly the environmental criteria, in both public procurement and the Industrial Decarbonization Accelerator Act (IDAA) is a step in the right direction. These criteria must be clear, aligned with broader climate goals, and mandatory, if the EU is to send a strong demand signal. The same applies to the accounting methodologies and labels linked to these criteria, which must also be based on robust lifecycle assessments and clear environmental standards. Labels must also set ambitious benchmarks that go beyond the current ETS, for sustained, long-term competitiveness. 

Broad Coalition Pushes for an Ambitious Clean Industrial Deal

On February 5th, before the CID was published a coalition of 39 industry leaders and civil society organizations called on the European Commission to advance a robust Clean Industrial Deal. A central priority in this effort is the deployment of carbon capture and storage (CCS), which is essential for reaching climate neutrality by 2050. The coalition’s letter underscores the need for targeted policy, infrastructure, and funding measures to accelerate CCS deployment and ensure a just transition for European industries.

Ensuring Effective State Aid for the Clean Industrial Deal

Referencing the launch of the Clean Industrial Deal, the accompanying Clean Industrial State Aid Framework (CISAF) sets out how Member States can design state aid measures to support its objectives. While Bellona Europa strongly supports the dedicated state aid measures supporting the implementation of the Clean Industrial Deal, we warn that guidelines for aid must be fit for purpose. There are still uncertainties and gaps in the current draft in need of revising to ensure effective state aid reaching the aims of the CID, and safeguarding its climate integrity,  

Specifically, Bellona Europa’s comments focus on how to best safeguard the proposed aid’s positive impact on climate change mitigation. This includes, but is not limited to, reviewing the necessity of thresholds proposed, the clear separation of CCS and CCU activity and in determining their climate impact, and added clarity throughout the document to strengthen its long-term durability. Bellona Europa outlines its recommendations in this document here.

«The Clean Industrial Deal must leverage the potential of ETS revenues spent towards industrial
decarbonisation by only considering those initiatives that deliver substantial climate impact, create
systemic change, are timely and scalable, and adhere to the ‘Do No Significant Harm’ principle.»