Will the Commissioners’ actions accelerate industrial decarbonization and the EU pathway to net zero? - FCA perspective -

Before a new European Commission takes office, each Commissioner-designate undergoes a rigorous hearing in the EU Parliament. These hearings test the Commissioner-designate's portfolio knowledge, political skills, and commitment to maintain neutrality and put the interests of all Europeans first. These hearings set the tone for the coming mandate, indicating priorities, forthcoming legislation, and strategic directions.??

As Future Cleantech Architects, we looked at how industrial decarbonization has emerged as a core theme in the hearings of the six key Commissioners-designate poised to bridge innovation and the decarbonization of Europe’s hard-to-abate sectors. Their shared focus reflected the urgency of creating a competitive, sustainable, and just transition to meet the EU climate goals for 2050.?

Cross-cutting priorities for all six Commissioners-designate include:??

• Strengthening a competitive Europe, with an emphasis on cleantech?

• Simplifying bureaucracy and supporting SMEs, aiming for a 25% reduction in red tape (35% for SMEs specifically)?

• Staying on course for climate goals set in the previous term, avoiding policy backsliding?

• Derisking private investment while leveraging public funds??

• Ensuring a just transition for all?

The hearings also spotlighted additional popular topics and inquiries from MEPs such as energy costs and dependance, European competitiveness, the status and future of the automotive industry, nuclear power (SMR and new conventional generation), aviation, steel, reskilling of workers, and industrial decarbonization. The themes addressed during the hearings showcase the importance of cleantech in addressing the issues the EU is facing. ?

Key legislative initiatives for decarbonizing hard to abate sectors, mentioned in the Hearings include:??

• The Clean Industrial Deal (CID)??

• The Industrial Decarbonization Accelerator Act (IDAA)??

• Action plans on Electrification, and on Affordable Energy ?

• The European Innovation Act?

• Expanded support for a Social Climate Fund and state aid frameworks?

Key Commissioner highlights?

Commissioner-designate Iliana Zaharieva for Research, Innovation, and Startups?

“Our greatest strength lies in the creativity of our people.”?

Main takeaways:?

• Zaharieva emphasized fast-tracking EU funding for SMEPs and proposed an EU-wide status for startups and scale-ups (28th regime) to reduce administrative burdens and harmonize regulations across Member States, enabling startups to grow within Europe.??

• Furthermore, a strong call was made for Member States to fulfill their investment promise of 3 % of GDP in R&D, with ambitions to increase this to 4%.?

• With only 8% of disruptive projects funded, Zaharieva called for more resources and flexibility for the European Innovation Council to support disruptive, high-risk, high-reward ventures.??

• The commissioner expressed a strong commitment to gender equality in R&I, highlighting that only 1% of EIC-supported start-ups are female-led, signaling a critical area for progress.?

FCA take: Despite her strong commitments in research, innovation, and startups, Zaharieva offered little linkage between the Research & Innovation (R&I) agenda and the Clean Industrial Deal or the Industrial Decarbonization Accelerator Act. Specific sectors, such as construction and cement, aviation, industrial heat, or long duration energy storage, were not mentioned despite their heavily contributing to Europe's emissions.?

Commissioners-designate Dan J?rgensen for Energy and Housing?

“Fighting climate change is a moral imperative; there is no backtracking feasible. We are in the middle of transforming the way we produce and consume energy, if we do it well, it will make us prosperous and competitive.”?

Main takeaways:?

• J?rgensen emphasized his priority to bring down energy prices by increasing energy efficiency, enhancing grid and interconnectors, and investing in carbon capture, hydrogen, and support to nuclear technologies in the energy mix. The Clean Industrial Deal (CID) will set the roadmap for decarbonization, affordable energy, and independence from Russian gas (current consumption amounts to 18%). The CID will also include a plan to unlock private capital by de-risking investments, thus encouraging private capital and improving financial security in green ventures.?

• J?rgensen voiced support for a binding renewable energy target for 2040, which would require rapid scaling of renewable energy deployment and additional interconnectors to ensure a unified pan-European energy network.?

• Hydrogen will be critical for sectors that are difficult to electrify, such as heavy industry (steel, fertilizers) and transport (maritime and aviation for the fuel). Infrastructure, storage, and legislative support are needed.?

• Nuclear energy was also pinpointed as necessary, especially for some MEPs, in reaching industrial decarbonization goals.? The Clean Industrial Deal will incorporate nuclear energy and include a "pink report" to evaluate investment needs in the nuclear sector, alongside ongoing discussions with industry stakeholders on this topic.?

• The use of energy taxation as a measure to incentivize the uptake of clean technologies was mentioned in a reference to the Draghi report.??

FCA take: While J?rgensen’s vision is compelling, greater detail on storage technologies beyond batteries, long duration energy storage strategy, and industrial (high-temperature) heat decarbonization is needed. The EU will have to focus on clean firm power, long duration (thermal) energy storage, and a revision of the Heating and Cooling Strategy, as FCA proposes, to complete the policy landscape and better address all aspects of industrial decarbonization, in complement to the IDAA, affordable energy action plan, and electrification action plan.?

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Commissioner-designate Apostolos Tzitzikostas for Sustainable Transport and Tourism?

“Competitiveness must build on sustainability.”?

Main takeaways:??

• The Sustainable Transport Investment Plan (STIP) was designated as the main tool to decarbonize maritime and aviation sectors through affordable sustainable fuels. Specifically on aviation, Tzitzikostas mentioned that he wants to see how the ReFuelEU aviation, under the Fit for 55, would roll out before thinking of having a Book and Claim system.???

• A swift roll out of charging infrastructure across Europe needs to take place to underscore the long-term commitment to the electrical vehicle for industry and consumers. Tzitzikostas also rejected rolling back the 2035 internal combustion engine ban, because the EU needs to modernize to survive.??

• Regarding the ETS 2, several concerns were raised by MEPs concerning the disadvantage European ports face due to the ETS 2.? Tzitzikostas confirmed how seriously he views the issue of carbon leakage and referred to the ongoing monitoring of the ETS 2. Additionally, he refers to the EU port strategy that is to come, focusing on competition.??

FCA take: Clarity on funding mechanisms for STIP and leveraging ETS revenues for R&I in alternative fuels would bolster this portfolio.?

Commissioner-designate Wopke Hoekstra for Climate, Net Zero and Clean Growth??

"Climate, Just Transition, and Competitiveness should be at the heart of our policy. We cannot CCS our way out of this; emissions must fall."??

Main takeaways:?

• Hoekstra reaffirmed his commitment to fulfilling the implementation of existing climate legislation, not, however, setting specific targets for the full phase out of fossil fuels. A 90% emissions-reduction target by 2040 will be enshrined into EU climate law. ?

• Within the first 100 days, the Clean Industrial Deal will be introduced to focus on industrial decarbonization, incentivizing investment, and green lead markets, promoting clean technologies, and access to sufficient and affordable energy.

• Building on the European Climate Risk Assessment by the European Environment Agency (EEA) released this year, he will develop a climate adaptation plan.?

• On the ETS and CBAM, Hoekstra praised the mechanism, pointing out its ability to address carbon leakage while encouraging other countries beyond the EU to adopt carbon markets. When faced with critical questions on the mechanism, he answered that there will be a need for a review in 2026. This assessment will look at maritime, aviation, municipal waste, and negative emissions.

• "We need a green steel industry in Europe, full stop". The Steel industry, one of the sectors of the Clean Industrial Act, will need more funding and the Commissioner is willing to look at new funding structures to unlock private finance.

• Hoekstra mentioned his belief in 'greening taxation', a reference to the revision of the Energy Taxation Directive and the VAT system, which could be key instruments in reaching climate goals.

FCA Take: Hoekstra’s strong commitment is welcome, but specifics on clean firm power, long duration energy storage, and industrial electrification strategies are needed to lower costs and drive decarbonization.?

More detailed commitments and plans to decarbonize hard to abate industries through the European Competitiveness Fund would have been welcomed. Energy storage, apart from batteries, was not mentioned as method or investment targets needed for industrial decarbonization.? Furthermore, the connection between tax and decarbonization should be further explored. ?

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Executive Vice-President-designate Stéphane Séjourné for Prosperity and Industrial Strategy?

"At every stage I will think of the SMEs, I want to reduce bureaucracy. Simplification, strategic action and smart investment are my priorities. We need a smooth and simple market."???

Main takeaways:?

• Séjourné highlighted the role of public procurement as a path to creating quality jobs and securing supply. He proposed introducing sustainability quality, sustainability, and durability criteria.??

• Séjourné underlined his commitment to the steel industry, ensuring that it would not be left behind and emphasizing the stress the industry feels being subject to the "the scissor effect" of high energy cost and competition as well as overcapacity from China. Measures must be taken to remedy these external aspects. The EC could consider extending CBAM scope to downstream production.

• Questions were raised about the definition of "strategic sectors" when discussing funding and focus under the Clean Industrial Deal, which were answered as strategic sectors will include, but not be limited to, steel, aluminium, chemicals, and cleantech.

• On the aeronautics industry, Séjourné stressed that mobility is key to the EU's strategy and that decarbonization of this industry will be part of the Clean Industrial Deal.

• The value and further use of the Important Projects of Common European Interest (IPCEI), a program that aims to direct EU support to strategic sectors under State aid, was mentioned as one lever to make the EU more competitive.?

FCA take: When mentioning the IPCEI, specific projects, such as long duration storage, could be chosen as a priority, emphasizing the need for these technologies to be developed and their potential role in decarbonization.? In addition, public procurement and the creation of green lead markets, as well as specific standards for low-carbon materials used in construction and steel, should be included in the work of the European Commission, which could provide a demand push for these sectors on their decarbonization pathway.??

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Executive Vice-President-designate Teresa Ribera Rodríguez for a Clean, Just and Competitive Transition?

“We need to promote the alignment and synergies between the green transition and a competitive European economy.”??

• She is committed to designing a new architecture beyond 2030 to enable the EU to reach net zero midcentury, including negative emissions strategies for residual emissions with a required very well-thought-out methodological framework for negative emissions.?

• Throughout the hearing, Ribera kept an unvarying line on the need to keep emission targets and decarbonizing the industrial sectors as a prerequisite for staying competitively viable on the global scene.?

• Ribera announced the need to develop a new state aid framework under the Clean Industrial Deal to support renewable energy, industrial decarbonization, and manufacturing capacity.

• Addressing questions on energy price and supply, Ribera mentioned the need to modernize the grid, looking at the role of storage in the quest for a more efficient and interconnected grid.?

• ?A clear theme for Ribera was adaptation, not neglecting mitigation, but underscoring the importance of risk assessments and acting upon these in a rapid manner.???

FCA take: The reaffirmation to develop the Clean Industrial Deal and the commitment to look at pathways beyond 2030 highlights a strong will to decarbonize Europe’s industry, which aligns with FCA priorities for 2024. FCA will be working on providing research and policy briefs on clean firm power, long duration energy storage, and (innovative) cleantech to decarbonize heavy industry.???

Next steps?

Following the final vote on the whole college tomorrow, 27 November, FCA will continue to contribute to the reflection on Europe’s industrial decarbonization. Our focus will include:

• Providing evidence-based insights into the Clean Industrial Deal and the Industrial Decarbonization Accelerator Act, as well as the next European research and innovation framework (FP10) and the European Innovation Act.?

• Looking at the industrial targets for 2040 on the way to net-zero emissions.

• Advocating for investment through the European Competitiveness Fund in clean firm power, long duration storage, and hydrogen prioritization for hard-to-electrify industries.?

• Supporting green lead markets through public procurement and low-carbon standards, especially for cement and steel.?