Europe races to boost industry as Trump, climate and geopolitics loom

BY: ANCA GURZU

BRUSSELS — European leaders laid out on Wednesday a much-awaited plan that seeks to resuscitate its ailing industrial base by boosting domestic cleantech manufacturing and alleviating high energy prices.?

In the works since last year, the plan is taking on heightened scrutiny as the continent reels from actions by United States President Donald Trump on issues ranging from the Russian war in Ukraine to tariffs.?

The European Commission, the EU’s executive arm, announced the roadmap,?called the “Clean Industrial Deal,” as the region’s industrial production has been trending down over the last couple of years (as the chart above shows), sparking urgency to reverse the trend. Notably, the plan aims to bring climate action and competitiveness under one growth strategy.?

Production decreased by 1.7% between December 2023 and December 2024 with Austria, Italy, Portugal and Germany seeing the biggest declines in that period, according to the EU’s statistical agency Eurostat. Any decrease in industrial production is often a warning sign for an economy. It can highlight several issues, such as slowing economic growth, weak consumer and business demand, supply chain issues and higher unemployment risks.??

“Our vision is for Europe to lead as a clean manufacturing power,” Teresa Ribera, the Commission’s executive vice-president in charge of the clean transition, said during a press conference about the plan on Wednesday. “We think the Clean Industrial Deal is a long-lasting proposal to keep Europe as an attractive hub for traditional business industries, accelerating new technologies and circular business models that can compete worldwide.”

The plan, which will feature specific legislative proposals expected to be introduced throughout this year and next, aims to drive reindustrialization and accelerate decarbonization by making a better business case for investing in scaling up cleantech industries and greening hard-to-abate sectors. ?

To provide industry with immediate access to capital, the Commission committed to mobilizing $105 billion (€100 billion) in the short-term for “EU-made clean manufacturing,” which will pull funds from several existing programs.

Europe’s industrial hardships are a result of several factors — including rising geopolitical tensions, heavy regulatory burdens and, following Russia’s invasion of Ukraine, high energy prices — all of which has led to reduced investments and lower manufacturing productivity. ?

As Europe’s traditional industrial base is eroding, new clean industrial sectors, such as batteries and green steel, are struggling to get off the ground, according to a recent analysis by lobby group Cleantech for Europe and Breakthrough Energy, which risks jeopardizing’s the bloc’s wider decarbonization goals.?

These worrying trends come amid growing international competition, especially from cheaper Chinese products, which could leave?Europe behind in the cleantech race. ?

The U.S. started making inroads in cleantech manufacturing under Biden administration policies in recent years, contributing to Europe’s scramble to build out its own cleantech sector, but the future of those policies in the U.S. are now uncertain under the new Trump administration.?

Editor’s note: Cleantech for Europe is supported by Breakthrough Energy, which also supports Cipher.?