Dear readers of the vgbe energy journal,

The European Commission has finally unveiled its Clean Industrial Deal, a strategic initiative to combine decarbonisation with economic competitiveness. This comprehensive package includes an Action Plan for Affordable Energy and the Omnibus Package, both of which aim to simplify sustainability regulations and EU investments.

At the heart of the Clean Industrial Deal are six key pillars that address Europe’s industrial and economic challenges. These pillars focus on ensuring access to affordable energy, fostering lead markets for clean supply and demand, stimulating public and private investment, securing access to essential materials and resources, strengthening global markets and partnerships, and promoting job creation and skills development. Measures to support these objectives include a review of the carbon border adjustment mechanism, the introduction of a European grid package and investment programmes from the European Investment Bank. One of the key highlights is the target of 32 per cent electrification by 2030, together with extended guarantees for power purchase agreements, which now include nuclear power. However, some of the proposed changes, such as the decoupling of gas and electricity prices and changes to grid tariffs, require careful consideration.

A key component of the initiative is the Action Plan for Affordable Energy, which prioritises the implementation of electricity market reforms. The plan aims to promote long-term contracts in a technology-neutral way, speed up the approval process for clean energy, storage and grid projects, and strengthen the internal energy market to reduce dependence on imported fossil fuels. While the plan sets out a promising way forward, concerns have been raised about the proposed harmonised methodology for network tariffs, which could fail to take into account national specificities and interfere with Member States’ powers to set tariffs. In addition, recommendations to reduce peak demand under normal market conditions could potentially limit demand-side flexibility.

The Omnibus Package, another key aspect of the Clean Industrial Deal, aims to reduce regulatory burdens, in particular on sustainability reporting. It proposes revisions to the Corporate Sustainability Reporting Directive, the EU Taxonomy and the Corporate Sustainability Due Diligence Directive. The main aim is to reduce reporting obligations, particularly for small and medium-sized enterprises. Adjustments to the Carbon Border Adjustment Mechanism include a revised compliance cycle, changes to calculation methodologies and the exclusion of electricity from indirect emissions reporting. On investment, the proposal focuses on increasing funding for sustainable infrastructure through InvestEU, estimating that legislative changes could unlock an additional € 50 billion in public and private investment. However, the allocation of these funds remains unspecified.

This initiative marks the beginning of the European Commission’s broader strategy to promote a decarbonised and competitive economy. While not all elements of the Clean Industrial Deal require legislative approval, the Commission is expected to play an active role in guiding businesses through policy recommendations and investment frameworks.

The journey towards a cleaner and more competitive European economy is just beginning.