Six months in, is the EU on track to deliver on the Clean Industrial Deal?

Six months ago, the European Commission unveiled the Clean Industrial Deal (CID), a sweeping policy designed to accelerate decarbonization, reduce energy costs, and above all, strengthen Europe’s industrial competitiveness, writes Gwenaelle-Avice Huet, EVP Europe Operations, Schneider Electric (pictured).

It arrived at a defining moment. An energy crisis, born of geopolitical shocks, had exposed Europe’s dangerous reliance on fossil fuels. EU wholesale energy prices were above historical levels, 2-4 times higher than the US and China. In this context, the CID is Europe’s hope to secure long-term competitiveness in an increasingly tough global economy.

Now that six months has passed, how far has Europe come on delivering these promises?

The picture is mixed. We have made progress, but the clock is ticking. The EU could lose up to €103 billion by 2040 from increased energy system costs if no action is taken. Europe has the policy vision in place, what it needs now is execution with speed and scale.

These are the areas I believe will be crucial in determining whether Europe’s industrial ambitions remain just a vision, or become reality.

Powering industry with clean electricity and modern grids

The CID rightly identifies electrification as a cornerstone of Europe’s industrial strategy. It is the most cost-effective pathway to decarbonize industry, cutting emissions, improving efficiency, and making clean energy more accessible and affordable. Under the EU’s Affordable Energy Action Plan, a key component of the CID, electrification could create up to €260 billion of savings annually by 2040.

Accelerating electrification is not just about preparing for our 2050 net zero target; for Europe it is foremost a matter of energy sovereignty. Reducing dependence on fossil fuels is critical in today’s geopolitical context, and access to affordable, clean electricity will determine whether European industry can keep pace with global competitors. In this race, electricity prices are a direct measure of competitiveness.

But Europe faces a two-part challenge. First, industry must electrify at scale. Second, the grid must be modernized to deliver that power reliably. Without both, decarbonization – and efforts to bolster competitiveness – will stall.

Industrial electrification in the EU has stagnated at around 23% over the past 15 years, even though key technologies – such as heat pumps and electric arc furnaces - are readily available and could meet more than 60% of current industrial energy demand. By 2035, direct electrification could replace most fossil fuels used for industrial process heat, slashing emissions and transforming energy use. However, this transition will drive a sharp increase in electricity demand – demand that Europe's grids cannot handle today.

The European Investment Bank’s €2 billion in guarantees backing the CID is a promising step toward electrification and grid modernization. But because it is non-binding, momentum will depend on strong national-level action.

The European Grids Package, due by the end of 2025, will be significant in determining the future of Europe's grids. I hope to see binding targets for capacity expansion, cross-border interconnections, digitalization, and smarter load management. A modern grid is not just about building more capacity, it’s about becoming more resilient.

Climate-related disruptions are already testing Europe’s electricity systems. A modern, digitally managed grid can detect faults instantly, reroute power in emergencies, and integrate local renewable sources, ensuring the stable, affordable supply of clean energy that industry needs to stay globally competitive.

Transforming Europe's industrial base with digital technology

Digitalization is the backbone of productivity, efficiency, and resilience – and it must remain a core focus of the CID. Accelerating the deployment of automation, data-driven processes, and advanced tools like Artificial Intelligence (AI) is essential to cut energy use, reduce costs, and strengthen competitiveness. Yet more than half (56%) of large European companies have not scaled major AI investment, falling behind the EU’s target for 75% adoption by 2030.

To close the broader digital gap, strong support frameworks are needed. EU state aid rules now cover automation, digitalization, and AI under the CID, but funding from the Recovery Plan (until 2026), the proposed Competitiveness Fund, and the Industrial Decarbonization Bank must be directed toward upgrading Europe’s existing industrial base, not just new projects.

Digitalization also depends on people. With 40% of adults in Europe lacking basic digital skills, workforce upskilling and reskilling must be a top priority. Companies like Schneider Electric are already investing in training and educational programmes, helping prepare today’s workers for tomorrow’s economy. Europe has a legacy of innovation and the assets to succeed. By scaling digital technologies and equipping its workforce with the skills to use them, Europe can cut costs, raise productivity, and secure a more competitive, resilient industrial future.

Cutting the red tape

We won't see results if implementation is blocked by slow approvals, fragmented regulation, and excessive bureaucracy. This Commission is strongly committed to simplification via a roll-out of multiple omnibus packages aimed at reducing the administrative burden and accelerating Europe’s transformation to net zero without overwhelming small companies with unnecessary bureaucracy.

The series of omnibuses will tackle a long-standing issue: companies and investors navigating a labyrinth of different regulations, overlapping reporting requirements, and slow permitting processes. These delays have often meant that renewable energy projects take years to connect to the grid, and new manufacturing facilities face a raft of compliance paperwork before breaking ground, all of which hampers industrial growth.

What comes next?

The CID is taking shape, but the real challenge lies ahead. The rest of 2025 and 2026 will be decisive in determining whether Europe’s clean industrial ambitions remain aspirations or become tangible realities.

Cutting red tape, electrifying industry, modernizing grids, and deploying clean technologies are core levers that will decide Europe’s industrial future. The tools exist – what’s needed now is political will, coordinated action across borders, and strong country-level ownership to ensure delivery.

I urge governments, policymakers, and fellow industry leaders to seize this moment: invest boldly in digitalization, back innovation with forward-thinking policy, and work together to build a more competitive industrial future. If we succeed, Europe will not only meet its climate goals but also emerge stronger, more resilient, and more competitive on the world stage.

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