EU’s Competitiveness Compass sets a bold course but needs fine-tuning to guarantee alignment between decarbonisation and growth
Today, the European Commission published its Competitiveness Compass, the North Star that will guide EU action during this term to ensure a comprehensive approach towards sustainable prosperity in the European Union (EU). The Communication outlines an ambitious list of initiatives and measures that could support the EU’s transition, but does not provide full clarity on how the Union will balance economic considerations and regulatory simplification with a transition toward decarbonisation to ensure that climate action and competitiveness are aligned and mutually enforcing.
Focus on industrial decarbonisation
The EU has much work ahead to ensure its future prosperity and to establish itself as a leading global hub for industry, science, and innovation. Many of the initiatives outlined in the Competitiveness Compass could be promising for industrial decarbonisation. The technology-neutral approach, now anchored in the new Commission’s approach, could also give countries and industries more flexibility towards their decarbonisation goals.
The Clean Industrial Deal, one of the pillars of the Competitiveness Compass that will be published next month, will represent a joint roadmap for decarbonisation and competitiveness.
Among other measures, it will include:
- Decarbonisation Accelerator Act, by addressing permitting delays, could speed up the transition.
- Sectoral action plans for steel and metals, chemicals, and potentially other hard-to-abate sectors would also be welcomed to ensure a consistent approach to their decarbonisation, given the complex technology mix that it will require.
Coordination and financing initiatives
Another positive point of the Communication is the ambition to better coordinate policies at EU and national level. As competences and funding are divided across different levels of governance, they will need to work in stronger alignment towards the same objectives. The Competitiveness Coordination Tool, proposed in the Competitiveness Compass, is a welcome initiative in this respect. Stronger cooperation on matters like energy infrastructure is particularly important. This would also be key for the deployment of CO₂ and hydrogen cross-border infrastructure.
On the financing side, references to the next Multiannual Financial Framework (MFF), the European Competitiveness Fund, and the TechEU investment programme are promising, but an EU budget matching the ambition of the Competitiveness Compass will be needed. Public funding will be required to incentivise private investment and bring to market a range of promising clean technologies, like next-generation geothermal and fusion energy.
The way forward
2025 presents itself as a key year to flesh out the flagship initiatives of the Competitiveness Compass. Political unity is key to bring about the changes that Europe desperately needs to remain competitive and cut its emissions.
Alessia Virone, CATF’s Government Affairs Director for Europe, highlights the need for pragmatic and forward-thinking policies to achieve these goals:
“The Competitiveness Compass provides an ambitious vision to address the many challenges the EU economy is currently facing. Pursuing economic competitiveness should, however, not mean compromising on the much-needed cut in emissions. As outlined in the Draghi report, decarbonisation policies can strongly drive growth when effectively integrated with industrial, competition, economic, and trade policies. To that goal, the Commission will need to ensure an equal focus on competitiveness and decarbonisation in the upcoming Clean Industrial Deal.”
For further insights, the Vision for the EU Net-Zero Transition and Clean Industrial Deal briefing by CATF provides recommendations for key measures the EU needs to take to champion clean technologies and achieve climate neutrality.
Press contact:
Julia Kislitsyna, Communications Manager, Europe, [email protected], +49 151 16220453
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