EU Unveils Ambitious Clean Industrial Deal

Mobilizing Capital for Green Growth

The European Commission’s new Clean Industrial Deal (CID) aims to make decarbonization a powerful engine for European industry’s growth, by galvanizing public and private finance. This crucial strategy seeks to harmonize a fragmented landscape of national industrial policies.

Bridging the Investment Gap

Reaching 2030 climate targets will require an estimated €1.24 billion annually, with private capital being indispensable. Banks, which finance roughly 70% of the European economy, are seen as critical partners in this endeavor. The CID seeks to provide the certainty needed for project developers, companies, and financial institutions, potentially accelerating the development of clean industries across the continent.

Stakeholder Recommendations for Success

In a recent collaborative effort, the European Banking Federation (EBF), UNEP Finance Initiative, and the Net-Zero Banking Alliance (NZBA) brought together policymakers, banks, and industry leaders. They outlined six key recommendations to maximize the CID’s transformative potential:

1. Support SMEs with Innovative Financial Products

   Banks should develop simpler, scalable green loans and sustainability-linked instruments for small and medium-sized enterprises. Targeted advisory services and aggregated project financing platforms are also crucial. Venture debt can provide essential growth capital for cleantech innovators.

2. Ensure Stable Revenue for Emerging Technologies

   Predictable carbon pricing via the EU Emissions Trading System (ETS) and the Carbon Border Adjustment Mechanism (CBAM) will be vital. Carbon contracts for difference (CCfDs) and long-term corporate power purchase agreements (PPAs) can offer revenue certainty, helping to overcome the “green premium” associated with less mature clean technologies.

3. Expand Guarantees and Blended Finance

   To mitigate the perceived technological and market risks of pioneering projects, such as green hydrogen and steel, Europe should scale up guarantees, counter-guarantees, and blended finance tools. The proposed Industrial Decarbonisation Bank, aiming to channel €100 billion, exemplifies this approach.

4. Streamline Development Processes

   Simplifying reporting, permitting, and procurement procedures will shorten project timelines, improving debt profitability and reducing financing costs. The anticipated Decarbonisation Accelerator Act is expected to streamline permitting for industrial energy access and decarbonization.

5. Integrate Industrial and Energy Policy

   Coordinated energy market reforms, renewable energy expansion, and decarbonization incentives are essential to lower energy costs and attract large-scale investment. Initiatives like the Action Plan on Affordable Energy and the European Grids Package are key components.

6. Maintain Long-Term Climate Focus

   The CID underscores that climate ambition is fundamental to Europe’s industrial renewal. Consistent policy decisions, clear net-zero pathways, and avoidance of abrupt reversals are necessary to build investor confidence and ensure sustained commitment through political cycles.

“The Clean Industrial Deal has great potential to support the EU’s economic and climate goals, especially as it aims to de-risk investments for banks and financial institutions to scale financing for economy-wide low-carbon development.”

—Eric Usher, Head of UNEP FI

“Bringing together key stakeholders from banking, business, and policymaking is key to develop understanding of how banks can maximize their participation in the Clean Industrial Deal.”

—Wim Mijs, CEO, European Banking Federation

“Mobilizing private capital requires clean technologies and supportive industrial policies. With these in place, banks can play an important role in financing the EU’s industrial ambitions.”

—Antoni Ballabriga, Net-Zero Banking Alliance (NZBA) Steering Group member and Global Head Sustainability Intelligence & Advocacy at BBVA

The development of a robust financing ecosystem, featuring deep capital markets, enhanced venture funding, and scalable blended finance instruments, will be crucial for transforming ambitious climate goals into tangible actions. The UNEP FI, NZBA, and EBF are committed to facilitating ongoing dialogue as the CID and its supporting policies evolve.

In 2023, the European Investment Fund allocated €2.4 billion to cleantech initiatives, demonstrating a growing commitment to sustainable innovation (EIF, 2024).