Clean Industrial Deal and Competitiveness Fund the new Priorities of von der Leyen

19 July 2024

Copyright: © European Union 2024 - Source : EP A new “Clean Industrial Deal” within the first 100 days of the mandate to support the competitiveness of European businesses without compromising sustainability ambitions. Additionally, increased research spending, a new European Competitiveness Fund, Union of Savings and Investments, AI Factories, public procurement favoring European products, initiation of new IPCEIs, less bureaucracy, and risk absorption measures for venture capital. These are some of the main policy directions in economic development and competitiveness that will guide the new EU Commission over the next 5 years.

Presented yesterday by Ursula von der Leyen before the vote that reconfirmed her for another 5 years at the helm of the EU Executive, this is therefore a European Commission that “will be investment-oriented” and aims to “decarbonize and, at the same time, industrialize the economy,” as stated in the “Political Guidelines for the next European Commission 2024-2029” published on July 18.

A balance not always easy between competitiveness and sustainability (but necessary given the worsening climate crisis) that the new Commission aims to achieve by creating an increasingly favorable environment for investments (public and private) and innovation.

What the Clean Industrial Deal will be like

The roadmap for the next 5 years of the Commission's work will be the Clean Industrial Deal, a Pact for Clean Industry that aims to be what the Green Deal was in the previous legislature and is, in fact, strongly connected to it.

This was clearly explained by von der Leyen in her speech to the European Parliament. Highlighting the achievements of these years - such as the historic milestone of 50% electricity production from renewable sources or the figures confirming that the EU attracts the highest investments in clean hydrogen - the Commission President explained that all this is nothing but “the European Green Deal in action.” The European growth strategy will therefore remain this, without compromising the climate goals set for 2030 and 2050.

However, we are now entering a new phase, where the goal will be the practical implementation of the Green Deal and its realization on the ground.

And this is where the Clean Industrial Deal comes in, a plan that von der Leyen intends to present within the first 100 days of the mandate and aims to channel investments towards infrastructure and industry, particularly for energy-intensive sectors. A clear direction that also aims to provide stability to businesses so they can plan their investments with confidence.

More information on the Clean Industrial Deal emerges from the programmatic guidelines document of July 18. In concrete terms, the Clean Industrial Deal aims to simplify and incentivize investments and ensure access to low-cost, sustainable, and secure energy and raw material supplies.

To achieve this, the Commission will first present legislation to accelerate industrial decarbonization to support industries and businesses in the transition, thus directing investments towards infrastructure and industry.

Additionally, there is the goal of creating a genuine Energy Union. This process is essential to reduce energy prices and further free ourselves from fossil fuels (and the resulting geopolitical dependencies), which involves strengthening joint fuel procurement and developing appropriate governance in the field.

Furthermore, increasing investments in clean energy infrastructure and technologies and creating new partnerships for clean trade and investments.

The European Competitiveness Fund is coming

However, the Clean Industrial Deal also requires resources. For this reason, among the various new features expected in the coming years, there will also be a new European Competitiveness Fund that will be part of the proposal for the next Multiannual Financial Framework.

A Fund that “will focus on common and cross-border European projects that will drive competitiveness and innovation, particularly to support the Clean Industrial Deal,” explained von der Leyen, and that “will ensure that we develop and produce strategic technologies in Europe” such as AI, space, clean technologies, or biotechnologies.

In concrete terms, the EU Competitiveness Fund should fundamentally support IPCEIs, with the new series of Important Projects of Common European Interest to be proposed at the beginning of 2025, according to the Political Guidelines of July 18.

Increased research spending

However, there can be no competitiveness without research and innovation. For this reason, the new EU Commission announces its intention to increase research spending to further support strategic priorities, innovative fundamental research, disruptive innovation, and scientific excellence.

To this end, the European Research Council (ERC) and the European Innovation Council (EIC) will be strengthened.

But that's not all. “To be at the forefront of innovation, we must ensure optimal conditions for researchers,” reads the programmatic document. “This means providing the innovative infrastructures and laboratories they need to develop and test ideas, through new public-private partnerships such as joint ventures. It means attracting new talent and retaining the best and brightest minds in Europe.” To this end - the section concludes - the goal will also be to “strengthen collaboration between research departments, higher education, and businesses, particularly by enhancing university alliances.”

The EU wants to increase private investments

Innovation and technological advancements also depend on private investments and capital. The green, digital, and social transitions cannot be sustained solely by public investments.

For this reason, the strategy will see close collaboration with the European Investment Bank (EIB) and the presentation of “risk absorption measures to facilitate the financing of fast-growing companies by commercial banks, investors, and venture capital,” according to the Guidelines.

But that's not all. In addition to completing the Capital Markets Union - an operation that could attract investments of an additional 470 billion euros per year - the new Commission will also propose a “European Union of Savings and Investments” (the proposal by Enrico Letta). “This way, we can leverage the substantial wealth of private savings in Europe to invest in innovation and the dual green and digital transition,” explain sources from Brussels. The target is those 300 billion euros of European household savings that are transferred to foreign markets each year.

All this will also help prevent European startups and innovative companies from being forced to go to the United States or Asia to finance their expansion. Instead, they should be able to easily find the resources they need to grow in Europe.

The new European Commission wants to reduce bureaucracy

Another topic that will be at the center of the new Commission's political agenda is the reduction of bureaucracy, combined with the completion of the Single Market (in sectors such as services, energy, defense, finance, electronic communications, and digital) that will allow our businesses, especially SMEs, to expand and make the most of the market.

In this context, the key words are “speed,” “consistency,” and “simplification.” Fundamental political priorities that must permeate all actions and will require every European Commissioner to reduce administrative burdens and speed up processes, in constant dialogue with stakeholders to avoid top-down solutions. A Vice-President responsible for implementation, simplification, and interinstitutional relations will oversee everything, tasked with probing the limits of the entire Union acquis.

For innovative businesses, more simplifications and less bureaucracy should also translate into a review of current regulations. Among the expected new features are:

the launch of a new legal status at the EU level to help innovative businesses grow, which will take the form of a so-called “28th regime”, allowing businesses to benefit from a simpler and harmonized set of rules in certain sectors;
the introduction of a new category of “small mid-cap companies”;
the analysis of cases where existing regulations applicable to large companies are too burdensome or disproportionate or hinder their competitive development.

Pro-Europe public procurement

New developments are also coming in the field of public procurement, a market that represents 14% of the EU's GDP.

In this area, the planned strategies are essentially twofold. On the one hand, the Commission aims to increase the efficiency of public procurement, a direction that could ensure an annual saving of 20 billion euros. “It is one of the main levers we have to develop innovative goods and services and create lead markets in the clean and strategic technology sectors,” reads the programmatic document.

On the other hand, the Commission will propose a revision of the Public Procurement Directive to allow European products to be favored in tenders issued in certain strategic sectors. This move aims to ensure added value for EU citizens while also ensuring greater security of supply of essential technologies, products, and services.

AI, life sciences, and data

Finally, the Commission intends to intensify investments in the next wave of frontier technologies, particularly supercomputing, semiconductors, the Internet of Things, genomics, quantum computing, or space technology.

Regarding Artificial Intelligence (AI), the upcoming new features are essentially threefold. First, within the first 100 days of the mandate, Brussels will ensure access to new supercomputing capabilities tailored to the needs of AI startups and industry through the AI Factories Initiative. Additionally, together with Member States, industry operators, and civil society, a strategy for applied AI will be developed to promote its new industrial uses and improve the delivery of a range of public services, such as healthcare. A European AI Research Council will then be established to pool all our resources, similar to the approach adopted with CERN.

In the life sciences as well, the ambition is to have a leading EU. In this context, to facilitate the transition of biotechnologies from laboratories to production facilities and from there to the market, the Commission will propose a new European biotechnology regulation in 2025. This will be part of a broader strategy for life sciences in Europe, aimed at identifying ways to support the green and digital transition and develop high-value technologies.

Finally, data, a true enabler for any growth and innovation strategy. Access to data is not only a significant driver of competitiveness (representing almost 4% of the EU's GDP) but also an essential element for productivity and social innovations, from personalized medicine to energy savings. Currently, however, European companies struggle to access the data they need, while paradoxically, large foreign tech companies use European data to support their activities.

For this reason, the Commission will present a European Data Union Strategy, aimed at ensuring a simplified, clear, and coherent legal framework that allows businesses and public administrations to share data seamlessly and on a large scale, while respecting high standards of privacy and security.

Consult the Political Guidelines for the next European Commission 2024-2029 of July 18, 2024