Clean Industrial Deal – How to reconcile climate ambition with industrial resilience?

Q1: What are the challenges facing Europe’s Clean Industrial Deal?

François-Régis Mouton: With this new Commission, Europe’ ambition is finally crystal clear – to become climate neutral while keeping our industrial base competitive. These are noble ambitions on which we shouldn’t compromise. The biggest obstacle, what really needs to change, is the policymaking ‘software’ used over the past 10-15 years to turn this ambition into reality. Not only has it proven its limitations, it has even become counterproductive. Changing the way we think about and design policies is of the utmost importance.

Let’s be clear, Europe is losing the global race in key industrial sectors and is having a tough time retaining investors and innovators.

We can no longer bury companies under reporting and compliance obligations, pick and choose solutions, impose targets and investments disconnected from economic realities on entire sectors and then wonder why investors fled and we failed.

The reality around us has changed; tiny updates won’t fix the issue. It’s time for a reset. We need a growth-oriented, goal-setting approach to which everyone can participate and be rewarded. 

Q2 : Do you see a change in the way industry and policymakers work to address these challenges?

François-Régis Mouton: Yes, although not to the extent needed, and not yet at working level. The Antwerp Declaration marked a turning point in that it brought the competitiveness issue to the attention of EU leadership and compelled them to react. Legislation shouldn’t have gone so far in the first place, and I believe the message was clearly heard at political level.

Now, for competitiveness to be more than a buzzword, it needs to be translated into policy to make a difference. That means taking a humble, critical look at the ‘Acquis Communautaire’, and making the necessary adjustments, for example through Omnibus packages. This is where things can become more difficult, where policy advisors will find it difficult to change their mindset and therefore try to avoid amending legislative files they worked on for years. They push back, they say ‘this too shall pass’, they suggest things can be solved in the implementation phase. The risk is that we end up with half-measures which don’t make the necessary difference. 

I think there is an opportunity for industry and policymakers to work closer as partners as it used to be the case before – this requires approaching desired outcomes as mutually beneficial ones and in the best interest of EU citizens.

Q3: What would be your main recommendation to policymakers?

François-Régis Mouton: I would say: be pragmatic in the way you approach problem-solving. Ambition needs to look further than reality, but legislation cannot be disconnected from technology or economics. 

For example, when the EU finally decided to support the deployment of CCS, the landmark regulation it came up with consisted in putting an investment obligation on the EU’s oil and gas producers into the development of 50 Mt of CO2 storage injection capacity by 2030, without any certainty or support to ensure CO2 would be captured by emitters and transported for storage in the first place. This makes no sense from a commercial standpoint, and it’s now clear this target will not be met not because the technology doesn’t work, but because of regulatory inadequacy. 

Another example is methane mitigation. What started off as a laudable legislative project which we supported 5 years ago turned into a punitive tool used against the very industry it was meant to regulate, and which now poses significant risks to Europe’s security of supply and severe non-compliance risk for our industry. The Regulation’s provisions are so prescriptive, unworkable and disproportionate that all 27 Member States asked the European Commission to make targeted adjustments through the announced Energy Omnibus. These are fundamental issues which cannot be addressed through secondary legislation flexibilities as suggested by Commissioner Jorgensen. 

A third and final example is low-carbon hydrogen. The EU adopted a Hydrogen Strategy in 2020 to give its hard-to-abate sectors certainty on the road to climate neutrality. However, instead of incentivizing all clean hydrogen production pathways in support of this objective, its support framework went all-in on renewable hydrogen, a nascent technology. The EU could have worked in parallel to decarbonize the ‘grey’, gas-based hydrogen production with CCS or simply use other forms of low-carbon hydrogen such as from nuclear. Today, with a mere 0.5Mt of renewable hydrogen production capacity, the 10Mt objective by 2030 is completely out of reach. The Court of Auditors has heavily criticized this approach and called for a reality check. 

Q4: Affordability is clearly a concern. How should that be addressed in future legislation?

François-Régis Mouton: Europe is not just losing speed relative to its global competitors, it is also losing the confidence of its people. 70% of Europeans aren’t satisfied with the way the EU works and want change. Doubling down on the approach that brought us here isn’t going to solve this. We need humility to recognize where things went wrong, critical analysis, and pragmatic solution-finding. 

Affordability should be a core dimension of all impact assessments. Not just by throwing around big headline figures and unsubstantiated promises, but evidence-based comparisons of different decarbonization pathways.

For example, renewable electrification is promoted as the default solution without taking into consideration the full infrastructure and system balancing costs. We are talking about billions in grid investments in the coming years – this will be passed on to consumers one way or another.

A low-carbon future that is unaffordable or achieved through de-industrialization and de-growth is not a sustainable one. By following a less technology-specific approach and supporting decarbonization solutions based on their abatement potential, we can maximize impact while minimizing the cost. 

Q5. Finally, what would be the guiding principle for EU energy policy in the next five years?

François-Régis Mouton: I would say realistic ambition, pragmatism, cooperation. 

We need to be realistic in our ambitious to set an achievable direction for a stronger, better Europe for future generations – the vision that brings everything together, including growth and jobs. We need pragmatism to maximize our chances of success, to facilitate incremental progress, to foster innovation and reward results. 

And finally we need cooperation between policymakers and industry from day one – not just in consultations, but in co-designing solutions from the beginning. This requires trust, openness, and the ability to reach compromises that drive progress.

Europe cannot control everything that impacts it, but it has everything it needs to overcome the challenges it faces. It just needs to unleash all its potential instead of regulating all aspects of its citizens’ and businesses’ lives.