Less could be more: Simplifying Industrial Transformation in the EU

How many plans does an industry need to reach Net Zero? Surely, one should suffice; two are already too many.
Yet, companies face transition plans, CAPEX plans, climate neutrality plans, and transformation plans. Navigating this regulatory labyrinth is a hassle, isn’t it? While simplification is clearly needed, what matters most is the smart optimisation of existing reporting requirements to lessen the organisational burden on businesses. Above all, we must establish meaningful incentives for companies to engage fully in the reporting process.

Although we are entering a cycle of deregulation, marginalising the experts who have brought us this far in order to ‘speed things up’ is far from wise. It might make sense from an inter-institutional standpoint, but not from a political or legislative one. Instead, we need a strategic and intelligent approach.

This is vital if we want to uphold the EU’s competitiveness agenda, climate ambition, and the uniqueness of our approach.

In a world increasingly driven by state-backed production and subsidised exports, we must embrace smart financing to enable our industry to stay on course: to set strategic direction, transform, innovate, adopt new technologies, and—most importantly—remain globally competitive.

The European Commission repeatedly hinges on a mix of legislative reforms and financial support tools: from expanding the Emissions Trading System (ETS) and introducing the Clean Competitiveness Fund, to strengthening the EU taxonomy on sustainable finance for green projects. Decarbonisation in the coming years will be supported largely through the Innovation Fund, the newly launched €100 billion Industrial Decarbonisation Bank, and the Modernisation Fund. Major public instruments such as the Recovery and Resilience Facility and cohesion policy funds, all supported by revenues from the EU ETS and mechanisms like InvestEU, will also play a role. Together, this toolbox of laws, finance, and new targeted state aid is intended to accelerate the shift to a climate-neutral economy.

Hard-fought compromises are tangible solutions because they require all sides to give up something important while safeguarding their core priorities. Such deals often leave all sides frustrated, yet strongly invested.

When every protagonist feels the sting of sacrifice, it is a strong sign that the agreement reflects a genuinely shared, balanced outcome, not simply a reflection of the dominant opinion of the day.

One such hard-fought, yet very meaningful, compromise – the toughest to reach in the Industrial Emissions Directive (IED) negotiations (where I served as rapporteur) – was the Deep Industrial Transformation (DIT). This mechanism strikes a balance: it allows for extended compliance deadlines – up to four more years – in exchange for major technological shifts and robust environmental outcomes. Applicable only in cases of advanced transformation, DIT demands significant emissions reductions, verified progress, and annual reporting on key milestones and co-benefits. It offers flexibility without compromising transparency or ambition. This could become a model to underpin broader efforts to decarbonise and modernise European industry, particularly where public money is involved or private investment is unlocked by public support. In short, companies that embark on genuine technological transformation to decarbonise or trigger substantial energy efficiency improvements should report solely under the DIT framework and be exempt from redundant, parallel reporting obligations. The reward? Access to financial support for their transformation.

If we take that path, we can transform the various transformation plans – with their overlapping and burdensome obligations – into a single, clear, and simple investment strategy: a single transformation and investment plan.

This should be backed by national and European funding tools and administrative incentives. These could range from CAPEX support for technological transition and adopting clean technologies, to OPEX support via secured PPAs and two-way CFDs, to investments in energy efficiency, demand-side flexibility, CCUS or energy storage, and improved access to public or private infrastructure, be it modern electricity grids or supply chains for hydrogen, ammonia, or biofuels. All of this with one clear purpose: to build a modern, competitive industrial base powered by cutting-edge clean technology. Doing so will ensure that the EU has a shared, consistent long-term competitiveness strategy focused on industrial innovation and modernisation.