Harnessing European Industrial Policy for Decarbonisation

Executive Summary

Europe’s industrial policy is evolving but lacks coherence. In “Transforming the Industrial Mindset: Harnessing European Industrial Policy for Decarbonisation,” we show how crises and global competition have pushed the EU away from its former laissez-faire approach. State-aid exemptions and national subsidies mark a shift toward interventionism. But without coordination, Europe risks a fragmented system of competing subsidies rather than a common green strategy.

Industrial policy must move from crisis response to structural transformation. In the 21st century, it is about steering innovation, investment, and production toward long-term goals: climate neutrality, competitiveness, and resilience. This demands strategic direction, democratic legitimacy, and coherence across fiscal, regulatory, and industrial instruments.

Core contributions

1. Institutional foundations. A sustainable European industrial policy requires fiscal autonomy, a permanent EU fiscal capacity, and governance that balances efficiency with cohesion. Without this, strategic autonomy will remain out of reach.
2. Technological levers. Europe must strengthen its capacity to create, scale, and deploy clean technologies. This includes support for high-risk innovation, strategic procurement, and protection against unfair trade practices—while avoiding over-reliance on global markets.
3. Co-benefits and legitimacy. Industrial decarbonisation must deliver visible social and territorial benefits. That means targeted reskilling for vulnerable workers, attention to regional inequalities, and integration of circular economy principles to reduce material dependency.

The broader lesson is clear: Europe’s green industrial policy can succeed only if it is more than technocratic. It must be ambitious, coordinated, and democratically grounded — capable of mobilising investment at scale while strengthening cohesion and resilience.