Cleantech at the Core of Europe’s Competitiveness Strategy

The European Commission’s recently unveiled Competitiveness Compass positions clean technologies as central to both decarbonisation and economic growth. Designed as a guiding framework for the incoming Commission's five-year legislative term, the Compass intends to embed competitiveness as a critical principle of policymaking, building on the key imperatives defined in the influential Draghi report.

The document outlines a broad strategy to make Europe more agile, innovative, and resilient. At its core is the ambition to simplify regulatory and administrative procedures, ease barriers within the single market, enhance access to financing, and strengthen skills across the workforce. Better coordination between EU and national policies is also a major focus, aiming to align efforts and avoid fragmentation.

A central theme is the integration of climate and competitiveness goals. With energy prices remaining high and volatile, and in the context of reducing dependency on Russian gas, the Commission is pushing for an accelerated clean energy transition. This involves not only increasing electrification and deploying more renewables, but also addressing near-term inefficiencies such as the design of network tariffs, taxation systems, and the lack of energy market integration.

To support this transition, the Commission published an Affordable Energy Action Plan, and this will be followed in 2026 by an Electrification Action Plan and a comprehensive European Grids Package. Energy-intensive industries, which face unique challenges in the shift to cleaner systems, are also in focus. Additional strategies will follow later in the year, including a sustainable transport plan in Q3 and a chemicals industry roadmap in Q4. A review of industrial carbon emissions is slated for 2025, and a Circular Economy Act is expected by late 2026.

Innovation is another pillar of the Competitiveness Compass, intended to narrow the gap between the EU and countries like the US and China. While Europe holds a strong position in global patent filings, only about a third of those patents are commercially exploited. To address this, the Commission is preparing a startup and scale-up strategy focused on improving financing conditions, increasing R&D spending, and better coordinating investments in high-impact sectors. Crucial to this innovation push will be improved infrastructure for computing, cloud services, and data, particularly for artificial intelligence.

Supporting this ecosystem, a European Innovation Act is planned for late 2025 or early 2026, followed by a Research Area Act in 2026. Sector-specific legislation will also be introduced in areas such as cloud technology, quantum computing, life sciences, advanced materials, and space. AI gigafactories are already underway, aimed at accelerating the industrial deployment of artificial intelligence across sectors.

A third imperative centres on boosting Europe’s resilience and security by reducing overreliance on external partners. Recognising that global trade remains essential for prosperity, the EU plans to strengthen partnerships while using its trade defence tools to protect against unfair competition. Future initiatives include the implementation of trade agreements with key economies, new trans-Mediterranean energy and clean tech cooperation, and a joint platform for purchasing critical raw materials. A Water Resilience Strategy is expected in the second quarter of 2025, with a European Climate Adaptation Plan to follow in 2026.

The strategy has drawn strong responses from industry leaders. Layla Sawyer, Secretary General of CurrENT, pointed to the challenge of scaling clean technologies beyond pilot projects, warning that many companies are now prioritising investments outside Europe due to regulatory uncertainty and deployment barriers.

Hans Korteweg, Managing Director of COGEN Europe, emphasised that making clean energy affordable and available is essential to protecting the competitiveness of EU industry. He called for a whole-system approach that values energy efficiency and integrates a diverse mix of clean energy solutions. Korteweg highlighted cogeneration as a mature, proven technology that not only enhances energy efficiency and reduces emissions, but also supports system flexibility and the integration of renewables like bioenergy and hydrogen.

Eurelectric’s Policy Director, Cillian O’Donoghue, welcomed the focus on deeper market integration, support for long-term contracts, and the forthcoming grid action plan, saying these steps align with Europe’s strengths and are crucial for global competitiveness.

Gwenaelle Avice Huet, Executive VP for Europe Operations at Schneider Electric, noted on LinkedIn that confidence across the continent has been shaken over the past year. She stressed the importance of simplified, business-friendly policies that remove barriers and empower industries to drive growth.

A statement from EUTurbines, the association representing gas and steam turbine manufacturers, echoed the call for a technology-neutral policy framework. They underlined that Europe’s energy future must be both secure and flexible, and that supporting all viable solutions is essential to achieving decarbonisation and long-term competitiveness.

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