Written by Martijn Meijer
Dear reader,
Welcome to a new edition of our monthly Energy & Climate Policy Update. We have a packed agenda: the European Commission published some of its first major initiatives for the new mandate over the past month. We look at some of these initiatives throughout the update to provide you a full overview, including in a new dedicated section on the Clean Industrial Deal.
Europe’s bold plan for sustainable growth, the “Clean Industrial Deal”, represents a major shift for EU businesses, especially in energy-intensive sectors. Don’t miss your chance to engage with the Commission to shape this deal and influence the policy direction for the next five years.
The spotlight
Simplification proposal on CBAM
On 26 February, the European Commission published its long-awaited Omnibus Simplification Package, aimed at streamlining and simplifying a range of EU regulations. The key objective of the package is to reduce administrative burdens, which should make it easier for businesses, public authorities, and citizens to navigate and comply with EU reporting requirements, ultimately strengthening the EU’s internal market.
The Package on sustainability reporting introduces changes to several pieces of EU legislation, including the EU Taxonomy, the Corporate Sustainability Due Diligence Directive and the Corporate Sustainability Reporting Directive. As part of the package, the Commission also proposes to simplify the Carbon Border Adjustment Mechanism (CBAM). We are taking a closer look at this proposal below.
What is the CBAM?
The CBAM has been a key element of the European Green Deal, aiming to prevent carbon leakage by imposing a “carbon border tax” on imports from outside the EU internal market. It ensures that non-EU companies gain an unfair advantage by avoiding EU climate rules. This mechanism requires importers to purchase CBAM certificates based on the carbon content of their imports, with prices linked to the European Emission Trading System (ETS) carbon price.
CBAM covers sectors, including iron and steel, cement, aluminium, fertilizers, electricity, hydrogen, and certain downstream products like screws and bolts. Operational since October 2023, the CBAM is being phased-in alongside the gradual phase-out of ETS free allowances. Currently, it is in a test phase where importers report emissions without paying levies.
What is in the proposal?
A key aspect of the Commission’s new simplification proposal is a delay of the implementation of border levies on emissions-intensive imports. The levies, initially scheduled for early 2026, will now be introduced in February 2027. Additionally, the Commission proposes several changes to simplify the reporting processes:
- Relief for small importers: companies importing small quantities of CBAM goods – products emitting less than 100 tons of CO₂ or weigh less than 50 tons – will be exempt from CBAM obligations.
- For larger importers, the proposal streamlines complex reporting requirements, simplifying the authorisation procedure, data collection, emission calculations, verification rules and financial liabilities.
- Delegating reporting obligations externally: importers will be allowed to delegate reporting responsibilities to third parties while retaining legal responsibility for submissions.
- Recognition of CO₂ levies paid: if a carbon price has already been paid in the country of origin, importers will receive a corresponding CBAM discount.
- Adjustments for steel and aluminium products: Some downstream goods and manufacturing processes not covered by the EU ETS will be exempt from CBAM.
By implementing the proposal, the Commission expects to exempt 90% importers from CBAM reporting obligations, while still 99% of the embedded emissions in the scope of CBAM are effectively targeted.
Next steps
The text will now be sent to the co-legislators, who will formulate a negotiation position in order to agree upon a final legislative text during interinstitutional negotiations. A CBAM review report is expected to be conducted in Q3 2025, evaluating the feasibility of extending the mechanism to additional ETS sectors, downstream products and indirect emissions. A legislative proposal is expected to be presented in Q1 2026.
Do you want to know more about how CBAM simplification measures may impact your business? Contact us now at eu@publyon.com.
Impact analysis for your business
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- Custom insights on how upcoming policy changes might impact your business;
- Strategic advice from your dedicated policy consultant on how to turn challenges into opportunities;
- Early warnings about key legislative developments.
Policy updates
The Action Plan on Affordable Energy launched
Together with the Clean Industrial Deal (see below), the Commission published an Action Plan on Affordable Energy. The document proposes measures to reduce energy bills in the short term, while aiming to accelerate cost-saving reforms and strengthen energy systems to prevent future price shocks. Key measures include reducing electricity prices by addressing network charges and boosting retail competition, streamlining permitting, expanding grids, and improving system flexibility. To ensure security of supply, the Action Plan focuses on preventing price spikes and improving cross-border energy access.
CDU biggest in German elections, technology-neutral Germany incoming?
On 23 February, the political alliance of the Christian Democratic Union (CDU) and its Bavarian sister party, the Christian Social Union (CSU), won the German federal parliamentary election with 28.5%, leading to Friedrich Merz being appointed as the likely next Chancellor. Merz is expected to steer Germany in a different direction from the current Chancellor Olaf Scholz, with a focus on all forms of renewable or low-carbon energy and a more favourable stance towards nuclear power. Merz’s approach may bolster EU support for nuclear energy. During his campaign, Merz voiced concerns about the impact of climate policies on businesses, pledging to prioritise economic growth above all else and advocating for the rollback of several EU green regulations.
US tariffs on foreign car imports
On 19 February, US President Trump said he plans to impose 25% tariffs on foreign car imports, starting from 2 April, as part of broader efforts to ‘close the gaps in trade deficits’. EU Trade Commissioner Sefčovič and Trump’s economic advisers met on 20 February, while the EU scrambles to avoid a trade war. Against Trump’s claims, the European Commission stated the EU has not offered to lower its car tariffs from 10% to 2,5%. On 2 February, Trump had already announced a 25% import tariff on aluminium and steel. In response, Commission President Von der Leyen stated that “strong and proportionate countermeasures” can be expected.
Commission published 2025 Work Programme
On 11 February, the European Commission released its Work Programme for 2025, outlining upcoming initiatives. The Work Programme underscores the importance of energy independence, with a focus on phasing out Russian energy imports and investing in small modular reactors (SMRs) to enhance long-term security and diversification. It also confirms that the legally binding 90% emissions reduction target for 2040 will be enshrined in the European Climate Law; this proposal is expected in Spring. Additionally, the programme includes a Sustainable Transport Investment Plan (Q4), which aims to scale up sustainable fuel production, expand recharging and refuelling infrastructure, and strengthen green trade partnerships.
€1.25 billion of grants under CEF Energy
On 30 January, the European Commission announced nearly €1.25 billion in funding under the Connecting Europe Facility (CEF) for 41 cross-border energy infrastructure projects. These projects hold the status of Projects of Common Interest (PCIs) and Projects of Mutual Interest (PMIs) under the TEN-E Regulation. Nearly €750 million is allocated to electricity grid projects, including offshore and smart grids, while over €250 million will fund development studies for hydrogen infrastructure. Another €250 million will support the construction of projects and preparatory studies for CO₂ infrastructure. The next CEF Energy call for proposals is scheduled for 2025. On 31 January, the Commission also opened a consultation to obtain the status of PCI or PMI in the context of the TEN-E.
Funding call for raw materials value chain
On 30 January, EIT RawMaterials launched a new funding call to strengthen Europe’s raw materials value chain, from innovation to production. This is the first European dedicated funding call focused on EU Critical Raw Materials Act objectives. The initiative aims to reduce Europe’s reliance on imports for critical raw materials, a key challenge highlighted in the Draghi Report. With investment sizes of up to €2.5 million per project, it supports mine developers, recycling initiatives, and innovators in scaling up strategic extraction and processing projects. Funding applications are accepted through an open process, with the final deadline on 8 September.
Business impact
Clean Industrial Deal
The start of 2025 has been packed with major EU developments. First came the publication of the Competitiveness Compass on 29 January (see our last update), followed by the European Commission Work Programme 2025 on 11 February (see the policy updates above). And now, as of 26 February, we finally have the long-awaited Clean Industrial Deal.
Now that the moment has arrived, let’s dive into the key components of the Clean Industrial Deal and see how it impacts energy and climate. Read it below and see our LinkedIn post for a quick overview.
What’s in the Deal?
The Clean Industrial Deal is the EU’s overarching growth strategy aimed at addressing climate challenges, decarbonisation, and industrial competitiveness. It builds on the European Green Deal, for which the legislation it brought has now largely entered the implementation phase following the adoption of key legislation.
Under the new mandate, the Clean Industrial Deal will continue the Green Deal’s objectives but with a stronger focus on clean growth and competitiveness through simplifying legislation and putting forward both legislative and non-legislative initiatives. Importantly, the Clean Industrial Deal is a strategy, not a legislative act, meaning it will set out a framework for future policies and regulations to be developed during this mandate. An overview of this can be found below:
Energy
- The Commission aims to increase the EU-wide electrification rate to 32% by 2030 (from 21,3% today) and install 100 GW of renewable electricity capacity annually until 2030. The Commission will look into simplifying state aid rules (June 2025) to make it easier for national governments to fund energy projects (see the policy updates above).
- The European Grid Package (Q1 2026) will enhance cross-border planning, and to stabilise energy prices, the Commission will extend the Gas Storage Regulation in Q1 2025 for better coordination and flexibility.
- The European Commission will simplify the Carbon Border Adjustment Mechanism (CBAM) in Q1 2025. Read this month’s Spotlight for more information.
Clean technologies
- By 2030, 40% of key components in clean tech products sold in the EU should be manufactured within the Union.
- The EU aims to create a full-on European carbon capture market through the implementation of the Industrial Carbon Management Strategy, while a new Industrial Decarbonisation Accelerator Act (Q4 2025) should streamline permitting for renewables, grids, storage, and industrial decarbonisation.
- The Commission plans to launch a Hydrogen Mechanism (Q1 2025) under the Hydrogen Bank to connect suppliers and buyers (e.g., in maritime and aviation).
Financing clean tech
- The Clean Industrial Deal will mobilise €100 billion in funding and counter-guaranteed loans to improve the business case for EU-made clean manufacturing in the short term, including an additional €1 billion in guarantees under the current Multi-annual Financial Framework (MFF).
- A Competitiveness Fund will be key to helping European industries make sustainable investments, while an Industrial Decarbonisation Bank (Q2 2026) will support projects by measuring carbon emission reductions and offering technology-neutral aid across sectors.
- Greater focus on InvestEU to support clean tech, alongside a new Clean Industry State Aid Framework, a Cleantech Guarantee Facility, and expanded IPCEIs to boost funding for manufacturing and scaling clean-tech products.
Industry-specific plans
In 2025, the European Commission will address sector-specific challenges through targeted plans, including: Industrial Action Plan for the Automotive Sector (5 March 2025), the Steel and Metals Action Plan (March 2025), the Chemicals Industry Package (Q4 2025), the Sustainable Transport Investment Plan (Q3 2025), and the Bioeconomy Strategy (Q4 2025).
What does this mean for your business?
In the short term (2025–2026), the focus will be on implementation and simplification. Major initiatives – such as the Industrial Decarbonisation Accelerator Act, Grids Package, Circular Economy Act, and CBAM revision – will be introduced from late 2025 onwards but must first go through the EU legislative process. The Commission’s priority remains enforcing existing legislation. Businesses need to adapt their business strategy to this new reality. Businesses should target the EU to help shape upcoming legislation but should also be active at Member State level to help ensure uniform implementation across countries.
Businesses should not expect a surge in direct EU funding for industry. The CID instead pools together existing funds, ETS revenues and additional private investment in a bid to provide short-term support for industrial decarbonisation and cleantech. To incentivise private spending, the strategy focuses on measures such as relaxed state aid rules, loans and counter-guarantees. It will be even more important for projects to demonstrate that they are strategically aligned with EU priorities if they want to profit from EU funding.
The Clean Industrial Deal takes a sector-focused approach, engaging businesses through industry dialogues to drive investment in cleaner, more competitive industries. In 2025, dialogues will begin in the automotive and steel & metals sectors, with more to follow. These discussions offer businesses a key opportunity to influence EU policy through alliances.
