EU Unveils Green Industry Package with Raw Material Reforms and Decarbonisation Bank

EU

New Proposals Target Lithium Supply, Industrial Emissions, and Simplified Climate Compliance Across Europe

EU Launches Broad Economic and Climate Plan to Advance Clean Tech and Raw Material Security

The European Commission has introduced a comprehensive policy package aimed at strengthening the EU's clean energy transition and boosting industrial competitiveness. The new plan includes proposals for reducing energy costs, simplifying climate reporting, and scaling joint raw material procurement, with lithium among the targeted critical materials.

Demand aggregation schemes, originally designed for natural gas, will now extend to other strategic raw materials. A proposed EU Critical Raw Materials Centre would oversee joint purchasing for participating companies, helping to reduce import dependencies and improve supply chain resilience.

Decarbonisation Bank and CBAM Overhaul Reflect Deepening Industry Support

Climate Commissioner Wopke Hoekstra reaffirmed the EU's commitment to reducing greenhouse gas emissions by 90% by 2040, while stressing that decarbonisation must be economically viable for industry. As part of this approach, the Commission proposed a new EU Bank for Industrial Decarbonisation, which could mobilize up to €400 billion—including €20 billion from the Emissions Trading System (ETS)—over the next decade.

Meanwhile, updates to the Carbon Border Adjustment Mechanism (CBAM) promise to simplify procedures and offer temporary exemptions for 90% of currently affected firms. The revised CBAM will expand to include new products and eventually require carbon intensity labeling for steel (2025) and cement.

Clean Procurement, Hydrogen Incentives, and Corporate Sustainability Rules Updated

Public procurement rules will mandate the use of cleaner industrial products starting in 2026. However, the EU’s hydrogen industry has criticized the latest draft of state aid reforms for lacking the flexibility needed to stimulate demand and close cost gaps with fossil-based hydrogen.

Additionally, the Commission eased compliance rules for around 6,000 EU and 900 non-EU firms under the Corporate Sustainability Due Diligence Directive (CSDDD). The new guidelines require alignment with the Paris Agreement’s 1.5°C climate goal. While Qatari officials voiced concern over the directive’s impact on LNG exports, the Commission clarified that fines up to 5% of global revenue would apply only to extreme violations, such as human rights abuses.