The European Commission has proposed giving itself legally-enshrined power to plan the expansion of European electricity grids, as it scrambles to update an ageing network to meet the soaring demands of the clean energy transition. The proposed changes to the Trans-European Networks for Energy, or TEN-E, regulation, would give the Commission power to conduct “central scenario” planning to assess what upgrades are needed to the grid — a marked change from the current decentralized system of grid planning. The Commission would conduct this planning every four years. Where no projects are planned, the Commission would have power to intervene. The proposal was part of the European Grids Package, a sweeping set of changes to EU energy laws released Wednesday. Electrification of everything from transport and heating to industrial processes is essential as Europe moves away from planet-warming fossil fuels. But that puts huge strain on networks, and the Commission estimates electricity demand will double by 2040. An efficient, pan-European electricity grid is essential to meeting this demand. “The European Grids Package is more than just a policy,” said Teresa Ribera, the EU’s decarbonization chief, in a statement Tuesday. “It’s our commitment for an inclusive future, where every part of Europe reaps the benefits of the energy revolution: cheaper clean energy, reduced dependence on imported fossil fuels, secure supply and protection against price shocks.” Along with centralized planning, the Grids Package proposes speeding up permitting of grids and other energy projects to get the infrastructure faster, including relaxing environmental planning rules for grids. Currently planning and building new grid infrastructure takes around 10 years. It would do this by amending four laws: the TEN-E regulation, the Renewable Energy Directive, the Energy Markets Directive, and the Gas Market Directive. The package also proposes “cost-sharing” funding models to ensure those countries that benefit from projects contribute to its financing, and speeding up a number of key energy interconnection projects across Europe.

Mr. Marcin Laskowski | via PGE The European Union finds itself navigating an era of extraordinary challenges. From defending our shared values against authoritarian aggression to preserving unity in the face of shifting geopolitical landscapes, the EU is once again being tested. Covid-19, the energy crisis, the full-scale Russian war against Ukraine and renewed strains in international relations have taught us a simple lesson: a strong Europe needs capable leaders, resilient institutions and, above all, stable yet flexible financial frameworks. The debate on the next Multiannual Financial Framework (MFF) is therefore not only about figures. It is, fundamentally, a debate about Europe’s security, resilience and its future. From the perspective of the power sector, the stakes are particularly high. Electricity operators live every day with the consequences of EU regulation, carrying both the costs of compliance and the opportunities of EU investment support. Data confirms that European funds channeled into the electricity sector generate immense value for the EU economy and consumers alike. Why? Because electrification is the backbone of Europe’s industrial transformation. The Clean Industrial Deal makes it clear: within a few short years, Europe must raise the electrification rate of its economy by 50 percent — from today’s 21.3 percent to 32 percent by 2030. That means the future of sectors as diverse as chemicals, steel, food processing and high-tech manufacturing is, in reality, a debate about electrification. If this transition is not cost-effective, Europe risks eroding its global competitiveness rather than strengthening it. > That means the future of sectors as diverse as chemicals, steel, food > processing and high-tech manufacturing is, in reality, a debate about > electrification. Electrification is also central to REPowerEU — Europe’s pledge to eliminate dependence on Russian fossil fuels. It is worth recalling that in 2024 the EU still paid more to Russia for oil and gas (€21 billion) than it provided in financial support to Ukraine (€19 billion). Only a massive scale-up of clean, domestic electricity can reverse this imbalance once and for all. But this requires a fresh approach. For too long, the power sector has been seen only through the lens of its own transition. Yet without power sector, no other sector will decarbonize successfully. Already today, electricity accounts for 30 percent of EU emissions but has delivered 75 percent of the reductions achieved from the Emissions Trading Scheme. As electrification accelerates, the sector — heavily reliant on weather-dependent renewables — faces growing costs in ensuring security of supply and system stability. This is why investments must also focus on infrastructure that directly enhances security and resilience, including dual-use solutions such as underground cabling of electricity distribution grids, mobile universal power supply systems for high/medium/low voltage, and advanced cyber protection. These are not luxuries, but prerequisites for a power system capable of withstanding shocks, whether geopolitical, climatic or digital. > For too long, the power sector has been seen only through the lens of its own > transition. Yet without power sector, no other sector will decarbonize > successfully. The European Commission estimates that annual investment needs in the power sector will reach €311 billion from 2031— nearly ten times more than the needs of industry sector. This is an unavoidable reality. The critical question is how to mobilize this capital in a way that is least burdensome for citizens and businesses. If mishandled, it could undermine Europe’s industrial competitiveness, growth and jobs. The MFF alone cannot deliver this transformation. Yet it can, and must, be a vital part of the solution. The European Parliament rightly underlined that completing the Energy Union and upgrading energy infrastructure requires continued EU-level financing. In its July proposal, the Commission earmarked 35 percent of the next budget — about €700 billion — for climate and environmental action. These funds must be allocated in a technology-neutral way, systematically covering generation, transmission, distribution and storage. Public-good investments such as power grids — especially local and regional distribution networks — should be treated as a top priority, enabling small and medium-sized enterprises and households to deploy renewables, access affordable energy and reduce energy poverty. > The debate is not only about money, it is also about the way it is spent. The debate is not only about money, it is also about the way it is spent.  A cautious approach is needed to the “money for reforms” mechanism. EU funds for energy transition must not be judged through unrelated conditions. Support for investments in energy projects must not be held hostage to reforms not linked to energy or climate. This caution should also apply to extending the “do no significant harm” principle to areas outside the scope of the Taxonomy Regulation, where it risks adding unnecessary complexity, administrative burden and uncertainty. The focus must remain firmly on delivering the infrastructure and investments needed for decarbonization and security. Moreover, EU budget rules must align with state aid frameworks, particularly the General Block Exemption Regulation, and reflect the long lead times required for power sector investments. At the same time, Europe cannot afford to lose public trust. The green transition will not succeed if imposed against citizens; it must be built with them. Europe needs more carrots, not more sticks. The next EU budget, therefore, must be more than a financial plan. It must be a strategic instrument to strengthen resilience, sovereignty and competitiveness, anchored in the electrification of Europe’s economy. Without it, we risk not only missing our climate targets but also undermining the very security and unity that the EU exists to defend.

Policymakers are overlooking a $370 billion market that will determine whether climate goals succeed or fail.  In the grand narrative of the clean energy transition, materials like lithium, rare earths and silicon dominate headlines. Yet the most strategically important materials for this transition may be hiding in plain sight, dismissed by policymakers as environmental villains rather than recognized as the enablers of human progress they truly are. The $370 billion blind spot Polyolefins — the family of materials that includes polyethylene and polypropylene — represent perhaps the greatest strategic oversight in contemporary clean industry policy Here is a reality check. Polyolefins represent a global market approaching $370 billion, growing at over 5 percent annually.1,2 They make up nearly half of all plastics consumed in Europe.3 By 2034, global production is expected to hit 371 million tons.4  Yet in the European Union’s Clean Industrial Deal — a €100 billion strategy for industrial competitiveness — polyolefins receive barely a mention.4 This represents a profound strategic miscalculation. While policymakers focus on securing access to exotic critical materials like lithium and cobalt, they overlook the fact that polyolefins are already critical materials— they simply happen to be abundant rather than scarce. In the infrastructure-intensive clean energy transition ahead, abundance is not a weakness; it is the ultimate strategic advantage. > While policymakers focus on securing access to exotic critical materials like > lithium and cobalt, they overlook the fact that polyolefins are already > critical materials. The EU’s REPowerEU plan calls for 1,236 GW of renewable capacity by 2030 — more than double today’s levels.4 Every offshore wind farm, solar array and electric grid connection depends on polyolefins. They insulate cables, protect components and form structural parts of turbines and solar panels. Every solar panel relies on polyolefin elastomers to protect its inner workings for up to 30 years, even in harsh weather.8 And every grid connection depends on polyethylene-insulated cables to carry electricity efficiently across long distances. 7 Multiply these requirements across thousands of installations, and the strategic importance of polyolefins becomes undeniable. Yet, currently, the policy framework treats these materials as afterthoughts, focusing instead on the relatively small quantities of rare elements in generators and inverters while ignoring the massive volumes of polyolefins that make the entire system possible. Beyond energy: the hidden dependencies The strategic importance of polyolefins extends far beyond energy infrastructure. As one example, modern medical systems depend fundamentally on polyolefin materials for syringes, IV bags, tubing and protective equipment. Global food security increasingly depends on polyolefin-based packaging systems that extend shelf life, reduce waste and enable distribution networks — feeding billions of people. Meanwhile, water infrastructure relies on polyethylene pipes engineered for 100-year lifespans. These applications are rarely considered alongside energy priorities — a dangerous fragmentation of strategic thinking. The waste challenge and a circular solution Let’s be clear, plastic waste is a real environmental challenge demanding urgent action. However, the solution is not abandoning these essential materials, it is building the infrastructure to capture their full value in circular systems. The fundamental error in current approaches is treating waste as a material problem rather than a systems problem. Europe currently captures only 23 percent of polyolefin waste for recycling, despite these materials representing nearly two-thirds of all post-consumer plastic waste.3 That’s not because the material can’t be recycled. The infrastructure to do so isn’t at the scale needed to collect, sort and recycle waste to meet future circular feedstock needs. Polyolefins are among the most recyclable materials we have. They can be mechanically recycled multiple times. And with chemical recycling, they can even be broken down to their molecular building blocks and rebuilt into virgin-quality material. That’s not just circularity, it’s circularity at scale. This matters because the EU’s target of 24 percent material circularity by 20305 is unlikely to be met without polyolefins. However, current frameworks treat them as obstacles rather than enablers of circularity. The economic transformation The transition represents an economic transformation, creating competitive advantages for regions implementing it effectively. A region processing 100,000 tons of polyolefin waste annually could capture €100-130 million in additional economic value while creating up to 1,000 jobs.6 > A region processing 100,000 tons of polyolefin waste annually could capture > €100-130 million in additional economic value while creating up to 1,000 jobs. At the end of the day, the clean energy transition must be affordable. Polyolefins help make that possible. They’re cheaper, lighter and longer lasting than many alternatives. Manufacturers with access to cost-effective recycled feedstocks can reduce input costs by 20-40 percent compared with virgin materials. Polyethylene pipes cost 60-70 percent less than steel alternatives while lasting twice as long.9 These aren’t marginal gains. They’re system-level efficiencies that make the difference between success and failure at scale. The strategic choice The real challenge isn’t technical, it’s institutional. Polyolefins sit at the crossroads of materials, environmental and industrial policy, yet these areas are treated as separate domains. There’s also a geopolitical angle. Unlike lithium or rare earths, polyolefins can be produced from diverse feedstocks — natural gas, biomass and even captured CO2 — enabling domestic production and supply chain resilience. This flexibility is a major asset, but current policies largely overlook it. > The path forward requires recognizing polyolefins as strategic assets rather > than environmental problems. The path forward requires recognizing polyolefins as strategic assets rather than environmental problems. This means including them in critical materials assessments — not because they are scarce, but because they are essential. It means coordinating research and development efforts rather than leaving them to fragmented market forces. Most importantly, it means recognizing that the clean energy transition will succeed or fail based on our ability to build infrastructure at unprecedented scale and speed. And that infrastructure will be built primarily from materials that combine performance, abundance, sustainability and cost-effectiveness in ways only polyolefins can provide. The choice facing policymakers is clear: continue treating polyolefins as problems to be managed or recognize them as strategic assets enabling the clean energy future. The regions that understand this integration first will shape the global economy for decades to come. -------------------------------------------------------------------------------- 1. Grand View Research. (2024). Polyolefin Market Size, Share, Growth | Industry Report, 2030. Retrieved from https://www.grandviewresearch.com/industry-analysis/polyolefin-market 2. Fortune Business Insights. (2024). Polyolefin Market Size, Share & Growth | Global Report [2032]. Retrieved from https://www.fortunebusinessinsights.com/polyolefin-market-102373 3. Plastics Europe. (2025). Polyolefins. Retrieved from https://plasticseurope.org/plastics-explained/a-large-family/polyolefins-2/ 4. European Commission. (2025). Clean Industrial Deal. Retrieved from https://commission.europa.eu/topics/eu-competitiveness/clean-industrial-deal_en 5. European Commission. (2022). Circular economy action plan. Retrieved from https://environment.ec.europa.eu/strategy/circular-economy-action-plan_en 6. Watkins, E., & Schweitzer, J.P. (2018). Moving towards a circular economy for plastics in the EU by 2030. Institute for European Environmental Policy. Retrieved from https://ieep.eu/wp-content/uploads/2022/12/Think-2030-A-circular-economy-for-plastics-by-2030-1. 7. Institute of Sustainable Studies (2025). EU Circular Economy Act aims to double circularity rate by 2030 EU Circular Economy Act – Institute of Sustainability Studies 8. López-Escalante, M.C., et al. (2016). Polyolefin as PID-resistant encapsulant material in PV modules. Solar Energy Materials and Solar Cells, 144, 691-699. Retrieved from https://www.sciencedirect.com/science/article/pii/S0927024815005206 9. PE100+ Association. (2014). Polyolefin Sewer Pipes – 100 Year Lifetime Expectancy. Retrieved from https://www.pe100plus.com/PPCA/Polyolefin-Sewer-Pipes-100-Year-Lifetime-Expectancy-p1430.html --------------------------------------------------------------------------------

With the European Green Deal and the Clean Industrial Deal, the EU set a clear course for the economic transition, serving Europe’s strategic interests of competitiveness and growth while also tackling climate change. For the EU to reach its industrial decarbonization and competitiveness objectives, the Draghi report identifies an annual investment gap of up to €800 billion. High-quality, reliable and comparable corporate disclosures, including on sustainability risks and impacts, are key to inform investment decisions and channel financing for the transition. EU rules on corporate sustainability reporting have been expected to fill the existing data gap. While simplification as such is a helpful aim, it looks like the Omnibus initiative is going too far. With the current direction of travel, confirmed by the Council in its agreement on 24 June, the Omnibus is likely to severely hinder the availability of comparable environmental, social and governance (ESG) data, which investors need to scale up investment for industrial decarbonization and sustainable growth, thus impairing their capacity to support the just transition. > The Omnibus is likely to severely hinder the availability of comparable > environmental, social and governance (ESG) data, which investors need to scale > up investment for industrial decarbonization and sustainable growth. The European Commission introduced the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD) and the EU Taxonomy to respond to real needs, voiced over the years by investors and businesses alike. These rules were intended to close the ESG data gap, bring clarity and structure to the disclosures needed to allocate capital effectively for a just transition, and foster long-term value creation. These frameworks were not meant as ‘tick-box compliance exercises’, but as practical tools, designed to inform capital allocation, and better manage risks and opportunities. Now, the Omnibus proposal risks steering these rules of course. Although investors have repeatedly shown support for maintaining these rules and their fundamentals, we are now witnessing a broad-scale weakening of their core substance. Far from delivering clarity, the Omnibus initiative introduces uncertainty, penalizes first movers, who are likely to face higher costs due to adjusting the systems they put in place, and undermines the foundations of Europe’s sustainable finance architecture at a time when certainty is most needed to scale up investment for a just transition to a low-carbon economy. THE COST OF DOWNGRADING SUSTAINABILITY DATA The EU’s reporting framework is a critical enabler of investor confidence, for them to support the clean transition, and resilience building of our economy. It aims to replace a fragmented patchwork of voluntary disclosures with reliable, comparable data, giving both companies and investors the clarity they need to navigate the future. Let’s be clear: streamlining corporate reporting is a goal that is shared by investors and businesses alike. But simplification must be smart: by cutting duplications, not cutting corners. The Omnibus is likely to result in excluding up to 90 percent of companies from the scope of CSRD and EU Taxonomy reporting, if not more, should the council’s position, which includes a €450 million turnover threshold, be retained. This would significantly restrict the availability of reliable data that investors need to make investment decisions, manage risks, identify opportunities and comply with their own legal requirements. Voluntary reporting is unlikely to bridge this data gap, both in terms of the number of companies that will effectively report and regarding the quality of information reported. Using basic, voluntary questionnaires that were designed for very small entities would result in piecemeal disclosures, downgrading data quality, comparability and reliability. Market feedback has already demonstrated that it is necessary to go beyond voluntary reporting to avoid these shortcomings. This is precisely why EU regulators designed the CSRD in the first place. As a result of the Omnibus initiative, investors will likely focus on a limited number of investee companies that are in scope of CSRD and provide reliable information — limiting the financing opportunities for smaller, out-of-scope companies, including mid-caps. This will also restrict the offer and diversity of sustainable financial products — despite the clear appetite of end investors, including EU citizens, for these investments. This runs counter to the objectives of scaling-up sustainable growth laid down in the Clean Industrial Deal, and of mobilizing retail savings to help bridge the EU’s investment gap as proposed in the Savings and Investments Union. CUTTING DUE DILIGENCE BLINDS INVESTORS The CSDDD is also facing significant risks in the current institutional discussions. Originally, the introduction of a meaningful framework to help companies identify, prevent and address serious human rights and environmental risks across their value chains marked an important step to accelerate the just transition to industrial decarbonization and sustainable value creation. For investors, the CSDDD provides a structured approach that improves transparency and enables a more accurate assessment of material environmental and human rights risks across portfolios. This fills long     standing gaps in due diligence data and supports better-informed decisions. In addition, the CSDDD provisions to adopt and implement corporate transition plans including science-based climate targets, in line with CSRD disclosures, are providing an essential forward-looking tool for investors to support industrial decarbonization, consistent with the EU’s Clean Industrial Deal’s objectives. By limiting due diligence obligations to direct suppliers (so-called Tier 1), the Omnibus proposal risks turning the directive into a compliance formality, diminishing its value for businesses and investors alike. The original CSDDD got the fundamentals right: it allowed companies to focus on the most salient risks across their entire value chain where harm is most likely to occur. A supplier-based model would miss precisely the meaningful information and material risks that investors need visibility on. It would also diverge from widely adopted international standards such as the OECD guidelines for Multinational Companies and the UN Guiding Principles. The requirement for companies to adopt and implement their climate transition plans is also at risk, being seen as overly stringent. However, the obligation to adopt and act on transition plans was designed as an obligation of means, not results, giving businesses flexibility while providing investors with a clearer view of corporate alignment with climate targets. Watering down or downright removing these provisions could effectively turn transition plans into paperwork with no follow-through and negatively impact the trust that investors can put in corporate decarbonization pledges. Additionally, the council proposal to set the CSDDD threshold to companies above 5,000 employees, if adopted, will result in fewer than 1,000 companies from a few EU member states being covered. Weakening the CSDDD would add confusion and leave companies and investors navigating a patchwork of diverging legal interpretations across member states. A SMARTER PATH TO SIMPLIFICATION IS NEEDED How the EU handles this moment will speak volumes. Over the past decade, the EU has become a global reference point in sustainable finance, shaping policies and practices worldwide. This is proof that competitiveness and sustainability can reinforce, not contradict, one another. But that leadership is now at risk. > How the EU handles this moment will speak volumes. Over the past decade, the > EU has become a global reference point in sustainable finance, shaping > policies and practices worldwide. The position taken by the council last week does not address some of the major concerns from investors highlighted above and would lead to even more fragmentation in reporting and due diligence requirements across companies and member states. While the window for change is narrowing, the European Parliament retains the capacity to steer policy back on track. The recipe for success and striking the right balance between stakeholders’ concerns is to streamline rules while preserving what makes Europe’s sustainability framework effective, workable and credible, across both sustainability reporting and due diligence. Simplify where it adds value, but don’t dismantle the tools that investors rely on to assess risk, allocate capital and support the transition. What the market needs now is not another reset, but consistency, continuity and stable implementation: technical adjustments, clear guidance, proportionate regimes and legal stability. The EU must stand by the rules it has put in place, not pull the rug out from under those using them to finance Europe’s future. --------------------------------------------------------------------------------

Vast amounts of valuable thermal energy are slipping through the fingers of Europe’s critical industries and institutions every day, as the heat escapes from their operations or remains untapped from natural ambient sources like nearby land, air or water. Today, some businesses and communities are harnessing this heat using innovative heat pump technologies to dramatically cut costs and CO2 emissions. As Europe races to revitalize key industries and accelerate growth, deploying heat pumps at scale is a key strategy for success. Consider this: in 2024 alone, Johnson Controls’ heat pumps cut energy costs for customers by 53 percent and emissions by 60 percent. > in 2024 alone, Johnson Controls’ heat pumps cut energy costs for customers by > 53 percent and emissions by 60 percent. Sound too good to be true? Let’s look at organizations realizing this powerful win-win every day. A hospital in Germany put a heat pump to work to tap heat energy 200 meters below the facility and realized a 30 percent cut in energy costs while producing enough heat to cover 80 percent of the hospital’s demand. The Aalborg hospital in Denmark is close to zeroing out carbon emissions, achieving an 80-90 percent cut while driving energy costs down by 80 percent. And in the UK, Hounslow Council transitioned from gas boilers to air source heat pumps, cutting its energy costs and CO2 emissions by 50 percent across more than 60 schools and public buildings. Natural and waste heat energy resources can be put to work for industry as well. Take, for example, a leading food company in Spain. Installing heat pumps at two of their manufacturing facilities enabled them to save €1.5 million per year and reduce CO2 emissions by nearly 2,000 tons, the equivalent annual emissions of around 400 homes. Nestle’s Biessenhofen plant in Germany also significantly cut energy costs for hot water production while lowering CO2 emissions by 10 percent.   The heat pumps powering these successes? Made by Johnson Controls here in Europe. So, the opportunity at hand is magnified as Europe can lead in cutting-edge energy technologies while putting the machines to work to boost core, centuries-old and critical legacy industries. To put the potential of industry heating needs and excess industrial heat in context, heat accounts for more than 60 percent of energy use in European industries, according to the European Heat Pump Association. Meanwhile, a leading European industrial company estimates that wasted heat in the European Union would just about meet the bloc’s entire energy demands for central heating and hot water. > To put the potential of industry heating needs and excess industrial heat in > context, heat accounts for more than 60 percent of energy use in European > industries, The fact is that untapped heat energy is everywhere. It’s critical that we put it to work now.  A catalyst for a competitive, energy-secure and sustainable Europe   Today EU companies pay 2-3 times more for their electricity than competitors in the United States and China — a disparity that puts a constraint on the competitiveness of European industries, according to analysis by the Draghi Report on the future of Europe’s competitiveness. The report calls for immediate action to lower energy costs and emissions as a combined competition and climate strategy.  With the visionary Clean Industrial Deal, European leaders are moving to do just that. Heat pumps can be front and center in this agenda. Heat pumps quickly bolster the bottom line: they are state-of-the-art, so they ensure the reliability and uptime of critical operations; and they are essential in driving every euro to growth and innovation instead of going out the door in excess energy bills. As leaders turn the Clean Industrial Deal into legislation this year, they can ensure essential industries and organizations prosper by including incentives for heat pumps, while also reforming electricity pricing so the full magnitude of savings can be realized. It is estimated that in Germany in 2024, for example, extraneous taxes on the electric bill represented 30 percent of cost — artificially increasing the cost of electricity and narrowing instead of increasing choices to meet critical energy needs with clean electricity.  Expansive troves of natural and wasted energy represent a huge opportunity for growth and competitiveness. Heat pump technologies are the enablers. They tap into this ‘free energy’ and transform it into the fuel that drives industrial processes, heats spaces, and delivers the higher temperature water and energy that’s essential for processing, pasteurizing, bulking and sterilizing. Natural and waste heat: a natural resource for companies   Seen at scale, our natural and escaping industrial heat are a new natural energy resource to be put to work, and a powerful economic catalyst to strengthen Europe’s competitiveness.   Visualization of the Hamburg Dradenau site where four 15-MW heat pumps will tap into treated wastewater to supply green heat to around 39,000 homes from 2026. Natural and waste energy is all around us. Recovering heat from a city’s wastewater treatment plant represents a powerful example. In Utrecht, the Netherlands, for example, a heat pump extracts residual heat from treated wastewater to provide heat to around 20,000 homes. And from 2026 in Hamburg, Germany, four large-scale heat pumps will extract heat from treated wastewater and feed it into the central district heating network, heating around 39,000 homes. Pharmaceutical companies, chemical facilities, and food and beverage enterprises are among the industries that can tap into energy they generate as a byproduct of the processes that produce the medicines and products we rely on every day.  In our modern data and information technology economy, data centers are among the biggest new sources of excess heat. The International Energy Agency notes that reused heat from data centers could meet around 300 TWh of heating demand by 2030, equivalent to 10 percent of European space heating needs. As artificial intelligence leads to increasingly more computing power in data centers, those numbers will grow significantly. The fact that up to half of the energy consumed by a data center is needed for cooling demonstrates how much heat is available. With heat pumps, we can capture that heat and put it to productive use. A trifecta for competitiveness, energy security and carbon neutrality Heat pump systems are key for Europe’s competitiveness, its energy security and tackling climate change. Tapping into the vast energy resources that are available everywhere and right now, heat pumps have the potential to become one of the continent’s next biggest industrial success stories. Let’s seize the moment for a future of economic strength and security, environmental health, and having pride in them being made right here. > Heat pump systems are key for Europe’s competitiveness, its energy security > and tackling climate change.

Europe is at a pivotal crossroads. Geopolitical instability and economic anxiety dominate the headlines and risk leading politicians into neglecting, or worse, actively dismantling, the continent’s climate leadership. This must not happen. Rather than turning their backs in a time of crisis, EU leaders should seek to accelerate climate action as a path to both security and prosperity.   In the face of rampant disinformation and constant undermining by vested interests in the fossil fuel industry, some now talk of diluting Europe’s climate goals to appease lobby groups and climate-skeptic politicians. This would be a big mistake. Climate ambition cannot be diminished or dismissed for short-term political goals or vested interests. It must be long-sighted, future-proofed and transformational. Europe must now, more than ever, double down and show that climate action delivers for people, particularly those who have lost faith that climate action can benefit their everyday lives.  A commitment to reducing net emissions by at least 90 percent by 2040, phasing out fossil fuels and a strong Clean Industrial Deal that puts cities at the center of its delivery is as important to the health and well-being of Europeans as a strong defense policy, trade relationships or social safety net. If done well, with workers and families’ needs at the center, it will be essential to building a resilient, competitive and secure Europe.   If Europe wants to win hearts, minds and markets, it must prove how the climate transition delivers not just long-term targets, but also tangible benefits — and this all begins in cities with good green jobs, security, healthier places to live, work and play and lower bills.  Europe cannot achieve industrial competitiveness without decarbonization, and it cannot meet its climate commitments without transforming industry. Cities are hubs of economic activity, innovation and workforce development that will determine whether Europe succeeds in achieving both goals.   City leaders understand how EU policies land on the ground. Empowered cities can turn high-level climate ambition into real economic transformation.  Today, Europe’s 18 C40 cities, representing approximately 48 million residents and contributing €3.51 trillion to the global economy, already support 2.3 million green jobs — 8 percent of their total employment — including over 1.3 million in sectors like clean energy, waste and transport. That number will only grow as key sectors decarbonize. With the right support, cities can accelerate the creation of good, green jobs and better access to them: jobs that are safe, secure and future-proof.   > Europe’s 18 C40 cities, representing approximately 48 million residents and > contributing €3.51 trillion to the global economy, already support 2.3 million > good, green jobs   The examples are everywhere: London’s Green Skills Academy is reskilling thousands for low-carbon careers. Rotterdam, where construction materials and buildings account for 25 percent of the city’s €1.3 billion annual spend, is using procurement to scale the circular economy, and through the Circular Materials Purchasing Strategy, strives for a 50 percent reduction in primary resource consumption by 2030. Considering that C40’s European cities have reduced per-capita emissions by 23 percent between 2015 and 2024, these are not just local initiatives — they are scalable models of the industrial transformation Europe needs.   Cities also control powerful economic levers. Strategic procurement can shape markets, drive clean-tech adoption and support local small and medium-sized enterprises (SMEs). For example, Oslo mandates zero-emission construction in public projects, and five years on, 77 percent of municipal building sites are emission-free, a great example of procurement driving industry-wide changes. With direct access to funding and streamlined EU instruments, cities can go further and faster, creating demand for clean innovation and building thriving local economies from the ground up.  Yet today, only 13 percent of the global workforce is ready for these future careers, and Europe faces urgent skills shortages in high-emitting sectors. Cities are ideally placed to bridge that gap. Madrid and London, for instance, are already training workers in retrofitting, heat pumps and renewables. Paris streamlines business registration to support start-ups, while Lisbon provides free ESG training to SMEs, ensuring they meet evolving climate standards. But this needs serious investment at the EU level and real collaboration. Without structured EU-city collaboration, industrial policies risk being disconnected from economic realities and workforce needs.  A just transition also means ensuring that new green jobs are high-quality, inclusive and secure. The green economy has the potential to create 30 percent more jobs compared with a business-as-usual approach, but only if inclusion and fairness are built in from the start so these jobs will go to those who need them the most. Cities, in partnership with unions, businesses and workers, can ensure that industrial shifts translate into widespread job opportunities, particularly for marginalized communities. Projects such as ‘Boss Ladies’ in Copenhagen are championing the inclusion of women in the building sector.   A Clean Industrial Deal that excludes cities will fall short. One that recognizes them as co-creators — alongside businesses, unions and communities — can build the industrial, climate and social transition Europe urgently needs in a time of crisis. Cities must be full partners, with direct access to the tools, funding and policy frameworks needed to drive this transition.   To translate ambition into action, the Clean Industrial Deal must include clear national frameworks for sustainable investment, early business engagement and market-shaping tools like grants, innovation hubs and procurement. With strong public-private partnerships and targeted investments in cities, we can create the conditions for green jobs, resilient industries and lower energy bills.  This unpredictable decade has presented a once-in-a-generation opportunity for Europe to create a future that works for everyone. Europe’s clean industrial strategy must prioritize city-led innovation, invest in workforce transformation and deliver for those who feel most left behind. That is how Europe can regain global leadership — not by pulling back, but by proving how climate action can be the surest path to economic resilience, energy independence and shared prosperity.  > This unpredictable decade has presented a once-in-a-generation opportunity for > Europe to create a future that works for everyone.  

BRUSSELS — The EU needs to build more tanks — and there’s no reason why those tanks can’t be green. In a bid to save its decaying steel and metal industries, the EU has formulated a plan to protect the sector against unfair competition from abroad, high energy prices and a looming trade war with the U.S. — all while helping it go green.  With this strategy — which is largely based on leveraging the EU’s arsenal of trade measures against cheaper foreign products and subsidizing the sector’s decarbonization — Brussels is hoping that saving metals manufacturing will also boost the defense industry and ultimately, keep Europe safe.    “A main battle tank contains 50 to 60 tonnes of high-quality steel, a self-propelled artillery system, up to 100 tonnes, a fighter aircraft 3 tonnes of aluminium,” the Commission writes in the plan, adding that “a stable and resilient supply chain for these materials is critical to strengthening the European Defence Technological and Industrial Base, ensuring the EU’s preparedness and internal security.” The 19-page document acknowledges how central steel has been for European integration, with the bloc’s first steps towards cooperation hailing back to the European Coal and Steel Community formed after World War II. “The choice was clear, Europe had to save its steel. We owe this to our history. Europe started with steel,” EU industry chief Stéphane Séjourné said at a press conference on Wednesday, referring to the same landmark 1951 agreement which eventually evolved into the European Union.  What started as a peace-building project by tying French and German interests together is now rapidly turning into a blueprint for manufacturing deterrence against an expansionist Russia unrestrained by U.S. pledges to come to Europe’s defense.  It was no coincidence that the EU revealed major plans on defense, finance and industry on the same day. The bloc’s rude awakening in the first months of Donald Trump’s second term as U.S. President means all the issues Europe faces have been dialed up to twelve. In particular the steel and aluminum industries will feel the impact of Trump’s imposition of 25 percent tariffs on all U.S. imports of the metals a week ago. Foremost a signal to the heavy industry that the Commission recognizes their problems, the Steel and Metals Action Plan paints sectors in near-inevitable decline. “The EU is the only major steelmaking region seeing a decrease in capacity,” the plan warns. The bloc’s rude awakening in the first months of Donald Trump’s second term as U.S. President means all the issues Europe faces have been dialed up to twelve. | Chip Somodevilla/Getty Images In the long term, Brussels hopes that focusing on producing low-carbon steel with cheaper locally produced renewable energy, hydrogen, and locally recycled scrap will give the industry an edge against its competitors.   UNPRECEDENTED STEPS If the defense industry and employment figures are the ‘why,’ the ‘how’ is more complicated.  The plan includes measures in the fields of energy, trade and sustainability. Perhaps most pressing, the Commission promises it will find a way to replicate safeguard measures intended to keep shielding the steel sector from imports shut out of the U.S. by Trump’s new tariffs. Safeguards can legally only last for eight years, so replacing them will require some legal creativity on the part of the Commission. The Steel Action Plan promises a proposal in the third quarter. The Commission also promises “to proactively open investigations based on a “threat of injury.” That is eurospeak for opening trade probes into dumping or subsidies like the now-famous case on Chinese electric vehicles. Using the legal term “threat of injury” means the EU doesn’t have to wait until an industry is already feeling the pressure. As an umbrella measure, steel and aluminum might soon be classified based on where they were originally “melted and poured,” not in which country they got altered after that. This would allow the EU to tackle circumvention of existing duties on imports. “Is it enough? History will tell,” a Commission official said, after being granted anonymity to discuss the plan candidly.  “But if we would have promised this a few years ago, no one would have believed it,” they said, referring to the Commission considering restrictions on scrap metal exports, tracking where steel is originally melted and poured, and erecting safeguards for aluminum. Those last two points are completely new measures. GREEN AND SECURE Brussels also gave the most steel-friendly nod yet about upcoming changes to the EU’s carbon-border tax known as CBAM, which places a levy on certain imports from countries without an equivalent carbon price. The Commission promised to expand the carbon tax to also cover specific products made from steel and aluminum — not just the basic metals. That would close what industry groups say is a loophole firms exploit to evade taxes. Early reaction from industry was positive. “We are grateful that the Commission has clearly recognized the strategic importance of the European steel industry to the EU’s sovereignty, security, and competitiveness,” said Henrik Adam, president of steelmakers’ association Eurofer. Europe’s top aluminum lobbyist Paul Voss on Tuesday noted “a completely new, different and better dynamic of exchange with the European Commission,” adding: “Now we need actual deliverables.” Brussels hopes that focusing on producing low-carbon steel with cheaper locally produced renewable energy, hydrogen, and locally recycled scrap will give the industry an edge against its competitors.  | Joseph Prezioso/Getty Images Green groups, meanwhile, welcomed the emphasis on helping heavy industries go green. “This is good news: Accelerating the decarbonization of the steel sector presents the best bet to securing a long-term future for the sector in Europe,” said Johanna Lehne, associate director for clean economy at climate think tank E3G. “We need to see much more concerted industrial policy driving the transition at pace: scaling first-generation near-zero emission pilots, growing demand through lead markets and securing low-cost abundant renewable electricity for the sector,” she added. 

Ursula von der Leyen is rounding out the first 100 days of her second term in office — and what a whirlwind it’s been. Since the European Commission president won a second mandate, Donald Trump’s return to the White House in the United States has upended the transatlantic relationship, calling into question the existence of NATO as well as U.S. support for Ukraine in its defensive war against Russia. The pressure coming from Washington — which has threatened the EU with 25 percent tariffs and warned it may not defend countries that fail to spend enough on defense — has forced the Commission to speed up work on reforms designed to bolster the bloc’s defenses and make it more competitive on the global stage.  “On all these issues, the direction of travel was always clear,” von der Leyen told a press conference on Sunday. “What has changed is the sense of urgency. Something fundamental has shifted.” Indeed, among the key reforms von der Leyen’s Commission is due to present this month is a so-called “White Paper” on defense that’s meant to spell out options on how Europe can finance a major defense rampup.  But Trump’s moves on Ukraine, as well as his threats not to defend countries that don’t spend enough on defense, have moved that timeline forward, with EU leaders endorsing plans to spend €800 billion in the coming years during an emergency meeting in Brussels last week — front-running the White Paper. In addition to defense, the European Commission president laid out a series of promises for the EU’s executive body to fulfill in the first 100 days of its term. But that was before Trump was elected and halted aid to Ukraine, threatened the EU with sweeping tariffs, and threw the established world order into doubt. The pressure coming from Washington has forced the Commission to speed up work on reforms designed to bolster the bloc’s defenses and make it more competitive on the global stage. | Kevin Dietsch/Getty Images So, how have von der Leyen’s promises held up? Here’s POLITICO’s verdict. 1. CLEAN INDUSTRIAL DEAL What von der Leyen said: “There is an equally urgent need to decarbonize and industrialize our economy at the same time,” von der Leyen wrote in her second-term manifesto. Her solution: A “Clean Industrial Deal” that would revive the EU’s struggling, heavy-polluting industries — think steel or cement — while reducing their carbon footprint, and also boost manufacturers of new climate-friendly technologies such as electric heat pumps.  Did she hit her target? The Clean Industrial Deal arrived on Feb. 26 (day 88) and responded to many of industry’s demands. The strategy outlined steps to reduce energy prices, source raw materials and create demand for low-carbon products. It was more wobbly on financing — with a new $100 billion fund mainly drawing from existing or already earmarked cash and betting on governments volunteering more money — and addressing trade pressures.  Meanwhile, although the Commission was also eager to roll back green regulations, its promised 2040 climate target — which green groups, clean-tech firms and EU countries like Denmark wanted to incorporate within the Clean Industrial Deal — has still not been published.  Where will the EU go next? The Clean Industrial Deal will unfold over the coming years with more than two dozen legislative proposals, legal reforms and sector-specific “action plans.” The big items for this year include a reformed state-aid framework coming in summer — meant to deliver on some of the investment and energy price promises — and an “Industrial Decarbonization Accelerator Act” toward the end of the year that will establish a label for low-carbon products and made-in-EU green requirements for government spending. And that 2040 target should come soon as well.  Score: — By Zia Weise 2. EUROPEAN ACTION PLAN ON THE CYBERSECURITY OF HOSPITALS AND HEALTH CARE PROVIDERS What von der Leyen said: Europe “must do more” to protect its health-care system from an ever-increasing barrage of cyberattacks, which can knock out vital systems or lock doctors and nurses out of sensitive patient data until criminals get a ransom. The EU’s answer? Ramped-up technical support, an early-warning system and rapid response teams. Did she hit her target? Sort of. The EU published its plan on Jan. 15 (day 46), which got a reasonably warm response. There was, however, one big caveat: It all depends on money, and the plan made little mention of that — even though cash remains “the most important issue,” according to Tomislav Sokol, a Croatian member of the European Parliament with the center-right European People’s Party group, in comments made when the plan was published.  Digitaleurope, a trade body, reckons the plan is a “good starting point” but echoed concerns about a lack of clarity on cash.  Where will the EU go next? The technical: The Commission will now consult on the plan, with various deadlines to hit throughout this year and next. The political: The cash question is for EU capitals to address, said Health Commissioner Olivér Várhelyi when unveiling the plan. “I understand that this is a problem across the board in Europe, that there’s not enough resources dedicated to [protecting data]. But we’re making the point with this proposal that there would have to be,” he said. The success of the plan “will, of course, depend on the support from the European member states,” said Wim Hafkamp, managing director at Z-Cert, the Dutch computer emergency response team for the health sector.  Score: — By Sam Clark 3. AI FACTORIES INITIATIVE What von der Leyen said: Von der Leyen pledged to ensure European startups had access to the necessary computing power to compete in the accelerating global artificial intelligence race by “building” massive AI supercomputers, also known as AI factories. With many European startups currently relying on U.S. computing power, the move could also be read as a push to become more technologically sovereign.  Did she hit her target? Kind of. On Dec. 11 (day 11), the European Commission announced it would contribute half of a planned €1.5 billion investment into seven European sites. But the victory was short-lived: U.S. President Donald Trump assumed office in January and announced a $500 billion AI hardware plan, moving the goalposts somewhat.  So the Commission moved again. On Feb. 10, at the AI Action Summit in Paris, von der Leyen unveiled a plan to mobilize €200 billion for hardware, including a €20 billion fund to build four AI gigafactories aimed at training the most complex AI models.  Where will the EU go next? On this one we’re only getting started. The Commission is expected to grant funding to five more AI factories in March. The road to the gigafactories is even longer: There’s no clear breakdown on how much funding will be provided, nor any details on how much of that will come from the EU budget.  Score: — By Pieter Haeck 4. WHITE PAPER ON DEFENSE What von der Leyen said: In her political guidelines the Commission president said she would present a White Paper on the Future of European Defence to identify investment needs. In the past months the Commission made clear that the policy document would also include financing options to help the bloc massively boost defense spending.  Did she hit her target? Yes and no. Von der Leyen technically hasn’t presented her White Paper yet, with publication slated for March 19 (day 109).  However, on March 4 (day 91) she did present a plan to send loans of up to €150 billion to governments to help them increase their military expenditure. The money can be spent on artillery, missiles, ammunition, drones and anti-drone systems, as well as on weapons for Ukraine.  Von der Leyen also said she would trigger the EU’s national escape clause, a mechanism to prevent defense spending from being included in the punishment mechanism for countries breaching the bloc’s deficit rules.  Her plans were approved by EU leaders on March 6.  Where will the EU go next? The Commission now has to translate the financing proposals into actual legislative instruments.  The EU’s executive branch is also still expected to present the White Paper on Defense, which could include more financing options, as well as more details on the EU’s industrial priorities for armament.  Score: — By Laura Kayali 5. VISION FOR AGRICULTURE AND FOOD What von der Leyen said: Von der Leyen pledged to present a Vision for Agriculture and Food, building on an agrifood roundtable held during the first half of last year. “We need to overcome contradictions … that’s why the strategic dialogue on the future of farming has begun,” she told lawmakers in July. “I’ve promised to listen carefully and to draw important lessons.” Did she hit her target? On Feb. 19 (day 81), Agriculture Commissioner Christophe Hansen delivered an underwhelming vision that tried to please everybody with better conditions for farmers, fairer supply chains and a rethinking of sustainability policies. But for many, this big, fancy vision — which is to replace the previous Farm to Fork Strategy — has landed more as a farmer-friendly agenda that’s big on promises but short on cash. Where will the EU go next? The Commission is expected to move forward with the first part of the plan in April: to cut red tape on the €300 billion-plus farm budget by easing requirements to access the cash. By the end of the year, Hansen wants to crack down on other rules affecting farmers beyond the Common Agricultural Policy (CAP) — such as environmental and food safety policies. Score: — By Paula Andrés 6. YOUTH POLICY DIALOGUES What von der Leyen said: In her guidelines von der Leyen said young people should be able to use their voices and shape their futures. She also said she wanted her commissioners to lead by example and to engage in “youth policy dialogues” within the first 100 days.  Did she hit her target? Yes, albeit narrowly. Sixteen of the 28 commissioners held their youth policy dialogues the week before the deadline (days 93-97), while three commissioners are set to hold dialogues on March 10 (day 100): justice chief Michael McGrath, tech sovereignty boss Henna Virkkunen and innovation lead Ekaterina Zaharieva. Deadline work resonates well with young people.  Where will the EU go next? The youth policy dialogues are meant to be a recurring event in which commissioners talk to young people once a year. The bigger question is how — or if — this will feed the Commission’s policy work.  Youth Commissioner Glenn Micallef, who played wheelchair basketball during his dialogue in Athens, told POLITICO that the experience of wheelchair sports is “a whole new dimension” compared to just reading up on inclusive sports.  Score: — By Pieter Haeck 7. ENLARGEMENT POLICY REVIEW What von der Leyen said: Outlining priorities several months ago, von der Leyen zeroed in on enlargement — expanding the bloc’s membership — as well as the need to tweak the EU’s rules to make space for new members. Paris and Berlin have both argued that if the EU is grow to as many as 30 or 35 members it will need to change rules on agricultural aid, for instance, to ensure that existing members aren’t penalized. This gave rise to von der Leyen’s call for an in-depth “policy review” examining all aspects of enlargement. In a foretaste of this intricate process — potentially including changes to the EU’s basic treaties — a preparatory document published in July was 22 pages long. Did she hit her target? Insofar as a document will be published, yes. That’s what the Commission does. But this is one case where the savage geopolitics of the day is likely to derail the EU’s natural bureaucratic pace.   Where will the EU go next? Von der Leyen has already flagged that Ukraine could join the bloc by 2030, possibly earlier. Her enlargement commissioner, Marta Kos, has floated the possibility of giving Ukraine faster access to parts of the EU’s single market as part of an accelerated accession process. “We are also working on plans to accelerate the integration of Ukraine into many more parts of the Single Market — to attract more investments, to strengthen Europe-wide value chains, and to create new opportunities for both Ukrainian and European businesses,” Kos said last week. Naturally, all this happened before the policy review was published. Score: — By Nicholas Vinocur