The European Competitiveness Fund: will it fulfill Europe’s clean transition ambitions?

Key Messages

• As the investment needs for decarbonization amount to around €406-462 billion per year, the European Competitiveness (ECF) does not put on the table much additional funding for clean transition and industrial decarbonization (€26.2 billion over 7 years). Reaching climate and decarbonization objectives therefore requires for the EU to pool resources with Member States towards common priorities, design regulations that crowd in private investment, and continue exploring additional funding sources. 
   
• The shift in the European budget towards integrating environmental programmes within a fund focused on competitiveness risks weakening the financing of climate and environmental actions. To ensure environmental and climate ambition are appropriately prioritized in the ECF, the Commission should either adopt strong eligibility criteria for a high level of climate ambition in project selection, or safeguard specific funds dedicated to environmental objectives throughout the ECF budget. 
   
• The ECF has the potential to strengthen Europe’s strategy to mitigate risks around supply chains and achieve objectives set in regulations such as the Critical Raw Material Act, through its focus on resilience. Enhancing circularity in industry can further reinforce the EU’s autonomy for critical raw materials. The Competitiveness Coordination Tool or the Strategic Stakeholder Board of the ECF will be key tools to steer European industrial policy and refine these strategies. 
   
• The ECF provides an opportunity to refine the European preference principle, which is increasingly used in EU proposals and referred to timidly in the ECF. To be effective, instruments embodying such a principle should address key bottlenecks to target key dependencies along critical supply chains, based on an evaluation of downstream and upstream risks.