Making the European Competitiveness Fund the Backbone of a Green Industrial Strategy

The European Competitiveness Fund (ECF), with a proposed budget of €207 billion, is positioned to become a central pillar of the EU’s industrial policy in the forthcoming long-term budget cycle. Its primary aim is to bolster Europe’s security, competitiveness, and climate leadership by strategically investing in clean technologies. However, there are concerns that, if the fund’s resources are spread too thinly across numerous priorities, it may fail to achieve significant impact. Advocates argue that the ECF should prioritise sectors with the greatest potential for decarbonisation and industrial scale-up to ensure meaningful progress. Key areas identified for focused investment include the battery value chain, electric vehicles, heavy-duty zero-emission transport, zero-emission aircraft and vessels, and clean fuels for aviation and shipping. These sectors are seen as critical to anchoring domestic manufacturing, enhancing strategic autonomy, and accelerating the green transition. The briefing stresses that public funds must be strictly directed away from fossil-fuel-based or environmentally damaging projects, reinforcing the EU’s commitment to sustainability. To support this vision, it is proposed that the Clean Transition and Industrial Decarbonisation window be increased to at least €50 billion, supplemented by national contributions. Effective deployment of the ECF will require a streamlined and versatile financial toolkit, combining grants, loans, guarantees, equity, and output-based incentives to reduce investment risks and stimulate market creation for European clean technologies. Equally important are robust eligibility criteria, including requirements for products to be made within the EU and adherence to environmental and social safeguards. Such conditions aim to ensure that public money not only drives innovation but also strengthens the European industrial base in line with broader EU objectives. Governance is highlighted as a crucial factor in the fund’s success. The establishment of an independent, science-driven Strategic Stakeholder Board is recommended to oversee priority-setting and funding decisions, with transparent, evidence-based methodologies guiding work programmes. This approach is framed as a pivotal political choice for Europe: whether to concentrate resources on building competitive clean industries for the future or to continue diffusing funding across too many competing goals. The ECF is envisioned as the financial backbone of a coherent and ambitious European industrial strategy focused on sustainability and resilience.