COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A New Industrial Strategy for Europe
Date: 2020-03-10
Institutions: European Commission, Secretariat-General
Subjects: EU growth strategy, European industrial area, circular economy, climate change policy, competitiveness, digital single market, industrial reorganisation, innovation, investment, updating of skills

EN 

  EN 

   EUROPEAN COMMISSION  Brussels, 10.3.2020  COM(2020) 102 final  COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE EUROPEAN COUNCIL, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE REGIONS A New Industrial Strategy for Europe  
 
 
1.  Europe’s new industrial way 

Europe  has  always  been  the  home  of  industry.  For  centuries,  it  has  been  a  pioneer  in 
industrial  innovation  and  has  helped  improve  the  way  people  around  the  world  produce, 
consume and do business. Based on a strong internal market, the European industry has long 
powered  our  economy,  providing  a  stable  living  for  millions  and  creating  the  social  hubs 
around which our communities are built.  

Throughout its long history, industry has proven its ability to lead change. And it must now 
do  the  same  as  Europe  embarks  on  its  transition  towards  climate  neutrality  and  digital 
leadership in an ever-changing and ever more unpredictable world.  

The twin ecological and digital transitions will affect every part of our economy, society and 
industry. They will require new technologies, with investment and innovation to match. They 
will create new products, services, markets and business models. They will shape new types 
of jobs that do not yet exist which need skills that we do not yet have. And they will entail a 
shift from linear production to a circular economy.  

These  transitions  will  take  place  in  a  time  of  moving  geopolitical  plates  which  affect  the 
nature of competition. The need for Europe to affirm its voice, uphold its values and fight for 
a level playing field is more important than ever. This is about Europe’s sovereignty.  

The breadth and depth, the scale and speed, the nature and necessity of the twin transitions are 
unprecedented.  This  is  reflected  in  President  von  der  Leyen’s  Political  Guidelines,  the 
priorities  set  out  by  the  European  Parliament  and  the  European  Council’s  Strategic  Agenda 
2019-2024.  The  European  Green  Deal1  and  the  Commission’s  recent  Strategy  on  Shaping 
Europe’s Digital Future2 set the ambition, speed and direction of travel for the years to come.  

We  now  need  a  new  industrial  way  for  Europe,  fit  for  the  ambitions  of  today  and  the 
realities of tomorrow. At the heart of this is the ability of Europe’s industry to lead the twin 
transitions  and  drive  our  competitiveness.  It  cannot  afford  to  simply  adapt  –  it  must  now 
become the accelerator and enabler of change and innovation. Our industrial policy must help 
make this ambition a reality. 

Europe’s  industrial  strategy  must  reflect  our  values  and  social  market  traditions.  We 
will rely on our strengths: our diversity and talent, our values and way of life, our innovators 
and  creators.  We  need  a  European  industrial  policy  based  on  competition,  open  markets, 
world-leading  research  and  technologies  and  a  strong  single  market  which  brings  down 
barriers  and  cuts  red  tape.  And  we  must  resist  the  simplistic  temptations  that  come  with 
protectionism or market distortions, while not being naïve in the face of unfair competition.  

This  strategy  recognises  the  strength  and  the  role  of  the  European  Union,  primarily  as  an 
enabler  and  regulator.  Setting  the  framework  and  providing  political  and  policy  direction  is 
crucial to offer the certainty needed for investors, innovators and industry alike.  

Our new industrial strategy is entrepreneurial in spirit and in action. The Commission is 
ready to co-design and co-create solutions with industry itself, as well as with social partners 
and all other stakeholders. This will be supported by a new focus on industrial ecosystems, 

1  COM(2019) 640 final. 
2  COM(2020) 67 final. 

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taking into account all players within a value chain. This is our new approach and reflects the 
need for new ways of thinking and working to lead the twin transitions.  

This strategy shows the direction of travel and the route we will take to get there. It lays out 
the  vision  of  what  we  want  to  achieve  by  2030  and  beyond,  and  the  fundamentals  that  will 
take us there. In times of transition and major change for our Union, one simple reality will 
remain  the  same:  Europe  will  always  be  the  home  of  industry.  And  with  this  strategy,  the 
European Commission is ready to do what it takes to make sure it stays that way.  

2.  Europe’s industry: Today and tomorrow 

Industry is central to Europe’s future progress and prosperity. It makes up more than 20% of 
the  EU’s  economy  and  employs  around  35  million  people,  with  many  millions  more  jobs 
linked  to  it  at  home  and  abroad.  It  accounts  for  80%  of  goods  exports  and  is  a  key  reason 
behind the EU’s position as top global provider and destination for foreign direct investment. 
Small and medium sized businesses (SMEs) account for over 99% of all European firms – the 
vast  majority  of  which  are  family  run  companies  –  and  are  our  economic  and  social 
backbone3. 

Europe’s  industry  has  a  global  competitive  advantage  on  high  value-added  products  and 
services. It leads by example complying with the highest social, labour and environmental 
standards, allowing Europe to project its values. Thanks to a strong innovation capacity, it is 
also a world leader in green technology patents and other high tech sectors. Our single market 
empowers  European  companies  of  all  sizes  to  innovate,  scale-up  and  employ  more  people. 
These strengths need to be channelled towards gaining leadership in areas where the EU still 
lags behind, such as on cloud and data applications.  

European industry is already undergoing a significant transformation. There is a pronounced 
shift  from  products  to  services  and  from  exclusive  to  shared  ownership  of  products  and 
services. The pressure on natural resources is already leading to a more circular approach to 
manufacturing. Thanks to disruptive technologies like 3D printing, Europe also needs to make 
the most of localisation as an opportunity to bring more manufacturing back to the EU in 
some sectors.  

In  order  to  bring  our  ambitions  to  life,  Europe  needs  an  industry  that  becomes  greener  and 
more  digital  while  remaining  competitive  on  the  global  stage.  This  will  help  transform  and 
grow traditional and new industries, support SMEs and drive our competitive sustainability 
across the EU. This is equally as important for services as it for goods.  

Thanks  to  Europe’s  social  market  economy,  economic  growth  goes  hand-in-hand  with 
improved social and living standards and good working conditions. The European Pillar of 
Social Rights will continue to be our compass and ensure the twin transitions are socially fair. 

With  its  strong,  innovative  and  integrated  industrial  base,  Europe  is  well  placed  to  take  the 
global lead.  

3 A dedicated SME strategy is adopted in parallel with this Communication – SME strategy for a sustainable and 
digital Europe, COM (2020) 103 final. 

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2.1 A globally competitive and world-leading industry 

New  and  ever-changing  geopolitical  realities  are  having  a  profound  effect  on  Europe’s 
industry. Global competition, protectionism, market distortions, trade tensions and challenges 
to the rules-based system are all on the rise. New powers and competitors are emerging. More 
established  partners  are  choosing  new  paths.  Coupled  with  a  period  of  global  economic 
uncertainty on the horizon, these trends pose new challenges for Europe’s industry as it sets 
off on the twin ecological and digital transitions.  

Faced  with  these  headwinds,  Europe’s  response  cannot  be  to  erect  more  barriers,  shield 
uncompetitive  industries  or  mimic  the  protectionist  or  distortive  policies  of  others.  Being 
competitive  requires  competition  –  both  at  home  and  in  the  world.  It  needs  the  right 
conditions for entrepreneurs to turn their ideas into actions and for companies of all sizes to 
thrive and grow.  

At the same time, the EU needs to be able to strengthen its strategic interests abroad through 
economic  outreach  and  diplomacy.  The  EU  must  leverage  the  impact,  the  size  and  the 
integration  of  its  single  market  to  set  global  standards.  Being  able  to  forge  global  high-
quality  standards  which  bear  the  hallmark  of  Europe’s  values  and  principles  will  only 
strengthen our strategic autonomy and industrial competitiveness.  

Europe will also continue to rely on free and fair trade with partners from around the world. 
The  rules-based  multilateral  trading  system  and  the  World  Trade  Organization  are 
indispensable to ensure open markets and a level playing field. The EU will continue efforts 
to  uphold,  update  and  upgrade  the  world  trading  system  so  it  is  fit  to  address  today’s 
challenges and tomorrow’s realities. 

2.2 An industry that paves the way to climate-neutrality 

The European Green Deal is Europe’s new growth strategy. At the heart of it is the goal of 
becoming the world’s first climate-neutral continent by 2050.  

Industry  has  a  leading  role  to  play  in  what  is  the  greatest  challenge  and  opportunity  of  our 
times. All industrial value chains, including energy-intensive sectors, will have a key role 
to play. They will all have to work on reducing their own carbon footprints but also accelerate 
the  transition  by  providing  affordable,  clean  technology  solutions  and  by  developing  new 
business models.  

To  become  more  competitive  as  it  becomes  greener  and  more  circular, industry  will  need  a 
secure supply of clean and affordable energy and raw materials. Stepping up investment 
in  research,  innovation,  deployment  and  up-to-date  infrastructure  will  help  develop  new 
production processes and create jobs in the process.  

In the entrepreneurial spirit of this strategy, EU institutions, Member States, regions, industry 
and  all  other  relevant  players  should  work  together  to  create  lead  markets  in  clean 
technologies  and  ensure  our  industry  is  a  global  frontrunner.  Regulatory  policies,  public 
procurement, fair competition and the full involvement of SMEs will be essential to make this 
happen.  

These  efforts  should  be  supported  by  policies  and  financial  instruments  at  EU  and  national 
level,  as  well  as  the  private  sector.  Those  who  move  first  and  move  fastest  will  hold  the 
greater competitive advantage.  

3 

 
2.3 An industry shaping Europe’s digital future 

Digital  technologies  are  changing  the  face  of  industry  and  the  way  we  do  business.  They 
create new business models, allow industry to be more productive, provide workers with new 
skills and support the decarbonisation of our economy. The digital sector will also contribute 
to the European Green Deal, both as a source of clean technology solutions and by reducing 
its own carbon footprint. 

With its Strategy on Shaping Europe’s Digital Future, the Commission set out its vision for 
how  Europe  can  retain  its  technological  and  digital  sovereignty  and  be  the  global  digital 
leader. Recognising that scalability is key in a digitalised economy, strengthening the digital 
single market will underpin Europe’s transition. 

Europe must also speed up investment in research and the deployment of technology, in areas 
such as artificial intelligence, 5G, data and metadata analytics. In 2018, only around one in ten 
EU companies analysed big data, while only one in four used cloud computing services.  

As  set  out  in  the  Commission’s  recent  European  Strategy  for  Data4,  Europe  needs  a 
framework to allow businesses to create, pool and use data to improve products and compete 
internationally in a way that upholds our values and respects the rights and privacy of all. 

The  EU  must  also  enhance  its  industrial  capacity  in  critical  digital  infrastructure.  The 
successful roll-out of highly secured and state-of-the-art 5G network will be a major enabler 
for  future  digital  services  and  be  at  the  heart  of  the  industrial  data  wave.  Europe  must  now 
invest if it wants to be a frontrunner in 6G networks.  

In the entrepreneurial spirit of this industrial strategy, Europe must pool its strengths to do 
collectively  what  no  one  can  do  alone.  Recent  examples  of  doing  so  have  shown  the 
potential and the value of this approach. Europe is now  home to one of the top three fastest 
supercomputers in the world and has reversed a downward trend in micro-electronics.  

Europe has everything it takes to lead this new technology race. It must build on its strengths, 
including  a  robust  industrial  base,  high  quality  research,  skilled  workers,  a  vibrant  start-up 
ecosystem, mature infrastructure and a leading position in the use of industrial data.  

3.  The fundamentals of Europe’s industrial transformation 

The  three  drivers  outlined  above  show  the  extent  of  transformation  Europe  will  undergo.  It 
takes a generation to transform an industrial sector and all the value chains it forms part of. 
But in a competitive and dynamic environment there is no time to waste. The next five years 
will be decisive to set the right enabling conditions for this transition.  

Underpinning  this  strategy  are  a  set  of  fundamentals  for  Europe’s  industrial  transformation. 
Some of these renew or expand on existing approaches in innovation, investment, standards or 
levelling  the  playing  field.  Others  reflect  the  need  for  new  ways  of  working  for  Europe  to 
strengthen its industry for the transitions, whether it be on skills or circularity.  
The fundamentals reflect the fact that there is no silver-bullet or standalone solution – they are 
each inter-connected and reinforce each other. But they also reflect the reality that, while a lot 
can be done at the European level to enable and provide certainty, many of the levers are in 
the hands of others. A partnership approach will therefore be essential.  

4  COM(2020) 66 final.  

4 

 
 
                                                            
3.1 Creating certainty for industry: A deeper and more digital single market 

Thanks  to  our  unique  single  market,  EU  companies  benefit  from  a  springboard  to  compete 
globally. By providing a common regulatory space and scale, the single market is the driver of 
competitiveness  and  facilitates  the  integration  of  companies  of  all  sizes  in  European  and 
global value chains.  

To allow the single market to propel our industry forward, legislation must be implemented 
and enforced across the board. The Single Market Enforcement Action Plan5 adopted today 
puts forward concrete proposals to strengthen joint efforts in this area, notably the creation of 
a Single Market  Enforcement Task  Force. The Single Market Barriers Report6 shows the 
need to break down the barriers facing businesses when selling goods or more acutely when 
providing services cross-border. Enhancing tax harmonisation would help remove one of the 
main obstacles faced by business when operating cross-border, notably by making a common 
consolidated corporate tax base a reality. 

Single  market  legislation  must  also  be  reviewed  and  updated  to  ensure  that  it  is  fit  for  the 
digital age. This  includes  the  revision  of EU rules  on  product  safety,  the implementation  of 
the European Data Strategy and the adoption of the Digital Services Act.  

An  “SME  to  SME  approach”  will  also  be  essential.  The  growing  number  of  young,  tech-
savvy  SMEs  can  help  more  established  industrial  firms  to  adapt  their  business  models  and 
develop new forms of work for the digital age. This has already created new opportunities and 
start-ups  should  be  supported  to  help  build  the  platform  economy.  But  new  forms  of  work 
must come with modern and improved forms of protections, including for those working on 
online platforms. 

The  single  market  depends  on  robust,  well-functioning  systems  for  standardisation  and 
certification.  These  help  to  increase  the  size  of  markets  and  provide  legal  certainty. 
Developing new standards and technical regulations, coupled with increased EU participation 
in international standardisation bodies, will be essential to boost industry’s competitiveness.  

The  EU  also  needs  to  ensure  that  its  Intellectual  Property  policy  helps  to  uphold  and 
strengthen  Europe’s  tech  sovereignty  and  promote  global  level  playing  field.  IP  helps  to 
determine the market value and competitiveness of Europe’s firms. This is their intangibles, 
such  as  brands,  designs,  patents,  data,  know-how,  and  algorithms.  Smart  IP  policies  are 
essential to  help  all  companies  to grow,  create  jobs  and  to  protect  and  develop  what  makes 
them unique and competitive.  

An  independent  EU  competition  policy  has  served  Europe  well  by  helping  to  level  the 
playing field, driving innovation and giving consumers more choice. Competition brings the 
best out of our companies and enables them to stay competitive globally. In a fast changing 
world, and a time when Europe is embarking on its major twin transitions, we should ensure 
that competition rules remain fit for today’s world.  

With this in mind, the Commission is currently reviewing the EU competition framework. 
This is looking at how current competition rules are applied, notably in relation to anti-trust 

5  Communication  and  its  accompanying  Report  on  Identifying  and  addressing  barriers  to  the  single  market, 

COM(2020) 93 final. 

6  Long term action plan for better implementation and enforcement of single market rules, COM(2020) 94 

final. 

5 

 
 
                                                            
remedies,  and  whether  rules  governing  horizontal  and  vertical  agreements  and  the  market 
definition notice are still fit for purpose. It will also look at how to improve case detection and 
speed  up  investigations.  The  Commission  will  use  the  tool  of  sector  inquiries  in  new  and 
emerging markets that are shaping our economy and society. 

The  ongoing  evaluation  of  merger  control  and  the  “fitness”  check  of  various  State  aid 
guidelines  are  also  part  of  this  review.  State  aid  rules  ensure  a  level  playing  field  within 
Europe,  avoiding  a  fratricidal  subsidies  race  while  supporting  important  public  interest 
objectives.  The  Commission  will  ensure  revised  State  aid  rules  are  in  place  in  2021  in  a 
number of priority areas, including energy and environmental aid. 

Making it happen 

  Single Market Enforcement Action Plan and Single Market Barriers Report, adopted 

today.  

  Setting up a Single Market Enforcement Task-Force, composed of Member States 

and the Commission. 

  SME Strategy for a sustainable and digital Europe, adopted today.  
  Evaluate,  review  and,  if  necessary,  adapt  EU  competition  rules  as  of  2021, 
including  the  ongoing  evaluation  of  merger  control  and  fitness  check  of  State  aid 
guidelines. 

  Intellectual Property Action Plan to assess the need to upgrade the legal framework, 

ensure a smart use of IP, better fight IP theft. 

  Follow-up to the European Data Strategy to develop an EU data economy, including 

the launch of common European data spaces in specific sectors and value chains. 

  Digital Services Act to update and strengthen the legal framework for a single market 

in digital services. 

  Initiative on improving the working conditions for platform workers. 

3.2 Upholding a global level playing field  

The  openness  of  Europe’s  economy  is  at  the  source  of  its  prosperity  and  competitiveness. 
Although, EU industry is highly integrated in global value chains and operates globally, the 
EU should not be naïve to threats to fair competition and trade.  

The EU works to keep markets open through trade deals with partner countries or regions or 
working  in  international  fora  to  find  rules  that  work  for  all.  We  must  continue  to  take  a 
coordinated European approach to secure mutually beneficial trade and overcome any barriers 
that  prevent  our  businesses  from  properly  accessing  other  markets  around  the  world.  This 
includes fighting aggressive tax planning schemes that create an uneven playing field.  

The EU will make the most of its full toolbox of trade defence mechanisms. By mid-2020, the 
Commission  will  explore  how  best  to  strengthen  anti-subsidies  mechanisms  and  tool.  This 
will be done in the White Paper on an Instrument on Foreign Subsidies which will address 
distortive effects caused by foreign subsidies within the single market. This will be followed 
up with a proposal for a legal instrument in 2021.  

This distortion is often coupled with a lack of reciprocal access for European firms to the 
home  country  markets  of  foreign,  state-owned  companies.  In  particular,  EU  procurement 
markets are mostly open to businesses from countries where EU companies are discriminated 

6 

 
 
 
against  or  confronted  with  outright  market  closures.  Therefore,  the  White  Paper  will  also 
tackle the issue of access of foreign, state-owned companies to procurement markets and EU 
funding.  A  swift  agreement  on  the  proposed  International  Procurement  Instrument  will 
also  be  essential  to  address  lack  of  reciprocity  and  to  give  the  EU  further  leverage  in 
negotiations.  

European industry should not face unfair competition from competitors around the world that 
abide  by  different  standards  or  principles,  such  as  on  climate.  A  new  Chief  Trade 
Enforcement  Officer  will  work  to  improve  the  compliance  and  enforcement  of  our  trade 
agreements, and report regularly to the European Parliament. The Commission will propose to 
make  the  respect  of  the  Paris  agreement  an  essential  element  for  all  future  comprehensive 
trade agreements.  

Reinforced customs controls are also essential to ensure that imported products comply with 
EU rules.  

Making it happen 

  White  paper  on  an  instrument  on  foreign  subsidies  by  mid-2020,  also  looking  at 

foreign access to public procurement and EU funding. 

  Strengthening  the  global  rules  on  industrial  subsidies  in  the  World  Trade 

Organization. 

  Swift adoption of the International Procurement Instrument. 
  Action plan on the Customs Union in 2020 to reinforce customs controls, including a 
legislative  proposal  for  an  EU  Single  Window  to  allow  for  fully  digital  clearance 
processes at the border. 

3.3 Supporting industry towards climate neutrality 

As  Europe  transitions  to  climate-neutrality,  certain  sectors  will  have  to  make  a  bigger  and 
more  transformative  change  than  most.  Energy-intensive  industries  are  indispensable  to 
Europe’s economy and are relied on by other sectors. Modernising and decarbonising energy-
intensive industries must therefore be a top priority. 

The European Green Deal sets the objective of creating new markets for climate neutral and 
circular  products,  such  as  steel,  cement  and  basic  chemicals.  To  lead  this  change,  Europe 
needs  novel  industrial  processes  and  more  clean  technologies  to  reduce  costs  and  improve 
market readiness.  

For instance, the Commission will support clean steel breakthrough technologies leading to a 
zero-carbon steel making process. The EU Emissions Trading System Innovation Fund will 
help  deploy  other  large-scale  innovative  projects  to  support  clean  products  in  all  energy-
intensive sectors.  

A  new  chemicals  strategy  for  sustainability  will  help  better  protect  people  and  the 
environment against hazardous chemicals and encourage innovation in the sector to develop 
safe and sustainable alternatives.  

Europe  also  needs  to  address  the  sustainability  of  construction  products  and  improve  the 
energy  efficiency  and  environmental  performance  of  built  assets.  A  more  sustainable  built 
environment will be essential for Europe’s transition towards climate-neutrality.  

7 

 
 
As the transition picks up speed, Europe must ensure that no one is left behind. The proposal 
for  the  new  Just  Transition  Mechanism7  will    mobilise  €100  billion  to  ensure  a  fair 
transition  for  carbon  intensive  regions  as  they  continue  to  transform  their  industries  and 
economies, 

Reducing emissions across industry will depend on an ‘energy efficiency first’ principle and 
a secure and sufficient  supply of low-carbon energy at competitive  prices. This  will  require 
planning  and  investment  in  low-carbon  generation  technologies,  capacity  and  infrastructure. 
We will need a more strategic approach to renewable energy industries, such as offshore 
energy,  and  the  supply  chain  underpinning  them.  This  will  also  help  cater  for  a  substantial 
increase in the amount of electricity required by the twin transitions. This should be supported 
by  efforts  to  better  connect  Europe's  electricity  systems  to  increase  security  of  electricity 
supply and integrate more renewables. 

As part of this, all carriers of energy, including electricity, gas and liquid fuels will need to be 
used more effectively by linking different sectors. This will be the aim of a new strategy for 
smart  sector  integration,  which  will  also  set  out  the  Commission’s  vision  on  clean 
hydrogen.  The  use  of  trans-European  energy  networks  will  also  support  the  transition  to 
climate neutrality. 

There should also be a special focus on sustainable and smart mobility industries. These have 
both  the  responsibility  and  the  potential  to  drive  the  twin  transitions,  support  Europe’s 
industrial  competitiveness  and  improve  connectivity.  This  is  notably  the  case  for  the 
automotive,  aerospace,  rail  and  ship  building  industries,  as  well  as  for  alternative  fuels  and 
smart and connected mobility.  

Staying  at  the  forefront  of  research  and  innovation,  the  swift  rollout  of  the  necessary 
infrastructure and robust incentives, including in procurement, will be key to ensure that EU 
mobility  industries  maintain  their  global  technological  leadership.  The  sector’s  entire  value 
chain must help shape new international standards for safe, sustainable, accessible, secure and 
resilient mobility. The Comprehensive Strategy for Sustainable and Smart Mobility will 
put forward comprehensive measures to help make the most of the sector’s potential. 

Should  differences  in  ambition  around  the  world  persist,  the  Commission  will  propose  a 
Carbon Border Adjustment Mechanism in 2021 to reduce the risk of carbon leakage, in full 
compatibility with WTO rules. This should be supported by strengthening our current tools to 
tackle carbon leakage.  

7  COM(2020) 22 final. 

8 

 
                                                            
Making it happen 

  Strategy for smart sector integration. 
  A Common European Energy data space will exploit the potential of data to enhance 

the innovative capacity of the energy sector. 

  Launch  the  Just  Transition  Platform  to  offer  technical  and  advisory  support  for 

carbon-intensive regions and industries.  

  EU Strategy on Clean Steel and Chemicals Strategy for Sustainability. 
  Review of the Trans-European Network Energy regulation. 
  EU Strategy on Offshore Renewable Energy. 
  Comprehensive Strategy for Sustainable and Smart Mobility. 
  ‘Renovation Wave’ Initiative and Strategy on the built environment. 
  Carbon  Border  Adjustment  Mechanism 

to  reduce  carbon 

leakage, 

in  full 

compatibility with WTO rules.  

3.4 Building a more circular economy 

In line with Europe’s new growth strategy, which gives back more than it extracts, Europe’s 
industry must play a leading role in the ecological transition. This means reducing its carbon 
and material footprint and embedding circularity across the economy.   

To do this, we must move away from the age-old model of taking from the ground to make 
products, which we then use and throw away. We need to revolutionise the way we design, 
make, use and get rid of things by incentivising our industry.  

This more circular approach will ensure a cleaner and more competitive industry by reducing 
environmental impacts, alleviating competition for scarce resources and reducing production 
costs.  The  business  case  is  as  strong  as  the  environmental  and  moral  imperative. 
Applying  circular  economy  principles  in  all  sectors  and  industries  has  potential  to  create 
700,000 new jobs across the EU by 2030, many of which in SMEs. 

The  EU  is  already  well  placed  in  this  field  and  should  now  focus  on  consolidating  its  first 
mover  advantage.  The  new  Circular  Economy  Action  Plan8  puts  forward  a  series  of 
measures to allow the EU’s industry to seize these opportunities.  

At  the  heart  of  it  is  a  new  sustainable  product  policy  framework  which  will  establish 
sustainability principles for all products, helping to make Europe’s industry more competitive. 
Priority will be given to high-impact product groups and action will include initiative on the 
common charger, a circular electronics initiative, sustainability requirements for batteries, and 
new measures in the textiles sector.  

The Action Plan also includes measures to empower consumers to play a more active role 
in the circular economy. Consumers should receive trustworthy and relevant information to 
choose  reusable,  durable  and  repairable  products.  The  Commission  will  propose  ways  to 
improve consumer rights and protection, including by working towards a ‘right to repair’ for 
consumers.  

8  COM(2020) 98 final. 

9 

 
 
 
                                                            
Public  authorities,  including  the  EU  institutions,  should  lead  by  example  by  choosing 
environmentally  friendly  goods,  services  and  works.  Through  this  green  procurement  they 
can help lead the shift towards sustainable consumption and production. The Commission will 
propose further legislation and guidance on green public purchasing. 

Making it happen 

  Circular Economy Action Plan adopted in parallel with this strategy, including a new 

sustainable product policy framework.

  New Regulatory Framework for Sustainable Batteries. 
  EU Strategy for Textiles. 
  Circular Electronics Initiative 
  Empowering consumers to play an active role in the circular economy, through better 

information on products and improved consumer rights.

3.5 Embedding a spirit of industrial innovation 

European  companies  have  seen  their  global  share  of  research  and  development  spending 
decline  over  the  past  five  years,  while  that  of  their  US  and  Chinese  counterparts  increased. 
The  key  to  addressing  this  trend  will  be  to  unlock  investment  in  innovation  with  an 
understanding of what we want to focus on and a clear pathway to market to allow scale. As 
part of this, SMEs should be incentivised and support to innovate and bring ideas to market. 

The  global  race  on  the  twin  transitions  will  increasingly  be  based  on  frontier  science  and 
mastering deep technologies. The next era of industry will be one where the physical, digital 
and biological worlds  are coming  together. If Europe  wants to  lead  the twin  transitions,  the 
industrial strategy has to be an industrial innovation strategy at heart.  

That  also  means  that  as  we  step  up  investment  in  disruptive  and  breakthrough  research  and 
innovation,  we  must  accept  failure  along  the  way.  This  helps  us  to  learn,  adapt  and  if 
necessary reset our way of doing things to allow us to move forward. We must shift our mind-
set  from  risk  averse  to  failure  tolerant.  This  needs  to  be  reflected  across  the  board  and 
innovation  should  be  embedded  in  our  policy  making.  As  part  of  our  work  on  better 
regulation and strategic foresight, we will ensure that policies are innovation-conducive. 

Industrial sectors should be invited and incentivised to define their own roadmaps for climate 
neutrality  or  digital  leadership.  These  should  be  enabled  by  high  quality  research  and  skills 
and  supported  by  the  EU.  A  number  of  sectors  have  already  taken  this  approach  since  the 
launch  of  the  European  Green  Deal.  In  the  co-design  and  entrepreneurial  spirit  of  this 
strategy,  this  should  be  supported  through  Public  Private  Partnerships  to  help  industry 
develop  the  technologies  to  meet  their  goals,  as  has  successfully  been  done  in  industrial 
alliances. 

The European Innovation Council, which will be fully launched in 2021, will  also aim to 
make the most of Europe’s strong research base. It will identify next generation technologies, 
accelerate their commercial application and help them support the rapid scale up of start-ups. 

The single market also needs to play its part by incentivising innovation to make the most of 
economies of scale, speed and scope. Place-based innovation and experimentation should 
be encouraged. This would allow regions to develop and test new solutions with  SMEs and 
local  characteristics,  strengths  and  specialisms.  New 
consumers,  drawing  on 

their 

10 

 
 
 
 
technologies  and  solutions  could  be  life  tested  with  policy  makers  and  regulators  to  enable 
innovative business models.  

Once tested and improved, these solutions can be scaled-up to European and global markets, 
ensuring the EU remains a frontrunner. The Digital Innovation Hubs, which act as one-stop-
shops  for  companies  to  access  technology-testing,  are  a  good  platform  to  build  on.  

Making it happen 

  Communication  on  the  Future  of  Research  and  Innovation  and  the  European 
Research Area to map out a new approach to innovation and ensure the EU budget is 
used with maximum impact. 

  Launch Public Private Partnerships

 in the Horizon Europe programme.

3.6 Skilling and reskilling  

A  competitive  industry  depends  on  recruiting  and  retaining  a  qualified  workforce.  As 
the twin transitions gathers speed, Europe will need to ensure that education and training keep 
pace. Making lifelong learning a reality for all will become all the more important: in the next 
five years alone, 120 million Europeans will have to upskill or reskill.  

This  reflects  the  importance  of  skills  for  the  twin  transitions  and  the  opportunities  they  can 
create for people. Moving to a low-carbon economy is expected to create more than 1 million 
jobs  by  2030,  while  there  are  already  currently  1  million  vacancies  in  Europe  for  digital 
technology  experts.  At  the  same  time,  70%  of  companies  report  that  they  are  delaying 
investments because they cannot find the people with the right skills. 

For  industry  workers,  digitisation,  automation  and  advances  in  artificial  intelligence  will 
require an unparalleled shift in their skill set. Retraining and reskilling have to be a major part 
of  our  social  market  economy.  Our  higher  and  vocational  education  and  training  systems 
will  also  need  to  provide  more  scientists,  engineers  and  technicians  for  the  labour  market. 
Better attracting skills and talent from abroad will also help to address the EU’s labour market 
needs. 

In  the  global  race  for  talent,  Europe  needs  to  increase  investment  in  skills  and  life-long 
learning  should  become  a  reality.  This  will  require  collective  action  of  industry,  Member 
States, social partners and other stakeholders through a new ‘Pact for Skills’ to contribute to 
up- and reskilling and to unlock public and private investment in the workforce. The Pact will 
put  focus  on  sectors  with  high  growth  potential  for  Europe  or  those  undergoing  the  most 
significant change. The European Education Area will also support these efforts. 

It  is  also  essential  to  have  a  better  balance  between  women  and  men  in  industry.  This 
includes  encouraging  women  to  study  Science,  Technology,  Engineering  and  Mathematics, 
consider a career in technology and invest in digital skills, thus improving the gender balance 
in creating and leading businesses.  

11 

 
 
 
 
 
Making it happen 

  An update of the Skills Agenda for Europe in 2030, including a recommendation on 

Vocational Education and Training. 
  Launch of a European Pact for Skills. 
  Communication on a European Education Area Strategic Framework. 
  Digital Education Action Plan. 
  Implementation of the EU Gender Strategy, adopted in March 2020.  

3.7 Investing and financing the transition 

Many of the future EU programmes, such as Horizon Europe, the Digital Europe Programme, 
the Single Market Programme, the Innovation Fund, InvestEU, the European Social Fund, the 
European  Defence  Fund  and  the  EU  Space  Programme,  and  all  European  Structural  and 
Investment funds will help to promote the competitiveness of EU industry. A swift agreement 
on the next long-term budget is essential for our industry’s future. 

At  a  time  when  the  public  purse  is  under  pressure,  we  will  need  new  ways  of  unlocking 
private investment. This includes leveraging and blending EU money with Member States and 
other  institutional  partners,  as  well  as  crowding  in  private  investors.  InvestEU  and  the 
European Green Deal Investment Plan will help unlock private investment where it is needed. 
The European Investment Bank and national promotional banks and institutions will have an 
important role to play. 

for 

especially 

large-scale 

deployment 

Mobilising private investment and public finance is acutely important where there are market 
failures, 
technologies. 
One  tool  with  a  proven  track  record  in  this  area  is  Important  Projects  of  Common 
European Interest (IPCEIs). Member States can use IPCEIs to pool financial resources, act 
quickly  and  connect  the  right  players  along  key  value  chains.  They  are  a  catalyst  for 
investment and allow Member States to fund large-scale innovation projects across borders in 
case  of  market  failures.    Building  on  experience  with  recent  IPCEIs,  the  Commission  will 
explore ways to combine national and EU instruments to leverage investment across the value 
chain, in full respect of relevant financial and competition rules. 

innovative 

of 

To help make the most out of this tool, the Commission will put in place revised State aid 
rules  for  IPCEIs  in  2021.This  review  seeks  to  clarify  the  conditions  under  which  Member 
State-led  projects  in  key  sectors  for  can  move  forward  in  a  timely  and in  a  pro-competitive 
manner. It should also help SMEs to participate fully in future IPCEIs.  

There  will  also  be  a  need  to  incentivise  investment  towards  competitive  sustainability 
throughout the financial system. The recent agreement on an EU taxonomy and the certainty 
provided by the Climate Law9 are big steps in the right direction.  

Building  on  this  progress,  the  Renewed  Strategy  for  Sustainable  Finance  will  put  in  place 
clear rules to guide investors to sustainable investment. As part of continued work to deepen 
the  Economic  and  Monetary  Union,  the  Commission’s  new  Action  Plan  on  the  Capital 
Markets  Union  will  include  an  initiative  to  strengthen  intra-EU  investment  protection  and 
efforts to unlock more diverse sources of funding for European businesses, especially SMEs. 

9  COM(2020) 80 final. 

12 

 
 
 
 
                                                            
The Digital Finance Strategy will help facilitate innovation in financial services to help scale 
up new services and business model and address new risks. 

Making it happen 

  Work with Parliament and Council to ensure rapid adoption and implementation of the 

next long-term budget. 

  Consider scope for coordinated investment by Member States and industry in the form 
of new IPCEIs and on the possible follow-up to the first IPCEIs on batteries and 
microelectronics. 

  Review State aid rules for IPCEIs, including energy transition projects. 
  A renewed sustainable finance strategy. 
  A new Digital Finance Strategy. 
  Action Plan on the Capital Markets Union in 2020, including measures in support of 
integrated capital markets and more funding opportunities for citizens and businesses. 

4.  Reinforcing Europe’s industrial and strategic autonomy 

Europe’s strategic autonomy is about reducing dependence on others for things we need the 
most:  critical  materials  and  technologies,  food,  infrastructure,  security  and  other  strategic 
areas. They also provide Europe’s industry with an opportunity to develop its own markets, 
products and services which boost competitiveness.  

Europe thrives on an open investment environment which allows others to invest in Europe’s 
competitiveness.  But  it must  also  be  more  strategic  in  the way  it  looks  at  risk  associated  to 
foreign  investment.  The  framework  for  the  screening  of  foreign  direct  investment10  that 
will be fully applicable in October 2020 will safeguard  Europe's interests on the grounds of 
security and public order. The Commission will make proposals to further strengthen this tool. 

Europe’s digital transformation, security and future technological sovereignty depends on our 
strategic  digital  infrastructures.  Beyond  the  Commission’s  recent  work  on  5G  and 
cybersecurity,  the  EU  will  develop  a  critical  Quantum  Communication  Infrastructure, 
designed to deploy in the next 10 years a certified secure end-to-end infrastructure based on 
quantum key distribution to protect key digital assets of the EU and its Member States.  

The EU will also support the development of key enabling technologies that are strategically 
important  for  Europe’s  industrial  future.  These  include  robotics,  microelectronics,  high-
performance  computing  and  data  cloud  infrastructure,  blockchain,  quantum  technologies, 
photonics, 
industrial  biotechnology,  biomedicine,  nanotechnologies,  pharmaceuticals, 
advanced materials and technologies.  

The  European  defence  and  space  sectors  are  essential  for  Europe’s  future.  However,  the 
fragmentation  of  the  defence  industry  puts  into  question  Europe’s  ability  to  build  the  next 
generation of critical defence capabilities. This would reduce the EU’s strategic sovereignty 
and its ability to act as a security provider.  

The European Defence Fund will help build an integrated defence industrial base across the 
EU. It will invest throughout European defence industrial value chains, facilitate cross-border 

10  Regulation (EU) 2019/452. 

13 

 
 
                                                            
cooperation  and  support  open  and  dynamic  supply-chains  that  include  SMEs  and  new 
entrants.  It will  also  support  disruptive  technologies,  allowing  companies  to  take more  risk. 
Coherence with other defence initiatives will be essential.  

Space technologies, data and services can strengthen Europe’s industrial base by supporting 
the development of innovative products and services, including the emergence of cutting-edge 
innovative technologies. 

Defence  and  space  industries  face  unprecedented  global  competition,  in  a  changing  geo-
political context, and new opportunities with the emergence of rapidly evolving technologies, 
and  the  emergence  of  new  actors.  By  seeking  synergies  between  civil,  space  and  defence 
industries  in  EU  programmes,  the  EU  will  make  more  effective  use  of  resources  and 
technologies and create economies of scale.  

With the transition of Europe’s industry to climate-neutrality, the reliance on available fossil 
fuels could be replaced with reliance on non-energy raw materials, many of which we source 
from abroad and for which global competition is becoming more intense. Boosting recycling 
and the use of secondary raw materials will help reduce this dependency. 

Demand  for  raw  materials  is  projected  to  double  by  2050,  making  diversified  sourcing 
essential  to  increase  Europe’s  security  of  supply.  Critical  raw  materials  are  also  crucial  for 
markets  such  as  e-mobility,  batteries,  renewable  energies,  pharmaceuticals,  aerospace, 
defence and digital applications.  

Access  to  medical  products  and  pharmaceuticals  is  equally  crucial  to  Europe’s  security  and 
autonomy  in  today’s  world.  A  new  EU  pharmaceutical  strategy  will  be  put  forward, 
focusing  on  the  availability,  affordability,  sustainability  and  security  of  supply  of 
pharmaceuticals. This has been highlighted by recent events linked to the Coronavirus disease 
2019 (COVID-19) outbreak. 

Making it happen 

  Follow-up to the 5G Communication11 and the Recommendation on cybersecurity 

of 5G networks.12 

  Action Plan on synergies  between  civil, defence and space  industries, including at 

the level of programmes, technologies, innovation and start-ups.  

  A new EU pharmaceutical strategy in 2020, including actions to secure supplies and 

ensure innovation for patients. 

  An Action Plan on Critical Raw Materials, including efforts to broaden international 

partnerships on access to raw materials. 

5. Joining the dots: A partnership approach to governance 

Europe’s industry must play to its unique features and strengths: its integration across value 
chains and borders, its diversity, traditions and people. As the twin transitions picks up speed 
and  global  competition  becomes  fiercer,  Europe’s  industry  is  also  transforming.  As  part  of 
this, there are increasing links between different products and services across sectors.  

11  COM(2020) 50 final. 
12  C(2019) 2335 final. 

14 

 
 
                                                            
As  well  as  focusing  on  specific  technologies,  Europe  also  needs  to  look  closely  at  the 
opportunities and challenges facing industrial ecosystems. These ecosystems encompass all 
players operating in a value chain: from the smallest start-ups to the largest companies, from 
academia to research, service providers to suppliers. And they each have their own features.  

Building on the work of Industry 2030 High Level Industrial Roundtable, the Strategic Forum 
on  IPCEIs  and  other  bodies,  the  Commission  will  systematically  analyse  the  different 
ecosystems and assess the different risks and needs of industry as it embarks on the twin 
transitions  in  a  more  competitive  world.  It  will  look  at  issues  including  research  and 
innovation  skills,  the  role  of  SMEs  and  big  companies,  as  well  any  external  pressures  or 
dependencies. 

In  doing  this  analysis,  the  Commission  will  work  closely  with  an  inclusive  and  open 
Industrial  Forum  consisting  of  representatives  from  industry,  including  SMEs,  big 
companies, social partners, researchers, as well as Member States and EU institutions. Where 
needed, experts from specific sectors will be called upon to share their knowledge.  

This work may show that some of the ecosystems, because of their specific nature or needs 
will  require  dedicated,  bespoke  support.  This  support  could  take  the  shape  of  regulatory 
action, unlocking financing or making the most of trade defence instruments. This would then 
form a dedicated toolbox. Progress will be monitored on a rolling basis, in cooperation with 
the European Parliament and the Council.  

Where identified as necessary, the approach of industrial alliances could be the appropriate 
tool. This has already shown its benefit in the area of batteries, plastics and microelectronics. . 
The  European  Battery  Alliance  has  managed  to  move  the  EU  to  a  position  of  industrial 
frontrunner  in  this  key  technology.  Alliances  can  steer  work  and  help  finance  large-scale 
projects  with  positive  spillover  effects  across  Europe,  using  the  knowledge  of  SMEs,  big 
companies, researchers and regions to help remove barriers to innovation and improve policy 
coherence.  

Clean Hydrogen is a prime example of where this can have a real added value. It is disruptive 
in  nature  and  requires  stronger  coordination  across  the  value  chain.    In  this  spirit,  the 
Commission  will  shortly  propose  to  launch  the  new  European  Clean  Hydrogen  Alliance 
bringing  investors  together  with  governmental,  institutional  and  industrial  partners.  The 
Alliance  will  build  on  existing  work  to  identify  technology  needs,  investment  opportunities 
and  regulatory  barriers  and  enablers.  Future  alliances  should  also  include  low-carbon 
industries, Industrial Clouds and Platforms and raw materials. 

.Making it happen 

  Building on the successful template of industrial alliances, a new European Clean 
Hydrogen Alliance will be launched. Alliances on low-carbon industries, Industrial 
Clouds and Platforms and raw materials should follow when ready. 

  The Commission will undertake a thorough screening and analysis of industrial needs 

and identify ecosystems needing a tailor-made approach.  

  An inclusive and open Industrial Forum will be setup by September 2020 to support 

this work. 

15 

 
6.  Conclusion  

This  strategy  lays  the  foundations  for  an  industrial  policy  that  will  support  the  twin 
transitions,  make  EU  industry  more  competitive  globally  and  enhance  Europe’s  strategic 
autonomy.  

Given  the  important  social  implications  of  the  changes  ahead,  dialogue  with  social  partners 
and civil society will be essential. The Commission’s annual Industry Days will continue to 
be an important event to bring all players together. The Commission will propose that Council 
Presidencies and interested Member States host Industry Days in their own countries. 

The Commission will strive to increase the political ownership of the strategy, suggesting a 
standing progress point at the Competitiveness Council and at the European Parliament. This 
will  be  done  on  the  basis  of  a  regular  monitoring  of  the  strategy’s  implementation  and 
analysis of a set of key performance indicators.  

Only a shared commitment from the EU, its Member States and regions, industry, SMEs and 
all other relevant stakeholders in a renewed partnership will allow Europe to make the most of 
the industrial transformation. The European Council in March 2020 offers an opportunity to 
support this renewed partnership on the basis of a shared vision and objectives. 

16