European Commission introduces the EU Competitiveness Compass

Europe faces a critical moment in balancing economic competitiveness with climate commitments. To address slowing productivity growth while advancing decarbonisation, the European Commission has introduced the EU Competitiveness Compass on Wednesday last week, a strategic framework to drive innovation, industrial resilience, and sustainability. This framework translates the recommendations from the Draghi Report into concrete actions to ensure that Europe remains an industrial and technological leader while achieving climate neutrality.

A core pillar of the Competitiveness Compass is industrial decarbonisation, which is crucial for maintaining Europe’s economic strength in a carbon-constrained world. The Clean Industrial Deal, one of the major initiatives under the Compass, ensures that Europe remains an attractive location for manufacturing, particularly in energy-intensive industries like steel, chemicals, and cement. These industries face high carbon costs and require new technologies to remain competitive. To support this, the Industrial Decarbonisation Accelerator Act will fast-track permitting for clean technology projects, making it easier for businesses to transition to low-carbon production methods.

Another key area within the Competitiveness Compass is energy security and affordability. The Affordable Energy Action Plan aims to stabilize energy prices, ensuring that European industries have access to clean and cost-effective energy sources. Additionally, the Clean Trade & Investment Partnerships will secure critical raw materials, hydrogen, and renewables, reducing dependency on fossil fuels and strengthening Europe’s supply chains.

To drive innovation, the EU Start-up & Scale-up Strategy will support deep tech development in areas such as carbon capture, hydrogen, and circular economy solutions, positioning Europe as a leader in sustainable industries. Meanwhile, the European Savings & Investments Union will help mobilize private capital to finance green industrial transformation.

Finally, the Union of Skills initiative will address workforce challenges by reskilling workers in transitioning industries.