Europe's moment to act on industrial decarbonization

Europe has no shortage of vision when it comes to climate policy. The EU’s Green Deal, Fit for 55, and national net-zero strategies present some of the most far-reaching frameworks in the world. But bold frameworks must be complemented with real life action. When it comes to industrial decarbonization - the cornerstone of economic and climate stability - the region remains trapped in an implementation deficit.

While policy papers and roadmaps accumulate, emissions reductions stagnate. Heavy industry, responsible for nearly 25% of greenhouse gas output, has been slow to transition. Complex permitting, investment caution, reluctance to change existing processes, and policy indecision continue to delay progress. Meanwhile, other regions are accelerating. China has quietly become the world leader in renewables, installing over 420 gigawatts of new renewable energy in 2024 alone, while India is rapidly scaling electrification across its manufacturing base.

Europe’s opportunity to lead is narrowing; not because of a lack of ambition, but because it has not yet shifted from discussion to deployment.

Industrial decarbonization as economic renewal

For Europe, decarbonizing heavy industry is not just about hitting climate targets. It’s a question of economic competitiveness and long-term resilience.

Many of Europe’s industrial assets are aging, energy-intensive, and exposed to global price volatility. In sectors like chemicals and steel, significant cost pressure and offshoring are already eroding domestic capacity. Competing with newer, larger facilities in Asia on efficiency alone is unrealistic. Europe must instead chart a different course; anchored in innovation, added value, and sustainability.

Low-carbon industrial transformation is Europe’s opportunity to rebuild its competitive edge. That means bold bets on technology development, integrating clean technologies into core industrial processes, upskilling its workforce for a decarbonized future, and designing policy to reward long-term climate value over short-term cost minimization.

For example, high-temperature electric heating systems that once seemed out of reach are now commercially viable and capable of replacing fossil combustion in key processes. These solutions aren’t theoretical. They’re ready. But deploying them at scale - both in Europe and subsequently on a global scale - requires aligned incentives and decisive support.

Breaking the cycle of risk and delay

Despite growing investor interest in climate-aligned industry, capital deployment in hard-to-abate sectors remains slow. Europe has the financial firepower. ESG assets under management are expected to surpass $40 trillion globally by 2030. But capital remains on the sidelines, waiting for clear signals, de-risked pilots, and faster permitting pathways.

That’s the paradox: breakthrough technologies need funding to scale, but investors need scale to justify funding. Without targeted mechanisms to break that cycle, progress will stall. Government action must shift from broad ambition to focused enablement. Long-term carbon pricing clarity, co-investment models, and fast-tracked permitting for proven technologies can unlock momentum.

Europe doesn’t need to eliminate all risk; it needs to foster a market where bold bets are feasible. Other regions offer lessons. In India, we see industrial leaders rapidly piloting technologies, often without waiting for perfect frameworks. In China, scale and speed have driven cost reductions across clean energy. Europe has the technical expertise to lead, but it must match it with the same urgency.‍

From policy signals to real-world impact‍

Some progress is visible. The EU’s Net-Zero Industry Act and Innovation Fund are strong steps toward industrial transformation. National initiatives in Sweden and the Netherlands are also beginning to show how collaboration between industry, academia, and government can deliver results. But isolated success stories are not enough.

Europe needs a coordinated push to scale what works and to back it with industrial policy that looks beyond electoral cycles. That means supporting industries where Europe has a structural advantage—advanced manufacturing, electrification, materials innovation—and creating the skills infrastructure to match. Developing breakthrough technologies also offers vast potential for high-value exports globally. Europe has in the past been able to develop technology leaders in e.g. wind power, now is the time to boldly scale up decarbonization technologies with huge global decarbonization potential and business opportunity.

It also means embracing calculated failure. Not every pilot will succeed, but without real-world testing, no transformation can occur. The cost of early-stage setbacks is marginal compared to the long-term economic cost of delay.‍

A turning point‍

Europe has the chance to lead the green industrial revolution; not through declarations, but through delivery. Clean industry is no longer an aspiration. It’s the next phase of global economic leadership.

We must move from passive policy to active execution. From risk aversion to informed ambition. And from fragmented pilots to a cohesive industrial agenda that treats decarbonization not as a burden, but as a strategic advantage and source of global economic power.

The groundwork is there. What’s needed now is resolve. Europe must choose to lead—not someday, but now.