The European Competitiveness Fund – one more step towards a European Green Industrial Policy?
The European Competitiveness Fund is the EU’s best shot at financing its green industrial policy – if it is designed and targeted correctly. In this blog, Ciarán Humphreys and Elena Schneider react to the European Parliament’s ITRE draft report, arguing that its proposed expert Council is welcome but, without a public data observatory and real coordination with Member States, insufficient to meet the moment.
In March of this year, with the world’s attention fixed on the war in Iran and the fate of the Strait of Hormuz, Beijing quietly unveiled its 15th Five-Year Plan. Tucked into its 109 “major engineering projects” was a clear statement of industrial intent for 2026–2030: a fully integrated green hydrogen-to-green-fuels value chain, next-generation batteries, and a significant expansion of nuclear and renewables.
Brussels has been having its own debate on strategic prioritisation. Since the clear diagnosis of the Draghi report, the idea that the EU must make choices if it wants to compete in the clean industries of the future has become increasingly orthodox (even if those choices have yet to be made by policymakers). This week’s publication of the draft report from the European Parliament’s Industry, Research and Energy committee (ITRE) gives us a further indication on whether we are actually moving in that direction.
Why the Competitiveness Fund matters
It is worth being explicit about why the ECF deserves so much political attention. Strategic prioritisation without investment capacity is an empty exercise; investment without strategic targeting is a slow-motion misallocation of public money. As we argued last year, the ECF is the primary EU-level lever for a more targeted, better-funded European green industrial policy that can deliver on both competitiveness and decarbonisation. If strategic prioritisation does not show up here, it will not show up at all.
The good news: ITRE proposes expert governance for the Fund
The most interesting move in the ITRE draft is the proposed Economic and Technological Advisory Council (ETAC): a body of up to fifteen independent experts, appointed through open call, advising the Commission on economic and technological developments, market failures, and the identification of strategic portfolios across ECF sectors. The Council would publish an annual report each September, and would operate independently – although how binding their recommendations would be on eventual funding decisions remains unclear. The purely expert nature of the ETAC, with no structured participation from any of the EU institutions, risk leaving this new body isolated.
Nonetheless, this is a welcome proposal. It is also strikingly familiar. In terms of expert guidance on strategic priorities, it reflects what I4CE – and others – had expected to see emerge from another Draghi-inspired initiative: the Competitiveness Coordination Tool (CCT). The CCT was meant to provide precisely this combination of independent analysis, diagnosis of current weaknesses, and strategic steer. Instead, the CCT is being “tested” through narrow pilots on AI Gigafactories and e-truck charging infrastructure, as well as further initiatives in the fields of housing and the bioeconomy. In practice, it is drifting towards becoming an umbrella label for unconnected cross-border projects rather than a governance architecture for industrial policy. Seeing the original spirit of the CCT kept alive through the ECF’s governance is therefore no small thing.
But a council of experts is not enough
An ETAC is a step in the right direction, but if it ends up being the entirety of the EU’s governance upgrade for industrial policy, then it will be seriously insufficient. Two things are missing: better data, and broader coordination.
Better data
Industrial policymakers make consequential investment decisions in a chronically thin information environment. That gap is today filled, by default, by industries and advocacy groups. They have a legitimate role to play – but independent, public-interest data is indispensable if strategic prioritisation is to mean anything more than following the loudest voices in the room. Civil society can and does help: I4CE‘s State of European Climate Investment work, and our contribution to the European Climate Neutrality Observatory, are proof of concept. But the EU itself is best placed to build this resource at scale.
That is why it is disappointing that the ITRE draft report deletes the Commission’s proposal for an Observatory of Emerging Technologies as part of the ECF governance framework. A body along these lines – perhaps building on the existing expertise of the Commission’s Joint Research Centre (JRC), as recently proposed – would be the natural complement to the ETAC, providing the transparent, public data foundation on which its recommendations would rest. Without it, there is a real risk that the Council of experts becomes just one more voice among many, easily drowned out during the annual budgetary horse-trading that will actually decide how ECF money gets spent. Data gives expert recommendations teeth.
Broader coordination
The proposed €234 billion envelope for the ECF over seven years is not trivial, but it is a rounding error next to Chinese industrial investment. It is also significantly smaller, on an annualised basis, than Germany’s €500 billion special fund for infrastructure and climate – a national instrument. If strategic prioritisation applies only to ECF disbursements, then the vast majority of relevant public investment capacity across the EU – national budgets, IPCEIs, state aid under the Clean Industrial Deal State Aid Framework, the cohesion funds, EIB lending – will remain outside the ETAC’s remit, steered by twenty-seven uncoordinated sets of priorities. That is not going to match the coherence of Chinese or American industrial policy. It is not even going to match Germany’s.
The EU has models to build upon. The European Semester, for all its flaws, shows how macroeconomic and budgetary dialogue between the Commission and Member States can be structured; and its interaction with the Recovery and Resilience Facility (RRF) demonstrated, perhaps more powerfully than any other recent instrument, what happens when you pair coordination and conditions with real financial incentives. Linking disbursements to reforms lifted the implementation of Semester country-specific recommendations by 17 percentage points – a striking shift in a framework that had been oft-criticised for its inability to shift national decision-making.
In the sectoral space, the Energy Union and offer a working template of comparable scale. Created to bring coherence to a fragmented landscape of largely national energy policies, its 2018 Governance Regulation – up for review by the end of the 2026 – established a structured cycle. Member States set out national contributions to shared EU targets, while the Commission provides guidance before adoption and monitors progress thereafter, and a high-level Task Force coordinates more pressing areas of action.
Industrial policy has no equivalent. It remains stuck between an exclusive competence toolkit (state aid and competition policy, largely designed to prevent bad outcomes in the Single Market) and a patchwork of weaker enabling instruments – Auctions-as-a-Service, Grants-as-a-Service, IPCEIs – that streamline investments and pool resources but do too little to build genuine cross-border value chains.
What’s needed: an Industrial Policy Union
This is where the original ambition for a Competitiveness Coordination Tool still has something to offer – a genuine coordination framework. Thought of as an Energy Union for industrial policy, the CCT could give Member States a structured space to align behind the strategic technology priorities identified by an Observatory and the ETAC; to map national strengths onto pan-European value chains in batteries, electrolysers, heat pumps, grid equipment, clean steel and the rest; and to coordinate state aid and regulatory measures so that each Member State’s investment reinforces the others rather than cannibalising them.
The RRF is winding down in 2026 with no real successor in sight, which means the EU’s most effective coordination lever is about to disappear just as global industrial competition intensifies. A properly designed ETAC, backed by a public data observatory and embedded in a real coordination framework with Member States, would start to fill that gap. Hoping that €234 billion over seven years will, by itself, be enough to nudge twenty-seven capitals towards a coherent European industrial policy is not a strategy. Therefore, a fully-developed coordination architecture remains crucial.
China has a plan. Germany has a fund. The EU is taking its first steps towards developing both. The ITRE text is promising – but if Europe wants to truly update its industrial policy, there is still some ground to cover.
