The EU launched its Clean Industrial Deal (CID) in February 2025 as a ‘joint roadmap for competitiveness and decarbonisation’. It addresses ‘three urgent problems’ facing businesses today: high energy costs, dependency on critical raw materials, and fierce global competition. By aligning competitiveness with climate goals, the EU believes it can create the right conditions for companies to expand and attract investment, unlocking more economic potential from its industrial base.
The deal applies to all industries and covers every stage of production but there is a particular focus on energy-intensive businesses, such as Ireland’s cement and agri-food producers, and on clean technologies. Progress in these sectors is viewed as crucial if decarbonisation targets are to be met.
Tax incentives
The CID suggests several tax incentives that individual EU nations could adopt to promote decarbonisation and boost business competitiveness:
- Accelerated depreciation for clean tech
Governments are encouraged to allow businesses to write off cleantech investments faster, reducing upfront costs and incentivising adoption. - Lower taxes
The deal stresses the importance of finalising revisions of the Energy Taxation Directive, which aims to incentivise electrification. In the interim, governments are encouraged to reduce taxes on electricity, making clean energy use more affordable. - Strategic sectors
Companies in industries critical to the clean transition – such as renewable energy, battery production and carbon capture – could receive tax credits to offset investment costs. - Carbon labelling
The EU’s Industrial Decarbonisation Accelerator Act introduces voluntary carbon intensity labels for industrial products. These could be used to create tax incentives for low-carbon goods. - CISAF
The EU’s newly-adopted Clean Industrial State Aid Framework (CISAF), which applies as of 25 June 2025 and remains in force until 31 December 2030, allows governments to support investment in greener businesses via measures including tax incentives, loans and public guarantees.
Investment scaling
While national routes to decarbonisation will differ, all governments will be required to commit substantial resources if they are to achieve it. The CID aims to drive and direct this fundraising momentum, creating opportunities to secure large-scale investments and financial incentives from a combination of EU funding, state aid and private capital.
It has already allocated €100bn to support clean technologies and decarbonisation, including €1bn in guarantees under the current multiannual financial framework, which oversees EU expenditure. From 2028 a Competitiveness Fund will be introduced to streamline the fundraising process.
‘It is a positive development for many Irish businesses’
There are also plans for an Industrial Decarbonisation Bank to finance clean tech projects, accessing resources of up to €100bn from the Innovation Fund, EU Emissions Trading System and InvestEU.
To support the CID, a new recommendation around the use of tax incentives was released by the European Commission at the start of July. It advocates two key provisions: accelerated depreciation, allowing businesses to deduct the full cost of clean tech investments faster, and targeted tax credits which members are encouraged to make refundable or allowable for offset against other national taxes.
Welcome move
Sinead Kelly, decarbonisation director and energy transition tax lead at PwC Ireland, has been following progress. ‘While we are still awaiting more detailed aspects of the CID, it is a positive development for many Irish businesses, particularly those in energy-intensive sectors and the cleantech sector.
‘The CID is focused on boosting competitiveness and unlocking investment in decarbonisation and circular economy measures. It is expected to create lots of new funding opportunities, both in Ireland – for example, through the EU Competitiveness Fund – and at EU level.’
Tax policy
Tax policy is referenced in all six of the deal’s main elements: access to affordable energy; boosting demand for cleaner products; financing; the circular economy; global markets and international partnerships; and skills and quality jobs. ‘If enacted, these provisions should help improve the investment business case and become a key enabler for businesses to achieve their net-zero targets,’ Kelly says.
‘Identify the tax and grant opportunities in advance of investment decisions’
Businesses need to understand and quantify their current and future exposure to environmental taxes, she adds, and ensure they factor into investment decisions the environmental tax savings that can be made by investing in renewable energy sources or energy-efficiency measures. ‘There is already a range of tax incentives and grants available in Ireland, such as accelerated capital allowances and R&D tax credits, to support investment in this area,’ she says. ‘It is important to identify these tax and grant support opportunities in advance of investment decisions and understand any conditions that must be met.’
Carbon borders
Another key component in EU decarbonisation is the new Carbon Border Adjustment Mechanism (CBAM), which tackles ‘carbon leakage’.
‘The CBAM has been introduced to try to equalise the costs of imported carbon-intensive goods with those produced in the EU,’ explains Paul Rodgers, director of global trade and customs at PwC. ‘Currently, importers of CBAM goods such as cement, fertilisers, electricity, iron and steel, aluminium and hydrogen must submit quarterly reports, but from 2027 they will also have to purchase CBAM certificates to pay the difference in carbon costs, including back-paying for CBAM imports in 2026.
‘CBAM payments are likely to impact cross-border trade’
‘The introduction of these additional CBAM payments is likely to impact cross-border trade, as EU companies will take a closer look at the competing costs of CBAM goods produced in EU countries versus non-EU countries. Also, downstream products are not yet in scope, so there may be a shift towards greater imports of intermediate or finished products manufactured from CBAM goods. However, it is expected that downstream products will eventually fall within scope.’
More information
Visit ACCA’s sustainability hub for more resources. You can also read an EU cleantech focus, Deloitte’s analysis on the green transition, and KPMG’s insights into the CID
