09. 09. 2025
AUTHOR: Strategic Perspectives
European Commission President Ursula von der Leyen will deliver the first State of the European Union address of her second term this Wednesday. Although the first months of the term didn’t deliver the goals outlined in the Draghi report, energy security, reindustrialisation, and stronger international partnerships are still expected to remain high on the Commission’s agenda. A clear commitment to the 90% climate target for 2040 during her speech can reinforce these priorities as it can guide policies and investments.
Reindustrialising Europe
In February, Ursula von der Leyen launched the Clean Industrial Deal, recognising that Europe’s industrial path to competitiveness depends on the decarbonisation of traditional industries and the roll-out of innovative cleantech solutions. In her speech, by reiterating her support to the 90% climate target by 2040, she can already send a strong signal that Europe stays on course and decarbonisation investments are secured and welcomed.
As outlined in the Draghi report, the conditions for consolidating the EU’s industry are massive investments, regulatory predictability, innovation, and new rules for the market. President von der Leyen has the opportunity to describe how to achieve this by laying down the priorities for the Industrial Decarbonisation Accelerator Act, the first piece of the Clean Industrial Deal, which will be proposed in the autumn. European industries need reliable demand for net-zero technologies and materials made in Europe. Lead markets offer a way forward by guaranteeing offtake for European producers through sustainability standards and European preference criteria. The former can grow the demand and reward early movers, while the latter is crucial to avoid subsidising cheaper imports and secure investments in Europe. An effective European preference could be applied to all public support (public procurement, consumer bonuses, auctions, State aid, etc.). Well-designed lead markets with European preference can create 449,000 new jobs in the automotive and battery sectors, 50,000 new jobs in the wind sector, and secure 98% of the green steel lead market for EU producers.
Making Electrification a central pillar of the EU energy and industrial policy
President von der Leyen also made energy security a key priority of her second mandate, with the legislation to phase out Russian fossil fuel imports by 2027. However, the recent trade deal with the US risks shifting dependence to American liquefied natural gas (LNG), making companies and households vulnerable to volatile prices. As the Electrification Action Plan is in preparation, President von der Leyen can state that electrification is a top priority for her Commission. Electrification offers a direct path to lower energy costs, stronger energy security, and more industrial competitiveness. By accelerating clean and domestic energy-based electrification, the EU can save €850 billion of fossil fuel imports by 2040.
The 2040 target and electrification are mutually reinforcing – the target gives predictability to investors, while electrification provides the technological pathway to reach it. President von der Leyen can send a strong signal by committing to electrifying half of the European economy by 2040. This would demonstrate how Europe benefits from aligning its energy and industrial policies around electrification.
Renewing the EU’s Economic Foreign Policy
Finally, President von der Leyen has the opportunity to show that the European Union can develop a forward-looking foreign economic policy that strengthens Europe’s position at home and abroad. The recent Clean Trade and Investment Partnership (CTIP) with South Africa is one of the good examples. Similar partnerships are needed at the time of increasing geopolitical tensions. Trade and investment agreements help other countries grow their own net-zero industries and give Europe more resilient supply chains and stronger markets.
In tomorrow’s speech, President von der Leyen can explain how the new Multiannual Financial Framework (MFF) will support tools like the Global Gateway and CTIPs and provide predictable climate and energy investments. This would allow the EU to show it can deliver, and not just pledge. Additionally, President Von der Leyen has the opportunity to announce the concrete next steps of the Global Energy Transitions Forum (GET-F). She could highlight her willingness to embed climate and energy goals in any new initiative, bilateral summit, and trade agreement with partners, including the upcoming Pact for the Mediterranean. In that regard, adopting the 90% emissions reduction target by 2040 and releasing a clear 2035 Nationally Determined Contribution (NDC) would send strong signals to partners and strengthen the EU’s credibility ahead of COP30 in Belém.
By anchoring reindustrialisation, energy security, and foreign policy in the 2040 target, President von der Leyen has the opportunity to outline her first answers to the Draghi report and keep the net-zero transition at the centre of the EU’s competitiveness agenda.
