Preview 2026: Industry transition, clean investments key as EU shapes post-2030 climate policy – think tank
This piece is part of a series of expert interviews to preview energy and climate policy developments in Germany and Europe in 2026. You can find the overview here. We will publish more interviews in the coming days, so stay tuned.
Clean Energy Wire: What are key developments in energy and climate policy for the European Union in 2026? What needs to happen?
Linda Kalcher: After adopting the 90-percent climate target for 2040, the debate will shift towards what this means for individual sectors in the post-2030 policy framework and how to mobilise investments.
I see five top priorities for this year. The first is prioritising European manufacturing and competitiveness. Mario Draghi warned about the ‘slow agony’ of European industry. The publication of the Grids Package and upcoming proposal of the Industrial Accelerator Act can both help turn that trend around. They can bring electricity prices down, prioritise ‘made in Europe’ and support the sectors where European companies still have an advantage, like industrial heat pumps and cables. With an effective lead market policy for net-zero technologies and materials, and European-preference conditions on public support, the EU can support strategic industries by incentivising predictable demand for their output.
The second priority is driving investments into Europe. Billions of euros are still flowing out of Europe for fossil fuel imports at times when the EU economy needs it the most. With the EU budget on the table and the proposals on phasing out fossil fuel subsidies and industrial decarbonisation coming, it’s high time to invest into Europe instead of sending money to the US, Russia or Qatar.
What are the other priorities you see?
A third priority is boosting electrification, which is the smartest way to strengthen energy security while investing in Europe. The Electrification Action Plan will be another pillar to increase the EU’s industrial leadership and finally deliver on EU leaders’ commitment to “ambitious electrification” adopted in 2024 in the Strategic Agenda. China’s pace of electrification is remarkable and shows steady growth, whereas the EU’s path is stagnating. It can be a key step in framing the future Energy Union framework post 2030, that will be proposed at the end 2026. In this context, it is urgent to correct the price ratio between gas and electricity, which is currently still favouring gas – an economic absurdity.
Another priority is preserving the Emission Trading System (EU ETS 1). Inspired by the successful lobbying effort of the German car industry to weaken its climate goals for 2035, the first companies are calling for the abolition or weakening of the carbon pricing scheme for electricity and industry. Many of Europe’s leading decarbonisation investments hinge on the ETS’ long-term price signal to predict future competitiveness. The industrial trailblazers are currently making important investments to decarbonise, and the ETS needs to reward them. An honest debate on the adequate and politically sustainable price might be necessary. If the price is too low, investments into carbon capture and storage won’t be incentivised, if it is too high, industry’s competitiveness is at risk. Creative policy solutions need to be found to address this problem.
Lastly, the EU has to ensure that so-called technology neutrality doesn’t turn into a waste of money. The principle makes sense as long as it is paired with cost-effectiveness. Without the right balance between what gets driven by the market and what gets subsidised, scarce public money risks being wasted across the board. The recent German decision to invest into hydrogen cars has raised eyebrows across the continent and comes across as an odd priority when industrial companies need hydrogen more urgently.
What is the general environment in which EU institutions and member state governments will make decisions this year? Do you expect difficult debates and negotiations?
As the US is reinforcing its position as a petrostate and China is increasing its dominance as an electrostate, the EU is caught in the middle. Key policy proposals on the table in 2026 will determine the EU’s path. There is a risk that this path will turn into a zigzag course and scare away investors. The European Parliament is no longer a reliable force and could thus weaken the business case to invest in Europe.
The importance of 2027 as a “super-election year” in the EU should not be understated: it brings additional volatility and uncertainty on how stable majorities in the Council are. It may lead to delays extending into the end of 2027 or early 2028 as well, as some governments will struggle to position themselves ahead of elections.
If you had to give European climate and energy policy 2026 a headline, what would it be? What is the 2026 EU climate and energy story?
Despite geopolitical tensions and European political volatility, the EU is staying the course on decarbonisation, as it is the smartest economic and security choice. In 2026, the EU translates its decarbonisation objectives into industrial leadership and strategic autonomy on energy and supply chains, paving the way for a more powerful Union in the new geoeconomic order.
