In recent years, the European Union has launched a strategic push to restructure its industrial base and strengthen competitiveness through decarbonization. Following Russia’s invasion of Ukraine and the ensuing energy crisis, decarbonization has come to be seen not merely as climate policy, but as a core instrument for ensuring energy security and boosting industrial strength. While maintaining its original climate targets, the EU is now accelerating efforts to integrate industrial and energy policy to realize these targets more swiftly and efficiently.
Japan and the EU face a number of common structural challenges that have emerged in the 2020s—ranging from energy security concerns and supply chain disruptions to dependence on traditional industries and low labor productivity. Precisely because of these shared issues, the evolution of EU policy offers valuable insights for the strategic design of Japan’s Green Transformation (GX) policy.
This report provides an overview of the EU’s industrial policy developments since the Green Deal, and it draws out three key takeaways for Japan’s GX strategy.
First, EU policy reframes decarbonization not as a "constraint" on economic growth and industrial competitiveness, but as a "driving force".
Second, the strategic selection of key technologies based on clearly defined priorities, such as climate and energy targets as well as economic security.
Third, the EU’s approach to increasing the transparency of subsidy policies, while combining support conditions and regulatory measures to promote the most effective decarbonization strategies.
We hope this report will serve as a useful guide for deepening Japan’s strategic GX initiatives and exploring avenues for collaboration with the EU.
<Table of Contents>
Introduction
Part I: The Evolving Landscape of EU Industrial Policy
1. Emergence of Industrial Policy
2. Charting the Path from the Green Deal to the Clean Industrial Deal: The Implications of the Draghi Report
3. Clean Industrial Deal
4. Net-Zero Industry Act
Part II: Challenges of EU’s Industry Policy
1. Governing a Fragmented Industrial Landscape
2. Funding for Net-Zero Projects
Part III: Insights from European Industrial Policy for Advancing Japan’s Green Transformation (GX)
1. The Relationship Between Decarbonization and Industrial Policy
2. Strategic Focus and Selection Criteria
3. Risks of Subsidy Dependence and the Importance of Conditionality
Conclusion
