The Green Deal is dead?! – Long live the "EU Compass for Competitiveness"!

The European Commission presented its "Compass for Competitiveness" on 29 January 2025. This initiative is the first major action of the new Commission and aims to help Europe increase its competitiveness and ensure sustainable prosperity. The EU Compass is based on the recommendations of the Draghi report and defines three key areas for action: innovation, decarbonisation and (supply) security.

Innovation

To close the innovation gap, the EU plans to create an enabling environment for young, innovative start-ups and strengthen industrial leadership in high-growth sectors. These include initiatives such as "AI gigafactories" and programs to promote quantum and biotechnologies, robotics and space technologies. A simplified legal system is also intended to facilitate the establishment and expansion of new companies.

Decarbonization

Another focus of the EU Compass is decarbonization. The EU wants to improve access to clean and affordable energy and take a competitive approach to decarbonising the EU industry. This includes accelerated procedures for granting business permits and tailor-made action plans for energy-intensive sectors such as steel, metals and chemicals. These points are also to become part of the future "Clean Industry Deal".

(Supply) Security

The EU aims to reduce its dependencies on third countries (and supply chains) while strengthening (supply) security. This is to be achieved through effective partnerships and a network of trade agreements. The EU Compass also provides for a European preference in the awarding of public contracts for critical sectors and technologies.

Horizontal factors

In addition to the three main pillars (innovation, decarbonisation and (supply) security, the EU Compass contains five horizontal factors that – from the EU Commission's point of view – are crucial for strengthening competitiveness:

(i) simplification,
(ii) removing barriers in the internal market;
(iii) competitive financing,
(iv) promoting skills and quality jobs;
(v) better coordination of policies at EU and national level.

The above-mentioned horizontal factors aime initially at significantly reducing the regulatory and administrative burden in the EU. For example, the administrative burden is to be reduced by 35 % for small and medium-sized enterprises ("SMEs") and by 25 % for all companies. In addition, so-called "standardized procedures" are to be faster and less bureaucratic. It also aims to facilitate efficient access to sources of finance, including venture capital. Employees are to be promoted and their skills strengthened. Finally, political goals in the EU are to be better coordinated and implemented.

Practical note

For companies and investors alike, the EU Compass offers numerous opportunities, especially in the areas of innovation and decarbonisation. It is advisable to find out about the new funding opportunities and legal framework conditions at an early stage in order to benefit from the planned measures.