Amber Advisory follows developments in European Union economic, energy, climate, industrial competitiveness and investment policy, with a particular focus on their practical implications for businesses and the investment environment in Latvia. Our areas of interest also include EU funding opportunities, industrial decarbonisation, energy security, critical raw materials and how businesses can adapt to an evolving regulatory landscape.
The European Union’s climate and energy policy is entering a new phase. Climate objectives are increasingly being linked to industrial competitiveness, energy security, investment, technological development and supply chain resilience.
Decarbonisation is no longer solely a matter of reducing emissions or complying with new regulatory requirements. It is becoming part of a broader European industrial policy aimed at reducing emissions, strengthening the competitiveness of European businesses and developing new markets for clean technologies.
This approach is particularly evident in the European Commission’s Clean Industrial Deal, an initiative centred on industrial decarbonisation and competitiveness. The Clean Industrial Deal identifies six key drivers of growth and competitiveness: affordable energy, lead markets for clean products, financing, the circular economy and access to raw materials, international markets and partnerships, and skills.
European climate policy is becoming industrial policy
The European Union’s long-term climate policy envisages a substantial reduction in emissions by 2040. At the same time, there is an increasing emphasis at EU level on ensuring that the achievement of climate objectives does not create long-term competitiveness risks for European industry.
Consequently, in the coming years, climate and energy policy will focus not only on emissions reduction but also on energy prices, infrastructure, investment, production capacity and technological independence. This approach is becoming particularly important as European businesses face global competition for investment, technology and energy resources.
One of the first priorities under the Clean Industrial Deal is affordable energy and infrastructure. EU measures aim to reduce energy costs, improve energy efficiency, strengthen the Energy Union and attract investment. For businesses, this means that energy costs must increasingly be viewed as a strategic factor in competitiveness.
Financing is becoming one of the main instruments of the transition
Investment will be central to Europe’s industrial transformation. The Clean Industrial Deal therefore envisages a range of instruments designed to mobilise both public and private financing.
Key instruments include InvestEU, Important Projects of Common European Interest (IPCEIs), Horizon Europe, the Innovation Fund, the Industrial Decarbonisation Bank and the TechEU investment programme.
Particular importance is attached to the Clean Industrial Deal State Aid Framework (CISAF). It was established to make it easier for Member States to deploy state aid instruments in support of the Clean Industrial Deal’s objectives.
CISAF provides opportunities to support renewable energy and low-carbon solutions, energy-intensive businesses, the decarbonisation of existing production facilities, clean technology manufacturing and measures to mitigate investment risks. The framework is intended to remain in place until the end of 2030.
This sends an important signal to Latvian businesses: investments in energy efficiency, electrification, emissions reduction and clean technology manufacturing should increasingly be assessed not only as cost items, but also as potentially eligible investments for public support.
The clean technology market is becoming a European growth priority
The European Union aims not only to reduce pollution and emissions but also to ensure that clean technologies are manufactured and deployed in Europe to the greatest extent possible.
The Clean Industrial Deal seeks to develop so-called lead markets by stimulating demand for low-carbon and European-made products. Proposed instruments include low-carbon product labelling, as well as the use of sustainability, resilience and minimum EU-content requirements in strategic areas of public and private procurement.
These developments could create new opportunities for businesses that already develop energy-efficient products, use recycled materials, reduce the carbon footprint of their products or offer solutions for industrial decarbonisation.
Critical raw materials are becoming a competitiveness issue
European industrial policy is increasingly focused on resource availability. Under the Clean Industrial Deal, the circular economy and access to materials are among the six key drivers of industrial competitiveness.
In 2025, the first list of strategic projects under the Critical Raw Materials Act was published, comprising 47 projects. In 2026, the EU Critical Raw Materials Centre is also expected to be established to support joint purchasing and the management of strategic stockpiles. Meanwhile, the EU is developing its circular economy policy, including the Circular Economy Act, which is expected towards the end of 2026.
This means that businesses will increasingly need not only to secure raw material supplies but also to assess opportunities for material reuse, recycling and substitution.
For Latvian businesses, new opportunities may emerge in recycling, material reuse, technology development and the utilisation of industrial by-products.
CBAM is increasing the importance of carbon costs in international trade
Another important element is the Carbon Border Adjustment Mechanism (CBAM).
CBAM aims to mitigate the risk of carbon leakage and ensure more equal competitive conditions between European producers and imports from countries with different climate policy frameworks.
In 2025, measures to simplify CBAM were advanced, including a new 50-tonne de minimis threshold for small importers, simplified administrative procedures and measures to prevent circumvention. A broader review of CBAM is also envisaged, including the possibility of expanding its scope in the future.
For businesses, this means that carbon costs are increasingly becoming a factor in international competitiveness. This is particularly relevant for companies operating in energy-intensive sectors or participating in international supply chains.
Energy infrastructure is becoming an investment priority
The transition to clean energy cannot take place without adequate infrastructure. The Clean Industrial Deal calls for faster development of electricity grids and energy storage solutions, alongside improvements to the regulatory framework for renewable energy projects.
The initiative places particular emphasis on accelerating the deployment of grid and storage infrastructure and creating a more favourable financial environment for investment.
This is also important for Latvia. Companies’ investment plans may increasingly need to account not only for energy generation itself but also for grid connection capacity, energy storage, flexibility solutions and energy efficiency.
European policy is becoming increasingly important for long-term business investment
The next steps in European climate and energy policy are not merely a matter of regulation. They will directly influence business investment decisions.
When a company invests in production equipment with a lifespan of 10–15 years, it is effectively making an investment decision based on the business environment of 2030 and 2040 as well.
It is therefore becoming increasingly important to assess investments not only on the basis of current costs but also in terms of:
- Energy consumption and future energy costs;
- Emissions costs and potential regulatory changes;
- Available public funding;
- Supply chain and raw material risks;
- The alignment of technologies with future market requirements;
- Opportunities to position products in growing markets for clean technologies and low-carbon products.
2026 and 2027 as a period of preparation
The European climate and energy policy agenda includes several important decisions and initiatives in the coming years. These include new energy policy measures, European electricity grid development, industrial decarbonisation initiatives, the Circular Economy Act, critical raw materials policy and the further development of CBAM.
This means that businesses have a particularly timely opportunity to review their upcoming investments and identify areas where adaptation may be necessary.
It is important not to wait until new requirements become mandatory. Businesses that prepare for change early are better positioned to access public funding, select appropriate technologies and strengthen their competitiveness.
Europe’s industrial transition creates both costs and new opportunities
The Clean Industrial Deal essentially marks a new approach to European economic development. Climate objectives are being linked to industrial policy, energy security, investment and technological progress.
For businesses, this means addressing two priorities simultaneously: reducing risks associated with energy, emissions and regulation, while taking advantage of emerging markets and financing instruments.
In the coming years, businesses that view decarbonisation not merely as an obligation but as part of their growth strategy may be better positioned to benefit from the transition.
Europe’s industrial transition is already underway. The question is no longer whether businesses will need to adapt to the changing economic environment, but how early they will do so and to what extent they will be able to seize the opportunities created by this transformation.
Source: What’s next in Europe? – Agenda of European climate and energy policy | Clean Energy Wire
Policy Tracker: Clean Industrial Deal – Flagship actions – ERCST