EIES welcomes the Competitiveness Compass’ commitment to addressing a wide range of challenges: simplification and innovation, supply security and manufacturing, combating hybrid threats and reducing risky dependencies. If tackling so many tasks sounds like a Rubik’s Cube, there is no escaping the need for solutions to all aspects of Europe’s current crisis. Fast-tracking this agenda and making it a coordinated political priority at both the EU and national level is essential to defend and improve the competitiveness of European industry and the security of the continent. 

Unveiled by the European Commission on 29 January, the Competitiveness Compass is designed as a road map, based on the Draghi Report, toward strengthening Europe’s energy infrastructure and industrial base, addressing risky dependencies, and boosting innovation.  

The European Initiative for Energy Security (EIES) commends the focus on strategic technologies and sectors. These priority areas should be the primary beneficiaries of the other initiatives designed to reduce market barriers and energy costs, unlock private capital boost innovation and manufacturing, and support demand through lead markets. This is vital to Europe’s economic and national security.  

Reducing energy costs is an immediate priority - an enabler for Europe’s broader industrial recovery, as well as a tangible benefit for citizens across the Union. The EU needs to act swiftly to achieve stable and affordable energy prices while reducing costly and risky dependencies on fossil fuel imports and concentrated supply chains dominated by rivals like China and Russia. Long-term solutions require deeper capital market integration and unlocking risk capital funding. This must be underpinned by real, market-driven technology neutrality in Europe’s approach to the energy transition. 

1. Simplification and innovation for a strong, modern industrial base 

EIES welcomes the Clean Industrial Deal and its focus on strategic industries across the European economy. Initiatives to follow will include the Decarbonisation Accelerator Act to support industries through prompt permitting, as well as the Advanced Materials Act to scale up next generation designed and engineered materials (e.g. metal hybrids and superalloys, high-performance ceramics, advanced polymers). The emphasis on strengthening technology transfer rules to address challenges to industrial competitiveness and innovation gaps in European manufacturing is crucial. 

Equally significant is the ambition to strengthen the European automotive sector to keep it competitive on a global scale, increasing its innovation capacity, the adoption of new technologies, processes, and ability to secure raw materials through diversified and sustainable supply chains. As a longstanding flagship of European innovation and manufacturing excellence, the auto sector is also a foundational element of European pride and self-confidence.   

The Compass importantly recognises the need to address risky dependencies to bolster Europe’s economic resilience and freedom of action. Openness to the global trading system has been a fundamental element of Europe’s prosperity and economic strength. But as highlighted by EIES, the resulting dependencies can be weaponised and leveraged by trading partners whose own systems are not based on or even run counter to free market principles, such as the need to make a profit. In this context, any increase in Russian gas imports into Europe will be unacceptable and would highlight Europe’s weaknesses rather than strengths. EIES supports strong energy and industrial cooperation across European nations and with allied like-minded countries across the globe. Businesses will benefit from collaboration on tech development and deployment. 

Strengthening the start-up environment and scaling up new technologies is imperative. Simplification (“cutting red tape”) is a core element of this effort and indeed, of the entire competitiveness strategy. The upcoming EU Start-up and Scale-up Strategy must be followed by swift action. We commend the Commission’s commitment to simplify regulations and diversify financing streams, including by enabling more equity and other risk capital. Dedicated funding for clean tech, raw materials, semiconductors and other technologies through the TechEU programme of the European Investment Bank should be followed by measures to scale manufacturing capacity. 

2. Increasing the resilience of energy infrastructure and electrification: cornerstones of Europe’s future energy security 

EIES welcomes enhanced coordination between industrial and investment policies and the focus on energy infrastructure, especially modernising electricity grids. The Commission should consider specifically adding cross-border energy infrastructure such as undersea cables as a focus. Given the growth in Russia- and China-linked hybrid attacks, EIES applauds the specific focus on improving the security of critical infrastructure, especially the need to align public and private sector efforts in increasing resilience against cyber, hybrid and physical threats.   

EIES expects the planned Electrification Action Plan and European Grids Package to streamline permitting and unlock investments in grid modernisation and expansion and storage systems. A pragmatic, technology-neutral approach to Europe’s energy mix that is inclusive of nuclear energy is also indispensable to energy security and the transition. This will support the continued development of domestic, low carbon energy generation and demonstrate that the EU regulatory environment is transparent, business-friendly and provides certainty for investors.  

Improving the framework for Important Projects of Common European Interest (IPCEI) procedures is required to improve efficiency and enabling an easier flow of private capital into high-priority European projects. EIES welcomes the inclusion of innovative sectors in the IPCEI framework. It is also commendable that the Compass intends to simplify EU budget funding in the next Multiannual Financial Framework (MFF). 

3. Achieving substantial coordination across trade and investment initiatives to secure raw material supply chains 

Large scale electrification will support Europe’s energy security, but this requires control of raw material and energy technology supply chains. China, which is also relatively oil and gas-poor, understands this and has acted accordingly over the past two decades. EIES supports the EU’s continued focus on securing supply chains, including through Clean Trade and Investment Partnerships. 

The EU should prioritise the development of high-standard projects and the enabling infrastructure in partner countries under the umbrella of the Minerals Security Partnership (MSP) and MSP Forum. Mechanisms that contribute to de-risking such projects, e.g. government guarantees or demand signals, should be prioritised. A key test will be whether the platform for the joint purchase of critical raw minerals succeeds in aggregating significant demand. 

A core element for diversifying and securing minerals and raw materials is attracting investment in mining and processing projects that meet high environmental, social and human rights standards. This will in turn contribute to reducing market concentration and bring economic, social and security benefits to both consumer and producer countries. 

Finally, EIES supports plans to propose a Circular Economy Act to develop Europe’s industrial recycling capacity and improve security of supply. In addition to security consideration, the initiative must factor in competitiveness goals and prioritise areas and materials where there is a strong business case for recycling.  

Conclusion 

The compass lays out several flagship Commission initiatives across interconnected policy areas paramount to Europe’s competitiveness and security. EIES salutes the “can-do” spirit of this document and proposed policy initiatives. Their success ultimately depends on the EU institutions’ and member states’ ability to rally behind and implement a shared energy, industrial and security vision that reflects new realities, goes beyond traditional political/ideological lines and inhibitions, and is underpinned by reforms aimed at leveraging private capital and the principle of tech neutrality.  

EU policies and regulations traditionally take time to negotiate, but competitors are not standing still. Europe must act now if it wants to remain a strong economic and geopolitical force. The EU demonstrated that it can move fast in the face of adversity during COVID and at the peak of the energy crisis. Fast-tracking these initiatives and coordinating action between member states starting today – rather than waiting for the outcome of lengthy regulatory negotiations – is mission-critical to achieve the shared goals laid out in this strategy document. 

The world has changed and become more competitive; Europe must change too if it is to compete.