The European Union has committed to becoming climate-neutral by 2050, with a 55% net reduction in greenhouse gas emissions by 2030, compared to 1990 levels, and down to net zero by 2050. Achieving these targets requires not only decarbonising energy supply but also transforming industrial production. But is there the will to do it?
Central to any transformation is the creation of EU-wide lead markets for low-carbon products. These are sectors where the demand for low-carbon goods is deliberately nurtured, allowing European producers to gain a competitive global advantage.
A lead market is one where innovations first take hold and reach commercial maturity before spreading globally. In the context of low-carbon products, this would mean creating stable demand for products with low embodied emissions (from their whole production process and lifecycle).
It’s also about providing policy support to help them compete against high-emission counterparts until economies of scale and learning effects drive costs down. It would involve harmonising standards and labels across the EU to make these products recognisable and trusted.
The EU has an opportunity to become the de facto global standard-setter for low-carbon products, but this will require coordinated market design, investment and regulation.
Chiefly, stakeholders are asking the European Commission to provide a clear definition for low-carbon products and a trajectory for how to reduce the carbon intensity of products generally. There are existing methodologies, such as Environmental Product Declarations, which could introduce a common methodology for lifecycle carbon footprint calculation and reporting.
The Commission could also align definitions within the EU Emissions Trading System (ETS), the Carbon Border Adjustment Mechanism (CBAM) and sustainable finance taxonomy frameworks. Requirements could also be introduced to mandate carbon footprint reporting for energy-intensive product manufacturers.
Better product policy
The European Commission’s Clean Industrial Deal Strategy, published earlier this year, highlights the potential for developing lead markets for low-carbon products using labelling, benchmarking, public procurement preferences and financial incentives. “Building a business case for decarbonised products also requires concrete measures on the demand side,” the strategy states. “Businesses will only make the necessary investments if they are sure there is a market for their products.”
The strategy explains that “Lead markets drive economies of scale, reduce costs, and make sustainable alternatives more accessible to consumers and businesses alike. This increased demand incentivises industries to accelerate their transition to cleaner and more circular production methods, reinforcing both environmental and economic benefits.”
They add that he implementation of the Industrial Carbon Management Strategy will build the business case for these permanent carbon removals to compensate for residual emissions from hard-to-abate sectors.
As part of this goal, the Commission has updated a work plan within the Ecodesign for Sustainable Products Regulation, which emphasises sustainability, repairability and circular economy across select product categories in the period from 2025 to 2030. This further aligns with the idea of fostering sustainable products.
However, to date, no comprehensive EU low-carbon products strategy exists.
The Carbon Capture and Storage Association (CCSA), an industry group advocating for more CCS, has called for such a strategy to set clear uptake targets for low-carbon products by 2030 to 2040.
They say it should support long-term market mechanisms beyond temporary subsidies. It should also promote public and private demand initiatives, including industry-led alliances and procurement commitments. Public procurement should be recognised as the first mover in stimulating market growth, they say. Such a strategy should be based around harmonised definitions of low-carbon product performances.
Much of the asks for such a low-carbon products strategy could be done through existing frameworks such as the Ecodesign for Sustainable Products Regulation.
If the inclusion of high-emission industrial materials were to be prioritised for addressing within this regulation, for instance, by introducing binding carbon performance thresholds aligned with net-zero goals, it could go a long way toward reducing the emissions of the most carbon-intensive products.
The CCSA is also calling for CCUS to be recognised as one of the valid decarbonisation solutions under the ESPR. They would like to see more coherence between the ESPR, CBAM, and the EU ETS through strong carbon accounting.
Decarbonising production
For some products, CCS appears to be the only way to get low-carbon versions. For instance, cement production releases CO₂ from the calcination process used to create it, which cannot be avoided without capturing the emissions.
Similarly, blast furnace steel production can integrate CCS to dramatically lower its carbon footprint. CCS-enabled steel or low-carbon cement” could meet EU construction demand under green procurement rules, helping industries retain competitiveness while meeting climate goals. When combined with bioenergy (BECCS), CCS can remove more CO₂ from the atmosphere than it emits, a valuable tool for offsetting residual emissions in other sectors.
To stimulate demand and enable cost reductions for low-carbon products, including those produced with CCS, policymakers could deploy a mix of supply-side and demand-side measures. For instance, green public procurement could mandate that infrastructure projects use verified low-carbon materials.
Procurement alignment
If procurement criteria were to be aligned with carbon intensity standards, and restrictions on high-carbon materials in public procurement contracts were to be phased in, it would send long-term demand signals to the wider market.
Policymakers could also introduce EU-wide carbon content disclosure rules, making the CO₂ footprint visible to buyers. Consumer incentives such as tax credits or reduced VAT for products certified as low-carbon could also be introduced.
Supply-side measures are also available. Carbon Contracts for Difference (CCfDs) guaranteeing a carbon price floor can make CCS investments bankable. Innovative financing solutions could be developed, such as expanding Horizon Europe and Innovation Fund grants for CCS demonstration in industrial clusters.
Infrastructure for creating low-carbon products can also be further developed by coordinating cross-border CO₂ transport and storage networks under the TEN-E framework.
If the EU were to succeed in creating lead markets for CCS-enabled products, it would have a first-mover advantage. European producers could shape international standards and export low-carbon materials globally before it becomes common practice elsewhere.
It could also help Europe’s industrial competitiveness, something that is a top priority of the Commission at the moment, following the publication of the Draghi Report last year.
Low-carbon products policy could help avoid carbon leakage risks by providing pathways for domestic heavy industry to decarbonise. The big question going forward is whether the Commission would like to move these efforts forward with a focus on low-carbon products.
[Edited By Brian Maguire | Euractiv’s Advocacy Lab ]
