The decarbonization of transport is a lever for industrial competitiveness, but the EU budget does not capitalize on it. This was the first reaction from the NGO Transport and Environment (T&E) upon learning the EU budget proposal for post-2027. According to T&E, the budgetary approach fails to leverage transport decarbonization to boost industrial competitiveness, as the resources allocated for scaling up clean technologies are insufficient.
The NGO believes that the budget’s new flagship program, the European Competitiveness Fund (ECF), allocates only €67 billion for climate transition and industrial decarbonization over a seven-year period, €40 billion of which comes from an existing instrument. However, public funding needs for clean technology manufacturing in transport alone require €39 billion annually by 2030.
Support for critical technologies like batteries and e-fuels for aviation and maritime transport is essential to enhance the bloc’s competitiveness, energy security, and strategic autonomy. But the limited funding of the European Energy Fund, combined with the broad range of eligible technologies, risks sidelining key transport investments. According to T&E, in the battery sector alone, this proposal jeopardizes up to 100,000 new jobs that could be created by 2030.
Strengthening clean technology value chains
T&E believes the proposal sends some positive signals in support of an EU green industrial strategy. The European Fisheries Fund will be able to grant production aid to boost clean product manufacturing, something not permitted in previous budgets. ‘Made in EU’ requirements are also introduced, giving companies that use local technologies and suppliers privileged access to EU funds.
In the words of Xavier Sol, Director of Sustainable Finance at T&E: “This budget proposal includes promising elements on production aid and local content, but the Competitiveness Fund, as proposed, is not yet the powerful green industrial engine it aims to be. Europe needs to develop and strengthen clean technology value chains and deploy green technologies at scale. Without sufficient financial firepower, it risks becoming an irrelevant player. It’s too little, but not too late to change course.”
A 35% target for climate and biodiversity investments allows funding for renewables, energy efficiency, and climate resilience, but it is insufficient to stay on track with EU climate goals. Fossil fuel subsidies are also not ruled out. And the dismantling of the LIFE program, the EU’s main instrument for climate and environmental action, is also concerning, according to T&E.
Tax on maritime fuels
To finance the budget, T&E recommends including under-taxed and highly polluting sectors like aviation and maritime transport in the plan. An EU-wide kerosene tax could generate around €21.25 billion annually if applied to all outbound EU flights. Similarly, taxes on maritime fuels could raise around €24 billion per year.
Xavier Sol adds: “Europe needs a major investment push to become more competitive, sustainable, and prosperous. This requires a focused, impactful, and predictable investment plan. This proposal is only a timid first step in that direction.”
