Taking the temperature of the EU’s clean industry strategy

Policy Study

Europe’s decarbonisation-competitiveness debate has placed industrial policy at the centre of the EU’s policy agenda. Since the Draghi Report of September 2024, a succession of EU initiatives – the Competitiveness Compass, the Clean Industrial Deal and now the Industrial Accelerator Act (IAA) – have sought to reconcile decarbonisation with competitiveness, including through “Made in Europe” requirements expressed at the level of individual components. This study takes the heat pump industry as a case study to identify which components should be prioritised for support to accelerate EU manufacturing, progress towards decarbonisation targets and regain competitiveness.

The analysis examines five core heat pump components – compressors, heat exchange units (HEUs), fans, controllers and refrigerants – across four dimensions: production levels; international competitiveness; trade balances and import dependencies; and innovation capacities. It draws on disaggregated trade and production data, desk research and interviews with nine industry stakeholders and experts, benchmarking the EU against China, the USA and Japan.

The results allow to understand the evolving position of the EU industry and individual member states for each of the five heat pump components analysed and to identify which components would benefit from an assertive industrial policy.