A digital agenda for the Clean Industrial Deal: Powering Europe's energy transition

Executive summary

Energy lies at the heart of the Clean Industrial Deal (CID), and digitalisation, particularly the deployment of AI, plays a crucial role in achieving its twin goals of industrial decarbonisation and enhanced competitiveness. This paper outlines the vital contribution of digital technologies in driving energy efficiency, reducing costs and strengthening Europe’s industrial competitiveness and resource efficiency.

To unlock the full potential of digitalisation, these technologies must be scaled sustainably and paired with an industrial strategy that supports the responsible deployment of digital infrastructure, notably energy- and resource-efficient data centres. The paper reviews current policy efforts to reduce emissions and energy use and highlights best practices already making an impact across Europe. It also explores the growing role of AI in driving down emissions through optimisation and innovation.

However, the path forward is not without challenges. Persistent barriers, including ageing grid infrastructure, slow permitting processes, limited financial incentives and a lack of digital and green skills, are slowing the uptake of digital and AI-driven solutions in the energy sector. This paper identifies these critical obstacles and offers targeted recommendations to address them. Overcoming these barriers is essential to enabling a competitive, clean and future-ready European economy.

Our key recommendations are to:

• Accelerate electrification and digitalisation of the EU energy system: To achieve this, it is essential to revise the Energy Taxation Directive to ensure equitable electricity-to-gas pricing and fully implement the Net Zero Industry Act to expedite clean and digital technologies. Additionally, leveraging electricity market mechanisms will promote the development of firm and flexible carbon-free resources, driving the transition towards a sustainable energy system.
• Prioritise digitalisation in the European Grids Package: This involves investing in digital infrastructure and international interconnectors, as well as introducing flexibility incentives to manage grid congestion. Public-private partnerships should be enabled to finance grid upgrades, whilst supporting smart grids and AI-driven energy management. Streamlining permitting processes and deploying generative AI solutions will enhance efficiency. Increasing transparency and regular reporting will foster accountability and drive progress towards Europe’s decarbonisation and digitalisation goals.
• Harmonise data standards and interoperability: Grids still operate in national silos, lacking integration, standardisation and interoperability. This prevents economies of scale and the deployment of shared digital technologies. To address this, the EU should support harmonised data standards and interoperability across the energy system to reduce fragmentation, align EU legislation and accelerate the development of common energy data spaces.
• Strengthen cybersecurity policies and standards: Align EU cybersecurity frameworks, extend transition periods for compliance and promote global standards convergence. Establish a public-private threat-sharing platform under ENISA to support real-time cyber threat intelligence and coordinated response.
• Upgrade the resilience of Europe’s energy infrastructure: Invest in dual-use technologies to protect critical energy assets through a mix of EU, national and private funds. Investments should encompass both cyber defences and physical infrastructure such as drones, satellites, and connectivity systems. The EU could take inspiration from efforts such as those in the US, where the US Administration’s ICEYE initiative is advancing radar-based surveillance infrastructure for both security and defense.
• Close the green and digital skills gap: Equip the workforce to lead the energy transition by expanding public-private partnerships and targeted investments. Establish a European framework for green and digital sustainability roles and ensure alignment between skills initiatives and EU industrial and climate strategies. Prioritise demand-driven training programmes that match evolving industry needs and secure a future-ready, resilient labour force.