Green, competitive or autonomous? The contradictions in the EU’s industrial policy

Author: Andrea Éltető

In: HUN-REN CERS, Institute of World Economics, Working Paper Nr. 284 (2026) September 2026

Abstract

Since 2019, the European Union’s industrial policy has been guided by the European Green Deal, which aims to achieve climate neutrality. However, the green and digital transitions have sharply intensified the EU’s dependence on critical raw materials and technologies from third countries, most notably China. The EU is attempting to resolve this tension by enhancing strategic autonomy, encouraging domestic mining, supporting urban mining and the circular economy, and building a European battery manufacturing capacity. This study argues that reconciling environmental sustainability, competitiveness and strategic autonomy represents a theoretical ‘wicked problem’ (Rittel & Webber, 1973). The paper examines current EU industrial instruments, the intense local and environmental conflicts surrounding European mining projects, the structural limits of recycling, and the struggles of the European battery industry. The paper highlights that an industrial strategy relying purely on technological substitution whilst ignoring absolute demand reduction deepens existing socio-ecological trade-offs, concluding that managing this wicked problem requires flexible, adaptive, and truly collaborative governance frameworks.