Europe’s transition to a climate-neutral economy depends heavily on the transformation of hard-to-abate and energy-intensive industries. These sectors – including steel, cement, chemicals, refining, transport, shipping, agriculture-related value chains and other resource-intensive activities – are essential to European production systems, employment, trade and strategic autonomy.
However, they remain among the most difficult sectors to decarbonise because they rely on high-temperature heat, fossil-based feedstocks, long-lived industrial assets, complex supply chains and capital-intensive technologies (IEA, 2021a; IRENA, 2024; ABB Motion & Fraunhofer IPA, 2025). A successful twin transition therefore would require targeted coordinated changes in infrastructure, finance, regulation, skills, markets and industrial ecosystems, alongside new technologies.

Context & Objectives

As part of the HARD2SCALE initiative, a macro-regional analysis was conducted to explore how different European regions can contribute to industrial transformation while maintaining competitiveness and resilience. The central lesson of the analysis is that Europe does not need one uniform industrial decarbonisation pathway. It needs a coordinated framework that allows different regions and sectors to move at different speeds while remaining connected through infrastructure, finance, innovation and skills. The transition must reduce emissions, maintain competitiveness, create new markets, support vulnerable regions and strengthen industrial resilience.

The macro-regional perspective helps clarify why the European industrial transition cannot follow a single pathway.Western Europe, Southern Europe, Central and Eastern Europe, and the Nordic and Baltic region each face different starting conditions, industrial structures, innovation capacities and infrastructure constraints. These differences do not make the transition fragmented by nature. Instead, they reveal a system of complementary strengths and needs: some regions are better positioned to scale advanced low-carbon technologies; others have strong renewable energy potential, manufacturing depth, strategic logistics assets or large transition-dependent workforces. The central challenge would be to connect these regional assets into a coherent European transition strategy.

The objective of the HARD2SCALE macro-regional analysis was therefore to identify common barriers, regional strengths and strategic opportunities that can support industrial decarbonisation while strengthening Europe’s competitiveness and resilience.

Key Findings / Highlights

Western Europe: From Innovation Leadership to Industrial-Scale Deployment

Western Europe enters the transition with strong policy frameworks, mature industrial clusters, advanced research systems and comparatively better access to finance. Its industrial base includes high-value manufacturing, chemicals, refining, steel, cement and other energy-intensive sectors that are deeply integrated into European and global value chains. The main difficulty is not a lack of ambition or technological awareness. It is the challenge of scaling technologies from pilots and demonstration projects to full industrial deployment. For Western Europe, the next phase of decarbonisation must therefore focus on scale. Industrial clusters need shared infrastructure, predictable regulation and demand-side mechanisms that make low-carbon products commercially viable.

Southern Europe: Renewable Potential and Implementation Gaps

Southern Europe combines traditional heavy industries, maritime activities, manufacturing and a large base of SMEs, while also benefiting from significant renewable energy potential. This gives the region a strategic opportunity to position itself as a producer and user of renewable-based industrial solutions. At the same time, grid bottlenecks, energy costs, fragmented governance and limited access to finance create uneven transition conditions. The role of SMEs is particularly important, requiring simplified funding access, technical assistance and practical pathways for energy efficiency, electrification and circular economy adoption.

Central and Eastern Europe: Industrial Transformation as a Just Transition Challenge

Central and Eastern Europe faces one of the most complex transition tasks in Europe. The region has a strong industrial identity built around heavy manufacturing, steel, cement, chemicals, automotive production and energy-intensive supply chains, but many industrial systems remain more carbon-intensive due to legacy infrastructure and fossil fuel dependence. The challenge is therefore both technological and socio-economic. Decarbonisation must be accompanied by workforce reskilling, economic diversification and access to finance to ensure a just and competitive industrial transition.

Nordic and Baltic Region: High Ambition Under Scaling Pressure

The Nordic and Baltic regions are often associated with high climate ambition, strong innovation capacity and advanced renewable energy systems. It includes important capabilities in green steel, clean shipping, bioeconomy, digitalisation and industrial symbiosis. However, infrastructure gaps and he valley of death between successful pilots and commercial-scale deployment remain significant challenges. The region highlights the importance of linking innovation leadership with investment readiness and market creation.

Across all macro-regions, the same types of barriers appear repeatedly: infrastructure gaps, high technology costs, regulatory uncertainty, permitting delays, weak market demand for low-carbon products, limited access to finance and shortages of specialised skills. While these barriers appear in different forms, they point to a common need for coordinated action across Europe.

Impact on Startups and the Innovation Ecosystem

The analysis demonstrates that Europe’s diversity can become a competitive advantage if regions are connected through shared infrastructure, technology transfer, industrial specialisation and policy learning. The transition does not require every region to develop the same capabilities. Instead, it requires regions to contribute different strengths to an integrated low-carbon industrial system. For startups developing solutions for Energy Intensive Industries and Hard-to-Abate sectors, these regional differences create distinct opportunities for market entry, partnerships and scaling. Some regions offer strong industrial deployment environments, while others provide renewable energy resources, manufacturing capabilities or specialised innovation ecosystems. The findings reinforce the importance of cross-border acceleration and ecosystem collaboration. Access to industrial partners, investors, infrastructure and market opportunities will be critical for startups seeking to scale solutions in areas such as hydrogen, industrial electrification, circular economy, digitalisation and low-carbon materials. For HARD2SCALE, this underlines the value of connecting innovators with regional ecosystems that can support both technology development and market deployment, helping reduce fragmentation and accelerate industrial transformation across Europe.

Conclusion & Forward Look

The findings demonstrate that successful industrial decarbonisation will depend not on a single model, but on stronger collaboration across Europe’s innovation ecosystem, combining regional strengths through cross-border acceleration, targeted investment and coordinated policy action. Industrial decarbonisation is not only an environmental obligation. It is also a strategic opportunity to strengthen Europe’s industrial base, create new markets, improve resilience and support long-term competitiveness. The role of HARD2SCALE is to help turn Europe’s diversity into a coordinated advantage: identifying scalable approaches, reducing fragmentation and supporting industries, ecosystems and policymakers as they move from planning to implementation. Whithin the project, the transition can be structured around four industrial cohorts: Transportation and Logistics; Materials and Resource Industries; Molecular Transformation Industries; and Agriculture and Land Use, to identify scalable technologies and practices, but also adapt them to regional realities.

References

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Article written by KiNNO.