I4CE has published the European Climate Neutrality Observatory report (ECNO) on the EU transition, with good news on cleantech, and not so good on progress itself.

The EU initiated an economy-wide transition to climate neutrality to be reached by 2050, but the current pace of the transition is too slow. Investments are lagging, with inadequate policy adjustments to provide certainty.

So far this year, there are, however, positive results in several policy areas. Notably, there are signs that the EU’s cleantech industrial base and innovation ecosystem are improving, now rated by ECNO as on track. Value added in the cleantech industry is on the rise and manufacturing capacities are increasing for key technologies, such as wind, solar photovoltaics, heat pumps, electrolysers, and batteries. Battery manufacturing is on track to exceed the EU target of 550 GWh annually by 2030.

In fact, solar power expansion has continued to exceed expectations, with a record 65GW of new capacity installed in 2024. For the first time in mid-2025, solar became the single largest source of electricity in the EU.

The industrial sector saw improvements across all indicators compared to last year, especially on energy efficiency, resource productivity and circularity, and the use of renewables. These positive developments have boosted jobs in renewable and environment-related sectors, while employment has also been rising in the EU’s coal and heavy industry regions.

Likewise, a rebound in carbon storage in forests as well as a growing market for the future delivery of technical removals contributed to an improvement in the assessment of carbon removal, however here the latest research that might affect this.

Finance for the transition remains a major stumbling block however, with financing gaps and misaligned incentives that continue to hinder investment in industrial decarbonisation and slow down broader demand for clean technologies.

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