The Draghi Report and its consequences: where Europe's industrial policy is now having an impact

Investors are having a tough time in Europe: approvals take years, electricity is twice as expensive as in the US, and competition from China is putting pressure on the market with dumping prices. Welcome to the reality of many European industrial companies – one year after Mario Draghi gave the EU its famous ‘electric shock’. But has Europe really understood since then – and, above all, has it taken action?

Written by Armin Scheuermann

Steel production at Thyssenkrupp — Decarbonisation, digitalisation, strategic resilience. Without a coordinated investment offensive, the EU faces a ‘slow death’ of its industrial base, according to the Draghi Report.

The short answer: yes, but slowly. And not equally convincingly everywhere. Nevertheless, a new dynamic in industrial policy has been evident since then at EU level, in Germany and in several member states. For companies in the process industry, energy suppliers and manufacturers of process engineering equipment, it is clear that the wake-up call has had an effect – even if implementation has not yet kept pace with expectations.

When Draghi presented his 400-page report to Commission President Ursula von der Leyen in September 2024, he spoke of an existential challenge for Europe. He said that €800 billion per year would have to be mobilised to keep pace with the US and China in terms of decarbonisation, digitalisation and strategic resilience. Without a coordinated investment offensive, the EU's industrial base would face a ‘slow death’.

Mario Draghi, author of the landmark report, with European Commission President Ursula von der Leyen.

One year later, the first Draghi Implementation Index shows that only 11.2% of the 383 recommendations have been fully implemented, with a further 20% partially implemented. In energy policy, for example, much is stagnating, while implementation in the chemical and digitalisation sectors is proving difficult – compared to the transport and raw materials sectors, which have made comparatively good progress. But the picture is not entirely sobering. There has been clear progress – especially where economic and political pressure converge.

EU Compass: Grand vision, slow implementation

When it took office in January 2025, the new Commission presented the so-called Competition Compass – a strategic roadmap with 33 concrete projects, including 14 legislative initiatives. The volume: over one trillion euros, around 90% of which was directly inspired by Draghi. The core message: Europe's industry should decarbonise, digitise and become more resilient – without losing its competitiveness. For the chemical, pharmaceutical and energy sectors, the effects are partly noticeable and partly still only announced.

In July 2025, the EU Commission published its own action plan for the chemical industry for the first time – a direct response to the alarming signals from the sector. Energy prices, regulatory costs and barriers to innovation had triggered a significant exodus trend since 2022 at the latest.

The plan focuses on four levers: Firstly, security of supply. A new Critical Chemicals Alliance is to ensure that raw materials such as ammonia or ethylene no longer lead to bottlenecks in the future. Secondly, reducing bureaucracy: the so-called ‘6th Omnibus Package’ has streamlined labelling requirements and registration regulations, saving the industry around 363 million euros annually. Thirdly, tax incentives for green chemicals – a lever that the BDI had also explicitly called for in its study published in 2024. And fourthly, investment promotion for new processes such as hydrogen-based synthesis or CO₂ recovery.

This shift in industrial policy is having an effect: according to the EU Commission, the first pilot plants – for example, for the electrification of organic synthesis – are already in the approval process. Faster approval processes are expected to accelerate projects by several months.

Pharmaceuticals: From supply crisis to innovation offensive

While the reform of European pharmaceutical legislation had been on the cards since 2023, Draghi gave it additional political momentum. The EU is now striving for a better balance between regulatory control, innovation promotion and security of supply. In concrete terms, this means faster procedures for drug approvals, investments in biotechnology, mRNA platforms and new manufacturing capacities.

Germany has also introduced its own measures as part of its National Pharmaceutical Strategy – from digital health data infrastructures to tax incentives for R&D. The Association of Research-Based Pharmaceutical Companies (vfa) praised the move as urgently necessary for Germany as a business location. Manufacturers of pharmaceutical plant technology are thus benefiting from increased willingness to invest on the part of their customers, easier framework conditions and a generally stronger demand for innovative, resilient and digital production systems, which are explicitly favoured by the National Pharmaceutical Strategy.

Energy: Relief at last – but not for everyone

No issue weighed more heavily on the shoulders of the process industries than the price of energy. Draghi explicitly called it a ‘major brake on growth’. The EU Commission responded with the Affordable Energy Action Plan (February 2025), which addresses four points: lower ancillary electricity costs, promotion of renewable electricity contracts, joint gas purchases and greater energy efficiency. The idea of harmonising grid fees across Europe is also now on the table – although it has not yet been implemented.

Germany is going one step further: in November 2025, the federal government decided on a temporary industrial electricity price – from 2026, electricity-intensive companies will be able to purchase electricity at around 5 ct/kWh. The programme will be financed with more than €3 billion. The goal: to stop deindustrialisation and maintain competitiveness.

Digitalisation, innovation, capital: more will, less effect

The Draghi report diagnosed not only an investment gap, but also a capital distribution problem: Europe is saving, but investing too little. This is particularly serious in the technology sector. The response: programmes such as ‘TechEU’ (€70 billion), the start-up initiative ‘Choose Europe’ and a new AI strategy are intended to close the gap.

But here, too, much has been announced, little has been implemented. Especially in the areas of AI, digital twins and networked systems, mechanical engineers are still waiting for concrete access to new funding. At least simulation software and process engineering digital tools have been made eligible for funding for the first time under the Net-Zero Industry Act.

Conclusion: A wake-up call with resonance – but still no breakthrough

One year after the publication of the Draghi Report, it is clear that European institutions and many national governments have understood the message. Industrial policy is being taken more seriously, managed in a more targeted manner and better financed. Many companies in the chemical, pharmaceutical and energy industries are beginning to feel the first signs of relief. Support structures are emerging, the availability of capital is slowly improving and regulatory procedures are gradually becoming more efficient.

However, the system change has not yet been completed. Many measures remain patchwork, national solo efforts are hampering the internal market, and political implementation is often slow where swift action is needed.

EU flags in front of a European Commission building — One year after the publication of the Draghi Report, it is clear that the European institutions and many national governments have understood.

Author

Armin Scheuermann

Chemical engineer and freelance specialised journalist