2024 marked a turning point for the European Union, with political priorities taking shape for the next five-year institutional cycle. This shift was driven by the European Parliament elections, the appointment of a new European Commission and European Council President, as well as by the publication of key reports, notably those by Letta on the Single Market and Draghi on European competitiveness. Crucially, research and innovation (R&I) emerged as a central enabler for economic and societal progress in policy terms, a focus that had been less evident in previous years. Together, these developments have laid the groundwork for the political agenda guiding the EU’s strategic direction in the institutional term that has just begun.

In this context, competitiveness remains a key pillar, always coupled with decarbonisation, though the latter has lost some traction in political discourse, clearly reflecting a shift away from the momentum generated by the European Green Deal in the previous EU institutional term. At the same time, “simplification” has emerged as a central theme in policy debates, with calls to mainstream it into both policymaking and legislation to address the bloc’s fading competitiveness relative to global rivals, particularly the US and China, on many fronts, including the battlefields for global supremacy represented by clean technologies and artificial intelligence (AI).

Against this backdrop, several major EU policy initiatives have already been launched or are in progress, reflecting a sense of urgency to act championed by European Commission President von der Leyen. In this regard, all eyes are currently on the Competitiveness Compass, a flagship initiative published on 29 January after a few weeks' delay. Presented as the “North Star” of the new Commission, it outlines the EU’s strategic vision for the next five years, charting a path for Europe to lead in inventing, manufacturing, and bringing future technologies, services, and clean products to market, while not losing sight of the objective of becoming the first climate-neutral continent.

Centred on the “simplify and accelerate” mantra, the Compass outlines a range of key initiatives relevant to the low-carbon energy R&I community at EERA, aimed at attaining the above-mentioned goals mainly by reducing regulatory burdens, streamlining access to funding, and stimulating clean energy investment. Among these is the Clean Industrial Deal, designed to position the EU as an attractive manufacturing hub while fostering clean technologies and circular business models. Set for launch on 26 February, it will be accompanied by the Affordable Energy Action Plan, which will focus on modernising grids and supporting energy-intensive industries. A Competitiveness Fund, expected by mid-2025 alongside the Multiannual Financial Framework, will then centre on scaling up strategic sectors, with initiatives in AI, quantum computing, and clean technologies to reinforce European industrial leadership. Additional measures include the launch of a Joint Purchasing Platform for Critical Raw Materials in mid to late 2025 and the publication of the European Research Area Act next year, which will be aimed at boosting R&D investment and bringing it up to the long-standing 3% of GDP target and enhancing talent and knowledge circulation across Europe.

In its initial appraisal of the Compass, EERA welcomes the recognition of research and innovation in its core ambitions and agrees with the overarching objectives of the initiative, noting, however, that the kind of competitiveness it aims to spur needs to be sustainable also from an environmental and social perspective. In this respect, the weak reference to the 2040 climate target in the text raises concerns, as it is seen as a necessary step to uphold confidence and maintain the trajectory towards net zero by 2050. EERA will continue to monitor and act upon all developments stemming from this initiative to ensure that the concept of sustainable competitiveness is successfully upheld and that low-carbon energy R&I remains central to these efforts.

These occurrences at the EU level are unfolding against a backdrop of major global political changes, the most notable of which is Donald Trump’s return to the US presidency on 20 January. His first two weeks in office have seen a flurry of executive orders related to climate and energy, including repealing parts of the Inflation Reduction Act (IRA), announcing the US’s second withdrawal from the Paris Agreement, rolling back a wide range of environmental regulations, and declaring a “national energy emergency” to accelerate oil and gas production. While these measures are widely seen as disastrous for the climate and the global clean energy transition, if any positive note can be drawn from them, it is that they may create an opportunity for Europe to reshoring cleantech investments previously drawn to the US by Biden’s IRA and to reclaim global political leadership in advancing decarbonisation.

Other major actions undertaken in the first days of Trump’s second term relate to the digital sphere, where he has launched a $100 billion investment—with plans to reach $500 billion—into the Stargate artificial intelligence infrastructure project, an announcement dwarfing the EU's recently announced flagship €2 billion AI Factories initiative. However, in this domain, a shift in the landscape occurred just a few days ago with China’s launch of the DeepSeek AI model, emerging as a cost-effective alternative to US technologies like OpenAI. An occurrence dubbed by Trump as a “wake-up call” for the American tech sector, it may nevertheless represent, for Europe, a welcome signal that the power dynamics in the field can change rapidly and that, therefore, its own AI industry may still have a fighting chance in the global AI race, despite the dominance of US and Chinese players.

In this complex European and international political context, geopolitical shifts, technological competition, and a worsening climate crisis all contribute to a fluid policy landscape that is difficult to decipher, anticipate, and, even more, to govern, with rapid changes constantly altering agendas. In this environment, the EU faces a defining, even existential, moment. To emerge successfully, it will need to navigate a delicate balancing act between internal pressures and external challenges, without forgetting its founding values which should forge its own and distinct way of influencing the evolving world order.