Decarbonization without deindustrialization in future pathways for European industry

Decarbonizing European industry while maintaining international competitiveness are two central objectives of European Union (EU) policy, yet they may conflict. This study investigates trade-offs between these goals across alternative industrial production pathways, from continued decline to policy-driven reindustrialization, focusing on steel, cement, methanol, ammonia, and high-value chemicals. Using an extended PyPSA-Eur energy system model with detailed process-level representation, we compare domestic low-carbon production costs against imported alternatives and evaluate three policy strategies: intra-European relocation, selective green intermediate imports, and targeted subsidies. Deep industrial decarbonization is technically feasible, with electrification playing a central role, but cost competitiveness peaks during the investment-intensive transition phase around 2040. Intra-European relocation delivers limited savings and faces significant real-world constraints. Strategic imports of green intermediates substantially reduce system costs while preserving downstream industrial activity. Overall, European industrial policy should prioritize decarbonizing existing capacity, leveraging green intermediate imports to retain high-value domestic production, supported by targeted, time-limited public support.