This paper critically examines the concept of green industrial policy in the European Union (EU) within the context of the European Green Deal, an initiative aimed at achieving climate neutrality by 2050. While the deal emphasizes climate targets, it has not fully addressed the economic and social sustainability aspects of the green transition. In response to growing concerns over the potential consequences of the United States Inflation Reduction Act (IRA) and China's influence in clean technology value chains, the EU has reassessed its green industrial policy approach with the Net Zero Industry Act (NZIA) proposal. The study traces the historical evolution of European industrial policy, evaluates current proposals from the European Commission, and proposes principles and recommendations for a more effective green industrial policy. The goal is to facilitate a comprehensive decarbonization process while ensuring economic and social sustainability, particularly given the EU's reliance on carbon-intensive industries. The paper also highlights the EU's leadership role in global green transition efforts, driven by the need for strategic autonomy and resilience in energy supply.This paper critically examines the concept of green industrial policy in the European Union (EU) within the context of the European Green Deal, an initiative aimed at achieving climate neutrality by 2050. While the deal emphasizes climate targets, it has not fully addressed the economic and social sustainability aspects of the green transition. In response to growing concerns over the potential consequences of the United States Inflation Reduction Act (IRA) and China's influence in clean technology value chains, the EU has reassessed its green industrial policy approach with the Net Zero Industry Act (NZIA) proposal. The study traces the historical evolution of European industrial policy, evaluates current proposals from the European Commission, and proposes principles and recommendations for a more effective green industrial policy. The goal is to facilitate a comprehensive decarbonization process while ensuring economic and social sustainability, particularly given the EU's reliance on carbon-intensive industries. The paper also highlights the EU's leadership role in global green transition efforts, driven by the need for strategic autonomy and resilience in energy supply.