On 4 March 2026, the European Commission unveiled a proposal for an Industrial Accelerator Act (IAA). The IAA is a comprehensive package designed to realign the EU’s industrial policy framework and strengthen demand for “Made in EU” industrial products by deploying a range of public procurement and financial support instruments. Key elements of the proposal include EU-wide standardised Union origin and low-carbon requirements for products in the context of public procurement and public support schemes. The proposal also sets out a new regime for foreign direct investments with limits on ownership interests and requirements for joint ventures, as well as accelerated permit-granting procedures for industrial manufacturing projects. The IAA further designates “industrial manufacturing acceleration areas” and introduces a voluntary EU label for low-carbon steel.
Background
The IAA is the European Commission’s response to increasing global competition triggered by, in particular, the US Inflation Reduction Act and ongoing industrial subsidies in China. At the same time, it addresses the current limited demand for low-carbon industrial products from the EU as well as existing barriers to investment, which are primarily due to uncertain sales prospects and the difficulty in scaling up new technologies. The IAA therefore aims to foster investment in decarbonisation and in net-zero technologies such as photovoltaics and solar thermal energy, onshore and offshore wind energy, heat pumps and geothermal energy. Harmonised procurement requirements are intended to create a basic demand for such climate-friendly technologies and make it easier to scale them up, while increasing investment security. This should also boost wider demand for EU products and ensure that the manufacturing industry accounts for at least 20% of the EU’s gross domestic product by 2035. In the long term, the measures are designed to help the EU achieve its climate targets up to 2050
Key provisions
EU-wide procurement and financial support criteria
A central component of the IAA is the introduction of binding Union origin and low-carbon requirements for public procurement and public support schemes. Where public contracts – particularly in the supply, construction or service sectors – involve the procurement of products from energy-intensive industries such as the paper, oil refinery, chemical or plastics industries, contracting authorities will in future have to take additional requirements into account in the procurement procedure. For example, at least 25% of the total volume of steel and products dependent on steel intended for use in the construction, infrastructure and transport sectors must be low-carbon. Other basic building materials such as concrete, mortar and aluminium will be subject to comparable low-carbon requirements, in some cases combined with an additional Union origin requirement.
The IAA also sets out specific requirements along the automotive value chain for the public procurement of pure electric vehicles (PEV), off-vehicle charging hybrid electric vehicles (OVC-HEV) and fuel cell vehicles (FCV). These must not only be assembled within the EU, the value of the vehicle components originating in the EU must account for at least 70% of the value of all vehicle components (in each case excluding the battery). The vehicle’s traction battery must contain a defined number of main specific components of Union origin. The proposal therefore not only covers the end product, but also targets upstream sectors of the industrial value chain.
The IAA does, however, include some key exceptions aimed at avoiding an excessively rigid application of its provisions. For example, goods and products from countries with which the EU has concluded an agreement establishing a free trade area or a customs union, or with regard to which the EU has obligations under the WTO Agreement on Government Procurement, are deemed to be of Union origin for the purposes of public procurement. Contracting authorities may also decide not to apply the requirements if the contract can only be performed by one specific economic operator, no suitable tenders were submitted in similar procedures or if application of the requirements would lead to disproportionate additional costs (25%).
The IAA also lays down new requirements for public support schemes that benefit the private sector, especially in connection with the construction and renovation of buildings and other infrastructure. Only beneficiaries that comply with the relevant Union origin and low-carbon requirements for the materials used – which are essentially the same as those for public procurement procedures – will be eligible for support under these schemes.
Financial support for PEV, OVC-HEV and FCV is also linked to fulfilment of the specified requirements along the value chain.
Regulation of foreign direct investment
The proposal introduces substantive conditions at EU level for foreign direct investment in emerging strategic sectors, notably battery and solar photovoltaic technologies. It covers investments over EUR 100 million where more than 40% of the global manufacturing capacity for the technology in question is held by the third country of which the investor is a national or where the investor is established as an undertaking. According to the proposal, foreign investors in these sectors may not hold ownership interests exceeding 49% in the target company and will have to establish a joint venture with an EU entity. Additional requirements are laid down for technology transfer through the licensing of intellectual property and know-how to the benefit of the European partners. At least 50% of employees must be EU nationals, at least 1% of annual revenue must be reinvested in research and development within the EU, and at least 50% of products placed on the EU market must be manufactured in the Union. Member States are to set up an investment authority within one month of the entry into force of the IAA. These authorities will essentially be responsible for reviewing and approving foreign direct investments, although the review can also be carried out by the European Commission under certain conditions. In the event of non-compliance with the investment regulations (especially where the (national) investment authority is not notified of the investment in advance), the competent authority will have the power to impose fines of at least 5% of the foreign investor’s average daily aggregate turnover.
Accelerated permit-granting procedures
The permit-granting procedures for industrial manufacturing projects are to be significantly simplified and streamlined. Companies will be able to submit a single application covering all the permits required for such projects. As part of this, the competent (national) authority will coordinate a single procedure and issue a comprehensive decision. No later than 45 days from the receipt of the application, it will either acknowledge that the application is complete or request any missing documents. Through a reference in the IAA, all energy-intensive industry decarbonisation projects are to be brought under the special acceleration provisions for net-zero technologies set out in Regulation (EU) 2024/1735 (Net Zero Industry Act) – regardless of its general scope of application. These projects are also to be considered strategic projects within the meaning of Article 14(1) Proposal for a Regulation on speeding-up environmental assessments (“Environmental Omnibus”).
Industrial manufacturing acceleration areas
Member States will be obliged to designate at least one industrial manufacturing acceleration area within 12 months following the entry into force of the IAA. These areas are intended to facilitate the geographical clustering of industrial activities as well as access to finance and critical raw materials, streamline administrative procedures and ensure prioritised grid connections. Projects within these areas will be covered by a baseline permit authorising industrial activities in advance. This means that only additional project-specific permits will still need to be obtained. Member States will be responsible for meeting the necessary requirements, including carrying out assessments and evaluations, and issuing the relevant permits.
Outlook
The IAA seeks to establish a far-reaching regulatory framework that introduces new requirements for a wide range of economic operators along the industrial value chains. This may unlock fresh market prospects but would also come with substantial regulatory responsibilities.
At this stage, the proposal is just an initial – and delayed – draft from the European Commission. Stakeholders should therefore closely monitor the process to see what revisions and refinements may follow.
Forward
