The European Commission has announced the release of its long-anticipated Industrial Accelerator Act (IAA) proposal, introducing a series of “made-in-EU” and low-carbon requirements for several industrial sectors and net zero technologies, including batteries, solar, wind, heat pumps, and nuclear. This initiative aims to protect and accelerate the development of sectors central to the EU’s manufacturing and decarbonisation goals.
The IAA proposal was initially introduced alongside the EU’s Clean Industrial Deal, which outlined strategies to expedite decarbonisation while supporting European manufacturing. The Commission highlighted that the new measures will also implement recommendations from the Draghi report by fostering demand for clean and EU-made products and key technologies. According to the Commission, the IAA is expected to reduce CO2 emissions by more than 30 million tonnes in energy-intensive industries, while potentially generating up to €10.5 billion in the automotive sector and over €600 million across the steel, aluminium, and cement industries.
The proposal targets sectors that are strategically significant for the EU economy and currently face competitive and structural challenges. These sectors are crucial for the clean transition and vital to downstream industries such as construction, mobility, energy systems, and defence. The Commission noted a decline in production and slower decarbonisation investment in Europe, with these industries facing market distortions due to unfair subsidies in non-EU markets, particularly China, which dominates over 80% of the manufacturing capacity for technologies like batteries and solar photovoltaics.
The IAA aims to address three main challenges: supply chain vulnerabilities in strategic sectors and technologies, limited demand for European low-carbon industrial products, and industrial technologies not being deployed at scale due to lengthy and fragmented permitting procedures for industrial decarbonisation projects.
The IAA introduces “made-in-EU” requirements for public procurement of clean technologies, including batteries, battery energy storage systems (BESS), solar PV, heat pumps, wind, electrolyzers, nuclear technologies, electric vehicles, and EV components. It also sets low-carbon requirements for steel used in automotive and construction, and both made-in-EU and low-carbon requirements for cement and aluminium used in these sectors. Notably, the “made-in-EU” definition includes products from third countries with free trade or customs union agreements with the EU.
Additionally, the package proposes conditions for foreign investments exceeding €100 million in strategic sectors, such as EVs, batteries, solar, and critical raw materials, by companies from countries controlling over 40% of global manufacturing capacity in these areas. It also suggests measures to simplify permitting procedures for industrial projects, including a requirement for Member States to establish a single digital process for expediting permits, and introduces Industrial Acceleration Areas to create clean manufacturing project clusters.
The proposed IAA will be submitted to the European Parliament and Council for negotiation before it can be adopted and implemented. Wopke Hoekstra, European Commissioner for Climate, Net Zero and Clean Growth, stated, “The EU is and remains an open economic bloc, but we can’t ignore the new geopolitical realities. We need to stand up more strongly for our own interests. Today’s new proposal is another step towards building more robust and clean industries, securing our supply chains, and protecting our economic security.”
