On 4 March 2026, the European Commission (the “Commission”) published its proposal for a regulation establishing a framework for the acceleration of its industrial capacity and decarbonisation in strategic sectors (“Proposed Industrial Accelerator Act”, or “Proposed IAA”), accompanied by four annexes. The initiative is intended to strengthen the EU’s industrial base while accelerating decarbonisation in key manufacturing sectors considered strategically important (i.e., energy-intensive industries, net-zero technology manufacturing, and the automotive manufacturing ecosystem). These sectors currently represent less than 15% of EU GDP, and the Commission’s objective is to increase this share to 20% by 2035. The Proposed IAA was delayed three times before publication and underwent significant rewriting, which reflects both internal debates within the Commission and diverging reactions from Member States. It also reflects the challenges posed by the broader geopolitical context, as the Commission aims to address economic security concerns through industrial policies whilst navigating international trade relationships and commitments.
The Proposed IAA introduces a regulatory framework combining three policy tools. First, it establishes demand-side measures designed to create “lead markets” for low-carbon and “Made in EU” industrial products through public procurement and certain public support schemes. Second, it introduces conditions for allowing certain foreign direct and indirect investments (“FDI”) in strategic sectors, aimed at maximising the industrial benefits of such investments within the EU. Third, it includes measures to streamline permitting procedures and facilitate industrial clustering, with the objective of accelerating the deployment of manufacturing projects.
This blog summarises the key aspects of each tool and their potential implications for companies active in the covered industries or looking to invest in the covered industries.
I. “Made in Europe” and Low-Carbon Requirements in Public Procurement and Public Support Schemes
A. Scope
The Proposed IAA aims to use demand-side measures to stimulate market demand for European-made and low‑carbon industrial products essential for the EU’s industrial resilience and decarbonisation.
These measures would progressively apply to:
- public procurement of works contracts or concessions for buildings and infrastructure as well as the lease and purchase of electric, hybrid or fuel cell vehicles;
- public support schemes to support households or businesses for the construction or renovation of buildings and infrastructures, as well as the lease and purchase of motor, electric, hybrid or fuel cell vehicles;
- public procurement where contracts have net-zero technologies as their subject matter, auctions to deploy renewable energy sources, and public support to the manufacturing of net-zero technologies or schemes supporting demand for net-zero technology final products.
Products used in these instances would have to meet various low-carbon and EU origin content requirements. These relate to:
- Energy-intensive industries, such as steel, cement (concrete and mortar), and aluminium;
- Net-zero technologies manufacturing (including battery energy storage systems, nuclear technologies, and onshore/offshore wind technologies, as defined in the Net-Zero Industry Act (“NZIA”; see our blog on that instrument);
- Automotive supply chains, including electric vehicles and key components such as battery cells and e-powertrain systems; and
- Potentially parts of the chemical industry, if the Commission extends the Proposed IAA’s scope through delegated acts.
An earlier draft of the Proposed IAA leaked in the press, included as “strategic sectors” (among others) advanced semiconductor technologies, artificial intelligence technologies, quantum technologies, and robotics and autonomous systems—but these have been dropped from the Proposed IAA published by the Commission.
B. Low-Carbon and Union-Origin Requirements
The Proposed IAA introduces low-carbon requirements for steel, and Union origin and low-carbon requirements for concrete and mortar and aluminium used in specific downstream sectors, namely buildings, infrastructure, and transport, as well as Union origin requirements for vehicles and for net-zero technologies (including for key components).
1. Low-carbon requirements for energy-intensive materials
The Proposed IAA introduces minimum shares of low-carbon products that must be used in public procurement or support schemes involving energy-intensive materials. The definition of “low-carbon” steel and other industrial products would rely on methodologies established under existing EU product legislation, such as the Construction Products Regulation and the Ecodesign for Sustainable Products Regulation.
2. Union-origin requirements
“Union origin” is defined by reference to the EU’s rules of origin under the Union Customs Code. Additionally, content from third countries that have concluded a free trade agreement (“FTA”) or customs union with the EU is considered equivalent to Union origin. In public procurement procedures, the same applies to content originating from countries that are parties to the WTO Government Procurement Agreement (“GPA”), where the EU must grant non-discriminatory access.
In any case, the Commission may exclude a third country, in whole or in part, where it does not in fact offer reciprocal access to its market for EU companies, where its exclusion is justified by the need to avoid dependencies or threats to security of supply, or where another applicable exception applies under the relevant agreements with that country.
C. Access to Public Procurement Procedures, Auctions or Public Support Schemes
The Commission emphasises that the Proposed IAA is intended to remain compatible with EU procurement law and the EU’s international commitments, including its WTO obligations.
Where a third country has not concluded an international agreement with the Union guaranteeing access to its public procurement market for European firms, operators owned or controlled by entities established in that country will be excluded from public procurement procedures in Europe that fall within the scope of the Proposed IAA. This compulsory exclusion could be extended to all sectors with the upcoming revision of the public procurement and concession directives.
To address cybersecurity concerns relating to energy grids, high-risk suppliers (which will be defined in the upcoming Cybersecurity Act 2) would be prevented from supplying critical components for net-zero technologies to bidders of renewable energy auctions, tenderers of public procurement procedures, or final products supported by government intervention.
II. Additional conditions on certain Foreign Direct Investment into the EU
The Proposed IAA would condition certain investments on meeting a set of pre-defined requirements designed to bring and retain industrial value in the EU. This is intended to apply fully to direct investments while for indirect investments, the draft text suggests that the investment authority has some discretion as to which conditions to apply. This new framework would operate in addition to the existing EU FDI screening framework, as recently amended (as to which, see our blog).
A. Scope of the Framework
The Proposed IAA would require mandatory pre-close screening of certain foreign investments meeting the following cumulative criteria:
- The investment value exceeds EUR 100 million;
- The investment target undertakes manufacturing activities in the EU in one of the following four sectors: (i) battery technologies and their value chain, (ii) electric vehicles and related components, (iii) solar PV technologies, and (iv) extraction, processing or recycling of critical raw materials;
- The investor originates from a non-EU country which holds more than 40% of global manufacturing capacity in the relevant sector; and
- The planned investment results in the investor acquiring 30% or more of share capital, voting rights, or equivalent ownership interests.
To receive clearance, investors would have to commit to bring some industrial added value to the EU by: keeping investment below control, technology transfers to the EU, financing of EU-based R&D, employing 50% of the workforce in the EU, and sourcing 30% of inputs from the EU.
National FDI screening mechanisms would continue to apply, which could result in additional remedies imposed on investors to receive national clearances. Investors from countries that have free trade agreements with the EU might benefit from an exemption from these requirements, though the text maintains room for an à la carte application of this exemption.
B. Governance and Enforcement
Responsibility to enforce the framework would not only rest with national “Investment Authorities” designated by Member States. The Commission would also have the power to review, on its own initiative, investments deemed particularly important to the EU’s economic security and have the final say, in addition to a consultative and coordinating role. These roles are expected to be exercised by DG GROW, which is responsible for industrial policy.
This governance model raises several open questions. In particular, it remains unclear whether Member States would rely on existing FDI screening authorities or designate separate bodies responsible for industrial investment policy. The Commission’s involvement and power to overrule Member States would likely trigger debate as the text progresses in the legislative process, underscoring the blurred line between economic security (an EU competence) and national security (a Member State competence).
C. Procedural Features
The review procedures established under the Proposed IAA could be relatively lengthy. The framework provides for an initial review phase of between 60 and 105 days, with the possibility of an additional second-phase investigation of up to 60 days for more complex cases. The mechanism operates as a pre-closing review framework. Investors would have to await clearance before implementing their investment.
Approved investments would also be subject to ongoing monitoring and reporting obligations.
III. Accelerated Permitting and Industrial Manufacturing Clustering
The Proposed IAA’s third pillar aims to facilitate industrial investment by accelerating permitting procedures and encouraging the geographic clustering of manufacturing activities.
A. Streamlined Permitting for Industrial Manufacturing Projects
The Proposed IAA seeks to accelerate permitting for industrial manufacturing and decarbonisation projects in covered sectors, addressing lengthy and complex administrative procedures frequently cited as barriers to investment. Building on existing initiatives such as the NZIA, the Proposed IAA promotes more coordinated permit‑granting processes, including single contact points, increased digitalisation and improved coordination between authorities. The Proposed IAA also strengthens digital access to permitting information, requiring Member States to make information on relevant procedures available through EU‑level digital portals under the Single Digital Gateway Regulation.
B. Industrial Manufacturing Acceleration Areas
Complementing these reforms, the Proposed IAA requires Member States to designate at least one industrial manufacturing acceleration area within their territory. Projects located in these areas may benefit from simplified permitting through an aggregated baseline permit covering multiple authorisations, with individual projects requiring only installation‑specific permits.
IV. Concluding Remarks
For businesses, the Proposed IAA signals three notable developments. First, public procurement and public support schemes are increasingly likely to become strategic industrial policy tools, with contracting and granting authorities required to integrate carbon-intensity and Union-origin criteria into procurement procedures or support schemes relating to industrial materials, clean technologies, and products used in sectors such as construction, infrastructure, transport and vehicle fleets. Second, large foreign investments in strategic manufacturing sectors in the EU (in particular, energy-intensive industries, net-zero technology manufacturing, and parts of the automotive value chain) may become subject to industrial policy conditions aimed at ensuring that such investments contribute to the development of European industrial capacity. Third, projects located in industrial manufacturing acceleration areas may benefit from simplified permitting procedures intended to facilitate faster deployment of manufacturing capacity.
As the Proposed IAA moves through the legislative process, negotiations are likely to focus on the scope of the demand-side requirements and the design of the investment conditionality framework, particularly in light of existing procurement rules (as well as their upcoming revisions), international trade commitments and the EU’s evolving economic security agenda.