Just the Facts | What is the Industrial Accelerator Act?

The manufacturing sector is a major employer and source of innovation in Europe – but it is also responsible for 15% of the EU’s total carbon emissions. The European Commission’s Industrial Accelerator Act aims to support companies in energy-intensive industries such as chemicals, steel and cement to decarbonise, while maintaining their international competitiveness.  

This Just the Facts provides an overview of the Industrial Accelerator Act’s core objectives and measures, as well as key challenges to implementation – notably divisions over “Made in EU” criteria and tensions between the competitiveness and sustainability agendas.  

What is the Industrial Accelerator Act?  

Energy-intensive industries (EIIs) such as steel, cement and aluminium make up more than half of the total energy consumption of European industry. They also produce important goods and materials for other European industries like automotive, construction, housing and clean tech. Given that European industry is responsible for 15% of the EU’s total carbon emissions, industrial decarbonisation is key to meeting the EU’s climate targets. In the current security and defence climate, the defence industry could also  drive demand for European green steel and other metals. 

The Industrial Accelerator Act (IAA), formerly known as the Industrial Decarbonisation Accelerator Act, aims to help European EIIs continue to decarbonise while maintaining their competitiveness internationally. “Decarbonisation” was dropped from the title by Commission President Ursula von der Leyen in her State of the European Union address on 10 September 2025, ostensibly to allow for “a broader sectoral and technological scope”. 

The IAA is part of the Clean Industrial Deal (CID), which the European Commission presented in February 2025. It also complements and builds on existing legislation such as the EU’s Net Zero Industry Act, which entered into force in June 2024 and aims to address some of the barriers to the development of the European net-zero manufacturing sector.  

The IAA was presented by EU Industry Commissioner Stéphane Séjourné on 4 March 2026. A draft proposal had previously been leaked ahead of the informal competitiveness retreat of EU leaders on 12 February, which was met with widespread criticism within the European Commission, delaying publication – originally scheduled for 10 December 2025 – for a third time.  

Aims of the Industrial Accelerator Act

According to the European Commission, the IAA will boost European industries’ competitiveness and productivity, accelerate administrative procedures, and facilitate investments. This includes creating lead markets, both public and private, which would pave the way for the widespread adoption of low-carbon products and stimulate early demand for green European products. The IAA therefore seeks not only to strengthen the EU’s resilience and strategic autonomy, but crucially also to contribute to the EU’s objective of climate neutrality by 2050. 

At the same time, the IAA sets a target for industry to comprise 20% of the EU’s GDP by 2035, a level last reached in 1991. Industry currently accounts for around 14% of the EU’s economy, according to World Bank data.  

To achieve these goals, the IAA aims to address three key issues: supply chains vulnerabilities, such as dependence on foreign inputs or exposure to unfair competition; weak global demand for European low-carbon industrial products, whether due to higher costs or lack of technological readiness; and lengthy, unpredictable permitting procedures for industrial decarbonisation projects, which can delay the deployment and scale-up of new technologies.  

Key measures and financing

In the short term, the CID – which encompasses the IAA – aims to mobilise over €100 billion through increased EU-level funding, private investments and state aid. The accompanying State Aid Framework (CISAF) provides the structure for Member States to financially support measures facilitating industrial decarbonisation, such as the development of clean energies.  

The key EU funding sources for measures under the CID and IAA are the Innovation Fund, Horizon Europe, InvestEU and a new Industrial Decarbonisation Bank. A new Competitiveness Fund will form a key pillar of the Multiannual Financial Framework (MFF) 2028-2034, the EU’s next long-term budget, and has the potential to act as a lever for public and private investment in industrial decarbonisation, scale-up and clean tech.  

The following key measures are outlined in the IAA:  

1. Low-carbon and “Made in EU” criteria in public procurement.

The IAA identifies public procurement, which accounts for about 15% of the EU’s GDP (over €2 trillion) and 10% of the EU’s carbon emissions, as an important lever to increase demand for high-quality European products. To harness this, the IAA introduces low-carbon and “Made in EU” requirements to ensure that the market for low-carbon industry products and clean tech products is not undermined by non-EU competition. A minimum quota of 25% low-carbon steel in the automotive and construction sectors applies, with additional “Made in EU” requirements for concrete (5%) and aluminium (25%) in these sectors when subject to public procurement procedures. “Made in EU” public procurement provisions also apply to net-zero technologies such as batteries and battery energy storage systems, solar components and heat pumps. In the automotive sector, a minimum of 70% of non-battery components in electric vehicles (EVs) must come from European production. Plans for a low-carbon label for industrial products, initially for steel, were dropped in the Commission’s final proposal in favour of rapidly implementing existing commitments, such as the Ecodesign for Sustainable Products Regulation (ESPR). 

2. New conditions for foreign investments in strategic sectors.   

The IAA sets conditions for foreign investments above €100 million by companies originating in countries that hold more than 40% of global production capacities in emerging sectors such as EVs, batteries, solar, and critical raw materials. Conditions include employing at least 50% European workers, foreign ownership remaining below 49%, technology transfer, and a minimum of 30% of input products being manufactured in the EU. However, exemptions remain – for example, in case of disproportionate costs (exceeding 25%).  

3. Streamlining of permitting procedures for decarbonisation projects.  

The IAA aims to address bottlenecks in order to speed up permitting processes for industrial modernisation and decarbonisation efforts. Digitalisation and the reuse of data would help to reduce the administrative burden on companies, particularly SMEs with fewer resources. The Act proposes a single digital “one-stop shop” and clear time limits for permitting procedures, with maximum timelines of 18 months for specific industrial decarbonisation projects. Under the Act, member states can designate Industrial Acceleration Areas to encourage the creation of strategic manufacturing clusters, which should benefit from faster permitting and access to infrastructure. In June 2025, the European Parliament had called upon the Commission to assess further measures to speed up permitting procedures and urged member states to ensure the necessary capacity to deal with permitting requests. 

Challenges facing the Industrial Accelerator Act

Division over “Made in EU”  

According to the Commission’s proposal, the “Made in EU” criteria in public procurement will apply to products originating from the EU and the European Economic Area (Norway, Iceland and Liechtenstein). The Commission also expands the definition to include third countries with which the EU has concluded a free trade agreement or a customs union, or that are signatories to the WTO’s plurilateral Agreement on Government Procurement. However, this is conditional on these countries fulfilling their obligations and demonstrating reciprocity; the European Commission could narrow the list of countries via delegated acts, if, for example, they exclude EU products from their own subsidy schemes. 

The definition of “Made in Europe” in early drafts of the IAA proved divisive within the European Commission: DG Trade, for example, called for an extension to all countries with which the EU has a free trade agreement. There were also differing opinions among member states, with Germany, Italy and Nordic countries warning that a “Made in Europe” label could deter foreign investment in European companies and raise prices. France, on the other hand, has been vocal in supporting the approach. Germany put forward the compromise “Made with Europe”, which shifts the emphasis onto upholding commitments to international trading partners – an approach largely followed in the Commission’s final proposal. Following the informal competitiveness retreat on 12 February 2025, EU Council President António Costa noted “broad agreement” between member states on the need for a “European preference” in selected strategic sectors.  

The move towards “Made in EU” raised concerns outside the bloc about possible exclusion, with UK Chancellor of the Exchequer Rachel Reeves calling for her country to be included in the label – together with other countries that share EU values, such as Canada. It was suggested that Clean Trade and Investment Partnerships (CTIP), as agreed between the EU and South Africa in November 2025, could serve as a basis for increasing the supply of low-carbon materials to European industries.   

The “Made in EU” requirement also raised questions about compatibility with international trade rules: the European Environmental Bureau (EEB), for example, warned that an origin-based preference for international trade is incompatible with the framework of the WTO, highlighting scope to instead tweak the Government Procurement Agreement, and arguing that environmentally and socially sustainable production is more important than geographical origin.  

Tension between industrial competitiveness and climate targets  

Debate around the IAA reflects growing tension between the dual objectives of industrial competitiveness and climate protection, with the IAA clearly framing sustainability goals as part of the EU’s broader drive for “strategic autonomy” and its response to a challenging geopolitical context. As European industries struggle with high energy costs and global competition – particularly from countries without comparable carbon pricing regimes – calls are growing in some EU member states and at EU level to weaken instruments central to EU climate policy, such as the EU’s Emissions Trading System (ETS). Under the ETS, which is due to be reviewed in 2026, greenhouse gas emissions in electricity generation and industry are capped and currently priced at €80 per tonne. 

The IAA is designed to align with the ETS and the Carbon Border Adjustment Mechanism (CBAM) by stimulating demand for low-carbon industrial products. Nonetheless, the EEB criticised that the Act lacks binding timelines to phase out fossil fuels and firm constraints on polluting technologies. Environmental groups such as Climate Action Network (CAN) Europe had previously warned that carbon pricing could be weakened and climate targets sidelined if pro-industry policies are implemented that are at odds with the EU’s climate targets. This is of particular concern in light of data showing the growing influence of corporate lobbyists over EU policymakers.  

It is therefore crucial that, amid the EU’s competitiveness drive, climate and environmental policy are not framed as the primary source of Europe’s industrial challenges, which could risk decarbonisation efforts being deprioritised or eroded. Despite being omitted from the IAA’s title, “decarbonisation” is central to the Act, and it should be used to bolster existing climate protection instruments such as the ETS. 

Next steps towards implementation

The proposed regulation will likely continue to face some pushback as it goes through legislative negotiations in the Council of the EU and Parliament. As an EU regulation, once adopted, it will be automatically applicable in member states and national authorities will then be responsible for applying the content and sustainability criteria in practice and ensuring compliance – including in procurement processes.  

The green and digital transition presents a significant opportunity to strengthen the EU’s industrial base, as the IAA notes. In turn, the decarbonisation of industry has a significant environmental and social impact. The EU and its member states therefore need to take a people-centric approach to industrial transformation. This means addressing the effects of proposed policies across different regions, supporting workers through the transition, reskilling and upskilling workers, and ensuring equity and inclusiveness.  

Ultimately, the success of the IAA hinges on cooperation between EU institutions, member states and industry, as well as the mobilisation of significant public and private funding. The Cyprus Presidency of the EU Council in the first half of 2026, and the Irish Presidency later in the year, both have an important role to play in advancing negotiations at EU level on the IAA and putting the necessary financial frameworks in place.  

[This article was updated on 5 March, following the European Commission’s publication of the IAA on 4 March]