European Commission unveils Industrial Accelerator Act Proposal – A turning point for EU Industrial Policy?

On 4 March 2026, the European Commission tabled its proposal for an Industrial Accelerator Act (Draft-IAA), which attempts to boost Europe's industrial base by accelerating industrial capacity and decarbonisation in strategic sectors. The initiative seeks to strengthen the EU’s manufacturing sector, enhance supply chain resilience and increase economic security through targeted interventions across several policy areas. If adopted by EU lawmakers, the act would affect manufacturing, trade and investment in net-zero technologies, energy-intensive industries and the automotive supply chain through measures relating to public procurement, foreign investment restrictions, permitting procedures and the introduction of "Made in EU" and low-carbon requirements.

Background and Objective

The Draft-IAA forms part of the European Commission’s broader effort to reinforce Europe’s competitiveness in certain strategic sectors amid intensifying global industrial policy competition. As such, it reacts to high energy prices, global overcapacities, high capital and operation costs for decarbonisation and new technology deployment and low investment. The proposal seeks to strengthen net-zero technologies and energy-intensive industries such as basic metal and chemicals and the automotive supply chain. 

At the heart of the proposal is an “industrialisation objective” to lift the share of manufacturing in EU GDP to at least 20% of EU GDP by 2035. To this end, the Commission proposes a set of key measures to alleviate the manufacturing sector from regulatory hurdles and promoting investment and development of the local industry.  

These measures seek to promote the development, competitiveness and resilience of the manufacturing sector while contributing to the EU’s climate objective, economic security and the development of a high-skilled labour market. The initiative builds on recent initiatives such as the Net-Zero Industry Act (NZIA), Clean Industrial Deal, Critical Raw Materials Act and advances the EU’s European Economic Security Strategy. It also proposes several aligning amendments to existing legislation including the NZIA and the Constructions Products Regulation (CPR).

Overview of the Key Measures

Speeding-up of permit-granting procedures

To accelerate permit-granting procedures, the Draft-IAA requires EU member states to establish single access points for dedicated single application and permit-granting procedures for industrial manufacturing projects. This covers projects for the construction, conversion or extension of an industrial site for carrying out an economic activity falling within NACE Code C (Manufacturing) with the exception C12 (Tobacco).

The purpose is that the project promoter need lodge only one comprehensive application at one authority to obtain all permits required for a project’s implementation. For the communication with the single access point, the proposal already foresees use of EU digital infrastructure including the proposed European Business Wallet.

If streamlined rules for specific industrial manufacturing sectors already exist under other EU regulations, these would take precedence over the Draft-IAA. 

Energy-intensive industry decarbonisation projects will be brought within the scope of the streamlining administrative and permit-granting processes of the Net-Zero Industry Act. This applies to projects for the construction or conversion of an energy-intensive business where the project would significantly and permanently reduce the CO₂-equivalent emissions intensity of industrial processes to the extent technically feasible. The industries covered by this include paper and paper products, coke and refined petroleum products, chemicals and chemical products, rubber and plastic products, non-metallic minerals and basic metals (NACE Codes C.17, 19, 20, 22-24).

Local content and low-carbon requirements

Under the Draft-IAA, minimum local content and low-carbon requirements would apply in public procurement procedures of products from energy intensive industries and electric vehicles. These requirements apply to procurement falling within the scope of the EU public procurement directives and are intended to create “lead markets” for European low-carbon industrial products

Public procurement

Public contracts involving products from energy-intensive industries used in buildings, infrastructure or motor vehicles would need to meet specific minimum thresholds. For example, at least 25% of steel used in such projects must qualify as low-carbon while 25% of aluminium must be both low-carbon and of Union origin. For concrete and mortar, at least 5% of the total volume used must meet both low-carbon and Union-origin criteria. 

Public support schemes

Similar requirements would also apply to certain public support schemes. Where public funding supports construction, renovation or vehicle purchases, beneficiaries will need to demonstrate compliance with the same minimum thresholds for low-carbon and Union-origin materials to qualify for support.

Union-origin requirements for electric vehicles

The proposal also introduces Union-origin requirements for certain vehicles procured through public procurement procedures or supported by public funding schemes. Eligible vehicles must be assembled within the EU and meet minimum thresholds for components originating in the EU. These thresholds apply in particular to vehicle components (excluding the battery), battery components, e-powertrain components and key electronic systems. For example, at least 70% of the value of vehicle components excluding the battery must originate in the Union, while additional origin requirements apply to battery components, e-powertrain components and electronic systems. These measures aim to ensure that public procurement and public support contribute to strengthening the EU automotive manufacturing base and its supply chains.

Taken together, these demand-side measures seek to leverage the scale of the EU’s public procurement market to create predictable demand for low-carbon industrial products and technologies produced within the Union.

Foreign direct investment restrictions

The Draft-IAA also introduces a framework for the imposition of conditions on certain foreign direct investments in emerging strategic manufacturing sectors. Foreign direct investments exceeding EUR 100 million in listed sectors by foreign investors from countries may be subject to specific conditions intended to ensure that such investments contribute to the development of the EU’s industrial base.

This additional layer of foreign-investment screening applies to foreign investors from countries that hold more than 40% of the global manufacturing capacity. Covered investments would face prior notification and approval requirements. The sectors covered include:

• Battery technologies and their value chain for battery energy storage systems (BESS);
• Several electric vehicles types (incl. components for electrification and digitalization); 
• Solar PV technology;
• Critical raw materials (incl. extraction, processing and recycling).

The Draft-IAA would give the Commission the delegated power to extend the list of strategic sectors.

Under the proposal, member states would designate national investment authorities responsible for reviewing relevant investments and monitoring compliance with the applicable conditions. These conditions may include requirements relating to technology transfer, the establishment or expansion of manufacturing capacity in the EU, job creation or the integration of EU-based suppliers into relevant value chains. Investments subject to such conditions would not take effect until the relevant requirements have been fulfilled.

The proposed framework complements the existing EU FDI screening mechanism, which focuses primarily on security and public order concerns. Instead, the Draft-IAA introduces an instrument ensuring that foreign investment in strategic sectors contributes to strengthening the EU’s industrial capacity and supply-chain resilience.

Designated Industrial Manufacturing Acceleration Areas

The Draft-IAA would require member states to designate at least one geographical area as an Industrial Manufacturing Acceleration Area within their territory. The objective of these areas is to facilitate the clustering of industrial manufacturing projects in one or more strategic sectors, thereby creating favourable conditions for industrial investment and development.

Within such areas, member states would be expected to implement enabling measures aimed at supporting industrial activity. These may include targeted support for infrastructure development, access to financing, R&D activities and the development of skilled labour pools. The Draft-IAA also envisages that projects located within acceleration areas would benefit from simplified administrative procedures and streamlined "baseline permitting" processes, with the aim of facilitating faster deployment of industrial manufacturing capacity.

The strategic sectors eligible for such acceleration areas include in particular, energy-intensive industries, the automotive industry and net-zero technologies manufacturing.

Next Steps

The Commission’s proposal marks the beginning of the EU’s ordinary legislative procedure. The Draft-IAA will now be examined by the European Parliament and the Council, which can propose amendments to the text. Once both institutions have adopted their respective positions, negotiations between the Parliament, Council and Commission will take place in trilogue discussions to reach a common position on the final legislative text. Only when the Regulation is formally adopted will the Industrial Accelerator Act enter into force and become applicable.

The preparation of the proposal has already sparked significant political attention. In the months preceding its publication, several draft versions of the initiative circulated among stakeholders and were partially leaked, reflecting the sensitivity of the proposed measures such as those relating to “Made in EU” requirements, public procurement and foreign investment conditions.

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