The Industrial Accelerator Act: from theory to practice 

Linking Europe’s climate transition with industrial competitiveness 

On 4 March 2026, the European Commission tabled the Industrial Accelerator Act (IAA), a flagship initiative under the Clean Industrial Deal, signalling a more explicitly industrial approach to delivering climate neutrality: Europe will need not only targets and carbon pricing, but also the ability to manufacture the required technologies, components and materials at scale. 

Building on the strategic direction outlined in the Draghi Report, the IAA represents a decisive shift towards demand‑side incentives for low‑carbon, Europe‑made industrial products, with targeted measures intended to strengthen strategic value chains and boost investment in clean industrial technologies. For companies across energy‑intensive industries, clean tech, advanced manufacturing and large‑scale infrastructure, the proposal marks an important evolution: EU climate policy is now more explicitly designed with industrial competitiveness, supply‑chain resilience and strategic autonomy in mind. 

This shift comes at a critical moment. Europe faces mounting competition from global powers pursuing assertive, state‑backed industrial policies, alongside rising geopolitical tensions and growing vulnerabilities in critical value chains. The IAA builds on the Commission’s progressively strengthened industrial policy toolbox, responding to industry calls for clearer signals, predictable demand and a level playing field. 

A new toolbox to strengthen European industrial capacity 

The Act seeks to reinforce industrial competitiveness while supporting climate objectives by creating demand for low‑carbon industrial products rather than relying only on emissions‑reduction policies. It also contributes to a broader economic ambition: increasing manufacturing’s share of EU GDP to 20% by 2035, reversing years of industrial decline. To achieve this, the IAA embeds Union origin and low‑carbon requirements into public procurement, support schemes, permitting, investment‑screening mechanisms and industrial‑planning tools. 

For companies across industrial value chains, this sends a clear message: future EU climate policies will increasingly focus on where clean technologies are produced, not only on their environmental performance. As these tools influence demand patterns, investment flows and supply‑chain configurations, the IAA will become a central factor in determining market access, competitiveness and strategic positioning within the Single Market. 

“Union origin” as a new element in procurement  

Public procurement becomes a key lever under the IAA. A clear and legally robust definition of Union origin, based on the Union Customs Code, ensures that public demand supports European industrial capacity. Products from countries with EU free‑trade agreements, customs unions or participation in the Government Procurement Agreement are treated as equivalent to Union origin for procurement and other forms of public intervention. 

This equivalence, however, is reversible. The Commission may withdraw it via delegated act if national treatment is not upheld, or if strategic dependencies or supply‑security concerns emerge. This safeguard retains openness to trusted partners while protecting critical industrial interests. 

When procuring steel, aluminium, concrete and mortar, or electric vehicles and their components, contracting authorities must exclude operators from countries without procurement agreements with the EU. Derogations exist but are narrowly defined, limited to cases of absent competition, unsuitable tenders, disproportionate costs (presumed above a 25% price difference), and technical incompatibilities. 

For companies, this means procurement will increasingly emphasise supply‑chain resilience, European production capacity and compliance with origin rules. 

Bringing forward industrial subsidies to support European production 

A similar logic applies to public support schemes. Products from partner countries with trade agreements are treated as equivalent to Union origin, whereas all other products remain subject to full origin‑based requirements. Member States must apply Union origin and/or low‑carbon requirements to at least 45% of support dedicated to steel, aluminium, concrete and mortar, and to all funding directed towards electric vehicles. This effectively reserves support in strategic areas for Union‑based production while allowing flexibility where compliance would lead to significant delays (seven months or more), or cost increases exceeding 30%. 

This framework also interacts with sector‑specific legislation. Union origin rules are reinforced for battery components used in procurement and support schemes, and similar requirements apply to electric vehicles benefiting from CO₂‑related incentives. 

For companies relying on public support, this shifts the basis of eligibility toward origin, resilience and low‑carbon performance, influencing funding access and positioning within EU‑backed value chains. 

Establishing common benchmarks for clean industrial production 

To make low‑carbon criteria viable across the Single Market, the IAA introduces an EU‑level framework for defining low‑carbon industrial production. For energy‑intensive materials such as steel, aluminium, concrete and mortar, this definition is anchored in the Ecodesign framework, with the possibility of further Commission measures. 

The Act also envisions voluntary greenhouse‑gas‑intensity classifications for industrial products placed on the EU market. These would rely on verified ETS and CBAM data and reflect technological progress, alternative production routes, recycled content and long‑term climate‑neutrality objectives. When integrated into support schemes, such classifications link financial incentives to measurable decarbonisation performance and could gradually shape procurement and private purchasing decisions. 

Increased scrutiny of investment in strategic sectors 

The IAA also introduces a more stringent framework for foreign direct investment in emerging strategic sectors. Investments above €100 million from investors based in countries holding more than 40% of global manufacturing capacity in the relevant sector, notably China, are subject to prior notification and approval. Conditions cover ownership limits, technology transfer, EU‑based R&D, workforce composition and integration into Union value chains. Enhanced monitoring, the possibility of direct Commission review and penalties, including fines of at least 5% of turnover or investment value, reinforce compliance. Anti‑circumvention rules avoid bypassing through indirect structures. 

For companies exploring acquisitions, partnerships or joint ventures, this signals tighter scrutiny of transactions affecting strategic industrial capabilities. 

A framework likely to evolve 

The draft Regulation grants the Commission extensive delegated‑act powers to adjust origin and decarbonisation requirements, introduce demand‑side measures and expand the list of sectors subject to investment screening, excluding areas such as digital, AI, quantum and semiconductors. The IAA should thus be seen as the first phase of a framework likely to evolve as industrial and economic‑security priorities develop. 

Facilitating faster deployment of strategic projects 

To accelerate industrial deployment, Member States must designate at least one industrial manufacturing acceleration area within 12 months. These zones aim to cluster industrial activity, strengthen value chains and speed up sustainable manufacturing, while considering regional needs. They must rely on clear geographic boundaries, prioritise brownfield sites, avoid sensitive areas and undergo strategic environmental assessment. Within these zones, access to finance, energy infrastructure, skills and innovation support must be facilitated, and permitting streamlined through aggregated baseline permits.  

Companies planning large‑scale projects may therefore benefit from faster approvals and more robust industrial ecosystems. 

Monitoring impact and maintaining competitiveness 

To avoid fragmentation and ensure proportionality, the Act includes structured evaluation cycles: an initial assessment two years after entry into force, followed by further reviews every three years. These will examine impacts on resilience, security, decarbonisation, downstream sectors, SMEs and public budgets, and assess whether demand‑side and investment measures should be expanded. 

Ultimately, the IAA aims to align climate ambition with industrial competitiveness without triggering subsidy races or reinforcing structural constraints such as high energy costs, complex procedures or fragmented markets.  

For companies across the energy, manufacturing, infrastructure and technology sectors, it represents both a strategic opportunity and a policy process requiring close attention, as it will shape European industrial conditions for the decade ahead.