After several delays, the European Commission finally published its proposal for an Industrial Accelerator Act last week (IAA). A much-awaited text, the first real milestone of the Clean Industrial Deal turns out to be a bold step toward a common European industrial policy, with a focus on decarbonisation and local manufacturing.
The proposed regulation comes in response to the European Union’s (EU) industrial crisis, caused by unfair competition from overcapacity exports and weak domestic demand. By setting clear low-carbon and Made-in-Europe criteria for energy-intensive materials and net-zero technologies, the EU can effectively support its strategic industries and regain its competitiveness.
Nevertheless, as could be expected with such a politically sensitive text, the proposal has significant room for improvement. Now the debate can be held in public, and the European Parliament and Council can take it upon themselves to reinforce the proposal to maximise its impact. The IAA has garnered broad political and industry support, but its implementation and scope remain the subject of debate among Member States and political groups.
Made-in-Europe Criteria: Strategic Focus, but unclear definition
A central pillar of the IAA is its “Made-in-Europe” criteria for public expenditure. They target strategic sectors essential for the EU’s economic security and competitiveness: batteries, solar photovoltaics, electrolysers, heat pumps, wind turbines, nuclear fission, electric vehicles, and low-carbon aluminium and cement.
Public authorities will be required to apply these criteria to a share of their State aid, public procurement, and support mechanisms, including EV incentives and building renovation programs. This marks a strategic shift: the EU aims to align with its major trading partners while directing public funds to bolster domestic value chains rather than subsidise cheaper imports.
The political message is strong, but its implementation is uncertain. Exemptions in the IAA could lead to inconsistent application, weakening the much-needed demand push. For instance, the proposal includes price exceptions for public procurement and support mechanisms if EU-content criteria result in a 25% to 30% increase.
These price thresholds may be too low for certain technologies, such as heat pumps, which are significantly cheaper when imported from China. Furthermore, the geographical definition of “Made-in-Europe” is not clearly stated in this proposal.
The Commission can exclude countries that have signed a free trade agreement with the EU, or that have signed the General Agreement on Procurement, if it identifies a lack of reciprocity or a security-of-supply risk. The list of partners that will remain is currently unclear.
Foreign Direct Investment: Ensuring Economic Benefits - with exceptions
The IAA introduces conditionalities on foreign direct investment (FDI) to ensure that third-country investments contribute to European value chains, jobs, and growth.
The Commission’s proposal includes requirements for shared ownership, intellectual property and technology transfers, R&D spending, employment of EU workers, and EU content. These conditions are designed to ensure that foreign investments deliver real economic benefits, not just assembly operations.
The list of covered sectors—currently including batteries, electric vehicles, solar photovoltaics, and critical materials—can be expanded to reflect evolving geoeconomic priorities.
This policy can be impactful, but the proposal includes exceptions that national governments can apply to two of the six existing conditions, significantly increasing the risk of market fragmentation and dumping by Member States that want to attract more investment.
Low-Carbon Lead Markets: A Good Policy Missing Crucial Details
The Act establishes lead markets for low-carbon materials, using EU-content and low-carbon criteria for public procurement and support mechanisms.
Sectors such as aluminium, concrete, mortar, and steel (the latter without EU-content requirements) are expected to see increased demand, incentivising decarbonization within the EU. This serves as a necessary complement to the Emissions Trading System (ETS), supporting demand for EU-made low-carbon products and reinforcing the business case for decarbonisation.
A significant gap remains in the steel sector, one of the most strategic sectors in the EU. The absence of a low-carbon steel label and the exclusion of steel from the Made-in-Europe policy could lead to increased imports of low-carbon steel.
Given the ongoing investments in decarbonising steel production, a robust label could provide necessary market certainty. Co-legislators may address this issue during the legislative process.
Next Steps: Addressing Limitations and Ensuring Consistency
The IAA has widespread support from governments, political groups, and industry stakeholders.
A majority of national governments have expressed support for low-carbon lead markets and European preference in the past months. Some Member States requested the inclusion of trading partners in the definition of Made-in-Europe, also known as the “Made-with-Europe” approach, and a clear focus on strategic sectors. The Commission’s proposal reflects these asks.
In the European Parliament, the three central political groups—EPP, Renew, and S&D—have all endorsed the policy in their priorities and position papers. Industry leaders, including cleantech innovators, the chemical, mining, and steel industries, automotive suppliers, and trade unions, have issued calls for the IAA to be adopted swiftly.
As the proposal moves into negotiations with the co-legislators, the focus will be on ensuring a predictable demand for EU-made technologies, securing strategic value chains, and maximising the impact of public funds. The IAA’s potential is significant, but its effectiveness will hinge on precise and consistent implementation. Its success will depend on resolving current limitations: refining exemptions, defining the Made-in-Europe scope, and introducing a low-carbon steel label.