A turning point for EU Industry: Commission unveils sweeping Industrial Accelerator Act to boost manufacturing, cut external reliance and drive net‑zero growth

On 4 March 2026, the European Commission published a draft regulation – the Industrial Accelerator Act (“IAA”) – aimed at rebuilding and modernising Europe’s industrial base, reducing reliance on non EU suppliers and accelerating decarbonisation across key sectors. Although not yet law, once adopted the IAA would apply directly and uniformly across all member states.

The IAA responds to mounting pressures on the EU’s traditional industrial backbone. Energy intensive sectors such as steel, aluminium, cement and chemicals face persistently high energy prices, significant capital needs for decarbonisation and intensifying competition from lower cost imports. Output in several of these sectors has fallen sharply since 2021 and many planned decarbonisation projects have been postponed or cancelled due to financing constraints and permitting delays. The Commission frames the long term contraction of manufacturing – from 17.4% of EU GDP in 2000 to 14.3% in 2024 – not as a temporary setback but as a structural challenge with direct implications for jobs, technological sovereignty and the Union’s broader economic security.

At the same time, the green transition, while economically promising, increases Europe’s exposure to external supply chains for batteries, electrolysers, wind components, solar systems and critical raw materials. Without coordinated EU level action, the Commission warns that the Union risks heightened vulnerabilities just as global competitors rapidly scale up industrial and subsidy policies.

The IAA is therefore positioned as a structural, EU‑wide response to these challenges, intended to safeguard industrial resilience and accelerate investment. The Commission explicitly aims for manufacturing to account for 20% of EU GDP by 2035, seeking to reverse decades of structural decline.

1. What the IAA seeks to achieve

The IAA is designed to:

• speed up industrial permitting that currently delays new factories and decarbonisation projects;
• create stable, EU wide demand for low carbon and EU made materials and technologies;
• ensure foreign investment in sensitive industrial sectors delivers genuine benefits in Europe, including technology transfer, a European workforce and joint ventures with EU companies; and
• promote industrial “acceleration areas” offering simplified and significantly faster permitting.

Together, these measures are intended to strengthen industrial resilience, secure supply chains and support the transition to a low carbon economy. The IAA sets out a staged implementation plan that would begin once the regulation enters into force, which it anticipates could be in 2027. From that point onwards, the envisaged measures would progressively apply.

2. Key features of the IAA

A. Faster, simpler permitting for industry

Under the IAA, each member state would establish a single digital entry point through which companies can submit all permits needed to build or expand an industrial facility. Authorities must confirm within 45 days whether an application is complete, with only one additional request for information permitted within 30 days.

Member States must also designate “industrial manufacturing acceleration areas” within 12 months after the regulation enters into force. These zones would operate under a form of pre approved permitting framework, meaning that projects located within them would require only a limited number of additional, project specific authorisations. This approach is intended to substantially reduce delays for new plants, upgrades and the deployment of low carbon technologies.

B. Low carbon and EU origin material requirements

Under the IAA, it is proposed that, starting on 1 January 2029, public projects – such as buildings, infrastructure works and public vehicle fleets – would need to use minimum shares of low carbon steel, aluminium and concrete. In some cases, these materials must also be of EU origin.

For public construction projects, the draft sets the following minimum thresholds:

• at least 25% low carbon steel;
• at least 25% low carbon, EU origin aluminium; and
• at least 5% low carbon, EU origin concrete or mortar.

These requirements are intended to stimulate demand for cleaner production within the EU and to reward manufacturers investing in decarbonisation.

C. EU origin requirements for electric vehicles

The IAA introduces criteria for what qualifies as an “EU origin” electric vehicle in public procurement and support schemes. The rules would begin to apply six months after the regulation enters into force and become more stringent three years later. Vehicles must be assembled in the EU and, over time, incorporate increasing shares of EU made components, from electronics to battery cells and battery management systems. A transitional rule applies to public service fleets: electric vehicles already registered in the EU may be treated as compliant until 31 December 2035.

D. Conditions on foreign direct investment

Significant new conditions would apply to foreign investment in emerging strategic manufacturing sectors (“ESMS”), particularly where a non EU country accounts for more than 40% of global production capacity. The ESMS identified in the IAA are:

• solar photovoltaic technologies;
• battery technologies and the full battery value chain for battery energy storage systems;
• pure electric vehicles, off vehicle charging hybrid electric vehicles and fuel cell electric vehicles, including their electrification and digitalisation components; and
• the extraction, processing and recycling of critical raw materials.

For foreign investments exceeding EUR 100 million in ESMS, investors must meet at least four of six conditions. These include limits on foreign ownership (no more than 49%), joint ventures with EU partners, IP sharing, allocating 1% of revenues to EU based R&D, employing at least 50% EU workers and sourcing at least 30% of inputs from the EU. The draft sets strict review timelines to balance protection with predictability.

E. Requirements for clean technologies (solar, wind, batteries, hydrogen and nuclear)

The IAA sets phased EU origin rules intended to localise manufacturing supply chains across clean technology segments. The requirements would apply across public procurement, auctions and support schemes in the following sectors:

• Battery energy storage systems (BESS): In the first stage, beginning one year after entry into force, any BESS must originate in the Union and larger installations above 1 MWh must also include a Union‑origin battery management system. In the second stage, starting three years after entry into force, a BESS must also contain Union‑manufactured battery cells, a Union-origin battery management system and one additional main specific component.
• Solar photovoltaic technologies: three years after entry into force, both the PV inverter and the PV cells (or equivalent) must originate in the Union. This reflects the Regulation’s concern regarding the EU’s high dependency on concentrated non‑EU supply chains and the cybersecurity relevance of inverters, which are treated as critical infrastructure elements within the energy system.
• Onshore and offshore wind: beginning one year after entry into force, wind projects procured through public tenders, auctions or supported by member state schemes must include at least one main specific component manufactured in the Union. After three years, the requirement increases to two such components.
• Hydrogen electrolysers: beginning one year after entry into force, any electrolyser supported through auctions or member state manufacturing support schemes must originate in the Union and include a Union‑origin stack plus at least one additional main specific component. After three years, electrolysers must also contain a Union‑origin stack and two additional main specific components.
• Nuclear fission technologies, including small modular reactors: starting four years after entry into force, any public procurement or member state support for new‑build nuclear plants must ensure that at least two main specific components originate in the Union, rising to three EU‑manufactured components after six years. These obligations do not apply to refurbishments, lifetime extensions, R&D projects or first industrial deployment. The Commission positions nuclear as strategically important for long term decarbonisation and energy sovereignty.

Beyond boosting EU content, the objective of these measures is to re anchor entire value chains in Europe and reduce strategic dependencies.

3. What this means for companies

The IAA is currently a Commission proposal only. It has not yet been debated, amended or voted on by the European Parliament or the Council and trilogue negotiations have not begun. The next step is for both institutions to commence first reading examinations and adopt their positions.

In the meantime, companies operating in or supplying the EU market should consider the following:

• Assess potential impacts: foreign investors and non EU companies active in critical technology sectors should evaluate how the IAA’s foreign investment conditions could affect current operations and pipeline transactions.
• Map supply chains: assess supply chains against the IAA’s proposed EU origin thresholds across batteries, wind, solar PV, hydrogen, nuclear and industrial materials to identify gaps and plan adjustments ahead of phased deadlines.
• Evaluate EU production: manufacturers outside the EU should assess the business case for establishing or expanding EU based capacity. Over time, procurement preferences, eligibility for support schemes and origin rules are likely to favour EU production.
• Monitor criteria and procurement practice: organisations involved in public procurement or reliant on public support should track how contracting authorities interpret new low carbon and EU origin criteria.
• Follow the legislative process: timelines, thresholds and sectoral scope may shift during negotiations. Engagement with industry associations and policymakers can help ensure practical implementation and alignment with sector realities.

In short, companies should view the IAA as a central plank of the EU’s evolving industrial strategy. Aligning corporate planning with the Union’s priorities – industrial resilience, supply chain security and decarbonisation – can position businesses for success regardless of the proposal’s final contours.

Stakeholders assessing implications, evaluating opportunities or seeking further discussions are welcome to contact us for further information.