backOn March 4, 2026, the European Commission (“Commission”) adopted a Proposal for a Regulation of the European Parliament and of the Council establishing a framework of measures for the acceleration of industrial capacity and decarbonisation in strategic sectors and amending Regulations (EU) 2018/1724, 2024/1735 and 2024/3110.
This long anticipated proposal proposes an Industrial Accelerator Act (“Proposed IAA”), which is to become a pillar of EU industrial policy. Its objective is to accelerate industrial capacity, strengthen economic resilience, and drive decarbonization in strategic manufacturing sectors.
The Proposed IAA applies to the following sectors: (a) certain energy intensive industries, covering the manufacture of inter alia paper and paper products, coke and refined petroleum products, chemicals and chemical products, rubber and plastic products, and non-metallic, basic metals; (b) the automotive industry, covering the manufacture of motor vehicles, trailers, and semi-trailers; and (c) certain net-zero technologies, covering inter alia solar technologies, wind renewable energies, battery and energy storage, electricity grid, nuclear fission energy,
renewable fuels of non-biological origin, and hydropower technologies. According to the Proposed IAA, these sectors represent around 15 per cent of EU manufacturing.
The Proposed IAA responds to vulnerabilities the European Union is facing, including a decline in the European Union’s share of global industrial gross value added over the past two decades, which decreased from 20.8% in 2000 to 14.3% in 2020. It also responds to the European Union’s growing dependencies in critical industrial supply chains, rising geopolitical tensions, and global market distortions.
What is the Proposed IAA?
The Proposed IAA aims to strengthen the European Union’s industrial competitiveness and resilience while boosting demand for EU made clean products. In the wider context of the Clean Industrial Deal in which the proposal fits, the Proposed IAA sets a concrete industrialization objective: by 2035, the manufacturing industry should account for at least 20% of the European Union’s gross domestic product. To achieve this objective, the Proposed IAA introduces a regulatory framework built around four core pillars that aim to:
- Speed up permit granting procedures for industrial manufacturing projects, including energy intensive industry decarbonization projects;
- Create a lead market for certain products in strategic sectors by laying down, in the context of public procurement and public support schemes, (a) EU origin requirements; (b) low carbon requirements; or (c) both;
- Set conditions on foreign direct investment (“FDI”) in emerging strategic sectors in the European Union; and
- Designate industrial manufacturing acceleration areas for the purposes of boosting industrial activities in the European Union.
Main Provisions and Key Obligations for EU Member States and Companies
- Accelerated permitting for industrial and decarbonization projects
The first pillar of the Proposed IAA (Chapter II, Articles 4-6) creates a uniform, digitalized, and accelerated permitting procedure for industrial manufacturing projects. Each EU Member State must operate a national “single access point” through which companies submit permit applications, which are then automatically forwarded to the competent authority. Authorities must confirm completeness or request missing information within 45 days. Decarbonization projects in energy-intensive industries benefit from further accelerated processing under Regulation (EU) 2024/1735 (the Net Zero Industry Act). - EU content (“Made in Europe”) and low carbon requirements in public procurement and public support schemes
The second pillar of the Proposed IAA (Chapter III, Articles 7-16), likely the most controversial, establishes EU origin and low carbon requirements for public procurement and public support schemes.
The Proposed IAA introduces a “Made in Europe” requirement that obliges EU Member States and contracting authorities to purchase or support only products that meet specified EU origin minimum thresholds, with certain third country content treated as equivalent to EU content. Crucially, countries treated as equivalent would, in principle, be third countries with which the European Union has concluded an agreement establishing a free trade area or a customs union, or that are parties to the Agreement on Government Procurement, where relevant obligations of the European Union exist under that agreement. The Commission may, by subsequent acts, exclude a third country falling under that definition wholly or partially where (a) the third country fails to grant national treatment to EU products or entities, (b) such exclusion is needed to avoid dependencies or threats to EU security of supply, or (c) is justified under any other exceptions provided in the applicable agreement.
In practice, under the Proposed IAA contracting authorities must apply EU origin and low carbon threshold requirements when procuring covered products. From 1 January 2029, for example, at least 25% of the aluminum used in relevant public contracts for buildings, infrastructure, or civil use motor vehicles must be low carbon and of EU origin.
EU Member States must also structure public support schemes so that a significant share of funding applies the same requirements, such as 100% of budgets for corporate electric vehicle schemes. Only manufacturers that meet the minimum EU origin and low carbon thresholds may benefit, for instance by assembling vehicles in the European Union and ensuring that at least 70% of the ex works price of components (excluding the battery) is EU content. - FDI screening in emerging strategic manufacturing sectors
The third pillar of the Proposed IAA (Chapter IV, Articles 17-24) sets up a new FDI regime for “emerging strategic manufacturing sectors,” covering battery technologies, electric vehicles, solar PV technologies, and critical raw materials.
The new FDI regime applies to investments above EUR 100 million in sectors where the investor’s country controls more than 40% of global manufacturing capacity in the specific sector. Such FDI may only proceed if the investor satisfies at least four of six conditions laid out in the Proposed IAA, which are (a) a 49% cap on ownership or control; (b) implementation of the FDI through a joint venture with an EU entity; (c) licensing of relevant intellectual property and know how agreements to the benefit of the target or asset; (d) research and development spending in the European Union; (e) employment of at least 50% EU workers; and (f) publishing a strategy to enhance EU value chains with an endeavor to source at least 30% of inputs from the European Union.
Investors that meet the notification thresholds of the new FDI regime must notify the competent authority of the EU Member State where the target or asset is located of any planned direct investment. This triggers a mandatory review of the proposed FDI. The authority must approve or reject the proposed FDI within 60 days, and the Commission may intervene where a proposed investment affects the functioning of the internal market. Penalties for non compliance start at 5% of the investor’s average aggregate daily turnover. - Establishment of industrial manufacturing acceleration areas
The fourth pillar of the Proposed IAA (Chapter V, Articles 25-27) establishes industrial manufacturing acceleration areas. Each EU Member State must designate on its territory at least one area to cluster industrial manufacturing projects in (a) energy-intensive industries; (b) the automotive industry; or (c) net-zero technologies sectors. For each designated area, EU Member States should take the necessary measures to ensure the development of the area, including by introducing an aggregated baseline permit covering all permits and administrative authorizations required for projects located within the area.
Open Questions
The Proposed IAA raises questions about effectiveness, compatibility with the European Union’s international obligations (including World Trade Organization law and trade agreements with third countries), and coherence with existing EU regulatory frameworks.
As the Proposed IAA focuses on sectors that account for about 15% of EU manufacturing output, and, for the most controversial “Made in Europe” rules, concerns only public procurement and support schemes, its actual impact on the European Union’s wider industrial development remains to be seen. In addition, the new FDI screening‑related provisions risk duplicating or complicating existing EU Member State FDI screening regimes. As the Commission would be empowered to adopt delegated acts to implement the Proposed IAA, the precise scope of the rules will also depend on subsequent implementing measures and on their application by national authorities.
Next Steps
The Proposed IAA will now be submitted to the European Parliament (“Parliament”) and the Council of the European Union (“Council”), which consists of EU Member State governments. The Parliament and the Council will each examine the Proposal and will likely suggest amendments. Once the Parliament and the Council agree on their respective positions on the Proposed IAA, they will enter into negotiations, in which the Commission also takes part, to try to agree on a final text.
If the legislative process proceeds smoothly, the Proposed IAA could be adopted in less than a year. However, given the contentiousness of several provisions of the Proposed IAA, it will likely take longer. The amendments that the Parliament and the Council may introduce could also significantly change the Proposed IAA. For instance, some EU Member States, such as France, are calling for stricter rules, while others, like the Czech Republic and the Netherlands, have expressed concerns about overlaps with the existing FDI regimes and about the potential negative impact of the Proposed IAA on competitiveness.