European Commission Proposes Industrial Accelerator Act

On 4 March 2026, the European Commission proposed an Industrial Accelerator Act ("the proposed IAA") that would, if adopted, incorporate "Made in EU" and low‑carbon preferences into public procurement, accelerate industrial permitting through a digital one‑stop shop, and condition certain large foreign-direct investments ("FDI") in strategic sectors.¹

Under the proposed IAA, public tenders and subsidy schemes will increasingly favor EU‑origin and low‑carbon content. Third country (i.e., "non‑EU") investors in batteries, EVs, solar PV and critical raw materials will need to recalibrate deal structures and operating models to satisfy ownership, workforce, sourcing and Intellectual Property ("IP") transfer criteria.

The proposed IAA is framed as Single Market legislation and interfaces with existing regimes including the Net‑Zero Industry Act ("NZIA"), the Critical Raw Materials Act ("CRMA"), the Ecodesign for Sustainable Products Regulation ("ESPR") and the Construction Products Regulation ("CPR"). The Commission’s goal is to lift manufacturing’s share of EU GDP to 20% by 2035.

Scope and Structure

The proposed IAA’s scope is relatively narrow but targets key sectors of the EU economy. It covers:

• Energy‑intensive industries such as steel, cement and aluminium for low‑carbon performance and, in defined use cases, origin requirements;
• Net‑zero technologies including batteries, battery energy storage systems, solar PV, heat pumps, wind, electrolysers and nuclear fission are covered by origin requirements when public funds are at stake; and
• The automotive value chain: vehicles and selected components face origin conditions in procurement and support contexts, supported by criteria for when a small zero‑emission vehicle can be treated as "made in the EU" for CO₂ standards flexibilities.

Two structural features of the proposed IAA will be critical when it comes to implementation:

• First, the IAA ties its procurement and support scheme requirements to the thresholds and procedures of the EU procurement directives.
• Second, procurement is in line with the European Union’s commitments under the WTO Government Procurement Agreement ("GPA") and bilateral commitments, while auctions and other public interventions treat third countries with whom the European Union has concluded an FTA or customs union as equivalent to Union origin within the covered scope. However, the Commission also signals that reciprocity tests could narrow access by delegated acts where partners do not offer openness on a reciprocal basis.

Demand‑side Preferences: Procurement, Auctions and Support Schemes 

The IAA would require contracting authorities and competent bodies to integrate EU‑origin and/or low‑carbon conditions in defined segments of public procurement, auctions and support schemes:

• In construction and transport uses, steel is subject to low‑carbon performance rather than origin, to align with product‑specific rules and ongoing trade measures addressing overcapacity.
• For concrete and mortar, and for aluminium used in buildings and vehicles, a mix of low‑carbon and origin requirements applies when public funds are used.
• For net‑zero technologies, the regulation establishes origin requirements across procurement, auctions and support schemes, tailored by technology and phased to reflect EU capacity.
• Solar PV requirements follow a component‑based approach: one year after entry into force, PV systems benefiting from public funds must include the inverter and at least two other main specific components manufactured in the European Union; three years after entry into force, the inverter and the cell become mandatory among at least four EU‑made components.

Competent authorities may depart from origin or performance requirements where objectively evidenced supply constraints would cause significant delay, or where compliance would impose disproportionate costs.

For support schemes, a delay longer than seven months may be presumed significant and a cost increase above 30% may be presumed disproportionate. Verification is designed to be workable: suppliers will rely on self‑declarations against harmonized, product‑specific methodologies, with low‑carbon definitions for construction products aligned to forthcoming CPR acts and for other steel products subject to ESPR rules. 

Streamlining of Permitting Procedures and Industrial Manufacturing Acceleration Areas 

The IAA would also standardize and digitalize permitting for industrial manufacturing, addressing a frequent cause of stalled final investment decisions. A single digital one‑stop procedure would coordinate all required authorizations and set maximum timelines. For energy‑intensive industry decarbonization projects and projects located in designated acceleration areas, the procedure would apply the principle of tacit approval at intermediate stages if authorities do not act within deadlines. 

Member States must designate at least one Industrial Manufacturing Acceleration Area within 12 months of entry into force. These zones concentrate infrastructure and services, allow pre‑packaged, area‑wide baseline permits for common authorizations, and are meant to synchronize access to energy and grids, financing and skills. 

FDI Conditionality: Scope, Approval and Conditions 

The proposed IAA also introduces economic‑value conditions for inbound FDI with the potential to reshape sensitive value chains. The regime applies to investments exceeding EUR 100 million in manufacturing in four emergent strategic domains:

• Battery technologies and their value chains for storage;
• Electric vehicles and components related to electrification and digitalization;
• Solar PV technologies; and
• The extraction, processing, and recycling of critical raw materials

Investments by investors from third countries with whom the European Union has concluded an FTA or forms a customs union are out of scope to the extent of the European Union’s international commitments, as are services investments and portfolio holdings.

From twelve months after entry into force of the IAA, a foreign investor must notify a National Investment Authority ("NIA") before acquiring or establishing control, with a notification trigger at 30% ownership or equivalent control in a Union target or asset. The NIA must then decide whether to approve, applying a common set of six value‑added conditions whereby approval requires meeting at least four of the following six:

• Foreign investors do not acquire more than 49 percent of ownership interests in an EU target;
• For joint ventures, foreign investors do not acquire more than 49% of ownership interests in any EU entity participating in the joint venture, and such joint ventures shall be structured to ensure effective participation of EU partners in management, technology transfer and capacity building;
• Foreign investors must license IP rights and share know-how to benefit the targeted EU entity. The targeted EU entity shall exclusively own the IP rights and know-how it develops, including those prior to the FDI. For jointly developed intellectual property rights and know-how, they can be jointly owned,
• Foreign investors must annually direct at least 1% of the EU target's gross revenue to research and development spending in the European Union, or the gross revenue generated by an EU asset, as applied in proportion to the foreign investor's share of control;
• At least 50% of the workforce employed must be EU workers across all categories of the workforce; and
• Foreign investors must prepare and publish on their website a strategy for enhancing EU value chains and prioritizing the sourcing of inputs for their manufacturing activity from the European Union, and endeavor to source at least 30% of their inputs in the European Union for the products placed on the EU market.

Investment Authorities will monitor compliance and impose penalties, with minimum fines for notification failures set as a percentage of the investor’s average daily aggregate turnover. The Commission coordinates the system, issues opinions within fixed timeframes, and may assume assessment in high‑impact or very large cases, preserving Member States’ decisions subject to an additional assessment period where they diverge from the Commission’s views 

WTO Compatibility with the Proposed IAA

WTO consistency and compatibility with its obligations under its FTAs with third countries will be a significant challenge for the EU. The proposed IAA seeks to align demand‑side "Made in EU" and low‑carbon preferences with GPA commitments by granting equivalent treatment to GPA and FTA partners, tailoring coverage by contracting authority and contract type, and reserving general and security exceptions. However, in earlier cases, the WTO Appellate Body has already found that comparable local-content schemes in renewables were discriminatory and could not be justified. The impact assessment itself flags elevated dispute risk for solar PV, 

unless conditions are tightly framed around legitimate security and resilience objectives and applied proportionately. The contemplated reciprocity tests and potential removal of partner access via follow‑on acts could also be contested as discriminatory if not carefully justified.

With regard to the FDI conditionality, the mandatory value‑added conditions interact with rules on services liberalization under the General Agreement on Trade in Services, as well as equivalent FTA investment‑liberalization disciplines. Even though the proposed IAA exempts FTA partners and seeks to ground restrictions in public policy and security rationales, those exceptions are narrowly construed, creating litigation and retaliation exposure for measures applied to non‑FTA investors from highly concentrated supplier countries.

Practical Consequences for Public Buyers, EU Manufacturers and Non‑EU Investors

For EU manufacturers in energy‑intensive sectors and net‑zero technologies, the proposed IAA creates clearer demand signals in publicly funded segments for low‑carbon and, in defined cases, EU‑origin products, complementing ETS and CBAM price signals.

For third country investors and OEMs active in batteries, EVs, PV and critical raw materials, the new FDI conditions will make approval planning, deal design and operating models more complex. 

Timing, Implementation and Interfaces with Existing Regimes 

The proposed IAA would apply the day after publication in the European Union’s Official Journal, with certain key provisions generally applying one year after entry into force and the FDI conditionality regime applying from the 12^th month. Member States must designate at least one acceleration area within 12 months and establish Investment Authorities within one month.

Next Steps: Politics, Points of Divergence and What to Watch 

The Council and the European Parliament as co‑legislators will now adopt their own positions, and early Member State signals show disagreement around openness, proportionality, and institutional balance:

• France has argued for a strict EU‑only approach to "Made in EU" preferences to ensure that public money directly supports EU production and jobs.
• Germany has promoted a "Made with EU" model that would open covered public interventions to trusted partners to contain cost and supply‑risk impacts while sustaining alliances and scale.
• The Netherlands has cautioned against turning an industrial instrument into an economic‑security tool, urging that references to economic security be pared back, that the IAA’s investment‑approval regime not blur into national‑security screening, and that the Commission’s role be clearly circumscribed and WTO‑consistent.

These positions foreshadow potentially difficult negotiations on the following issues:

• Which third countries qualify for equivalence in procurement and public interventions;
• The exact sector and component scope and the pace of phasing;
• How far to push value‑added FDI conditions; and
• How tightly to formulate exceptions for cost and delay to keep the preferences workable without unduly narrowing competition. 

Companies should assume the core architecture of the proposed IAA—including demand‑side preferences, permitting acceleration and value‑added FDI conditions—will survive the negotiation process between the institutions, while scope, third country eligibility, and proportionality safeguards are calibrated in trilogues. 

Conclusion

The IAA would move EU industrial policy from broad enabling frameworks to enforceable market‑shaping tools. For EU manufacturers, it promises demand visibility, faster permits and cluster benefits, at the price of greater documentation and compliance demands. For non‑EU investors in strategic sectors, it sets a clear but demanding baseline for ownership, workforce, sourcing, R&D, and IP arrangements when originating from highly concentrated third‑country suppliers.