The European Commission’s Industrial Accelerator Act, proposed on 4 March 2026, represents one of the most ambitious EU industrial policy initiatives in recent decades. The draft regulation attempts to pursue several objectives simultaneously: accelerating industrial permitting, creating lead markets for low-carbon and European-made products, attaching conditions to large foreign investments in strategic sectors, and concentrating manufacturing in designated industrial acceleration areas. Whether a single regulatory framework can deliver across these different policy fronts remains an open question.
What Is the Industrial Accelerator Act?
The Industrial Accelerator Act (IAA) is a proposed EU Regulation, formal reference COM (2026) 100 final, published by the European Commission on 4 March 2026. It is presented as a framework of measures for the acceleration of industrial capacity and decarbonisation in strategic sectors. It amends three existing pieces of EU legislation: the Single Digital Gateway Regulation (EU) 2018/1724, the Net-Zero Industry Act (EU) 2024/1735, and the Construction Products Regulation (EU) 2024/3110.
Commission President Ursula von der Leyen first referred to it, under its original name, the Industrial Decarbonisation Accelerator Act, in her State of the Union address on 10 September 2025. The word ‘decarbonisation’ was subsequently dropped from the title, reportedly to allow for broader sectoral and technological scope. Originally scheduled for December 2025, the proposal was delayed several times, reflecting significant internal disagreements within the Commission, particularly over the scope and severity of the proposed ‘Made in EU’ sourcing rules.
Its intellectual foundations rest heavily on the Draghi Report on EU competitiveness, published in 2024, and on the Commission’s Clean Industrial Deal and Competitiveness Compass communications from early 2025. The IAA is explicitly described as putting the Draghi report into action. The proposal was presented at a press conference by Stéphane Séjourné, Executive Vice-President for Prosperity and Industrial Strategy, who described it as marking ‘a major step in the renewal of the European economic doctrine.’
The regulation is structured around four distinct policy pillars, each targeting a different aspect of the EU’s industrial challenge. They are sufficiently different in nature that some legal commentators have described the IAA less as a coherent framework and more as a collection of disparate ideas bundled under a single legislative umbrella.
What Was It Meant to Do?
The Commission’s stated rationale begins with a stark set of statistics. In 2024, manufacturing accounted for 14.3% of EU GDP, down from 17.4% in 2000. The EU’s manufacturing sector employs 18.3% of workers in the EU business economy, making it a crucial pillar of employment and regional economic cohesion. The IAA sets an explicit target: manufacturing should account for at least 20% of EU GDP by 2035. That would require adding roughly €850 billion in manufacturing value, a number the Commission has not disaggregated in the proposal.
The Commission identifies three structural problems the IAA is intended to address. First, strategic supply chain vulnerability: key industrial inputs and technologies, batteries, solar photovoltaic modules, electric vehicles, critical raw materials, are overwhelmingly manufactured outside Europe, principally in China, which the Commission notes accounts for over 80% of global battery manufacturing capacity and an equivalent share in solar PV. Second, a lack of demand for European-made, low-carbon industrial products: European producers of green steel, low-emission cement, and clean aluminium face markets unwilling to pay a ‘green premium,’ creating a structural underinvestment problem. Third, lengthy and fragmented permitting: industrial decarbonisation projects are held back by multi-year approval processes that vary significantly between Member States and sometimes between regions within the same country.
Against this backdrop, the IAA is built around four policy instruments.
1. Demand-side measures for strategic products – The proposal introduces sustainability and resilience criteria in public procurement and subsidy schemes when public funds are used to support the purchase of strategic industrial products such as steel, cement, electric vehicles, batteries, solar panels and heat pumps. The aim is to create “lead markets” for low-carbon and European industrial products.
2. Streamlined permitting procedures – Member States would be required to simplify authorisation procedures for strategic industrial projects, including through digital single access points and coordinated administrative processes intended to shorten approval timelines.
3. Industrial acceleration areas – Member States would designate zones intended to host clusters of strategic industrial manufacturing. These areas would benefit from simplified planning procedures, coordinated infrastructure development and support measures for financing and workforce skills.
4. Investment resilience safeguards – The proposal also interacts with the EU’s framework for foreign investment screening by highlighting supply chain vulnerabilities in strategic sectors such as batteries, solar technologies and critical raw materials. The aim is to ensure that foreign investment contributes to strengthening European industrial capacity while safeguarding economic security.
Where strategic sectors are concerned, the proposal also reflects the EU’s growing focus on economic security and supply-chain resilience. Rather than creating a new foreign investment screening regime, the Act interacts with existing EU and national frameworks by emphasising the risks associated with excessive external dependency in areas such as batteries, solar technologies and critical raw materials. In practice, this means that investments benefiting from public support or participating in strategic industrial programmes may face resilience-related conditions concerning supply-chain diversification, sustainability standards and long-term industrial capacity within the Union.
The Commission’s Case: What It Is Meant to Achieve
The Commission’s own impact assessment projects substantial benefits from the proposed measures. Demand-side instruments designed to create markets for low-carbon industrial products are expected to stimulate investment across sectors such as steel, aluminium, cement and automotive manufacturing. The Commission also anticipates significant employment effects, particularly in emerging clean-technology value chains such as batteries and solar manufacturing. Administrative reforms are another core element of the proposal. By digitalising and streamlining industrial permitting procedures, the Commission expects to reduce regulatory costs and accelerate project timelines for energy-intensive industries seeking to decarbonise. Taken together, these measures are projected to contribute meaningfully to emissions reductions in sectors that currently account for roughly a fifth of the European Union’s greenhouse gas emissions.
The geopolitical framing is explicit. The Commission points to extensive industrial support in China and to major U.S. industrial policy initiatives such as the Inflation Reduction Act and the CHIPS and Science Act as evidence that global competition is increasingly shaped by state-backed industrial strategies. The Industrial Accelerator Act is presented as Europe’s response: not a retreat from openness, but a recalibration designed to ensure that the transition to a low-carbon economy generates industrial capacity, jobs and value within the Union.
The proposal also draws attention to the economic cost of fragmentation within the EU single market. International Monetary Fund research has suggested that regulatory and administrative barriers within the Union can impose trade costs comparable to very high tariffs. By clustering infrastructure and simplifying permitting, the proposed Industrial Acceleration Areas aim in part to reduce these internal barriers.
Will It Work? An Assessment
The honest answer is: probably not in full, possibly in part, and with significant unintended consequences along the way. The IAA has real strategic logic behind it, but the gap between its stated ambitions and its practical architecture is wide, and the criticisms that have emerged from across the legal, academic, and industry communities are substantive.
The Procurement Architecture Is Internally Inconsistent
A detailed early legal critique of the procurement provisions comes from Pedro Telles, a professor of public procurement and competition law and one of the field’s more prodigious academic commentators. Telles characterises the draft as ‘complex and puzzling at stages’ and notes that it ‘lacks internal coherence’ because it bundles four distinct policy approaches within a single text, approaches that, in his view, are not sufficiently connected with one another. On the substance of the procurement provisions, Telles identifies a central problem in Article 11, which obliges contracting authorities to exclude economic operators from public tenders where those operators come from third countries not party to the WTO Government Procurement Agreement (GPA) or relevant free trade agreements. The logic is clear enough. The problem lies in the exceptions.
Article 11(3) gives contracting authorities discretion to disregard these requirements where: a product or service is only available from one supplier without reasonable alternative, no response to a tender for the same product was received in the previous two years, or the rules would result in a disproportionate increase in cost, defined as an increase of at least 25%, or technical incompatibility. Telles’ assessment of the cost exception is pointed: beyond the requirement to base a cost-justification on ‘objective and transparent data,’ the contracting authority has considerable discretion, and the threshold itself is generous. In a procurement market where compliance is already under-resourced and enforcement is patchy, a cost exception set at 25% is likely to be routinely invoked.
Article 11(4) compounds the issue. Compliance with the Union-origin and low-carbon requirements can be established by a self-declaration from the economic operator. Telles notes drily that contracting authorities will, in all probability, adopt the self-declaration strategy and take it at face value without meaningful scrutiny. This is not a peripheral concern. If compliance is self-certified and exceptions are widely available, the substantive effect of the obligations may be negligible.
WTO Compatibility Is a Genuine and Serious Risk
The Commission has sought to frame the IAA’s demand-side measures within existing EU trade obligations, granting preferential treatment in public procurement to GPA members and FTA partners. Nevertheless, WTO compatibility remains a serious risk. Legal commentators, including Mayer Brown, have noted that similar local-content schemes in renewable industries have been found discriminatory by the WTO Appellate Body, highlighting the need for careful design and justification. The proposal contemplates a reciprocity mechanism to adjust partner-country treatment, which, if challenged, would require a demonstration that measures are proportionate and not protectionist in nature.
The question of which countries qualify as “trusted partners” has already generated political debate. Some Member States favor a stricter “Made in EU” approach, while others advocate extending coverage to allied partners to manage costs and supply-chain risks. These discussions reflect the broader tension between strategic autonomy, industrial policy, and international trade obligations.
The 20% GDP Target Is Ambitious to the Point of Implausibility
The Commission’s target of increasing manufacturing’s share of EU GDP from 14.3% to 20% by 2035 is the headline number by which the Act will ultimately be judged. It is worth pausing on what it actually represents. EU GDP in 2024 was approximately €17.4 trillion. A 20% share of manufacturing would require the sector to grow by roughly €985 billion in real terms relative to its 2024 level, or for the rest of the economy to shrink, which is not the ambition. The IAA provides no disaggregated model of how that growth would materialise sector by sector.
The target was already in place before the IAA was conceived: it appears in the Commission’s earlier industrial policy communications. The IAA is the first instrument that formally adopts it as a legislative objective, but the proposal contains no binding mechanism for tracking progress toward it and no consequence for failing to reach it. An explicit review clause applies five years after entry into force, at which point the Commission will assess whether lead market provisions remain necessary in light of market developments, but 2035 itself is not a hard deadline in the legislative text.
Environmental Safeguards May Be Weakened
The acceleration of permitting and the introduction of Industrial Manufacturing Acceleration Areas have attracted concern from environmental organisations and some Member States. Under the proposal, environmental assessments for projects within designated areas may be conducted for the entire area rather than for individual projects, through aggregated permitting procedures. Critics argue that area-wide assessments may not provide sufficient evidence for rigorous project evaluation or appropriate mitigation measures. Unlike the renewable energy acceleration zones already included in EU legislation, Industrial Manufacturing Acceleration Areas would not be limited to specific technologies, potentially widening the scope of activities that benefit from expedited and aggregated environmental review.
The FDI Regime Is Novel, Burdensome, and Legally Uncertain
The FDI-related provisions of the IAA focus on ensuring that strategic foreign investment in Europe contributes to local value creation and supply chain resilience. While the Commission does not impose ownership caps or mandatory technology transfer, the proposal highlights sectors such as batteries, solar PV, and critical raw materials as sensitive for EU industrial policy. Some industry stakeholders have expressed concerns about the potential uncertainty this creates, particularly regarding how investment conditions may interact with procurement rules and the Commission’s discretion over “trusted partner” status. The legal architecture for these safeguards is largely untested, leaving questions about how they will affect cross-border investment in practice.
The Industry Is Divided
Industry reaction has been mixed and, in the automotive sector, openly divided. The European Association of Automotive Suppliers (CLEPA) gave a qualified welcome, noting that the ‘Made in EU’ requirements address concerns about unfair competition but warning that the regulation’s effectiveness depends on robust assessment of trusted trade partners to prevent circumvention. Volkswagen CEO Oliver Blume and Stellantis CEO Antonio Filosa jointly called for the Act in an open letter supporting a CO2 bonus for European-made battery electric vehicles. German premium manufacturers, BMW, Mercedes-Benz, are notably more cautious, concerned about potential retaliation from China, which remains a critical export market. Hydrogen Europe welcomed the direction of travel while calling for the co-legislators to ‘close the gaps on ambition, scope, and clarity.’
What Happens Next?
The IAA will now enter the EU’s ordinary legislative procedure. Both the European Parliament and the Council of the EU must adopt their own positions before trilogue negotiations between the three institutions can begin. Given the complexity of the text and the range of political and technical issues, such as differing approaches to public procurement, industrial policy priorities, and the application of investment and resilience criteria, the legislative process is likely to be lengthy, and the final regulation may differ substantially from the current proposal.
Under the current draft, permitting provisions would apply from one year after entry into force, lead market provisions for public procurement would apply to procedures launched on or after 1 January 2029, Member States would have 12 months to designate at least one Industrial Manufacturing Acceleration Area. The application of investment and resilience criteria for strategic projects supported under the IAA would begin from the 12th month after entry into force. The Commission has signalled that it intends to pursue the IAA as a priority and wants adoption to be expedited. Whether the European Parliament and Council share this sense of urgency, and whether the political coalition that underpins the proposal holds together during the legislative process, remain open questions.
The Industrial Accelerator Act reflects a genuine and significant shift in European economic doctrine. After decades in which EU industrial policy was largely concerned with preventing market distortion, the Commission is now using the regulatory state to actively shape where production happens, who can invest, on what terms, and at what pace. The geopolitical logic is real: Europe’s dependencies in strategic sectors are a security vulnerability, and its main trading rivals are not playing by the same rules. The question is whether the specific instrument the Commission has designed is capable of delivering what it promises. The procurement provisions rely heavily on self-certification and are honeycombed with exceptions. The WTO-compatibility of the demand-side measures remains contested, and the Commission’s own evidence base has been formally criticised by its internal scrutiny body. The 20% GDP target is aspirational rather than mechanistically tied to any provision in the text. And the FDI conditionality regime, while addressing a real problem, is legally novel in ways that will take years of practice, and quite possibly litigation, to resolve.
None of that means the IAA should not proceed. The diagnosis of Europe’s industrial position is largely correct, and the instinct that policy needs to be more active is defensible. But the design of the cure is imprecise, and the risk is that four ambitions pursued simultaneously, across four imperfect instruments, result in less than any single one of them would have achieved if pursued with more discipline and coherence.
Background Reading and Additional Sources:
- COM(2026) 100 final – The regulation text (PDF)
- Commission publications page (regulation + impact assessment SWD(2026)72)
- European Parliament Legislative Train Schedule
- Pedro Telles – ‘Some preliminary impressions on the Industrial Accelerator Act proposal’ (procurement law critique, Art. 11 exceptions, self-declaration loophole)
- Bruegel – ‘Made with Europe, not Made in Europe, should guide EU industrial policy
- Chatham House – ”European preference’ signals a wider change of EU doctrine’
- Mayer Brown – WTO compatibility, procurement and FDI overview
