NautaDutilh | Inside the Industrial Accelerator Act Proposal: 5 Things you Need to Know

Blog | On 4 March 2026, the European Commission published its long-awaited proposal for a Regulation establishing a framework of measures for the acceleration of industrial capacity and decarbonisation in strategic sectors (Industrial Accelerator Act or IAA). The proposal is accompanied by a press release, Q&A, and factsheet. The IAA is deliberately wide-ranging, seeking to cover competitiveness, decarbonisation, supply-chain resilience, foreign investment, and territorial industrial policy within a single framework.

Key takeaways

• Strategic industrial and decarbonisation projects would benefit from a single digital, coordinated permitting procedure, with the aim to shorten approval timelines.
• EU-origin (“Made in EU” / “Made in Europe”) and low-carbon thresholds would be built into EU public procurement and support schemes for key materials and motor vehicles as well as net-zero technologies, with derogations, exclusions of certain third-country bidders, and with the Commission given flexibility to adjust technical criteria, revoke third-country access, and adopt demand-side measures for productions from the chemicals industry.
• Value-added conditions and approval requirements would apply to large foreign direct investments (FDIs) in emerging strategic sectors.
• Member States must designate “industrial manufacturing acceleration areas” where industrial projects in strategic sectors benefit from pre-cleared, area-wide environmental and planning approvals via an aggregated baseline permit.

Background

The IAA was first announced by Commission President von der Leyen in her 2025 State of the Union Address. Building on the Draghi Report on EU competitiveness, the Commission’s proposal responds to concern that the EU’s strategic dependencies are being “weaponised” in an increasingly contested global economy. Combined with subsidised foreign overcapacity, the Commission believes that this exposes the EU’s industrial resilience and economic security. At the same time, the energy transition is seen as a potential engine of industrial growth, provided the EU can scale up its own manufacturing capabilities.

The proposal builds on previous communications from the Commission, including the Clean Industrial Deal and the Competitiveness Compass for the EU, as well as the European Economic Security Strategy. It is also shaped by extensive stakeholder input, which highlighted high energy costs, unfair international competition, high decarbonisation costs, limited willingness of downstream customers to pay a “green premium,” complex and lengthy permitting, and difficulties accessing funding.

The IAA focuses on energy-intensive industries (such as steel, cement, chemicals, and aluminium), net-zero technologies (including batteries, solar PV, wind, heat pumps, electrolysers, and carbon capture), and the European automotive industry, which the Commission identifies as critical enablers for construction, mobility, energy, defence, and space.

The IAA’s general objective is for manufacturing to reach at least 20% of EU GDP by 2035, though this, at present, is understood as a best-efforts obligation (let’s wait and see whether this remains to be the case).

Its three core aims are:

• leveraging the Single Market to create demand for EU-origin (“Made in EU”) and low-carbon industrial products and net-zero technologies;
• maximising the quality of FDI in the most strategic sectors; and
• streamlining permitting and fostering industrial clusters.

5 things you need to know:

#1 Streamlined and digital permitting for industrial and decarbonisation projects

#2 Union-origin and low-carbon requirements in public procurement and support schemes

#3 FDI in emerging strategic sectors

#4 Industrial manufacturing acceleration areas

#5 Other amendments to existing legislation

Click here to read the full explanation.

Next steps

The proposal is subject to the ordinary legislative procedure. The European Parliament and Council will first need to develop their own negotiating positions, after which the three institutions will enter trilogue negotiations to agree a final text.

Given the IAA’s political sensitivity and technical complexity, this process is likely to encounter obstacles along the way and take some time to be completed, with negotiations expected to focus on the balance between industrial policy and wider geopolitical considerations, including the EU’s relationship with the United States.

We expect that five design choices will be especially contested from a legal perspective: (i) the binding timelines (or lack thereof) for the CPR/ESPR delegated acts on which the lead-market pillar depends; (ii) the proportionality justification for the FDI conditions under Articles 49 and 63 TFEU; (iii) WTO/GPA compatibility of the Union-origin requirements; (iv) the enforcement architecture behind the 20% GDP target; and (v) the legal basis under Article 114 TFEU.

Compliments of NautaDutilh  – a member of the EACCNY