European Commission | Questions and Answers on the Industrial Accelerator Act

What is the Industrial Accelerator Act and why is the Commission proposing it?

The Industrial Accelerator Act (IAA) is a legislative proposal designed to strengthen Europe’s industrial base by boosting manufacturing, growing businesses, and creating jobs in the EU. It delivers on the recommendations of the Draghi report on EU competitiveness, the political guidelines of the Commission, and the mission entrusted to the Executive Vice-President for Prosperity and Industrial Strategy.

The IAA mobilises public procurement and public incentives to boost demand for low-carbon and European-made products and net-zero technologies, speeds up investment through faster and simpler permitting, and introduces targeted conditions to ensure major foreign direct investments generate added value for the EU. In so doing, it will create lead markets for clean and strategically important industrial products. In 2024, manufacturing represented 14.3% of EU GDP. The objective is to increase the manufacturing’s share of EU GDP to 20% by 2035 and reinforce Europe’s resilience, competitiveness, and economic security.

The Act complements the Automotive Package adopted on 16 December 2025, defining the ‘Made in EU’ conditions to benefit from the flexibilities under the CO2 standards for cars and vans and the super-credit for small affordable electric cars, as well as the conditions to benefit from financial support for greening corporate fleets.

What are the expected benefits?

The IAA is expected to create substantial value added and high-quality jobs for the EU. Low-carbon demand measures alone could generate more than €600 million of additional value in the steel, aluminium, and cement industries by 2030, and up to €10.5 billion across the automotive value chain. It will also create tens of thousands of jobs, including 85,000 in battery projects and 58,000 in solar manufacturing, while safeguarding existing jobs in steel, aluminium and cement as these sectors transition to cleaner production. The foreign investments conditionalities will also create local employment opportunities, as well as boost overall EU manufacturing capacity.

Digitalised permitting will lead to administrative savings of up to €240 million for all manufacturing industries in the EU.

In total, the Act is expected to save 30.58 million tonnes of carbon dioxide in the energy intensive industries (steel, cement and aluminium), batteries, and vehicle components. Streamlining permitting procedures will accelerate the implementation of decarbonisation projects, therefore leading to an accelerated pace of GHG savings of a sector that represents 22.5% of total EU GHG emissions.

To what sectors does the Industrial Accelerator Act apply?

The IAA covers the manufacturing industry, with a focus on energy intensive industries, the automotive value chain, and net-zero technologies needed to enable the clean industrial transformation and ensure supply-chain resilience. For instance, low-carbon requirements are introduced for the steel used in automotive and construction, while ‘Made in EU’ and low-carbon requirements apply to the cement used in construction and the aluminium used in automotive and construction, when subject to public procurement and other forms of public intervention. For net-zero technologies, the Act introduces ‘Made in EU’ requirements for batteries, battery energy storage systems (BESS), solar PV, heat pumps, wind, electrolysers, and nuclear technologies, when subject to certain public procurement procedures, auctions, and support schemes. It also introduces ‘Made in EU’ provisions for electric vehicles (EVs) and their components.

Why has the Commission chosen these sectors?

The IAA focuses on sectors that are strategically important for the EU economy, and which currently face strong competitive and structural pressures: energy-intensive industries (steel, cement, aluminium, chemicals), net-zero technologies, and automotive components manufacturing. These sectors are essential enablers of the clean transition and vital to downstream industries such as construction, mobility, energy systems, and defence. At the same time, they face declining production in Europe, slower decarbonisation investments and growing global competition and market distortions, such as unfair subsidies, in markets that are increasingly concentrated outside the EU. The value chain of each sector/technology was subject to an in-depth analysis to determine where the EU faced strategic dependencies and structural challenges. Lead markets measures were proposed for steel, cement and aluminium, to start with, and chemicals, at a later stage. These are the most energy and emissions-intensive sectors, as well as sectors for which demand will increase, driven by the green transition needs. Rather than applying a single uniform “European content” threshold across all net-zero technologies, the IAA tailors requirements to the specific structure, maturity, and dependencies of each sector. This approach allows the EU to gradually increase the share of European-made components where it is most impactful and realistic. The targeted design ensures that intervention is proportionate and focused where it can deliver the greatest resilience and economic return.

What does ‘Made in EU’ mean for third countries?

The European Union remains one of the world’s most open markets and is committed to maintaining that openness as a key source of economic strength and resilience. The proposal encourages greater reciprocity by providing equal treatment for public procurement as well as other forms of public intervention to countries that offer EU companies access to their markets through trade agreements. Companies from these countries will therefore benefit from treatment equivalent to Union-origin content. Therefore, ‘Made in EU’ requirements do not restrict market access or consumer choice in an unwarranted manner, but ensure taxpayers’ money benefits European companies and workers. They are designed in a targeted and proportionate manner to create demand in European strategic value chains, giving investor certainty, avoiding critical dependencies, while at the same time ensuring that the EU honours its commitments towards international partners and continues to be open to international trade and investment on fair terms.

What does the Act propose in terms of permitting? What are Industrial Accelerator Areas and what benefits will they bring?

The IAA proposes to fully digitalise permitting processes for industrial manufacturing projects, introduce clear time limits and, for certain projects such as energy-intensive industry decarbonisation or projects located in Industrial Acceleration Areas, allow for faster approval of intermediary steps where authorities do not respond within set deadlines. Dedicated single points of contact and maximum timelines of 18 months for specific projects will speed up energy intensive industries’ decarbonisation investment in the EU.

These measures are designed to provide greater clarity, predictability, and legal certainty for investors. By reducing administrative delays and ensuring transparent, trackable processes, the IAA lowers investment risk and accelerates project deployment.

Member States shall designate Industrial Acceleration Areas to encourage the creation of strategic manufacturing clusters. Projects located in these areas benefit from faster permitting, improved coordination, and better access to infrastructure, financing, and skills ecosystems. The objective is to create competitive industrial hubs that attract investment, facilitate decarbonisation, and strengthen supply chain resilience.

What are the implications for non-EU investors/companies that want to invest in the EU?

The EU remains open to foreign direct investment (FDI). The IAA sets conditions, however, for foreign investments above €100 million by companies originating in countries that hold more than 40% of global production capacities in EVs, batteries, solar, and critical raw materials. Conditions include EU shareholding majority, technology transfer, integration into EU value chains, and job creation.

These measures complement the EU’s existing foreign direct investment (FDI) screening framework. While FDI screening focuses on national security risks, the IAA addresses the economic impact of major investments on the functioning of the Single Market, such as supply security and added value to the Union. By applying common conditions across Member States, the IAA will strike a carefully calibrated balance by ensuring that strategic foreign investments contribute to Europe’s competitiveness, resilience, and industrial transformation, while preventing fragmentation

How does the Industrial Accelerator Act deliver on the Draghi report?

The IAA puts the Draghi report into action by proposing targeted EU-made and low-carbon content requirements to create demand for EU net-zero tech and low-carbon industrial products using public procurement money, public schemes and auction funding. In doing so, it operates as an ‘insurance policy’ to make sure the EU becomes more independent in those strategic economic areas where significant investments are needed.

Compliments of the European Commission