The Industrial Accelerator Act: a stepping stone or paradigm shift?

Accelerating industry – but towards what?

When European Commission Executive Vice President Stéphane Séjourné presented the proposal for an Industrial Accelerator Act (IAA), he called it nothing short of a ‘change in doctrine – something that would have been unthinkable just a few months ago’.

The rhetorical ambition reflects a real shift. European industry has faced compounding structural pressures in recent years: structurally high energy costs, growing global overcapacities, supply chain fragilities and increasing weaponisation of trade by major powers. In response, the European Union has progressively rediscovered industrial policy, moving away from treating these tools as a market distortion and towards a stance that sees them as a strategic necessity. The IAA, the centrepiece of the European Commission’s Clean Industrial Deal and its attempt to connect competitiveness, resilience and decarbonisation, fits squarely into that shift. It has been widely hailed (and, in equal measure, criticised) as Europe’s ‘Made in Europe’ moment, a genuine break with the EU’s longstanding free-trade orthodoxy on industrial and trade policy.

The IAA is at once evidence that industrial policy is increasingly mainstream at the EU level – and that the paradigm shift remains incomplete. It marks genuine progress in certain dimensions, while crystallising a tension that has been building in Brussels: the gap between ambitious rhetoric and what the text actually delivers. Those gaps are not inevitable. The legislative process ahead is an opportunity to fix them.

That story began before the proposal was ever published – and the file had already changed before it arrived. What was first announced as the Industrial Decarbonisation Accelerator Act eventually emerged – after considerable delays and internal debate within the European Commission – simply as the Industrial Accelerator Act. The ‘D’ – decarbonisation – was first dropped in EU Commission President von der Leyen’s State of the Union address in September 2025. This is not merely semantic: where the file was first presented as explicitly linking industrial support and industrial decarbonisation, the published proposal reads more as a push to safeguard and expand European manufacturing capacity. Its central objective (Art. 2) – that manufacturing should account for at least 20% of EU GDP by 2035 – is a reindustrialisation target. Decarbonisation has been folded into a broader competitiveness agenda, which raises a question the Accelerator’s negotiators will have to answer: how green is the industrial future the act is accelerating towards?

The IAA builds on familiar ground

The IAA does not arrive on a blank slate. Many of its core instruments have direct antecedents in the Net-Zero Industry Act (NZIA), agreed just two years ago: accelerated permitting, ‘one-stop-shops’ for public support and criteria linking public support to sustainability and resilience considerations. The IAA extends this toolkit from clean technologies (NZIA scope) to legacy industries like steel, metals, automotive, cement and chemicals, and goes further in both language and intent.

Under the NZIA, sustainability and resilience criteria introduced a new principle to EU industrial policy: that public procurement and renewable energy auctions could legitimately consider factors beyond price (such as environmental sustainability, supply chain resilience/dominance of a single supplier, cybersecurity and social or employment-related conditions). In practice, they are set quite broadly, penalising Chinese supply up to a point, but with a cost escape threshold that means non-price criteria can be quite readily circumvented by national authorities. 

Building on this, the IAA’s ‘low-carbon’ criteria introduce mandatory minimum quotas for sustainable industrial products in public procurement: at least 25% of procured steel and aluminium, and 5% of concrete, must meet low-carbon standards. Its ‘Union-origin’ criteria introduce, for the first time in EU law, explicit local content language – a politically significant departure from the EU’s longstanding free-trade orthodoxy.

Through low-carbon criteria, the IAA seeks to build lead markets for industrial products where the green premium remains a barrier to scale: structured public demand, the logic goes, can sustain emerging clean technologies through the period where they cost more than conventional alternatives (see E3G, 2025). But the mandatory requirements apply only to public procurement, with provisions for the grants, loans and guarantees, through which Member States direct the majority of industrial support, being much looser. Private buyers face no obligations. For many products in scope, the definition of ‘low-carbon’ is delegated to acts not yet adopted, creating uncertainty at precisely the moment the IAA is meant to accelerate investment. And one notable absence stands out: a dedicated low-carbon label for steel, present in earlier leaked drafts, has disappeared. Without a shared European definition, ‘low-carbon steel’ risks meaning different things in different Member States, fragmenting the very lead market the IAA seeks to build.

Through ‘Union-origin’ criteria, the IAA seeks to safeguard and strengthen European manufacturing both in legacy industries and emerging clean technologies. Language as explicit on local content is unprecedented and, however contested, marks a genuine shift in what the EU is willing to say on ‘buy European’. However, the framework as designed is strikingly broad in scope: it extends ‘Union-origin equivalent’ status to all countries holding free trade agreements, customs unions or Government Procurement Agreements with the EU, resulting in a list of over 70 countries. Rather than defining a limited group of trusted partners upfront, the proposal operates on an exclusionary logic: countries can be removed from eligibility via Delegated Act – a process that rests with the European Commission – where reciprocity in trade and investment openness is found to be lacking. However, the feasibility of advancing these diplomatically sensitive exclusion procedures in this case-by-case way is questionable. 

This matters, particularly in light of another instrument of the IAA: a framework linking large foreign direct investments to industrial policy objectives. For investors from countries accounting for more than 40% of global production in selected sector – de facto, China – it makes technology transfer and local investment in workforce or R&D conditions of market access. This represents a meaningful departure from how the EU has historically approached inbound investment. However, its effectiveness depends on the Union-origin framework providing a credible demand signal. This is where the two instruments risk working against each other. A Chinese firm investing in Morocco, an partner with which the EU has a free trade agreement, could supply products qualifying as ‘Union-origin equivalent’ and thereby access EU procurement markets without ever being subject to IAA conditionality on technology transfer and local employment. The incentive to invest directly in Europe, and accept the conditions the foreign direct investment framework seeks to attach, risks being significantly weakened as a result.

Both the NZIA and the IAA include escape clauses triggered when compliant products are significantly more expensive than non-compliant alternatives, set at 15–20% under the NZIA, and raised to 20–25% under the IAA. The higher threshold reflects a harder-edged acknowledgement of real cost differentials. But the International Energy Agency’s latest Energy Technology Perspectives shows that manufacturing cost gaps between China and the EU already exceed the IAA’s threshold across almost every advanced clean tech sector. A waiver threshold calibrated below actual market conditions would not deliver the demand signal necessary to launch a green, European lead market in the products concerned. 

What is so far missing from the debate is how far public authorities are willing to invest to bridge a ‘resilience premium’, with higher thresholds needing to be balanced with the need to deploy clean technologies quickly. Until that consensus is reached between Member States, the EU is left with a half measure that creates the framework for supporting domestic production, but one that will be immediately undermined in the implementation. 

From reaction to strategy

The IAA is the latest – and most ambitious – addition to a growing EU industrial policy toolkit. It pushes further than its predecessors in three significant ways: by introducing a demand-side dimension and the push to build lead markets for clean products; by anchoring an explicit local content framing into EU law for the first time; and by tying large foreign investments to industrial policy conditions. In doing so, it adds another layer to the EU’s response to growing global industrial pressures, and is a step closer towards a European industrial policy. 

But the proposal bears the mark of a deeper tension in EU policymaking: between those who want to strictly limit the scope of industrial policy and those who would see it used much more comprehensively, between institutional inertia and the pressure to move fast in a changed global order. The final text reads, in places, as an attempt to bridge those diverging visions rather than express a coherent one. 

Those tensions are likely to crystallise, and potentially intensify, in the negotiations ahead. In the EU Council, Member States’ positions on ‘Union-origin’ and local content diverge significantly, and some may prefer to extend the legislative timeline rather than resolve the underlying disagreements. In the European Parliament, the fault lines may be less predictable and not follow party lines cleanly. On a file of this nature, one of the more consequential divides may emerge between those MEPs aligned with the interests of new entrants and SMEs, and those closer to positions of incumbent industrial players. 

National dynamics will also matter. France has been among the most vocal proponents of a European approach to local content and ‘Made in Europe’ conditionality for decades, a political orientation that gives particular significance to the fact that two of the three parliamentary rapporteurs of the file are French. German industry federations, on the other hand, have attacked the Act as a ‘bureaucratic monster’ and ‘poison’ for their economic model. 

The negotiations ahead are where the IAA’s ambition will be tested. And the stakes extend well beyond this file: how Parliament and EU Council resolve the open questions and tensions on local content and on low-carbon definitions will send ripples through to other files from the Public Procurement Act (proposal expected in the second half of the year) and provisions in the Competitiveness Fund (with negotiations between the institutions ongoing) to the broader trajectory of EU clean industrial policy.

Driven by accumulated pressure, the European Union has come far in rediscovering industrial policy. It now needs to decide what future it is building towards, and by what mechanism it seeks to achieve it. To make decarbonisation a priority, the definition of low-carbon products needs to be sufficiently rigorous to send a clear demand signal for those same products, with quotas that, even if starting at a lower level, are set to ratchet up over time as the domestic production base matures. To make public procurement an effective lever for this demand, escape clauses should be shored up to increase the likelihood of these non-price criteria being applied on the ground, not only touted in the discourse. To move Europe towards an industrial policy that is truly European, a more ambitious consensus on European preference should be aimed towards – but this last point remains the most difficult knot to unpick in the negotiations to come. 

The views and opinions in this article do not necessarily reflect those of the Heinrich-Böll-Stiftung European Union | Global Dialogue.