Industrial Accelerator Act: A New Framework for EU (Sustainable) Industrial Growth

On March 4, 2026, the European Commission (EC) published a proposal for an Industrial Accelerator Act (IAA) — an ambitious framework designed to reinforce the EU’s industrial base while accelerating decarbonization in key sectors. The proposal combines into a single regulatory package industrial policy, climate ambition, and economic security tools, to steer investment and demand across strategic value chains. Core measures include (1) promoting EU-origin and low-carbon products, (2) restricting foreign investments in strategic sectors, and (3) simplifying permitting and creating dedicated industrial manufacturing acceleration zones to speed up industrial deployment. If adopted, the IAA could significantly reshape the operating environment for strategic manufacturing sectors, including automotive, net-zero technologies (such as batteries and solar), and critical raw materials.

Key Takeaways

• Map exposure across value chains: The IAA brings together several policy priorities — economic resilience, industrial competitiveness, climate transition, and supply-chain security. The proposal targets all industrial manufacturing sectors but focuses on strategically important areas, including energy-intensive industries (chemicals, rubber, plastics, basic metals, nonmetallic minerals, paper, and refined petroleum products); carbon-intensive industrial materials (steel, aluminum, concrete, mortar, and other products whose performance depends mainly on these); net-zero technologies (such as batteries, solar, wind, nuclear, and renewable energy technologies); automotive, including electric vehicles; and critical raw materials. Given the breadth of these sectors, the IAA could affect large segments of industrial value chains. Companies should begin assessing where their procurement, production, and sales activities may intersect with the new rules.
• Assess implications for investment strategies: The IAA seeks to support the expansion of EU manufacturing capacity by promoting industrial investment. However, it introduces stricter conditions for foreign investments in key emerging sectors such as batteries, electric vehicles, solar technologies, and critical raw materials. Large investments in these sectors would require prior approval and need to satisfy conditions relating to, among others, foreign ownership caps, workforce development, research-and-development (R&D) commitments, and value-chain integration in the EU. Non-EU investors (and EU companies in affected sectors seeking foreign capital) should begin stress-testing investment and deal structures against these potential requirements. These new rules would apply alongside existing foreign direct investment (FDI) screening regimes.
• Prepare “origin + carbon” documentation: The IAA also seeks to stimulate demand for EU-origin and low-carbon products, particularly in public procurement procedures and public support schemes. Companies will increasingly need to demonstrate both the origin and carbon intensity of their products. Companies should strengthen internal processes for supply-chain traceability, emissions accounting, and documentation, as these will likely become essential eligibility requirements.
• Engage early in the legislative process: The EC’s proposal marks only the first stage of the EU legislative process. The text will now be examined by the European Parliament and the Council of the European Union (Council), and substantial amendments remain possible. During this phase, businesses and trade associations will have opportunities to engage with policymakers, build sector coalitions, and shape the final design of the IAA and its implementing measures.

Overview of the IAA’s Core Measures

The IAA aims to strengthen EU industrial competitiveness while accelerating decarbonization through measures in three main areas: (1) restrictions on foreign investments in strategic sectors, (2) promotion of EU-origin and low-carbon products, and (3) permitting simplification and industrial manufacturing acceleration areas. Below, we summarize the main elements of each.

1) Restrictions on foreign investments in emerging strategic manufacturing sectors

• Acquisitions of EU companies or assets and greenfield investments in certain emerging strategic manufacturing sectors by non-EU investors (including EU companies ultimately owned or controlled by non-EU persons) would require prior approval where the investment value exceeds €100 million and the investor is from a third country that holds more than 40% of the global manufacturing capacity in the relevant sector. The EC should monitor global capacity and publish results to guide the application of this threshold. The regime would apply to the following sectors: (1) battery technologies and battery energy storage value chains; (2) electric and hybrid vehicles, including electrification and digitalization components; (3) solar PV technologies; and (4) extraction, processing, and recycling of critical raw materials.
• To be approved, investments would need to satisfy at least four of the six conditions: (1) foreign ownership cap of 49%; (2) joint venture with EU partners; (3) licensing of relevant intellectual property or know-how to the EU target; (4) minimum R&D expenditure commitments; (5) EU workforce requirements (at least 50% employees) and training commitments; and (6) EU value chains enhancement, including sourcing at least 30% of inputs from EU suppliers. The EU workforce requirement is mandatory.
• Before implementing their investment, investors would need to seek approval from the competent Member State authorities, which should verify compliance with the above conditions. Nonetheless, the EC would retain significant monitoring powers:
  • Member States must inform the EC of all notified investments.
  • The EC may issue an opinion on compliance with the IAA. Member States must take into account the EC’s opinion in their final decision.
  • The EC may directly intervene in the assessment for particularly significant investments, such as those exceeding €1 billion, affecting multiple Member States, or security of supply or environmental effect risks.
• Failure to comply with these rules may result in investment prohibitions or monetary penalties. This regime would go beyond traditional national security FDI screening (which will continue to apply in parallel) by linking market access to demonstrable economic value creation within the EU.

2) Promotion of EU-origin and low-carbon products

• EU Member State authorities would be required to prioritize EU-origin and low-carbon products in public procurement processes and public support schemes relating to energy-intensive industries, electric vehicles, and net-zero technologies. Key mechanisms:
  • Excluding from tenders operators from third countries that are not party to international agreements with the EU providing for procurement access commitments (e.g., the World Trade Organization Government Procurement Agreement or other regional or bilateral agreements). This is expected to affect such countries as Brazil, China, India, Indonesia, Malaysia, Russia, and Thailand.
  • Limiting access to certain public support schemes for suppliers considered high-risk from a cybersecurity perspective.
  • Applying targeted EU-origin and low-carbon requirements in public procurement and support schemes, unless compliance would result in disproportionate costs or technical incompatibilities.
• The IAA sets out detailed EU-origin and low-carbon thresholds for several product categories, including carbon-intensive industrial materials, electric vehicles, and net-zero technologies. Examples in public procurement include steel and aluminum should contain at least 25% low-carbon content; aluminum should contain at least 25% EU-origin content; electric vehicles should be assembled in the EU with EU-origin components that represent at least 70% of their value (excluding batteries); and solar photovoltaic (PV) technologies should, among others, incorporate EU-origin PV inverters and cells.
• EU origin would be based on customs origin rules, with some exceptions. Low-carbon products should be defined by reference to greenhouse gas intensity standards derived from existing EU Emission Trading System and Carbon Border Adjustment Mechanism frameworks. In practice, these rules would make product traceability and carbon data management critical for companies seeking access to procurement markets and public support schemes.

3) Permitting simplification and industrial manufacturing acceleration areas

• The IAA sets out various measures aimed at speeding up industrial deployment across the EU:
  • Member States would need to establish single digital access points and unified permit-granting procedures for industrial manufacturing projects in any sector (except for tobacco).
  • Member States would need to designate at least one industrial manufacturing acceleration zone, designed to cluster manufacturing projects, particularly in energy-intensive industries, automotive, and net-zero technologies. Within these areas, Member States should facilitate coordinated infrastructure development, faster permitting, improved access to financing, R&D support, and innovation ecosystems.
•  These reforms aim to reduce administrative fragmentation, increase regulatory certainty, and, overall, reduce lead times for major industrial projects.

What Comes Next

The EC’s proposal now enters the EU ordinary legislative procedure, where it will be examined by the European Parliament and the Council. Negotiations could take many months, and significant amendments are possible given the political sensitivity of measures relating to industrial policy, trade, and foreign investment. Nonetheless, the overall policy direction is clear: The EU is moving toward a more assertive industrial strategy aimed at strengthening domestic manufacturing capacity, securing supply chains, and accelerating green transition. Companies operating across the affected sectors should therefore closely monitor the legislative process and begin preparing for potential implementation.