Inside the Industrial Accelerator Act Proposal: 5 things you need to know

First, the Commission proposes to create a common, streamlined digital permitting framework for two categories of projects, which are treated differently under the proposal:

1. 1. "industrial manufacturing projects," i.e., the construction, conversion, or extension of an industrial site under NACE Code C (Manufacturing, excluding tobacco): these projects are subject to the new single-access-point and single permit-granting procedure, which apply from one year after entry into force. Each Member State would be required to set up a single national digital access point, using European Business Wallets and, where appropriate, other existing EU digital infrastructures, through which businesses submit a single application for all permits needed to build, expand, convert, or operate such a project. The application would be automatically routed to competent authorities, who would share data electronically, re-use existing public data, and give applicants real-time status visibility. A designated coordinating authority would manage the single permit-granting procedure and ensure the adoption of a single "comprehensive decision" at the end of the process, with strict deadlines for initial completeness checks and follow-up requests. However, where they exist, other EU streamlined permitting regimes for specific industrial manufacturing projects would take precedence over the IAA permitting process.
   2. "energy-intensive industry [EII] decarbonisation projects," i.e., the construction or conversion of a commercial facility of an energy-intensive business in the industries listed in Annex I that significantly and permanently reduce CO₂-eq emission rates. For these projects, the Commission extends the streamlined permitting processes already established for net-zero projects under the NZIA (rather than the new single-access-point procedure), and they are also recognised as "strategic projects" under the forthcoming Environmental Omnibus Regulation on environmental assessments. Covered industries include paper, coke and refined petroleum products, chemicals, rubber and plastic products, other non-metallic minerals, and basic metals.

Second, the Commission proposes the adoption of Union-origin ("Made in EU") and low-carbon requirements in public procurement and public support schemes to drive demand for EU-made and low-carbon energy-intensive industrial products and certain motor vehicles.

From 1 January 2029, contracting authorities would need to require minimum percentage shares for all public procurement procedures within the scope of Directives 2014/23/EU, 2014/24/EU, and 2014/25/EU that include the procurement of products from energy-intensive industries:

• For steel and steel-dependent products intended for use in buildings, infrastructure, and motor vehicles for civil purposes: at least 25% of the total volume of steel should be low-carbon. With respect to steel, contrary to what applies to concrete/mortar and aluminium, only a low-carbon requirement applies, not a Union-origin requirement.
• For concrete and mortar and concrete/mortar-dependent products intended for use in buildings and infrastructure for civil purposes: at least 5% of the total volume of concrete and mortar should be low-carbon and of Union origin;
• For aluminium and aluminium-dependent products intended for use in buildings, infrastructure, and motor vehicles for civil purposes: at least 25% of the total volume of aluminium should be low-carbon and of Union origin.

"Union origin" refers to "content originating in the Union," determined in accordance with the Union Customs Code. Content originating in third countries with which the Union has concluded an FTA (free trade agreement) or customs union, or that are parties to the GPA (general procurement agreement) where relevant Union obligations exist, shall be deemed to be of Union origin. The Commission must adopt a delegated act to exclude, in whole or in part, third countries where the third country has failed to provide (non-discriminatory) “national treatment”, where exclusion is justified to avoid dependencies or security-of-supply risks, or where such exclusion falls within any other exception under the applicable agreement.

The "low-carbon" status references technical criteria in other EU instruments, specifically delegated acts under the Construction Products Regulation for construction products and under the Ecodesign for Sustainable Products Regulation (ESPR) for other products. Neither set of delegated acts has yet been adopted, and the IAA imposes no binding deadlines for their adoption. Until they exist, the low-carbon threshold will remain undefined in practice, meaning the lead-market pillar risks being inoperable for as long as those acts remain outstanding. Once activated, operators would be required to submit a self-declaration demonstrating compliance. The Commission is also empowered to establish voluntary classification systems based on greenhouse gas intensity for certain manufactured products placed on the EU market.

Contracting authorities may decide not to apply the Union-origin and/or low-carbon requirements where no reasonable alternatives exist, no suitable requests to participate were submitted, or where compliance would result in disproportionate costs or technical incompatibility. A cost difference exceeding 25% is presumed to constitute disproportionate cost.

For other forms of public intervention, Member States must design their public support schemes so that they contribute to strengthening the EU's strategic industrial value chains through the Union-origin or low-carbon requirements, ensuring that beneficiaries comply with minimum Union-origin and/or low-carbon steel, concrete and mortar, and aluminium shares. This requirement applies to public support schemes accounting for at least 45% of the national budget allocated to support schemes for energy-intensive industries, and 100% for electric, hybrid electric, and fuel cell vehicles. The 45%/100% distinction is significant: vehicle support schemes are comprehensively covered while other EII support schemes require only partial coverage.

Competent authorities may still implement support schemes that do not meet the requirements if compliance would lead to significant delays, presumed where estimated delays exceed seven months, and/or would incur disproportionate costs, presumed where compliance would increase the cost of the final product by more than 30%. It is not apparent from the current wording whether these two conditions (delay and cost) are cumulative; this ambiguity should be resolved during the legislative process.

Annex III to the IAA contains specific rules for electric, hybrid electric, and fuel cell vehicles, including Union-origin thresholds for components (e.g., ≥70% of non-battery components by ex-works price) and a certification obligation requiring manufacturers to provide an accompanying document certifying Union-origin compliance when issuing the vehicle certificate of conformity, from six months after entry into force. Annex III also introduces a "super credits" mechanism linking small zero-emission vehicles "made in the EU" to EU vehicle CO₂ emission performance standards under Regulation (EU) 2019/631.

The Commission could also adopt delegated acts to update product scope and technical thresholds, and lay down Union-level demand-side measures for products from the chemicals industry to promote the production, sales, and use of substances and mixtures of Union origin derived from sustainable carbon sources (i.e., sustainable biomass, waste, and carbon captured from CO₂ emissions).

Third, the IAA would introduce a dedicated approval regime for FDIs in "emerging strategic sectors" (batteries/BESS, electric, hybrid and fuel cell vehicles, solar PV, and critical raw materials) exceeding EUR 100 million and where more than 40% of global manufacturing capacity is held by the investor's home (third) country (inevitably, China quickly comes to mind).

In a nutshell, such investments would require prior approval by a national Investment Authority (or, in some cases, by the Commission directly), could only be cleared if prescribed "value-added" conditions are met, and would be subject to a harmonised notification, review, and enforcement framework, including a 30-day admissibility decision, a 30-day Commission opinion period, and a 60–75 day Investment Authority decision window, extendable by 30 days; where the Investment Authority diverges from a Commission opinion, the decision does not enter into force for a further two months, including penalties for non-compliance.

Approval requires the investment to fulfil at least four of six prescribed value-added conditions. The workforce condition, requiring at least 50% Union workers across all categories, with a five-year non-decrease commitment, is a mandatory standalone prerequisite for approval, in addition to the 4-of-6 requirement. It is not one of the six optional conditions but a separate, absolute requirement without which no approval can be granted.

The scope of sectors and some technical elements could later be adjusted by the Commission through delegated acts, and certain investments (including portfolio investments, services-focused projects, and some treaty-protected investments) would fall outside this regime.

The FDI regime is grounded on Article 207(2) TFEU (common commercial policy) as an additional legal basis alongside Article 114 TFEU. The proposal's own recitals acknowledge that the measures must comply with Articles 49 and 63 TFEU, respectively, freedom of establishment and free movement of capital, and must therefore satisfy the proportionality requirements that the CJEU consistently applies to such restrictions. Given the blunt numerical character of several conditions (49% ownership cap, 50% workforce threshold), proportionality will be a central battleground in the legislative process and any subsequent legal challenge.

Fourth, the Commission proposes the creation of "industrial manufacturing acceleration areas" designed to cluster strategic industrial activities in locations where infrastructure, permitting, and support conditions are optimised. Unlike comparable designation mechanisms under the NZIA, which are optional for Member States, designation under the IAA is mandatory: each Member State must designate at least one such area within 12 months of entry into force.

Each Member State would need to designate at least one such area based on objective criteria, including existing or potential industrial specialisation, energy and infrastructure availability, access to critical raw materials, and skilled workforce potential. Priority should be given to locations outside nature and biodiversity conservation areas and that are not expected to have a significant environmental impact, favouring instead artificial and built surfaces, industrial sites, and brownfield sites.

With each area, Member States must establish an "aggregated baseline permit" that covers the permits and administrative authorisations common to the industrial activities planned there. All necessary environmental and planning assessments are carried out at area level before this baseline permit is issued; project-specific permitting is then limited to residual, installation-specific authorisations, such as permits under the Industrial Emissions Directive and grid connection permits, that fall outside the baseline permit. This upfront area-level clearance is the key operational innovation of the acceleration area regime.

All industrial manufacturing projects located in acceleration areas would be treated as strategic projects for the purposes of the new environmental assessment framework, enabling use of further acceleration tools. Member States would need to take all necessary measures to develop these areas, including facilitating financing, promoting R&D, and conducting reviews of energy and infrastructure needs that must be fed into the network development plans of transmission and distribution system operators.

Importantly, the IAA would also make significant amendments to existing instruments, including the NZIA, the Single Digital Gateway Regulation, and the Construction Products Regulation.

These amendments tighten Union-origin requirements in public procurement, auctions, and support schemes for net-zero technologies (such as BESS, solar PV, heat pumps, wind, nuclear fission, hydrogen, and electrolysers), align digital permitting and data re-use rules, and expand the Commission's powers to adopt and update origin, low-carbon, and labelling requirements.

For certain auctions of specified net-zero technology elements, the NZIA amendment extends cybersecurity-related pre-qualification criteria to 100% of the auctioned volume, including restrictions related to "high-risk suppliers." This goes significantly beyond the NZIA's current cybersecurity framework and has direct implications for supply-chain planning and vendor selection in energy auctions.