The IAA is a follow-up to last year’s Clean Industrial Deal, which we discuss in our briefings, Clean Industrial Deal: Reform of Public Procurement Law, and Clean Industrial Deal: Crucial Role of the Energy Sector.

The IAA sets out measures to:

• streamline permit-granting for “industrial manufacturing projects”, including “energy-intensive industry decarbonisation projects”,
• introduce “Union origin” requirements, low-carbon requirements, or both, to public procurement and public support schemes,
• set conditions on foreign direct investments (“FDIs”) in emerging strategic sectors, and
• require Member States to designate industrial manufacturing acceleration areas to boost industrial activities.

Overall, the IAA is concerned with these areas of the economy (albeit that individual measures are targeted more specifically):

• “industrial manufacturing projects”, which relate to the construction, conversion or extension of an industrial site for carrying out an economic activity listed in NACE Code C (Manufacturing) (except C12). This brings in many industries including the manufacture of food products, beverages, wood, coke and refined petroleum products, chemicals and chemical products, basic pharmaceutical products and pharmaceutical preparations, rubber, plastic, glass, cement, concrete, computer products, and more,
• “energy-intensive industries”, which include, among other things, the manufacture of coke and refined petroleum products; chemical and chemical products (like basic chemicals, fertilisers and nitrogen compounds, plastics, pesticides and paints); rubber and plastic products; non-metallic mineral products (like glass, cement, lime, plaster, bricks and tiles), and basic metals (like iron and steel, aluminium and copper),
• “net-zero technologies” as defined in the Net Zero Industry Act (“NZIA”), which include solar technologies, onshore and offshore renewable technologies, and battery and energy storage technologies, and
• automotive manufacture and the automotive supply chain.

The IAA sets a target to increase the share of manufacturing in EU GDP from 14.3% in 2024 to 20% by 2035.

Permit-granting

Member States would be required to establish a permit-granting procedure based on a single application covering all permits required for industrial manufacturing projects. Member States would designate a competent authority to coordinate the permit granting procedure to ensure the issue of a comprehensive decision.

There would be a single access point for submitting the application. Single access points would use European Business Wallets (to be established under a separate Regulation) to enable interoperability and automated data exchange between competent authorities, re-use of data and documents already held by public authorities, a high level of cybersecurity, and transparency and accountability.

All ‘energy intensive industry decarbonisation projects’ would be subject to the NZIA provisions on streamlining administrative and permit-granting processes. They would also be deemed ‘strategic projects’ for the purposes of Article 14 of a proposal for a Regulation on speeding-up environmental assessment (which provides a toolbox to support faster environmental assessments for strategic sectors or categories).

“Made in EU” and low-carbon requirements

Contracting entities would exclude from access to certain procurement procedures any tenders submitted by economic operators owned or controlled by an entity established in a non-EU country which has not concluded an agreement with the EU guaranteeing such access.

The procurement procedures concerned are those within scope of the EU procurement directives where the contracts, works contracts or work concessions include the procurement of products from ‘energy intensive industries’ (as well as certain procurements concerning vehicles).

In these procurements, contracting authorities would require the following minimum percentage shares:

• for steel intended for use in buildings, infrastructure and vehicles, at least 25% of the total volume would be low-carbon,
• for concrete and mortar intended for use in buildings and infrastructure, at least 5% of the total volume would be low-carbon and of Union origin, and
• for aluminium intended for use in buildings, infrastructure and vehicles, at least 25% of the total volume would be low-carbon and of Union origin.

Content originating in non-EU countries would be capable of satisfying “Union origin” requirements if certain conditions are met (which are intended to satisfy EU commitments under international trade law). However, the Commission would exclude non-EU countries from availing of “Union origin” equivalence in certain circumstances (for example, to avoid dependencies that could threaten the security of supply in the EU of the product in question).

“Low-carbon requirements” would be satisfied for construction products and for other products by compliance with delegated acts made under the Construction Products Regulation and Ecodesign Regulation respectively. For example, concrete would be considered low-carbon where it meets the criteria for “low-carbon concrete” in measures adopted under the Construction Products Regulation.

Similar mechanisms are elaborated for other forms of public intervention, with a particular focus on schemes benefitting households or companies and that primarily aim to support construction or renovation of buildings, infrastructure and the lease and purchase of vehicles.  

Member States may decide not to apply the “Union origin” requirements and low-carbon requirements where certain conditions are met. These broadly relate to lack of suitable tenders, significant delays due to unavailability of components or products, or cost differences reaching set percentage thresholds.

Public procurement requirements under the NZIA

The NZIA introduced requirements for environmental and resilience criteria where contracts concern “net-zero technologies”. The IAA refocuses the application of these provisions on technologies for which procurement at scale is expected to take place. (These include solar, onshore wind and offshore renewables, battery and energy storage, and electricity grid technologies.)

The IAA would introduce “Union origin” mechanisms, similar to those outlined above, to procurements concerning certain “net-zero technologies”. The NZIA would also be amended to provide that all “net-zero technology manufacturing projects” would be deemed “strategic projects” for the purpose of the proposal for a Regulation on speeding-up environmental assessment.

Renewable energy auctions under the NZIA

The NZIA introduced mandatory non-price criteria into renewable energy auctions. The IAA adds to these requirements mainly by:

• extending cybersecurity and data security pre-qualification criteria and applying them to the entire volume of renewable energy auctioned per year (rather than just 30%),
• adding “Union origin” requirements as a pre-qualification or award criteria in auctions for battery energy storage systems, solar PV technologies, electrolysers, and on and offshore wind technologies, and
• increasing the share of auctions covered by the requirements, as well as the cost threshold for opt-out. For example, non-price criteria must currently be applied to at least 30% or 6GW of the volume of renewable energy auctioned per year per Member State. These thresholds would increase to at least 40% or 8GW.

Other forms of public intervention under the NZIA

The NZIA embeds sustainability and resilience contributions in schemes benefitting households, companies and consumers which incentivise the purchase of net-zero technology final products. The IAA brings in cybersecurity and “Union origin” requirements to these forms of public intervention where they relate to battery energy storage systems, solar PV technologies, and hydraulic heat pumps.

“Union origin” requirements and certain cybersecurity requirements are also applied to supports for construction and manufacturing of net-zero final technology products for electrolysers and nuclear power plants.

Conditionality around FDI

New conditions would apply to FDIs exceeding EUR 100 million in the “emerging strategic manufacturing sectors” where more than 40% of the global manufacturing capacity is held by the non-EU country of which the foreign investor is a national or undertaking.

“Emerging strategic manufacturing sectors” include battery technologies, electric vehicles and components related to electrification and digitalisation, and solar PV technologies. There are exceptions to the rules, for example in relation to investments covered by free trade agreements or portfolio investments.

In scope FDIs may be implemented if approved by an Investment Authority designated at Member State level or by the European Commission (in defined circumstances). Approval would be based on fulfilment of at least four out of six “value add” conditions concerned with ownership and control by foreign investors, intellectual property rights, and a minimum threshold for employment of EU workers.

Foreign investors would be required to notify any planned direct investment which would result in control over the EU target or asset. Foreign investors would be considered to have control where the investment constitutes 30% or more share capital or voting rights in a Union target or 30% or more of ownership of a Union asset.

The notification would undergo an assessment by the Investment Authority and/or the European Commission. In certain cases, the FDI could be deemed to have the potential to significantly impact the added value creation in the internal market. The IAA includes monitoring and enforcement provisions which include financial penalties.

Industrial Manufacturing Acceleration Areas

Member States would designate at least one acceleration area to cluster industrial manufacturing projects in one or several of the strategic sectors listed (energy-intensive industries, automotive industry, and net-zero technologies), in accordance with certain factors and requirements set out in the IAA. Member States would be required to implement enabling conditions and permit-granting procedures for these areas.

Penalties

Member States would lay down rules on penalties for infringing the IAA.

Next steps

The European Commission invites feedback on the draft IAA until 6 May 2026: Industrial Accelerator Act – speeding up decarbonisation.

The IAA is a complex legislative initiative which seeks to support the growth of EU industry and decarbonisation while adhering to international trade law and agreements. It will be negotiated by the European Parliament and the Council of the EU before its adoption and entry into force. As a first step, each institution will publish its negotiating mandate. Various Member States are likely to favour a range of approaches, for example in relation to FDI conditionality. 

As Member States and industry currently implement new non-price criteria requirements across renewable energy auctions and various public procurement procedures, it is hoped that the EU co-legislators will consider lessons learned from NZIA implementation, particularly with a view to avoiding unintended barriers to deployment of new infrastructure.