EU Proposes Industrial Accelerator Act for Public Procurement and Funding

JD Supra Trade Law

Published March 4th, 2026

Detected March 10th, 2026

Summary

The European Commission has proposed the Industrial Accelerator Act (IAA), which would introduce EU origin and low-carbon content requirements for public procurement and public funding. The proposal aims to boost the EU's manufacturing share and includes conditions for foreign direct investments in key sectors.

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What changed

The European Commission has proposed the Industrial Accelerator Act (IAA), a new regulation designed to bolster the EU's industrial competitiveness by making European origin and low-carbon content formal criteria for accessing public procurement and funding. Key provisions include origin and low-carbon requirements for materials like steel, concrete, and aluminum in construction, as well as for net-zero technologies and vehicles. The IAA also introduces conditions for foreign direct investments exceeding EUR 100 million in specific sectors, mandating criteria such as a minimum of 50% EU workforce.

Companies involved in construction, infrastructure, and manufacturing of net-zero technologies and vehicles should assess how these proposed origin and low-carbon criteria impact their eligibility for public contracts and funding. Non-EU investors considering significant investments in battery, electric vehicle, solar PV, or critical raw materials sectors must pay close attention to the new FDI conditions, particularly the workforce requirement. The proposal's compatibility with existing WTO commitments and trade agreements remains an open question, and companies with cross-border structures should monitor its development closely.

What to do next

Assess eligibility for public procurement and funding under proposed EU origin and low-carbon criteria.
Review EU manufacturing footprint against Union origin requirements for net-zero technologies and vehicles.
Evaluate foreign direct investment structures against new conditions, including workforce requirements.

Source document (simplified)

March 9, 2026

EU Industrial Accelerator Act: What Companies Need to Know

Dr. Jürgen Beninca, Sarah Blazek, Dr. Sarah Jabri, Armelle Sandrin-Deforge, Bijan Tavakoli, Kevin Wilcock Jones Day + Follow Contact LinkedIn Facebook X Send Embed

On 4 March 2026, the European Commission proposed a Regulation that would, for the first time, make European origin and low-carbon content formal conditions for access to public procurement and public funding across major industrial sectors. The proposal, known as the Industrial Accelerator Act (IAA), is part of the EU's Clean Industrial Deal and draws on recommendations in the Draghi report on EU competitiveness. Its central ambition is to reverse manufacturing's declining share of EU GDP from approximately 14% today to 20% by 2035.

Key features

The IAA introduces EU origin and/or low-carbon requirements in public procurement and public support schemes, varying by sector. For steel, concrete and aluminum used in construction, infrastructure and transport, the proposal establishes low-carbon requirements and, for concrete and aluminum, Union origin requirements. Union origin requirements also apply to net-zero technologies, including batteries, solar PV, heat pumps, wind turbines, hydrogen electrolysers and nuclear technologies, and for vehicles.

The proposal also conditions certain foreign direct investments in four sectors: battery technologies, electric vehicles, solar PV, and critical raw materials. Investments exceeding EUR 100 million where a single third country holds more than 40% of global manufacturing capacity must satisfy at least four of six prescribed conditions covering joint ventures, technology transfer, R&D and local sourcing. A mandatory condition requires at least 50% of the workforce to be EU workers.

The IAA additionally introduces a digital permitting access point and Industrial Manufacturing Acceleration Areas offering streamlined permitting and investor support.

Trade law compatibility

The origin preferences sit in potential tension with the EU's commitments under the WTO Government Procurement Agreement. The FDI conditions chapter raises separate questions under bilateral investment treaties and WTO rules on trade-related investment measures. Companies with cross-border structures should treat compatibility as an open question at this stage.

State aid

The IAA offers companies new meaningful opportunities to access expanded public support schemes and strengthen their position in emerging EU low‑carbon and Union‑origin value chains. At the same time, key state‑aid parameters may not yet be calibrated with the clarity companies need, creating the potential for regulatory uncertainty. This is particularly relevant for third‑country investors, who face both enhanced access prospects and heightened compliance risks as the framework evolves.

Implications for companies

Companies in construction and infrastructure supply chains relying on non-EU steel, concrete or aluminium should assess procurement eligibility under the proposed origin and low-carbon criteria. Foreign-owned manufacturers in the battery, solar PV and electric vehicle sectors should review their EU manufacturing footprint against the Union origin requirements. Non-EU investors considering investments above EUR 100 million in the four covered sectors should note that the mandatory 50% EU workforce condition represents a constraint that could require early attention in investment structuring.

Next steps

The proposal will be negotiated by the European Parliament and Council. Discussions are likely to focus on the scope of origin preferences, trade law compatibility and administrative burden. Given the novelty of some mechanisms, significant changes during the legislative process remain possible.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.
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