EU Launches Industrial Accelerator Act to Double Manufacturing Share by 2035

“Buy European”, “Made in Europe”: The European Commission has presented the Industrial Accelerator Act (IAA), a legislative proposal to strengthen the European industrial base. The law is intended to promote manufacturing, support business growth, and create jobs.

The goal is to increase the share of manufacturing in EU GDP from the current 14.3 percent to 20 percent by 2035. The proposal follows the recommendations of the Draghi Report on EU competitiveness and the Commission’s policy guidelines.

Core Elements of the Law

The IAA is built on three central pillars: First, public procurement and incentives are to boost demand for low-carbon and European-made products as well as net-zero technologies. Second, investments are to be accelerated through faster and digitalized permit procedures. Third, conditions for large foreign direct investments are being introduced to ensure they create added value for the EU.

The law focuses on strategically important sectors: energy-intensive industries such as steel, cement, and aluminum; net-zero technologies such as batteries, photovoltaics, heat pumps, and wind power; and the automotive value chain. For these areas, “Made in EU” requirements and low-carbon standards are being introduced when they are the subject of public contracts, auctions, or support schemes.

Expected Benefits

The Commission forecasts significant economic effects. Measures to boost low-carbon demand could generate added value of over 600 million euros in the steel, aluminum, and cement industries by 2030 and up to 10.5 billion euros in the automotive value chain. The law is expected to create tens of thousands of jobs, including 85,000 in battery projects and 58,000 in solar production. Digitalization of permit procedures is expected to result in administrative savings of up to 240 million euros.

From an environmental perspective, the Commission expects savings of 30.58 million tons of CO2 in energy-intensive industries, batteries, and vehicle components. Accelerated permit procedures are intended to advance decarbonization projects in a sector that accounts for 22.5 percent of the EU’s total greenhouse gas emissions.

Permit Procedures and Industrial Acceleration Areas

A central element of the IAA is the complete digitalization of permit procedures for industrial manufacturing projects. Clear deadlines and single points of contact are to accelerate decarbonization investments. For specific projects, a maximum deadline of 18 months applies. Member States are to designate industrial acceleration areas where projects benefit from faster procedures, better coordination, and improved access to infrastructure and financing.

Regulations for Foreign Investment

For foreign direct investments exceeding 100 million euros from companies in countries that hold more than 40 percent of global production capacity for electric vehicles, batteries, solar energy, and critical raw materials, conditions are being introduced. These include EU majority ownership, technology transfer, integration into EU value chains, and job creation. The Commission emphasizes that these measures complement the existing foreign direct investment review framework and focus on economic impacts, while FDI review addresses national security risks.

Trade Union Criticism: Demand for Binding Social Standards

Wolfgang Katzian, President of the Austrian Trade Union Federation (ÖGB) and the European Trade Union Confederation (ETUC), welcomes the proposal in principle as an “important impetus for active industrial policy”. However, the concrete implementation is crucial.

“‘Made in Europe’ must go hand in hand with high-quality jobs. Support must not be granted unconditionally. It must be tied to binding and verifiable conditions, such as location guarantees, the securing and expansion of jobs, accompanying qualification and further training measures, and consistent compliance with labor law standards.”

Katzian also criticizes the planned expansion to EU free trade partners. “Made in Europe” must remain limited to the European Economic Area and must not become “Made with Europe”. An expansion would undermine the core of the initiative, the strengthening of European value creation. The ÖGB also calls for the establishment of a permanent EU investment fund modeled on the Recovery and Resilience Facility to create greater budgetary scope for future investments.

Business Criticism: Bureaucracy Instead of a Breakthrough

Volker Treier, Head of Foreign Trade at the German Chamber of Industry and Commerce (DIHK), offers sharp criticism of the IAA approach. German industry needs a signal that doing business in Europe will become simpler and more cost-effective for everyone. Sector-specific and granular approaches that bring bureaucracy and protectionism are not the necessary breakthrough.

“The Industrial Accelerator Act instead interferes with business decisions and sends the wrong trade policy message to the world. Anyone who wants to strengthen Europe must not offend important partners.”

Treier criticizes the fact that there is no noticeable relief for the broad business community. Instead of consistently reducing bureaucracy, new hurdles threaten to emerge in public procurement and support instruments. Additional requirements, far-reaching proof of origin, and high standards for so-called lead markets burden small and medium-sized enterprises in particular.

Outlook

The Industrial Accelerator Act must now go through the European legislative process. Both trade unions and business associations have announced they will actively participate in the process. While the Commission sees the IAA as a necessary response to geopolitical challenges and unfair market distortions, critics are calling for a design that on the one hand secures social standards and on the other hand reduces rather than increases bureaucracy.