The EU Industrial Accelerator Act: takeaways for public procurement

Energy-intensive products and EVs: made ‘green’ in the EU

On 4 March, the European Commission adopted its highly anticipated proposal for a regulation establishing a framework of measures for accelerating industrial capacity and decarbonisation (IAA or Industrial Accelerator Act), see the press release here.

The IAA aims to maximise the quality and benefits of foreign investment in the EU and support lead markets for ‘made in the EU’ and low carbon products. According to the Commission, the proposal will also reduce the administrative burden for companies, resulting in a one-off net reduction of around EUR 240 million in terms of administrative burden for businesses.

Despite these objectives, the IAA contains provisions that will make both foreign investments and public procurement harder for businesses. This article focuses on the impact on public procurement. The takeaways for foreign investments will follow in a separate publication.

Public procurement as a tool for climate and industrial policy

According to the Commission’s proposal, the strategic use of public intervention is essential to prevent critical dependencies in the EU, in particular because public contracts contribute up to 15% of the EU’s GDP. Public authorities and entities must therefore ensure that public contracts and public support schemes foster economic security and resilience of supply chains.

Public contracts and support schemes are also important demand-side measures that can help the EU achieve its net zero objectives. Against that background, the IAA proposal introduces minimum requirements relating to EU origin (“made in Europe”) and low carbon production for certain products used in public contracts and public support schemes.

This approach reflects a broader policy trend of integrating non-economic policy goals into the public procurement framework, and is in line with the upcoming Public Procurement Act, which is currently under discussion within the Commission (see our event on this topic here).

The Commission describes the relation between both instruments as follows: while the Industrial Accelerator Act establishes the framework for what ‘Made in Europe’ procurement entails, the forthcoming revision of the public procurement legal framework will clarify how such procurement is to be carried out.

Minimum requirements for energy‑intensive products and EVs

The most significant intervention in the procurement framework is the introduction of mandatory minimum requirements for certain energy-intensive products and electric vehicles that are the subject of a public contract or benefit from public support.

The proposal covers in particular:

• Steel
• Concrete and mortar
• Aluminium
• Certain electric vehicles

From 2029 onwards, contracting authorities and entities should exclude offers that fail to meet the following minimum requirements:

• Steel products used in civil buildings, infrastructure and motor vehicles: at least 25% of the total volume must be low carbon.
• Concrete and mortar products used in civil buildings and infrastructure: at least 5% of the total volume must be low carbon and of EU origin.
• Aluminium products used in civil buildings, infrastructure and motor vehicles: at least 25% of the total volume must be low carbon and of EU origin.

Whether or not a product is “low carbon” should be determined in accordance with existing EU legislation, in particular the Construction Products Regulation and the Ecodesign for Sustainable Products Regulation. The Commission is also empowered to adopt additional voluntary classification systems for low carbon products.

In addition, contracting authorities and entities should also exclude offers for a public contract to lease, purchase, rent, and hire-purchase certain electric vehicles, or to be used in services for the public authority that do not meet the EU origin minimum requirements for the assembly, components, batteries, powertrains and electronics of the vehicle. Derogations apply, however, for small electric vehicles.

Exceptions and verification

Public authorities can only derogate from the minimum requirements in limited situations, namely if:

• only one economic operator exists that can supply the products and no reasonable alternative exists,
• no suitable tenders were submitted,
• applying the requirements would result in disproportionate costs, or
• a technical incompatibility would arise.

To reduce the administrative burden on contracting authorities and businesses, tenderers must prove that they meet the minimum requirements by submitting a self-declaration or an equivalent document, which could include certification or a label received under other EU legislation. However, the IAA proposal does not determine the consequences of non-compliance for tenderers or contracting authorities.

In practice, contracting authorities are likely to require additional verification in order to avoid legal risks, which may significantly increase the administrative burden for both authorities and businesses.

Added value or added paperwork?

If turned into law, the proposal for an Industrial Accelerator Act marks a shift in how the EU intends to safeguard industrial competitiveness, secure supply chains, and channel foreign investment toward its strategic priorities. By coupling stringent low carbon and EU‑origin requirements in public procurement with a far more demanding screening regime for high‑value foreign investments, the IAA proposal creates both new opportunities and notable compliance challenges for businesses operating in energy‑intensive and emerging strategic sectors.

While the Commission aims to stimulate innovation, resilience, and social stability within the EU, the practical impact of these measures, particularly the strict approval conditions and expanded monitoring obligations may deter certain investors and increase administrative burdens for companies and contracting authorities.

Before the IAA proposal becomes law, however, it must be approved by the Council and the European Parliament. After that, member states must implement the adopted regulation to make sure that their legislation is compliant. As the legislative process evolves, companies should closely monitor how member states implement the IAA, assess their exposure to the new requirements, and prepare for a more interventionist and security‑focused industrial policy landscape within the EU. 

If you have any questions about how the Industrial Accelerator Act may affect your organisation, please reach out to one of our lawyers below.