In a Nutshell

What is the IAA? 

The EU Industrial Accelerator Act (IAA) is a proposed Regulation aimed at strengthening the competitiveness and accelerating the decarbonisation of EU manufacturing. It specifically targets energy-intensive industries (EIIs), net-zero technology manufacturers, and the automotive sector. 

The IAA seeks to address three main challenges facing EII’s and net-zero technology manufacturing:          

1. The limited market demand for low-carbon industrial products due to high production costs and early-stage investment risks.                                                                                            
2. Supply chain vulnerabilities and international dependence in developing net-zero technologies due to lower production costs and faster industrial scaling in third countries, such as China.  
3. The EU’s lengthy and fragmented permitting procedures that delay investment in clean industry.

How does the IAA work in practice? 

The IAA seeks to address these challenges through three policy mechanisms. Firstly, it seeks to create lead markets for low-carbon materials by introducing minimum low-carbon and Union origin requirements in public procurement and public support schemes from 1 January 2029. The aim is to de-risk investment and create a demand-side drive for low-carbon steel, concrete, aluminium, and selected net-zero technologies.

Secondly, it outlines conditions on large foreign direct investments in emerging strategic sectors where a single third country controls more than 40% of global manufacturing capacity, including batteries, electric vehicles, and solar PV. The aim is to ensure that such investments generate economic value in the EU, including through job creation, innovation, and industrial development. 

Thirdly, it aims to streamline and digitalise permitting for industrial manufacturing projects through a single digital one-stop shop and by extending accelerated permitting to all EII decarbonisation projects. This accelerated permitting was previously only available to net-zero technologies under the Net-Zero Industry Act. 

How does carbon removal fit into the IAA? 

The IAA does not explicitly reference carbon dioxide removal (CDR), failing to distinguish between emissions reductions and carbon removals within its low-carbon material threshold or to include CDR technologies in its lead-market framework. However, the IAA could indirectly enable CDR deployment through a couple of provisions.  

Since this accelerated permitting applies to carbon capture and storage infrastructure, it could also be used for some CDR methods such as bioenergy with carbon capture and storage. Conditions to support the development of CDR hubs could also be facilitated by the IAA’s Industrial Manufacturing Acceleration Areas, which enable geographic clusters to obtain an aggregated permit for industrial activity in the area.

 Additionally, the lead-market provisions for low-carbon concrete could create demand-side opportunities for carbon mineralisation, a method in which CO₂ is permanently embedded into construction materials, if forthcoming EU product definitions recognise these processes. 

What’s on the Horizon

• 4 March 2026: The IAA proposal was published, following postponements from the European Commission. The proposed Regulation will now proceed to the European Parliament and the Council of the European Union for negotiations.  
• 11 March–8 May 2026: The Industrial Decarbonisation Accelerator Act is open for stakeholder feedback following its publication, with input feeding into the upcoming legislative negotiations.

• Q2 2026: The rapporteur in Parliament who will lead the file will likely be assigned in April/May. The European Parliament Legislative Observatory will be regularly updated to include procedural details, namely the committee(s) responsible and the rapporteur once appointed. 

• 2027:  
  • Articles 4 and 5 on permitting provisions apply from one year after entry into force. 
  • Member States must designate at least one Industrial Manufacturing Acceleration Area within 12 months of entry into force. 
  • Member States must designate an Investment Authority for FDI screening within 1 month of entry into force. 
• 1 January 2029: The lead market procurement obligations will apply 

Relevant upcoming initiatives stemming from the CID:

• Q2 2026: Proposal for an Industrial Decarbonisation Bank
• Q4 2026: Revision of Public Procurement Directives to mainstream the use of non-price criteria
• 2026: Launch of TechEU investment programme on scale-ups with the EIB Group and private sector

Deep dive

Lead market for low-carbon materials and emissions accounting

A central feature of the Industrial Accelerator Act is the introduction of demand-side measures, or public procurement, to stimulate markets for selected low-carbon industrial materials. Because public demand creates a market, investments flow into products or technologies that were previously too risky or expensive to purchase, meaning that costs will then fall and the product can eventually compete without public support.

From 1 January 2029, publicly funded construction, infrastructure, and vehicle projects must meet minimum low-carbon material requirements. Steel and concrete are required to be EU-made with minimum low carbon thresholds set at 25%and 5% respectively, and aluminium at 25% with the same EU-made requirements. These mandates will apply to both direct government procurement and publicly subsidised private projects like home renovation schemes. The thresholds have received criticism as being insufficient to drive meaningful market change. The 5% concrete requirement is notably low relative to the other thresholds, with commentators noting that many projects may already meet it without major adjustments.

It’s important to note that low-carbon as it is used in the proposal has not yet been defined for any of these materials in the IAA. Definitions on which products receive greenhouse gas intensity labels, the methodology for calculating emissions, and the performance classes associated with these labels are to be defined in future delegated acts. The Ecodesign for Sustainable Products Regulation (ESPR) will define the low-carbon criteria for steel, and the Construction Products Regulation (CPR) will define low-carbon criteria for construction products including concrete and mortar.

In developing the emissions methodology, the IAA outlines that greenhouse gas intensity must be assessed across the full production chain. The full production chain assessment includes direct emissions from industrial facilities as well as indirect emissions associated with purchased electricity, hydrogen, and heat. In developing the methodology, the Commission is required to draw on existing data and reporting systems under the EU Emissions Trading System and the Carbon Border Adjustment Mechanism. Until the classification frameworks are established, the Commission may introduce voluntary greenhouse gas intensity classification systems for industrial products not yet covered by delegated acts, intended to provide interim market signals. In practice, the procurement obligation cannot be enforced until these definitions are finalised, making the real decarbonisation impact of the lead market contingent on the level of ambition written in the future rules.

The IAA treats steel differently from concrete and aluminium. It has no EU-origin requirement, only a low-carbon threshold, meaning qualifying steel can come from anywhere globally. It also uses a sliding-scale emissions threshold based on recycled scrap content, allowing both primary (blast-furnace) and scrap-based (electric-arc) production routes to participate while still requiring emissions reductions.

CDR at the edges

While the IAA does not contain provisions specifically designed to support CDR, the Regulation establishes procurement rules, product classification systems, and permitting procedures that could interact with carbon removal technologies. The extent of the interaction will largely depend on the methodological choices made in the subsequent implementing acts.

CCS infrastructure at industrial sites qualifies as an EII decarbonisation project, making such projects eligible for additional accelerated permitting provisions extended from the Net-Zero Industry Act. This eligibility could apply to BECCS integrated into industrial processes. Once developed, the emissions accounting methodology will determine how low-carbon products are classified. The IAA requires greenhouse gas intensity to be assessed across the full production chain but does not clarify whether captured and permanently stored CO₂ is credited within a product’s carbon intensity calculation. If it is, BECCS-integrated production could achieve a lower carbon intensity score, improving its competitiveness under the lead market framework.

The framework for low-carbon material classifications also leaves open questions relevant to CDR-integrated materials. The procurement thresholds established by the IAA apply to materials classified as low-carbon, but the technical definitions of these categories will be developed through delegated acts under the ESPR and CPR. These definitions will determine whether production processes that embed carbon within materials, such as mineralised concrete, are recognised within the classification system.