On 4 March 2026, the European Commission adopted a legislative proposal aimed at boosting demand for low-carbon technologies and products manufactured in Europe. The Accelerated Industrial Decarbonisation Act implements recommendations from the Draghi Report and is designed to strengthen the EU's industrial base – particularly in the strategic sectors of steel, cement, aluminium, automobiles and net-zero technologies.
At the core of the proposal are targeted and proportionate "Made in Europe" requirements as well as climate-friendliness criteria for public procurement and public funding schemes. The framework created can be extended to additional energy-intensive sectors such as the chemical industry as needed. The stated objective is to increase the share of manufacturing in EU GDP from the current 14.3 per cent (as of 2024) to 20 per cent by 2035.
"Today marks a major step in the renewal of the European economic doctrine so the Union is fit for the 21st century, as recommended by the Draghi report. Facing unprecedented global uncertainty and unfair competition, European industry can count on the provisions of this Act to boost demand and guarantee resilient supply chains in strategic sectors. It will create jobs by directing taxpayers’ money to European production, decreasing our dependencies and enhancing our economic security and sovereignty," says Stéphane Séjourné, Executive Vice-President for Prosperity and Industrial Strategy.
Lead Markets for Low-Carbon Products and "Made in EU"
The act introduces the "Made in EU" principle and a preference for low-carbon solutions in public procurement and funding programmes. This is intended to increase demand for European industrial products – from cement and aluminium to net-zero technologies such as batteries, solar energy, wind power, heat pumps and nuclear energy. For the steel sector, the legislation includes proposals to favour specific low-carbon solutions in order to create targeted market demand. This measure is intended to provide investors with certainty and predictability, promote innovation and make clean steel an integral part of the EU's industrial future.
Conditions for Foreign Direct Investment
Under the new act, the EU remains open to foreign direct investment (FDI). However, for larger investments exceeding EUR 100 million in strategic sectors – including batteries, electric vehicles, photovoltaics and critical raw materials – conditions are introduced where a single third country holds more than 40 per cent of global production capacity. Such investments must create high-quality jobs, promote innovation and growth, and generate real value in the EU, for example through technology and knowledge transfer. It must also be ensured that at least 50 per cent of the associated employment takes place in Europe.
At the same time, the proposal promotes reciprocity in public procurement: countries that grant EU companies access to their markets receive equal treatment. Goods from partner countries with which a free trade agreement or customs union exists are to be treated in the same way as goods originating in the Union.
Simplified Permitting Procedures and Acceleration Zones
As part of the Commission's simplification agenda, permitting procedures for industrial projects are being streamlined and digitalised. Provisions include the establishment of a single digital point of contact with clear deadlines and the principle of tacit approval at the stages of the permitting process for energy-intensive decarbonisation projects.
In addition, the act introduces acceleration zones for decarbonisation. These are intended to enable industrial symbioses and encourage the establishment of project clusters for clean manufacturing. Such clusters facilitate investment in essential energy infrastructure and promote area-wide permits. For projects in these zones, profiles are developed together with investors and the development of required skills is supported.
Next Steps
Before the proposed regulation is adopted and enters into force, it will be discussed by the European Parliament and the Council of the European Union. The proposal was announced in the Clean Industrial Deal and in the Joint Communication on strengthening the EU's economic security.
