Creating “Lead Markets” through Green Procurement Requirements

The law seeks to stimulate demand for sustainable products through the strategic use of public procurement and state support schemes.

• Sectors Affected: Measures initially focus on energy-intensive industries(steel, cement, aluminum) and net-zero emission technologies(batteries, solar, heat pumps, wind and nuclear).
• Low Carbon Requirements: For public tenders launched from January 2029, minimum quotas of low carbon materials are established: 25% for steel, 25% for aluminum and 5% for cement/concrete.
• Origin requirements (“Made in EU”): Origin criteria are introduced to ensure that public investment benefits the European value chain. In the automotive sector, in order to access incentives, electric vehicles will have to meet a Union content value of at least 70% by 2027 and 75% by 2030.
• Exemption Mechanisms: Authorities may omit these requirements if the cost is disproportionate (increase greater than 25%) or if there are no suppliers available that meet the conditions.

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Carbon Intensity Labeling System

A framework is established to differentiate industrial products according to their greenhouse gas (GHG) emissions.

• Steel Priority: A specific classification system is developed for steel, based on performance classes (A-C) that consider both the primary and secondary production route.
• Administrative Simplification: The methodology will reuse data already validated under the Emissions Trading Scheme (ETS) and the Border Carbon Adjustment Mechanism (CBAM) to avoid duplicate reporting.
• Transparency: Labeling will make it easier for buyers to identify low-carbon products, allowing European companies to monetize their “green premium”.

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Permit Streamlining and Industrial Acceleration Zones

The IAA introduces measures to eliminate bureaucratic bottlenecks that delay industrial projects.

• Digital One-Stop-Shop: Member States must establish a digital single point of access for all permit applications to be handled electronically and interoperably.
• Time Limits: A maximum period of 18 months is imposed for permitting procedures for decarbonization projects in strategic industries.
• Industrial Acceleration Zones: Countries will designate specific areas to cluster industrial activities. These clusters will benefit from:
  • Aggregate baseline permits: Preliminary environmental assessments at the zone level so that individual projects require less paperwork.
  • Infrastructure priority: Priority assessment by DSOs for connection to electricity and hydrogen.
  • Tacit approval: At certain intermediate steps, if the administration does not respond in a timely manner, the proceeding will be considered approved.

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Conditions for Foreign Direct Investment

The EU establishes mandatory conditions for large foreign investments that may affect the single market in strategic sectors.

• Application Thresholds: Applies to investments in excess of EUR 100 million from investors from countries controlling more than 40% of global manufacturing capacity in sectors such as batteries, solar or critical raw materials.
• Mandatory Conditions (must meet at least 4 out of 6):

• • Control limit: The investor may not own more than 49% of the capital or voting rights.
  • Joint Ventures: Obligation to associate with Union entities with equal participation in management.
  • Technology transfer: Intellectual property license agreements in favor of the European entity.
  • Investment in R&D: Allocate at least 1% of gross revenues annually to research and development within the Union.
  • Local employment: Ensure that at least 50% of the workforce are Union workers at all levels, including management positions.
  • Supply chain: Sourcing at least 30% of European inputs for the manufacturing activity.

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SME Support and Horizontal Measures

The regulations include safeguards to mitigate the administrative burden on small and medium-sized companies.

• Simplification in Construction: In the construction sector, micro and small businesses will be able to demonstrate compliance with low carbon requirements through self-declarations, reducing certification costs.
• Digital Savings: It is estimated that the digitization of permit processes will generate net savings for SMEs of approximately 26.86 million euros per year.
• Review Clause: The Commission will evaluate the effectiveness of these measures three years after their entry into force, with an in-depth review after five years.

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The Industrial Accelerator Act (IAA) is currently in its initial stage of legislative processing and, therefore, is not yet implemented.

• Current status: Proposal adopted. The European Commission formally adopted the proposal on March 4, 2026. This means that the legal text has already been drafted and officially presented by the executive arm of the European Union.
• Next steps: Negotiation. The proposal must now be negotiated and approved by both the European Parliament and the Council of the European Union (where member state governments are represented) before it can become law and enter into force.

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Planned implementation schedule

Although the law will be passed soon, its implementation will be staggered to allow the industry to adapt:

• General entry into force: The Regulation is expected to enter into force in 2027.
• Requirements for vehicles: Union certifications of origin will begin to apply six months after entry into force.
• Digitalization and permitting: Measures on digital one-stop shops and permitting procedures will be implemented one year after the law takes effect.
• Foreign Investment: Investment authorities must be designated in the first month after entry into force, but mandatory conditions for investors will start to apply 12 months later.
• Steel, cement and aluminum procurement: Low carbon and European origin requirements for these specific sectors are foreseen for tenders launched on or after January 1, 2029.