All Eyes On Europe

“Made in Europe” - first information on the impact of the upcoming legislation of the Industrial Accelerator Act

A. Starting point: Net-Zero Industry Act (NZIA)

Since the Net-Zero Industry Act (NZIA) entered into force on 29 June 2024, Chinese and other non-EU manufacturers of net-zero technologies have been watching the European market with growing concern – will market access to Europe now become more difficult?

According to the very latest public information, the planned proposal (scheduled for 28 January 2026) for the Industrial Accelerator Act will shed more light on the matter. The Act is expected to introduce measures for accelerating industrial capacity and decarbonisation in strategic sectors, including: streamlined permitting procedures for industrial and decarbonisation projects, enhanced public procurement requirements favouring EU-origin products, new frameworks for foreign direct investment in strategic sectors as well as designation of industrial acceleration areas to cluster key manufacturing.

In addition to these new provisions, the proposal is expected to amend the NZIA to strengthen Union-origin requirements.

Market Landscape: 

The renewable energy technology market is dominated by non-European companies. In 2023, only 15% of solar module demand was met by domestic EU production, with the majority imported from Asia. Battery technologies show similar patterns, with Chinese imports accounting for around 50%.

NZIA Objectives: 

The NZIA sets an ambitious target: by 2030, the EU aims for domestic production to meet at least 40% of its net-zero technology needs to strengthen European resilience (Article 5 NZIA). Importantly, this does not mean closing the EU market to foreign technologies. 

The Resilience Mechanism:

Beyond accelerating approval procedures and introducing Net-Zero Valleys and a Net-Zero Europe Platform, the NZIA includes provisions on public procurement for net-zero technologies that warrant attention: the resilience mechanism under Article 29 NZIA. 

The NZIA stipulates that when public procurement involves certain net-zero technologies, award criteria must be taken into account to ensure sustainability and resilience, provided the Commission has determined a critical dependency on a third country. A market-dominating position of a third country exists if:

• the proportion of a specific net-zero technology or its main specific components originating in a third country accounts for more than 50% of the supply within the Union, or
• this proportion has increased by at least 10 percentage points on average over two consecutive years and reaches at least 40%.

In such cases, contracting authorities must pursuant to Article 25(7) NZIA ensure that no more than 50% of the value of the specific technology or its main specific components originates from each individual third country, require evidence of compliance upon request, and impose a proportionate charge of at least 10% of the contract value for non-observance.
For auctions and public procurement, resilience becomes a mandatory consideration alongside sustainability and innovation (Articles 26 and 28 NZIA).

Origin Determination:

The NZIA itself does not provide any details on how to determine the country of origin. Instead, it refers to Regulation (EU) No 952/2013 (Union Customs Code), where no specific requirements are laid down, but rather reference is made to the last substantial processing or working – which is assessed on a case-by-case basis. 
These criteria may, according to latest information, gain more clarity with the expected proposal for the Industrial Accelerator Act. Specific requirements may be established for individual net-zero industries to determine when a product qualifies as EU-originated.

B. Up next: Industrial Decarbonisation Accelerator Act (IDAA)

The publication of the Commission’s proposal for the IAA has been postponed – it is now scheduled for 28 January. A crucial date. Because:

Scope:

According to latest public information, the Commission’s proposal for IAA goes significantly beyond initial expectations. Whilst focusing on industrial manufacturing projects, including energy-intensive decarbonisation projects, and relevant downstream sectors, the Regulation pursues ambitious objectives:

• Streamlining permitting procedures for manufacturing and industrial decarbonisation projects
• Establishing industrial acceleration areas to cluster strategic manufacturing
• Creating and protecting European lead markets for low-carbon European products through public procurement and support schemes
• Introducing frameworks for foreign direct investment in emerging key strategic sectors
• Strengthening supply chain resilience, particularly regarding critical raw materials

Key implications for manufacturers

The IAA is expected to introduce measures that may fundamentally reshape market access conditions:

Beyond the NZIA's resilience mechanism, the IAA will establish mandatory Union-origin requirements for public procurement and public support schemes across strategic sectors. This may affect not only net-zero technologies but also energy-intensive industrial products and electric vehicles.

Significant foreign investments in emerging key strategic sectors will be subject to prior approval, with conditions that may include ownership caps, technology transfer requirements, local content obligations, and R&D investment commitments within the EU.

Furthermore, The IAA is expected to broaden the scope of Union-origin requirements under the NZIA  and provide clearer definitions for determining when a product is considered to have EU origin, addressing the current ambiguity in origin determination.

C. Outlook

The NZIA and IAA are two sides of the same coin. The NZIA focuses on building Europe's clean domestic production of key technologies. The IAA extends this "Made in Europe" preference to the decarbonization of energy-intensive industries.

Adaptation is no longer optional – it's essential. The European market isn't closing, but the rules of engagement are fundamentally changing. How foreign companies navigate this new landscape will depend on the IAA's final design. The question is no longer whether Europe will prioritise domestic production in the energy sector, but how far that preference will reach.

Any questions? Please let us know, happy & ready  to help!