With the Industrial Accelerator Act (IAA), the European Commission is, for the first time, proposing EU-wide local-content and low-carbon requirements for national procurement and subsidy schemes. Done right, it could become one of Europe’s most consequential industrial-policy initiatives in years. Yet in its current form, the proposal risks becoming a paradigm shift on paper with little economic impact in practice. In most sectors, the proposed rules would apply to only a small share of demand, while broad exemptions could leave implementation largely at the discretion of member states. A more effective compromise remains within reach. Negotiators should keep Buy European rules as open as possible to trade partners while strengthening guardrails against circumvention. At the same time, local-content and low-carbon requirements need enough bite to incentivise manufacturing investment and supply-chain diversification.
1. Introduction
The Industrial Accelerator Act (IAA) could become a notable shift in EU industrial policy. For the first time, the European Commission is proposing EU-wide local-content and low-carbon requirements for national procurement and subsidy schemes. In sectors deemed strategic – electric vehicles, clean technologies and energy-intensive industries – governments across the bloc would increasingly be required to make important chunks of public spending conditional on low-carbon production in Europe or selected trading partners.
The timing is hardly accidental. European industry is grappling with weak domestic demand while facing intense, state-backed competition from China. In that context, the IAA could prove one of the EU’s more astute industrial-policy instruments. Rather than funnelling subsidies into national champions, coordinated “Buy European” rules would seek to create demand for cleaner, European-made products across the single market. That could provide a badly needed boost to sectors central to Europe’s competitiveness and climate transition – without fuelling subsidy races or distorting competition within the bloc.
Yet the EU risks squandering the opportunity. From the outset, the proposal has been pulled in opposing directions. France and like-minded countries have pushed for sweeping Buy European rules that would sharply limit access for foreign producers. Others remain reluctant. While almost all governments now have voiced their support of the IAA in principle, a number of countries – including Germany – still seek to narrow the IAA’s scope wherever possible. The result is a Commission proposal that sits awkwardly between these two camps: What looks like a paradigm shift on paper is unlikely to matter much in practice.
New estimates in this paper suggest that the economic impact of the current proposal would be limited. In many sectors, the proposed local-content and low-carbon requirements would apply to only a narrow slice of demand, making them unlikely to shape investment decisions. At the same time, broad exemptions would leave member states considerable discretion over whether the rules are applied, risking a patchwork of national approaches too fragmented to influence production in a meaningful way. The outcome would be the worst kind of Brussels compromise: new reporting requirements for firms, fresh administrative burdens for governments, possible diplomatic friction with trading partners and little economic gain.
Yet a smarter compromise remains well within reach if negotiations converge around two principles:
First, proponents of stronger Buy European rules will need to accept that blanketly excluding trade partners from the outset is neither politically feasible nor economically wise. In most sectors covered by the IAA, imports are concentrated among a small number of countries, and local-content rules should remain open to many of them in order to preserve supply chains and maintain competitive pressure on domestic producers. The real challenge is not openness itself but preventing it from becoming a back door for Chinese content to benefit from European support. That risk can be managed by strengthening the Commission’s proposed safeguards.
Second, sceptics seeking to narrow the IAA’s scope should recognise that half-hearted Buy European rules combine the worst of all worlds. Where the IAA applies, it must bite. Negotiations should focus on ensuring that local-content and low-carbon requirements have sufficient scale and fewer loopholes to shape investment decisions.
2. How the IAA’s Buy European rules would work
The IAA is designed to bolster industrial manufacturing in sectors central to Europe’s clean transition. It includes faster permitting for industrial projects and new conditions on foreign investment in batteries, electric vehicles, solar photovoltaics and critical raw materials. Its most consequential innovation, however, lies in its proposed provision for local content and low-carbon products.
At its core, this mechanism is simple. Whenever EU member state governments spend public money in selected sectors – through procurement, subsidy schemes or auctions – products would need to meet “Union-origin” requirements, low-carbon standards or both. The precise rules vary across sectors and instruments (see Table 1), but the underlying logic is the same: Access to public spending would increasingly depend on factors such as local assembly, the sourcing of key components in Europe, or – in the case of energy-intensive industry – low-emission production methods.
Table 1: Energy-Intensive Industries: Buy European and Low-Carbon Provisions
Table 2: Clean Tech and EVs
The proposal targets a select group of sectors that the Commission considers critical to Europe’s clean transition. These include energy-intensive industries such as steel, aluminium and cement, as well as clean technologies including batteries, wind equipment, solar photovoltaics, electrolysers and heat pumps. Most consequentially, the proposal would also reshape public support for electric vehicles.
Electric vehicles offer a good illustration of how the mechanism would work. Cars would qualify for public support only if they are assembled in the EU, source key battery components locally and meet a 70% local value-added threshold. Crucially, the rules would extend beyond purchase subsidies for households to tax incentives for corporate fleets, through which roughly two-thirds of new cars enter European markets.
Figure 1: Countries that have an FTA with the EU or are parties to the WTO-GPA
Sources: WTO and EU Commission
Importantly, the Union-origin requirement would not limit access to public support to production within EU member states. Instead, the Commission has opted for a broad definition of “Union”. Countries linked to the EU through customs unions or free-trade agreements would generally qualify for auctions and subsidy schemes, while procurement rules would also extend to countries covered by the WTO Government Procurement Agreement (GPA). Taken together, the regime could apply to more than 80 partner countries (see Figure 1).
The list of eligible countries, however, would not be fixed. The Commission would retain the power to declare specific trade partners – or individual sectors within them – ineligible if they do not grant European firms reciprocal access to their own subsidy schemes and public procurement, or if their inclusion is deemed to pose risks to supply-chain security in the EU. Commissioner Séjourné has already suggested that the final list could be considerably smaller than the full set of eligible trade partners.
Governments may also choose not to apply the rules at all if the costs become too steep. Thresholds for cost increases - beyond which administrations can waive the IAA requirements - are set to 20% in auctions, 25% in public procurement and 30% in subsidy schemes. Further escape clauses apply when compliant products are unavailable or competition among suppliers is judged too weak.
Table 3: Derogation clauses for low-carbon and Union-origin provisions
Finally, most provisions would take years to take effect. While EV rules would begin six months after the Act enters into force, batteries would follow only after a year. Low-carbon requirements for steel, aluminium and cement, meanwhile, would not start to bind until several years later (see Figure 2). Effects in these sectors will be slower still, since they depend heavily on public procurement. Long lags between planning, tendering and actual orders mean that any impact on firms’ order books may take years to emerge.
Figure 2: IAA Timeline
3. Applying low carbon and local content rules makes good economic sense
In principle, the Commission’s proposed approach is a smart one, for two reasons. First, it proposes an industrial-policy instrument that is particularly well suited to the EU context. Second, it seeks to deploy it in sectors that are under pressure and in which policy support still stands a plausible chance of success.
Buy European rules are a smart addition to the EU’s industrial policy kit
Many industrial-policy instruments work by directing public support to individual firms. In some cases, governments effectively “pick winners” or bail out companies under pressure. Better-designed schemes allocate support through auctions or competitive calls, but even these have drawbacks. Competition for funding is often limited, implementation slow and outcomes susceptible to political pressure.
Local-content and low-carbon rules partly avoid these pitfalls by working through the demand side. Rather than subsidising firms directly, they shape the market in which companies compete. Firms benefiting from procurement or subsidy schemes would still need to win customers and contracts – but within conditions that favour European and low-carbon production.
This makes the instrument particularly attractive in an EU context. First, it does not require large amounts of new money at the European level. Many member states already subsidise electric vehicles and clean technologies, while governments are major purchasers of energy-intensive materials. Redirecting existing procurement and subsidies toward European and low-carbon production could therefore strengthen strategic industries without requiring fresh resources from the EU’s notoriously limited budget.
Second, harmonised Buy European rules are comparatively single-market friendly. Rather than encouraging governments to back national champions, they remain open to firms across the EU. German subsidies and procurement rules would benefit French producers, and vice versa. A common framework could therefore reduce subsidy fragmentation, sharpen competition within Europe and strengthen industry without splintering the single market.
The proposal targets sectors where Buy European and Low Carbon can actually help
The proposed sectoral scope of the instrument also makes sense. The industries targeted by the IAA are under intense pressure. Demand at home is weak. European car sales remain around 2 million below pre-pandemic levels, while EV uptake has been slower than expected, at 2.5 million EVs below the 2025 target. More broadly, the deployment of clean technologies is losing momentum as political uncertainty increasingly clouds Europe’s climate ambitions; the installation rate for wind, for instance, would have to double to reach 2030 targets. Similarly, demand for low-carbon steel and cement remains too weak to provide predictable markets for green investment in the sector.
Figure 3: Clean Tech Exports
Source: Comext. HS codes: EVs: 8703.60, 8703.70, 8703.80, 8704.60; batteries: 8507.60, 8507.80, 8507.90; solar: 8541.42, 8541.43; wind: 8502.31; heat pumps: 8418.61; electroplating/electrolysis equipment: 8543.30 (substantially broader than electrolysers; displayed as upper bound).
Moreover, what demand remains is increasingly being captured by heavily subsidised Chinese rivals. Despite anti-subsidy tariffs imposed on Chinese EVs in 2024, imports have continued to rise. In particular, hybrid vehicles, which fall outside the tariffs’ scope, have surged, helping push Chinese car exports to Europe above 1.2 million vehicles a year. Chinese firms are also making inroads into clean technologies in which Europe still retains an edge. In wind energy, for instance, 8 of the 10 largest turbine manufacturers are now Chinese, and producing a heat pump in China costs only half as much as in the EU. This reflects not only genuine gains in scale and innovation, but also extensive state support. OECD estimates suggest Chinese manufacturers in key sectors covered by the IAA receive three to eight times more government support than OECD rivals, with subsidies accounting for around 60% of gains in global market share over the past two decades.
There are good reasons for policymakers not to sit idly by and let these industries crumble under the current economic pressures. Automotive remains one of Europe’s largest industrial ecosystems, employing more than 10 million people and accounting for roughly a third of private R&D spending. Clean technologies matter not only for competitiveness but also for reducing strategic dependencies during the energy transition. Supporting the decarbonisation of steel, aluminium and cement, meanwhile, is critical for lowering industrial emissions and reaching the EU’s climate goals.
Nor are these industries lost causes. For most of the sectors targeted by the IAA, Europe is still far from out of the race. The EU remains the world’s second-largest producer of electric vehicles and exporter of low-carbon goods, comfortably ahead of competitors such as the US and South Korea (see Figure 3). In energy-intensive industries, Europe continues to specialise in high-value production, such as specialty steels, and leads global investment in technologies to decarbonise steel, aluminium and cement (Figure 4). While higher energy prices compared to the rest of the world will inevitably lead to some reallocation of production outside of Europe, especially for highly energy intensive inputs, the EU could build an important edge in low carbon solutions for the sector. There are thus good reasons for governments to intervene in most of the sectors covered by the IAA. Harmonised Buy European rules provide a way to do this through a coordinated strategy rather than a patchwork of national subsidies and firm-specific bailouts.
Figure 4: Clean project pipeline (final investment decisions, in MT capacity)
Source: E3G
Some critics have nonetheless faulted the proposal for focusing too heavily on incumbent industries. Indeed, cars and energy-intensive industries are economically important today but are neither fast-growth sectors nor pushing productivity growth at Europe’s technological frontier. Sectors such as robotics, quantum technologies and advanced digital industries were featured in earlier drafts only to disappear from the final proposal, and some are calling for including them again.
Yet this criticism overlooks the inherent limitations of the tools offered under the IAA. By design, it can shape only sectors in which governments cover a meaningful share of demand – through procurement, public auctions or subsidy schemes. That is true for electric vehicles, energy-intensive materials and parts of clean-tech deployment, and in the future possibly also in sectors like cloud computing. But in most frontier industries, from AI to quantum computing, public demand remains too limited for local-content rules to meaningfully shape markets. Such sectors may well warrant industrial-policy support – but through different instruments.
4. In its current form, the economic impact of the IAA will be limited
The Commission is thus proposing a sensible addition to Europe’s industrial-policy toolkit. The problem is not the direction of travel. The trouble is that, in its current form, the economic impact of the rules is likely to be limited.
The IAA will only cover a small share of demand
The market impact of the IAA depends on three factors: how much demand is covered by procurement, auctions or subsidy schemes; how stringent the proposed local-content and low-carbon requirements are; and how much European production already meets them. Taken together, these factors suggest that, in many sectors, the proposal would shape only a small share of demand (Figure 5).
Electric vehicles are the one sector in which the IAA could materially shift market outcomes. Proposed local-content requirements for assembly, battery components and value creation would apply to roughly 80% of the market, largely because company-car tax breaks and subsidy schemes account for around 60% of new registrations each year.
In most other sectors, however, the current proposal would touch only a sliver of the market. Cement illustrates the problem. Just 5% of publicly procured cement would need to satisfy Union-origin and low-carbon criteria. Since public procurement accounts for roughly 30% of demand, the IAA would ultimately apply to less than 2% of the market via procurement, including a small fraction from renovation subsidy schemes. In practice, the impact on additional investments for clean cement production facilities could be smaller still. Low-carbon cement production is already expected to exceed the threshold, while almost all cement is produced domestically, limiting the bite of Union-origin rules.
Steel and aluminium would not fare much differently. Although producers would benefit not only from procurement rules but also from requirements that subsidised vehicles increasingly must use green inputs, the share of the market covered would still remain below 5%.
Wind equipment offers another version of the same problem. Proposed local-content rules would apply to 40% of auctioned volumes, while auctions account for roughly 60% of deployment. Yet European wind parks already rely overwhelmingly on European-made equipment. The proposal would therefore function less as a tool to spur new production than as a defensive backstop against future Chinese gains. But even here the threshold is too low. If the European share of wind equipment were to fall to 40%, Europe would already have suffered a major industrial failure.
Figure 5: How much of the market the IAA provisions would reach, and the share already IAA-compliant
Note: The chart shows the approximate percentage of each product’s annual EU-27 market touched by four channels of the Industrial Accelerator Act (IAA): public procurement, auctions, support schemes, and manufacturing/project support. Thin grey bars show the share already meeting the Union-origin or low-carbon provision (or are expected to meet them in the next few years), even absent the IAA. For Union-origin, the chart considers EU-27 production only (i.e. excluding FTA/GPA partners treated as Union-origin). Not enough data is available for electrolysers, heat pumps and nuclear. All assumptions, derivations and sources can be found in the annex online.
Broad exemptions will leave the application mostly in the hands of member states
Broad exemptions could weaken the IAA’s impact further. The Commission’s proposal allows member states to waive local-content and low-carbon requirements when compliance pushes up costs too far. The problem is that the thresholds are currently set in ways that in many cases would make the IAA largely optional in practice.
Public-procurement exemptions illustrate the problem. Under the Commission’s proposal, governments could opt out once Union-origin or low-carbon requirements raise product costs by more than 25%.* The Commission proposal is ambiguous on whether costs are to be assessed at product or project level in procurement. To illustrate the difference: If a local government procures the construction of a public building, the cost increase for the entire project due to IAA-compliance would typically not exceed 1%. On the other hand, the cost increase at component level – such as using clean steel beams or clean steel bars instead of their fossil alternatives for instance – would typically exceed the 25% threshold. Since green steel and cement, for example, still carry price premiums well above that threshold, the IAA would often remain optional in practice. The same applies to EV subsidies and tax incentives. Union-origin requirements would bind only if non-compliant models are less than 30% cheaper. Given the price advantage of many Chinese competitors – even after absorbing current EU countervailing duties on Chinese EVs – that threshold could often be breached, leaving governments free to opt out.
Auctions for wind, BESS and solar are the one exception. Here, local-content rules would remain comparatively binding, since exemptions apply only if they raise overall project costs by more than 20%. Because costs are assessed at project rather than component level, even large price differences for individual products may not be enough to qualify. In solar parks, for example, panels and inverters account for only around a third of total costs. Even if Chinese components were 50% cheaper, the exemption threshold might still not be reached.
Overall, however, the proposal leaves national and local administrations ample room to sidestep IAA provisions. The result could be patchy implementation, with some regions applying the rules in some sectors while others largely opt out. That risks undermining one of the IAA’s main strengths: replacing fragmented national approaches with a coordinated European framework large enough to shape investment decisions.
5. How to make the IAA matter
The IAA risks becoming an odd piece of EU economic policy: a paradigm shift in principle, but a paper tiger in practice. Harmonised Buy European rules would mark a genuine break with Europe’s traditional approach to industrial policy. Properly designed, they could become a sensible addition to the EU’s industrial-policy toolkit and give a much-needed boost to industries squeezed by weak domestic demand and mounting Chinese competition. Yet in its current form, the proposal is likely to leave barely an economic trace across most of the sectors it covers.
This tension is no accident. It reflects the fact that the EU remains divided over what the IAA should be. Under pressure from industrial decline, most member states are now on the record supporting at least the broader direction of the legislation. Yet the opening weeks of negotiations suggest deep disagreements over what that should mean in practice. France and others favour broader sectoral coverage and tougher restrictions on foreign suppliers. Germany and several allies, by contrast, are pushing for wider exemptions, lighter local-content rules or the exclusion of procurement altogether.
The real risk is that negotiations converge on the worst of all worlds. Even weak Buy European rules would impose real costs. Firms would face new reporting and labelling requirements. Governments would have to redesign procurement and subsidy schemes. And EU-wide Buy European rules would inevitably strain relations with some trade partners. If the economic impact remains modest, Europe will incur these costs without much to show for them in terms of resilience or competitiveness.
To avoid an outcome that is politically cumbersome but economically toothless, all sides will need to move. A sensible compromise remains well within reach if negotiations converge around two principles. First, proponents of stronger Buy European rules should accept a regime that remains as open as possible to trade partners, provided circumvention risks are credibly contained. In return, sceptics should recognise that if Buy European rules are to exist at all, they must bite where they apply.
Focus on circumvention risks, not trade partner lists
Much of the political debate has focused on whether all of the EU’s free-trade partners should qualify as Union-origin producers, or whether eligibility should be restricted to the EU27 and perhaps a small circle of trusted partners. The issue is set to become one of the main fault lines in the negotiations. It is also the wrong issue to get bogged down in.
First, the debate over whether the initial list of eligible countries should include 20, 40 or 80 members is economically overblown. In the sectors covered by the IAA, trade is already highly concentrated. The EU imports not from the full universe of free-trade partners, but from a small number of countries. In electric vehicles, for example, 86% of non-Chinese imports come from just five partners (see Figure 6). In most clean technologies, the list of economically relevant suppliers is not much longer.
Most of these countries are partners the EU would want to include in the regime anyway. Many are tightly integrated into European production networks and supply critical inputs, for example in the area of batteries. Just as importantly, competition with these producers largely occurs on fair terms and can help spur industrial upgrading inside the single market. There is little reason, for example, why European carmakers should be shielded from competition by companies such as Hyundai, Kia or Nissan.
Broad eligibility could, in fact, strengthen Europe’s leverage. In many sectors, the countries from which Europe imports are also among its most important export markets. Most non-Chinese imports of EVs, for instance, come from Britain, America, Japan and Turkey – countries that also account for a large share of EU exports outside the bloc. In this context, the IAA therefore creates an opportunity to reinforce reciprocity: Countries that open procurement and subsidy schemes to European firms gain access to Union-origin status and European demand incentives; those that do not risk exclusion.
Second, openness also matters because reshoring is not always the right objective. Solar panels are the clearest example. Europe lost the battle for large-scale solar manufacturing more than a decade ago, and current-generation module production is unlikely to return at scale. Here, the goal should be diversification rather than domestic production. Several Southeast Asian countries built substantial manufacturing capacity after the United States largely shut Chinese producers out of its market. To the extent that these facilities are not indirectly controlled or owned by Chinese operators, allowing them to qualify as Union-origin producers could diversify European supply chains — without feeding the illusion that Europe can rebuild large-scale solar manufacturing from scratch.
Figure 6: Clean tech trade for the EU-27
Source: Comext, extra-EU trade. HS codes: see figure 3. Electroplating/electrolysis equipment is substantially broader than electrolysers; displayed as upper bound.
The real risk is not the number of potentially eligible trade partners but circumvention. Without credible guardrails, Chinese producers could increasingly serve European markets through manufacturing bases in countries that qualify for Union-origin status under the IAA. This is already apparent. According to Rhodium Group, Chinese firms have invested more than €6 billion in Morocco since the pandemic, particularly in automotive and energy supply chains. Because Morocco has a free-trade agreement with the EU, such production could potentially qualify under the IAA.
Rather than getting bogged down in the size of the trade-partner list, negotiations should focus on limiting circumvention risks. Here, the Commission’s proposal offers sensible starting points. Trade partners could lose eligibility not only where reciprocity is lacking, but also where continued inclusion creates supply-security or circumvention risks. This broadens the Commission’s scope to respond if third countries increasingly become conduits for rerouting Chinese production into the EU. These safeguards won’t fully eliminate all circumvention risks - but the credible threat of losing Union-origin status will go a long way in discouraging investment aimed primarily at exploiting loopholes.
Negotiations should strengthen the credibility of this mechanism. That requires three things. First, eligibility decisions should – as the Commission proposes – be made through delegated acts. If every exclusion requires a qualified majority in the Council, enforcement will quickly become too politically cumbersome to be credible. Second, the Commission should retain the ability to exclude individual sectors rather than entire countries. Declaring a trade partner broadly ineligible will almost always prove politically difficult. Sector-specific exclusions, by contrast, are more workable – and therefore more likely to deter circumvention in practice. Third, the legislation should explicitly recognise circumvention risks through FTA partners as a criterion for exclusion. At present, the issue is addressed only indirectly through a broad reading of security risks. Making it explicit in the legal text would give the Commission a clearer mandate to exclude partners that increasingly serve as conduits for distorted imports from countries like China.
Make local-content and low-carbon rules count
In exchange for a trade-friendly regime, sceptics should accept that Buy European rules must bite to be worth having. First, local-content and low-carbon requirements need to shape enough demand to influence investment decisions. On the one hand, this means preserving some of the proposal’s strongest provisions, such as local-content rules for corporate car subsidies, which cover roughly 60% of Europe’s new car sales.
In other sectors, the legislation should be more ambitious than currently proposed. A larger share of wind auctions and procurement should fall under IAA rules. For low-carbon materials such as cement, mandates should be set substantially higher than the current 5% and gradually be increased over time. Equally important, low-carbon definitions – set outside the IAA itself – must be demanding enough to trigger real investment rather than reward cosmetic decarbonisation.
Second, cost-escape clauses should not enable national and even local discretion to decide whether to apply the rules. Lack of competition and unreasonable cost increases should indeed absolve administrations from demanding compliance with IAA rules – but with the current proposal, cost thresholds are breached much too easily in many cases, leaving it up to administrations to decide whether to still apply the rules, even if they don’t have to anymore. To avoid this highly uneven implementation, exemptions should be more tightly constrained.
In public procurement and auctions, cost thresholds should be assessed at project rather than product level. What matters for public budgets is whether a bridge, school or wind park becomes materially more expensive, not whether green steel or low-carbon cement carries a price premium on its own. In most cases, the effect on total costs would be modest. Green steel, for example, would raise the cost of many construction projects by less than 1%. Even fully replacing conventional cement with low-carbon alternatives would increase the cost of a typical public building by only around 1–3%; under the IAA’s proposed 5% mandate, the increase would amount to little more than rounding error.
In subsidy schemes, by contrast, cost derogations should not apply at all. Narrowing public support to products that fulfil Union-origin and low-carbon criteria does not prevent European consumers from buying, for example, cheaper Chinese goods if they choose to do so. It merely means that European taxpayers would no longer subsidise imports that often already benefit from substantial foreign state support.
In fact, in its current form, the proposal risks undermining the very goal it seeks to achieve. If Chinese EV producers undercut European rivals by a wide-enough margin, governments would remain free to subsidise these Chinese vehicles. The legislation would thus reward precisely the aggressive foreign-backed price competition the IAA is meant to curb. Nor is there a strong case for broad exemptions. A sufficiently broad definition of Union origin would preserve enough competition to prevent excessive mark-ups.
6. Outlook
The IAA offers a chance to add a competition- and single-market-friendly instrument to the EU’s industrial-policy toolkit – one that could give a much-needed boost to strategic industries under mounting pressure. Properly calibrated, it could become one of Europe’s most consequential industrial-policy initiatives in years. Rather than getting bogged down in familiar ideological fights, negotiators should now focus on reaching an economically sensible compromise: a trade-friendly regime with enough economic weight to shape investment decisions. That outcome remains well within reach.
At the same time, the Industrial Accelerator Act risks promising more than it can deliver. Buy European rules are a useful instrument in sectors where public demand and subsidies meaningfully shape markets. In many others, they have little to say. Industries squeezed by Chinese competition may require stronger trade defences. Frontier sectors - from robotics and quantum technologies to artificial intelligence and advanced computing - face a different challenge: mobilising capital, pooling risks and financing innovation at scale. Those battles will not be won through procurement rules, but through deeper capital markets, smarter state-aid frameworks, common investment tools and a stronger EU budget. A better IAA can help sustain parts of Europe’s industrial base. But restoring Europe’s growth model will require much more.
*The Commission proposal is ambiguous on whether costs are to be assessed at product or project level in procurement. To illustrate the difference: If a local government procures the construction of a public building, the cost increase for the entire project due to IAA-compliance would typically not exceed 1%. On the other hand, the cost increase at component level – such as using clean steel beams or clean steel bars instead of their fossil alternatives for instance – would typically exceed the 25% threshold.
Photo: ©2026 Jacques Delors Centre, Hertie School gGmbh. AI-generated artwork. All rights reserved.