This memo is the first of two publications by Catalyse Europe on the Industrial Accelerator Act. The second examines the Act’s provisions on foreign investment conditionalities.
Europe urgently needs industrial scale-up and capacity, but poorly designed legislation will deter the investment required. Catalyse Europe welcomes the Industrial Accelerator Act (“IAA”) as a key step towards building the necessary industrial strategy for the clean energy transition and the EU’s strategic resilience. Building a competitive clean industrial base is at the core of Catalyse Europe’s mission to accelerate Europe’s clean energy transition for economic prosperity and security. With formal negotiations underway in the Council and European Parliament and clear fault lines visible, Catalyse Europe wishes to contribute by centring the debate on three critical elements for the IAA to deliver on its industrial, climate and security ambitions.
First, the IAA’s design must genuinely enable clean industrial firms’ growth and competitiveness. Second, the IAA will not succeed as standalone legislation; it must be coherent with and mutually reinforce other key files currently underway to be effective. Third, while local content requirements are politically sensitive, the differing trade-offs must be assessed and mitigated strategically. Lack of political agreement on part of the proposal should not delay adoption and implementation of the entire Act, as we currently see.
The IAA should be judged by whether it helps companies build and scale clean industry in Europe. If it adds complexity, leaves key rules unresolved or clashes with other legislation, it risks missing this vital opportunity to turn ambition into investment, resilience and security.
1. The direction is right, but the design must be credible for results
Repeated energy price and security shocks since 2018 have made it clear that Europe’s prosperity and clean energy transition depend on reducing exposure to concentrated supply chains. Whether in fossil fuels today or clean technologies tomorrow, the IAA’s enabling conditions for industry and demand-side mechanisms that reward clean European manufacturers are important building blocks. But shortcomings in the design risk creating uncertainty and deterring clean investment.
Simplification must be real: The IAA introduces new certification, origin tracing and procurement requirements alongside enabling conditions such as faster permitting and acceleration areas for industry.
The simplification measures proposed must meaningfully outweigh any new obligations, otherwise the Act will undermine its own purpose.
Coherence is key: Several laws affecting industry are being developed in parallel, including the automotive package, and inconsistencies across these initiatives will increase uncertainty and administrative burdens, ultimately reducing clean investment. The same risk applies to the upcoming Public Procurement Framework review: if “Made in EU” and clean requirements are defined or approached differently across pieces of legislation, businesses could face contradictory obligations and additional costs. These instruments must be designed coherently and provide a clear, harmonised approach across sectoral legislation.
There is no investment without market certainty: Key definitions, such as what counts as low-carbon or qualifying third countries, are deferred to future implementing measures. Relying too heavily on future technical legislation undermines businesses’ ability to adapt, comply and develop investment pipelines. Core standards and criteria should be swiftly defined with clear frameworks, with any secondary legislation focused on implementation support.
2. The IAA is critical, but the coherence with other current EU files and challenges is just as important
The IAA needs strong demand and price signals to accompany its procurement measures. The ETS carbon price is essential to give the IAA’s low-carbon criteria their commercial value. Therefore, the ETS must maintain a credible decarbonisation trajectory while supporting companies’ clean investments. The upcoming Electrification Action Plan, which will introduce binding targets and address barriers to electrification across industrial, transport and building sectors, must also deliver concrete measures for demand-side switching in industry. The Network Charges proposal must support this by bringing down the structural cost of electricity relative to gas and helping close the electricity-gas taxation gap for energy-intensive industries. The EU should make both proposals ambitious and deliver them without further delay. Together, these reviews must provide the price signals and demand-side pillars that make the IAA economically meaningful and actionable in practice.
There is no industrial acceleration without grid development. Clean manufacturing, electrification, supply security and resilience all depend on physical infrastructure. The AccelerateEU call to conclude the Grids Package by summer, which is now expected to conclude by the end of the year under the Irish Presidency, as the Council agreed on its negotiation position on June 26, reflects this urgency. Accelerating industrial deployment without the network to support it is not possible. An ambitious and swift compromise on the Grids Package alongside the IAA is essential.
The IAA’s industrial ambitions also sit within a wider economic security framework that must be coherent. The IAA’s own FDI conditionalities amend the recently revised FDI Screening Regulation, while the Tech Sovereignty Package and cybersecurity restrictions on critical energy infrastructure affect the same sectors and supply chains. These instruments reinforce the IAA’s logic that building clean industrial capacity is a security necessity, not just an economic choice. To achieve their shared security and industrial objectives, legislation must develop criteria coherently, so these instruments reinforce each other rather than create contradictory requirements.
The scale-up problem has deeper roots than any single piece of legislation can solve. Addressing Europe’s inability to retain and grow clean industrial companies at scale requires cross-cutting action across policy areas, with a genuinely simpler regulatory environment, stable investment signals, and public financing designed to attract private capital efficiently and at the scale needed. This also means delivering on the Savings and Investment Union, deepening capital markets and completing the Single Market so European companies can access the finance and market scale they need to grow in Europe. The IAA is a necessary piece but is not sufficient on its own. The scale-up challenge must be addressed as an interconnected system.
3. Made in EU and Made with EU: acknowledging the trade-off
The Union origin debate reflects a real trade-off. Stronger local content can protect capacity and reduce dependency, but it can also raise costs, deter investment and create bottlenecks where Europe does not yet produce at the required scale. Broader partner inclusion can lower costs and maintain access to critical inputs, but it can also weaken security and resilience for critical components where Europe remains dependent on external suppliers.
EU preference makes sense where genuine strategic vulnerabilities exist. Europe’s recent energy crises have shown that dependency carries real costs and may in some cases justify a premium for resilience. Yet that premium must be acknowledged and proactively managed, so the EU must put the conditions in place to produce what it mandates buying locally. Over time, as European clean manufacturing scales, the premium is likely to decrease, but only if the enabling conditions, financing, demand signals and the broader framework are delivered alongside the IAA.
What the EU cannot afford is for the Union origin debate to become the obstacle that blocks progress on the IAA. Political divergences on local content are genuine and will not disappear, but they cannot be a reason to delay the EU’s clean industrial strategy when it is needed now. The conversation must explicitly acknowledge the very real trade-offs and focus on establishing a coherent framework to effectively manage them over time, while allowing the rest of the IAA negotiations to move forward.