EU proposes Industrial Accelerator Act to protect strategic manufacturing

THE EUROPEAN Commission has proposed new legislation aimed at protecting domestic manufacturing from “unfair global competition” across sectors including steel, cement, aluminium, batteries, solar photovoltaic (PV) and critical minerals. 

The proposed Industrial Accelerator Act (IAA) is intended to boost low-carbon manufacturing in Europe while limiting strategic investments from dominant foreign manufacturers. The commission said the move comes “against a background of growing unfair global competition and increasing dependencies on non-EU suppliers in strategic sectors”. 

The proposed legislation would allow the commission or a member state to block investments greater than €100m (US$115m) from countries that control more than 40% of global manufacturing in a given sector. The legislation would also allow authorities to impose conditions on investors to protect European jobs, research and development (R&D) and intellectual property. 

Countries with free trade agreements with the EU will be exempt from the restrictions. 

Foreign investments could be blocked if investors fail to meet at least four of six proposed conditions, including limits on ownership stakes, requirements to maintain a majority EU workforce, and commitments to research spending and local sourcing.

The measures are expected to have considerable impact on investments from China, which, the commission highlighted controls more than 80% of global battery and solar PV manufacturing capacity. In February, the EU placed tariffs of up to 35% on Chinese electric vehicles. 

The IAA proposal also sets a goal to increase manufacturing’s share of EU GDP from 14% in 2024 to 20% by 2035. 

The chemicals sector is not included in the initial proposal, although the EU said it may be added in the future. The EU is currently conducting a trade defence investigation into Chinese imports of 1,4-butanediol (BDO), an intermediate used in pharmaceuticals and other chemicals.

According to the commission, the legislation could create 85,000 jobs in battery manufacturing and 58,000 in solar PV manufacturing, while protecting existing employment in foundation industries such as steel, aluminium and cement. 

Stéphane Séjourné, the European Commission’s executive vice-president for prosperity and industrial strategy, said: “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.” 

The proposal will now be negotiated with the European Parliament and the Council of the European Union before it can come into force.

Low-carbon technologies

The IAA proposal highlights the reliance of net-zero technologies on foundation sectors such as steel and cement. Production of heat pumps and geothermal technology, it notes, depends heavily on components from non-EU suppliers, while carbon capture deployment is constrained by limited CO2 transport and storage infrastructure. 

The issue was highlighted by bp-owned Net Zero Teesside Power’s decision to source 7,000 t of steel from China rather from the nearby British Steel plant for its carbon capture-enabled power station in northeast England. 

Aniruddha Sharma, chair and CEO of carbon capture technology developer Carbon Clean, said the proposed act represents a “massive opportunity for Europe to reassert its leadership in clean technology”.