European Commission proposes Industrial Accelerator Act to shield clean tech from Chinese competition

The European Commission has published a draft regulation that would fundamentally reshape how the bloc spends public money, requiring that strategic clean-tech procurement favour European-made and low-carbon goods. The Industrial Accelerator Act, unveiled on Wednesday, represents the most explicit embrace of industrial protectionism by Brussels in decades, reversing a long-standing doctrine that treated open markets as an unqualified good.

A doctrine shift born of necessity

Stéphane Séjourné, the Commission vice-president responsible for industry, described the act as "a change in doctrine" that would have been "unthinkable even just a few months ago". The language is deliberate. For years the Commission policed state-aid rules and procurement directives to prevent member states from favouring national champions. Now it is proposing to do exactly that at EU level, arguing that the alternative is the complete loss of strategic capacity.

Séjourné linked the urgency to recent energy-price spikes triggered by Middle East instability, saying events in Iran underscored the need for a plan to shore up European industry. "Without a strong industrial base, without a European social model, we won't have any climate transition and we won't have strategic autonomy," he said. The framing is notable: climate policy, social policy and geopolitical autonomy are now presented as a single package that cannot survive deindustrialisation.

The China benchmark

The immediate catalyst is the scale of Chinese dominance in the very sectors Europe has targeted for its green transition. Commission officials disclosed that roughly 50% of batteries and 94% of solar photovoltaic modules and cells used in the EU are imported from China. Europe once had a thriving solar-panel industry; it was lost to Chinese competition supported by state-backed overcapacity and cheaper energy. Séjourné put the stakes bluntly: "If we do nothing then it's quite clear that very soon 100% of tech technology will be produced in China."

The numbers explain why the Commission has moved from voluntary initiatives to binding procurement rules. The Net-Zero Industry Act, adopted last year, set non-binding targets for domestic manufacturing capacity. The Industrial Accelerator Act goes further by attaching conditions to public spending, a lever the EU controls more directly than private investment decisions.

How the procurement rules would work

The draft regulation applies to contracting authorities at local, regional and national levels when they spend public money or design subsidy programmes for goods in designated strategic sectors: green technology, electric vehicles, low-carbon steel, aluminium and cement. Two core requirements stand out.

First, a "Made in the EU" content target. For electric vehicles purchased by public bodies or benefiting from public funds, at least 70% of components, excluding the battery, must originate in the EU. The battery exclusion is pragmatic: Europe still lacks sufficient cell production, and the separate Battery Regulation already addresses supply-chain resilience there.

Second, a low-carbon materials mandate. Authorities would be required to procure steel, aluminium and cement with verified low-carbon footprints, even where these are more expensive than conventional alternatives. The Commission argues this creates a guaranteed demand pull for European producers investing in decarbonised processes, such as hydrogen-based direct reduction of iron ore.

Mirroring Chinese investment conditions

A third pillar targets foreign direct investment. Any non-EU firm investing €100 million or more in a strategic clean-tech sector would have to guarantee that at least 50% of the jobs created go to EU workers, alongside conditions on ownership structures, innovation activity and research location. The design explicitly mirrors requirements China imposes on foreign investors in its own strategic sectors, a reciprocal approach the Commission believes is overdue.

The Commission estimates the combined measures could create or preserve 150,000 jobs in clean tech and low-carbon industries. The broader macroeconomic target is to raise manufacturing's share of EU GDP from 14.3% in 2024 to 20% by 2035, a level not seen since the early 2000s. Achieving that would require reversing a decades-long trend of industrial hollowing out, particularly in energy-intensive sectors.

The third-country puzzle: who counts as domestic?

The most politically sensitive question is which non-EU countries qualify for the same treatment as EU producers. The draft regulation states that parties to a free-trade agreement or customs union with the EU, the European Economic Area members Norway, Iceland and Liechtenstein, plus Turkey via its customs union, would automatically be considered local. Additionally, the 21 signatories of the WTO Agreement on Government Procurement (GPA), including the UK, Canada, Japan, South Korea and the United States, could also qualify.

But qualification is not automatic. The Commission will conduct a "reciprocity assessment" of each trading partner in the coming months. Séjourné declined to specify "who's in, who's out", but officials indicated that countries with relatively open markets, the UK and Japan were cited, could be counted as domestic for electric-vehicle procurement. Conversely, countries with more closed procurement markets, notably the United States and India, would likely face restrictions. The US Inflation Reduction Act's domestic-content bonuses for clean vehicles are a direct precedent the EU now cites to justify its own approach.

Reactions expose the fault lines

The plan has drawn fire from trading partners. Peter Kyle, the UK business secretary, urged the EU to stop "putting up barriers" during a Brussels visit last week. The UK's concern is practical: British carmakers such as Jaguar Land Rover and Nissan's Sunderland plant export heavily to the EU, and exclusion from "domestic" status would raise costs for public-fleet buyers. Japan and Turkey have expressed similar alarm.

Industry is split. Bas Eickhout, co-president of the Greens/EFA group in the European Parliament, welcomed the move: "Europe needs to leave behind a bit the naivety that we had. There is no global open market. Look at the US, look at China, look at all the big players; they are all doing industrial policies. It's about time Europe starts doing that as well, and in a way the Industrial Accelerator Act is a first careful step."

The VDMA, Germany's engineering federation representing 3,000 mostly mid-sized firms, struck a sceptical note. Thilo Brodtmann, its chief executive, argued that "the focus on local content distracts from Europe's real challenges, such as high administrative costs, a weakened internal market and Europe's lack of technological leadership." The VDMA's membership depends on global supply chains; they fear retaliation and complexity more than they welcome protected markets.

Legislative hurdles and the timeline

The draft regulation now enters the ordinary legislative procedure, requiring agreement between the Council of the EU and the European Parliament. Member states are divided: France, Italy and Spain broadly support the approach; Germany, the Netherlands and the Nordics are wary of WTO disputes and retaliation. The Parliament's industry committee will likely push for stronger reciprocity clauses, while the trade committee will emphasise WTO compatibility.

A key test will be the reciprocity assessment due later this year. Its methodology, whether it measures market access de jure or de facto, whether it weights sectors equally, will determine whether the UK, Japan and Canada are treated as partners or locked out. The Commission has promised transparency, but the criteria remain unpublished.