Europe’s clean industrial transition is entering a decisive phase. The technologies needed to decarbonise industry already exist. Electric heat pumps are replacing fossil fuel boilers and renewable electricity is becoming increasingly competitive.
But Europe’s challenge extends beyond deploying these technologies as it must also ensure they are manufactured, scaled and integrated within Europe if it wants to remain globally competitive.
This challenge has become increasingly urgent, in 2024 alone, Europe spent around €350 billion on fossil fuel imports, money that continues to leave the European economy instead of supporting domestic industry, jobs and innovation. While this represents a significant improvement from the €600 billion spent during the height of the energy crisis in 2022, it remains a major competitive disadvantage for European businesses.
At the same time, Europe’s industrial electricity demand has declined. According to Eurelectric’s Power Barometer 2025 report, high energy costs reduced industrial final energy consumption by 5% in 2023. Alongside lower industrial output, improvements in energy efficiency and greater self-consumption through renewables also contributed to falling industrial power demand. Reversing this trend will be essential if Europe is to strengthen its industrial base while accelerating electrification.
Last year’s Eurelectric study, The New Industrial Age, argued that electrification offers a pathway to reverse this trend by reducing dependence on imported fossil fuels while strengthening Europe’s industrial base. The Industrial Accelerator Act (IAA) is the next step in creating the policy framework needed to make that vision a reality.
Proposed by the European Commission in March 2026 as part of the Clean Industrial Deal, the Industrial Accelerator Act aims to introduce new measures to support the production of clean technologies, low-carbon industrial materials and electric vehicles through public procurement, state support schemes and foreign investment rules, while reinforcing supply chain resilience and Europe’s open strategic autonomy. The proposal will now be negotiated by the European Parliament and Council before becoming law.
These are important objectives but turning ambition into deployment will require legislation that provides clarity, regulatory certainty and the right investment conditions.
That is why Eurelectric has published its new position paper on the Industrial Accelerator Act, setting out practical recommendations to help ensure the legislation strengthens both Europe’s industrial competitiveness and its energy transition.
This week’s #FridayFeature explores why the IAA matters, what it gets right, and where it can go further.
Europe’s clean industry needs speed as much as strategy
Europe is entering a period of severe investment deficit as it needs between €800 billion and €1.2 trillion in clean energy investment every year to meet its climate and electrification objectives.
At the same time, as global competition for clean technology manufacturing is intensifying, Europe is seeking to strengthen domestic production of technologies ranging from batteries and heat pumps to wind turbines and solar panels, while maintaining open and increasingly diversified trade partnerships.
The Industrial Accelerator Act is designed to support that objective by building on the foundations laid by the Net-Zero Industry Act (NZIA).
Rather than differing from existing legislation, the IAA introduces additional measures on public procurement, auctions, supply chain resilience, permitting and industrial investment.
For Eurelectric, this is a step in the right direction, however, businesses also need predictable rules. As our position paper argues, implementing the existing NZIA framework successfully should remain the immediate priority before significantly expanding its scope.
Industrial competitiveness depends on electrification
One of the strongest messages running throughout both our new position paper and last year’s The New Industrial Age report is that industrial competitiveness and electrification cannot be separated.
The earlier study demonstrated that the economics of electrification are already improving across different industrial sectors. For industrial processes operating below 500°C, such as battery cell manufacturing, electric technologies including heat pumps are already more competitive than fossil fuel alternatives. In sectors such as milk powder production, electrification can reduce total energy consumption while improving competitiveness. Even for highly energy-intensive industries such as ethylene production, the study found that continued innovation and targeted support could make electrification commercially viable before the end of the decade.
As Eurelectric Secretary General Kristian Ruby said at the launch of The New Industrial Age:
“Electrifying Europe’s industrial sectors is essential to unlocking economic opportunities, cutting emissions, and strengthening the continent’s role as a global innovation leader. To achieve this, we need targeted industrial strategies that reflect each sector’s unique needs.”
The Industrial Accelerator Act helps create exactly those enabling conditions because it introduces the concept of Industrial Manufacturing Acceleration Areas – designated locations where projects could benefit from faster permitting, coordinated planning and quicker grid connections.
By aligning these areas with the concept of Electrification Acceleration Areas, Europe could identify locations where new industrial demand can connect quickly because sufficient grid capacity already exists or is planned.
Bringing network operators into planning decisions from the outset would also ensure that industrial investment and electricity infrastructure develop together.
Regulatory certainty matters just as much as ambition
Another one of the recurring areas in which the IAA could go further in our view is giving investors more clear and stable rules.
Many of the IAA’s objectives rely on new procurement rules, resilience criteria and Union-origin requirements.
While these measures can strengthen European manufacturing, they also introduce additional complexity for companies planning projects with investment horizons stretching over decades.
The position paper therefore suggests:
- implementing the existing Net-Zero Industry Act before expanding requirements further
- clearer definitions within primary legislation
- stable and transparent rules on Union-origin requirements
- greater consistency between the IAA and other EU legislation, including the Cybersecurity Act and the forthcoming Permitting Directive
The aim is straightforward – reduce unnecessary administrative burdens while preserving the legislation’s strategic ambitions.
Open strategic autonomy means stronger partnerships
The Industrial Accelerator Act forms part of Europe’s wider strategy on open strategic autonomy.
Rather than closing markets, the proposal seeks to diversify supply chains while maintaining cooperation with trusted international partners and we support this approach.
The position paper welcomes the inclusion of countries that have reciprocal trade agreements with the European Union, arguing that resilient supply chains are built through trusted partnerships as well as stronger European manufacturing.
It also recommends maintaining stable eligibility rules and ensuring that any future changes follow transparent decision-making processes, giving companies sufficient time to adapt their supply chains.
Manufacturing needs investment as well as regulation
Perhaps the clearest lesson from The New Industrial Age is that electrification is increasingly becoming technically and economically viable, but financing remains one of the biggest barriers to deployment.
The study concluded that stronger financial support, long-term contracts and expanded Carbon Contracts for Difference will be essential to improve project bankability while protecting industry from volatile fossil fuel and carbon prices and the same principle applies to the Industrial Accelerator Act.
While the IAA introduces important new obligations for manufacturers and project developers, it currently provides little additional financial support to help businesses meet those requirements or for more European supply to develop.
Eurelectric therefore recommends that stronger investment mechanisms should accompany the legislation.
Among the proposed solutions are:
- institutionalising support through the Innovation Fund Heat Auction
- using the ETS Investment Booster to accelerate industrial electrification
- strengthening the future Industrial Decarbonisation Bank
- supporting clean technology manufacturing through the Competitiveness Fund.
Together, these instruments could help bridge the investment gap while accelerating both industrial decarbonisation and European manufacturing capacity.
A stronger framework for Europe’s industrial future
Europe’s industrial transition will ultimately matters more than number of projects is European manufacturing capacity and volume, as well as Europe’s ability to innovate on that basis
As The New Industrial Age report demonstrated, electrification has the potential to restore industrial competitiveness. By reducing Europe’s dependence on imported fossil fuels and unlocking significant economic value across manufacturing.
The good news is the Industrial Accelerator Act provides an opportunity to create the policy framework needed to accelerate that transition and ensure manufacturing benefits accrue in Europe.
Put simply; factories need affordable clean electricity, manufacturers need predictable investment conditions, developers need faster permitting and Europe needs policies that connect all three.
These issues will also be at the centre of this year’s Power Barometer event on 30 September, where policymakers, industry leaders and power sector experts will discuss the future of industrial electricity demand, competitiveness and Europe’s evolving electricity system.
As industrial electrification accelerates, understanding how electricity demand evolves will become increasingly important for investment, grids and Europe’s wider industrial strategy.
With greater regulatory clarity, targeted financial support and a stronger focus on industrial electrification, the Industrial Accelerator Act can become an important building block in Europe’s new industrial age – one powered by clean electricity, stronger competitiveness and greater resilience.
This week’s edition was written by:
Erin Kalejs – Strategic Communications, Eurelectric
Disclaimer: This article is for communication purposes only and may not reflect Eurelectric positions. Any positions taken in this article shall not be attributable to Eurelectric’s official positioning. Official Eurelectric positions are reflected only in position papers published here.