The following is an adaptation of an article written by Bettina Felde-Tóth, a research fellow at the Europe Strategy Institute of the University of Public Service, originally published in Hungarian on the Five Minutes Europe blog of Ludovika.hu.
On Wednesday, the EU Commissioner for Industry presented the key points of a long-delayed and controversial regulation aimed at accelerating EU industrial policy at a press conference.
There has been much discussion about the competitiveness, or rather the lack thereof, of the European Union, and a number of solutions have been proposed within the community, the most significant of which are the Letta Report in 2024, the Draghi Report in 2025, and most recently, the Industrial Accelerator Act (IAA) in 2026, which builds on the Draghi Report.
The aim of the European Commission’s new legislative proposal, the IAA, is to increase demand for low-carbon industrial products manufactured in the EU, thereby increasing local production capacity in order to boost competitiveness. Public procurement and state aid are particularly important in this regard. The proposal introduces ‘Made in EU’ or low-carbon requirements in certain strategic sectors, such as steel, cement, aluminium, net-zero technologies (such as batteries and renewable energy equipment), the automotive industry, and, where possible, other energy-intensive sectors such as the chemical industry.
For these products, publicly funded projects may give preference to products manufactured in the EU or low-emission products, which could create new markets for green industry manufacturers. The aim is to increase the manufacturing industry’s contribution to EU GDP from 14.3 per cent to 20 per cent by 2035.
‘With the current proposal, the EU also wants to make production within the EU more favourable’
All the above sectors will also be affected by the Carbon Border Adjustment Mechanism (CBAM), which came into effect at the beginning of 2026. In practice, this means that when products affected by the mechanism (iron and steel, cement, aluminium, fertilizers, electricity products, hydrogen, and imported goods with indirect emissions, such as processed products) are imported into the EU, the importer will have to pay a price equivalent to the carbon price within the EU. The EU’s aim with this measure was to prevent EU companies from relocating their production to third countries. There is therefore consistency between the two EU regulations, both of which encourage local production, and with the current proposal, the EU also wants to make production within the EU more favourable.
At the same time, the proposal has been widely criticized, as evidenced by the fact that the Commission intended to publish it in December and then in February, but kept postponing it. Germany, among others, can be named as a critical advocate. According to Berlin, instead of focusing on international trade, less regulation, and better business conditions, the Commission’s proposal focuses on additional requirements and regulations. Of course, civil society has also criticized the proposal, noting low environmental standards and the lack of a sufficiently strong and binding decarbonization mechanism.
Furthermore, there is another fundamental dilemma: the basic problem for manufacturers is the production of low-carbon steel or aluminium. Is it worth it? Will there be demand for it? Is anyone willing to pay more to get a greener version of the same product? Until there is business value behind it, the answer is unfortunately no. For a manufacturing company, economic profitability usually comes when they are penalized for failing to meet a strategic goal: for example, an institution or authority imposes a penalty, or consumer awareness rises to such a level that they only buy products that have some kind of green certification. The widespread adoption of the latter still seems utopian, so we can only rely on the former.
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