EU-förslag om krav vid upphandling av klimatvänlig teknik

Klimat- och näringslivsdepartementet har remitterat EU-kommissionens förslag till förordning om industriell acceleration och omställning som presenterades den 4 mars 2026 till bland annat Stockholms stad för yttrande. Syftet med förslaget är att öka efterfrågan och produktion av nettonollteknik inom EU samt bidra till omställningen av energiintensiva sektorer.En central del av förslaget är införandet av krav i offentlig upphandling på både unionsursprung och lågt koldioxidavtryck för vissa utpekade produkter. Dessa omfattar bland annat stål, aluminium, betong/murbruk samt elektrifierade fordon. Med unionsursprung avses produkter som tillverkats inom EU eller i länder som EU har frihandels- eller tullunionsavtal med, i enlighet med EU:s tullkodex och WTO:s avtal om offentlig upphandling.Förslaget innebär även en revidering av EU-förordningen om nettonollindustri (EU 2018/1724), särskilt vad gäller upphandlingsregler. Genom revideringen föreslås ett krav på att unionsursprung införs för vissa tekniker, så som batterier, solceller och elfordon, vid offentlig upphandling. Vidare föreslås minimikrav för lågt koldioxidavtryck i upphandling av energiintensiva material. Exempelvis anges att minst 25 procent av det stål som används i byggprojekt ska uppfylla kraven. För betong och cement föreslås att minst 5 procent ska ha både lågt koldioxidavtryck och unionsursprung. De exakta definitionerna för vad som utgör lågt koldioxidavtryck fastställs i andra EU-rättsakter.Förslaget innehåller undantagsmöjligheter från upphandlingskraven. Det gäller exempelvis om kraven leder till oproportionerliga kostnader, om det saknas lämpliga anbud eller om det endast finns en leverantör.Utöver upphandlingsreglerna syftar förslaget till att förenkla tillståndsprocesser för industrin. Företag föreslås kunna lämna in en samlad digital ansökan för samtliga nödvändiga tillstånd. Varje medlemsstat ska även inrätta en nationell kontaktpunkt för att hantera dessa ärenden. En maximal handläggningstid om 18 månader föreslås gälla från det att en ansökan är komplett till dess att beslut fattas.EU-kommissionen föreslår även striktare regler för utländska investeringar i dessa sektorer och att medlemsstater inrättar industriella accelerationsområden, ett geografiskt avgränsat område som tilldelats grundtillstånd för industriell verksamhet för att påskynda industrietableringar. [R9 PM Europeiska kommissionens förslag till Förordningen om industriell acceleration och omställning (Industrial Acceler(2681165) (0).pdf] 1 (7) PM Rotel IX (Dnr KS 2026/465) Europeiska kommissionens förslag till Förordningen om industriell acceleration och omställning (Industrial Accelerator Act, COM (2026/956) Remiss från Klimat- och näringslivsdepartementet Remisstid den 3 juni 2026 Förslag till beslut Föredragande borgarråden Åsa Lindhagen Sammanfattning av ärendet Klimat- och näringslivsdepartementet har remitterat EU-kommissionens förslag till förordning om industriell acceleration och omställning som presenterades den 4 mars 2026 till bland annat Stockholms stad för yttrande. Syftet med förslaget är att öka efterfrågan och produktion av nettonollteknik inom EU samt bidra till omställningen av energiintensiva sektorer. En central del av förslaget är införandet av krav i offentlig upphandling på både unionsursprung och lågt koldioxidavtryck för vissa utpekade produkter. Dessa omfattar bland annat stål, aluminium, betong/murbruk samt elektrifierade fordon. Med unionsursprung avses produkter som tillverkats inom EU eller i länder som EU har frihandels- eller tullunionsavtal med, i enlighet med EU:s tullkodex och WTO:s avtal om offentlig upphandling. Förslaget innebär även en revidering av EU-förordningen om nettonollindustri (EU 2018/1724), särskilt vad gäller upphandlingsregler. Genom revideringen föreslås ett krav på att unionsursprung införs för vissa tekniker, så som batterier, solceller och elfordon, vid offentlig upphandling. Vidare föreslås minimikrav för lågt koldioxidavtryck i upphandling av energiintensiva material. Exempelvis anges att minst 25 procent av det stål som används i byggprojekt ska uppfylla kraven. För betong och cement föreslås att minst 5 procent ska ha både lågt koldioxidavtryck och unionsursprung. De exakta definitionerna för vad som utgör lågt koldioxidavtryck fastställs i andra EU-rättsakter. Borgarrådsberedningen föreslår att kommunstyrelsen beslutar följande. 1. Remissen besvaras med Stockholms stads yttrande, bilaga 1 till promemorian. 2. Paragrafen justeras omedelbart. 2 (7) Förslaget innehåller undantagsmöjligheter från upphandlingskraven. Det gäller exempelvis om kraven leder till oproportionerliga kostnader, om det saknas lämpliga anbud eller om det endast finns en leverantör. Utöver upphandlingsreglerna syftar förslaget till att förenkla tillståndsprocesser för industrin. Företag föreslås kunna lämna in en samlad digital ansökan för samtliga nödvändiga tillstånd. Varje medlemsstat ska även inrätta en nationell kontaktpunkt för att hantera dessa ärenden. En maximal handläggningstid om 18 månader föreslås gälla från det att en ansökan är komplett till dess att beslut fattas. EU-kommissionen föreslår även striktare regler för utländska investeringar i dessa sektorer och att medlemsstater inrättar industriella accelerationsområden, ett geografiskt avgränsat område som tilldelats grundtillstånd för industriell verksamhet för att påskynda industrietableringar. Beredning Ärendet har beretts av stadsledningskontoret i samråd och trafikkontoret. Föredragande borgarrådets synpunkter Stockholms stad ska vara en världsledande förebild i den rättvisa klimatomställningen. För att nå målet om att bli klimatpositiva till 2030 och fossilfria till 2040 krävs tydlig styrning och kraftfulla styrmedel som möjliggör en acceleration av det praktiska genomförandet. Därför välkomnar jag EU-kommissionens förslag för att stärka marknaden för nettonollteknik och minska utsläppen från energiintensiva sektorer. Offentlig upphandling är ett av stadens mest kraftfulla verktyg för att driva omställningen från linjära till cirkulära verksamheter och affärsmodeller. Vi behöver skifta cirkularitet från pilotprojekt till norm. Därför välkomnar jag förslagets krav på lågt koldioxidavtryck vid upphandling av energiintensiva material som stål, betong och cement. Detta ligger helt i linje med Stockholms mål att halvera de konsumtionsbaserade utsläppen till 2030. Stadens egna erfarenheter, exempelvis vid upphandling av rekonditionerade IT- lösningar eller så kallade upcyklade textilier, som består av återbrukat material som genom kreativ design och återanvändning förvandlas till nya produkter, visar att fler och fler marknader är mogna för cirkulära krav och att tydliga spelregler främjar konkurrenskraften. Stockholms stads upphandling och inköp uppgår till cirka 40 miljarder kronor varje år och som stor upphandlare har staden möjlighet att påverka marknader, exempelvis stimulera investeringar i ny teknik och bidra till att öka mognadsgraden för cirkularitet inom fler sektorer. 3 (7) För att möjliggöra omställningen behöver cirkulära principer integreras på systemnivå. Inom byggsektorn, som står för en tredjedel av stadens konsumtionsutsläpp behövs ett skifte från att riva och bygga nytt till att bevara och konvertera befintliga byggnader och återbruka byggmaterial. Jag anser därför att förslaget bör vara ännu tydligare med att premiera återbruk och livscykelvärde, inte enbart inköp av material med lågt koldioxidavtryck. Digitala produktpass (DPP) är här ett centralt verktyg för att säkerställa spårbarhet och möjliggöra en professionell återbruksmarknad. I övrigt hänvisar jag till Stockholms stads yttrande, bilaga 1. Stockholm den 27 maj 2026 Åsa Lindhagen Bilagor 1. Stockholms stads yttrande, dnr KS 2026/465-8.1 2. Remiss – Annexes to the proposal Europeiska kommissionens förslag till Förordningen om industriell acceleration och omställning (Industrial Accelerator Act, COM (2026/956); dnr KS 2026/465-1.1 3. Remiss – Subsidiarity grid KS 2026/465-1.2 4. Remiss – Proposal establishing measures for industrial capacity and deccarbonisation in strategic sectors; dnr KS 2026/465-1.3 5. Remiss – Impact assessment report; dnr KS 2026/465-1.4 6. Remiss – Executive summary of the impact assessment; KS 2026/465-1.5 Borgarrådsberedningen tillstyrker föredragande borgarrådets förslag. 4 (7) Ärendet Klimat- och näringslivsdepartementet har remitterat EU-kommissionens förslag till förordning om industriell acceleration och omställning som presenterades den 4 mars 2026 till bland annat Stockholms stad för yttrande. Syftet med förslaget är att öka efterfrågan och produktion av nettonollteknik inom EU samt bidra till omställningen av energiintensiva sektorer. En central del av förslaget är införandet av krav i offentlig upphandling på både unionsursprung och lågt koldioxidavtryck för vissa utpekade produkter. Dessa omfattar bland annat stål, aluminium, betong/murbruk samt elektrifierade fordon. Med unionsursprung avses produkter som tillverkats inom EU eller i länder som EU har frihandels- eller tullunionsavtal med, i enlighet med EU:s tullkodex och WTO:s avtal om offentlig upphandling. Förslaget innebär även en revidering av EU-förordningen om nettonollindustri (EU 2018/1724), särskilt vad gäller upphandlingsregler. Genom revideringen föreslås ett krav på att unionsursprung införs för vissa tekniker, så som batterier, solceller och elfordon, vid offentlig upphandling. Vidare föreslås minimikrav för lågt koldioxidavtryck i upphandling av energiintensiva material. Exempelvis anges att minst 25 procent av det stål som används i byggprojekt ska uppfylla kraven. För betong och cement föreslås att minst 5 procent ska ha både lågt koldioxidavtryck och unionsursprung. De exakta definitionerna för vad som utgör lågt koldioxidavtryck fastställs i andra EU-rättsakter. Förslaget innehåller undantagsmöjligheter från upphandlingskraven. Det gäller exempelvis om kraven leder till oproportionerliga kostnader, om det saknas lämpliga anbud eller om det endast finns en leverantör. Utöver upphandlingsreglerna syftar förslaget till att förenkla tillståndsprocesser för industrin. Företag föreslås kunna lämna in en samlad digital ansökan för samtliga nödvändiga tillstånd. Varje medlemsstat ska även inrätta en nationell kontaktpunkt för att hantera dessa ärenden. En maximal handläggningstid om 18 månader föreslås gälla från det att en ansökan är komplett till dess att beslut fattas. EU-kommissionen föreslår även striktare regler för utländska investeringar i dessa sektorer och att medlemsstater inrättar industriella accelerationsområden, ett geografiskt avgränsat område som tilldelats grundtillstånd för industriell verksamhet för att påskynda industrietableringar. Remissammanställningen Ärendet har beretts av stadsledningskontoret i samråd med trafikkontoret. Stadsledningskontoret 5 (7) Stadsledningskontorets tjänsteutlåtande daterat den 8 maj 2026 har i huvudsak följande lydelse. Sammanfattning av synpunkter Stadsledningskontoret är i grunden positivt till förslaget om gemensamma och effektivare tillståndsprocesser för industrietableringar, men framhåller att det är oklart hur processerna ska utformas och vilka konsekvenser dessa får för staden. Därför efterfrågar stadsledningskontoret ytterligare klargöranden. Stadsledningskontoret delar ambitionen om att öka andelen byggmaterial med lågt koldioxidavtryck i offentlig upphandling. Samtidigt bedöms förslaget kunna leda till ökade kostnader och mer administration för upphandlande myndigheter. Vidare betonas att ansvarsfördelningen och formerna för uppföljning och verifiering av kraven är otydliga. Detta riskerar att skapa administrativt betungande processer, särskilt eftersom byggsektorn har långa leveranskedjor med många underleverantörer. Regelverket behöver därför vara tydligt, proportionerligt och flexibelt. Stadsledningskontoret framhåller även behovet av att tydliggöra förordningens relation till annan relevant EU-lagstiftning för att säkerställa rättssäkerhet, effektiv tillämpning och genomförbara upphandlingar. Ställningstaganden Stadsledningskontoret välkomnar förslaget och ändamålet med EU-kommissionens förslag till förordning. Stadsledningskontoret välkomnar förslagets ambition om att skapa bättre förutsättningar för grön omställning, hållbara industrilösningar och stärkt konkurrenskraft inom EU genom att öka efterfrågan för produkter med lågt koldioxidavtryck. Delar av förslagen ligger utanför den kommunala kompetensen, därav väljer stadsledningskontoret att avgränsa kommentarerna nedan till delarna om offentlig upphandling och tillståndsprocesserna i förslaget. Då dessa bedöms kunna medföra indirekt eller direkt påverkan på staden. Tillståndsförfaranden Stadsledningskontoret noterar förslaget om att införa en gemensam tillståndsprocess för industrietableringar och delar bedömningen att det i grunden är positivt att införa effektiva administrativa processer som underlättar för såväl staden som näringslivet, samtidigt som krav upprätthålls och kvalitet samt rättssäkerhet säkerställs. - Stadsledningskontoret vill samtidigt framhålla att det i nuläget är oklart hur dessa processer närmare kommer att utformas, vilket försvårar möjligheten att analysera förslagets konsekvenser. Det är rimligt att anta att förordningen kan komma att påverka såväl miljöbalken som plan- och bygglagen, och därmed även det kommunala planmonopolet och tillsynsansvar. Det finns därför behov av ytterligare klargöranden av hur dessa ansökningsfaranden kan komma att utformas. Offentlig upphandling och lågt koldioxidavtryck 6 (7) Stadsledningskontoret instämmer i EU-kommissionens ambition att öka andelen byggmaterial med lågt koldioxidavtryck i offentlig upphandling. Stockholms stad är en av Sveriges största offentliga inköpare och upphandlar entreprenader, varor och tjänster för cirka 40 miljarder kronor om året. Det är av stor vikt för staden att genom inköp och upphandling bidra till samhällsutvecklingen i linje med stadens fastställda mål, bland annat på miljö- och klimatområdet. - Stadsledningskontoret noterar att det kan få effekter på konkurrensen för upphandlande myndigheter vid utestängande av vissa tredjeländer utestängs från att delta i offentliga upphandlingar. Därmed kan det, i enskilda fall, sannolikt komma innebära vissa kostnadsökningar för upphandlande myndigheter, bland annat ifråga om ökade inköpsutgifter samt arbete med kontroller av att de nya reglerna efterlevs. - Stadsledningskontoret understryker vidare att det föreligger en otydlighet i förslaget avseende hur uppföljningen av dessa produkter och regler ska genomföras, och därmed även vilket ansvar som faller på upphandlande myndighet för att säkerställa att produkter uppfyller ställda krav. Förordningen specificerar inte hur verifieringen av kravefterlevnaden ska ske, vilket skapar osäkerhet i den praktiska tillämpningen. Verifieringsmodeller för kraven bör därför vara administrativt effektiva, tydliga och ändamålsenliga för berörda parter. Det finns idag många förfaranderegler, detta driver administrativa kostnader för upphandlande myndigheter och försämrar förutsättningar för flexibilitet i upphandlingar. Det behövs finnas ett utrymme för upphandlande myndigheter att låta omständigheterna i det enskilda fallet påverka hur upphandlingen ska genomföras. Dessutom riskerar krångliga förfaranderegler leda till att små och medelstora företag avstår från att delta i offentliga upphandlingar. - Uppföljning är generellt förenad med svårigheter, och särskilt svårt i de fall leverantörer använder långa leveranskedjor och många underleverantörsled, vilket är vanligt inom bland annat byggsektorn. Detta riskerar att leda till en administrativt betungande process avseende uppföljningsansvar, särskilt om detta ansvar i sin helhet läggs på upphandlande myndighet, då informationen i många fall är svår att verifiera. - Stadsledningskontoret betonar att det även för de kommunala bolagen inom kommunkoncernen finns motsvarande utmaningar i arbetet med hållbarhetsredovisningen i enlighet med direktivet om hållbarhetsrapportering (EU 2022/2464). - Stadsledningskontoret betonar därför vikten av ökad tydlighet avseende hur upphandlande myndighet ska underlätta för att de föreslagna åtgärderna och målen i förordningen ska kunna uppnås. Det är centralt att roll- och ansvarsfördelningen mellan upphandlare och leverantör förtydligas i syfte att säkerställa att nivåerna uppnås. 7 (7) - Stadsledningskontoret noterar även att förordningens relation till annan relevant lagstiftning behöver tydliggöras för att säkerställa en effektiv tillämpning, rättssäkerhet och genomförbarhet i upphandlingar. Den pågående revideringen av EU:s upphandlingslagstiftning, de gällande förordningarna om byggprodukter och ekodesign samt kommande delegerade akter inom dessa spelar en roll för samstämmighet och tydlighet. Detta är av särskild vikt inom offentlig upphandling, där det finns höga krav på transparens. Otydlighet i regelverket riskerar att försämra konkurrensen, skapa onödigt betungande processer, driva kostnader och därmed ej uppnå målet om att öka andelen produkter med lågt koldioxidavtryck. - Stadsledningskontoret noterar att för större elektrifierade fordon och arbetsmaskiner för byggentreprenader är införande av digitala produktpass (DPP) inom ekodesignförordningen ett exempel på behov av samstämmighet och tydlighet vid införande. Dessa pass blir obligatoriska för prioriterade produktgrupper från och med 2027 med en förväntad fullständig utrullning senast 2030. - Stadsledningskontoret framhäver att det är angeläget att få tydlighet gällande implementeringsplaner av DPP för bland annat större elektrifierade fordon och arbetsmaskiner. Det är också viktigt att beakta att framtagande detaljerade digitala produktdata över en hel livscykel i sig är ett omfattande, och även kostnadsdrivande arbete. DPP behöver vara på hög kvalitetsnivå och heltäckande för att ge rätt användbarhet för jämförbarhet, uppföljning och kontroll Införda digitala produktpass för elektrifierade fordon inom byggsektorn förväntas tillföra ett stort värde med transparent information om spårbarhet. --- [Stockholms stads yttrande.pdf] Stadshuset Ragnar Östbergs Plan 1 105 35 Stockholm Sida 1 (4) bvvvv Till Klimat-och näringslivsdepartementet Ert Dnr: Europeiska kommissionens förslag till Förordningen om industriell acceleration och omställning (Industrial Accelerator Act, COM (2026/956) Sammanfattning Stockholms stad är i grunden positiv till förslaget om gemensamma och effektivare tillståndsprocesser för industrietableringar, men framhåller att det är oklart hur processerna ska utformas och vilka konsekvenser dessa får för staden. Därför efterfrågar staden ytterligare klargöranden. Stockholms stad delar ambitionen om att öka andelen byggmaterial med lågt koldioxidavtryck i offentlig upphandling. Samtidigt bedöms förslaget kunna leda till ökade kostnader och mer administration för upphandlande myndigheter. Vidare betonas att ansvarsfördelningen och formerna för uppföljning och verifiering av kraven är otydliga. Detta riskerar att skapa administrativt betungande processer, särskilt eftersom byggsektorn har långa leveranskedjor med många underleverantörer. Regelverket behöver därför vara tydligt, proportionerligt och flexibelt. Stockholms stad framhåller även behovet av att tydliggöra förordningens relation till annan relevant EU-lagstiftning för att säkerställa rättssäkerhet, effektiv tillämpning och genomförbara upphandlingar. Ställningstaganden Sammanfattning av synpunkter Stockholms stad är i grunden positiv till förslaget om gemensamma och effektivare tillståndsprocesser för industrietableringar, men framhåller att det är oklart hur processerna ska utformas och vilka konsekvenser dessa får för staden. Därför efterfrågar staden ytterligare klargöranden. Stockholms stad delar ambitionen om att öka andelen byggmaterial med lågt koldioxidavtryck i offentlig upphandling. Samtidigt bedöms förslaget kunna leda till ökade kostnader och mer administration för upphandlande myndigheter. Kommunstyrelsen Yttrande Dnr KS 2026/465 2026-05-15 Kungsklippan 6 112 25 Stockholm daniel.lauridsen@stockholm.se start.stockholm Yttrande Dnr KS 2026/465 Sida 2 (4) Vidare betonas att ansvarsfördelningen och formerna för uppföljning och verifiering av kraven är otydliga. Detta riskerar att skapa administrativt betungande processer, särskilt eftersom byggsektorn har långa leveranskedjor med många underleverantörer. Regelverket behöver därför vara tydligt, proportionerligt och flexibelt. Staden framhåller även behovet av att tydliggöra förordningens relation till annan relevant EU-lagstiftning för att säkerställa rättssäkerhet, effektiv tillämpning och genomförbara upphandlingar. Ställningstaganden Stockholms stad välkomnar förslaget och ändamålet med EU- kommissionens förslag till förordning. Stockholms stad välkomnar förslagets ambition om att skapa bättre förutsättningar för grön omställning, hållbara industrilösningar och stärkt konkurrenskraft inom EU genom att öka efterfrågan för produkter med lågt koldioxidavtryck. Delar av förslagen ligger utanför den kommunala kompetensen, därav väljer Stockholms stad att avgränsa kommentarerna nedan till delarna om offentlig upphandling och tillståndsprocesserna i förslaget. Då dessa bedöms kunna medföra indirekt eller direkt påverkan på staden. Tillståndsförfaranden Stockholms stad noterar förslaget om att införa en gemensam tillståndsprocess för industrietableringar och delar bedömningen att det i grunden är positivt att införa effektiva administrativa processer som underlättar för såväl staden som näringslivet, samtidigt som krav upprätthålls och kvalitet samt rättssäkerhet säkerställs. - Stockholms stad vill samtidigt framhålla att det i nuläget är oklart hur dessa processer närmare kommer att utformas, vilket försvårar möjligheten att analysera förslagets konsekvenser. Det är rimligt att anta att förordningen kan komma att påverka såväl miljöbalken som plan- och bygglagen, och därmed även det kommunala planmonopolet och tillsynsansvar. Det finns därför behov av ytterligare klargöranden av hur dessa ansökningsfaranden kan komma att utformas. Offentlig upphandling och lågt koldioxidavtryck Stockholms stad instämmer i EU-kommissionens ambition att öka andelen byggmaterial med lågt koldioxidavtryck i offentlig upphandling. Stockholms stad är en av Sveriges största offentliga inköpare och upphandlar entreprenader, varor och tjänster för cirka 40 miljarder kronor om året. Det är av stor vikt för staden att genom inköp och upphandling bidra till samhällsutvecklingen i linje med stadens fastställda mål, bland annat på miljö- och klimatområdet. Yttrande Dnr KS 2026/465 Sida 3 (4) - Stockholms stad noterar att det kan få effekter på konkurrensen för upphandlande myndigheter vid utestängande av vissa tredjeländer från att delta i offentliga upphandlingar. Därmed kan det, i enskilda fall, sannolikt komma att innebära vissa kostnadsökningar för upphandlande myndigheter, bland annat ifråga om ökade inköpsutgifter samt arbete med kontroller av att de nya reglerna efterlevs. - Stockholms stad understryker vidare att det föreligger en otydlighet i förslaget avseende hur uppföljningen av dessa produkter och regler ska genomföras, och därmed även vilket ansvar som faller på upphandlande myndighet för att säkerställa att produkter uppfyller ställda krav. Förordningen specificerar inte hur verifieringen av kravefterlevnaden ska ske, vilket skapar osäkerhet i den praktiska tillämpningen. Verifieringsmodeller för kraven bör därför vara administrativt effektiva, tydliga och ändamålsenliga för berörda parter. Det finns idag många förfaranderegler, detta driver administrativa kostnader för upphandlande myndigheter och försämrar förutsättningar för flexibilitet i upphandlingar. Det behövs finnas ett utrymme för upphandlande myndigheter att låta omständigheterna i det enskilda fallet påverka hur upphandlingen ska genomföras. Dessutom riskerar krångliga förfaranderegler leda till att små och medelstora företag avstår från att delta i offentliga upphandlingar. - Uppföljning är generellt förenad med svårigheter, och särskilt svårt i de fall leverantörer använder långa leveranskedjor och många underleverantörsled, vilket är vanligt inom bland annat byggsektorn. Detta riskerar att leda till en administrativt betungande process avseende uppföljningsansvar, särskilt om detta ansvar i sin helhet läggs på upphandlande myndighet, då informationen i många fall är svår att verifiera. - Stockholms stad betonar att det även för de kommunala bolagen inom kommunkoncernen finns motsvarande utmaningar i arbetet med hållbarhetsredovisningen i enlighet med direktivet om hållbarhetsrapportering (EU 2022/2464). - Stockholms stad betonar därför vikten av ökad tydlighet avseende hur upphandlande myndighet ska underlätta för att de föreslagna åtgärderna och målen i förordningen ska kunna uppnås. Det är centralt att roll- och ansvarsfördelningen mellan upphandlare och leverantör förtydligas i syfte att säkerställa att nivåerna uppnås. Yttrande Dnr KS 2026/465 Sida 4 (4) - Stockholms stad noterar även att förordningens relation till annan relevant lagstiftning behöver tydliggöras för att säkerställa en effektiv tillämpning, rättssäkerhet och genomförbarhet i upphandlingar. Den pågående revideringen av EU:s upphandlingslagstiftning, de gällande förordningarna om byggprodukter och ekodesign samt kommande delegerade akter inom dessa spelar en roll för samstämmighet och tydlighet. Detta är av särskild vikt inom offentlig upphandling, där det finns höga krav på transparens. Otydlighet i regelverket riskerar att försämra konkurrensen, skapa onödigt betungande processer, driva kostnader och därmed ej uppnå målet om att öka andelen produkter med lågt koldioxidavtryck. - Stockholms stad noterar att för större elektrifierade fordon och arbetsmaskiner för byggentreprenader är införande av digitala produktpass (DPP) inom ekodesignförordningen ett exempel på behov av samstämmighet och tydlighet vid införande. Dessa pass blir obligatoriska för prioriterade produktgrupper från och med 2027 med en förväntad fullständig utrullning senast 2030. - Stockholms stad framhäver att det är angeläget att få tydlighet gällande implementeringsplaner av DPP för bland annat större elektrifierade fordon och arbetsmaskiner. Det är också viktigt att beakta att framtagande detaljerade digitala produktdata över en hel livscykel i sig är ett omfattande, och även kostnadsdrivande arbete. DPP behöver vara på hög kvalitetsnivå och heltäckande för att ge rätt användbarhet för jämförbarhet, uppföljning och kontroll Införda digitala produktpass för elektrifierade fordon inom byggsektorn förväntas tillföra ett stort värde med transparent information om spårbarhet. Stockholm som ovan Karin Wanngård Kommunstyrelsens ordförande --- [Remiss- Proposal establishing measures for industrial capacity and decarbonisation in strategic sectors.pdf] EN EN EUROPEAN COMMISSION Brussels, 4.3.2026 COM(2026) 100 final 2026/0068 (COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a framework of measures for the acceleration of industrial capacity and decarbonisation in strategic sectors and amending Regulations (EU) 2018/1724, (EU) 2024/1735 and (EU) 2024/3110 {SEC(2026) 70 final} - {SWD(2026) 70 final} - {SWD(2026) 71 final} - {SWD(2026) 72 final} (Text with EEA relevance) EN 1 EN EXPLANATORY MEMORANDUM 1. CONTEXT OF THE PROPOSAL • Reasons for and objectives of the proposal This explanatory memorandum accompanies the proposal for a Regulation establishing a framework of measures for the acceleration of industrial capacity and decarbonisation in strategic sectors: the ‘Industrial Accelerator Act’. In today’s geopolitical landscape, the frequent and targeted use of economic tools to advance strategic objectives poses a serious threat to the Union’s resilience, competitiveness, economic security and strategic autonomy. As highlighted in the Draghi report on European Competitiveness, the weaponisation of EU dependencies of trading partners in strategic sectors puts the EU’s security, competitiveness and economy at risk. 1 The Union’s capacity to respond and reduce third country dependencies lies in the strength of its industrial base, innovation capacity and integrity of the Single Market. The transition to a clean and digital economy presents a major opportunity to strengthen the EU’s industrial base, as outlined, inter alia , in the Commission Communication on Clean Industrial Deal 2. Global competition, rapid technological change, structural cost disadvantages, unfair global market distortions such as the increasing use of foreign subsidies to create a competitive edge , and the weaponisation of economic dependencies are reshaping global value chains . At the same time, rising geopolitical tensions are intensifying existing vulnerabilities and creating new ones . Against this backdrop, the EU must act strategically to secure and further strengthen its resilience and industrial base, long -term competitiveness and ensure that the climate transition becomes an engine of industrial growth. The manufacturing sector is essential for safeguarding and boosting the EU’s long -term economic resilience and to meet its climate neutrality goal. In 2024, it accounted for 18.3% of employment in the EU business economy 3 and 14,3% of the EU’s total GDP,4 while generating 26,2% of EU’s greenhouse gas emissions 5. Despite its continued economic importance, the sector’s share of GDP has declined over the past decades from 17.4% in 2000 to its current level of 14,3%6. This regression is not only an economic reality, but a strategic warning signal with potentially structural impacts to the EU’s prosperity and social cohesion . At the same time, the manufacturing sector increasingly faces challenges, such as high energy prices, global overcapacities, high capital and operational costs for decarbonisation and new technology deployment, low investment compared to other regions, as well as regulatory hurdles7. 1 Joint Communication, Strengthening EU economic security, JOIN(2025) 977 final. 2 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, The Clean Industrial Deal: A joint roadmap for competitiveness and decarbonisation (COM/2025/85 final, 26.2.2025). 3 Eurostat, Enterprises by detailed NACE Rev. 2 activity and special aggregates [sbs_ovw_act__custom_20259000], last updated 08 December 2025, DOI: 10.2908/sbs_ovw_act. 4 Eurostat, Gross value added and income by main industry (NACE Rev.2 ) [nama_10_a10__custom_20259318], last updated 20 February 2026, DOI: 10.2908/nama_10_a10. 5 Eurostat, Air emissions accounts by NACE Rev. 2 activity [env_ac_ainah_r2__custom_20259376] , last updated 28 November 2025, DOI: 10.2908/env_ac_ainah_r2. 6 Eurostat, Gross value added and income by main industry (NACE Rev.2 ) [nama_10_a10__custom_20259318], last updated 20 February 2026, DOI: 10.2908/nama_10_a10. 7 Draghi, M. (2024). The future of European competitiveness – In-depth analysis and recommendations (Part B). EN 2 EN That is why the Industrial Accelerator Act aims to ensure that by 2035, this trend is reversed and that manufacturing represents 20% of the EU GDP . It will do so by accelerating permitting for all manufacturing projects, and by providing a toolbox to provide access to the European single market in a way that prevents strategic dependencies, creates manufacturing jobs, boosts decarbonisation and climate performance and secure access of European citizens and companies to vital commodities and products at all times. Achieving the EU’s strategic autonomy while maintaining industrial competitiveness and, at the same time, decarbonising requires a strong business case. In that context, strengthening the competitiveness of certain strategic sectors and technologies, notably net -zero technologies as well as energy -intensive industries, and the automotive supply chain, is essential for the EU’s resilience, strategic autonomy and climate objectives. A failure to secure and diversify crucial supply chains would create significant economic and societal risks, leading to potential disruption of public order in the Union. Reducing external vulnerabilities could contribut e to strengthening our economy, boosting investments and supporting the business case for the ongoing deep industrial transformation process. The sectors covered by the Industrial Accelerator Act – in particular energy-intensive industries, net -zero technologies manufacturing, and automotive industry – account for a limited share of EU manufacturing output but play a disproportionate strategic role. Taken together, the strategic sectors targeted by the Industrial Accelerator Act account for around 15% of EU manufacturing production. Their importance therefore lies less in their aggregate size than in their central role as upstream suppliers and enablers of downstream industrial ecosystems, including construction, mobility, energy as well as space and defence. Delayed or insufficient progress on climate action could intensify the economic and social impacts of climate change, with implications for social stability. Action is especially needed in the following sectors: Energy-intensive industries (EIIs) are a key pillar of European prosperity and a cornerstone of the continent’s industrial base, underpinning most industrial ecosystems. Yet, production volumes in EIIs have substantially decreased since 2021, compared to other manufacturing sectors8. Cost gaps with other world regions have widened and import shares have increased, in particular for basic metals and chemicals 9. Capacity utilisation rates remain at unsustainably low levels 10. Decarbonising these industries requires substantial investments 11, however, the pace of decarbonisation is not fast enough to reach the EU climate objectives. Although many decarbonisation projects have been announced and some are on the way, since 2023 more than half of the projects remain unimplemented 12. Modernising these sectors is fundamental not only to achieving our climate objectives, but also for Europe’s ability to anchor industrial value chains and provide high - quality jobs. Among energy-intensive industries, steel and cement are the largest emitters , while the chemical industry is the third - largest contributor to the EU GHG emissions. Aluminium is also highly electro-intensive and is recognised as a strategic raw material, with demand expected to increase by 33 % until 8 Internal European Commission analysis, see Impact Assessment report . 9 OECD Working Papers, A comprehensive overview of the Energy Intensive Industries ecosystem , 2025/09. 10 A European Steel and Metals Action Plan, COM (2025) 125 final, 19 March 2025. 11 Approximately EUR 500 billion are needed by 2040 for the chemicals, basic metals, non -metallic minerals and pulp and paper industries - Draghi, M. (2024). The future of European competitiveness – In-depth analysis and recommendations (Part B) , p. 99 and Commission Staff Working Document , Impact assessment report, Europe’s 2040 climate target and path to climate neutrality by 2050 building a sustainable, just and prosperous society, Part 3, pp.164-167. 12 JRC analysis, see Impact Assessment report. EN 3 EN 2050. At the same time, these industries have lost significant EU’s market share in the past decade. In view of their high emissions intensity and strategic role for the clean and digital transition, these sectors are considered priority to establish demand-side measures. They are also characterised by a limited cost impact on downstream industries. Net-zero technologies face competitiveness challenges and significant supply chain vulnerabilities13. While deployment in the EU – and the world - is progressing, the EU’s manufacturing global market share of these technologies is declining. Production is highly concentrated in China, which accounts for over 80 % of battery manufacturing capacity and solar photovoltaic, including solar inverters which carry an essential function in the Union’s critical infrastructure. In other net zero technologies, such as heat pumps and geothermal, EU production depends heavily on components from non-EU suppliers. Wind power technologies are experiencing cost pressures from low -priced Chinese imports, while carbon capture technologies lag in CO2 transport and storage. Without decisive action, the EU risks becoming even more dependent on imported clean technologies, precisely at the moment when global partners are accelerating their industrial strategies 14 and weaponising their industrial strengths. At the same time, net -zero technologies are a source of EU’s industrial strength and should be granted a global level -playing field in light of unfairly subsidised overcapacities by third countries. Downstream industries are also under pressure. The competitiveness of the European automotive industry – a symbol of Union industrial leadership - has significantly decreased, with the average profitability of European automotive suppliers dropping from 7.4 % in 2017 to 5 % in 2023 and more than 100,000 job cuts announced in 2024/2515. Recent surveys show that half of the European automotive component suppliers plan to reduce production capacity in the EU in the next years . This decline threatens hundreds of thousands of jobs and the integrity of Europe’s industrial future. Against this backdrop, the proposal addresses three main sub-problems: (1) Supply chain vulnerabilities in strategic sectors and technologies. Global, not always fair, competition and international value chain dependencies undermine Europe’s ability to increase or retain production in strategic sectors and technologies . An area of concern is the lack of technology know -how and manufacturing expertise in the EU for certain key net -zero and digital technologies. This concern is exacerbated by a fragmented EU approach towards foreign investments, which oftentimes do not come with technology transfer, job creation and value chain integration in the EU. (2) Limited demand/no lead markets for European low -carbon industrial products . High production costs, different levels of technological readiness and a lack of industrial scaling effects limit the development and market uptake of low -carbon products in energy-intensive industries, therefore undermining or delaying the decarbonisation investments. This is further accentuated by the challenges in distinguishing low - carbon industrial products from high -carbon equivalents and the limited willingness of downstream sectors to pay a low-carbon premium. (3) Industrial technologies are not deployed at scale . Lengthy, fragmented and uncertain permitting procedures for industrial decarbonisation projects, including infrastructure connection, delay the deployment and scale -up of new technologies. Decarbonising 13 Competitiveness Progress Report on Clean Energy Technologies , COM(2025) 74 final, 26 February 2025. 14 BloombergNEF, New Energy Outlook. 15 European automotive industry: What it takes to regain competitiveness, McKinsey, 10 March 2025. EN 4 EN industrial processes requires deep and costly transformation of assets and operations, entailing substantial investments, which may become frozen throughout lengthy permitting processes. Difficulties in de -risking investment and accessing funding represent a major bottleneck. Against this scenario, the Clean Industrial Deal announced a new regulatory initiative to address permitting bottlenecks, introduce resilience and sustainability criteria, and create lead markets for European clean and resilient industrial products and technologies. This proposal delivers on the political commitment made by President von der Leyen, who announced in the 2025 State of the Union Address an Industrial Accelerator Act (IAA ) to boost demand for clean and Made in EU products in strategic sectors and technologies. It is also announced in the European Economic Strategy Communication of 3 December 2025. The legislative proposal aims to strengthen the EU’s long -term economic resilience, prosperity and strategic autonomy by supporting industrial production and accelerating decarbonisation. It has the following objectives: • Leverage access to and the scale of the Single Market to boost demand for European low-carbon industrial products and net -zero technologies, including by facilitating differentiation for low-carbon steel to increase its value and marketability. • Maximise the quality and benefits for the Single Market of foreign investment in the EU in the most strategic sectors. • Deploy manufacturing projects at scale by speeding -up and simplifying permits for manufacturing projects, as well as by facilitating the development of industrial clusters in industrial manufacturing acceleration areas (‘acceleration areas’). To achieve these objectives, the proposal introduces a balanced regulatory approach to enhance the competitiveness of the industry and mitigate, as well as prevent, strategic dependencies in key sectors. It is limited to the set of minimum requirements necessary to address the problems currently faced by a selected number of strategic sectors, without unduly constraining the market and technological development or disproportionately increasing the cost of specific materials and products. Moreover, the proposal sets a framework to streamline permitting procedures and promote a coordinated approach to investment projects across the Union. • Consistency with existing policy provisions in the policy area The proposal responds to the Clean Industrial Deal, the ‘Competitiveness Compass for the EU’ and the Joint Communication on Strengthening EU Economic Security, all of which acknowledge the need for urgent action to safeguard the EU’s future as an economic powerhouse, an investment destination and a manufacturing centre. It delivers on the Automotive Action Plan, which states that public support benefiting the automotive industry will be made conditional on resilience and sustainability criteria and calls on the Industrial Accelerator Act to promote Made in EU requirements on battery cells and components in EVs sold in the EU, in line with the Union’s international commitments. It also delivers on the Automotive package, adopted on 16 December 2025, which, inter alia, provides for the granting of super -credits for small affordable electric vehicles made in the Union prior to 2035 and amends the 2035 emissions reduction target, with the remaining emissions to be compensated through the use of low -carbon steel made in the Union or EN 5 EN renewable and low -carbon fuels. This proposal 16, which amends Regulation (EU) 2019/631, empowers the Commission to adopt delegated laying down the criteria under which products within its scope may qualify as ‘small zero -emission vehicles made in the Union’ or ‘low- carbon steel made in the Union’. The Automotive package also includes a proposal for a Regulation on clean corporate vehicles 17. This proposal limits financial support for corporate vehicles to zero- and low -emissions corporate vehicles and empowers the Commission to adopt delegated acts setting out the methodology for determining the criteria for ’made in the European Union’. To ensure coherence across the three instruments and legal certainty , this Regulation provides harmonised definitions of ‘small affordable electric vehicles made in the Union’ ‘low -carbon steel made in the Union’ and ‘corporate cars and vans made in the European Union’. Accordingly, the proposals of 16 December 2025 should be adapted to refer to the horizontal approach adopted in this Regulation, rather than to delegated acts, in order to ensure consistency of the legal framework. This Regulation is consistent with the Union Customs Code, which lays down the Union’s non-preferential rules of origin. For the purpose s of determining the origin of products covered by this Regulation, the Union’s non -preferential rules of origin, as established under that Code, apply. • Consistency with other Union policies The IAA contributes to the legislation relevant for EU economic security, industrial competitiveness and decarbonisation. Given the role of energy -intensive industries and net - zero technologies in many sectors of the economy and industrial value chains, several sets of European policies and legislation are relevant. First, the IAA is consistent with and complements the Net Zero Industry Act (NZIA) by extending streamlined permitting provisions, such as single points of contact and time limits to all energy -intensive industrial decarbonisation projects, and by introducing Made in EU requirements for some specific net -zero technologies components, in order to prevent circumvention, further build EU manufacturing capacity as well as resilient and competitive domestic value chains. Second, the proposal is consistent with the European Climate Law, as it aims to contribute to achieving the climate neutrality goal by supporting investments in the decarbonisation of industry and in net-zero technologies. Third, the proposal is consistent with the most recent initiatives to streamline permitting procedures and enhance the competitiveness of the automotive sector. In particular, the IAA aims to streamline key permitting processes, notably through digitalisation and the reuse of data. It builds on the menu of measures made available under the Environmental Permitting proposal, applying it to the specific needs of the sector. The proposal is also consistent with other EU legislation aimed at supporting the transformation of the European industry to a clean, circular and climate neutral economy. For example, the IAA is consistent with and complements forthcoming product -specific environmental legislation. In the construction sector, it complements the Construction Products Regulation (CPR), including the harmonised standard for GHG emissions and the planned low-carbon concrete label. In the steel sector, the forthcoming delegated act on steel products under the Ecodesign for Sustainable Products Regulation (ESPR) will provide the 16 Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EU) 2019/631 as regards CO2 emission performance standards for new light duty vehicles and vehicle labelling and repealing Directive 1999/94/EC. 17 Proposal for a Regulation of the European Parliament and of the Council on clean corporate vehicles. EN 6 EN necessary elements to implement the lead market provisions for steel taking into account the differing decarbonisation characteristics of primary and secondary steel producers and rewarding circularity. In designing labelling and information requirements based on performance thresholds for different products , such thresholds should take account of the recycled content of the industrial product, the threshold decreasing with the increase of recycled content in the products , where relevant . Similarly, the IAA complements the Batteries Regulation, which sets the framework for environmental ambition for EU battery manufacturing, allowing lead market provisions under the Accelerator Act to focus on Made in EU requirements. It complements the upcoming environmental performance rules for PV modules under the Ecodesign and Energy Labelling by promoting EU manufacturing of compliant products. In terms of boosting low-carbon and bio-based solutions it aligns with the new EU Bioeconomy Strategy. The proposal is also consistent with the rest of the EU climate legislation. The EU Emission Trading System (EU ETS) is the main climate policy instrument to reduce GHG emissions and plays a central role in incentivising emission reductions in energy -intensive industries as well as power generation. This proposal complements the price signal provided by the EU ETS, supporting the creation of lead markets for low -carbon industrial products. It is also aligned with the Carbon Border Adjustment Mechanism Regulation (CBAM). In terms of upcoming initiatives, the Circular Economy Act proposal will complement the IAA by boosting recycling and access to secondary raw materials , reducing dependencies and vulnerabilities also for energy-intensive industrial products. Consistency between the sector specific measures in the Accelerator Act and the overarching framework of the upcoming Public Procurement revision will also be ensured. The proposal takes into account the Union’s international commitments in public procurement under the WTO Agreement on Government Procurement (GPA), and relevant bilateral EU trade agreements . O perators established in countries covered by such commitments can benefit from enforceable access to specific procurement procedures defined in the relevant coverage schedules. These commitments are structured across categories of contracting authorities, including central government, sub -central authorities, bodies governed by public law and utilities, and across procurement types such as goods, services and construction works. Their applicability therefore depends on the contracting authority conducting the procurement and the subject matter of the contract. Besides, the Union retains the right to apply general or security exceptions. As a result, the Union’s procurement commitments do not confer uniform or comprehensive access to all partners, and it is not possible to establish a single list of third countries with fully secured access to the entire EU procurement market. Detailed information on procurement commitments and supplier eligibility is available to contracting authorities 18, which supports the consistent application of international procurement obligations while preserving the Union’s ability to pursue its policy objectives as set out in this proposal. While the IAA establishes the framework for what ‘Made in Europe ’ procurement entails, covering energy-intensive industrial products , net -zero technologies and automotive components, the forthcoming revision of the public procurement legal framework will clarify how such procurement is to be carried out. In particular, it will integrate and implement sector-specific requirements set out in relevant legislative acts within a common procurement 18 Detailed information is available through the European Commission’s “Procurement for Buyers ” tool on the Access2Markets portal and will help EU contracting entities to find out which bidders are eligible to participate in public procurement procedures in EU member states, based on the provisions of the WTO Agreement on Government Procurement (GPA) and bilateral EU trade agreements. EN 7 EN framework and , for key sectors, provid e contracting authorities with clear tools to give preference to tenders composed mainly of European products. This approach ensures coherence and legal certainty for both public buyers and economic operators. The proposed Regulation also takes account of the Union’s trade defence instruments, including the recently proposed measure addressing the negative effects of global overcapacity on the EU steel market. In addition, it operates in complementarity to the existing Foreign Direct Investment framework, which is about security and public order . Finally, the proposal is without prejudice to the application of the EU’s competition rules. 2. LEGAL BASIS, SUBSIDIARITY AND PROPORTIONALITY • Legal basis The appropriate legal basis is Article 114 of the Treaty on the Functioning of the European Union (‘the Treaty’) which allows the Union to adopt harmonisation measures. Given the complexity and transnational character of resilience and industrial decarbonisation, such measures are needed to ensure the proper functioning of the Single Market in particular for strategic sectors. Moreover, it is also necessary to use Article 207 of the Treaty on the EU common commercial policy as an additional legal basis regarding certain measures introduced under this Regulation. Provisions on foreign investments capture a specific set of sectors to ensure minimum investment conditions, and value -added production in the Union. Therefore, the provisions are primarily aimed at the proper functioning of the Single Market. Nevertheless, foreign direct investments are explicitly included in the scope of the EU common commercial policy. • Subsidiarity (for non-exclusive competence) Competitiveness, sustainable prosperity, economic security and decarbonisation are matters of high EU relevance. No single Member State alone is capable of effectively addressing industrial decarbonisation due to the integrated nature of the challenge: energy markets, climate change mitigation efforts and the need for the proper functioning of the Single Market for energy -intensive industrial products and net -zero technologies. The competitiveness challenges currently facing industry are likely to prompt Member States to implement unilateral measures. While such efforts may be justified, leaving them uncoordinated risks negatively impacting the functioning of and fragmenting the Single Market, making the EU more vulnerable to external shocks and unable to leverage the assets of the Single Market to deliver benefits to local and European ecosystems. A harmonised EU-level approach is therefore necessary under Article 114 TFEU to ensure the well-functioning of the Single Market and to address the challenges of resilience and industrial decarbonisation, while safeguarding the EU’s competitiveness. The measures included in this initiative would not be as effective (if at all) if implemented by Member States acting alone, as the challenges they address concern the Single Market. They are not limited to individual Member States or to a subset of Member States, but they relate to the EU industrial base and EU -wide value chains. In addition, measures implemented at Member States’ level only are unlikely to adequately meet the needs of closely interconnected supply chains within the Single Market and could lead to further market fragmentation and risks of supply chain disruption. Furthermore, climate change is a trans -boundary challenge requiring both international and EU-level action to effectively complement and reinforce measures taken at regional, national and local levels. The cost of inaction is pan -European. The necessary industrial EN 8 EN transformation will impact many sectors across the EU economy, making coordinated action at the EU-level indispensable to drive transformative, just and cost -effective transition and upward convergence. Uncoordinated national measures risk imposing diverging rules on market operators, non-harmonised public procurement practices, such as under green public procurement practices, and permitting procedures, and ultimately undermining the functioning of the Single Market. Without further EU action, the status quo is likely to persist, increasing the risk of the EU losing strategic industrial capacities and capabilities, of the Single Market to be further fragmented, and of the EU becoming critically dependent on third countries for green, digital, defence, and economic security objectives. This in turn could have negative implications on the Union’s economic security, social and territorial cohesion, primarily through impacts on employment, regional development, and equitable access to industrial opportunities. In line with this logic, the proposed actions focus on areas where there is a demonstrable value added in acting at Union level due to the scale, speed and scope of the efforts needed - actions aimed at improving the business case for EIIs to invest in decarbonisation and for EU strategic sectors and technologies to strengthen their competitiveness. Article 5(3) TEU provides that the principle of subsidiarity applies in areas which do not fall within the exclusive competence of the Union. Article 3(1)(e) TFEU provides that the Union has exclusive competence in the area of common commercial policy. Article 207(2) TFEU falls into the category of exclusive competences. Therefore, the question of subsidiarity does not arise insofar Article 207 TFEU is used as an additional legal base for measures implementing the Union’s common commercial policy. • Proportionality The proposed measures meet the principle of proportionality, demonstrating added value in acting at the EU level due to the scale, urgency and scope of the efforts needed. The measures on permitting will impose obligations on Member States to streamline processes. The digitalisation of the permitting procedures will lead in the long term to time and cost savings for both authorities and businesses, enabling the acceleration of clean manufacturing and industrial deployment across the EU. The low-carbon and made in EU requirements are proportionate to the European industrial production capacities and designed as to not place significant financial burdens on the Member States’ administrative budgets. Establishing lead markets is pivotal to increasing the competitiveness of the key sectors and technologies, thereby strengthening the EU’s industrial base and ensuring autonomy in these strategic sectors. Mandatory conditions on foreign direct investment are necessary to achieve the objective of maximising the benefits of these investments across Member States, strengthening the Single Market benefits and leveraging the access to the Single Market. They will ensure investment comes with know-how development, job creation, and value chain integration. The measures on industrial manufacturing acceleration areas leave Member States responsible for identifying and designating such areas, while providing benefits aimed at enabling better and more competitive conditions for the manufacturing industry. • Choice of the instrument A regulation is considered the most appropriate instrument as it makes it possible to set requirements that apply directly to national authorities and relevant economic operators. This will help ensure that the requirements are implemented in a timely and harmonised way, leading to greater legal certainty. EN 9 EN 3. RESULTS OF EX-POST EVALUATIONS, STAKEHOLDER CONSULTATIONS AND IMPACT ASSESSMENTS • Ex-post evaluations/fitness checks of existing legislation Not applicable. • Stakeholder consultations In line with the Better Regulation Guidelines, the Commission carried out a comprehensive stakeholder consultation process, with the aim of collecting reliable information using a range of methods, consulted parties and tools. The Commission ran multiple activities: an online open consultation between April 15th and July 8th 2025 (314 responses and 133 attached position papers); a call for evidence for the impact assessment (295 replies) ; a targeted consultation open to associations and companies from the EIIs sector (62 responses); a reality check workshop open to companies from the EIIs sector (40 participants); a reality check workshop on EU low -carbon steel label, open only to steel companies (34 participants); a reality check workshop open to Member States (46 participants), with all three reality checks including the possibility to submit position papers; and a targeted consultation open for the battery ecosystem and its downstream sectors (63 respondents). The results of the public consultation are summarised in the factual summary report published with the answers to the call for evidence on the ‘Have your say’ portal. Overall, stakeholders argued the challenges faced by the EU energy-intensive industries as being the lack of sufficiently affordable, renewable energy, unfair international competition, high capital and operational costs attributed to decarbonisation, low willingness for downstream sectors to pay for green premium, complex, long permitting procedures and difficulty accessing funding for decarbonisation projects. The Commission received broad support for the idea of creating and protecting lead markets for low-carbon, EU made industrial products, as a key mechanism to stimulate demand and foster investment in decarbonisation. Similarly, stakeholders agreed that the creation of lead markets will serve to protect the competitiveness of EU clean tech and automotive industries. They further confirmed that Made in EU requirements are important for ensuring that the market for low -carbon industry products and clean tech products is not undermined by non - EU competition. The majority of stakeholders from the batteries sector also supported Made in EU requirements in various policy measures, for both public procurement and products placed on the market. Streamlining and speeding up permitting procedures saw a high support, in particular from SMEs, which have less resources to manage the administrative workload. Stakeholders viewed provisions for foreign investment positively, noting that such measures could attract much-needed capital along with additional benefits. • Impact assessment In line with the Better Regulation Guidelines, this regulatory proposal is based on an impact assessment that analyses the problem and sub -problems related to the need for the EU industry to accelerate the decarbonisation of processes and products, in a global context of competitiveness challenges. The impact assessment identifies possible policy options to address problem -drivers and assesses their likely impacts. The impact assessment was structured to reflect the consultation of the Commission’s Inter-Service Steering Group on the Industrial Accelerator Act. The impact assessment received a negative opinion from the Regulatory Scrutiny Board (RSB) on 26 September 2025. The Board recommended to: EN 10 EN • Develop the dynamic baseline, including a better explanation of the magnitude of decarbonisation investment slowdown and decarbonisation speed gap. • Improve analysis on problem drivers, including drivers related to permitting and FDIs, and, based on this, revise the general and specific objectives in a S.M.A.R.T manner, as well as improve the measures. • Conduct a more in -depth analysis of the availability and economic viability of industrial decarbonisation technologies, and the demand for low -carbon alternatives, including price elasticity and substitutability. • Improve, by better quantifying, the costs and benefits analysis, including the improvement of Annex 3. • Acknowledge the robustness of the modelling for the costs and benefits analysis, and transparently report the assumptions used for the calculation. All the above-mentioned points were addressed to the best extent possible. When the revised impact assessment was resubmitted, the Board issued a positive opinion with reservations on 20 November 2025. The reservations pointed at the need to improve the analysis on the expected impacts of the general objective, as well as the interplay with economic security implications. It also noticed the need to further explain the limitations related to the modelling, as well as the cost benefit calculations and impacts on consumers and downstream sectors. The comments have been addressed via an improved analysis and to the extent feasible. The Board’s opinions as well as the final impact assessment and its executive summary are published together with this proposal. The impact assessment is built around a set of 5 specific objectives that tackle the problem drivers identified. It sets out three policy options for each specific objective, based on the level of policy intervention, the scope, the efficiency and coherence, as well as the proportionality and subsidiarity principles. Policy option 1 (PO1) proposes a carbon intensity label for all energy -intensive sectors. It aims to create lead markets, by introducing low -carbon requirements for energy -intensive materials (steel, cement 19 and aluminium) in selected downstream sectors (automotive and construction) in public procurement and support schemes. It also proposes introducing minimum Made in EU requirements for batteries, solar PV systems and vehicle components in public procurement procedures and for public support schemes. Regarding the objective of maximising benefits for FDIs, it introduces voluntary conditions for investments above a specified threshold for battery supply chain and potentially for relevant EIIs. To streamline permitting, the option proposes a unified digital procedure for all permits, applicable to the entire manufacturing sector. Lastly, it recommends Member States to facilitate public funding for projects in industrial areas. Policy Option 2 (PO2) builds upon the first option by broadening the scope and requirements. Regarding lead markets, under PO2, low -carbon and Made in EU requirements are introduced for steel, cement and aluminium used in selected downstream sectors (automotive and construction) in public procurement and support schemes. Conditions for specific investments are mandatory rather than voluntary. PO2 increases support for the permitting process by introducing additional measures dedicated to EIIs. Lastly, it requires, instead of recommends, Member States to designate industrial areas. The label decreases 19 For the lead markets measures related to cement, the requirement s are established at the level of concrete and mortar, as these are the relevant final products used in construction. EN 11 EN however its scope by mandating a specific carbon intensity label for steel, with detailed rules that can later be expanded to include other energy-intensive materials. Policy Option 3 (PO3) further extends the previous two options. On lead markets, it introduces low -carbon and Made in EU requirements for all steel, cement and aluminium placed on the market for use in automotive and construction It also extends Made in EU requirements to all batteries, solar PVs and key vehicle components placed on the market. On permitting, it introduces dedicated measures for industrial areas. Overall, the preferred option is PO2, as it would meet the objectives in the most effective and efficient way. It also has a more positive impacts in terms of proportionality that the other two options, as it suggests introducing low -carbon and made in EU for public procurement and public support only, while also showing the most coherence. PO2 could bring about one -off net reductions of about EUR 240 million in terms of administrative burden for businesses, mainly from permitting provisions (see Annex 4 of the impact assessment). The costs and benefits analysis concluded that PO2 results in overall net benefits of about EUR 8 billion for the economy in 2030 , despite showing some adjustment costs for downstream sectors impacted by the low -carbon and/or Made in EU requirements. However, these losses are largely offset by long -term benefits in terms of value -added creation enhanced economic security, resilience and job creation of the European strategic industries, which ultimately provide stability and sustainable economic prosperity. PO3 would be more effective in achieving certain objectives, especially concerning the lead market provisions, but it would disproportionately increase the costs for the economy. Differences compared to the preferred option in the impact assessment The proposal for the Regulation contains measures that diverge from the preferred policy option presented in the impact assessment, namely: • Concerning permitting procedures, s pecific measures for industrial manufacturing clusters (namely, tacit approval at intermediate stages and priority assessment of connection requests), which were not in the preferred policy option, have been introduced, in view of the synergetic benefits expected with the rest of the provisions on industrial manufacturing acceleration areas. • In terms of scope, the provisions on public procurement procedures, auctions and support schemes cover additional net -zero technologies than those analysed in the impact assessment. The proposal introduces Made in EU requirements also for solar thermal, heat pumps, wind, nuclear fission, and hydrogen, in line with the goal of increasing EU’s economic security, resilience, sustainability and security of supply. A dedicated annex in the impact assessment has been added to present the key impacts of these measures. While batteries and solar PV already today face a unique combination of high global overcapacities and high EU dependencies on single sources of supply, the other net -zero technologies in scope face intense (not always fair) global competition and could experience similar market developments. Therefore, the Commission has decided to introduce such provisions, in order to anticipate and mitigate potential future supply and market risks. Regarding steel, the proposal limits requirements for steel used in the automotive and construction sectors to low -carbon criteria (rather than combining low -carbon and EU-origin requirements) within the framework of public procurement and support schemes. In light of the recently proposed trade measure addressing the negative EN 12 EN trade-related effects of global overcapacity on the Union steel market, introducing a European preference for steel is not considered necessary. • For the purposes of compliance with the low -carbon requirements, concrete will be considered low -carbon where it meets the criteria for “low -carbon concrete” laid down in the implementing measures adopted under the Construction Products Regulation (CPR). Likewise, low-carbon steel products used in construction and covered by a harmonised technical specification must comply with the low -carbon definition established under the CPR framework. Steel products falling outside the scope of the CPR will be considered low -carbon where they meet the conditions for “low-carbon steel” to be set out in the delegated acts under the ESPR. This approach will ensure regulatory consistency with the existing product specific legislation. • In addition, the proposal includes amendments to Article 25 of NZIA on public procurement to clarify the technology scope in including only technologies that are commonly publicly procured. It also includes changes in Article 26 of NZIA in relation to auctions. This is to take account of the growing importance of auctions for securing the Union’s energy supply and safeguarding its technological sovereignty. It also includes amendments to Article 1 and 22 of the Construction Products Regulation. • The proposal does not follow the preferred policy option to adopt a voluntary steel label in support of low-carbon steel investment decisions. Instead, the focus is put on implementing rapidly existing commitments, such as in the context of the ESPR, and to design an empowerment to be able to supplement the lead market provisions with the development of voluntary labels on the low -carbon performance classes of energy-intensive industrial products. All these measures remain within the overall framework assessed in the impact assessment and do not significantly affect the comparison of options. For clean technologies, the scope extension implies that the resulting impacts on electricity markets could be of higher magnitude, including for downstream users. However, the same safeguards that were analysed in detail for batteries and solar apply as well to other net zero technologies. • Regulatory fitness and simplification This proposal is designed to mitigate the impacts of Union origin and low -carbon requirements, and foreign direct investment conditionalities, on regulatory burden. Other parts e.g. on permitting directly reduce it for economic operators. The administrative costs for businesses that will apply directly with this Regulation are expected to be offset by efficiency gains from streamlined permitting and long-term benefits in terms of greater resilience of supply chains . They relate to obligations to demonstrate compliance for lead market provisions for companies operating in relevant downstream sectors. In terms of conditionalities on investments, the uniform application of the conditions across the Union would largely prevent forum shopping and race to the bottom in attracting foreign investments, while harmonising and simplifying the business conditions. For Member States, additional administrative costs are expected, connected to the monitoring and implementation of lead markets provisions in public procurement and support sche mes. Similarly, the implementation of conditions on foreign investment, including prescription, monitoring and penalising, will add to the administrative costs. Permitting provisions are also expected to increase costs for public authorities in the short term, while, on the other hand, digitalisation and simplification will deliver substantial cost and time savings in the medium EN 13 EN and long term, for both the industry and public authorities. Lastly, the designation of acceleration areas as well as implementation of benefits for industrial areas will come with an additional administrative cost for Member States, against the benefits for individual companies operating within the areas. • Fundamental rights Article 16 of the Charter of Fundamental Rights of the European Union (‘the Charter’) provides for the freedom to conduct a business. The measures under this proposal create innovation capacity and foster demand for energy -intensive industrial products in the Union, which can reinforce the freedom to conduct a business in accordance with Union law and national laws and practices. 4. BUDGETARY IMPLICATIONS The proposal has budgetary implications for the Commission. Specifically, it will require approximately 6 full -time equivalents per year to implement, an additional recurring cost of EUR 20 000 per section for the expansion of Annex 1 of the SGDR with the envisioned permitting provisions and a one-off cost of EUR 20 000 for investment in the back -end of the Single Digital Gateway (SDG) system. Compared to the Impact assessment report, the figures have been adjusted to reflect to wider scope of the measures proposed in the Act. The budget implications are mainly to carry out the work foreseen to (i) review foreign direct investment notifications submitted by the Investment Authorities within Member States; (ii) monitor enforcement of Member States’ obligations on lead market provisions ; and (iii) implement the expansion of Annex II of the SGDR and the back -end SDG system to meet permitting provisions. 5. OTHER ELEMENTS • Implementation plans and monitoring, evaluation and reporting arrangements The Commission will evaluate the coherence, results, impacts, proportionality and subsidiarity of this proposal three years after the date on which it becomes applicable. A review clause is proposed after five years, to assess whether lead market provisions remain necessary in light of market developments, or whether such measures should be considered for other sectors critical to the EU’s economic security. The measures proposed are conceived as targeted and time -bound interventions to accelerate the Union’s industrial capacity and boost economic security of strategic sectors only. This guarantees that the tailor -made approach remains flexible, evidence -based and can be adapted to the evolving needs of Europe’s industrial base. In order to conduct the evaluation, Member States and national competent authorities will provide necessary and relevant information to the Commission, as appropriate, at its request. • Detailed explanation of the specific provisions of the proposal Chapter I of the Regulation outlines the general provisions of the Regulation, including the subject matter, namely the improvement of the functioning of the internal market by establishing a framework to ensure the Union’s access to a secure, sustainable, and resilient supply of relevant manufacturing products and their supply chains , the scope of the Regulation, the industrialisation objective and the definitions needed for the purposes of this Regulation. Chapter II outlines the enabling conditions for industrial production and decarbonisation. It sets out provisions that ensure streamlined, efficient and digital permit -granting procedures EN 14 EN for industrial manufacturing projects. It also introduces provisions on permit -granting procedures for energy -intensive industry decarbonisation projects and net zero industry projects. Chapter III establishes a framework for the application of Union origin and low -carbon requirements to certain products and services from strategic sectors in the context of public procurement and public support schemes. It sets out low -carbon requirements for steel, and Union origin and low -carbon requirements for concrete and mortar and aluminium used in specific downstream sectors, namely buildings, infrastructure and transport, as well as Union origin requirements for vehicles. In addition, it provides an empowerment for laying down demand -side measures concerning products from the chemical industry. Chapter IV establishes the framework for the imposition of conditions on foreign direct investments in emerging strategic sectors, where the investment value exceeds EUR 100 million. Such investment will not take effect until the relevant conditions have been fully complied with. The Investment Authorities designated by Member States will be responsible for reviewing and monitoring compliance with those conditions, with the Commission playing a coordinating role. Chapter V establishes a framework for the designation of industrial manufacturing acceleration areas by Member States based on a defined set of criteria. These areas are intended to facilitate the geographical clustering industrial activities and to promote favourable conditions for the industries established therein. Industrial manufacturing acceleration areas will be developed in synergy with other Union initiatives. Chapter VI establishes the common, final provisions of the Regulation by setting out implementation rules, including evaluation, monitoring, review, exercising the delegation power and penalties. It also includes amendments to Regulation (EU) 2018/1724 [Single Digital Gateway Regulation]; Regulation (EU) 2024/1735 [Net -Zero Industry Act], including provisions on origin requirements for public procurement procedures; cybersecurity requirements for public procurement and strengthened cybersecurity provisions for auctions; origin requirements for auctions and for other types of public intervention. Finally, it includes amendments to Regulation (EU) 2024/3110 [Construction Products Regulation] in order to ensure coherence and synergies with, and to support the objectives of, this proposal. Annex I sets out the list of sectors for industrial manufacturing acceleration areas. Annex II defines low -carbon content requirements, Union origin requirements, or both, for certain products of energy -intensive industries in the context of public procurement procedures and public support schemes. Annex III sets out Union origin requirements for vehicles for public procurement procedures and public support schemes. It also sets the criteria for a small zero -emission vehicle to be considered ‘made in the EU’ for the purposes of Article 5 of Regulation 2019/631. Annex IV sets out the amendment to Annex II to Regulation (EU) 2018/1724. EN 15 EN 2026/0068 (COD) Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a framework of measures for the acceleration of industrial capacity and decarbonisation in strategic sectors and amending Regulations (EU) 2018/1724, (EU) 2024/1735 and (EU) 2024/3110 (Text with EEA relevance) THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION, Having regard to the Treaty on the Functioning of the European Union, and in particular Article 114 and 207(2) thereof, Having regard to the proposal from the European Commission, After transmission of the draft legislative act to the national parliaments, Having regard to the opinion of the European Economic and Social Committee20, Having regard to the opinion of the Committee of the Regions21, Acting in accordance with the ordinary legislative procedure, Whereas: (1) The global COVID -19 pandemic, Russia’s illegal and unprovoked war of aggression against Ukraine, hostile economic actions, cyberattacks, foreign interference, the weaponisation of Union economic dependencies, arbitrary deployment of trade measures, the increa sing effects of climate change and rising geopolitical tensions have exposed the Union’s vulnerabilities and pose a serious threat to the Union’s societies, economies, and undertakings. The Union’s economic security is therefore inextricably linked to its capacity to strengthen resilience and mitigate risks arising from hostile economic interconnections. The Union is committed to protecting its economic security and addressing threats to its supply chains, infrastructure, key technologies and threats coming from the weaponisation of its economic dependencies22. The Union’s economic security and social cohesion are inextricably linked to its capacity to strengthen its resilience and mitigate the risks arising from economic interconnections. That requires the strengthening of the resilience of its supply chains and the safeguarding of its internal market and industrial capacity, while maintaining territorial, social and economic cohesion, including by fostering a strong and competitive industrial base in selected strategic sectors, such as clean and digital technologies, energy-intensive industries and the automotive sector, to secure access to strategic materials and technologies and retain high-quality jobs in the Union. 20 […] 21 […] 22 https://www.consilium.europa.eu/en/policies/european-economic-security/ EN 16 EN (2) The European Economic Security Strategy 23, and the Economic Security Communication of 3 December 2025 24 clearly set the Union’s pathway towards addressing geo -economic tensions and technological shifts to avoid economic dependencies in critical industrial supply chains, technologies and infrastructures which can lead to local shortages and threat en the Union’s competitiveness, economy and ultimately its social cohesion. (3) Despite t he Union ’s objectives of economic security, resilience, quality jobs and climate neutrality, manufacturing capacity has decreased over the last 20 years. The share of manufacturing in total GDP has declined from 17 .4% to 14.3% between 2000 and 2024. It is therefore necessary to strengthen economic resilience, competitiveness and job creation, while also ensuring that the Union’s climate and energy targets are met. The Union’s manufacturing capacity should aim to account for at least 20% of the Union’s gross domestic product by 2035. The development of industrial manufacturing projects within the Union should be facilitated to contribute to that objective. (4) The challenges posed by the need for industrial decarbonisation and for a resilient industrial production are complex and transcend national borders. Fragmented national measures aimed at tackling those challenges risk undermining the functioning of the internal market. Measures adopted by individual Member States could lead to divergent requirements imposed on market operators, inconsistent procurement practices and d ivergent permit -granting procedures across Member States . Such measures could create obstacles to cross -border trade within the Union and distortions on the internal market, undermining investor confidence, increas ing costs, and redirecting investment flows within the Union. It is therefore necessary to establish harmonised measures to ensure the proper functioning of the internal market. (5) To ensure legal certainty, reference should be made to the most recent revision of the European Classification of Economic Activity (NACE, Rev. 2 ). In order to ensure consistency with existing Union legislation and enable the uniform application of this Regulation across the Union, industrial manufacturing as well as energy -intensive industries should be defined by referring to the NACE classification codes25. (6) Energy-intensive industries are a key pillar of the Union’s prosperity. They enable a wide range of downstream industries and contribute to the Union’s economy by creating jobs, supporting growth and fostering innovation. However, they also account for around 22.3% of the Union’s greenhouse gas emissions and require substantial investments in decarbonisation, leading also to reduce d pollution. The combination of high energy prices, the need for large -scale decarbonisation investments and unfair global competition places energy -intensive industries at a competitive disadvantage, and there are growing signs of industrial decline. (7) Net-zero technologies are pivotal to achieving the Union’s energy and climate targets. They play a crucial role in reducing greenhouse gas emissions and enabling the decarbonisation of a wide range of economic sectors, including building, transport and the industry. They are also key in advancing sustainable energy solutions, by enabling 23 Joint Communication to the European Parliament , the European Council and the Council on “European Economic Security Strategy” (JOIN/2023/20 final). 24 Joint Communication to the European Parliament and the Council on Strengthening EU economic security (JOIN(2025)977 final). 25 With the exception of NACE Code C12, e -liquids used in vaping devices and nicotine -containing products under C20.59 and manufacture of electronic cigarettes and tobacco heating devices under C32.99 (unless they are authorised as medicinal products or certified as medical devices) . EN 17 EN the decarbonisation of the energy supply and providing innovative solutions to enable the needed expansion and digitalisation of electricity grids and the energy system as a whole. However, the Union’s net -zero technology manufacturing sector faces significant challenges, including increasing global competitive pressures and supply chain vulnerabilities which endangers the Union’s competitiveness and economic resilience. (8) The bioeconomy is able to provide sustainable biomass and bio -based solutions for industrial production. The Commission communication “A Strategic Framework for a Competitive and Sustainable EU Bioeconomy” 26 identifies lead markets, such as bio - based plastics and polymers, bio -based chemicals and biobased construction products, as well as lead technologies that can support the Union’s strategic autonomy and the decarbonisation of the industrial sectors identified in this initiative. (9) The automotive industry is a cornerstone of the Union economy . With a view to delivering on the Union’s climate policy objectives, over the past years, the European automotive industry has been investing heavily in the development of cleaner vehicles and innovative components. Electric vehicles and electric vehicle components, including traction batteries, e -powertrain components and electronic systems, are essential technologies for advancing the decarbonisation of road transport. However, as a result of costs disadvantage and the transformation of the value chain with an increasing value share for batteries, e -powertrain and electronics, the level of Union content in vehicles produced in the Union is decreasing. It is no longer possible to postpone effective measures to avoid the risk of local production being displaced. In the absence of such measures, the current circumstances would lead to a full reliance on third countries for key vehicle components. That would be a serious threat to the Union’s economic security and future resilience, as well as for its climate goals. (10) The unpredictability, complexity and, at times, excessive length of national permit - granting procedures undermine the cost-effectiveness of investments necessary for the development of industrial activities. Therefore, and in order to ensure and speed up the effective implementation of industrial manufacturing activities, Member States should apply streamlined and digitalised permit -granting processes. A competent authority should coordinate all permit granting processes and issue a comprehensive decision within the applicable time limit. (11) The implementation of single access points should be based on the European Business Wallets established pursuant to [Proposal for a Regulation on the establishment of European Business Wallets 27], as they provide a secure, standardised, and interoperable platform for businesses to interact with public sector bodies. This should enable the efficient and effective submission of applications, while ensuring a high level of data protection, cybersecurity, and integrity of information. The European Business Wallets will also enable the streamlining of investments that were made and the avoidance of unnecessary duplications, allowing for the optimisation of resources and the reduction of administrative burdens for businesses. The implementation of single access points should also, to the extent possible, use existing Union digital infrastructures, catalogues and building blocks, including those developed under the Once-Only Technical System and its implementing acts. This would promote 26 Communication from the Commission to the European, the Council, the European Economic and Social Committee and the Committee of the Regions, A Strategic Framework for a Competitive and Sustainable EU Bioeconomy (COM(2025)960). 27 Proposal for a Regulation of the European Parliament and of the Council on the establishment of European Business Wallets (COM/2025/838 final). EN 18 EN complementarity, interoperability and the efficient use of public resources, while avoiding duplication of existing digital solutions. (12) In order to ensure streamlined and simplified permit -granting procedures, a single application covering all necessary permits should be provided for all industrial manufacturing projects except for the manufacturing sector under the C12 code. It should not apply w here specific permit -granting or licensing procedures or requirements are established in Union harmonisation legislation for industrial manufacturing projects, such as pursuant to Regulation s (EU) 2024/1735 28 and (EU) 2024/125229 of the European Parliament and of the Council . Sectorial Union legislation governing medicines and medical devices has recently undergone or is undergoing further streamlining of harmonised rules and timelines for authorisations and certifications, with options to speed up the process if necessary. Those rules should therefore not be considered permit -granting procedures within the context of this initiative. (13) Regulation (EU) [202X/XX] of […] 30 establishes a common acceleration framework for environmental assessments in order to boost the Union’s roll out of key technologies, reduce dependencies and strengthen competitiveness. Procedures linked to environmental assessments should be accelerated and streamlined for plans, programmes and projects across all sectors of the economy while maintaining high levels of protection of human health and of the environment. Some sectors may, however, require yet faster environmental assessments. Therefore, and in order to safeguard the coherence of the legal framework of environmental assessments, while allowing for the additional needs for acceleration in certain strategic sectors, Regulation (EU) [202X/XX] establishes a dedicated toolbox that should therefore be used in the context of this Regulation. Given their essential role in ensuring the achievement of the Union’s climate objectives, and their contribution to the Union’s resilience and economic security, energy -intensive industry decarbonisation projects, industrial manufacturing projects located in industrial manufacturing acceleration areas, and net -zero technology projects should be considered strategic projects within the meaning of Regulation (EU) [202X/XX ] and therefore benefit from the dedicated toolbox established under that Regulation. (14) Regulation (EU) 2024/1735 sets out provisions that streamline administrative and permit-granting processes for net -zero technology manufacturing projects. Some specific components in the supply chain of net-zero technologies are produced through energy-intensive production processes. Energy -intensive industry decarbonisation projects fall within the scope of Regulation (EU) 2024/1735 where the relevant facilities produce components that are part of the supply chain of a net -zero technology. However, energy-intensive facilities that do not produce components that are used in net -zero technologies are currently excluded from the scope of Regulation (EU) 2024/1735. Th is creates the risk of uneven conditions of between 28 Regulation (EU) 2024/1735 of the European Parliament and of the Council of 13 June 2024 on establishing a framework of measures for strengthening Europe’s net -zero technology manufacturing ecosystem and amending Regulation (EU) 2018/1724 (OJ L, 2024/1735, 28.6.2024, ELI: http://data.europa.eu/eli/reg/2024/1735/oj). 29 Regulation (EU) 2024/1252 of the European Parliament and of the Council of 11 April 2024 establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) No 168/2013, (EU) 2018/858, (EU) 2018/1724 and (EU) 2019/1020 (OJ L, 2024/1252, 3.5.2024, ELI: http://data.europa.eu/eli/reg/2024/1252/oj ). 30 Proposal for a Regulation of the European Parliament and of the Council on speeding -up environmental assessments (COM/2025/984 final, 10.12.2025). EN 19 EN energy-intensive industries and slows down decarbonisation efforts. All energy - intensive decarbonisation projects should therefore be subject to the same permit - granting processes. (15) The Union should adopt a more strategic approach in leveraging its economic weight and the value of access to its internal market. In that context, the strategic use of public intervention is essential to prevent critical dependencies in the Union . Public procurement amounts to 15% of the Union’s GDP. Contracting authorities and entities should therefore, where appropriate, ensure that public procurement requirements foster economic security and resilience of supply chains. Public support schemes also play an important role in stimulating demand in downstream sectors that account for a significant share of demand for certain strategic products and technologies. Such schemes should therefore favour beneficiaries that make a greater contribution to strengthening the Union’s resilience and advancing its decarbonisation objectives. Auctions are crucial for the deployment of net -zero technologies and should be designed to foster demand for such technologies including components originating from the Union. (16) The Union and Member States maintain an open investment environment, as enshrined in the Treaty on the Functioning of the European Union (TFEU) and embedded in their international commitments. This includes commitments u nder the World Trade Organisation Agreement on Government Procurement (GPA) 31, as well as bilateral trade agreements, to open public procurement procedures and other forms of public intervention. At the same time, the Union retains the right to apply general or security exceptions. The Commission will regularly assess whether the conditions for excluding a third country from the scope of the provisions deeming content originating in third countries to be equivalent to Union origin, are in place, and will take appropriate action. Economic security aims at protecting and strengthening the internal market. Member States cannot rely on economic security to prevent, condition, or otherwise hinder in any way investments coming from other Member States. (17) The progressive integration of candidate countries and potential candidates into the Union’s internal market, including through their gradual participation in Union policies and programmes, is essential to support their alignment with the acquis, strengthen their competitiveness, promote their deeper integration into Union value chains and enhance the Union’s economic security. This Regulation should therefore contribute to fostering such gradual integration, including by facilitating the participation of economic operators from those countries in Union -wide value chains, Union public procurement, public support schemes and auctions where appropriate and in line with the Union’s interests and objectives. (18) Acknowledging the importance of the Union’s advancing towards greater strategic autonomy and resilience, the Union should also recognise for reasons of coherence the proactive efforts of partner countries to prioritise domestic participation in economic activities, similar to the measures established within this Regulation. In the context of implementing Union origin requirements within certain categories of public procurement and public schemes procedures, the Union should thoughtfully consider partner countries’ content conditions for strategic Union-funded or supported investments in these partner countries, accepting its presence. This strategic approach 31 World Trade Organisation (WTO), Agreement on Government Procurement 2012, available at https://www.wto.org/english/docs_e/legal_e/rev-gpr-94_01_e.pdf. EN 20 EN is expected to enhance mutual economic benefits, strengthen strategic partnerships, and align with the Union’s overarching objectives of international partnerships. (19) Demand-side measures should focus on establishing low -carbon requirements for steel, cement and aluminium used in buildings, infrastructure and motor vehicles , where appropriate , since those sectors are the most energy -intensive industries. Targeted Union wide demand-side measures can help create lead markets for low - carbon and Union -produced energy -intensive industrial products, supporting decarbonisation while strengthening the Union’s industrial base. (20) Downstream sectors that account for a large share of demand for certain energy - intensive materials, such as the construction and automotive sectors, should be prioritised under this Regulation when establishing low -carbon requirements, Union origin requirements, or both. Th at is particularly appropriate given that such sectors are significantly subject to public procurement and support schemes, while the share of energy -intensive input in total production value is relatively small and therefore minimises the impact of any price premium. (21) In order to ensure regulatory consistency with existing Union product legislation, steel, concrete and aluminium in construction should be considered low -carbon in compliance with the requirements set out in the implementing measures adopted pursuant to Regulation s (EU) 2024/3110 32 and (EU) 2024/1781 33 of the European Parliament and of the Council. (22) The Clean Industrial Deal Communication 34 highlighted the need to create lead markets for industrial products with a low greenhouse gas emissions intensity, including by promoting such products on the internal market through the establishment of a Union labelling scheme, starting with the steel sector. That should be seen in the context of Union products legislation already designed to introduce labelling and information requirements, including comprehensive product labelling requirements to be established under the delegated acts pursuant to Regulation s (EU) 2024/3110 and (EU) 2024/1781. Considering the importance of both primary and secondary steel production for the long -term resilience of the Union industrial base, such requirements should be based on classes of performance that acknowledge the different decarbonisation effort of the technologies ’ routes, also rewarding circularity, adjusting emission intensity thresholds based on percentage of scrap metal used in production for those product categories that typically require primary steel production, as necessary. It should also be possible to complement the delegated acts adopted pursuant to Regulations (EU) 2024/3110 and (EU) 2024/1781 in order to support the creation of lead markets by informing investment decisions towards products granted a lower greenhouse gas intensity performance class, for industrial products not yet regulated by a Delegated Act under Regulation (EU) 2024/1781, or covered in the scope of products included in the working plan adopted in accordance with that 32 Regulation (EU) 2024/3110 of the European Parliament and of the Council of 27 November 2024 laying down harmonised rules for the marketing of construction products and repealing Regulation (EU) No 305/2011 (OJ L, 2024/3110, 18.12.2024, ELI: http://data.europa.eu/eli/reg/2024/3110/oj). 33 Regulation (EU) 2024/1781 of the European Parliament and of the Council of 13 June 2024 establishing a framework for the setting of ecodesign requirements for sustainable products, amending Directive (EU) 2020/1828 and Regulation (EU) 2023/1542 and repealing Directive 2009/125/EC (OJ L, 2024/1781, 28.6.2024, ELI: http://data.europa.eu/eli/reg/2024/1781/oj). 34 Communication From the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of The Regions , A Green Deal Industrial Plan for the Net-Zero Age (COM/2023/62 final, 1.2.2023). EN 21 EN Regulation. To do so, it should be possible to establish voluntary classification systems based on the greenhouse gas intensity of industrial products. To provide environmental integrity and administrative feasib ility, it is important to rely on well - established and monitored emissions accounting methodologies. For domestic installations and sub -installations, the EU Emissions Trading System (EU ETS) provides relevant products benchmarks and system boundaries in Annex I to Commission Delegated Regulation (EU) 2019/331 35 and sound emissions accounting rules in Commission Implementing Regulation (EU) 2018/2066 36. Concerning imported products, in order to limit administrative burden, it is appropriate to enable the use of data already verified in the context of the Carbon Border Adjustments Mechanism (CBAM), in accordance with implementing rules adopted pursuant to Article 7(a) of Regulation (EU) 2023/956 of the European Parliament and of the Council37. In view of reflecting accurately the greenhouse gas intensity of the industrial product, in addition to covering the direct emissions typically related to the installation’s activities covered by Annex I of Directive 2003/87/EC of the European Parliament and of the Council 38, it is appropriate to also account for the most important sources of indirect emissions, including those from electricity, hydrogen and heat production used in the manufacturing process. To ensure consistency and limit administrative burden, methodologies used to define low -carbon requirements under this Regulation should make use of emissions of data reported under the EU ETS and CBAM, where available and relevant. (23) In order to ensure the attainment of the objectives of this Regulation , in particular the creation of lead markets for European low-carbon industrial products, minimum mandatory technical specifications should be provided for low-carbon and Union origin requirements in public procurement procedures Those requirements should apply to the procurement of those products in public supply contracts and in public works, public services contracts and concessions, where those products will be used for activities conducted under those contracts. In compliance with the public procurement framework, those minimum mandatory technical specifications should avoid artificially restricting competition and avoid favouring a specific economic operator. Contracting authorities and contracting entities should conduct the public procurement procedures in compliance with Directives 2014/23/EU 39, 2014/24/EU 40 35 Commission Delegated Regulation (EU) 2019/331 of 19 December 2018 determining transitional Union-wide rules for harmonised free allocation of emission allowances pursuant to Article 10a of Directive 2003/87/EC of the European Parliament and of the Council (OJ L 59, 27.2.2019, p. 8 , 27.2.2019, ELI: http://data.europa.eu/eli/reg_del/2019/331/oj). 36 Commission Implementing Regulation (EU) 2018/2066 of 19 December 2018 on the monitoring and reporting of greenhouse gas emissions pursuant to Directive 2003/87/EC of the European Parliament and of the Council and amending Commission Regulation (EU) No 601/2012 (OJ L 334, 31.12.2018, p. 1, 31.12.2018, ELI: http://data.europa.eu/eli/reg_impl/2018/2066/oj). 37 Regulation (EU) 2023/956 of the European Parliament and of the Council of 10 May 2023 establishing a carbon border adjustment mechanism (OJ L 130, 16.5.2023, p. 52 , 16.5.2023, ELI: http://data.europa.eu/eli/reg/2023/956/oj). 38 Directive 2003/87/EC of the European Parliament and of the Council of 13 October 2003 establishing a scheme for greenhouse gas emission allowance trading within the Community and amending Council Directive 96/61/EC (OJ L 275, 25.10.2003, p. 32 , 25.10.2003, ELI: http://data.europa.eu/eli/dir/2003/87/oj). 39 Directive 2014/23/EU of the European Parliament and of the Council of 26 February 2014 on the award of concession contracts (OJ L 94, 28.3.2014, pp. 1-64, ELI: http://data.europa.eu/eli/dir/2014/23/oj). 40 Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC (OJ L 94, 28.3.2014, p. 65 , ELI: http://data.europa.eu/eli/dir/2014/24/oj). EN 22 EN and 2014/25/EU 41 of the European Parliament and of the Council and applicable sectoral legislation. The Union origin of products and components should be determined in accordance with the Union customs legislation. (24) In order to ensure the feasibility of the requirements at reasonable cost and avoid restricting competition, it is necessary to lay down the conditions under which contracting authorities may, on an exceptional basis, decide not to apply the low- carbon and Union origin requirements. Those conditions should cover cases where the application of such requirements would result in technical incompatibilities in the operation or maintenance of a project such as situations where the use of such products would risk compromising the fulfilment of basic requirements for construction works of the building or infrastructure, set out in Regulation (EU) 2024/3110. The requirements laid down in this Regulation should apply exclusively to procurement procedures falling within the scope of Directive 2014/23/EU, Directive 2014/24/EU and Directive 2014/25/EU, that is, to procedures whose estimated value reaches or exceeds the thresholds set out in those Directives. Accordingly, procurement procedures not covered by those Directives, including those below the applicable thresholds, should not be subject to the requirements established by this Regulation , thereby avoiding disproportionate obligations for low -value procurements carried out by contracting authorities, including at local level. (25) The Automotive package adopted on 16 December 2025 includes a proposal to amend Regulation (EU) 2019/631 of the European Parliament and of the Council42 to provide, inter alia, for the granting of super -credits for small affordable electric vehicles made in the Union prior to 2035 and amends the 2035 emissions reduction target, with the remaining emissions to be compensated through the use of low -carbon steel made in the Union or renewable and low-carbon fuels. The Automotive package also includes a [proposal for a Regulation on clean corporate vehicles ] which limits financial support for corporate vehicles to zero- and low -emissions corporate vehicles ‘made in the European Union’. In order to ensure legal certainty and consistency with Regulation (EU) 2019/631 as amended and the [proposal for a Regulation on clean corporate vehicles], this Regulation should lay down definitions of ‘small affordable electric vehicles made in the Union’, ‘low-carbon steel made in the Union’ and ‘corporate cars and vans made in the European Union’. (26) In order to simplify procedures and reduce administrative burden, the verification of compliance with the requirements laid down in this Regulation should not impose a disproportionate burden on economic operators or contracting authorities. The verification system should therefore be based on a self -declaration by economic operators. Such approach is consistent with the general framework for public procurement established by Directive 2014/24/EU, in particular Article 59 thereof, which provides for self -declaration of compliance, subject to subsequent verification of the successful tenderer . For vehicles, manufacturers should, at the time of issuing the certificate of conformity in accordance with Regulation (EU) 2018/858 of the 41 Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC (OJ L 94, 28.3.2014, p. 243). 42 Regulation (EU) 2019/631 of the European Parliament and of the Council of 17 April 2019 setting CO2 emission performance standards for new passenger cars and for new light commercial vehicles, and repealing Regulations (EC) No 443/2009 and (EU) No 510/2011 (OJ L 111, 25.4.2019, p. 13 , ELI: http://data.europa.eu/eli/reg/2019/631/oj). EN 23 EN European Parliament and of the Council 43, provide an accompanying document certifying for the vehicles that comply with the relevant Union origin requirements. This document should be equivalent to a self -declaration and form part of the documentary evidence demonstrating compliance with the requirements set out in this Regulation. (27) To ensure that the requirements established by this Regulation remain appropriate even as market conditions, technological developments and the climate and internal market policy objectives of the Union continue to evolve, the Commission should be empowered to revise the requirements based on objective criteria and monitoring results. When assessing whether to revise Union origin requirements, low -carbon requirements, or both, the Commission should take into account developments in the relevant legislative frameworks, including the customs legislation on rules of origin, Emissions Trading System laid down in Directive 2003/87/EC the Carbon Border Adjustment Mechanism laid down in Regulation (EU) 2023/956, and trade defence instruments. (28) Investment, including from foreign entities, plays a critical role in fostering a strong internal market and territorial cohesion , particularly by promoting innovation and driving economic growth in the Union which is essential for its competitiveness. However, in exceptional circumstances, particularly large investments originating from third countries that hold a very significant market position in the global risk disrupting important supply chains and the security of emerging strategic sectors that are of particular importance in the development of the internal market. Divergent conditions applied by Member States for such investments fragment the internal market by creating unequal conditions for investors allowing investments that do not contribute genuine added value to the Union economy while creating significant risk for the development and supply security in these sectors and creating an incentive for “regulatory arbitrage” by investors. Allowing such investments to proceed without any conditions could mean that the added value creation associated with selected strategic technologies and innovative manufacturing activities remains outside the Union , which have detrimental effect for the Union’s supply security and technological development in emerging strategic sectors . Moreover, unconditional exposure of the internal market to such large investments risks putting into question the Union’s technological advancements necessary for its twin transition and defence capabilities. Therefore, the provisions of this Regulation should ensure that such large investments coming from third countries that hold a particularly significant market position do not disrupt the Union’s supply security and economic security, and ensure its technological advancement in emerging strategic sectors. If such investments do not provide for sufficient Union participation and technology transfer, the long -term supply security of emerging strategic sectors is hampered due to lack of Union capacities independent from the country holding a significant share of relevant global supply. Furthermore, it has been observed that certain of such investments do not involve meaningful employment of Union workers, which jeopardizes the development of skills crucial for the development of emerging strategic sectors in the internal market. 43 Regulation (EU) 2018/858 of the European Parliament and of the Council of 30 May 2018 on the approval and market surveillance of motor vehicles and their trailers, and of systems, components and separate technical units intended for such vehicles, amending Regulations (EC) No 715/2007 and (EC) No 595/2009 and repealing Directive 2007/46/EC (OJ L 151, 14.6.2018, p. 1 , ELI: http://data.europa.eu/eli/reg/2018/858/oj). EN 24 EN (29) In order to ensure that the internal market remains attractive for investment, and that investment adds value to the Union’s economy and society, it is necessary to establish common conditions for foreign direct investment in manufacturing emerging strategic sectors. Those sectors should be manufacturing sectors with innovative potential where Union entities are not at or near the global innovation frontier , and where appropriate Union capacities and participation should be ensured. Harmonised criteria should apply to foreign investors of a third country which holds over 40% of the global manufacturing capacity in emerging strategic sectors. To ensure the effectiveness of the provisions of this Regulation, t he Commission should monitor the global manufacturing capacity of those sectors and publish the results. (30) Greenfield foreign investments occur where the foreign investor or a foreign investor’s subsidiary in the Union sets up new facilities or a new undertaking in the Union. Both Greenfield and Brownfield foreign investments should fall within the scope of this Regulation to the extent that they involve the acquisition of control over a Union target or Union asset, as they both have the possibility to impact the well-functioning internal market. (31) The review of the investments and application of the harmonised conditions should be carried out in accordance with this Regulation. It should take into account all information available and adhere to the principle of proportionality. Moreover, all measures taken by national authorities or the Commission with respect to the review of foreign investments should comply with Union law, and in particular with Articles 49 and 63 TFEU. (32) Therefore, the provisions of this Regulation should apply to foreign direct investments in emerging strategic sectors in accordance with the thresholds established by this Regulation, notwithstanding the screening mechanism established under Regulation (EU) 2019/452 of the European Parliament and of the Council 44. Moreover, the provisions of this Regulation should also apply without prejudice to Union competition law instruments, including Regulation (EU) 2022/2560 of the European Parliament and of the Council45 and Council Regulation (EC) No 139/200446. (33) The foreign direct investment criteria should capture emerging strategic sector investments in the Union by third -country investors (‘foreign investors’) in the Union. However, it could also be necessary to include investments in the Union by entities that are controlled, directly or indirectly, by a third -country person or entity regardless of the ultimate owner’s location (‘foreign investor’s subsidiary’), as they are equally capable of disrupting the functioning of the internal market, including its supply and economic security, due to the control exercised from the third country having a significant market share Therefore, Investment Authorities should apply the investment criteria where they are clearly needed to effectively ensure the protection of public security, the supply and economic security, and environmental sustainability in the Union, and where it is essential for the technological advancements of the internal market for the green and digital transition and defence purposes. Moreover, to 44 Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union (OJ L 79I, 21.3.2019, p. 1, ELI: http://data.europa.eu/eli/reg/2019/452/oj). 45 Regulation (EU) 2022/2560 of the European Parliament and of the Council of 14 December 2022 on foreign subsidies distorting the internal market (OJ L 330, 23.12.2022, p. 1 , ELI: http://data.europa.eu/eli/reg/2022/2560/oj). 46 Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ L 24, 29.1.2004, p. 1, ELI: http://data.europa.eu/eli/reg/2004/139/oj). EN 25 EN prevent the circumvention of the Regulation’s provisions, where no alternative measures are reasonably available . To ensure the proportional application of conditions prescribed to investments made by the foreign investor’s subsidiary, the Commission should have the opportunity to assess the notification and request the Investment Authority to prescribe certain conditions. Apart from review of foreign direct investments made by the foreign investor’s subsidiary as established by this Regulation, investments coming from other Union Member States should not be conditioned or deterred. (34) It is necessary to ensure a lasting link between the foreign investor and the Union target, whether it is carried out directly by a foreign investor or through an entity established in the Union and controlled by a foreign investor. However, that should not apply to the acquisition of company securities that are intended purely for financial investment and without any intention to influence the management or control of the company (‘portfolio investments’). (35) Restructuring operations within a corporate group and investments made in financial institutions in application of a resolution tool as well as of write down and conversion powers should fall outside of the scope of this Regulation. Internal restructurings should only be excluded from the scope of application to the extent that they are conducted solely for the purpose of the internal reorganisation of a Union target or of the corporate group to which the Union target belongs, without resulting in any changes in the beneficial ownership or control of the Union target. In particular, internal restructurings should be excluded where they do not result in a situation where a new foreign investor acquires ownership or control over the Union target or over a company that directly or indirectly owns or controls that Union target, where there is an increase in the shares held by foreign investors, or where the transaction results in additional rights for foreign investors that may lead to a change in the effective participation of one or more foreign investors in the management or control of the Union target. (36) The foreign direct investment criteria should only apply to emerging strategic sector foreign direct investments reaching an investment value threshold that is able to disrupt the functioning of the internal market. A threshold of EUR 100 million should be considered as having potential for to impact the well -functioning of the internal market in emerging strategic sectors. Such foreign direct investment covered by the scope of this Regulation would bear high risk on the security and environmental sustainability of the Union, while not producing enough added value including ensuring Union contribution in the investment, enhancement of the Union’s technological development, employment of Union workers and contribution to Union value chains for the internal market without compliance with the harmonised conditions. (37) In order to ensure the effective application of this Regulation, each Member State should designate an investment authority responsible for assessing the conditions of investment by foreign entities in emerging strategic sectors. Moreover, it should be equipped with the legal, administrative, and financial resources to carry out its tasks effectively and independently, with due regard to the authorities already responsible for implementing Regulation (EU) 2019/452. (38) To enable Member States to effectively identify the investments defined in this Regulation, foreign investors should notify competent authorities prior to acquiring or establishing significant stakes in undertakings or assets within the Union. Setting a EN 26 EN threshold at 30 percent ownership or other rights establishing control for both undertakings and assets should ensure that the mechanism captures investments capable of impacting the well-functioning of the internal market. (39) To minimise the risk of circumvention through fragmented or indirect acquisitions, where several foreign investors act in concert, or where investments are made through affiliated entities or complex ownership structures, their respective interests should be aggregated by the Investment Authority for the purpose of determining the investment value and the notification threshold. Aggregation should also apply to existing holdings in the same Union undertaking or asset, whether direct or indirect, individual or joint, to ensure that successive transactions leading to significant influence or control are duly notified. (40) In order to ensure Union participation in large foreign direct investments originating from third countries having a significant global position, this Regulation should establish limits on the extent of ownership and control that foreign investors can acquire in Union undertakings and assets. Accordingly, foreign investors should not, whether directly or indirectly, establish, acquire, hold, or exercise ownership interests exceeding 49% of the share capital, voting rights, or equivalent ownership interests in any Union target, nor establish or obtain equivalent ownership, leasehold, or other rights conferring control over a Union asset. (41) To ensure that foreign investors and Union entities cooperate in emerging strategic sectors while ensuring sufficient participation of Union partners, joint venture requirements should be prescribed, which should include contractual arrangements . In the joint venture, the foreign investor should not hold more than 49 % of the share capital, voting rights, or equivalent ownership interests or other rights conferring control in any of the Union entities participating in the joint venture. That condition should also contribute to the strategic autonomy of the Union and ensure value added to the internal market. (42) It is necessary to assess, as part of the conditions for approval of a foreign direct investment, whether the transfer of technology can contribute to achieving the objectives of this Regulation. To that end, the foreign investors should be encouraged to license to the Union Target, the joint venture or the legal entity acquiring or owning the Union asset the relevant intellectual property rights, and know-how, which are necessary for carrying out the concerned economic activity in the context of the foreign direct investment. Appropriate intellectual property licensing agreement(s) should therefore be granted by the foreign investor to the Union Target, the joint venture or the legal entity acquiring or owning the Union asset. The scope and conditions of these agreements, such as the exact IP rights concerned, the exclusive nature of the license, the duration of the license or confidentiality -preserving measures, should be appropriate to the circumstances and to the objective pursued under this Regulation and the relevant investment. The foreign investor should commit to granting the appropriate licenses of intellectual property rights and relevant know- how they hold, as required for the economic activity concerned . That could be achieved by providing a description of the main aspects of the possible licensing agreements, on a confidential basis, with the Investment Authority. (43) Where the Union Target or the legal entity acquiring or owning the Union asset owns intellectual property rights in an invention, a work or any other asset subject to intellectual property protection prior to the foreign investment , those intellectual property rights should fully and exclusively remain under the control of the Union EN 27 EN Target or the legal entity acquiring or owning the Union asset. The foreign investor should not claim any intellectual property right nor undertake any activity that would affect the ability of the Union Target or the legal entity acquiring or owning the Union asset to own and exercise the intellectual property rights on their inventions, works, trademarks, designs or any other relevant asset obtained prior to the foreign investment. Where an invention, a work or any other asset subject to intellectual property protection is the result of a collaborative work between the Union Target or the legal entity acquiring or owning the Union asset and the foreign investor or as a result of the joint venture, the intellectual property rights should be owned jointly by the foreign investor, the Union Target or the legal entity acquiring or owning the Union asset, depending on the circumstances. The conditions accompanying the co - ownership of intellectual property rights should, to the extent possible, be defined and communicated to the Investment Authority, ahead of the approval of the foreign direct investment. These conditions should include clarifications as to the possibility for one co-owner to grant a licence and start infringement procedures as well as the financial agreements as regards the filing and registration of intellectual property rights and licensing agreements. In the case of a joint venture without a legal personality , clarifications should be provided to the Investment Authority regarding the ownership of intellectual property. (44) It is necessary to ensure that the foreign investors’ expertise of the large foreign direct investment under the scope of this Regulation should contribute to enhancing the Union’s technological development both within and outside the Union Target, the joint venture or the legal entity acquiring or owning the Union asset . To that end, foreign investors should invest in research and development projects to be executed within the Union while ensuring that the Union will benefit from the results produced . It is therefore necessary to assess, as part of the conditions to be considered for having a foreign direct investment approved, whether the foreign investors’ research and development investments are adequate to achieve that objective . Such investments could be directed to the benefit of research institutions established in the Union , including in the context of joint projects with the Union Target, the joint venture or the legal entity acquiring or owning the Union asset . Those investments could also be made within the Union target, the joint venture or the legal entity acquiring or owning the Union asset , for developing or executing specific research and development activities. These investments could also consist in the training of Union workers, or direct or indirect financial support to research and development projects within the Union Target, the joint venture or the legal entity acquiring or owning the Union asset. Any assessment performed in relation to investments in research and development projects to be executed within the Union should be without prejudice to Union competition law instruments, including Regulations (EU) 2022/2560 and (EC) No 139/2004. (45) To promote sustainable integration of investments by foreign entities to the internal market and the development of skills in emerging strategic sectors, and to ensure meaningful social contribution at the place of the investment, such investments should employ a proportion of Union workers and should provide appropriate training and capacity-building measures, involving education and training providers, as well as social partners. The foreign investor should ensure that the thresholds established in this Regulation are fulfilled across all categories of workforce, including the operational, technical, supervisory, and managerial positions. EN 28 EN (46) To strengthen the industrial capacity of emerging strategic sectors and to integrate foreign direct investment into the Union’s industrial ecosystem, a certain share of inputs manufactured in the Union should be included in products placed on the Union market by such investments. (47) In order to ensure that foreign direct investments fulfil at least 4 of the 6 conditions established by this Regulation, the competent Investment Authority should examine each notification and issue a reasoned decision on its approval or rejection. Investment Authorities should establish the fulfilment of the conditions, or as appropriate, the intent of the foreign investor to comply with the conditions. Such investments should not be implemented without the explicit approval of the Investment Authority. Accordingly, foreign investors should comply with a set of conditions before starting their economic activity regarding the relevant foreign direct investment . Investment Authorities should decide in a timeframe ensuring both procedural efficiency and legal certainty. Where justified by the complexity of the case or the need for additional information, that timeframe could be extended, for justified and duly substantiated reasons. (48) Member States should inform the Commission about notifications received to allow the Commission to effectively monitor the investment landscape and ensure a harmonised investment framework across the internal market. (49) In order to ensure the horizontal application of this Regulation in the internal market, the Commission should be able to provide an opinion on whether the investment fulfils the conditions set out in this Regulation. Such opinion should be made publicly available. If the Investment Authority intends to diverge from the Commission opinion in its decision, it should extend the approval process for two additional months in order to properly assess the Commission's arguments. When taking a decision, Member States should justify how they took the Commission’s opinion into account. (50) In order to ensure the horizontal application of this Regulation on the Single Market, the Commission should be able to review foreign direct investments, based on its own initiative or on the initiative of a Member State affected by the foreign direct investment. That should be particularly the case for investments where several member states are impacted, as well as high value investments and investments with particular strategic importance for the Union due to their effect on the Single Market. (51) The Investment Authorities should not only ensure compliance with the conditions at the time of the foreign direct investment’s notification, but also throughout its operation, as appropriate, to ensure that the benefits of the foreign direct investment are maximised on the internal market. (52) To ensure that foreign direct investment criteria for the emerging strategic sectors remain appropriate even as market conditions, technological developments and the competitiveness policy objectives of the Union continue to evolve, the Commission should monitor the global manufacturing trends of strategic sectors and be empowered to adopt implementing acts imposing foreign investment criteria to additional strategic sectors. The Commission should assess in particular the threshold value, as well as whether all of the investment criteria referred to in this regulation are appropriate and necessary to meet the objectives of this regulation. (53) Clustering industrial activity can contribute substantially to achieving the objectives of this Regulation and to strengthening certain strategic sectors in the internal market. It is therefore appropriate to promote the development of industrial manufacturing EN 29 EN acceleration areas . Such areas should be limited in geographical scope in order to foster industrial symbiosis. When designating the areas, Member States should, in cooperation with regional authorities where appropriate, take into account industrial production (in particular for certain strategic sectors) and their regions’ general level of development, with a focus on the less developed regions and those in transition . Furthermore, in order to strengthen the resilience, strategic autonomy and competitiveness of the Union’s industrial base, the designation of industrial manufacturing acceleration areas should align with strategic projects and other Union initiatives such as Net-Zero Acceleration Valleys. (54) The industrial acceleration measures within the acceleration areas should seek appropriate synergies with other Union initiatives, including strategic projects recognised in Union legislation , Net -Zero Acceleration Valleys and Union funding opportunities, in order to align the strategic priorities in the internal market and benefit industrial installations vital for the strategic autonomy and competitiveness of the Union. Th ose benefits should also apply to undertakings awarded with the competitiveness seal under Regulation (EU) XXXX/[XX] 47 (European Competitiveness Fund), unless specifically excluded by the Member State. (55) To enable an adequate supply of critical raw materials for projects in the acceleration areas, the European Critical Raw Materials Board established by Article 35 of Regulation (EU) 2024/1252 should provide a platform to exchange information on critical raw materials related supply chain bottlenecks in the acceleration areas. It should be possible for p rojects in relevant areas to benefit from the Joint purchasing mechanism established in Article 25 of Regulation (EU) 2024/1252 to aggregate their demand for strategic raw materials and increase their negotiating power with potential sellers, especially when they contain small or medium -sized enterprises ( SMEs) and small mid-cap companies (SMCs). (56) Sufficient and timely energy supply to the acceleration areas constitutes a fundamental enabling condition for their effective deployment and for the development of manufacturing activities. Reliable and accurate information on future energy demand contributes to cost -effective grid development. Member States should therefore prepare an analysis for each acceleration area, identifying its future energy needs. Such analysis should serve the purpose of providing information for the national grid planning thereby contributing to purposeful anticipatory grid investments and faster energy connections for the acceleration area. When defining the scope, Member States should take into account the availability of relevant transport and network infrastructure. The results of these assessments should be reflected in national network development plans to adequately capture future points of energy demand in upcoming grid planning. (57) Where industrial manufacturing acceleration areas are set up, their designation should correspond to the potential to access or organise education and training opportunities to ensure the availability of skilled labour. (58) To promote the development of industrial manufacturing acceleration areas and to expedite the permit-granting procedures necessary for industrial activities within those 47 Proposal for a Regulation of the European Parliament and of the Council on establishing the European Competitiveness Fund ('ECF’), including the specific programme for defence research and innovation activities, repealing Regulations (EU) 2021/522, (EU) 2021/694, (EU) 2021/697, (EU) 2021/783, repealing provisions of Regulations (EU) 2021/696, (EU) 2023/588, and amending Regulation (EU) (COM/2025/555 final, 16.7.2025). EN 30 EN areas, Member States should establish an aggregated baseline permit reflecting the specific characteristics of each identified industrial acceleration area and tailored to the industrial manufacturing sector or sectors to be deployed therein. That aggregated baseline permit issued by public authorities should cover the permits commonly required for such activities within the area, excluding those permits that are installation specific, such as those required under Directive 2010/75/EU of the European Parliament and of the Council 48 and the grid connection permit . Consequently, project promoters should be required to obtain additional permits only for activities not covered by the aggregated baseline permit as well as environmental assessments where required. In case of activities potentially affecting Union and nationally protected sites, relevant permits should be granted only after having ensured that the activities are compatible with the conservation objectives of these sites. Such approach should significantly accelerate permit -granting procedures and reduce the administrative burden associated with them whilst maintaining high level of environmental standards. (59) In order to establish a framework to ensure the Union’s strategic autonomy and economic security through access to a secure, sustainable and resilient supply of relevant manufacturing products, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of changes to the list of third countries whose content is not treated as equivalent to Union origin , the introduction or amendment of Union origin and low -carbon requirements, including for additional net-zero technologies and for products and services listed in Annexes II and III , laying down Union -level demand -side measures for products from the chemical industry , taking into account, among others, recommendations from the Critical Chemicals Alliance, the extension of foreign direct investment criteria to additional emerging strategic sectors, the specification of common procedural rules for foreign direct investment criteria , and establishing classification systems based on the greenhouse gas intensity for products. It is of particular importance that the Commission carries out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Inter -institutional Agreement of 13 April 2016 on Better Law-Making49. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts. (60) In order to ensure uniform conditions for the implementation of this Regulation, implementing powers should be conferred on the Commission as regards specifying the method for calculating the proportion of volume of products and components originating in the Union and for verifying the compliance with the conditions laid down in Article 15 . Those powers should be exercised in accordance with Regulation (EU) No 182/2011 of the European Parliament and of the Council50. 48 Directive 2010/75/EU of the European Parliament and of the Council of 24 November 2010 on industrial emissions (integrated pollution prevention and control) (OJ L 334, 17.12.2010, p. 17 , ELI: http://data.europa.eu/eli/dir/2010/75/oj). 49 OJ L 123, 12.5.2016, p. 1, http://data.europa.eu/eli/agree_interinstit/2016/512/oj. 50 Regulation (EU) No 182/2011 of the European Parliament and of the Council of 16 February 2011 laying down the rules and general principles concerning mechanisms for control by the Member States of the Commission's exercise of implementing powers (OJ L 55, 28.2.2011, p. 13, ELI: http://data.europa.eu/eli/reg/2011/182/oj). EN 31 EN (61) The Commission should evaluate this Regulation based on the information provided by Member States. Pursuant to paragraph 22 of the Interinstitutional Agreement on Better Law -Making of 13 April 2016, such evaluation should be based on the five criteria of efficiency, effectiveness, relevance, coherence and Union value added. It should also serve as the basis for impact assessments of possible further measures. (62) To ensure compliance with the obligations laid down in this Regulation, Member States should provide for penalties to be imposed on undertakings that do not comply with their obligations. Such penalties should be without prejudice and in addition to specific penalty requirements set out by this Regulation, for instance on foreign direct investments. It is therefore necessary that Member States lay down effective, proportionate and dissuasive penalties in national law for failure to comply with this Regulation. It is also necessary for Member States to ensure that project promoters have access, where relevant, to administrative or judicial review in accordance with national law. (63) When reviewing this Regulation, the Commission should assess the need to amend the provisions included in Chapters III and IV. In particular, it should consider introducing targeted Union origin in transport sectors critical to the Union’s economic security, notably building of ships and building of rail rolling stock. The Commission should also consider introducing an enhanced review of foreign direct investments for aeronautical products and parts. (64) Regulation (EU) 2018/1724 of the European Parliament and of the Council 51, which established the Single Digital Gateway, provides general rules for the online provision of information, procedures and assistance services that are relevant to the functioning of the internal market. In order to allow businesses and manufacturing industry project promoters, including for cross -border projects, to directly enjoy the benefits of the internal market without incurring an unnecessary additional administrative burden , the information that needs to be submitted to any relevant authorities as part of the permit - granting process under this Regulation is that set out in Annex I to Regulation (EU) 2018/1724. The related procedures are included in Annex II to that Regulation to ensure that project promoters can benefit from fully online procedures and the Once - Only Technical System Services. In particular, promoters of manufacturing industry projects should be able to fully access and complete any procedure related to the permit-granting process online, in accordance with Article 6(1) of Regulation (EU) 2018/1724 and Annex II of that Regulation. Regulation (EU) 2018/1724 should therefore be amended accordingly. (65) Regulation (EU) 2024/1735 introduces resilience requirements for a range of net -zero technology final products. Those requirements aim at reducing dependencies on individual third countries of supply, but they are not sufficient to enable Union industries to scale up the potential of the internal market and carry a risk of circumvention. Therefore, in order to address such challenges , the legislative framework should ensure the need to attract and retain technological know-how within the Union, through targeted additional intervention. (66) The provisions on public procurement laid down in this Regulation should build on the provisions of Regulation (EU) 2024/1735 on resilience; and complement them by 51 Regulation (EU) 2018/1724 of the European Parliament and of the Council of 2 October 2018 establishing a single digital gateway to provide access to information, to procedures and to assistance and problem-solving services and amending Regulation (EU) No 1024/2012 (OJ L 295, 21.11.2018, p. 1, ELI: http://data.europa.eu/eli/reg/2018/1724/oj). EN 32 EN introducing additional requirements for battery energy storage systems, solar photovoltaic technologies, heat pumps, onshore and offshore wind technologies, electrolysers and nuclear fission energy technologies. Such additional requirements should ensure that a certain share of the products and their main specific components originate in the Union. Th at approach should ensure sufficient diversification while strengthening strategic manufacturing capacity and technological sovereignty within the Union. The system for verification of compliance with the requirements should limit the administrative burden and align with common public procurement practice as well as the existing system of verification of compliance under Regulation (EU) 2024/1735. It should therefore rely on a self-declaration by economic operators. (67) In addition to complementing the public procurement provisions of Regulation (EU) 2024/1735, this Regulation should also amend them to provide greater legal certainty . The scope of Article 25 of Regulation (EU) 2024/1735 should be limited to those net - zero technologies for which public procurement of a relevant scale is expected to take place, thereby enhancing the clarity of the provision. (68) In line with the same policy objective pursued for renewable energy auctions under Regulation (EU) 2024/1735, this Regulation should extend the additional Union origin requirements to renewable energy auctions for certain renewable energy technologies , in order to contribute to strengthening the Union’s industrial base and ensuring resilience of net -zero technology supply chains. To reflect the specific characteristics of renewable energy auctions, the additional requirements should apply to the net-zero technologies that are most relevant in the context of auctions, which are battery energy storage systems, solar photovoltaic technologies, electrolysers, as well as on - and offshore wind technologies. Where Union origin requirements apply to auctions, other provisions setting similar requirements for public support schemes should not apply to those auctions. (69) To reinforce the effectiveness of the framework, and to reflect recent increases in geopolitical risks and global market distortions, the share of auctions covered by the requirements should be increased and a higher cost threshold for the opt -out from those requirements should be established. That should also prevent excessive use of exemptions and provide an effective incentive to boost Union production of renewable energy technologies. (70) Businesses and households are an essential part of the demand for net -zero technologies in the Union . Public support schemes designed to support consumer demand for such products are important tools for strengthening the Union’s economic security and accelerating the green transition. In order to build on the provisions of Regulation (EU) 2024/1735 on resilience , it is necessary to complement those provisions introducing additional requirements for battery energy storage systems, solar photovoltaic technologies and heat pumps. Such additional requirements should ensure that certain main specific components and, in some cases, the whole final product, originate in the Union. Th at approach is in line with the general objective of support schemes to promote socially -desirable outcomes, in view of making progress on the ambitions of the European Pillar of Social Rights as well as environmental and climate objectives. Furthermore, it should ensure sufficient diversification while strengthening strategic manufacturing capacity and technological sovereignty within the Union. Public authorities in charge of support schemes should have the possibility either to condition the eligibility of the scheme to the fulfilment of the requirements, or to grant additional financial compensation when the requirements are fulfilled. In the latter case, the additional financial compensation should have an incentivising EN 33 EN effect. However, if State aid is involved, the additional financial compensation should not exceed the applicable maximum aid intensity. (71) Digital technologies continue to transform the way we generate, distribute, and consume energy. Such digital evolution, while presenting unprecedented opportunities, has also introduced complexity and interdependence within modern energy systems, which are now susceptible to a growing array of cyber threats. The integration of digital technologies into energy systems increases the attack surface for malicious actors, who can exploit vulnerabilities to disrupt operations, steal sensitive data, or manipulate energy markets. Such disruptions not only threaten the security and stability of our energy infrastructure and continuous supply of energy but also have cascading effects on all sectors of the economy that rely on stable energy inputs. Furthermore, energy system disruptions could undermine investor confidence and deter investment in essential modernisation and decarbonisation efforts. Therefore, safeguarding the cybersecurity of these systems is paramount to ensuring economic security, maintaining trust, and fostering resilience against future challenges. (72) To ensure a high level of cybersecurity, it is necessary to prevent high-risk suppliers, as identified in accordance with [the proposal for a revised Cybersecurity Act] from supplying critical components to bidders of renewable energy auctions, tenderers of public procurement procedures, and final products supported by government intervention in the scope of this Regulation. (73) Furthermore, the cybersecurity provisions of Article 26 of Regulation (EU) 2024/1735 should not only apply to 30 %, but to all renewable energy auctions in light that cybersecurity is essential to the stability and integrity of the Union’s energy system as a whole. A gap even in just one element of an energy system’s cybersecurity could endanger the stability of the whole system. In addition to the high level of cybersecurity ensured in critical sectors by Directive (EU) 2022/2555 and in products with digital elements under Regulation (EU) 2024/2847 , extending the scope of the cybersecurity requirements of Regulation (EU) 2024/1735 to all renewable energy auctions should further reduce the vulnerabilities of the Union’s energy system and contribute to securing energy and economic stability. (74) The application of the requirements on Union origin and cybersecurity for net -zero technologies should complement t he requirements on sustainability and resilience set out in Regulation (EU) 2024/1735. They should therefore be inserted in that Regulation to ensure consistency and simplify implementation by the relevant authorities. (75) In line with the measures for public procurement, auctions and public support schemes, this Regulation should also complement Regulation (EU) 2024/1735 with Union origin requirements for Member State support to the construction of nuclear power plants and to the manufacturing of hydrogen electrolysers. To secure long term Union sovereignty, energy security, and sector resilience, it is essential that the new nuclear plants, both large scale reactors and small modular reactors, prioritise as much as possible Union sourced technologies and components while maintaining the highest quality standards. Such strategy will not only boost domestic capabilities but also position the Union as a reliable, competitive player in the global nuclear market. However, in order to prevent risks related to technological lock -in, the Union origin requirements for nuclear power plants should only apply to new -builds, excluding refurbishments and lifetime extensions of existing nuclear power plants. (76) Regulation (EU) 2024/1735 should therefore be amended accordingly. EN 34 EN (77) Hydrogen is a crucial energy carrier for the energy transition in many industry applications and is instrumental in driving the transition to cleaner energy systems. To accommodate the emergence of gigawatt scale electrolyser deployments in the Union, it is essential to have a concerted, enhanced support system is essential. (78) Where Union origin requirements require that a certain number of components should originate in the Union without specifying which ones, the choice should be left to the economic operators . This ensures sufficient competition among suppliers of the required components and enables economic operators to make the most cost -efficient choices while applying the requirements. (79) Regulation (EU) 2024/3110 empowers the Commission to adopt delegated acts to establish environmental sustainability labelling requirements for specific product categories and families of construction products, provided that a product is typically chosen by consumers and does not have a different overall environmental performance over its life cycle depending on its installation. Such strict conditions should be removed in order to enable the Commission to set requirements for the labelling of construction products on the basis of their carbon intensity, including for those products that are not typically sold to end consumers. Regulation (EU) 2024/3110 should therefore be amended accordingly. (80) To the extent that any of the measures envisaged by this Regulation constitute State aid, the provisions concerning such measures are without prejudice to the application of Articles 107 and 108 TFEU. (81) Since the objective of this Regulation, namely to support resilient and decarbonised industrial production, cannot be sufficiently achieved by the Member States and can rather, by reason of the scale or effects of the action, be better achieved at Union level, the Union may adopt measures in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve that objective, HAVE ADOPTED THIS REGULATION: CHAPTER I GENERAL PROVISIONS Article 1 Subject matter and scope 1. This Regulation aims at improving the functioning of the internal market by establishing a framework to support the development, competitiveness and resilience of the Union's manufacturing sector, with a focus on selected strategic sectors, while contributing to the Union’s climate objective, economic security and the creation, retention of, and transition into high-quality jobs. 2. To achieve the general objective referred to in paragraph 1, this Regulation lays down measures aiming to (a) speed-up permit -granting procedures for industrial manufacturing projects, including energy-intensive industry decarbonisation projects; EN 35 EN (b) create lead market for certain products in strategic sectors, by laying down Union origin requirements, low-carbon requirements, or both, in the context of public procurement, public support schemes; (c) set conditions on foreign direct investments in emerging strategic sectors; (d) designate industrial manufacturing acceleration areas by Member States for the purposes of boosting industrial activities. Article 2 Industrialisation objective The Union and Member States shall seek to ensure that by 2035 the manufacturing industry of the Union accounts for at least 20% of the Union’s gross domestic product. Article 3 Definitions For the purposes of this Regulation, the following definitions apply: (1) ‘industrial manufacturing project’ means the construction, conversion or extension of an industrial site intended for carrying out an economic activity classified under NACE Code C (Manufacturing), with the exception of NACE Code C12; (2) ‘energy- intensive industries’ means the industries listed in point 1 of Annex I; (3) ‘energy‘energy-intensive industry decarbonisation projects’ means the construction or conversion of the commercial facility of an energy -intensive business as defined in Article 17(1), point (a), of Council Directive 2003/96/EC 52 in the energy - intensive industries listed in point 1 of Annex I to this Regulation that reduce emission rates of CO2 -eq of industrial processes significantly and permanently to an extent which is technically feasible; (4) ‘permit-granting procedure’ means a process that covers all relevant permits to build, expand, convert and operate industrial manufacturing projects, including building, chemical and grid connection permits as defined in Article 1 of [the Proposal for a Directive amending Directives (EU) 2018/2001, (EU) 2019/944, (EU) 2024/1788 as regards acceleration of permit -granting procedures 53], and environmental assessments and authorisations where required, and encompassing all applications and procedures from the acknowledgement that the application is complete to the notification of the comprehensive decision on the outcome of the procedure; (5) ‘comprehensive decision’ means the decision or set of decisions taken by a Member State authority or authorities, that determines whether or not a project promoter is authorised to build, expand, convert and operate an industrial manufacturing project; 52 Council Directive 2003/96/EC of 27 October 2003 restructuring the Community framework for the taxation of energy products and electricity (OJ L 283, 31.10.2003, pp. 51 –70, ELI: http://data.europa.eu/eli/dir/2003/96/oj). 53 Proposal for a Directive of the European Parliament and of the Council amending Directives (EU) 2018/2001, (EU) 2019/944, (EU) 2024/1788 as regards acceleration of permit -granting procedures ((2025/0400 (COD)). EN 36 EN (6) ‘contract’ means public contract as defined in Article 2(1), point (5), of Directive 2014/24/EU54, supply, works and service contracts as defined in Article 2, point (1), of Directive 2014/25/EU 55, and concessions as defined in Article 5, point (1), of Directive 2014/23/EU; (7) ‘contracting authority’ means a contracting authority as defined in Article 6 of Directive 2014/23/EU, Article 2(1), point (1), of Directive 2014/24/EU and Article 3 of Directive 2014/25/EU; (8) ‘contracting entity’ means a contracting entity as defined in Article 7 of Directive 2014/23/EU and Article 4 of Directive 2014/25/EU; (9) ‘economic operator’ means the manufacturer, the authorised representative, the importer, the distributor, the dealer and the fulfilment service provider and, for the purposes of public procurement procedures, it means economic operator as set out in Article 5, point (2), of Directive 2014/23/EU, Article 2(1) , point (10), of Directive 2014/24/EU and Article 2, point (6), of Directive 2014/25/EU; (10) ‘public procurement procedure’ means either of the following: (a) a procedure for the award of works or a service concession covered by Directive 2014/23/EU; (b) any type of award procedure covered by Directive 2014/24/EU for the conclusion of a public contract or Directive 2014/25/EU for the conclusion of a supply, works and service contract; (11) ‘greenhouse gas intensity’ means emissions (measured in tCO2eq) released during the production of industrial products referred to in Article 10(2); (12) ‘manufacturer’ means any natural or legal person that manufactures a product or that has a product designed or manufactured, and markets that product under their name or trademark; (13) ‘system boundary’ means the group of chemical or physical processes included in the calculation of the greenhouse gas intensity of products; (14) ‘precursor’ means any input material into a production process that is part of the system boundaries. (15) ‘chemical industry’ means activities classified under NACE Rev. 2, Code C20 (Manufacture of chemicals and chemical products), carried out by manufacturers established in the Union; (16) ‘sustainable carbon sources’ means biomass that complies with the sustainability criteria laid down in Article 29 of Directive (EU) 2018/2001, waste and carbon from capturing carbon dioxide emissions. (17) ‘substance’ means substance as defined in Article 2, point (7), of Regulation (EC) No 1272/2008; 54 Directive 2014/24/EU of the European Parliament and of the Council of 26 February 2014 on public procurement and repealing Directive 2004/18/EC (OJ L 94, 28.3.2014, pp. 65 –242, ELI: http://data.europa.eu/eli/dir/2014/24/oj). 55 Directive 2014/25/EU of the European Parliament and of the Council of 26 February 2014 on procurement by entities operating in the water, energy, transport and postal services sectors and repealing Directive 2004/17/EC (OJ L 94, 28.3.2014, pp. 243 –374, ELI: http://data.europa.eu/eli/dir/2014/25/oj). EN 37 EN (18) ‘mixture’ means a mixture as defined in Article 2, point (8), of Regulation (EC) No 1272/2008; (19) ‘made available on the market’ means any supply of a product for distribution, consumption or use on the Union market during a commercial activity, whether against payment or free of charge; (20) ‘fuel cell vehicle’ or ‘FCV’ means a vehicle equipped with a powertrain containing exclusively energy converter s transforming chemical energy (input) into electrical energy (output), or vice versa, and electric machines as propulsion energy converters; (21) ‘motor vehicle’ means any vehicle of categories M and N referred to in Article 4(1), points (a) and (b), of Regulation (EU) 2018/858 of the European Parliament and of the Council56; (22) 'off-vehicle charging hybrid electric vehicle' or 'OVC -HEV' means a vehicle equipped with a powertrain containing at least two different categories of propulsion energy converters where one of the propulsion energy converters is an electric machine that can be charged from an external source'; (23) ‘pure electric vehicle’ or ‘PEV’ means a vehicle equipped with a powertrain containing exclusively electric machines as propulsion energy converters and exclusively rechargeable electric energy storage systems as propulsion energy storage systems; (24) ‘main specific components’ means the main specific components as listed in the Annex to Commission Implementing Regulation 2025/117857; (25) ‘vehicle’s traction battery’ means the electric vehicle battery specifically designed to provide electric power for traction as defined in Article 3(14) of Regulation (EU) 2023/154258. (26) ‘e-powertrain components’ means power electronics, transport propulsion electric motors and e-axles and their components, rotors and stators; (27) ‘main electronic systems’ means advanced driver assistance systems (including lidars, radars, sensors, cameras, ECUs and integration platforms), central computing units, wireless access systems, in -vehicle infotainment head units and chassis electronics; (28) ‘vehicle component’ means any part of a vehicle, including processed material; (29) ‘assembled’ means the process of the final assembly of the vehicle; (30) ‘vehicle manufacturer’ means a natural or legal person who is responsible for all aspects of the type -approval of a vehicle, system, component or separate technical unit, or the individual vehicle approval, or the authorisation process for parts and 56 Regulation (EU) 2018/858 of the European Parliament and of the Council of 30 May 2018 on the approval and market surveillance of motor vehicles and their trailers, and of systems, components and separate technical units intended for such vehicles, amending Regulations (EC) No 715/2007 and (EC) No 595/2009 and repealing Directive 2007/46/EC (OJ L 151, 14.6.2018, p. 1, ELI: http://data.europa.eu/eli/reg/2018/858/oj). 57 Commission Implementing Regulation (EU) 2025/1178 of 23 May 2025 on laying down rules for the application of Regulation (EU) 2024/1735 of the European Parliament and of the Council as regards the list of net -zero technology final products and their main specific components for the purposes of assessing the contribution to resilience (OJ L, 2025/1178, 18.6.2025, ELI: http://data.europa.eu/eli/reg_impl/2025/1178/oj). 58 EN 38 EN equipment, for ensuring conformity of production and for market surveillance matters regarding that vehicle, system, component, separate technical unit, part and equipment produced, irrespective of whether or not that person is directly involved in all stages of the design and construction of that vehicle, system, component or separate technical unit concerned; (31) ‘foreign direct investment’ means an investment , including greenfield investments, into a Union target or a Union asset by a foreign investor or by the foreign investor’s subsidiary aiming to establish or to maintain lasting and direct links between the foreign investor and the entrepreneur to whom or the undertaking to which the capital is made available , or at using an Union asset, in order to carry on an economic activity in a Member State, including investments which enable effective participation in the management or control of a company carrying out an economic activity; (32) ‘foreign investor’ means a natural person of a third country who does not hold the nationality of a Member State or an undertaking of a third country, intending to make or having made a foreign direct investment; (33) ‘foreign investor’s subsidiary’ means an undertaking controlled, directly or indirectly, by a foreign investor regardless of its place of establishment; (34) ‘Union target’ means an undertaking established under the laws of a Member State; (35) ‘Union asset’ means an immovable asset used or intended to be used for manufacturing products in the territory of the Union; (36) ‘Union worker’ means any natural person who has an employment contract or employment relationship as defined by law, a collective agreement or practice in force in a Member State and is either a citizen of the Union or a third country national legally residing in a Member State with a valid work permit at the moment of recruitment; (37) ‘portfolio investment’ means the acquisition of company securities that are intended purely for financial investment and without any intention to influence the management or control of the company; (38) ‘turnover’ means the amount derived by an undertaking within the meaning of Article 5(1) of Council Regulation (EC) No 139/200459; (39) ‘active material’ means a material which reacts chemically to produce electric energy when the battery cell discharges or to store electric energy when the battery is being charged; (40) ‘electric vehicle battery’ means an electric vehicle battery as defined in Article 3(1), point (14), of Regulation (EU) 2023/1542 of the European Parliament and of the Council60; (41) ‘supplier’ means a manufacturer established in the Union, the authorised representative of a manufacturer who is not established in the Union, or an importer, who places a product on the Union market; 59 Council Regulation (EC) No 139/2004 of 20 January 2004 on the control of concentrations between undertakings (OJ L 24, 29.1.2004, p. 1). 60 Regulation (EU) 2023/1542 of the European Parliament and of the Council of 12 July 2023 concerning batteries and waste batteries, amending Directive 2008/98/EC and Regulation (EU) 2019/1020 and repealing Directive 2006/66/EC (OJ L 191, 28.7.2023, p. 1 , ELI: http://data.europa.eu/eli/reg/2023/1542/oj). EN 39 EN CHAPTER II ENABLING CONDITIONS FOR INDUSTRIAL PRODUCTION AND DECARBONISATION Article 4 Single access points 1. Member States shall set up a single access point at national level for the submission by project promoters of the single application for industrial manufacturing projects referred to in Article 5(1). 2. The single access points shall automatically attribute the permit applications to the relevant authority, inform the applicant about all steps of the permit -granting procedure, the status of the procedure and of the decisions of the relevant authorities, and enable the applicant to check compliance with applicable deadlines. To that effect the single access points shall use the European Business Wallets established pursuant to [Proposal for a Regulation on the establishment of European Business Wallets]. Through the use of European Business Wallets, the single access points shall enable: (a) interoperability and automated data exchange between competent authorities; (a) re-use of data and documents already held by public authorities; (b) a high level of cybersecurity, and integrity of information; (c) transparency and accountability of the permit-granting procedure. 3. When setting up the single access points , Member States shall, where appropriate, make use of existing Union digital infrastructure, catalogues and building blocks established by Union law. Article 5 Permit-granting procedure 1. Member States shall establish a single permit-granting procedure based on a single application covering all permits required for industrial manufacturing projects. 2. Member States shall designate a competent authority to coordinate the permit- granting procedure referred to in paragraph 1 in order to ensure the adoption and issue of a comprehensive decision within the applicable time limit. 3. No later than 45 days from the receipt of the application for a permit for industrial manufacturing projects , the competent authority shall either acknowledge that the application is complete or request any missing information needed to process the application. Where, after the submission of any missing information, the application is still deemed to be incomplete, the competent authority may, within 30 days of the submission of the requested missing information , make a second request for any information still missing. The competent authority shall not request information in areas not covered in the first request for additional information and shall request further information only as necessary to cover the missing information. EN 40 EN 4. The provisions of this Article shall not apply where rules to streamline the administrative and permit -granting processes are established in other Union legislative acts for specific industrial manufacturing sectors. Article 6 Energy-intensive industry decarbonisation projects 1. Chapter II, Section II, of Regulation (EU) 2024/1735 shall apply to all energy - intensive industry decarbonisation projects. 2. All energy-intensive industry decarbonisation projects shall be considered strategic projects contributing to resilience and decarbonisation or resource efficiency for the purposes of [Article 14 of Proposal for a Regulation on speeding -up environmental assessment]. Points 1, 2 and 3 of the Annex in that Regulation shall apply. CHAPTER III STRENGTHENING THE UNION’S STRATEGIC INDUSTRIAL VALUE CHAINS Article 7 Union origin 1. For the purposes of this Chapter, content of Union origin refers to content originating in the Union. 2. The origin of products and components shall be determined in accordance with Regulation (EU) No 952/2013 of the European Parliament and of the Council. Article 8 Content equivalent to Union origin in public procurement 1. With respect to the Union origin requirements referred to in Article 11, content originating in third countries with which the Union has concluded an agreement establishing a free trade area or a customs union, or that are parties to the Agreement on Government Procurement , where relevant obligations of the Union exist under that agreement, shall be deemed to be of Union origin. 2. The Commission shall adopt delegated acts in accordance with Article 30 to exclude, in whole or in part, a third country from the scope of paragraph 1 based on any of the following criteria: (a) that third country has failed to provide national treatment related to Union products or entities under the agreements referred to in paragraph 1 in relation to any of the sectors listed in Annex I; (b) such exclusion is justified to avoid dependencies or any other developments that may threaten the security of supply in the Union of the products in question; (c) such exclusion is justified under any other exception under the applicable agreement. EN 41 EN Article 9 Content equivalent to Union origin in other forms of public intervention 1. With respect to the Union origin requirements set out in Article 12, content originating in third countries with which the Union has concluded an agreement establishing a free trade area or a customs union shall be deemed to be of Union origin. 2. The Commission shall adopt delegated acts in accordance with Article 30 to exclude, in whole or in part, a third country from the scope of paragraph 1 based on any of the following criteria: (a) that third country has failed to provide national treatment related to Union products or entities under the agreements referred to in paragraph 1 in relation to any of the sectors listed in Annex I; (b) such exclusion is justified to avoid dependencies or any other developments that may threaten the security of supply in the Union of the products in question; (c) such exclusion is justified under any other exception under the applicable agreement. Article 10 Low-carbon products 1. For the purposes of this Chapter, a product covered by Annex II shall be considered low-carbon when it complies with the requirements set out in delegated acts, as follows: (a) for construction products referred to in Regulation (EU) 2024/3110 and covered by a harmonised technical specification or a European Technical Assessment, the delegated acts adopted pursuant to Article 5(5) or Article 22(9) of Regulation (EU) 2024/3110; (b) for all other products, delegated acts adopted pursuant to Article 4 of Regulation (EU) 2024/1781, as applicable. 2. To support the creation of lead markets by informing investment decisions towards products granted a lower greenhouse gas intensity performance class , t he Commission is empowered to adopt delegated acts in accordance with Article 30 in order to supplement this Regulation by establishing voluntary classification systems based on the greenhouse gas intensity for products manufactured through activities listed in Annex I of Directive 2003/87/EC (‘industrial products’) when they are placed on the Union market, to the extent that these products are not already regulated by a Delegated Act under Regulation (EU) 2024/1781 or included in the working plans adopted in accordance with that Regulation. Emissions and all other relevant data used for the calculation of the greenhouse gas intensity shall be verified by verifiers accredited under Commission Implementing Regulation (EU) 2018/2067 of the European Parliament and of the Council 61 or verifiers accredited under the delegated acts adopted pursuant to Article 18 of 61 Commission Implementing Regulation (EU) 2018/206 7 of 19 December 2018 on the verification of data and on the accreditation of verifiers pursuant to Directive 2003/87/EC of the European Parliament and of the Council (OJ L 334, 31.12.2018, pp. 94 , ELI: http://data.europa.eu/eli/reg_impl/2018/2067/oj). EN 42 EN Regulation (EU) 2023/956, as appropriate. Emissions shall be monitored in accordance with the rules laid down in Chapter III of Commission Implementing Regulation (EU) 2018/2066 and the data monitoring methods and quality requirements set out in Annex VII to Delegated Regulation (EU) 2019/331. For imported products, emissions may be monitored in accordance with Annex IV to Regulation (EU) 2023/956 and the data monitoring methods and quality requirements established by implementing acts adopted pursuant to Article 7(7), point (a), of Regulation (EU) 2023/956, where it provides for an equivalent dataset. Such delegated acts shall specify, as appropriate, the following elements: (a) the identification of the product for which a manufacturer may apply for a label on greenhouse gas intensity; (b) the relevant system boundaries, covering emissions from the industrial manufacturing process, emissions from relevant precursors and emissions from electricity consumption. These emissions are considered independently of whether these emissions occur in the manufacturer’s facility or in other facilities, recognising that certain precursors might be acquired from other installations; (c) the methodology for the calculation of the greenhouse gas intensity of the product (d) a classification with performance classes; (e) complementary rules concerning the governance of the label, including competent entities; and (f) complementary rules on accreditation, monitoring and verification, In developing those rules, the Commission shall at least take into account: (a) the latest applicable product benchmark values as defined under Directive 2003/87/EC; (b) data already available under the EU ETS and CBAM; (c) new Union rules concerning accounting for emissions, including from electricity consumption, low -carbon fuels and renewable fuels of non - biological origin; (d) emerging low -carbon production technologies, as well as the estimated emissions’ reduction potential of emerging technologies; (e) the need to incentivise the uptake of recycled materials in all production routes; and (f) the alignment with climate neutrality objectives, as laid down in Regulation (EU) 2021/1119 of the European Parliament and of the Council62. 62 Regulation (EU) 2021/1119 of the European Parliament and of the Council of 30 June 2021 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’) (OJ L 243, 9.7.2021, p. 1 , ELI: http://data.europa.eu/eli/reg/2021/1119/oj). EN 43 EN Article 11 Public procurement 1. Contracting authorities and contracting entities shall exclude from access to procurement procedures referred to in Part I of Annex II and Part I of Annex III tenders submitted by economic operators owned or controlled by an entity established in third countries which have not concluded an international agreement with the Union guaranteeing such access. 2. For p ublic procurement procedures referred to in Part I of Annex II and Part I of Annex III, contracting authorities and contracting entities shall apply the Union origin requirements and low-carbon requirements laid down therein in accordance with Articles 8 and 10. 3. Contracting authorities and contracting entities may decide not to apply the requirements set out in Annex es II and III where any of the following conditions are fulfilled: (a) the required products or services can only be supplied by one specific economic operator, and no reasonable alternative or substitute exists, and the absence of competition is not the result of an artificial narrowing down of the parameters of the public procurement procedure; (b) no suitable tenders or no suitable requests to participate were submitted, including in response to a similar former public procurement procedure launched by the same contracting authority or contracting entity in the two years preceding the start of the planned new procurement procedure; (c) their application would require a contracting authority or contracting entity to acquire goods, services or works having disproportionate costs or would result in technical incompatibility in their operation and maintenance. Estimated cost differences exceeding 25%, based on objective and transparent data, may be presumed by contracting authorities and contracting entities to be disproportionate. 4. Contracting authorities and contracting entities shall require economic operators supplying products or services to submit a self -declaration, or an equivalent document, demonstrating compliance with the requirements set out in this Article. Article 12 Other forms of public intervention 1. Without prejudice to Articles 107 and 108 TFEU, Member States shall design public support schemes in a way that they contribute to the objective of strengthening the Union’s strategic industrial value chains through the Union origin requirements, low- carbon content requirements, or both, laid down in Part II of Annex II and Part II of Annex III, in accordance with Articles 9 and 10 and without prejudice to Article 13. Member States shall apply the requirements referred to in the first subparagraph to public support schemes accounting for at least 45% of the total national budget allocated to the public support schemes covered by Part II of Annex II and accounting for 100% of the total national budget allocated to the public support schemes covered by Part II of Annex III. 2. When designing and implementing a public support scheme covered by Part II of Annex II and Part II of Annex III , the competent authority shall assess the EN 44 EN contribution of products and technologies to the overall target laid down therein on the basis of an open, non-discriminatory and transparent process. 3. The competent authority may still implement support schemes that do not meet the requirements laid down in Part II of Annex II and Part II of Annex III, in whole or in part, if the application of such requirements: (a) would lead to significant delays due to the unavailability of the required components or final products. Estimated delays in excess of seven months, based on objective, transparent and verifiable data, may be presumed to be significant; (b) would incur disproportionate costs. Disproportionate costs shall be presumed to exist where, based on objective, transparent and verifiable data, compliance would increase the cost of the underlying final product or technology by more than 30%. Article 13 Financial support for corporate vehicles For the purposes of Article 4 of the [Proposal for a Regulation of 16 December 2025 on clean corporate vehicles], the ‘made in the European Union’ criterion for providing financial support for the uptake of corporate cars and vans shall comply with the criteria set out in Part II of Annex III to this Regulation. This ‘made in the European Union’ criterion shall be considered equivalent to the ‘Union origin’ referred to in Article 7 of this Regulation. Article 14 CO2 emission performance standards credits 1. For the purposes of Article 5 (1) and (2) of Regulation (EU) 2019/631 [as amended by the Proposal for a Regulation of 16 December 2025 amending Regulation (EU) 2019/631 as regards CO2 emission performance standards for new light duty vehicles and vehicle labelling], the ‘made in the EU’ criterion for small zero - emission vehicles shall comply with the criteria set out in Part III of Annex III to this Regulation. This ‘made in the EU’ criterion shall be considered equivalent to the ‘Union origin’ referred to in Article 7 of this Regulation. 2. For the purposes of Article 5b of Regulation (EU) 2019/631 [as amended by the Proposal for a Regulation of 16 December 2025 amending Regulation (EU) 2019/631 as regards CO2 emission standards for new light duty vehicles and vehicle labelling], ‘low-carbon steel made in the EU’ shall be understood as follows: (a) ‘low-carbon’ shall comply with the conditions referred to in Article 10(1) of this Regulation; (b) ‘made in the EU’ shall be equivalent to the ‘Union origin’ referred to in Article 7 of this Regulation. EN 45 EN Article 15 Certification of a vehicle’s compliance with Union origin requirements From [ OP please insert date: six months after entry into force], when issuing a vehicle’s certificate of conformity in accordance with Articles 36 and 37 of Regulation (EU) 2018/858, for vehicles in compliance with the relevant Union origin requirements laid down in Annex III to this Regulation, manufacturers shall provide an accompanying document certifying the compliance of the vehicle. Article 16 Delegation of powers 1. The Commission is empowered to adopt delegated acts in accordance with Article 30 to supplement this Regulation by laying down Union-level demand-side measures for products from the chemical industry in order to promote the following activities: (a) the production and sales of substances and mixtures of Union origin derived from sustainable carbon sources; (b) the use in products made available on the market of substances and mixtures of Union origin derived from sustainable carbon sources. In the preparation of the delegated acts, the Commission should take into account: (a) the contribution of the requirements to the Union’s objective of economic security, resilience and climate neutrality set out in Regulation (EU) 2021/1119; (b) the market situation at Union level, as identified through monitoring activities, including declining Union market shares and Union industry producing at below capacity (c) the impact of setting such measures on the overall competitiveness and greenhouse gas emissions of the relevant sectors, as well as on costs for downstream consumers and small and medium enterprises and public budgets. 2. The Commission is empowered to adopt delegated acts in accordance with Article 30 in order to amend Annex II or Annex III concerning the Union origin requirements, low-carbon requirements or both set out for products referred to therein, taking into account the following criteria: (a) the market situation at Union level, as identified through monitoring activities, including declining Union market shares and Union industry producing below capacity; (b) technological progress; (c) the contribution of the requirements to the Union’s objective of public order, economic security, resilience and climate neutrality set out in Regulation (EU) 2021/1119; (d) demand for the relevant products or technologies driven by the downstream sectors’ growth; (e) share of product or technology in total production value of the downstream sector; (f) the impact of setting Union origin requirements, low -carbon requirements, or both on the overall competitiveness and greenhouse gas emissions of the EN 46 EN relevant sectors, including on costs for downstream consumers and small and medium enterprises and public budgets. 3. The Commission is empowered to adopt implementing acts i n accordance with Article 31(2) to specify the method for calculating the proportion of volume of products and components originating in the Union in accordance with Regulation (EU) No 952/2013, and where appropriate, to provide for the use of standardised templates for certificates of compliance. Implementing acts referred to in subparagraph 1 may also establish the methods and procedures to be applied by the relevant competent national authorities, including contracting authorities and contracting entities, to verify compliance with the requirements laid down in this Regulation and, where appropriate, to make use of digital tools for the purposes of calculation, verification and demonstration of compliance. CHAPTER IV FOREIGN INVESTMENT CONTRIBUTION Article 17 Scope 1. This Chapter shall apply to foreign direct investments exceeding a value of EUR 100 million in the emerging strategic manufacturing sectors referred to in paragraph 2, where more than 40 % of the global manufacturing capacity is held by the third country of which the foreign investor is a national or undertaking. Such investments shall not be implemented unless explicitly approved by the Investment Authority or the European Commission, referred to in Article 1 9, in accordance with the provisions laid down in this Chapter. 2. This chapter shall apply to foreign direct investment in manufacturing in any of the following emerging strategic sectors: (a) battery technologies and its value chain for battery energy storage systems; (b) pure electric vehicles, off -vehicle charging hybrid electric vehicles and fuel - cell electric vehicles, including components related to electrification and digitalisation; (c) solar PV technologies; (d) extraction, processing and recycling of critical raw materials. 3. This Chapter shall not apply to: (a) investors and investments covered by economic partnership and free trade agreements in force or provisionally applied by the Union to the extent relevant commitments have been made under those agreements , including investments made by the Union subsidiaries of such foreign investors; (b) investments targeted at p roviding services, including investments made by the Union subsidiaries of investors; (c) portfolio investments. EN 47 EN Article 18 Value added foreign direct investment criteria 1. Member States shall, by [ OP insert date: 1 month after entry into force of this Regulation], designate an Investment Authority which shall perform the review of foreign direct investment and implement the provisions of this Chapter. Member States shall provide that Investment Authority with the necessary resources, legal and administrative means for performing the tasks set out in this Regulation. 2. From [OP insert date: 12 month after entry into force of this Regulation], Investment Authorities shall only approve foreign direct investments made directly by foreign investors that fulfil either four or more of the following six conditions: (a) foreign investors do not acquire, hold, or exercise ownership interests representing more than 49% of the share capital, voting rights, or equivalent ownership interests in any Union target, or equivalent ownership, leasehold or other rights conferring control over a Union asset; (b) foreign investor undertakes the direct investment through a joint venture with one or more Union entities, with the foreign investor holding no more than 49% of the share capital, voting rights, or equivalent ownership interests or other rights conferring control in any of the Union entities participating in the joint venture . Such joint ventures shall be structured to ensure effective participation of Union partners in management, technology transfer, and capacity building; (c) foreign investors have entered into agreements providing for the licensing of their intellectual property rights and of their know -how to the benefit of the Union Target, or the Union asset , to enabl e it to carry out its economic activities in the context of the foreign direct investment. All intellectual property rights or assets developed by the Union Target or the legal entity owning the Union asset prior to the foreign investment or without the collaboration of the foreign investor shall be fully and exclusively owned by the Union Target or the legal entity of the Union asset. All intellectual property rights or assets either developed in that context as a result of a collaboration with the foreign investor’s other business assets, or in the case of point b, developed by the joint venture, shall be owned jointly by the Foreign Investor and the Union Target, the joint venture defined in point b or the legal entity owning the Union asset; (d) the foreign investor annually directs to research and development spending in the Union an amount equivalent to at least 1% of the gross annual revenue of the Union target, or the gross annual revenue generated by the Union asset, as applied in proportion to the foreign investor’s share of control; (e) at least 50% of the workforce employed in the context of the foreign direct investment, at the time of its implementation and continuously throughout its operation, shall be made up of Union workers across all categories of the workforce, including operational, technical, supervisory, and managerial positions. Such employment shall be accompanied by adequate training and capacity-building measures. Where a Union target or Union asset already performing manufacturing activities before the investment is acquired, including after bankruptcy, maintaining the existing workforce or re - employment of the former workforce shall be prioritised, in accordance with EN 48 EN national law and the application of collective agreements. In the event that the foreign investor, the Union target or the Union asset receives public funding, notwithstanding article 107 TFEU, it shall commit not to decrease the number Union workers for a period of five years on pain of recovery by the relevant national authorities, the funding awarded; (f) in the context of the foreign direct investment, the foreign investor prepares and publishes on its website a strategy for enhancing Union value chains and prioritising the sourcing of inputs for the manufacturing activity from the Union and endeavours to source from the Union a minimum of 30% of inputs used for the products placed on the Union market. 3. The foreign direct investment shall comply with the condition referred to in paragraph 2(e) to be approved by the Investment Authority pursuant to paragraph 2. 4. Investment Authorities may apply some or all of the conditions set out in paragraph 2 to direct investments made within the Union by a foreign investor’s subsidiary where it is essential to achieve the objectives of this Regulation, under the following conditions: (a) preventing the circumvention of this Regulation by the foreign investor; or (b) where no alternative measures, including commitments proposed by the foreign investor or the foreign investor’s subsidiary, are reasonably available and less restrictive of direct investment within the Union in order to meet the objectives of the Regulation. 5. The Commission shall adopt an implementing act , by [OP please insert date: 6 months after entry into force of this Regulation]) to specify the detailed rules for verifying the compliance with the conditions laid down in paragraph 2 . Those implementing acts shall be adopted in accordance with the examination procedure referred to in Article 31(3). Article 19 Prior notification of planned foreign direct investments 1. A foreign investor shall notify any planned direct investment within the scope of Article 17 to the Investment Authority of the Member State where the Union target or Union asset is located , and which would result in control over the Union target or Union asset as laid down in paragraph 3. The notification shall contain all necessary information to allow the Investment Authority to perform the investment review pursuant to Article 20. 2. For the purposes of determining whether the investment value reaches the threshold set out in Article 17(1), only previous investments of a foreign investor made in the same Union target or Union asset by the foreign investor from [OP please insert the date = the date of the entry into force of this Regulation] shall be aggregated. 3. Foreign investors shall be considered to have control, where the investment in question reaches either of the following threshold: (a) 30 percent or more share capital or voting rights in a Union target; (b) 30 percent or more of ownership of a Union asset, and leasehold or other rights conferring control over a Union asset. EN 49 EN 4. Where a foreign investor's acquisition or establishment of an investment would result in foreign investors collectively holding more than the ownership or control thresholds laid down in paragraph 3, th at acquisition or establishment shall be notified. 5. For the purposes of calculating whether either of the thresholds laid down in paragraph 3 have been reached , aggregated interests held directly or indirectly, including through affiliates, chains of ownership or by foreign investors acting in concert, shall be considered. 6. Where the relevant Union targets or assets are located in more than one Member State, the foreign investor shall notify the competent Investment Authorities of all Member States concerned and the Commission on the same day with reference to the other notifications. The Member States concerned shall coordinate the review of such notifications and agree on the conditions imposed with the other Member States concerned, as well as with the Commission. The Commission shall decide which conditions shall be applied to the foreign direct investment in case there is no agreement between the Member States concerned. Foreign direct investment notified pursuant to the first sub paragraph shall fulfil the conditions laid down in Article 18 in all Member States concerned. Article 20 Review and approval 1. The Investment Authority shall decide on the admissibility of the notification pursuant to Articles 17 and 19 within 30 days of receiving the notification. Th at deadline may be extended by a further 15 days where the Investment Authority demonstrates satisfactorily that an extension is justified by the circumstances. Where the Investment Authority decides a notification is admissible, it shall immediately transmit the full notification to the Commission including all documents received. 2. Within 30 days after receiving the notification, the Commission may issue a written opinion on whether the foreign direct investment falls within the scope of Articles 1 7 and 1 9, whether it fulfils the conditions laid out in Article 1 8(2), and whether the Investment Authority is to approve the investment or not. Where the Commission issues a written opinion, it shall transmit it to the Investment Authority without delay. The Commission may share the written opinion with the Investment Authorities of other Member States or publish the written opinion on its official website, with due regard to confidentiality. 3. No sooner than receiving the opinion of the Commission or the lapse of the deadline referred to in paragraph 2 and no later than 60 days , or 75 days if the deadline was extended in accordance with paragraph 1, after receipt of the notification, the Investment Authority shall issue a reasoned decision approving or declining the foreign direct investment. The Investment Authority shall approve the foreign direct investment if it fulfils 4 out of 6 conditions set out in Article 18. The deadline for issuing the reasoned decision may be extended by a further 30 days where the Investment Authority demonstrates satisfactorily that an extension is justified by the circumstances. EN 50 EN The Investment Authority shall communicate such reasoned decisions to the Commission within three days of adoption. 4. Where the Investment Authority gives a decision which diverts from the Commission opinion as regards compliance of the foreign direct investment with the conditions laid down in Article 1 8, the Investment Authority shall assess the notification in greater detail within an additional period of two months and the decision shall only enter into force after the lapse of this deadline. Investment Authorities shall, in their reasoned decision issued pursuant to paragraph 3, justify how the opinion of the Commission was taken into account. 5. The Investment Authority shall, in its approval decision, set out reporting obligations on the investor concerned, with a view to assessing the continuous fulfilment of the conditions laid down in Article 18. 6. Any party subject to a decision issued pursuant to paragraphs 1 or 3 shall have the right to seek judicial recourse against such decision. Article 21 Review of foreign direct investment by the Commission 1. Following the notification referred to in Article 19(1), the Commission may decide to undertake the assessment of the foreign direct investment in the following circumstances: (a) on its own initiative, where the foreign direct investment has the potential to significantly impact added value creation in the Union market; (b) on the request of an Investment Authority handling a notification, or an Investment Authority of another Member State , in which the foreign direct investment in question would have a significant impact on its territory; or (c) on its own initiative, where the foreign direct investment has value exceeding EUR 1 billion. 2. For the purposes of paragraph 1, the foreign direct investment shall be deemed to have the potential to significantly impact the added value creation in the internal market, in any of the following cases: (a) it is of particular strategic importance for the internal market; (b) it has considerable economic impact on the territory of more than one Member State; (c) it has high potential of disrupting the security of supply of that emerging strategic sector or related value chains in the Union, or security in more than one Member State; (d) it has high potential of having detrimental environmental effect in more than one Member State; (e) it is of a particularly high value compared to other investments in that emerging strategic sector. 3. Following the notification referred to in Article 19(1), the Commission may decide to undertake the assessment of an investment referred to in Article 1 8(4). The Commission may carry out its assessment on its own initiative, or at the request of an Investment Authority handling a notification, or an Investment Authority of another EN 51 EN Member State on which the foreign direct investment in question would have a significant impact. Based on its assessment, the Commission may require the Investment Authority to apply in a proportionate manner, or not to apply, some or all the conditions set out in Article18(2). 4. Where the Commission decides to assess the foreign direct investment pursuant to this Article, the provisions set out in Article 18 shall apply, mutatis mutandis, starting from its decision to undertake the assessment. Article 22 Monitoring and enforcement by the Investment Authority 1. The Investment Authority shall regularly monitor the foreign direct investment to ensure that it continues to fulfil the conditions laid down in Article 18. For th at purpose, the foreign investor shall regularly report to the Investment Authority on compliance with the conditions. 2. Upon request by the Commission, the Investment Authority shall transmit the investor’s reports submitted pursuant to paragraph 1 to the Commission together with its own assessment on each report. 3. The Investment Authority shall establish penalties in case of non -compliance with the provisions of this Chapter, in particular where foreign investors or investments fail to comply with the following requirements: (a) the notification requirements in accordance with Article 19; (b) the conditions laid down in Article 18; (c) the monitoring obligations established by this Article. 4. Penalty payments established by the Investment Authority shall not amount to less than 5 % of the average daily aggregate turnover of the foreign investor undertaking in case of a violation pursuant to paragraph 3, point (a). Where the foreign investor is a private person , the Investment Authority shall establish a penalty payment of at least 5 % of the investment value in case a violation pursuant to paragraph 3, point (a). The penalty payments established by the Investment Authority shall be effective and proportionate to the violations laid down in paragraph 3. The Investment Authority shall inform the Commission without undue delay of any non-compliance referred to in paragraph 3 and of the consequential penalties imposed. Article 23 Monitoring by the Commission 1. For the purposes of Article 17, the Commission shall monitor the global manufacturing capacity for each of the emerging strategic sectors, building on existing monitoring activities performed, in particular pursuant to Regulation (EU) 2024/1735. EN 52 EN 2. The Commission shall provide and publish updated information on the most recent year for which data is available for each of the emerging strategic sectors referred to in Article 17(2). Where the Commission decides to assess the foreign direct investment pursuant to Article 21, it may by decision impose penalties if the foreign investor provides false or misleading information in their notification, or if it does not supply the information required for the Commission to perform its review obligation. The penalties imposed by the Commission shall not exceed the 5% average daily turnover of the foreign investor, or in case of a private person foreign investor, 5% of the investment value. Article 24 Delegation of powers 1. The Commission is empowered to adopt delegated acts in accordance with Article 30 of this Regulation to supplement the list of emerging strategic sectors to be covered by this Chapter to sectors critical to the Union’s economic security including net- zero technologies listed in Article 4(1), points (b), (d), (e), (g), (h), (j), (k), (n), (p), and (s), of Regulation (EU) 2024/1735, nuclear fuel cycle technologies referred to in Article 4(1), point (i), of Regulation (EU) 2024/1735 , electric propulsion technologies for transport referred to in Article 4(1), point (r ), of Regulation (EU) 2024/1735, and excluding digital technologies, artificial intelligence , quantum technologies and semiconductors. These delegated acts shall be without prejudice to other Union acts establishing investment criteria for these sectors. 2. The delegated acts referred to in paragraph 1 shall be based on the following factors: (a) an assessment of whether modifying the list of emerging strategic sectors would unduly deter or discourage foreign direct investment in the Union; (b) number of foreign direct investments in that sector , taking into account their contribution to the Union’s security of supply and their added value to the Union’s economy; (c) market situation and conditions, including supply chain disturbances, on Union level; (d) technological developments and the Union’s competitiveness in that sector in comparison to third countries; (e) supply chain dependence in the relevant sector on one or more countries. 3. The delegated acts adopted pursuant to paragraph 1 shall contain: (a) the threshold value referred to in Article 17(1) for each of those additional sectors; (b) whether the investment conditions referred to in Article 18 are appropriate and necessary to meet the objectives of this Regulation with respect to the sector concerned, and if not, which of those criteria is to be applied. EN 53 EN CHAPTER V INDUSTRIAL MANUFACTURING ACCELERATION AREAS Article 25 Designating national industrial manufacturing acceleration areas 1. Member States shall designate at least one industrial manufacturing acceleration area on their territory by [OP please insert date: 12 months following the entry into force of this Regulation] to cluster industrial manufacturing project s in one or several of the strategic sectors listed in Annex I. 2. Member States shall designate industrial manufacturing acceleration areas by decision, on the basis of the following elements: (a) the impact of the industrial manufacturing acceleration area's production on the security of the Union's supply for the strategic sectors listed in Annex I; (b) the potential of the industrial manufacturing acceleration area to support the deployment of production capacity in the strategic sectors listed in Annex I , to strengthen Union value chains and the Union’s innovation potential to accelerate sustainable manufacturing industrial activities, including decarbonisation and circular business practices, and to foster the functioning of the internal market, in alignment with strategic projects and other initiatives , including as Net Zero Acceleration Valleys, carried out pursuant to other Union legislation; (c) the number of SMEs and SMCs that would benefit from the provisions of this Chapter within the industrial acceleration area; (d) the Member State’s regions’ level of development , including least developed areas, regions in transition, and those undergoing industrial transformation. 3. When designating industrial manufacturing acceleration areas, Member States shall: (a) define a clear geographic scope for the acceleration area; (b) prioritise locations where the deployment of a specific sector or sectors of industrial manufacturing projects is not expected to have a significant environmental impact; (c) prioritise locations outside Natura 2000 sites and outside areas designated under national protection schemes for nature and biodiversity conservation, as well as other areas identified on the basis of sensitivity maps and outside protected areas as referred to in Article 6 of Directive 2000/60/EC; (d) take into account climate risks in the areas designated; (e) prioritise artificial and built surfaces, industrial sites, and brownfield sites , as well as already identified strategic projects pursuant to other Union legislation. 4. When designating industrial manufacturing acceleration areas , Member States shall take into account, as relevant, the following considerations: (a) the infrastructural needs of the acceleration area; (b) the financing needs of manufacturing industry located in the acceleration area and the possibility to support that industry, where applicable , in accordance with applicable State aid rules; EN 54 EN (c) the supply chain needs within the acceleration area and the essential materials , particularly secondary materials, necessary for manufacturing activities; (d) the feasibility of connecting the acceleration area with sufficient low-carbon energy supply for the acceleration of industrial manufacturing activity; (e) skill needs, the shortages and employment trends and support measures to achieve the adequate reskilling and upskilling of the local workforce; (f) the need, as relevant, for depollution of the acceleration area to facilitate the commencement of new industrial activities; (g) research and innovation needs for accelerating the manufacturing industrial activity in the area; (h) relevant location -specific information made publicly available by industry, including corporate climate transition plans, related targets and actions, investment needs, and required enabling policy frameworks. 5. Before their adoption, the plans or programmes on the designation of the industrial manufacturing acceleration areas shall be subject to an environmental assessment pursuant to Directive 2001/42/EC of the European Parliament and of the Council 63, and, if they are likely to have a significant impact on Natura 2000 sites, to the appropriate assessment pursuant to Article 6(3) of Council Directive 92/43/EEC 64 and, where applicable, to the relevant assessment to comply with Article 4(7) of Directive 2000/60/EC of the European Parliament and of the Council65. 6. Member States shall inform the Commission of the designation of an industrial manufacturing acceleration area , within 30 days from the adoption of the relevant decision. Article 26 Enabling conditions Member States shall take the following measures, where appropriate, to facilitate the development of industrial manufacturing acceleration areas: (a) facilitate financing of projects in the acceleration areas by ensuring coordination between authorities and streamlining internal procedures, in synergy with Union programmes and in accordance with existing State aid rules where applicable , taking into account the participation of SMEs and SMCs; (b) promote research and innovation investments to accelerate the innovative potential and Union’s competitiveness and technology leadership in the acceleration areas; (c) conduct, and review at least every three years, a comprehensive analysis of the energy needs of each accel eration area and identifying the required energy 63 Directive 2001/42/EC of the European Parliament and of the Council of 27 June 2001 on the assessment of the effects of certain plans and programmes on the environment (OJ L 197, 21.7.2001, p. 30, ELI: http://data.europa.eu/eli/dir/2001/42/oj). 64 Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora (OJ L 206, 22.7.1992, p. 7, ELI: http://data.europa.eu/eli/dir/1992/43/oj). 65 Directive 2000/60/EC of the European Parliament and of the Council of 23 October 2000 establishing a framework for Community action in the field of water policy (OJ L 327, 22.12.2000, p. 1 , ELI: http://data.europa.eu/eli/dir/2000/60/oj). EN 55 EN infrastructure capacity for the proper functioning and development of industrial manufacturing projects located in the acceleration area. Such analysis shall be conducted, at least, when designating the industrial acceleration area and for the milestones of years 2030, 2040 and 2050 , ensuring alignment with the Union’s decarbonisation pathway; (d) ensure that the network development plans prepared by transmission system operators pursuant to Article 51 of Directive (EU) 2019/944 of the European Parliament and of the Council 66 and distribution system operators pursuant to Article 32 of Directive (EU) 2019/944 take due account of the analysis prepared pursuant to point ( c) of this paragraph , considering the potential of anticipatory investments to accommodate future system needs; (e) exchange information on relevant supply chains, identify potential bottlenecks, and strengthen coordination between acceleration areas on critical raw materials issues within the framework of the European Critical Raw Materials Board established by Article 35 of Regulation (EU) 2024/1252; (f) promote entities in the acceleration areas and facilitate their participation, where relevant, in the joint purchasing mechanism established by Article 25 of Regulation (EU) 2024/1252, including by providing guidance, support, and information to ensure effective engagement; (g) support the development and availability of a highly skilled workforce and provide appropriate training and apprenticeship opportunities, thereby contributing to high-quality employment within those acceleration areas; (h) exchange information on the necessary skills, potential shortages of those skills and best practices applied in the acceleration areas within the framework of the Industrial Forum expert group established by COM/2020/10267; (i) ensure synergies and promote the benefits provided under the Pact for Skills 68 or entities established in the acceleration areas, with particular attention to Large-Scale Skill Partnerships and Regional Skills Partnerships included therein. Article 27 Permit-granting procedures in acceleration areas 1. For each designated industrial manufacturing acceleration area, Member States shall prepare and issue an aggregated baseline permit authorising industrial activities located within that area . This aggregated baseline permit shall cover the permits and administrative authorisations required for the industrial manufacturing projects 66 Directive (EU) 2019/944 of the European Parliament and of the Council of 5 June 2019 on common rules for the internal market for electricity and amending Directive 2012/27/EU (OJ L 158, 14.6.2019, p. 125, ELI: http://data.europa.eu/eli/dir/2019/944/oj). 67 Communication from the Commission to the European Parliament, the European Council, the Council, the European Economic and Social Committee and the Committee of the Regions a New Industrial Strategy for Europe (COM/2020/102 final). 68 Communication from the Commission to the European Parliament, the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions , European Skills Agenda for sustainable competitiveness, social fairness and resilience ((COM(2020) 274 final). EN 56 EN located within the acceleration area, excluding those permits that are installation specific. 2. Before issuing the aggregated baseline permit referred to in paragraph 1, Member States shall carry out all necessary assessments, including relevant environmental assessments, planning procedures and evaluations applicable at the level of the acceleration area. Member States shall take into account the assessment carried out pursuant to Article 25(5). 3. Industrial manufacturing projects located within an industrial manufacturing acceleration area shall be required to obtain only those additional permits or authorisations that fall outside the scope of the aggregated baseline permit referred to in paragraph 1. 4. All industrial manufacturing projects located within an acceleration area shall be considered strategic projects contributing to resilience and decarbonisation or resource efficiency for the purposes of [Article 14 of Proposal for a Regulation on speeding-up environmental assessment ]. Points 1, 2 and 3 of the Annex to that Regulation shall apply. CHAPTER VI FINAL PROVISIONS Article 28 Evaluation By [OP: Please insert the date = two years after the date of entry into force of this Regulation], and every three years thereafter, the Commission shall carry out an evaluation of this Regulation and of its contribution to the functioning of the internal market. The evaluation shall consider: (a) progress made in achieving the objectives specified in Article 1, particularly on resilience, economic security and decarbonisation of industrial production; (b) progress made in achieving the industrialisation objective pursuant to Article 2, taking into account the challenges and opportunities in the internal market and global markets; (c) the related administrative costs, economic impacts on downstream sectors, small and medium enterprises and impacts on public budgets. Article 29 Review By [OP: Please insert the date three years after the date of entry into force this Regulation], the Commission shall assess the necessity of amending Chapters III and IV. The Commission may submit a legislative proposal in order to repeal or amend this Regulation. That review shall be carried out periodically every three years after the first review. When carrying out its review, the Commission shall pay particular attention to the effectiveness of this Regulation and the persistence of the circumstances that have justified the adoption of this Regulation and to the necessity to introduce Union origin requirements for products from certain sectors critical to the Union’s economic security , notably the building of ships and of rail rolling stock. EN 57 EN Article 30 Exercise of the delegation 1. The power to adopt delegated acts is conferred on the Commission subject to the conditions laid down in this Article. 2. The power to adopt delegated acts referred to in Articles 8, 9, 10, 16 and 24 shall be conferred on the Commission for an indeterminate period of time from [OP please insert the date = the date of the entry into force of this Regulation]. 3. The delegation of power referred to in Articles 8, 9, 10, 16 and 24 may be revoked at any time by the European Parliament or by the Council. A decision to revoke shall put an end to the delegation of the power specified in that decision. It shall take effect on the day following the publication of the decision in the Official Journal of the European Union or at a later date specified therein. It shall not affect the validity of any delegated acts already in force. 4. Before adopting a delegated act, the Commission shall consult experts designated by each Member State in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. 5. As soon as it adopts a delegated act, the Commission shall notify it simultaneously to the European Parliament and to the Council. 6. A delegated act adopted pursuant to Articles 8, 9, 10, 16 and 24 shall enter into force only if no objection has been expressed either by the European Parliament or by the Council within a period of two months of notification of that act to the European Parliament and the Council or if, before the expiry of that period, the European Parliament and the Council have both informed the Commission that they will not object. That period shall be extended by two months at the initiative of the European Parliament or of the Council. Article 31 Committee procedure 1. The Commission shall be assisted by a Committee. That Committee shall be a committee within the meaning of Regulation (EU) No 182/2011. 2. Where reference is made to this paragraph, Article 4 of Regulation (EU) No 182/2011 shall apply. 3. Where reference is made to this paragraph, Article 5 of Regulation (EU) No 182/2011 shall apply. Article 32 Penalties Member States shall lay down rules on penalties applicable to infringements of the provisions of this Regulation and shall take all necessary measures to ensure that they are implemented. The penalties provided for shall be effective, proportionate and dissuasive. Member States shall, without delay, notify the Commission of those rules and measures and shall notify it, without delay, of any subsequent amendment affecting them. EN 58 EN Article 33 Amendments to Regulation (EU) 2018/1724 Annexes I and II to Regulation (EU) 2018/1724 are amended in accordance with Annex V to this Regulation. Article 34 Amendments to Regulation (EU) 2024/1735 Regulation (EU) 2024/1735 is amended as follows: (1) in Article 3 the following points (34), (35) and (36) are added: (a) ‘(34) ‘industrial battery’ means an industrial battery as defined in Article 3(1), point (13), of Regulation (EU) 2023/1542 of the European Parliament and the Council*;’ (b) ‘(35) ‘stationary battery energy storage system’ means a stationary battery energy storage system as defined in Article 3(1), point (15), of Regulation (EU) 2023/1542;’ (c) ‘(36) ‘hydronic heat pump’ means a space heater using ambient heat from an air source, water source or ground source, and/or waste heat for heat generation and heating space through a water circuit.’ ___ * Regulation (EU) 2023/1542 of the European Parliament and of the Council of 12 July 2023 concerning batteries and waste batteries, amending Directive 2008/98/EC and Regulation (EU) 2019/1020 and repealing Directive 2006/66/EC (OJ L 191, 28.7.2023, p. 1, ELI: http://data.europa.eu/eli/reg/2023/1542/oj).; (2) in Article 9, the following paragraph (14) is added: 14. All net -zero technology manufacturing projects shall be considered strategic projects contributing to resilience and decarbonisation or resource efficiency for the purpose of Article 14(1) of [Proposal for a Regulation on speeding-up environmental assessment].’; (3) Article 25 is amended as follows: (a) paragraph 1 is replaced by the following: ‘1. For public procurement procedures falling within the scope of Directive 2014/23/EU, 2014/24/EU or 2014/25/EU, where contracts have net -zero technologies listed in Article 4(1), points (a) to (d), (h) and (i) , of this Regulation as part of their subject matter, or in the case of works contracts and works concessions including said technology, contracting authorities and contracting entities shall apply minimum mandatory requirements regarding environmental sustainability established in the implementing act referred to in paragraph 5 of this Article.’; (b) in paragraph 7, the first subparagraph is replaced by the following: ‘The tender’s resilience contribution shall be taken into account in the case of public procurement procedures, work contracts and works concessions referred to in paragraph 1, in accordance with this paragraph.’ EN 59 EN (c) in paragraph 7, point (a) is replaced by the following: ‘(a) an obligation for the duration of the contract not to supply more than 50 % of the value of the specific net -zero technology final product referred to in this paragraph from each individual third country as determined by the Commission; (d) in paragraph 7, point (b) is replaced by the following: ‘(b) an obligation for the duration of the contract that no more than 50 % of the value of all the main specific components of the specific net -zero technology referred to in this paragraph taken together is supplied or provided directly by the successful tenderer or by a subcontractor from each individual third country as determined by the Commission;’; (4) The following Article 25a is inserted: ‘Article 25a Origin requirements for public procurement procedures 1. For public procurement procedures referred to in Annex II, contracting authorities and contracting entities shall exclude from access to such procurement procedures tenders submitted by economic operators owned or controlled by an entity established in third countries which have not concluded an international agreement with the Union guaranteeing such access. 2. For p ublic procurement procedures referred to in Annex II , contracting authorities and contracting entities shall apply the Union origin requirements laid down therein. Requirements relating to specific main specific components shall only apply to the extent that those components are included in the final product. 3. Contracting authorities and contracting entities may decide not to apply one or several requirements set out in Annex II where any of the following conditions are fulfilled: (a) the required products can only be supplied by one specific economic operator, and no reasonable alternative or substitute exists, and the absence of competition is not the result of an artificial narrowing down of the parameters of the public procurement procedure; (b) no suitable tenders or no suitable requests to participate have been submitted, including in response to a similar former public procurement procedure launched by the same contracting authority or contracting entity in the two years preceding the start of the planned new procurement procedure; (c) their application would require a contracting authority or contracting entity to acquire goods, services or works having disproportionate costs or would result in technical incompatibility in operation and maintenance. Estimated cost differences in excess of 25%, based on objective and transparent data, may be presumed by contracting authorities and contracting entities to be disproportionate. (d) their application would lead to significant delays to the delivery of the project due to the unavailability of the required components or final products . Estimated d elays in excess of seven months, based on objective , transparent and verifiable data, may be presumed to be significant. EN 60 EN 4. Contracting authorities shall require economic operators supplying products falling within the scope of this Article to submit a self -declaration, or an equivalent document, demonstrating compliance with the requirements set out in this Article.’ (5) Article 26 is amended as follows: (a) the heading is replaced by the following: ‘Auctions for net-zero technologies’ (b) paragraph 1 is amended as follows: the introductory wording is replaced by the following: ‘When designing auctions for net-zero technologies listed in Article 4(1), points (a) to (g), (i) and (j), Member states shall include:’ in point (a), the following point (iv) is added: ‘ (iv) high-risk suppliers as defined in Article 2 point (39) of Regulation xxxx/xxxx [CSA2] : For auctions that include control systems, management control systems, supervisory control and data acquisition systems, remote access systems or firewalls, suppliers identified as high - risk suppliers in accordance with Regulation xxxx/xxxx [CSA2]shall not be involved in the following processes: (1) the supply of those products or systems; (2) the design, development or production of those products or systems; (3) the management, control or operation of those products or systems; (4) the development, maintenance, operation, or updating of their software point (b), is replaced by the following: ‘pre-qualification criteria or award criteria as referred to in paragraphs 2 and 2a’. (c) The following paragraph 2a is inserted: ‘2a. Where the auctions have net -zero technologies listed in Annex II as part of their subject -matter, Member States shall include the pre -qualification or award criteria laid down in Annex II .’ Criteria relating to specific main specific components shall only apply to the extent that those components are included in the final product.’; (d) in paragraph 3, the first subparagraph is replaced by the following: ‘ The Commission is empowered to adopt an implementing act further specifying the pre-qualification and award criteria referred to in paragraph 1points (a), (i), (ii) and (iii), and paragraph 2.’ (e) paragraph 4 is replaced by the following: ‘4. Member States shall give to each of the criteria referred to in paragraphs 2 and 2 a, when applied as award criteria, a minimum weight of 5 % and a combined weight of between 15 % and 30 % of the award criteria. That is without prejudice to the possibility to give a higher weighting to the criteria referred to in the fourth subparagraph of paragraph 2, in accordance with any limit for non -price criteria set out in State aid rules.’. (f) paragraph 5 is replaced by the following: ‘5. Member States shall not be required to apply one or several of the pre-qualification and award criteria laid down in paragraph 1 , points (a), (i), (ii) and (iii), and paragraph 1 , point (b), where the application of those criteria would result in disproportionate costs or EN 61 EN in significant delays to the delivery of the project due to the unavailability of the required components or final products. Estimated cost differences in excess of 20% per auction, based on objective and verifiable data, may be presumed by Member States to be disproportionate. Delays in excess of seven months, based on objective, transparent and verifiable data, may be presumed to be significant.’ (g) paragraph 7 is replaced by the following: ‘7. Paragraphs 1 to 5 shall apply to at least 40% of the volume auctioned per year per Member State or alternatively to at least 8 Gigawatt per year per Member State . Paragraph 1 , points (a)(ii) and (iv), shall apply to 100% of the volume auctioned per Member State.’ (h) in paragraph 8, the introductory wording is replaced by the following: ‘By 31 December 2027, the Commission shall carry out a comprehensive assessment of the application of the criteria referred to in paragraph 2 and their effect on the accelerated deployment of renewable energy technologies. By 31 December 2029 and every two years thereafter, the Commission shall carry out a comprehensive assessment of the application of the criteria referred to in paragraphs 2 and 2 a and their effect on the accelerated deployment of renewable energy technologies. In particular, the Commission shall assess the impact of the criteria on:’ (6) The following Articles 28a to 28e are inserted: Article 28a Origin requirements for other forms of public intervention 1. Without prejudice to Articles 107 and 108 TFEU, support schemes referred to in Annex II shall include the requirements laid down therein. Requirements relating to specific main specific components shall only apply to the extent that those components are included in the final product. 2. When designing and implementing a scheme pursuant to paragraph 1, the authority shall assess the fulfilment of the requirements on the basis of an open, non - discriminatory and transparent process. 3. When additional financial compensation is granted, it shall not exceed 15% of the cost of the final product for the consumer, including transport and installation costs where relevant , with the e xception of schemes targeting citizens living in energy poverty, as defined in Article 2, point (1), of Regulation (EU) 2023/955 of the European Parliament and of the Council (57), for which the limit shall be 20 %. Article 28b Limitations to high-risk suppliers for other forms of public intervention For support schemes within the scope of Articles 28 and 28 a that include control systems, management control systems, supervisory control and data acquisition systems, remote access systems or firewalls, Member States shall design those schemes in such a way as to ensure that beneficiaries shall be eligible to the scheme only where suppliers identified as high -risk suppliers in accordance with Regulation xxxx/xxxx [CSA2] are not be involved in the following processes: (a) the supply of those products or systems; (b) the design, development or production of those products or systems; EN 62 EN (c) the management, control or operation of those products or systems; (d) the development, maintenance, operation, or updating of their software. Article 28c Union origin requirements for Member State support to construction and manufacturing of net-zero technologies 1. Without prejudice to Articles 107 and 108 TFEU and in accordance with the Union’s international commitments, when supporting the construction or manufacturing of net-zero technology final products referred to in Annex II of this Regulation , Member States shall ensure that the Union origin requirements laid down in that Annex are met. Requirements relating to specific main specific components shall only apply to the extent that those components are included in the final product. 2. Member States may decide not to apply one or several requirements referred to in paragraph 1 where any of the following conditions are fulfilled: (a) the required components can only be supplied by one specific economic operator, and no reasonable alternative or substitute exists, and the absence of competition is not the result of an artificial narrowing down of the parameters of the public procurement procedure; (b) their application would result in disproportionate costs or technical incompatibility in operation or maintenance . Estimated cost differences in excess of 25%, based on objective and transparent data, may be presumed to be disproportionate; (c) their application would jeopardise the project or lead to significant delays to the delivery of the project due to the unavailability of the required components or final products . Delays in excess of seven months, based on objective, transparent and verifiable data, may be presumed to be significant. 3. Without prejudice to Articles 107 and 108 TFEU and in accordance with the Union’s international commitments , when supporting the manufacturing of net -zero technology final products referred to in Annex II of this Regulation and that include control systems, management control systems, supervisory control and data acquisition systems, remote access systems or firewalls, Member States shall ensure that suppliers identified as high -risk suppliers in accordance with Regulation xxxx/xxxx [CSA2] are not involved in the following processes: (a) the supply of those products or systems; (b) the design, development or production of those products or systems; (c) the management, control or operation of those products or systems; (d) the development, maintenance, operation, or updating of their software. Article 28d Union origin 1. For the purposes of Articles 25 a, 26 and 28 a and 28c, content of Union origin refers to content originating in the Union. 2. The origin of products and components shall be determined in accordance with Regulation (EU) No 952/2013 of the European Parliament. EN 63 EN Article 28e Content equivalent to Union origin in public procurement 1. With respect to the Union origin requirements referred to in Article 25a, content originating in third countries with which the Union has concluded an agreement establishing a free trade area or a customs union, or that are parties to the Agreement on Government Procurement , where relevant obligations of the Union exist under that agreement, shall be deemed to be of Union origin . 2. The Commission shall adopt delegated acts in accordance with Article 44 to exclude, in whole or in part, a third country from the scope of paragraph 1 based on any of the following criteria: (e) that third country has failed to provide national treatment related to Union products or entities under the agreements referred to in paragraph 1 in relation to any of the net-zero technologies listed in Article 4, point (1); (f) such exclusion is justified to avoid dependencies or any other developments that may threaten the security of supply in the Union of the products in question; (g) such exclusion is justified under any other exception under the applicable agreement. Article 28f Content equivalent to Union origin in auctions 3. With respect to the Union origin requirements referred to in Article 26, content originating in third countries with which the Union has concluded an agreement establishing a free trade area or a customs union shall be deemed to be of Union origin. 4. The Commission shall adopt delegated acts in accordance with Article 44 to exclude, in whole or in part, a third country from the scope of paragraph 1 based on any of the following criteria: (h) that third country has failed to provide national treatment related to Union products or entities under the agreements referred to in paragraph 1 in relation to any of the net-zero technologies listed in Article 4, point (1); (i) such exclusion is justified to avoid dependencies or any other developments that may threaten the security of supply in the Union of the products in question; (j) such exclusion is justified under any other exception under the applicable agreement. Article 28g Content equivalent to Union origin in other forms of public intervention 1. With respect the Union origin requirements set out in Article 28a, content originating in third countries with which the Union has concluded an agreement establishing a free trade area or a customs union shall be deemed to be of Union origin. 2. The Commission shall adopt delegated acts in accordance with Article 44 to exclude, in whole or in part, a third country from the scope of paragraph 1 based on any of the following criteria: EN 64 EN (k) that third country has failed to provide national treatment related to Union products or entities under the agreements referred to in paragraph 1 in relation to any of the net-zero technologies listed in Article 4, point (1); (l) such exclusion is justified to avoid dependencies or any other developments that may threaten the security of supply in the Union of the products in question; (m) such exclusion is justified under any other exception under the applicable agreement. Article 28h Delegation of power 1. The Commission is empowered to adopt delegated acts in accordance with Article 44 to amend the Union origin requirements laid down in Annex II, taking into account the following criteria: (a) the market situation at Union level including declining Union market shares and Union industry producing below capacity; (b) the contribution of the requirements to the Union’s objective of public order, economic security, resilience and climate neutrality set out in Regulation (EU) 2021/1119; (c) technological progress; (d) demand for the relevant net-zero technologies; (e) the impact of setting Union origin requirements on the overall competitiveness and greenhouse gas emissions of the relevant sectors. 2. The Commission is empowered to adopt delegated acts to supplement Annex II with Union origin requirements for additional specific net -zero technology final products referred to in Article 4(1), points (g), ( h), (j), (k), (n), (p), and (s), as well as solar thermal technologies referred to in Article 4(1), point (a), nuclear fuel cycle technologies referred to in Article 4(1), point (i), and electric propulsion technologies for transport referred to in Article 4(1), point (r), which shall be required in accordance with Articles 25 a, 26, 28 a and 28 c. In doing so, the Commission shall take the following into account: (a) the market situation at Union level, as identified through monitoring activities, including declining Union market shares and Union industry producing below capacity; (b) the contribution of the requirements to the Union’s objective of public order, economic security, resilience and climate neutrality; (c) the impact of setting Union origin requirements, low -carbon requirements, or both on the overall competitiveness and greenhouse gas emissions of the relevant sectors, as well as on downstream costs for consumers and small and medium enterprises and on public budgets. (d) demand for the relevant products or technologies. 1. The delegated acts referred to in paragraph 2 shall set out: (a) the products and components to which the minimum Union origin requirements shall apply; EN 65 EN (b) the scope of application of the minimum Union origin requirements; (7) Article 42 is amended as follows: (a) the following paragraph 2a is inserted: ‘2a. Member States, public authorities, procuring authorities and procuring entities applying Chapter IV of this Regulation shall report on the application of exemptions in accordance with the provisions of that Chapter.’ (b) paragraph 3 is replaced by the following: ‘3. Where they are not already included in, or in accordance with the elements of, the national energy and climate plans, each Member State shall submit to the Commission a report setting out the data referred to in paragraphs 2 and 2a by 15 March 2027 and every three years thereafter.’; (8) The following Annex II is added: ‘ANNEX II Union origin requirements for net-zero technologies Part I – Public procurement 1. In accordance with Article 25 a, for public procurement procedures published after the entry into force of this Regulation falling within the scope of Directives 2014/23/EU, 2014/24/EU or 2014/25/EU where contracts, works contracts or work concessions include the procurement of the following net -zero technologies, procurement documents shall include the requirements laid down below: (a) Battery energy storage systems: From [OP: Please insert the date = 1 year after entry into force of this Regulation] until [3 years after entry into force of this Regulation], the battery energy storage systems shall originate in the Union and , for projects including battery energy storage exceeding 1 Megawatt -hour, contain a battery management system that originates in the Union. From [OP: Please insert the date = 3 years after entry into force of this Regulation], the battery energy storage systems shall originate in the Union and contain battery cells, a battery management system as well as one additional main specific component that originate in the Union. (b) Solar PV technologies: From [OP: Please insert the date = 3 years after entry into force of this Regulation], the PV inverter and the PV cells or equivalent shall originate in the Union. (c) Hydronic heat pumps: From [OP: Please insert: 3 years after the entry into force of this Regulation] the hydronic heat pump shall originate in the Union. (d) Onshore and offshore wind technologies: From [OP: Please insert the date = 1 year after the entry into force of this Regulation] until [OP: Please insert the date = 3 years after entry into force of this Regulation], one main specific component shall originate in the Union. From [OP: Please insert the date = 3 years after the entry into force of this Regulation], two main specific components shall originate in the Union. (e) Nuclear fission technologies: EN 66 EN For public procurement procedures published after [OP: Please insert the date = 4 years after entry into force of this Regulation] where works contracts or work concessions include the construction on a new -build nuclear power plant, including small modular nuclear reactors (SMR), at least two main specific components shall originate in the Union. For public procurement procedures published after [OP: Please insert the date = 6 years after entry into force of this Regulation] where works contracts or work concessions include the construction on a new -build nuclear power plant, including small modular nuclear reactors (SMR), at least three main specific components shall originate in the Union. These requirements shall not apply to research, development and innovation projects including first industrial deployment of nuclear power plants. Part II – Auctions In accordance with Article 26, when auctions have the following net -zero technologies as part of their subject-matter, Member States shall include the pre-qualification or award criteria laid down below: (a) Battery energy storage systems: For auctions published from [OP: Please insert the date = 1 year after entry into force of this Regulation] until [OP: Please insert the date = 3 years after entry into force of this Regulation], the battery energy storage system shall originate in the Union and , for projects including battery energy storage exceeding 1 Megawatt -hour, contain a battery management system that originates in the Union. For auctions published after [OP: Please insert the date = 3 years after entry into force of this Regulation], the battery energy storage system shall originate in the Union and contain battery cells, a battery management system as well as one additional main specific components that originate in the Union. (b) Solar PV technologies: For auctions published after [OP: Please insert the date = 3 years after entry into force of this Regulation], PV inverter and the PV cells or equivalent shall originate in the Union. (c) Hydrogen: For auctions published after [OP: Please insert the date = 1 year after the entry into force of this Regulation], the electrolysers used to produce the hydrogen shall originate in the Union, and the stacks as well as one additional main specific component shall originate in the Union. For auctions published after [OP: Please insert the date = 3 years after the entry into force of this Regulation], the electrolysers used to produce the hydrogen shall originate in the Union, and the stacks as well as two additional main specific components shall originate in the Union. (d) Onshore and offshore wind technologies: For auctions published from [OP: Please insert the date = 1 year after entry into force of this Regulation] until [OP: Please insert the date = 3 years after entry into force of this Regulation], one main specific component of the wind turbine shall originate in the Union. EN 67 EN For auctions published after [OP: Please insert the date = 3 years after entry into force of this Regulation], two main specific components of the wind turbine shall originate in the Union. Part III – Other forms of public intervention In accordance with Article 28b, when deciding to set up new schemes or to update existing schemes benefitting households or companies that support the demand for net -zero technology final products listed in this paragraph, Member States, regional or local authorities, bodies governed by public law or associations formed by one or more such authorities or one or more such bodies governed by public law, shall design the schemes in such a way as to ensure that beneficiaries shall be eligible to the scheme or to additional financial compensation only where the requirements laid down below are fulfilled: (a) Battery energy storage systems: For schemes set up or updated between [OP: Please insert the date = 1 year after entry into force of this Regulation] and [OP: Please insert the date = 3 years after entry into force of this Regulation], the battery energy storage systems shall originate in the Union and , for projects including battery energy storage exceeding 1 Megawatt-hour, contain a battery management system that originates in the Union. For schemes set up or updated from [OP: Please insert the date = 3 years after entry into force of this Regulation], the battery energy storage systems shall originate in the Union and contain battery cells, a battery management system as well as one additional main specific components that originate in the Union. (b) Solar PV technologies: For schemes set up or updated from [OP: Please insert the date = 3 years after entry into force of this Regulation], the PV inverter and the PV cells or equivalent shall originate in the Union. (c) Hydronic heat pumps: For schemes set up or updated from [OP: Please insert the date = 3 years after entry into force of this Regulation], the hydronic heat pump shall originate in the Union. IV – Member State support to construction or manufacturing of net-zero technologies In accordance with article 28 c, when supporting the construction or manufacturing of the following net -zero technology final products, Member States shall ensure that the Union origin requirements laid down below are fulfilled: (a) Hydrogen: From [OP: Please insert the date = 1 year after entry into force of this Regulation] when setting up new support schemes for investments into supporting the manufacturing capacity of electrolysers, Member States shall ensure that the electrolyser originates in the Union and the stack and at least one additional main specific component of the electrolyser originate in the Union. From [OP: Please insert the date = 3 years after entry into force of this Regulation] when setting up new support schemes for investments into supporting the manufacturing capacity of electrolysers, Member States shall ensure that the electrolyser originates in the Union and the stack and EN 68 EN at least two additional main specific components of the electrolyser originate in the Union. (b) Nuclear: For projects for which the application for support takes place after [OP: Please insert the date = 4 years after entry into force of this Regulation] when supporting the construction of new -build nuclear power plants, including small modular nuclear reactors (SMR), Member States shall ensure that at least two main specific components of the nuclear fission technology final products originate in the Union. For projects for which the application for support takes place after [OP: Please insert the date = 6 years after entry into force of this Regulation] when supporting the construction of new -build nuclear power plants, including small modular nuclear reactors (SMR), Member States shall ensure that at least three main specific components of the nuclear fission technology final products originate in the Union. These requirements shall not apply to research, development and innovation projects including first industrial deployment of nuclear power plants. Article 35 Amendments to Regulation (EU) 2024/3110 In Article 22(9) of Regulation (EU) 2024/3110 , the first subparagraph is replaced by the following: ‘In order to ensure transparency for users and to promote sustainable products, the Commission is empowered to adopt delegated acts in accordance with Article 89 to supplement this Regulation, by establishing specific environmental sustainability labelling requirements for particular product families and product categories.’. Article 36 Entry into force and application This Regulation shall enter into force on the day following that of its publication in the Official Journal of the European Union. Articles 4 and 5 shall apply from [OP: Please insert the date = [one] year after the date of entry into force of this Regulation]. This Regulation shall be binding in its entirety and directly applicable in the Member States in accordance with the Treaties. Done at Brussels, For the European Parliament For the Council The President The President EN 1 EN LEGISLATIVE FINANCIAL AND DIGITAL STATEMENT 1. FRAMEWORK OF THE PROPOSAL/INITIATIVE ................................................. 3 1.1. Title of the proposal/initiative ...................................................................................... 3 1.2. Policy area(s) concerned .............................................................................................. 3 1.3. Objective(s) .................................................................................................................. 3 1.3.1. General objective(s) ..................................................................................................... 3 1.3.2. Specific objective(s) ..................................................................................................... 3 1.3.3. Expected result(s) and impact ...................................................................................... 3 1.3.4. Indicators of performance ............................................................................................ 3 1.4. The proposal/initiative relates to: ................................................................................. 4 1.5. Grounds for the proposal/initiative .............................................................................. 4 1.5.1. Requirement(s) to be met in the short or long term including a detailed timeline for roll-out of the implementation of the initiative ............................................................ 4 1.5.2. Added value of EU involvement (it may result from different factors, e.g. coordination gains, legal certainty, greater effectiveness or complementarities). For the purposes of this section 'added value of EU involvement' is the value resulting from EU action, that is additional to the value that would have been otherwise created by Member States alone. ................................................................................. 4 1.5.3. Lessons learned from similar experiences in the past .................................................. 4 1.5.4. Compatibility with the multiannual financial framework and possible synergies with other appropriate instruments ....................................................................................... 5 1.5.5. Assessment of the different available financing options, including scope for redeployment ................................................................................................................ 5 1.6. Duration of the proposal/initiative and of its financial impact .................................... 6 1.7. Method(s) of budget implementation planned ............................................................. 6 2. MANAGEMENT MEASURES................................................................................... 8 2.1. Monitoring and reporting rules .................................................................................... 8 2.2. Management and control system(s) ............................................................................. 8 2.2.1. Justification of the budget implementation method(s), the funding implementation mechanism(s), the payment modalities and the control strategy proposed .................. 8 2.2.2. Information concerning the risks identified and the internal control system(s) set up to mitigate them............................................................................................................ 8 2.2.3. Estimation and justification of the cost-effectiveness of the controls (ratio between the control costs and the value of the related funds managed), and assessment of the expected levels of risk of error (at payment & at closure) ........................................... 8 2.3. Measures to prevent fraud and irregularities ................................................................ 9 3. ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE ............ 10 3.1. Heading(s) of the multiannual financial framework and expenditure budget line(s) affected ....................................................................................................................... 10 EN 2 EN 3.2. Estimated financial impact of the proposal on appropriations ................................... 12 3.2.1. Summary of estimated impact on operational appropriations.................................... 12 3.2.1.1. Appropriations from voted budget ............................................................................. 12 3.2.1.2. Appropriations from external assigned revenues ....................................................... 17 3.2.2. Estimated output funded from operational appropriations......................................... 22 3.2.3. Summary of estimated impact on administrative appropriations ............................... 24 3.2.3.1. Appropriations from voted budget .............................................................................. 24 3.2.3.2. Appropriations from external assigned revenues ....................................................... 24 3.2.3.3. Total appropriations ................................................................................................... 24 3.2.4. Estimated requirements of human resources.............................................................. 25 3.2.4.1. Financed from voted budget....................................................................................... 25 3.2.4.2. Financed from external assigned revenues ................................................................ 26 3.2.4.3. Total requirements of human resources ..................................................................... 26 3.2.5. Overview of estimated impact on digital technology-related investments ................ 28 3.2.6. Compatibility with the current multiannual financial framework.............................. 28 3.2.7. Third-party contributions ........................................................................................... 28 3.3. Estimated impact on revenue ..................................................................................... 29 4. DIGITAL DIMENSIONS .......................................................................................... 29 4.1. Requirements of digital relevance .............................................................................. 30 4.2. Data ............................................................................................................................ 30 4.3. Digital solutions ......................................................................................................... 31 4.4. Interoperability assessment ........................................................................................ 31 4.5. Measures to support digital implementation .............................................................. 32 EN 3 EN 1. FRAMEWORK OF THE PROPOSAL/INITIATIVE 1.1. Title of the proposal/initiative REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on establishing a framework of measures for accelerating industrial capacity and decarbonisation in strategic sectors and amending Regulation (EU) 2018/1724, Regulation (EU) 2024/1735 and Regulation (EU) 2024/3110 (Industrial Accelerator Act). 1.2. Policy area(s) concerned Single market, Competitiveness, Climate. 1.3. Objective(s) 1.3.1. General objective(s) The general objective is to increase decarbonised and resilient industrial production in the EU manufacturing industry, with a special attention on energy -intensive industries (EIIs) and clean technologies, considering their contribution to Europe’s competitiveness, economic security, and sustainable economic growth, in line with the Clean Industrial Deal’s objectives. 1.3.2. Specific objective(s) Specific objective No 1 Facilitate differentiation for low -carbon industrial products to increase their value and marketability. Specific objective No 2 Boost demand for European low-carbon products and clean tech. Specific objective No 3 Maximise the quality and benefits of foreign investment in the EU. Specific objective No 4 Speed-up and simplify permits for industrial decarbonisation Specific objective No 5 Increase investment projects in industrial areas. 1.3.3. Expected result(s) and impact Specify the effects which the proposal/initiative should have on the beneficiaries/groups targeted. Economic Impacts Introducing a harmonised low -carbon label for industrial products and verification mechanism will improve market transparency, allowing producers to capture value for cleaner production and stimulate competition based on performance rather than cost alone. It will create new commercial opportunities for EU manufacturers, enhance price differentiation in international markets, and attract private investment in low-carbon technologies. By increasing the share of EU -made and low -carbon products in domestic consumption, the measure will boost demand within European market, strengthen EN 4 EN industrial competitiveness, and reduce dependence on high -carbon or imported alternatives. Creating lead markets for low -carbon steel, cement, and clean technologies will accelerate economies of scale and stimulate further investment. Encouraging joint ventures and strategic partnerships that generate European added value will increase knowledge transfer, industrial innovation, and technological sovereignty. It will improve supply -chain security, diversify input sources, and enhance the resilience of EU industrial ecosystems. Reducing permitting times will shorten project delays and lower financing costs, strengthening the investment climate for industrial decarbonisation. Faster approvals will speed up the deployment of clean -energy infrastructure, carbon -capture facilities, and electrification projects, stimulating industrial productivity and regional development. Supporting a higher number of final investment decisions (FIDs) in industrial areas will drive capital formation, modernise existing facilities, and attract complementary private financing. Concentrating investment in industrial clusters will generate economies of scale and strengthen regional competitiveness. Social impacts The label on greenhouse gas intensity of industrial products will strengthen consumer and buyer confidence in low -carbon products, supporting skilled employment in verification, testing, and certification services. By rewarding innovation, it will help sustain quality industrial jobs and foster upskilling and reskilling across manufacturing supply chains. Increased EU demand will help preserve and create high -quality jobs in manufacturing regions transitioning to low -carbon industries. It will also improve regional cohesion by fostering re -industrialisation in affected areas, while mitigating adjustment costs for workers through stable production prospects. High-quality foreign investments and partnerships will create new employment opportunities, particularly in advanced manufacturing and research -intensive segments. They will also strengthen cooperation between EU and non -EU companies, promoting workforce training and skills exchange. . Improved transparency and digital tools will increase citizen trust and participation in local industrial projects. Increased industrial activity in existing sites will generate stable employment and strengthen local supply chains, while minimising social disruption by utilising brownfield sites and leveraging existing workforce skills. Industrial clustering will support regional convergence and resilience. Environmental impacts A reliable and comparable labelling framework will incentivise the reduction of greenhouse-gas (GHG) emissions across industrial value chains. It will encourage continuous improvement in product design, materials use, and energy efficiency, helping industry meet climate-neutrality objective. EN 5 EN By introducing low-carbon requirements, greater uptake of low -carbon products will drive significant emission reductions in the construction and transport sectors. This demand-driven approach complements supply -side innovation, accelerating the overall decarbonisation of the European economy. Shorter and more predictable permitting processes will accelerate the deployment of low-carbon technologies and environmental upgrades, enabling earlier emission reductions and contributing to the EU’s intermediate climate targets. By concentrating new projects within industrial areas, the measure promotes efficient energy and natural resource use, and enables shared infrastructure for CO₂ capture, renewable energy, and waste recycling. This approach aligns industrial growth with environmental protection and circular-economy principles. 1.3.4. Indicators of performance Specify the indicators for monitoring progress and achievements. The number of awarded low -carbon label certificates for relevant industrial products will measure progress in creating a reliable and transparent framework that allows producers to differentiate their products based on carbon performance. It will demonstrate the EU’s progress in making low -carbon industrial products visible, verifiable and comparable on the market, thereby strengthening their competitiveness and value creation. The share of EU and low -carbon production in EU consumption for relevant products will capture the proportion of clean and domestically produced materials in overall EU demand. It indicates whether demand -side measures, such as public procurement, investment incentives, and EU -content criteria, are effectively stimulating the uptake of low -carbon and European-made products. A growing share will demonstrate the emergence of strong EU lead markets for green industrial goods and will point to reduced dependence on high-carbon imports. The number of joint ventures in relevant sectors that create European added value, innovation and industrial resilience will measure the level of high -quality industrial partnerships between EU and non -EU actors contributing to technology transfer, innovation, and secure supply chains. This indicator reflects the success of the IAA in attracting sustainable, “high quality” foreign investment and promoting collaboration that strengthens the EU’s industrial base. Increases in such ventures signal a more resilient and innovative industrial ecosystem that retains greater value within Europe. The average permitting time for industrial decarbonisation projects will track the efficiency of administrative procedures across Member States. It measures how long competent authorities take to process and approve applications for industrial decarbonisation projects, including grid and clean -energy connections. A reduction in average permitting times will demonstrate that the streamlining, coordination and digitalisation measures introduced under the IAA are effectively accelerating investment and reducing bureaucratic barriers for companies. The number of industrial FIDs realised in relevant industries will serve as a direct indicator of investment momentum and business confidence in the EU’s industrial transition. It reflects the extent to which companies are committing capital to new or upgraded decarbonisation projects, particularly within existing industrial areas and clusters. Rising numbers of realised FIDs will show that the framework established EN 6 EN by the IAA is translating into tangible projects, supporting job creation, regional re - industrialisation and faster deployment of clean technologies across Europe. 1.4. The proposal/initiative relates to:  a new action  a new action following a pilot project / preparatory action69  the extension of an existing action  a merger or redirection of one or more actions towards another/a new action 1.5. Grounds for the proposal/initiative 1.5.1. Requirement(s) to be met in the short or long term including a detailed timeline for roll-out of the implementation of the initiative The proposal responds to the urgent need to accelerate industrial decarbonisation and strengthen Europe’s manufacturing competitiveness in a context of global technological competition and rising investment needs. The initiative aims to remove barriers that slow down investment in low -carbon and resilient industrial production and to ensure the integrity of the Single Market in its transition towards climate neutrality. 1.5.2. Added value of EU involvement (it may result from different factors, e.g. coordination gains, legal certainty, greater effectiveness or complementarities). For the purposes of this section 'added value of EU involvement' is the value resulting from EU action, that is additional to the value that would have been otherwise created by Member States alone. Reasons for action at EU level (ex-ante) Industrial decarbonisation and resilience challenges transcend national borders. Divergent definitions of low -carbon products, uncoordinated demand -side measures and inconsistent permitting procedures risk fragmenting the Single Market and weakening Europe’s industrial base. Only coordinated EU -level action can guarantee a level playing field, prevent investment diversion, and ensure that climate and industrial policies reinforce one another. The Regulation acts under Article 114 TFEU to preserve the functioning of the single market and, where relevant, Article 207 TFEU to ensure coherence on measures related to foreign investment. Expected generated EU added value (ex-post) EU intervention will generate lasting benefits through economies of scale, lower transaction costs, and improved legal certainty for investors and authorities. It will strengthen Europe’s capacity to manufacture low-carbon products, attract sustainable investment, and speed up project deployment. Harmonised criteria, shared digital tools, and consistent permitting principles will reduce administrative burden while providing uniform market conditions across Member States. 1.5.3. Lessons learned from similar experiences in the past Experience from the Net -Zero Industry Act (NZIA), the Critical Raw Materials Act (CRMA) and the Ecodesign for Sustainable Products Regulation (ESPR) demonstrates that targeted Single -Market instruments combining common 69 As referred to in Article 58(2), point (a) or (b) of the Financial Regulation. EN 7 EN definitions, demand -side incentives and administrative simplification deliver measurable investment acceleration. These precedents demonstrate the effectiveness of clear regulatory frameworks and structured coordination between the Commission and Member States. The IAA applies these lessons specifically to energy -intensive industries and clean energy technology manufacturing, and vehicle components ensuring coherence with existing instruments and avoiding regulatory overlap. 1.5.4. Compatibility with the multiannual financial framework and possible synergies with other appropriate instruments The proposal is fully consistent with the 2021 -2027 Multiannual Financial Framework and will be implemented through existing Union programmes. Synergies are foreseen with the Innovation Fund, InvestEU, Horizon Europe, Connecting Europe Facility – Energy, the Cohesion Policy funds, and the Technical Support Instrument. The initiative complements the Clean Industrial Deal, CRMA, and the European Competitiveness Fund, without creating new spending envelopes or financial obligations beyond existing resources. 1.5.5. Assessment of the different available financing options, including scope for redeployment All financing will be ensured through redeployments from programmes. Without prejudice to the outcome of negotiations on the next MFF, the appropriations foreseen from 2028 onwards are strictly indicative. EN 8 EN 1.6. Duration of the proposal/initiative and of its financial impact  limited duration –  in effect from [DD/MM]YYYY to [DD/MM]YYYY –  financial impact from YYYY to YYYY for commitment appropriations and from YYYY to YYYY for payment appropriations.  unlimited duration – Implementation with a start-up period from YYYY to YYYY, – followed by full-scale operation. The Regulation will enter into force in 2027 and remain applicable beyond 2030, with a review every five years to assess progress and alignment with Union climate and economic security objectives. 1.7. Method(s) of budget implementation planned  Direct management by the Commission –  by its departments, including by its staff in the Union delegations; –  by the executive agencies  Shared management with the Member States  Indirect management by entrusting budget implementation tasks to: –  third countries or the bodies they have designated –  international organisations and their agencies (to be specified) –  the European Investment Bank and the European Investment Fund –  bodies referred to in Articles 70 and 71 of the Financial Regulation –  public law bodies –  bodies governed by private law with a public service mission to the extent that they are provided with adequate financial guarantees –  bodies governed by the private law of a Member State that are entrusted with the implementation of a public -private partnership and that are provided with adequate financial guarantees –  bodies or persons entrusted with the implementation of specific actions in the common foreign and security policy pursuant to Title V of the Treaty on European Union, and identified in the relevant basic act – bodies established in a Member State, governed by the private law of a Member State or Union law and eligible to be entrusted, in accordance with sector-specific rules, with the implementation of Union funds or budgetary guarantees, to the extent that such bodies are controlled by public law bodies or by bodies governed by private law with a public service mission, and are provided with adequate financial guarantees in the form of joint and several liability by the controlling bodies or equivalent financial guarantees and which may be, for each action, limited to the maximum amount of the Union support. EN 9 EN 2. MANAGEMENT MEASURES 2.1. Monitoring and reporting rules This Statement includes staff expenditures. Standard rules for this type of expenditure apply. The Commission will evaluate the output, results and impact of this proposal every three years after the date on which it becomes applicable. The evaluation will assess the contribution of this Regulation to the functioning of the single market, including the objectives specified in Article 1, particularly on resilience, economic security, and decarbonisation of industrial production. 2.2. Management and control system(s) 2.2.1. Justification of the budget implementation method(s), the funding implementation mechanism(s), the payment modalities and the control strategy proposed The management mode for the initiative is direct management by the Commission. This is the most appropriate approach given the limited scope of Union expenditure, which is confined to standard administrative and monitoring -related costs. Using established internal procedures ensures effective and efficient controls, low error rates, fast processing of transactions and minimal control costs. 2.2.2. Information concerning the risks identified and the internal control system(s) set up to mitigate them Overall, the initiative requires staff expenditure. Standard rules for this type of expenditure apply. Most aspects of the initiative follow established procedures for engaging with stakeholders through for example the Industrial Forum and implementing monitoring obligations. The main operational risk is insufficient administrative capacity to implement the work plans and monitoring activities foreseen in the Regulation. This proposal is accompanied by an impact assessment report, which provides the analytics underpinning the chosen policy approach. The preparation of the initiative also drew on a public consultation as well as targeted consultations with industry stakeholders, Member States and trade associations, which ensured the collection of relevant data, information and feedback. Nonetheless, unintentional consequences or unforeseen impacts may still occur during implementation. These will be identified through the monitoring procedures set out in the Regulation, allowing the Commission to address them in an appropriate and timely manner. 2.2.3. Estimation and justification of the cost -effectiveness of the controls (ratio between the control costs and the value of the related funds managed), and assessment of the expected levels of risk of error (at payment & at closure) The initiative involves limited administrative expenditure. Standard Commission control procedures apply. As no funding programmes or multi -layered delivery mechanisms are created, control activities remain straightforward and cost-effective. Controls are carried out entirely under direct management, using standard ex -post audits under the Commission’s internal control framework. This ensures an appropriate balance between control effort and the limited value of funds managed. Given the simplified set -up and the absence of high -risk financial operations, the expected error rate at payment and at closure is low and comfortably below the EN 10 EN materiality threshold. The control system therefore provides a high level of assurance at proportionate cost. 2.3. Measures to prevent fraud and irregularities The initiative does not establish funding programmes or financial support schemes. It therefore relies on the Commission’s existing internal control framework and Anti - Fraud Strategy. Standard preventive and detective measures apply, including risk - based internal controls, segregation of duties and established workflows for administrative expenditure. The Commission will ensure that appropriate measures are in place so that, when implementing the tasks arising from this Regulation, the financial interests As with all Commission -managed activities, the European Anti -Fraud Office (OLAF) and the European Public Prosecutor’s Office (EPPO) may exercise their powers in accordance with their respective legal bases to investigate fraud, corruption or other illegal activities affecting the EU’s financial interests. The European Court of Auditors retains its standard audit rights over Commission expenditure. EN 11 EN 3. ESTIMATED FINANCIAL IMPACT OF THE PROPOSAL/INITIATIVE 3.1. Heading(s) of the multiannual financial framework and expenditure budget line(s) affected Existing budget lines In order of multiannual financial framework headings and budget lines. Heading of multiannu al financial framewor k Budget line Type of expenditu re Contribution Number Diff./Non -diff.70 from EFTA countrie s71 from candidate countries and potential candidate s72 From other third countrie s other assigned revenue 1 03 02 01 02 Diff. Yes No No No 7 20 01 02 01 Non- diff. No No No No New budget lines requested In order of multiannual financial framework headings and budget lines. Heading of multiannu al financial framewor k Budget line Type of expenditu re Contribution Number Diff./Non -diff. from EFTA countrie s from candidate countries and potential candidate s from other third countrie s other assigned revenue N/A 70 Diff. = Differentiated appropriations / Non-diff. = Non-differentiated appropriations. 71 EFTA: European Free Trade Association. 72 Candidate countries and, where applicable, potential candidates from the Western Balkans. EN 12 EN 3.2. Estimated financial impact of the proposal on appropriations 3.2.1. Summary of estimated impact on operational appropriations –  The proposal/initiative does not require the use of operational appropriations –  The proposal/initiative requires the use of operational appropriations, as explained below 3.2.1.1. Appropriations from voted budget Heading of multiannual financial framework 1 ‘Single Market, Innovation and Digital’ EUR million (to three decimal places) DG: GROW Year Year Year Year TOTAL MFF 2021-2027 TOTAL MFF 2028-203473 2024 2025 2026 2027 Operational appropriations 03 02 01 02 Commitments (1a) 0.000 0.000 0.000 0.040 0.040 0.140 Payments (2a) 0.000 0.000 0.000 0.040 0.040 0.140 TOTAL appropriations for DG GROW Commitments =1a+1b 0.000 0.000 0.000 0.040 0.040 0.140 Payments =2a+2b 0.000 0.000 0.000 0.040 0.040 0.140 EUR million (to three decimal places) DG: GROW Year Year Year Year Year Year Year TOTAL MFF 2028-203474 2028 2029 2030 2031 2032 2033 2034 Operational appropriations 03 02 01 02 Commitments (1a) 0.020 0.020 0.020 0.020 0.020 0.020 0.020 0.140 Payments (2a) 0.020 0.020 0.020 0.020 0.020 0.020 0.020 0.140 TOTAL appropriations Commitments =1a+1b 0.020 0.020 0.020 0.020 0.020 0.020 0.020 0.140 73 Figures in the tables above are all strictly indicative pending the outcome of the 2028 -2034 MFF negotiations which cannot be prejudged. 74 Figures in the tables above are all strictly indicative pending the outcome of the 2028 -2034 MFF negotiations which cannot be prejudged. EN 13 EN for DG GROW Payments =2a+2b 0.020 0.020 0.020 0.020 0.020 0.020 0.020 0.140 EUR million (to three decimal places) Year Year Year Year TOTAL MFF 2021-2027 TOTAL MFF 2028-203475 2024 2025 2026 2027 TOTAL operational appropriations Commitments (4) 0.000 0.000 0.000 0.040 0.040 0.140 Payments (5) 0.000 0.000 0.000 0.040 0.040 0.140 TOTAL appropriations of an administrative nature financed from the envelope for specific programmes (6) 0.000 0.000 0.000 0.000 0.000 0.000 TOTAL appropriations under HEADING 1 Commitments =4+6 0.000 0.000 0.000 0.040 0.040 0.140 of the multiannual financial framework Payments =5+6 0.000 0.000 0.000 0.040 0.040 0.140 EUR million (to three decimal places) Year Year Year Year Year Year Year TOTAL MFF 2028-203476 2028 2029 2030 2031 2032 2033 2034 TOTAL operational appropriations (including contribution to decentralised agency) Commitments (4) 0.020 0.020 0.020 0.020 0.020 0.020 0.020 0.140 Payments (5) 0.020 0.020 0.020 0.020 0.020 0.020 0.020 0.140 TOTAL appropriations of an administrative nature financed from the envelope for specific programmes (6) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 75 Figures in the tables above are all strictly indicative pending the outcome of the 2028 -2034 MFF negotiations which cannot be prejudged. 76 Figures in the tables above are all strictly indicative pending the outcome of the 2028 -2034 MFF negotiations which cannot be prejudged. EN 14 EN TOTAL appropriations under HEADING 1 Commitments =4+6 0.020 0.020 0.020 0.020 0.020 0.020 0.020 0.140 of the multiannual financial framework Payments =5+6 0.020 0.020 0.020 0.020 0.020 0.020 0.020 0.140 EUR million (to three decimal places) Year Year Year Year TOTAL MFF 2021-2027 TOTAL MFF 2028- 203477 2024 2025 2026 2027 • TOTAL operational appropriations (all operational headings) Commitments (4) 0.000 0.000 0.000 0.040 0.040 0.140 Payments (5) 0.000 0.000 0.000 0.040 0.040 0.140 • TOTAL appropriations of an administrative nature financed from the envelope for specific programmes (all operational headings) (6) 0.000 0.000 0.000 0.000 0.000 0.000 TOTAL appropriations Under Heading 1 to 6 Commitments =4+6 0.000 0.000 0.000 0.040 0.040 0.140 of the multiannual financial framework (Reference amount) Payments =5+6 0.000 0.000 0.000 0.040 0.040 0.140 EUR million (to three decimal places) Year Year Year Year Year Year Year TOTAL MFF 2028-203478 2028 2029 2030 2031 2032 2033 2034 • TOTAL operational appropriations (all operational headings) Commitments (4) 0.020 0.020 0.020 0.020 0.020 0.020 0.020 0.140 Payments (5) 0.020 0.020 0.020 0.020 0.020 0.020 0.020 0.140 77 Figures in the tables above are all strictly indicative pending the outcome of the 2028 -2034 MFF negotiations which cannot be prejudged. 78 Figures in the tables above are all strictly indicative pending the outcome of the 2028 -2034 MFF negotiations which cannot be prejudged. EN 15 EN • TOTAL appropriations of an administrative nature financed from the envelope for specific programmes (all operational headings) (6) 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 TOTAL appropriations Under Heading 1 to 6 Commitments =4+6 0.020 0.020 0.020 0.020 0.020 0.020 0.020 0.140 of the multiannual financial framework (Reference amount) Payments =5+6 0.020 0.020 0.020 0.020 0.020 0.020 0.020 0.140 Heading of multiannual financial framework 7 ‘Administrative expenditure’ EUR million (to three decimal places) DG: GROW Year Year Year Year TOTAL MFF 2021- 2027 TOTAL MFF 2028- 203479 2024 2025 2026 2027  Human resources 0.000 0.000 0.000 1.164 1.164 8.148  Other administrative expenditure 0.000 0.000 0.000 0.000 0.000 0.000 TOTAL DG GROW Appropriations 0.000 0.000 0.000 1.164 1.164 8.148 TOTAL appropriations under HEADING 7 of the multiannual financial framework (Total commitments = Total payments) 0.000 0.000 0.000 1.164 1.164 8.148 EUR million (to three decimal places) 79 Figures in the tables above are all strictly indicative pending the outcome of the 2028 -2034 MFF negotiations which cannot be prejudged. EN 16 EN Year Year Year Year TOTAL MFF 2021- 2027 TOTAL MFF 2028- 203480 2024 2025 2026 2027 TOTAL appropriations under HEADINGS 1 to 7 Commitments 0.000 0.000 0.000 1.204 1.204 8.288 of the multiannual financial framework Payments 0.000 0.000 0.000 1.204 1.204 8.288 Heading of multiannual financial framework 7 ‘Administrative expenditure’[1] EUR million (to three decimal places) DG: GROW Year Year Year Year Year Year Year TOTAL MFF 2028-203481 2028 2029 2030 2031 2032 2033 2034  Human resources 1.164 1.164 1.164 1.164 1.164 1.164 1.164 8.148  Other administrative expenditure 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 TOTAL DG GROW Appropriations 1.164 1.164 1.164 1.164 1.164 1.164 1.164 8.148 TOTAL appropriations under HEADING 7 of the multiannual financial framework (Total commitments = Total payments) 1.164 1.164 1.164 1.164 1.164 1.164 1.164 8.148 EUR million (to three decimal places) Year Year Year Year Year Year Year TOTAL MFF 2028-203482 2028 2029 2030 2031 2032 2033 2034 80 Figures in the tables above are all strictly indicative pending the outcome of the 2028 -2034 MFF negotiations which cannot be prejudged. 81 Figures in the tables above are all strictly indicative pending the outcome of the 2028-2034 MFF negotiations which cannot be prejudged. 82 Figures in the tables above are all strictly indicative pending the outcome of the 2028 -2034 MFF negotiations which cannot be prejudged. EN 17 EN TOTAL appropriations under HEADINGS 1 to 7 Commitments 1.184 1.184 1.184 1.184 1.184 1.184 1.184 8.288 of the multiannual financial framework Payments 1.184 1.184 1.184 1.184 1.184 1.184 1.184 8.288 3.2.2. Estimated output funded from operational appropriations (not to be completed for decentralised agencies) Commitment appropriations in EUR million (to three decimal places) Indicate objectives and outputs  Year 2024 Year 2025 Year 2026 Year 2027 Enter as many years as necessary to show the duration of the impact (see Section1.6) TOTAL OUTPUTS Type83 Avera ge cost No Cost No Cost No Cost No Cost No Cost No Cost No Cost Total No Total cost SPECIFIC OBJECTIVE No 184… - Output - Output - Output Subtotal for specific objective No 1 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 SPECIFIC OBJECTIVE No 2 ... - Output Subtotal for specific objective No 2 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 83 Outputs are products and services to be supplied (e.g. number of student exchanges financed, number of km of roads built, etc .). 84 As described in Section 1.3.2. ‘Specific objective(s)’ EN 18 EN TOTALS 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 Indicate objectives and outputs Year Year Year Year Year Year Year TOTAL 2028-203485 POST GRAND  2028 2029 2030 2031 2032 2033 2034 2034 TOTAL OUTPUTS Type Average cost No Cost No Cost No Cost No Cost No Cost No Cost No Cost No Cost No Cost No Cost SPECIFIC OBJECTIVE No 1… - Output 0 0.000 0 0.000 - Output 0 0.000 0 0.000 - Output 0 0.000 0 0.000 Subtotal for specific objective No 1 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 SPECIFIC OBJECTIVE No 2 ... - Output 0 0.000 0 0.000 - Output 0 0.000 0 0.000 - Output 0 0.000 0 0.000 Subtotal for specific objective No 2 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 TOTALS 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 0 0.000 85 Figures in the tables above are all strictly indicative pending the outcome of the 2028 -2034 MFF negotiations which cannot be prejudged. EN 19 EN 3.2.3. Summary of estimated impact on administrative appropriations –  The proposal/initiative does not require the use of appropriations of an administrative nature –  The proposal/initiative requires the use of appropriations of an administrative nature, as explained below 3.2.3.1. Appropriations from voted budget EUR million (to three decimal places) VOTED APPROPRIATIONS Year Year Year Year TOTAL 2021 - 2027 TOTAL 2028 - 2034 2024 2025 2026 2027 HEADING 7 Human resources 0.000 0.000 0.000 1.164 1.164 8.148 Other administrative expenditure 0.000 0.000 0.000 0.000 0.000 0.000 Subtotal HEADING 7 0.000 0.000 0.000 1.164 1.164 8.148 Outside HEADING 7 Human resources 0.000 0.000 0.000 0.000 0.000 0.000 Other expenditure of an administrative nature 0.000 0.000 0.000 0.000 0.000 0.000 Subtotal outside HEADING 7 0.000 0.000 0.000 0.000 0.000 0.000 TOTAL 0.000 0.000 0.000 1.164 1.164 8.148 Figures in the tables above are all strictly indicative pending the outcome of the 2028 -2034 MFF negotiations which cannot be prejudged. EUR million (to three decimal places) VOTED APPROPRIATIONS Year Year Year Year Year Year Year TOTAL 2028 - 2034 POST GRAND TOTAL 2028 2029 2030 2031 2032 2033 2034 2034 HEADING 7 Human resources 1.164 1.164 1.164 1.164 1.164 1.164 1.164 8.148 0.000 8.148 Other administrative expenditure 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Subtotal HEADING 7 1.164 1.164 1.164 1.164 1.164 1.164 1.164 8.148 0.000 8.148 Outside HEADING 7 Human resources 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Other expenditure of an administrative nature 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Subtotal outside HEADING 7 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 TOTAL 1.164 1.164 1.164 1.164 1.164 1.164 1.164 8.148 0.000 8.148 Figures in the tables above are all strictly indicative pending the outcome of the 2028 -2034 MFF negotiations which cannot be prejudged. 3.2.4. Estimated requirements of human resources –  The proposal/initiative does not require the use of human resources EN 20 EN –  The proposal/initiative requires the use of human resources, as explained below 3.2.4.1. Financed from voted budget Estimate to be expressed in full-time equivalent units (FTEs) VOTED APPROPRIATIONS Year Year Year Year Year Year Year Year Year Year Year 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034  Establishment plan posts (officials and temporary staff) 20 01 02 01 (Headquarters and Commission’s Representation Offices) 0 0 0 6 6 6 6 6 6 6 6 20 01 02 03 (EU Delegations) 0 0 0 0 0 0 0 0 0 0 0 01 01 01 01 (Indirect research) 0 0 0 0 0 0 0 0 0 0 0 01 01 01 11 (Direct research) 0 0 0 0 0 0 0 0 0 0 0 Other budget lines (specify) 0 0 0 0 0 0 0 0 0 0 0 • External staff (in FTEs) 20 02 01 (AC, END from the ‘global envelope’) 0 0 0 0 0 0 0 0 0 0 0 20 02 03 (AC, AL, END and JPD in the EU Delegations) 0 0 0 0 0 0 0 0 0 0 0 Admin. Support line [XX.01.YY.YY] - at Headquarters 0 0 0 0 0 0 0 0 0 0 0 - in EU Delegations 0 0 0 0 0 0 0 0 0 0 0 01 01 01 02 (AC, END - Indirect research) 0 0 0 0 0 0 0 0 0 0 0 01 01 01 12 (AC, END - Direct research) 0 0 0 0 0 0 0 0 0 0 0 Other budget lines (specify) - Heading 7 0 0 0 0 0 0 0 0 0 0 0 Other budget lines (specify) - Outside Heading 7 0 0 0 0 0 0 0 0 0 0 0 TOTAL 0 0 0 6 6 6 6 6 6 6 6 Figures in the tables above are all strictly indicative pending the outcome of the 2028 -2034 MFF negotiations which cannot be prejudged. The human resources required will be met by staff from the DG who are already assigned to the management of the action and/or have been redeployed within the concerned services. The staff required to implement the proposal (in FTEs): To be covered by current staff available in the Commission services Exceptional additional staff* To be financed under Heading 7 or Research To be financed from BA line To be financed from fees Establishment plan posts 6 N/A External staff EN 21 EN (CA, SNEs, INT) Description of tasks to be carried out by: Officials and temporary staff Additional staff (equivalent to 6 FTEs) will be needed to carry out the tasks of the proposal for lead markets and FDI screening. The 6 FTE will be redeployed within the implementing DG. External staff 3.2.5. Overview of estimated impact on digital technology-related investments TOTAL Digital and IT appropriations Year Year Year Year TOTAL MFF 2021 - 2027 TOTAL MFF 2028 - 2034 2024 2025 2026 2027 HEADING 7 IT expenditure (corporate) 0.000 0.000 0.000 0.000 0.000 0.000 Subtotal HEADING 7 0.000 0.000 0.000 0.000 0.000 0.000 Outside HEADING 7 Policy IT expenditure on operational programmes 0.000 0.000 0.000 0.040 0.040 0.140 Subtotal outside HEADING 7 0.000 0.000 0.000 0.040 0.040 0.140 TOTAL 0.000 0.000 0.000 0.040 0.040 0.140 3.2.6. Compatibility with the current multiannual financial framework The proposal/initiative: –  can be fully financed through redeployment within the relevant heading of the multiannual financial framework (MFF) –  requires use of the unallocated margin under the relevant heading of the MFF and/or use of the special instruments as defined in the MFF Regulation –  requires a revision of the MFF 3.2.7. Third-party contributions The proposal/initiative: –  does not provide for co-financing by third parties –  provides for the co-financing by third parties estimated below: Appropriations in EUR million (to three decimal places) Year 2024 Year 2025 Year 2026 Year 2027 Year 2028 Year 2029 Year 2030 Year 2031 Year 2032 Year 2033 Year 2034 Total Specify the co - financing body TOTAL appropriations co-financed EN 22 EN 3.3. Estimated impact on revenue –  The proposal/initiative has no financial impact on revenue. –  The proposal/initiative has the following financial impact: –  on own resources –  on other revenue –  please indicate, if the revenue is assigned to expenditure lines EUR million (to three decimal places) Budget revenue line: Appropriations available for the current financial year Impact of the proposal/initiative86 Year 2024 Year 2025 Year 2026 Year 2027 Year 2028 Year 2029 Year 2030 Year 2031 Year 2032 Year 2033 Year 2034 Article …………. 4. DIGITAL DIMENSIONS 4.1. Requirements of digital relevance If the policy initiative is assessed as having no requirement of digital relevance: Justification of why digital means cannot be used to enhance policy implementation and why the ‘digital by default’ principle is not applicable. N/A Otherwise: High-level description of the requirements of digital relevance and related categories (data, process digitalisation & automation, digital solutions and/or digital public services) Reference to the requirement Requirement description Actor(s) affected or concerned by the requirement High-level Processes Categories Article 4 Making available a single access point at national level connecting all relevant public authorities, in order to ensure that permit -granting procedures for industrial manufacturing are carried out through fully digital means. Member States National competent authorities Economic Operators Permit granting Data Digital Solution Digital Public Service Process digitalisation and 86 As regards traditional own resources (customs duties, sugar levies), the amounts indicated must be net amounts, i.e. gross amounts after deduction of 20% for collection costs. EN 23 EN automation Article 5 Orchestration of national permit -granting procedures to enable a one -stop-shop for permitting of industrial manufacturing projects. Member States National competent authorities Permit granting Data Process digitalisation and automation Article 6 The application of streamlined administrative and permit-granting processes, as defined by Regulation (EU) 2024/1735 , is extended to cover energy- intensive industry decarbonisation projects. Member States National competent authorities Permit granting Process digitalisation and automation Article 20 Monitoring and publishing of the global manufacturing capacity for emerging strategic sectors. European Commission Monitoring Data Article 16 Notification of planned direct investments by foreign investors. Economic operators Member states Notifications Data Article 17 Review and approval procedure for prior notifications of planned direct investments. Member states European Commission Notifications Process digitalisation and automation Article 19- 20 Monitoring of foreign investment compliance National competent authorities European Commission Reporting Data Article 22 Notification of designated industrial manufacturing acceleration areas , including required assessments, by Member States. Member States European Commission Notifications Data Article 24 Establishing of an aggregated baseline permit that authorises industrial activities in designated acceleration areas. Member States National competent authorities Permit granting Process digitalisation and automation Article 37 List of areas of information relevant for citizens and business exercising their internal market rights established by Regulation (EU) 2018/1724 is extended by information on p ermit-granting procedures, effectively utilising solutions under the Single Digital Gateway. European Commission Member States National competent authorities Economic operators Citizens Information sharing Data Process digitalisation and automation Digital Public Service 4.2. Data High-level description of the data in scope EN 24 EN Type of data Reference to the requirement(s) Standard and/or specification (if applicable) Permit-granting applications for industrial manufacturing projects Article 4, Article 5 The Commission is empowered to adopt implementing acts to set out technical standards necessary to ensure the interoperability of the national single access points. Data on global manufacturing capacity for emerging strategic sectors Article 20 The Commission shall provide and publish updated information on the most recent year for which data is available for each of the emerging strategic sectors. Prior notification of planned investments by foreign investors Article 16 N/A Reports on foreign investment compliance Article 19-20 N/A Notification of designated industrial manufacturing acceleration areas Article 22 N/A Alignment with the European Data Strategy Explanation of how the requirement(s) are aligned with the European Data Strategy This legislative initiative is in line with the use of privately -held data by government authorities (business -to-government – B2G) in order to ensure evidence -driven policy decisions. The digital permitting system shall be designed to ensure interoperability and automated data exchange between competent authorities, the re -use of data and documents already held by public authorities, a high level of cybersecurity and information integrity, as well as transparency and accountability in the permit-granting procedure. Alignment with the once-only principle Explanation of how the once -only principle has been considered and how the possibility to reuse existing data has been explored Re-use of data already held by public authorities is ensured. The permit -granting procedures are added in the scope of Single Digital Gateway and Once -Only Technical System. The ‘once-only principle’ is respected in this case to minimise administrative burden on actors operating in the Single Market. Member States and the Commission shall ensure the protection of business confidential information. Explanation of how newly created data is findable, accessible, interoperable and reusable, and meets high-quality standards The Commission shall, by means of implementing acts, establish detailed rules, technical standards, and procedures necessary to ensure the interoperability, security, and effective functioning of the digital permitting systems. Data flows High-level description of the data flows EN 25 EN Type of data Reference(s) to the requirement(s) Actor who provides the data Actor who receives the data Trigger for the data exchange Frequency (if applicable) Permit-granting applications Article 4 Economic Operator National Competent Authority Required for permit-granting applications. N/A Prior notification of planned investments by foreign investors Article 16 Economic operator National competent authority Upon the intention to realise investment N/A Reports on foreign investment compliance Article 19-20 National competent authority European Commission Upon request N/A Decision on designated industrial manufacturing acceleration areas Article 22 Member State European Commission Decision made N/A 4.3. Digital solutions For each digital solution, please provide the reference to the requirement(s) of digital relevance concerning it, a description of the digital solution's mandated functionality, the body that will be responsible for it, and other relevant aspects such as reusability and accessibility. Finally, explain whether the digital solution intends to make use of AI technologies. Digital solution Reference(s) to the requirement(s) Main mandated functionalities Responsible body How is accessibility catered for? How is reusability considered? Use of AI technologies (if applicable) Digital Permitting System Article 4 Permit-granting procedures for industrial manufacturing are carried out through fully digital means. The system shall provide a single user interface enabling interaction with the relevant public services. The digital permitting system shall enable the paperless submission, tracking, and decision-making Member States National Competent Authorities The digital permitting system shall enable the paperless submission, tracking, and decision-making of permit applications and shall be designed to ensure user-friendliness and accessibility for all applicants, including persons with disabilities. The digital permitting system shall enable the paperless submission, tracking, and decision-making of permit applications and shall be designed to ensure re-use of data and documents already held by public authorities. // EN 26 EN of permit applications. For each digital solution, explanation of how the digital solution complies with applicable digital policies and legislative enactments Digital Permitting System Digital and/or sectorial policy (when these are applicable) Explanation on how it aligns AI Act N/A EU Cybersecurity framework The National Digital Permitting System shall be designed to ensure a high level of data protection, cybersecurity, and integrity of information. eIDAS // Single Digital Gateway and IMI The Single Digital Gateway Regulation is amended to include in its scope Information on permit -granting procedures for industrial manufacturing projects and procedures related to industrial manufacturing projects. Others Once-Only Technical System 4.4. Interoperability assessment High-level description of the digital public service(s) affected by the requirements Digital public service or category of digital public services Description Reference(s) to the requirement(s) Interoperable Europe Solution(s)(NOT APPLICABLE) Other interoperability solution(s) Digital Permitting System Category of digital public services according to COFOG 04.7.4 Member States shall enable a national a digital permitting system connecting all relevant public authorities, in order to ensure that permit -granting procedures for industrial manufacturing are carried out through fully digital means. Article 4 // Once-Only Technical System Assessment of the impact of the requirement(s) on cross-border interoperability Digital public service #1: Digital Permitting System Assessment Measure(s) Potential remaining barriers (if applicable) Organisational measures for a smooth cross -border digital public services delivery Member States shall be responsible for the development, operation, maintenance, security, and supervision of their digital permitting systems. To the extent possible, the implementation of the digital permitting systems should make use of existing Union digital infrastructures, catalogues and building blocks, including those developed under the Once -Only Technical System and its implementing acts. This would promote complementarity, interoperability and the efficient use of public resources, Additional organisational measures at national level may be needed to ensure appropriate involvement of competent authorities responsible for individual permits. EN 27 EN while avoiding duplication of existing digital solutions. Measures taken to ensure a shared understanding of the data The Commission shall, by means of implementing acts, establish detailed rules, technical standards, and procedures necessary to ensure the interoperability, security, and effective functioning of the digital permitting systems . The permit -granting procedures are added in the scope of Single Digital Gateway and Once - Only Technical System. Use of commonly agreed open technical specifications and standards The Commission shall, by means of implementing acts, establish detailed rules, technical standards, and procedures necessary to ensure the interoperability, security, and effective functioning of the digital permitting systems. 4.5. Measures to support digital implementation For each measure to support digital implementation, please fill in the table below Description of the measure Reference(s) to the requirement(s) Commission role (if applicable) Actors to be involved (if applicable) Expected timeline (if applicable) Implementing Acts Article 4, 13, 31 Implementing Acts European Commission --- [Remiss - Annexes to the proposal.pdf] EN EN EUROPEAN COMMISSION Brussels, 4.3.2026 COM(2026) 100 final ANNEXES 1 to 4 ANNEXES to the Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a framework of measures for the acceleration of industrial capacity and decarbonisation in strategic sectors and amending Regulations (EU) 2018/1724, (EU) 2024/1735 and (EU) 2024/3110 {SEC(2026) 70 final} - {SWD(2026) 70 final} - {SWD(2026) 71 final} - {SWD(2026) 72 final} EN 1 EN TABLE OF CONTENTS ANNEX I Strategic sectors for industrial manufacturing acceleration areas .............................................. 2 ANNEX II Low-carbon and Union origin requirements for energy intensive industries ............................ 2 Part I – Public procurement procedures ..................................................................................... 2 Part II – Other forms of public intervention ............................................................................... 2 ANNEX III Union origin requirements for vehicles ...................................................................................... 4 Part I – Public procurement procedures of electric vehicles ...................................................... 4 Part II – Other forms of public intervention and financial support for corporate vehicles ........ 5 Part III – Super credits for small zero-emission vehicles ........................................................... 6 ANNEX IV Amendment to Regulation (EU) 2018/1724 .............................................................................. 7 EN 2 EN ANNEX I Strategic sectors for industrial manufacturing acceleration areas 1. Energy-intensive industries: (a) Manufacture of paper and paper products, as classified under NACE Code C17; (b) Manufacture of coke and refined petroleum products, as classified under NACE Code C19; (c) Manufacture of chemicals and chemical products, as classified under NACE Code C20; (d) Manufacture of rubber and plastic products, as classified under NACE Code C22; (e) Manufacture of other non -metallic minerals, as classified under NACE Code C23; (f) Manufacture of basic metals, as classified under NACE Code C24. 2. Automotive industry: Manufacture of motor vehicles, trailers and semi -trailers, as classified under NACE Code C29; 3. Net-zero technologies, as referred to in Article 4(1) of Regulation (EU) 2024/1735; ANNEX II Low-carbon and Union origin requirements for energy intensive industries Part I – Public procurement procedures Where, in the context of public procurement procedures launched on or after 1 January 2029 falling within the scope of Directives 2014/23/EU, 2014/24/EU or 2014/25/EU, where the contracts, works contracts or work concessions include the procurement of products from energy intensive industries, contracting authorities shall require the following minimum percentage shares: (a) Steel, and any product the performance of which depends mainly on steel, intended for use in buildings, infrastructure and motor vehicles for civil purposes: at least 25% of the total volume of steel used shall be low-carbon; (b) concrete and mortar, and any product the performance of which depends mainly on concrete and mortar, intended for use in buildings and infrastructure for civil purposes: at least 5% of the total volume of concrete and mortar used , including the clinker and cement used to produce them, shall be low -carbon and of Union origin; (c) aluminium, and any product the performance of which depends mainly on aluminium, intended for use in buildings, infrastructure and motor vehicles for civil purposes : at least 25% of the total volume of aluminium used shall be low-carbon and of Union origin. Part II – Other forms of public intervention For schemes established or updated on or after 1 January 2029 that benefit households or companies and that primarily aim to support the construction or renovation of buildings for residential and commercial purposes and infrastructure and the lease and purchase of motor vehicles for civil purposes , Member States, regional or local authorities, bodies governed by public law or associations formed by one or more such authorities or one or more such bodies EN 3 EN governed by public law, shall ensure that only beneficiaries that comply with the following minimum requirements, are eligible. (a) steel, and any product the performance of which depends primarily on steel : at least 25% of the total volume of steel used in the product or project that receives support shall be low-carbon; (b) concrete and mortar, and any product the performance of which depends mainly on concrete and mortar: at least 5% of the total volume of concrete and mortar used, including the clinker and cement used to produce them, in the product or project that receives support shall be low -carbon and of Union origin; (c) aluminium, and any product the performance of which depends mainly on aluminium: at least 25% of the total volume of aluminium used in the product or project that receives support shall be low-carbon and of Union origin. EN 4 EN ANNEX III Union origin requirements for vehicles Part I – Public procurement procedures of electric vehicles New pure electric vehicles (PEV), off -vehicle charging hybrid electric vehicles (OVC -HEV) or fuel cell vehicles (FCV) purchased , leased, rented or hire -purchased in public procurement procedures that fall within the scope of Directive 2014/24/EU, or Directive 2014/25/EU, launched on or after [OP: Please insert the date = six months after the date of entry into force of this Regulation] shall comply with the Union origin requirements set out in this Annex. New PEV, OVC -HEV and FCV that are used for the provision of services sourced through public procurement procedures that fall within the scope of Directive 2014/24/EU, or Directive 2014/25/EU, shall comply with the Union origin requirements set out in this Annex. Vehicles referred to in subparagraphs 1 and 2 shall include the following Union origin requirements: (a) the vehicle is assembled within the Union; (b) the ratio between the total ex -works price of vehicle components - excluding the vehicle battery - originating in the Union and the total ex -works price of all components – excluding the battery – is at least 70%; (c) the vehicle’s traction battery contains at least three main specific components of batteries, among which the battery cells, originating in the Union; (d) the vehicle’s traction battery contains at least five main specific components of batteries, among which the battery cells, the cathode active material, and the battery management system, originating in the Union; (e) the ratio between the total ex -works price of e -powertrain components originating in the Union and the total ex -works price of all e -powertrain components is at least 50%; (f) the ratio between the total ex -works price of main electronic systems originating in the Union and the total ex -works price of all main electronic systems is equal to or greater than 50%. The requirements set out in points d), e) and f) apply from [OP: please insert date 3 years after the date of entry into force of this Regulation]. By way of derogation to the requirements set out above, small electric vehicles of subcategory M1E, as defined in Regulation (EU) 2018/858 , shall include the following Union origin requirements: 1. the vehicle is assembled within the Union; 2. and one of the two criteria below: (a) the ratio between the total ex -works price of vehicle components - excluding the vehicle battery - originating in the Union and the total ex -works price of all vehicle components – excluding the battery – is equal to or greater than 70%; or (b) the vehicle’s traction battery contains at least three main specific components of batteries, among which the battery cells, originating in the Union. Upon request of a vehicle manufacturer, all PEV, OVC -HEV or FCV from that vehicle manufacturer can be considered compliant, for a period of twelve months, with the Union EN 5 EN origin requirements if the manufacturer demonstrates that the total number of all PEV, OVC- HEC or FCV vehicles compliant with the Union origin requirements that were assembled by that vehicle manufacturer during the period comprised between 1 January and 31 December (included) of the previous year represent a percentage equal or greater than 85% of the total number of PEV, OVC-HEV or FCV from the same vehicle manufacturer that were registered within the Union in the same period. Where public procurement procedures concern public service contracts referred to in subparagraph 2, vehicles already registered in the Union shall be deemed to comply with the requirements set out in this Annex until 31 December 2035. Part II – Other forms of public intervention and financial support for corporate vehicles For schemes established or updated after [OP: Please insert the date = six months after the date of entry into force of this Regulation] that support the purchase, lease, rent or hire - purchase of new PEV, OVC -HEV or FCV, Member States, regional or local authorities, bodies governed by public law or associations formed by one or more such authorities or one or more such bodies governed by public law shall ensure that only vehicles that comply with the below minimum Union origin requirements are eligible under the scheme. For the purpose of considering corporate cars and vans ‘made in the European Union’ in accordance with Article 4 of the [Proposal for a Regulation of 16 December 2025 on clean corporate vehicles], the below requirements apply. (a) the vehicle is assembled within the Union; (a) the ratio between the total ex -works price of vehicle components - excluding the vehicle battery - originating in the Union and the total ex -works price of all vehicle components – excluding the battery – is equal to or greater than 70%; (b) the vehicle’s traction battery contains at least three main specific components of batteries, among which the battery cells, originating in the Union; (c) the vehicle’s traction battery contains at least five main specific components of batteries, among which the battery cells, the cathode active material, and the battery management system, originating in the Union; (d) the ratio between the total ex -works price of e -powertrain components originating in the Union and the total ex -works price of all e -powertrain components is equal to or greater than 50%; (e) the ratio between the total ex -works price of main electronic systems originating in the Union and the total ex -works price of all main electronic systems is equal to or greater than 50%. The requirements set out in points d) , e) and f) apply from [OP: please insert date three years after the date of entry into force of this Regulation]. By way of derogation to the requirements set out above, small electric vehicles of subcategory M1E, as defined in Regulation (EU) 2018/858 , shall include the following Union origin requirements: 1. the vehicle is assembled within the Union; 2. one of the two criteria below: (a) the ratio between the total ex -works price of vehicle components - excluding the vehicle battery - originating in the Union and the total ex -works price of all EN 6 EN vehicle components – excluding the battery – is equal to or greater than 70%; or (b) the vehicle’s traction battery contains at least three main specific components of batteries, among which the battery cells, originating in the Union. Upon request of a vehicle manufacturer, all PEV, OVC -HEV or FCV from that vehicle manufacturer can be considered compliant, for a period of twelve months, with the Un ion origin requirements if the manufacturer demonstrates that all PEV, OVC -HEV or FCV compliant with the Union origin requirements that were assembled by that vehicle manufacturer during the period comprised between 1 January and 31 December (included) of the previous year represent a percentage equal or greater than 85% of the total number of PEV, OVC-HEV or FCV from the same vehicle manufacturer that were registered within the Union in the same period. Part III – Super credits for small zero-emission vehicles For the purpose of considering vehicles as “made in the EU” in accordance with Article 5 of Regulation (EU) 2019/ 631 [as amended by the Proposal for a Regulation of 16 December 2025 amending Regulation (EU) 2019/631 as regards CO2 emission performance standards for new light duty vehicles and vehicle labelling], the following criteria apply: 1. the vehicle is assembled within the Union; 2. and one of the two criteria below: (a) the ratio between the total ex -works price of vehicle components - excluding the vehicle battery - originating in the Union and the total ex -works price of all vehicle components – excluding the battery – is equal to or greater than 70% ; or (b) the vehicle’s traction battery contains at least three main specific components of batteries, among which the battery cells, originating in the Union. EN 7 EN ANNEX IV Amendment to Regulation (EU) 2018/1724 Annexes I and II are amended as follows: 1. Annex I is amended as follows: (a) the following row ‘Permit-granting procedures’ is added in the table for ‘Areas of information related to businesses ’ before the row ‘AJ. Critical raw materials projects’: ‘Permit granting processes Information on permit -granting procedures for industrial manufacturing projects including Net -zero technology manufacturing and critical raw material projects.’; (b) in row ‘R. Net-zero technology manufacturing projects’, in the second column, point 1 is deleted; (c) in row ‘AJ. Critical raw materials projects’, in the second column, point 2 is deleted; 2. Annex II is amended as follows: (a) row ‘Starting, running, and closing business’ is amended as follows: (a) in the second column, the following second subparagraph is added: ‘Permission for exercising a business activity, including procedures related to all relevant permits to build and operate critical raw materials projects1, procedures for all relevant permits to build, expand, convert and operate net-zero technology manufacturing projects 2, and procedures related to industrial manufacturing projects.’;  (b) in the third column, the following second subparagraph is added: ‘Confirmation of the request for permission for business activity, as well as all outputs pertaining to the procedures related to critical raw material, net-zero technology manufacturing and manufacturing industry projects (ranging from the acknowledgement that the application is complete to the notification of the comprehensive decision on the outcome of the procedure, including by the designated contact point).’; (b) rows ‘Critical raw materials projects’ and ‘Net -zero technology manufacturing projects’ are deleted. 1 Procedure related to all relevant permits to build and operate critical raw materials projects, including building, chemical and grid connection permits and environmental assessments and authorisations where these are required, and encompassing all applications and procedures from the acknowledgment that the application is complete to the notification of the comprehensive decision on the outcome of the procedure by the single point of contact concerned pursuant to Article 9 of Regulation (EU) 2024/1252. 2 Procedures for all relevant permits to build, expand, convert and operate netzero technology manufacturing projects, and net -zero strategic projects, including building, chemical and grid connection permits, environmental assessments and authorisations where required, and encompassing all applications and procedures. --- [Remiss - Subsidiarity Grid.pdf] EN EN EUROPEAN COMMISSION Brussels, 4.3.2026 SWD(2026) 70 final COMMISSION STAFF WORKING DOCUMENT Subsidiarity Grid Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a framework of measures for the acceleration of industrial capacity and decarbonisation in strategic sectors and amending Regulations (EU) 2018/1724, (EU) 2024/1735 and (EU) 2024/3110 {COM(2026) 100 final} - {SEC(2026) 70 final} - {SWD(2026) 71 final} - {SWD(2026) 72 final} 1 Subsidiarity Grid 1. Can the Union act? What is the legal basis and competence of the Unions’ intended action? 1.1 Which article(s) of the Treaty are used to support the legislative proposal or policy initiative? The legal basis for this proposal is Article 114 of the Treaty on the Functioning of the European Union (TFEU), which enables the European Parliament and the Council to adopt measures to establish the single market and ensure its effective functioning. Moreover, Article 207 of the Treaty on the EU common commercial policy is the legal basis for the measures introducing minimum conditions on foreign investments to bring value added production in the Union for a specific set of sectors. 1.2 Is the Union competence represented by this Treaty article exclusive, shared or supporting in nature? In the case of Article 114, the Union’s competence is shared. In the case of Article 207, the Union’s competence is exclusive Subsidiarity does not apply for policy areas where the Union has exclusive competence as defined in Article 3 TFEU1. It is the specific legal basis which determines whether the proposal falls under the subsidiarity control mechanism. Article 4 TFEU 2 sets out the areas where competence is shared between the Union and the Member States. Article 6 TFEU 3 sets out the areas for which the Unions has competence only to support the actions of the Member States. 2. Subsidiarity Principle: Why should the EU act? 2.1 Does the proposal fulfil the procedural requirements of Protocol No. 24: - Has there been a wide consultation before proposing the act? - Is there a detailed statement with qualitative and, where possible, quantitative indicators allowing an appraisal of whether the action can best be achieved at Union level? - The preparation of the proposed Industrial Accelerator Act was subject to a thorough consultation process to gather the views of different stakeholders across the Union. - A call for evidence and a public consultation ran from 15 April to 8 July 2025 (12 weeks) via the ‘Have your say’ portal. The call for evidence received 295 contributions, while the public consultation collected 314 answers. A factual synopsis report summarising the outcomes of the public consultation activities is publicly accessible on the ‘Europa’ portal5. In parallel, the European Commission held targeted consultations: (i) a survey of 62 energy -intensive industry stakeholders across the steel, non-ferrous, cement, ceramics, chemicals, glass and pulp and paper sectors; (ii) ‘reality -check’ workshops with energy-intensive industry companies and with the steel sector; and (iii) a Member State workshop on lead markets and permitting; plus a battery-sector targeted consultation (63 respondents). 1 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12008E003&from=EN 2 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12008E004&from=EN 3 https://eur-lex.europa.eu/LexUriServ/LexUriServ.do?uri=CELEX:12008E006:EN:HTML 4 https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:12016E/PRO/02&from=EN . 5 Industrial Accelerator Act - speeding up decarbonisation. 2 - A synopsis report summarising all stakeholders’ positions and contributions to the Industrial Accelerator Act is presented in Annex 2 to the staff working document on the impact assessment report6. - Furthermore, the explanatory memorandum and Chapter 3 of the impact assessment report present qualitative and – where possible – quantitative indicators enabling an assessment of the need to act at Union level. 2.2 Does the explanatory memorandum (and any impact assessment) accompanying the Commission’s proposal contain an adequate justification regarding the conformity with the principle of subsidiarity? Yes. The explanatory memorandum and Chapter 3 of the impact assessment report include a section that provides detailed proof of compliance with the subsidiarity principle. They also clarify why referring to the Union’s objective for a stronger manufacturing base is justified for subsidiarity purposes. This objective reflects challenges that arise from integrated supply chains, cross -border ecosystem needs, and common exposur e to international pressures. Acting only at national level would lead to uneven approaches, undermine the level playing field, and weaken the functioning of the single market. A coordinated framework is therefore necessary to ensure that national measures contribute coherently to this shared objective. 2.3 Based on the answers to the questions below, can the objectives of the proposed action be achieved sufficiently by the Member States acting alone (necessity for EU action)? The objectives of the Industrial Accelerator Act cannot be achieved sufficiently by Member States acting alone due to the deeply integrated and cross -border nature of European industrial value chains and ecosystems, energy systems and investment flows. Ind ustrial decarbonisation projects require access to integrated value chains and depend on transnational infrastructure, common definitions, and interoperable administrative frameworks. The targeted consultations confirmed this: 90% of stakeholders considered EU- level demand-side coordination essential. With reference to public procurement, existing green public procurement practices remain largely voluntary, sector -specific, fragmented, and inconsistently applied across Member States. Voluntary resilience criteria are even less frequently integrated into current procurement procedures. The absence of coordinated EU-level action results in divergent national rules on: low -carbon product definitions; resilience criteria in procurement; and investment-screening procedures. This conflicts with the Treaty’s single -market objectives (Articles 26 and 114 TFEU) and distorts competition across Member States. (a) Are there significant/appreciable transnational/cross-border aspects to the problems being tackled? Have these been quantified? The problems identified are transnational and cross -border as they relate to industrial decarbonisation investment and well-integrated supply chains in strategic sectors and clean technologies across the Union. For instance, looking at the causes of the sl owdown in decarbonisation investments, permitting procedures represent a bottleneck. While Member States remain responsible for environmental and industrial permitting, they lack the capacity to ensure coherence and mutual recognition of procedures, time f rames and 6 Add reference when available. 3 data requirements across borders. The causes (e.g. administrative complexity, infrastructure access, and fragmented regulatory approaches) vary regionally but have Union-wide repercussions, as delays or inconsistencies in one Member State affect supply chains, investment decisions and downstream markets across the EU. It also affects the achievements of the Union’s climate objectives. The problem is widespread, affecting all Member States with manufacturing industries, rather than being limited to a few iso lated cases. Many authorities, especially at regional level, are overstretched and face resource and expertise constraints in handling complex decarbonisation projects. Member States and stakeholders generally agree on the need to streamline permitting and foster lead markets but differ on instruments, scope and speed of implementation. This divergence justifies Union intervention to lay down a coherent, minimal set of common parameters ensuring that national actions contribute effectively to a single, well-functioning single market. (b) Would national action or the absence of the EU-level action conflict with core objectives of the Treaty7 or significantly damage the interests of other Member States? Given the need to secure a competitive industrial base and strengthen the Union’s manufacturing capacity in key technologies underpinning the green and digital transitions, Member States may decide to: take unilateral decisions to secure foreign investments in key technologies at national level, in order to avoid increased dependencies; and/or introduce uncoordinated incentives to support domestic sectors and businesses. Such actions could ultimately distort competition between Member States, create intra-EU barriers to the free movement of goods, and contribute to the fragmentation of the single market. (c) To what extent do Member States have the ability or possibility to enact appropriate measures? A regulation is of general application and is binding upon and directly applicable in all Member States. Nevertheless, the proposal includes a few mandatory minimum measures, while giving Member States discretion as to the manner of implementation and the level of ambition they wish to pursue. Notably, creating lead markets enables Member States to lay down requirements exceeding those set out in the Regulation. Moreover, the Industrial Accelerator Act proposes measures to incentivise national authorities to simplify and accelerate administrative procedures for industrial decarbonisation projects. The measures outline the general objectives to be achieved, leaving Member States the flexibility to implement them in the manner that best suits their internal processes and digital infrastructure. (d) How does the problem and its causes (e.g. negative externalities, spillover effects) vary across the national, regional and local levels of the EU? The slowdown in decarbonisation investments and current supply chain vulnerabilities undermine the business case for EU industries and businesses and put the achievement of the EU’s climate end economic security goals at risk. Decline in industrial competi tiveness would spill over across all sectors and stages of the value chains, ultimately jeopardising people’s well-being. Regions that currently host energy-intensive industries are particularly at risk of further economic and social decline, leading to widening disparities in employment 7 https://europa.eu/european-union/about-eu/eu-in-brief_en. 4 and prosperity across the single market. Such growing imbalances ultimately threaten the Union’s overall resilience, as echoed in the 2025 Strategic Foresight Report8. (e) Is the problem widespread across the EU or limited to a few Member States? The problems identified are widespread across the EU, affecting in particular the more industrialised Member States, and the ones aspiring to be. Energy-intensive industries face similar challenges across all Member States, leading to comparable consequenc es such as industrial slowdown, loss of production capacity, postponed decarbonisation investments, and plant closures resulting in lay-offs. Moreover, reducing dependency on non -EU countries for the Union’s most strategic industries is a challenge for the Union, as such dependencies could constrain or delay the EU’s ability to decarbonise in the event of supply disruptions. Slowing industrial decarbonisation due to competitiveness losses and supply chain vulnerabilities poses a serious challenge to the EU’s climate ambition, strategic autonomy and economic security. (f) Are Member States overstretched in achieving the objectives of the planned measure? The consultations and the impact assessment carried out during the preparation of this proposal indicated that Member States generally support the initiative, while seeking to balance the expected benefits of the preferred policy measures against the associated costs. In the case of permitting measures, they are in line with existing best practices regarding digitalisation, and timelines fall within average timelines in the Union. Moreover, the Commission envisages to issue the necessary guidelines to ensure a successful achievement of the different objectives, notably on foreign direct investment conditionalities or the designation of industrial acceleration areas by Member States. The proposal sets targets to boost capacities of different strategic industries with the objective of accelerating decarbonisation in the Union, while securing a stable domestic supply. Every target has been measured based on existing and expected capacities for the different sectors to ensure its viability. (g) How do the views/preferred courses of action of national, regional and local authorities differ across the EU? Overall, Member States are supportive of the Industrial Accelerator Act and recognise the need for EU -level coordination to accelerate industrial decarbonisation and create lead markets for European low-carbon products and technologies. In the dedicated consultation workshop, Member State representatives welcomed the proposal’s ambition but stressed the importance of maintaining consistency with existing legislation such as the Net-Zero Industry Act , the Ecodesign for Sustainable Products Regulation, and ci rcular economy initiatives. Several Member States are in favour of introducing ‘Made in EU’ requirements and preference criteria in public procurement to stimulate demand. At the same time, they emphasise the importance of ensuring technological neutrality , affordability, alignment with the methodologies of the EU emissions trading system and the carbon border adjustment mechanism, and the avoidance of new administrative burdens. On permitting, Member States call for practical simplification through digital tools and standardised procedures while opposing strict deadlines. Some prefer limiting acceleration measures to 8 COM(2025) 484 final 2025 Strategic Foresight Report. 5 major decarbonisation projects, whereas others favour cross -cutting simplification applicable to all industrial investments. 2.4 Based on the answer to the questions below, can the objectives of the proposed action be better achieved at Union level by reason of scale or effects of that action (EU added value)? Yes, the objectives of the proposed action can be better achieved at Union level due to the scale, the urgency and the scope of the efforts needed. (a) Are there clear benefits from EU-level action? Acting at EU level has clear added value. A common European framework will provide the scale, coherence and predictability needed to accelerate industrial decarbonisation and strengthen competitiveness across the single market. It will guide and de -risk investments in low-carbon production processes, ensuring that industrial projects materialise in line with Europe’s collective objectives rather than through fragmented national approaches. In particular, EU -level action will harmonise definitions, labelling methodologies, and demand-side instruments such as public procurement and European content requirements, thereby preventing market distortions and ensuring a level playing field for industrial producers. Common principles for permitting and planning will also facilitate cros s-border coordination, speed up project deployment, and improve access to shared infrastructure such as energy grids and CO₂ transport and storage networks. By replacing divergent national regimes with a single, coherent framework, this initiative will save companies and administrations significant time and resources, lower compliance costs, and provide greater legal certainty for investors. Coordinated action at EU level will create economies of scale, accelerate the industrial transition, and strengthen the resilience, sustainability and competitiveness of Europe’s industrial base. (b) Are there economies of scale? Can the objectives be met more efficiently at EU level (larger benefits per unit cost)? Will the functioning of the internal market be improved? Yes. Acting at EU level provides clear economies of scale and efficiency gains. By setting a single, coherent framework for industrial decarbonisation, the Industrial Accelerator Act will streamline permitting procedures across Member States, strengthen de mand for low - carbon and EU -made products, and create a predictable investment environment that supports competitiveness and economic security. EU-level coordination will deliver substantial efficiency benefits by harmonising rules for public procurement, public support schemes, and foreign direct investment conditionalities, thereby preventing regulatory fragmentation and reducing compliance costs for businesses. A uniform application of these measures will also avoid forum shopping and ensure a level playing field for companies operating within the single market. The preferred policy option focuses on simplifying and accelerating industrial investments while maintaining environmental protection. It reduces administrative complexity by building on existing legislative frameworks (such as the Net -Zero Industry Act) t hrough targeted amendments rather than creating new, stand-alone systems. This approach avoids duplication, lowers adjustment costs, and delivers faster results. 6 Overall, EU action enables the objectives to be achieved more efficiently than at national level by pooling resources, providing legal clarity, and ensuring consistency across the Union. The coordinated framework will help attract investment and enhance th e overall functioning of the single market by supporting a resilient, competitive and decarbonised European industrial base. (c) What are the benefits in replacing different national policies and rules with a more homogenous policy approach? As stated above, achieving Europe’s industrial decarbonisation and competitiveness objectives requires a coherent and harmonised framework at EU level. Fragmented national approaches would risk undermining the single market by creating unequal conditions f or companies, increasing administrative burdens, and causing delays in project deployment. Diverging national rules on permitting, labelling or EU-content requirements could result in market distortions, unfair competition, and higher compliance costs for operators active across several Member States. A more homogenous EU framework will instead ensure consistency, predictability and interoperability across the Union, allowing companies to invest and operate efficiently under a harmonised set of rules. It will also enable better coordination on shared infrastructure, maximising synergies and avoiding duplication of effort. By replacing divergent national policies with a common European framework, the Industrial Accelerator Act will strengthen resilience to external shocks, ensure a level playing field across the single market, and enhance the Union’s ability to respond colle ctively to global industrial and economic challenges. (d) Do the benefits of EU-level action outweigh the loss of competence of the Member States and the local and regional authorities (beyond the costs and benefits of acting at national, regional and local levels)? There is no loss of competence for Member States and local or regional authorities as they remain the main actors responsible for carrying out permitting procedures and introducing public procurement requirements. This Regulation provides a common framework for their actions. (e) Will there be improved legal clarity for those having to implement the legislation? The Regulation sets out specific timelines and criteria to guide Member States’ actions when a specific requirement is laid down. Several provisions of the Regulation will be specified through implementing or delegated acts, which should further harmonise and facilitate the implementation of the obligations introduced under this Regulation, thus improving legal clarity. 3. Proportionality: How the EU should act 3.1 Does the explanatory memorandum (and any impact assessment) accompanying the Commission’s proposal contain an adequate justification regarding the proportionality of the proposal and a statement allowing appraisal of the compliance of the proposal with th e principle of proportionality? Yes. The explanatory memorandum and the impact assessment report (Chapter 3) provide detailed proof of compliance with the proportionality principle. The proposal is limited to 7 what is necessary to achieve its objectives, ensuring the functioning of the single market for decarbonised and resilient industrial production, without going beyond what is required. The initiative focuses on a narrow set of targeted measures: - streamlining and digitalisation of permitting procedures for industrial manufacturing projects, - creation of EU lead-markets with minimally harmonised demand-side criteria - harmonisation of conditions for foreign direct investments in emerging key strategic sectors to ensure high value added to the single market, - creation of industrial acceleration areas to increase the competitiveness of the manufacturing industry, - harmonisation of definitions and labelling for low -carbon steel products . The measures establish enabling frameworks and shared principles, leaving detailed implementation and administrative organisation to national authorities. The proposal therefore complies with the proportionality principle: it intervenes only where coordination at EU level adds clear value, and with the least intrusive means con sistent with the objectives of efficiency, legal certainty and a level playing field. 3.2 Based on the answers to the questions below and information available from any impact assessment, the explanatory memorandum or other sources, is the proposed action an appropriate way to achieve the intended objectives? The proposed action is an appropriate and proportionate way to achieve the intended objectives. It targets those areas where Member States cannot effectively act alone, ensuring common product definitions, coherent permitting principles and uniform investment conditions, and relies on a simple, flexible instrument that minimises administrative burden while securing EU-wide consistency. (a) Is the initiative limited to those aspects that Member States cannot achieve satisfactorily on their own, and where the Union can do better? Yes. The scope of the Industrial Accelerator Act is limited to cross -border issues (market fragmentation and administrative bottlenecks) that require coordination across 27 Member States. National action alone cannot ensure equal competitive conditions or guarantee mutual recognition of procedures. (b) Is the form of Union action (choice of instrument) justified, as simple as possible, and coherent with the satisfactory achievement of, and ensuring compliance with the objectives pursued (e.g. choice between regulation, (framework) directive, recommendati on, or alternative regulatory methods such as co-legislation, etc.)? A regulation is the most suitable instrument, as it ensures uniform application of core definitions and procedures essential for a functioning single market. It avoids delays linked to transposition and prevents divergences that could arise under a directive. (c) Does the Union action leave as much scope for national decision as possible while achieving satisfactorily the objectives set? (e.g. is it possible to limit the European action to minimum standards or use a less stringent policy instrument og approach?) The proposal leaves wide discretion to Member States in organising their permitting systems, defining administrative responsibilities, and implementing digital tools. It lays down only minimum procedural principles and coordination mechanisms. Similarly, t he 8 adoption of EU-wide product labels and procurement criteria remains voluntary or limited to specific sectors, giving national authorities the freedom to adapt. (d) Does the initiative create financial or administrative cost for the Union, national governments, regional or local authorities, economic operators or citizens? Are these costs commensurate with the objective to be achieved? The impact assessment found that the initiative’s costs for Member States and companies may be high in the short run. However, in the long run, they are expected to be modest and outweighed by time savings, reduced duplication, and improved certainty. Additionally, the initiative is expected to increase the EU’s security of supply and overall economic security, including by supporting job creation and decarbonisation investments. Digitalisation and simplification of permitting are expected to reduce average project-approval times. Existing data under the EU emissions trading system and the carbon border adjustment mechanism are reused for the label on greenhouse gases intensity, avoiding new reporting obligations. For the Commission, implementation costs are limited to coordination, guidance, enforcement and IT support functions. (e) While respecting the Union law, have special circumstances applying in individual Member States been taken into account? Yes. The proposal accommodates differences in administrative structure, legal tradition and regional competences by allowing Member States to tailor implementation within common parameters. Territorial impact analysis confirms that the measures will benefi t regions hosting energy -intensive industries by accelerating investment while respecting environmental safeguards and national permitting laws. --- [Remiss - Impact assessment report.pdf] EN EN EUROPEAN COMMISSION Brussels, 4.3.2026 SWD(2026) 71 final COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a framework of measures for the acceleration of industrial capacity and decarbonisation in strategic sectors and amending Regulations (EU) 2018/1724, (EU) 2024/1735 and (EU) 2024/3110 {COM(2026) 100 final} - {SEC(2026) 70 final} - {SWD(2026) 70 final} - {SWD(2026) 72 final} 1 Table of contents 1 Introduction: Political and legal context ........................................................................ 4 1.1 Political context .......................................................................................................... 4 1.2 Legal and policy context ............................................................................................ 5 2 Problem definition ............................................................................................................ 6 2.1 What is the problem? .................................................................................................. 6 2.2 What are the sub-problems and their drivers? ............................................................ 8 2.3 How likely is the problem to persist? ....................................................................... 19 3 Why should the EU act? ................................................................................................ 22 3.1 Legal basis ................................................................................................................ 22 3.2 Subsidiarity: Necessity of EU action ....................................................................... 23 3.3 Subsidiarity: Added value of EU action ................................................................... 23 4 Objectives: What is to be achieved? ............................................................................. 23 4.1 General objective ...................................................................................................... 23 4.2 Specific objectives .................................................................................................... 23 5 What are the available policy options? ........................................................................ 24 5.1 What is the baseline from which options are assessed? ........................................... 24 5.2 Description of the policy measures .......................................................................... 26 5.3 Options discarded at an early stage .......................................................................... 28 6 What are the impacts of the policy options? ................................................................ 31 6.1 POLICY OPTION 1 ................................................................................................. 31 6.2 POLICY OPTION 2 ................................................................................................. 53 6.3 POLICY OPTION 3 ................................................................................................. 62 7 How do the options compare? ....................................................................................... 71 7.1 Effectiveness ............................................................................................................ 71 7.2 Efficiency ................................................................................................................. 72 7.3 Coherence ................................................................................................................. 76 7.4 Proportionality/Subsidiarity ..................................................................................... 77 8 Preferred option ............................................................................................................. 79 8.1 REFIT (simplification and improved efficiency) ..................................................... 79 8.2 Application of the ‘one in, one out’ approach .......................................................... 80 9 How will actual impacts be monitored and evaluated? .............................................. 80 Annex 1: Procedural information ......................................................................................... 83 Annex 2: Stakeholder consultation (Synopsis report) ........................................................ 94 Annex 3: Who is affected and how? ................................................................................... 107 Annex 4: Analytical method ................................................................................................ 121 2 Annex 5: Competitiveness check ......................................................................................... 150 Annex 6: SME Check ........................................................................................................... 154 Annex 7: Sectoral analyses .................................................................................................. 158 Annex 8: Interplay with other legislation and policies and baseline scenario ................ 184 Annex 9: Overview of policy measures .............................................................................. 204 Annex 10: Extended information on the problem section ................................................ 226 Annex 11: Extended information on the impacts (Section 6) ........................................... 240 Annex 12: Development of a low-carbon product label for steel ..................................... 254 Annex 13: Overview of third countries conditionalities for FDI ..................................... 274 Annex 14: Extended information on the scenarios in the LEAD_VC cost absorption .. 276 Annex 15: Sensitivity analysis: costs and benefits ............................................................. 282 Annex 16: Net-Zero Technologies ....................................................................................... 290 3 Glossary Term or acronym Meaning or definition B2B Business to business BESS Battery Energy Storage System BF-BOF Blast Furnace – Basic Oxygen Furnace CBAM Carbon Border Adjustment Mechanism CCS Carbon Capture and Storage CPR Construction Products Regulation CRMA Critical Raw Materials Act DSO Distribution System Operator EIA Environmental Impact Assessment EIIs Energy Intensive Industries EPBD Energy Performance of Buildings Directive ESPR Ecodesign for Sustainable Products Regulation ETS Emission Trading System EU European Union EVs Electric Vehicles FDI Foreign Direct Investment FID Final Investment Decision FTA Free Trade Agreement GHG Greenhouse Gases GPA WTO Government Procurement Agreement GWP Global Warming Potential IAA Industrial Accelerator Act IEA International Energy Agency IED Industrial and Livestock Rearing Emissions Directive LCA Life-cycle assessment LCOP Levelised Cost of Production MFF Multiannual Financial Framework NZIA Net Zero Industry Act OEM Original Equipment Manufacturer PO Policy option PPA Power Purchase Agreement PV Photovoltaic RRF Recovery and Resilience Facility SEA Strategic Environmental Assessment SME Small and Medium-sized Enterprises SO Specific Objective WTO World Trade Organisation 4 1 Introduction: Political and legal context 1.1 Political context The European Union (EU) manufacturing sector employed around 30 million persons and generated EUR 2.5 trillion of value added in 2023, making it the largest sector of the EU’s business economy for its contribution to employment (18.7%) and value added ( 23.6%).1 However, the EU’s share of global industry gross value added declined from 20.8% in 2000 to 14.3% in 202 4.2 Industrial investment in the EU is lower than in other regions. 3 EU energy prices continue to be higher than our trade partners’ and are forecasted to remain so in coming years. Europe still faces commercialisation obstacles and regulatory hurdles. 4 Furthermore, a major structural challenge for some EU industries 5 is state-subsidised overcapacity at global level, which distorts global prices and international markets. Manufacturing industries account for about 26% of the EU’s total greenhouse gas (GHG) emissions. Energy intensive industries ( EIIs), on their own, represent 22% of the EU’s total GHG emissions or more than three quarters of all industrial emissions.6 For the purpose of this impact assessment, EIIs include the following industrial sectors: chemicals, steel, pulp and paper, plastics, refineries, cement, non-ferrous metals, glass and ceramics, as first identified in the European Commission’s Annual Single Market Report 2021 and consistently used in subsequent policy frameworks.7 Decarbonisation and industrialisation are two sides of the same coin, as decarbonisation should be delivered with a strong and resilient European industrial base. Achieving the EU's climate neutrality goal without negatively affecting industry’s performance depends on a strong business case for decarbonisation. Without a healthy decarbonised industrial base, the EU will not achieve its objectives of economic securit y, competitiveness and decarbonisation as outlined in the Competitiveness Compass.8 The global market for net -zero industry technologies 9 is projected to nearly triple by 2035. 10 While deployment in the EU is progressing, the Union’s global market share is declining, and domestic manufacturing capacity remains limited. Production is highly concentrated, with mainland China controlling over 90% of solar photovoltaic (PV) and batter y manufacturing capacity, and more than 90% for battery anodes and solar wafers. 11 Strengthening EU clean tech manufacturing is therefore essential.12 The Antwerp Declaration13 calls for a European Industrial Deal to complement the EU Green Deal and safeguard quality jobs in Europe. The Declaration calls for urgent action to restore the business case for investments in Europe. 1 Eurostat. Enterprises by detailed NACE Rev. 2 activity and special aggregates. 2 Eurostat. Gross value added and income by main industry (NACE Rev.2 ). 3 ERT (2022). European Competitiveness and Industry – Benchmarking Report 2022. 4 Draghi, M. (2024). The future of European competitiveness: A competitiveness strategy for Europe (Part A), p.28 5 Steel, aluminium and chemicals. 6 Eurostat (2023). Air emissions accounts by NACE Rev. 2 activity. 7 European Commission (2021). Commission Staff Working Document, Annual Single Market Report 2021, accompanying the Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Updating the 2020 New Industrial Strategy: Building a stronger Single Market for Europe's recovery, COM(2021) 350 final, p.120. 8 European Commission (2025). A Competitiveness Compass for the EU, COM(2025) 30 final, 29 January 2025. 9 Net-zero technologies include solar technologies, onshore wind and offshore renewable, battery and energy storage, heat pumps, hy drogen technologies, electricity grid, and other technologies listed under Article 4 of the NZIA. 10 IEA (2024). Energy Technology Perspectives 2024. 11 IEA (2024). Energy Technology Perspectives 2024. 12 European Commission (2025). Competitiveness Progress Report on Clean Energy Technologies, COM(2025) 74 final, 26 February 2025. 13 The Antwerp Declaration for a European Industrial Deal webpage (2024). About the Antwerp Declaration. 5 Economic security has become a central pillar of the EU’s industrial policy since the adoption of a European Economic Security Strategy. 14 In October 2023, the Commission adopted a Recommendation15 identifying ten critical technology areas that are essential for Europe’s security and competitiveness. These technologies underpin the green and digital transitions but also expose the Union to strategic dependencies and supply chain risks. The European Commission presented in February 2025 the Clean Industrial Deal16 as Europe’s new growth strategy to accelerate decarbonisation, increase competitiveness and ensure productivity growth for European industry. On the financing side, this included the Clean Industrial Deal State aid framework adopted in June 2025, an Industrial Decarbonisation Bank planned for 2026 and the European Competitiveness Fund. The Commission also presented an Action Plan for Affordable Energy to decrease energy costs across the EU. EU leaders adopted the Budapest declaration17 highlighting the urgent need and determination to make the EU more competitive through a new European competitiveness deal . In March 2025, the European Council reaffirmed its commitment to strengthening Europe’s competitiveness.18 The European Parliament Resolution on Energy Intensive Industries 19 calls on the Commission to develop solutions for speeding up decarbonisation projects and for the creation of lead markets for clean and circular European products, via non-price criteria in EU public procurement in line with the EU’s international commitments. It is in that context that the Clean Industrial Deal announced a new regulatory initiative to address permitting bottlenecks, introduce resilience and sustainability criteria to create lead markets for the development of European clean and resilient industrial technologies and products and develop a label on the carbon intensity of i ndustrial products, starting with steel. The European Steel and Metals Action Plan 20 and the European Chemicals Industry Action Plan21 reiterate the commitment to include resilience and sustainability criteria to support the demand for EU-made clean products. The Automotive Action Plan 22 states that to boost the European production of key vehicle components, any public support benefitting the automotive industry will be made conditional on resilience and sustainability criteria to be proposed under this initiative. It also calls on it to address European content requirements on battery cells and components in EVs sold in the EU, in line with the Union’s international legal commitments . Based on these previous commitments, the 2025 State of the Union Address announced a proposal of an Industrial Accelerator Act (IAA) to boost demand for clean and Made in E U products in key strategic sectors and technologies. 1.2 Legal and policy context A range of EU policy and legal instruments govern how the manufacturing industry operates in the EU, cover ing areas such as GHG emission reductions for manufacturing sites in the EU , energy markets, energy efficiency, conditions to operate in the Single Market and compliance with environmental and climate legislation. In particular, t he EU Emissions Trading System 14 European Commission (2023). Joint Communication to the European Parliament, the European Council and the Council on “European Economic Security Strategy”. 15 Commission Recommendation C(2023) 6689 identifies ten critical technology areas for the EU’s economic security: 1) Advanced semiconductors technologies; 2) Artificial intelligence technologies; 3) Quantum technologies; 4) Biotechnologies; 5) Advanced connectivity, navigation and digital techno logies; 6) Advanced sensing technologies; 7) Space and propulsion technologies; 8) Energy technologies; 9) Robotics and autonomous systems; and 10) Advanced materials, manufacturing and recycling technologies. 16 European Commission (2025), The Clean Industrial Deal: A joint roadmap for competitiveness and decarbonisation, COM(2025) 85 final, 26 February 2025. 17 European Council (2024). Budapest Declaration on the New European Competitiveness Deal, adopted 8 November 2024. 18 European Council Conclusions, March 2025. 19 European Parliament (2025). Resolution on energy-intensive industries, 3 April 2025. 20 European Commission (2025). A European Steel and Metals Action Plan, COM(2025) 125 final, 19 March 2025. 21 European Commission (2025). A European Chemicals Industry Action Plan, COM 2025 530 final, 8 July 2025. 22 European Commission (2025). Industrial Action Plan for the European automotive sector, COM(2025) 95 final, 5 March 2025. 6 (ETS) Directive 23 is the main climate policy instrument to incentivise GHG emissions reduction. It provides the main price signal for industries to invest in decarbonisation, and the Commission is preparing its proposal for a review to ensure the instrument is adjusted to promote cost -effective emissions reductions in line with the climate neutrality target. The Carbon Border Adjustment Mechanism (CBAM) is the instrument protecting some ETS sectors from the risk of carbon leakage, while ensuring that domestically produced and imported goods face the same carbon costs in the internal market. A comprehensive review of CBAM , accompanied by an anti-circumvention strategy, has been adopted at the end of 2025. The Net Zero Industry Act (NZIA) 24, as well as the Batteries Regulation 25, also provide incentives for clean tech and resilient industrial manufacturing in the EU. Industrial decarbonisation is also supported by policies and legislation on the demand side, aiming at decarbonising downstream end-use sectors. This includes for instance recent legislation on the building and construction sectors, and aviation and waterborne transport or most notably the automotive package, with the revision of CO2 standards and the introduction of low-carbon steel credits. It also includes products legislation, such as the Ecodesign for Sustainable Products (ESPR), which aims at improving the environmental sustainability and circularity of products placed on the EU market. Permitting and access to energy infrastructure is also covered by other recently adopted Commission’s initiatives, namely the grids action plan, the electricity market design, the grid tariff and grid anticipatory investment guidance implementation, the Grids package on infrastructure planning and permitting and the Environmental Omnibus, to simplify administrative burden in environmental legislation. Annex 8 presents the list of relevant initiatives and a detailed explanation of how they relate to IAA. 2 Problem definition 2.1 What is the problem? The overarching problem this initiative aims to address is to support the EU industry’s competitiveness and resilience in a context of increased global pressure, while accelerating the decarbonisation of its processes and products . The business case to invest in innovation and industrial decarbonisation in the EU needs to be improved, with particular focus on EIIs and clean tech manufacturing. Lengthy and complex permitting procedures slow down projects, while limited access to affordable energy, infrastructure and key materials further constrains investment. These bottlenecks undermine industrial competitiveness and delay the clean transition. Global pressures The causes for the industry’s reduced competitiveness are multiple, and many depend on external macroeconomic factors beyond the scope of this initiative.26 Energy inputs account for 7% to 9% of the production value in EU EIIs, and although gas and electricity prices in the EU 23 Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the Union and amending Council Directive 96/61/EC. 24 Regulation (EU) 2024/1735 of the European Parliament and of the Council of 13 June 2024 on establishing a framework of measur es for strengthening Europe’s net-zero technology manufacturing ecosystem. 25 Regulation (EU) 2023/1542 of the European Parliament and of the Council of 12 July 2023 concerning batteries and waste batter ies, amending Directive 2008/98/EC and Regulation (EU) 2019/1020 and repealing Directive 2006/66/EC. 26 Such as such as demand slowdown, higher energy and feedstock supply costs in the EU than in certain trading partners, overcapacities and unfair trade policies by some third countries. The Draghi Report identifies several key factors contributing to the declining competitiveness of the EU industry and EIIs: higher energy prices and emissions costs relative to global competitors, substantial investment nee ds for decarbonisation, regulatory burdens, and an uneven playing field at the international level, exacerbated by limited market demand for greener products and net -zero technologies ( Source: Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B), p. 97-100). Similarly, Letta´s report notes that EIIs are particularly vulnerable and transitioning them to clean energy is challenging due to cost uncertainties, capital barriers, and technology scale issues. 7 have dropped from their 2022 peaks, gas prices are still about five times higher than on other global markets and electricity prices are approximately twice as high. The forecasts for 2030 indicate a continuation of Europe’s energy cost disadvantage.27 Most manufacturing industries operate in a global market shaped by increasingly distorted competition. These distortions are the result of a combination of state subsidies, global industrial overcapacity, tariff asymmetries, and the strategic deployment of foreign industrial policies that challenge Europe’s ability to remain competitive, while decarbonising. In the new world order, competitors like China are moving faster in developing their clean technology industries and supporting their competitiveness. In 2023, China accounted for 55% global steel production28, and above 60% for aluminium, solar PV, batteries, and electric vehicles (EVs).29 Beyond competitiveness pressures, the erosion of EU industrial capacity also creates growing economic security vulnerabilities. Several industrial value chains meet the criteria of high-risk dependencies, including heavy reliance on a single dominant supplier, exposure to non-market overcapacity30, and the increasing use of export restrictions or coercive economic practices. Such dependencies can be weaponised, creating systemic risks for the Single Market and undermining the Union’s ability to secure the inputs needed for clean technologies, critical infrastructure, and defence -related manufacturing. As EU production shrinks and i mport reliance grows, the likelihood and impact of supply disruptions, price manipulation or arbitrary restrictions increase accordingly. Energy Intensive Industries in Europe: an industrial fabric at risk Over the past decade, t he EU EIIs have reduced their GHG emissions by 35%31, while their emissions intensity decreased by 25% since 2000.32 In parallel, their competitiveness has been declining, more starkly since the energy crisis in 2021, as energy costs in the EU remain above those of many international competitors. Cost gaps with other world regions have widened and imports shares (in particular, for chemicals and metals) have increased.33 Figure 1 below illustrates how production volumes in EIIs have substantially declined, compared to production volumes in other manufacturing sectors. The current steel capacity utilisation rate is of approximately 65%, while to be market competitive the sector would need to run at above 8 5% capacity.34 For the chemicals industry , production utilisation rates have stagnated at 74-75% range, significantly below the historical averages of 81.5%.35 In a decade , the EU trade balance for EIIs has steadily declined, getting close to deficit in 2022.36 While this is the case for most energy-intensive sectors, the trend was largely driven by basic metals with a 36% drop, and chemicals with an 8.1% drop in exports and 15% increase in imports, amongst others.37 27 European electricity prices are expected to be up to twice as high as prices in the US by 2030. Electricity wholesale prices are forecasted to reach EUR 55-100/MWh and gas prices EUR 20- 40/MWh. Source: ERT (2024). Competitiveness of European Energy-Intensive Industries. 28 Eurofer (2024). European Steel in Figures. 29 IEA (2023). Clean energy supply chains vulnerabilities. 30 European Commission, An enhanced methodology to monitor the EU’s strategic dependencies and vulnerabilities, Single Market Economics Paper, 18 April 2023, doi:10.2873/768035. 31 European Commission, JRC internal calculation, based on EUROSTAT table “Air emissions accounts by NACE Rev. 2 activity” – see figure 6 in Annex 7. 32 Emission intensity defined as emissions per unit of value added. Source: OECD (2025), A comprehensive overview of the Energy Intensive Industries ecosystem,2025/09. 33 Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B), p. 95. 34 European Commission (2025). Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: A European Steel and Metals Action Plan, COM (2025) 125 final, 19 March 2025 35 CEFIC (2025). The Competitiveness of the European Chemical Industry, January 2025. 36 See figure 21 in Annex 10. 37 OECD (2025). A comprehensive overview of the Energy Intensive Industries ecosystem, 2025/09. 8 Figure 1: production volume and confidence indicators for EIIs, internal European Commission analysis The Draghi report highlights that decarbonising industry requires a far-reaching transformation of assets and processes, which calls for substantial investment. The impact assessment for the 2040 Climate Target Plan estimates the investment needs to transform the iron and steel sector at around EUR 80 billion between 2031 and 2040 and EUR 100 billion between 2031 and 2050, while for the four largest EIIs together (chemicals, basic metals, non -metallic minerals, and pulp and paper industry) the investment needs are estimated at around EUR 287 billion over 2031-2040 and EUR 500 billion over 2031-2050.38,39 While decarbonisation technologies are often more mature and more cost competitive for non EII sectors, manufacturing companies still face significant costs alongside administrative hurdles, regulatory challenges and skills shortages for companies. Today, the cost difference between high carbon and low -carbon technologies remain high, as it is explained under Sub -problem 1 and 3 and in more detail in Annex 7. Clean technologies also face competitiveness challenges and supply chain vulnerabilities.40 For instance, for solar PV modules, the EU relies almost entirely on imports from China. Lack of competitiveness is also visible in more downstream value chains. For instance, the European automotive industry has witnessed a significant reduction in profitability , with the average profitability of European automotive suppliers dropping from 7.4% in 2017 to 5.1% in 2023.41 See Annex 7 for further analysis of all relevant sectors. 2.2 What are the sub-problems and their drivers? The main problem is the limited business case for EU industry, and EIIs in particular, to invest in decarbonisation in time to reach the EU’s climate targets while ensuring the competitiveness of EU energy intensive and clean tech industries in the process. 2.2.1 Sub-problem 1: Limited demand for European low-carbon industrial products at current prices Limited demand for low -carbon industrial products is mainly due to the currently higher costs of these products against more carbon intensive alternatives. Additionally, business customers often lack sufficient incentives and face difficulties distinguishing between low - emission and carbon intensive industrial products, due to the absence of commonly agreed, transparent and harmonised standards, labelling and definitions. Th ese factors restrict market 38 European Commission (2024). Commission Staff Working Document: Impact Assessment Report (Part 3), accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Securing our future - Europe's 2040 climate target and path to climate neutrality by 2050, building a sustainable, just and prosperous society, COM(2024) 63 final, pp.164-167. 39 Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B), p. 99. 40 European Commission (2025). Competitiveness Progress Report on Clean Energy Technologies, COM(2025) 74 final, 26 February 2025. 41 McKinsey (2025). European automotive industry: What it takes to regain competitiveness, 10 March 2025. 9 entry and identification of low -carbon industrial products and hamper business to business (B2B) transactions from complying with high climate mitigation ambition. 2.2.1.1 Driver 1 (market failure): Challenges in distinguishing low -carbon industrial products from high-carbon alternatives Although many industrial production facilities closely monitor their emissions, there is currently no harmonised carbon accounting methodology systematically applied for industrial products.42 This is due to several reasons. First, current environmental and GHG reporting requirements are typically registered at installation level , as in the context of the EU ETS. Translating these installation-level emissions into emissions per product requires attributing the emissions from various production stages and possibly various installations (in or outside the EU) to a specific industrial product. 43 Second, the complexity is further increased by factors such as the diversity of production technologies, the outsourcing of certain production steps, long and complex supply chains and the varying use of imported heat and electricity in production processes. Finally, different methodological approaches are used on the scope of emissions to be considered. Without sound verification mechanism in place, the level playing field among businesses cannot be guaranteed, greenwashing can proliferate, and the exercise may become an administrative burden, including for public authorities when dealing with green public procurement procedures. As a result, several initiatives have emerged to define what constitutes a “low-carbon” industrial product. For instance, over 150 sustainability standards and initiatives 44 spanning the entire steel value chain aim to determine what constitutes iron and steel with lower environmental impacts. As explained in the baseline (Section 5.1 and Annex 8), the ESPR and the CPR (Construction Product Regulation) provide a regulatory framework to introduce information and/or performance requirements on the environmental or carbon footprint of products from a life-cycle perspective . This initiative will complement and ensure coherence with these frameworks45 while enabling more targeted deployment of carbon -intensity information for selected industrial products. 2.2.1.2 Driver 2: Limited willingness to pay a premium for low -carbon industrial products While in some sectors, such as electricity production, the cost of low -carbon technologies is already lower than that of conventional fossil fuel -based alternatives, industrial sectors often continue to face significantly higher costs for producing low-carbon products, often due to lack of economies of scale .46 In the steel and cement sectors, estimates suggest that procurement cost for low-carbon steel could range from around 33%% in a low-cost scenario to as much as 70% in a high -cost scenario, compared to conventional technologies and considering current CO2 costs.47 42 In this context, industrial products are considered intermediate industrial goods that are not used by end-consumers as such but require further transformation. 43 While this process is relatively straightforward for standardised products such as electricity, it becomes much more complex for industrial goods with long and intricate production chains, such as plastics. As described in Annex 9, similar work is ongoing in the context of the CBAM methodology being developed for the definitive phase. 44 JRC (2024). Draft preparatory study on iron and steel – ecodesign measures under the ESPR, p. 41. 45 Some of these frameworks are mentioned in Annex 8: Interplay with other legislation and policies and baseline scenario 46Mission Possible Partnership (MPP), E3G and the Industrial Transition Accelerator (ITA) (2025). Building the EU’s Clean Industrial Future: Unlocking Investment through Lead Markets. 47 VUB Brussels School of Governance (2024).Public procurement of steel and cement for construction, assessing the potential of lead markets for green steel and cement in the EU. Note: Based on 2020 estimates, the cost gap is expected to narrow by 2030 due to technological maturation and higher CO₂ prices. 10 To create a sound business case, when commercially marketing low-carbon products , manufacturers will likely need to pass on these additional costs in the short to medium term through a "green premium" to potential buyers.48 However, the percentage of buyers willing to pay a premium for low -carbon products is estimated to range from 14% in the aluminium market to 16% in steel.49 In certain segments, the uptake of low-carbon products will likely develop at a faster pace, due to EU requirements. For instance, the revised E nergy Performance of B uildings Directive50 (EPBD) requires Member States to draw up national roadmaps on the introduction of limit values on the life -cycle Global Warming Potential ( GWP) of buildings. In addition, the automotive sector appears more willing to accept higher premiums for low -carbon metals, as shown by a growing number of low -carbon steel supply agreements. 51 One key driver is that automakers are subject to life -cycle CO2 emissions reporting obligations, increasing attention on the overall carbon footprint of a vehicle, including emissions from manufacturing. However, the extent to which these commitments will translate into actual demand remains uncertain.52 According to the Public Consultation, 81% (253 out of 314) of respondents agree that downstream sectors and consumers lack the willingness to pay a premium for clean industrial products. This is backed by all participating EIIs, including steel (95%), aluminium (80%), cement (77%), ceramics (100%), chemicals (96%), glass (66%), fertilisers (87%), pulp & paper (100%) and metals & mining (100%), as well as by downstream sectors such as automotive (80%), batteries (75%) and construction (75%). Public procurement is a key driver for low-carbon demand for industrial materials and products. The construction sector dominates EU public procurement involving energy -intensive materials53, making it a critical lever for stimulating demand for low-carbon industrial products. However, despite this potential, market demand alone is often insufficient to support the scale- up of low-carbon production required to offset higher production costs. Furthermore, public procurement practices aimed to support the uptake of low -carbon materials remain limited at both EU and national levels. Key barriers include a lack of training and capacity, insufficient data availability, fear of litigation and legal complexities.54 Financial constraints may also be a barrier to support the higher initial costs often associated with low -carbon products. For instance, demand for low -carbon steel under green public procurement accounts for 2.1% of total steel demand.55 Finally, the limited willingness to pay for the green premium depends on a range of policy measures to bolster the business case for decarbonisation investments, optimizing net benefits. Importantly, the lion’s share of demand generated by lead market s measures will continue to originate from private sector uptake and procurement. 2.2.2 Sub-problem 2: Supply chain vulnerabilities in strategic sectors Security of supply is a precondition for sustainable industrial growth. EU manufacturing is exposed to a risk of dependency for its most strategic industries. The production processes for 48 Somers, J. (2022), Technologies to decarbonise the EU steel industry, Publications Office of the European Union, doi:10.2760/069150. 49 McKinsey (2024). Materials ‘green’ premia: Trends and outlook to 2030. 50 Directive (EU) 2024/1275 of the European Parliament and of the Council of 24 April 2024 on the energy performance of buildings 51 BloombergNEF (2023). Green Steel Demand is Rising Faster Than Production Can Ramp Up. 52 ICCT (2024). Which automakers are shifting to green steel? An analysis of steel supply chains and future commitments to fossil-free steel. 53 Based on GROW calculations from WTO GPA publications and statistics on EU public procurement sourced from TED (Tenders Electronic Daily) contract award data and the Public Procurement Data Space (PPDS), filtered for procurement in construction-related CPV codes linked to energy-intensive construction works. This is irrespective to whether procure ment was low -carbon or not. In 2023, contracted value for procurements above EU thresholds involving EIIs materials totalled EUR 189B over almost 12k contracts awarded and in 2024, this increased to EUR 214B over more than 13k contracts awarded 54 Bellona Foundation (2024). Green public procurement of cement and steel in the EU -An overview of the state of play. 55 EUROFER contribution. 11 certain industrial sectors (mainly clean tech and, increasingly, EIIs ) rel y heavily on third countries for their input materials and/or components, which puts these sectors at risk of supply chain disruptions, limiting Europe ’s potential to decarbonise. Industrial decarbonisation will also depend on access to energy and raw materials, therefore the risk of disruption in these value chains pose a serious challenge to the EU’s strategic autonomy and clean energy transition . Looking ahead, Europe’s security and open strategic autonomy will depend increasingly on the ability to increase supply chain resilience, particularly in net-zero and digital technologies.56 2.2.2.1 Driver 3: European industry loss of competitiveness due to fierce global competition and value chain dependencies Energy-intensive industries A strong industrial base is essential for Europe’s economic resilience. However, sectors like steel, chemicals, aluminium, have been losing market shares in Europe due to several factors, including higher operating costs compared to foreign competitors, rising imports because of persistent global overcapacities. 57 While both exports and imports for EIIs have increas ed by more than 25% compared to 2007, a striking difference appears when compared to 2015, where imports rose by 16.9% , while exports increased by only 1.4%.58 For instance, the EU dependency on aluminium imports has reached more than 50% of domestic demand in 2023.59 Furthermore, for chemicals and plastics, the Commission’s SCAN monitoring system 60 confirms a clear pattern of loss of competitiveness due to fierce global competition and deepening value-chain dependencies. Out of roughly 780 products analysed, about one -third were identified as distressed, showing a price increase combined with a higher reliance on fewer suppliers between January–September 2025 and the 2022–2024 average.61 The weakening of Europe’s industrial position is also visible in the investment pipeline, where many announced industrial decarbonisation projects remain stalled before final investment decision. Despite an unprecedented wave of projects announcements in the past five years, the real pace of decarbonisation has slowed sharply since 2023. Analysis from the Commission’s Joint Research Centre (JRC) shows that almost half of all announced industrial projects remain unimplemented, and fewer than one in three has entered construction or operation.62 56 COM(2025) 484 final – European Commission 2025 Strategic Foresight Report 57 Just for steel, in 2024, global overcapacity was estimated to be more than four and a half times the EU’s yearly consumption (OECD, 96th Session of the Steel Committee: Statement by the Chair | OECD). 58 OECD (2025). A comprehensive overview of the Energy Intensive Industries ecosystem. 59 European Commission (2025). A European Steel and Metals Action Plan, COM(2025) 125 final, 19 March 2025. 60 SCAN (Supply Chain Alert Notification) is an indicator-based mechanism to monitor the evolution of supply chains in the EU and identify their distress. It aims at contributing to a better risk assessment of supply chains, particularly in strategic areas, with t he goal of detecting disruptions as early as possible to avoid potential adverse effects. 61 A large share of the distressed products also falls within the highest Single -Point-of-Failure (SPOF) risk categories, meaning that global production is heavily concentrated in just a few countries. The top supplier for over 60% of these products is China , followed by the United States (15%) and India (8%). While the dataset captures only trade dynamics, these patterns are consistent with wider evidenc e of industrial contraction and growing import dependence observed in the sector. 62 European Commission, JRC internal analysis based on Europe Media Monitor. 12 Figure 2: Announcements of decarbonised projects in the EII by start date, Commission analysis based on BloombergNEF, Decarbonizing Steel Project Database (1.0.5) Figure 2 confirms that, in the case of steel, most of the projects announced in 2023 -2025, are still in the announced stage. Most concerning is the cancellation of projects announced during the study period (2023 -2025), and which were supposed to start between 2024 and 2027 (~10%). Cement, chemicals, and refining account for most projects, but implementation lags. Collectively, these projects represent over EUR 1.5 billion of announced investment. Achieving the Union’s climate and industrial objectives will require an additional EUR 480 billion in annual investment63 in energy systems, industrial innovation, scale-up and transport compared to the previous decade. While the EU has mobilised significant resources through instruments such as the Innovation Fund and InvestEU, private investment remains below the level required to meet the 2030 and 2040 climate targets. When turning to steel64, Europe’s clean-steel transformation remains largely on paper. Out of roughly 250 European decarbonisation projects since 2018 , about 68% are still at the announcement or concept stage, with no final investment decision yet taken. Batteries manufacturing A similar situation is visible in the batteries industry. In 2024, the EU imported around EUR 28 billion worth of batteries, with EUR 22 billion coming from China alone65, while EU exports stood below EUR 11 billion. 66 In 2024, China dominated global battery production, holding around 83% of the world’s capacity, well above their end-use demand.67 China’s market share on the upstream battery supply chain is even more significant.68 While European battery manufacturers continue to scale up and optimi se their production processes, they face intense price competition from third-country producers, particularly China. The EU battery ecosystem remains heavily reliant on critical components and technological know-how sourced from these third countries. These factors have led to the cancellation or delay in the EU of several battery projects, including 233 GWh of battery cells, 100 GWh of anode active materials, 513 GWh cathode active material, and 115 GWh of precursor active 63 European Commission (2025), Clean Industrial Deal, COM/2025/85 final, 26 February 2025. 64 BloombergNEF, Decarbonizing Steel Project Database (1.0.5), 2025. Commission analysis. More details in Annex 8. 65 Bruegel, European Clean Tech Tracker. 66 Ericher, M. et al. (2024). Les Themas de la DG. Deployment of electromobility: How to develop the European battery supply. 67 BloombergNEF. 68 By 2025, it is projected to control 87% of global battery cell production, 88% of Cathode Active Material (CAM), 95% of Anode Active Material (AAM), 89% of separators and over 90% of electrolyte production. Source: BloombergNEF. 13 materials as considered no longer competitive. Although the EU reached a battery cell installed capacity of around 205 GWh by the end of 2025 and has over 750 GWh in the pipeline69, these cancelations and delays show the competitiveness gap of the European industry . This gap is further exacerbated by the vulnerability of the existing EU battery industry to supply chain disruptions due to export restrictions on key components and technologies . Additionally, the absence of a robust domestic value chain means EU manufacturers may face a premium for depending on imports to sustain its battery sector, impacting both cost and reliability. PV manufacturing The European solar PV industry has been losing competitiveness due to several factors, mainly Chinese overcapacity and lower manufacturing costs and prices. Regarding overcapacity70, at least 80% of global manufacturing across the supply chain components is concentrated in China, which makes them the dominant country in the global PV manufacturing market .71 72 This level of concentration creates structural risks for the EU’s security of supply of PV systems: overcapacity in China drives prices down globally and exports are redirected to the EU following US import restrictions, discouraging investment in alternative production outside China, and reinforcing dependency on a single source. This dependence heightens exposure to potential supply disruptions, trade tensions or geopolitical shocks, and raises cybersecurity concerns risks in related to system equipment such as inverters. At present, the EU manufacturing capacity in the solar PV value chain amounts to approximately 12 GW of PV modules, around 2 GW of PV cells, and less than 1 GW of PV ingots and wafers.73 Inverter manufacturing is still quite strong in the EU (over 82GWAC74) but there is similar worrying pressure and trend as for the rest of the supply chain. Other clean technologies, or ‘net -zero technologies’ (e.g. wind, electrolysers) , face similar challenges, however the combination of high global overcapacities and high dependencies of the EU’s consumption on one single source of supply is particularly acute for solar PV and batteries.75 Therefore, the assessment report focuses primarily on these two technologies, while Annex 16 provides an in-depth analysis on additional net-zero technologies. Vehicle components Over the past years, the European automotive industry has been investing heavily 76 in the development of cleaner vehicles and innovative components. However, b ased on JRC estimates, the EU content of cars produced in Europe has been slightly decreasing over time. At the European level, the production index for the European automotive component industry continues to fall at a steady pace (by an average of 11% in 2025 compared to 2021 production volumes), as does vehicle production (compared to 2023) . Despite the exceptional customs tariffs introduced in 2024 on Chinese EVs, imports of Chinese vehicles continue to grow (+35% in volume in the first half of 2025 (+380% compared to 2021), compared to a 50% drop in EU exports to China), and they have reached a market share of 9.9% in July 2025 despite efforts to restore level playing field and to safeguard the European automotive industry against unfair competition. This phenomenon has been squeezing the volumes and margins of European 69 European Battery Alliance. 70 SolarPower Europe (2025). Reshoring Solar Manufacturing to Europe, figure 7. 71 IEA (2024). Energy Technology Perspectives 2024. 72 European Commission (2025). Competitiveness Progress Report on Clean Energy Technologies, COM(2025) 74 final, 26 February 2025. 73 European Commission, : Summary - Net-Zero Technologies (NZT) Monitoring Dashboard - Power BI 74 SolarPower Europe (2024), Inverters Explained 2.0: Strengthening Europe's Inverter Industry . 75 European Commission (2025). Communication providing updated information under Regulation (EU) 2024/1735. OJ C 2025/3236. 76 EUR 70 billion a year when considering the whole automotive supply -chain – vehicle manufacturers and suppliers, EUR 30 billion when considering only the automotive suppliers Automotive R&D investment, by world region, ACEA, 11 Sept 2024. Automotive suppliers in the EU – R&I vision on circularity, CLEPA, 11 September 2023. 14 manufacturers and representing huge competition for local manufacturers. 77 Furthermore, as described in the Draghi report, even more than 10% of local EU production may be displaced in the following five years.78 Lastly, the automotive industry’s vulnerability to external supply chain disruptions was displayed by recent announcements by the largest European automobile manufacturers trade association about the difficulty to secure chips for the automotive supply chain. Despite efforts to diversify supply chains following the semiconductor shortage in the past , automotive companies are still facing vulnerabilities to external shocks when it comes to the supply of essential parts for their vehicles, which decreases the resilience of supply chains. 2.2.2.2 Driver 4: A fragmented EU approach towards foreign investments The EU’s openness to foreign direct investment (FDI) is enshrined in the Treaty on the Functioning of the EU and is essential to ensure the Union’s competitiveness and progress towards decarbonisation. Foreign investors can play a significant role in areas where Europe lags on innovative technologies and processes. However, FDIs do not necessarily imply that technology transfer, know -how development, job creation/retention and value chain integration, are realised in Europe or by European companies. Europe’s heavy industry is dependent on imported technologies and equipment in emerging low-carbon value chains such as hydrogen electrolysers, batteries, and solar PV .79 In many cases, investors choose to limit their European footprint to assembly or non-core operations, preserving strategic technologies and innovation activities abroad .80 while other investors choose to position high value added segments of the production chain, such as R&D, in the EU.81 Unlike other countries such as the United States, Korea or Japan82, the EU does not consistently attach requirements on R& I or skills development. Most importantly, o ver the past decades, China has applied FDI conditionality by restricting market access in sectors such as automotive, solar, and wind, to joint ventures with Chinese partners, often under majority control by the Chinese partner, while requiring foreign companies to transfer technology, establish local R&I, source components locally and comply with data -localisation and security reviews; these conditions enabled Chinese firms to absorb foreign know-how, scale up domestic capabilities.83 Foreign companies seemed to have been willing to accept China’s demanding FDI conditions because the market itself was too large and too strategic to ignore. In addition, many firms feared that if they stayed out, rivals would step in and gain an advantage, so they chose to comply with technology transfer, joint venture, and localisation requirements. These factors meant that, even though foreign companies may have been at higher risk of intellectual property loss, stringent FDI conditions were tolerated in the context of increasing global integration of production chains, and with China having a strong comparative advantage in the cost of labour. 77 For example, the trade balance with China on passenger vehicles became negative in 2025 (EUR 1.2 billion in the first half of the year) and imports of automotive parts from China increased by around EUR 4 billion between 2021 and 2025 (+66%) – compared with a decline in exports to China of around 50%. This is due to a 30 -35% price differential between European and Chinese products. See: Made in Europe Local content policy for the European automotive industry. Gerpisa, April 2025. 78 Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B), p. 145. 79 Mission Possible Partnership (MPP), E3G and the Industrial Transition Accelerator (ITA) (2025). Building the EU’s Clean Industrial Future: Unlocking Investment through Lead Markets. 80 Damioli, G., Marin, G., & Zanfei, A. (2024). The effects of foreign entry on local innovation by entry mode. Research Policy, 53(2), 104807. https://doi.org/10.1016/j.respol.2024.104807. 81 Coveri, A., Paglialunga, E. and Zanfei, A. (2024). Functional specialisation and upgrading in European regions: new insights from FDI data. WP-EMS #2024/01. 82 SWD(2025) 11 - Key Performance Indicators (KPIs) - Overview of Resilience Measures by Selected Global Players accompanying the 2025 Annual Single Market and Competitiveness Report and Annex 10 of this Impact Assessment. 83 Jonathan E. Hillman, The Digital Silk Road: China’s Quest to Wire the World and Win the Future (New York: Harper Business, 2021). 15 By contrast, the EU approach remains largely project-by-project, sometimes dependent on EU and national funding programmes .84 Member States currently compete to attract investors, leading to uncoordinated and uneven requirements. Competition between EU countries for attracting new assembly and material production investments is likely to intensify , as new EV entrants expand into Europe.85 This fragmented approach does not maximise benefits of foreign investment in the EU, as Member States compete individually to attract foreign investors with varying conditions and incentives, leading to uneven requir ements on technology transfer, skills, and R& I commitments. As a result, the Union’s overall ability to leverage foreign investment strategically is weakened. This lack of expertise leads to a strong dependency on imports of such batteries from a dominant foreign supplier, with this supplier (China) having a track-record of weaponizing dependencies. It is important to reduce internal market risks associated to this dependenc y, ensuring that assembly activities of foreign investors in battery production in the EU lead to knowledge spillovers and gradually reduce the EU dependency on foreign know-how, creating the conditions for maintaining and reinforcing EU capabilities in locating the strategic parts of the battery value chain in Europe , with the economic benefits it brings. In addition, multi -stage production is highly sensitive to fixed -cost thresholds and policy -driven cost differentials, meaning that without coordinated EU-level conditions, firms have strong incentives to keep the high-value stages abroad.86 Recent evidence confirms that upstream stages do not automatically localise: China retains a strong comparative advantage specifically in cells and modules, while European production remains competitive only in downstream assembly, the part creating least added value .87 This pattern is not limited to batteries but applies to other industries where China’s dominant market position similarly heightens Europe’s strategic dependencies. In the Public Consultation, 53% (166 out of 314 respondents) view foreign direct investments as useful to bring in needed capital; 55% (172 out of 314) support applying conditions to align such investments with EU industrial & strategic interests. 2.2.3 Sub-problem 3: Industrial decarbonisation technologies are not deployed at scale Many projects of the most promising technologies for decarbonising EIIs are not commercially deployed at the necessary scale, nor at the pace needed to meet the climate neutrality target . The long investment cycles for industry from R&I to deployment highlight the importance of policy predictability to reduce regulatory and financing risks .88 Furthermore, the availability and economic viability of these technologies vary depending on the specific sector and parameters such as the technology readiness level, the energy and raw materials needs, the CO2 abatement potential and CO2 abatement costs. Many technologies, such as heat pumps or energy efficiency solutions, are already mature and able to help reducing costs, while improving performance. At the same time, they are not always available at scale. Electrifying industrial production is a viable solution due to the rapid renewable energy deployment but requires process transformation and it is not always affordable nor fully available, because of the need to improve connections and increase grid capacity, or to meet the specific EIIs’ needs to consume baseload power. 84 Many (but not all) Member States screen FDI for possible security risks. This however is done only for some FDI, with conditions differing between Member States (such as regards the extent to which clean tech/EEI are covered), and only as regards risks to security and public order. 85 CEPII (2024), “Will Chinese Auto Export Boom Transform into Local Production in Europe?”, CEPII Policy Brief No. 45, Paris. 86 Head, K., Mayer, T., Melitz, M., Yang, C. (2025), “ Industrial policies for multi-stage production: the battle for battery-powered vehicles”, CEPR / HMMY Working Paper. 87 CEPII (2024), “Will Chinese Auto Export Boom Transform into Local Production in Europe?”, CEPII Policy Brief No. 45, Paris. 88 Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B). 16 In addition, decarbonising the sectors with so-called ‘hard-to-abate emissions’ (i.e. chemicals, basic metals, cement, and pulp and paper) requires significant investments. Emission-abatement technologies, including electrification, EAF, clean hydrogen, carbon capture and storage (CCS), carbon capture and use (CCU), and raw material recycling require large capital costs (CAPEX). In addition, the operational costs (OPEX) are uncertain when technologies are not mature and often higher than those of traditional technologies , as long as electricity and low - carbon fuel (e.g. clean hydrogen) prices remain high in Europe. These elements are an important factor determining the slow decarbonisation pace. Estimates suggest that by 2030, producing green steel (H2-DRI-EAF route) in Europe c ould cost around EUR 100/tonne of steel (17%) more than in the US or Saudi Arabia. This cost gap exceeds that observed today for conventional BF-BOF steel, reflecting Europe’s higher (clean) energy and hydrogen prices.89 Comparing all iron and steel technology pathways, estimates suggest that in 2024 the low-emission solution was 74% more costly than the conventional routes, and 48% more costly than a new build basic oxygen furnaces (BOF) plant. Data suggest that by 2030 the costs will have fallen but will on average remain higher (66%) than for an existing BOF plant, and 42% to a newly buil t BOF plant.90 In the case of cement, techno-economic studies for theoretical cement plants estimate CO₂ abatement costs at approximately EUR 47.3–60.2/tCO₂ for oxy-fuel technologies and EUR 77.4–129/tCO₂ for post -combustion capture. 91 A detailed analysis of the availability and economic viability of industrial decarbonisation technologies and their cost evolution is presented in Annex 7. A large majority of respondents (85% - 266 out of 314) to the Public Consultation point to limited access to affordable decarbonised energy and high operational and capital costs (n=260, 83% and n=251, 80%, respectively) as critical barriers. 2.2.3.1 Driver 5: Lengthy, fragmented and uncertain permitting procedures for decarbonisation projects Industrial manufacturing activities can have significant impacts on the environment beyond CO2 emissions (e.g., SOx, NOx, dust, dioxins, waste generation, water, resource consumption). EU and national legislation have regulatory frameworks to address these impacts. Industrial plants show compliance with the legislation via permits, processed and gr anted by national, regional or local authorities. While permitting is not an exclusive trait of industries (including EIIs), industrial activities are a considera ble source of pressure on the environment. As such, as mentioned below, the permit-granting process can be particularly cumbersome for them - the higher the environmental hazard, the more complex permitting can become. In the context of Europe’s decarbonis ation transition, where the investments needed are extremely large, the complexity and duration of permitting processes can be an obstacle to investing in Europe and therefore impact its ability to decarbonise. Permitting process has been recognised as a m ajor challenge for project development.92 The evidence gathered via stakeholder consultations, as well as internal Commission analysis through the implementation of Union funding for industry showed unnecessarily lengthy and complex industrial permitting. See Annex 2 for more detail. The issues identified are common to the different manufacturing sectors, however industrial projects that need to drastically change their processes in EIIs sectors face an extra layer of difficulty due to the innovative and 89 Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B), p. 99. 90 BloombergNEF (2024). Numbers are averages and may vary due to the abundance of cheaper renewable energy. 91 Marmier, A. (JRC) (2023). Decarbonisation options for the cement industry. 92 2025 annual knowledge sharing report of the Innovation Fund: De-risking innovative low-carbon technologies. 17 impactful nature of their projects. Almost half of the respondents to the Innovation Fund Sharing Report note that the novel nature of their operation does not fit well in the existing permitting procedures. 93 For Innovation Fund projects, the time required for granting the permits after the applications were filed was on average 16.4 months. Almost 45% of projects estimated that their permit-granting processes would require from 12 to 48 months.94 More than half of the projects indicated that in the end they required more time than originally foreseen.95 The complexities and delays stem from several factors, which are closely related to the administrative setting of each Member State. The most important factors include the numerous authorities involved in the permit-granting process (5 to 10 different authorities can be involved for a single project) 96, unclear or insufficient details on the necessary information to be submitted, lack of administrative capacities in Member States, potential inconsistencies between EU and national regulatory framework implementation, or low levels of investments by Member States in digitising permitting systems. Results from the Public Consultation show that permitting is seen as a major bottleneck (82% - 256 out of 314), with 69% (218 respondents) agreeing that challenges related to permitting are widespread and different ( n=222, 71%) across Member States. A fragmented regulatory landscape and complexity of the process (n=187, 60%) and multiple authorities involved in the permitting process (53%, of businesses and business associations) are flagged as main challenges. SMEs in particular (59% - 40 out of 68) point to a lack of administrative capacity. 65% of respondents to the Innovation Fund survey on permitting, ranked the permit -granting process among their top challenges.97 2.2.3.2 Driver 6: Difficulty to access resources (e.g. inputs and funding) For a project developer to proceed with a specific investment project, several elements are needed to make that commitment such as financing, and access to the energy grid. Industrial decarbonisation requires substantial investments and needs to attract private investors. In the past six years, despite many announcements, less than one-third of industrial decarbonisation projects in large energy -intensive sectors have reached final investment decisions, and almost half remain unimplemented (see Driver 3). A recurrent issue for decarbonising industrial facilities is securing a timely connection to the energy grid.98 Timely feedback is crucial from a business planning perspective, affecting the business case of each application and hence overall competitiveness. However, at least 15 Member States have experienced queuing problems, which slows down the clean transition and European economic growth. 99 This challenge differs between Member States , connection levels, generation and demand side. In case of not meeting technical requirements or potential impacts on the security of the electricity grid due to insufficient capacity, grid connection may 93 Permitting novel production processes is addressed to some extent at the EU level by the revised Industrial Emissions Directi ve, which contains specific permitting flexibilities for the implementation of 'deep industrial transformation’, where more time is granted for innovative installations to comply with permit conditions. 94 27% of respondents indicated 12 to 24 months, 9% from 24 to 36 months and 9% from 36 to 48 months. 95 Most of them (12 projects) required less than one additional year to have their permits granted. 8 projects used the same amount of time as they had estimated, and only a few projects (5) could save time in the permission process. Within the group of 28 projects, all biofuels and bio- refineries projects (3) and chemicals projects (3) needed more time for the permitting process than anticipated. Fund project s participating in the survey were signed between late 2021 and late 2023 and results may therefore be skewed towards projects with shorter permitting periods. 96 Innovation Fund survey on permitting showed that 51% of the respondents found the high number of public authorities involved in the permitting procedures as a challenge. 97 2025 annual knowledge sharing report of the Innovation Fund. 98 Almost half (47%) of the Innovation Fund survey respondents highlighted their energy connections as an issue. 99 Study on network development planning, tariff structures and connection requests for electricity distribution grids, 2025,Publications Office of the EU, [forthcoming]. 18 be refused. For example, in 2024 in Spain, 11 GW of connection requests coming from industry were rejected. Barriers to finance . Multiple funds are available at the EU level ( e.g. the Recovery and Resilience Facility (RRF), InvestEU, the Innovation Fund, Horizon Europe, the Research Fund for Coal and Steel, the Modernisation Fund, the LIFE programme, and the Social Climate Fund). Programmes like InvestEU have played an important role in mobilising private capital and de -risking investments in decarbonisation projects . However, the broader EU funding landscape remains complex to access and fragmented. Under directly EU managed funds, the Innovation Fund reinvests a portion of EU ETS revenues to support the decarbonisation efforts of the EIIs. However, applications meeting the f unding criteria tend to exceed the number of projects funded by a considerable margin. At Member State level, only a limited amount of ETS revenues is dedicated to investment in decarbonisation.100 Beyond grid access and access to finance, industries also face increasing difficulty in accessing critical and other raw materials at competitive prices and/or quantities. The rapid global race for clean -tech manufacturing has intensified demand for both primary and secondary raw materials, many of which are diverted to third countries offering higher prices or fewer export restrictions. This challenge is compounded by third countries increasingly using export controls to secure domestic supply most notably and recently China101, which has recently added restrictions to exports which now also include rare earth elements and other inputs critical for magnet and clean -tech production. At the same time, Europe faces the paradox of valuable secondary raw materials such as metal scrap being exported to third countries rather than reprocessed domestically, reducing availability for EU clean -tech and industrial producers .102 These developments heighten input cost volatility and strategic uncertainty for EU industries. Respondents from the Public Consultation also identified permitting times for grid access as around 24 – 120 months, with the process sometimes taking much longer. Timeframes differ however by country and regions. Main issues identified, aside from lengthy timelines, were limited grid capacity, and legal timelines not being enforced or misaligned with reality on the ground. 100 Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B) , p. 100 . In 2023, 67% of revenue used domestically went to domains of energy supply, grids and storage (e.g. renewables, self-consumers), and public transport and active mobility (Use of auctioning revenues generated under the EU Emissions Trading System | European Environment Agency's home page). ETS investment is channelled to priority areas, such as renewable energy production, energy networks and interconnectors, energy efficiency and the just transition. 101 China’s new export controls now require government approval for the export of magnets containing rare earths, and plans to add five more elements (holmium, erbium, thulium, europium, ytterbium) to its control list. Financial Times, 20 October. 102 The Commission noted declining scrap availability in the EU due to “scrap leakage” to third countries and has activated a customs surveillance system for ferrous, aluminium and copper scrap to ensure sufficient access for EU industries. 19 Figure 3: Problem tree 2.3 How likely is the problem to persist? The need to decarbonise industrial manufacturing and to improve its competitiveness will remain a high priority for the EU and is also highlighted in the 2025 Strategic Foresight Report103, which stresses that Europe’s resilience and prosperity depend on accelerating industrial transformation while safeguarding competitiveness and strategic autonomy. The EU ETS, including its planned review in 2026, provides incentives to decarbonise, but it will not be sufficient on its own to fully unlock the investments in low -carbon technologies. Investments are slowed down due to an ETS price not sufficiently high, and key barriers such as permitting bottlenecks and too high capital and operational costs. Today, the carbon price ranges between 70 -80 EUR/ton ne, while studies point at a much higher price to make investments in low-carbon technologies commercially viable.104 Over time, decarbonisation technologies like clean hydrogen, electrification of high - temperature processes or CC(U)S are expected to become more cost-effective105, especially as the EU ETS tightens, strengthening the incentive to decarbonise. However, in the short -to- medium term, the pace of decarbonisation remains too slow, driven by factors such as financing gaps, lack of incentives, permitting delays, infrastruc ture deficits, slow technology adoption, and a shortage of skilled workers. The price signal alone will not be sufficient to address on its own all the above drivers. At the international level, competitors to EU EIIs are not subject to equivalent carbon pricing measures, making the risk of carbon and investment leakage likelier to materialise. The CBAM and its review should help alleviate some of these impacts, notably by addressing the risk of circumvention. However, until low-carbon technologies and products reach cost parity with conventional alternatives, the problem is likely to remain. Without additional policy measures to foster a competitive market for decarbonis ed industrial products now, the EU risks losing strategic manufacturing sectors that are critical for its resilience and economic security. In other words, while emissions abatement might be achieved and climate targets met, these may result from reduced industrial output, rather than more 103 European Commission (2025). 2025 Strategic Foresight Report, COM(2025) 484 final. 104 According to Agora Industry, by 2030, the average CO2 abatement costs of all steel breakthrough technologies expected to be commercially available will be well above EUR 86/tCO2. They range from EUR 111/ tCO2 (NG-DRI-EAF-CCS) to USD 171/tCO2 (100% H2-DRI-SMELT- BOF). A CO2 price of EUR 86/tCO2, in isolation, would likely not be enough to make these technologies competitive. Source: Agora Industry, Wuppertal Institute and Lund University (2024): Low-carbon technologies for the global steel transformation, 2024. 105 See Annex 7 – Overview of cost evolution of industrial decarbonisation technologies. 20 efficient technologies. This gap can be quantified by looking at the drivers of recent emissions trends. According to the Climate Action Progress Report 202 5, the EIIs industrial production installations covered by the ETS reduced their GHG emissions year on year by 6.4% in 2022, 7.5% in 2023 and 0.8% in 2024 , due to a combination of a reduced output and efficiency gains.106 Zooming in on the specific iron and steel case, Figure 4 shows that over the past six years the emissions reduction was mainly driven by changes in the production activity level, rather than in emission intensity.107 Figure 4: Iron and Steel: EU GHG Emissions drivers 2018-2024 (ktCO2), European Commission JRC analysis Past trends combined with recent announcement of projects being stopped, indicate that strategic sectors could face further decline, ultimately undermining the EU’s long -term economic growth, technological innovation, and resilience. In strategic sectors, this could also lead to greater dependencies. On the demand side, only a limited share of industrial buyers is currently willing to pay a ‘green premium’ for energy-intensive materials. While some recent EU (product) policies address the environmental or energy performance of the product or building in scope, they do not systematically look into the value chain, nor go as far as setting minimum requirements for the use of low -carbon materials in such products/ buildings. 108 The structural disadvantages companies face in Europe (e.g. higher energy prices or reliance of certain raw materials), combined with unfair global practices, will continue to put Europe at a systematic risk of overdependencies. On public procurement, auctions and public support schemes, the NZIA has recently introduced resilience requirements for a range of clean -tech products. While this will decrease the dependencies from a single third country of supply, it will not be sufficient for these industries to ramp up at sufficient scale to compete with already established foreign markets and global overcapacities. In fact, as regards solar PV systems and batteries, the risk exists that Chinese companies would be able to supply the Eu ropean market through factories built outside of China, in other Southeast Asian markets, and thereby circumventing the rules put in place by NZIA. According to BloombergNEF, investments in solar PV already appear to be shifting 106 European Commission (2025), Climate Action Progress Report, p.94. 107 Internal calculation based on JRC-IDEES and CETO 2024/ LMDI. The Log-Mean Divisia Index (LMDI) is a method used to decompose changes in an aggregate variable, like CO2 emissions, into the contributions of its constituent factors over time. Sectoral analysis in Annex 7. 108 This is the case of the Construction Products Regulation (CPR), or the Ecodesign for Sustainable Products (ESPR), the End-Of-Life Vehicles and the EPBD. See more details in Annex 8. 21 away from China as domestic manufacturers are investing in factories abroad, also in response to the US tariffs and imports restrictions on China .109 When it comes to batteries, Chinese companies have heavily invested in Indonesia and Morocco 110, while markets such as India, Türkiye and Brazil are leveraging tariffs to attract Chinese investment.111 The challenges facing the EU’s clean tech sectors are structurally embedded and unlikely to resolve without targeted intervention. Battery and PV manufacturers located in the EU are caught in a strategic squeeze: on one side, they face fierce price competition from third-country producers. On the other side, these same countries control access to critical upstream components and technologies, enabling them to restrict exports or inflate supply costs, further undermining the competitiveness of EU manufacturers. On vehicle components, data (as described in Annex 7 on sectoral analysis), show an increase of delocalisation of production in the past few years, which is likely to persist over time unless mitigated by policy measures, as EU suppliers continue to face unfair competition. The expected benefits of foreign investments depend on the business model and governance pursued by the investor for its European affiliates. Without conditions, EU firms may remain locked into high -cost abatement pathways since foreign investors face little obligation or commercial incentive to locate their R&I, engineering, or advanced processes within the EU . A clear illustration is the Tesla –CATL partnership in the United States, where investment incentives were tied to local content, technology transfe r and domestic battery supply chains. This has led to the localisation of advanced cell manufacturing and R& I activities in the U.S. In contrast, similar investments in Europe by the same actors have largely focused on assembly and final integration, with limited technology transfer or anchoring of critical value chain segments. Targeted improvements aimed at streamlining permitting procedures have been implemented for the deployment of specific sectors like energy infrastructure, renewable capacities, critical raw materials projects or net-zero technology manufacturing projects. In addition, the Industrial Emissions Directive (IED) was recently amended to facilitate environmental permitting of industrial installations. However, no current initiative addresses the entire industrial manufacturing sector, nor the entire permit-granting process from start to finish. Consequences of the problems Regions that are currently home to EIIs face risks of further economic and social decline, with significant regional disparities in employment and prosperity in the Single Market. This vulnerability echoes the broader megatrends identified in the 2025 Strategic Foresight Report112, which emphasises the growing regional and social disparities as a key test for Europe’s resilience by 2040. EIIs, batteries, automotive and PV industries risk losing further market share, technological leadership, and becoming locked into deeper strategic dependencies. This would directly undermine the EU’s ability to deliver on the “promote” pillar of the European Economic Security Strategy .113 Asymmetries in global investment conditions place EU industry at a 109 BloombergNEF.Clean Tech in the Time of Tariffs. 110 Volta Foundation (2025). 2024 Battery Report. 111 BloombergNEF. Clean Tech at Heart of Growing Tariff Storm.. 112 European Commission (2025). 2025 Strategic Foresight Repor, COM(2025) 484 final. 113 European Commission (2023). Joint Communication to the European Parliament, the European Council and the Council on “European Economic Security Strategy”. 22 structural disadvantage compared to global competitors who benefit from strong conditionalities and incentive frameworks that maximise spillovers.114 For the EU, continued clean technologies dependency means that the domestic battery and PV production will remain vulnerable to external shocks, price manipulation, and supply disruptions. China’s recent export restrictions on key battery technologies, including lithium - ion battery cells and packs, key production equipment and technologies link ed to high -end batteries and graphite anodes, cathode material processes and lithium refining, signal a strategic shift toward consolidating its dominance and limiting foreign access to critical capabilities.115 Without additional policy measures, EU PV modules dependency on China could rise to 98% of the value chain . According to the Solar Alliance, which has set the target of achieving 30 GW manufacturing capacity along the value chain, if this goal is not met, Europe would miss out on creating more than 40 000 highly skilled jobs.116 When it comes to the automotive industry, the cost disadvantage of manufacturing key automotive components in the EU is combined with increasing pressure from Chinese imports, the impact of tariffs on the US market and increasing tendencies for local content requirements in other jurisdictions 117, and in some cases the technological gap vis -à-vis non -EU manufacturers. Further competitiveness losses in the EU automotive industry may increase the risk of delocalisation of component manufacturing outside the EU , possibly contributing to economic security risks. It is therefore critical to pursue the active reinforcement of cooperation with other countries to strengthen the resilience of EU supply chains. In addition, declining domestic manufacturing capacity increases the risk of “cumulative vulnerability” across interconnected value chains, where disruptions in one critical input can cascade rapidly - from the component to the raw material - and impede the Union’s ability to maintain continuity of supply, manage emergencies and safeguard public order. This trend seems to be accelerating, and as a short -term impact 76 000 job losses have already been announced among the automotive suppliers, and up to 50% of the production is at risk in the next five years.118 3 Why should the EU act? 3.1 Legal basis The initiative intends to increase decarbonised and resilient industrial production in the manufacturing industry, with a focus on energy -intensive industrial sectors and clean technologies. It intends to facilitate the harmonisation of the definitions of low-carbon industrial products, support European lead markets for the development, production and diffusion of clean tech in industry, streamline across EU Member States related planning, tendering and permitting processes, as well as address the fragmented approach of EU Member States towards foreign investments. Article 114 (Single Market) of the Treaty of the Functioning of the European Union (TFEU) is the appropriate legal basis. Article 173, on the other hand, is not considered an appropriate l egal basis as it does not allow for harmonisation measures on the internal market, which remains the aim of measures included in IAA. Article 207 of the TFEU may be required depending on the specific measures proposed to address the fragmentation of foreign investments in EU Member States. 114 Draghi, M. (2024). The future of European competitiveness: A competitiveness strategy for Europe (Part A), p.13 115 China Issues New Rules on Exports of EV Batteries and Materials, Institute for Energy Research, and MOFCOM & GAC Announcement (2025) N. 58: Decision to Impose Export Controls on Items related to Lithium Batteries and Artificial-Graphite Anode Materials 116 SolarPower Europe (2025). EU Solar Jobs Report 2025. 117 More details (also related to local content requirements in public procurement procedures) in Annex 10, Subproblem 1, Driver 2: Limited willingness to pay a premium for low-carbon industrial products. 118 CLEPA – Eurofund, Geripsa (2025). 23 3.2 Subsidiarity: Necessity of EU action Industrial decarbonisation, as well as c ompetitiveness, sustainable prosperity, industrial security and resilience are matters where EU action is needed . No single Member State alone is capable of effectively addressing industrial decarbonisation due to the integrated nature of the challenge. A harmonised EU-level approach is therefore necessary to avoid Single Market fragmentation and adequately address the urgency of the problems while protecting the level playing field as well as addressing administrativ e bottlenecks like permitting . Furthermore, climate change is a trans -boundary issue requiring international and EU action to effectively complement and reinforce regional, national and local action. 3.3 Subsidiarity: Added value of EU action While national measures may address parts of the challenge, they risk fragmenting the Single Market and undermining collective effectiveness. Given that supply chains are deeply integrated across Member States, a coordinated EU -level approach is essential. It enables economies of scale and solutions that fit the scope of the problem and helps prevent inefficiencies and duplication. In line with this logic, each policy option (PO) focuses on areas where there is a demonstrable value added in acting at Union level due to the scale, speed and scope of the efforts needed. 4 Objectives: What is to be achieved? 4.1 General objective The general objective is to increase decarbonised and resilient industrial production in the EU manufacturing industry, with a special attention on EIIs and clean technologies , considering their contribution to Europe’s competitiveness, economic security, and sustainable economic growth, in line with the Clean Industrial Deal’s objectives. Progress regarding the general objective will be measured by monitoring the carbon intensity of EII production, as well as production capacities and output for the EU in EIIs, certain clean tech and vehicle components. 4.2 Specific objectives This overall objective is broken down into five specific objectives (SOs), related to the problems and drivers: 1. Facilitate differentiation for low-carbon industrial products to increase their value and marketability (SO1 addressing problem driver 1); this will be measured by an indicator on the availability of a low-carbon label for relevant industrial products, supported by a robust verification mechanism. 2. Boost demand for European low -carbon products and clean tech, (SO2 linked to problem drivers 2 and 3); measured by the share of EU and low -carbon production in EU consumption for relevant products, 3. Maximise the quality and benefits of foreign investment in the EU (SO3 linked to problem driver 4); measured by number of joint ventures for relevant sectors that create European added value, innovation and industrial resilience. 4. Speed-up and simplify permits for industrial decarbonisation (SO4 linked to problem driver 5); measured by the average permitting times 5. Increase investment projects in industrial areas (SO5) measured by the number of industrial Final Investment Decisions (FID) realised in relevant areas 24 Figure 5: Problem drivers and specific objectives 5 What are the available policy options? 5.1 What is the baseline from which options are assessed? The current baseline presents a structural imbalance in Europe’s industrial transition: emissions are decreasing, but they are largely driven by shrinking production rather than cleaner production methods taking hold. Figure 6 below illustrates past and potential future trends for the EU iron and steel sector, as an example . Between 2005 and 2023, CO₂ emissions and production volumes have moved almost in parallel.119 Figure 6: EU Iron and steel: production level and CO2 emissions (2023-2050) Looking at the emissions projections extrapolated on the historical trends of production and emissions, although in reach, they will need to decline much faster to meet the EU 2030, 2040 and 2050 climate targets. While CO 2 emissions reductions and production levels remained relatively correlated so far, emissions will have to be reduced much faster in the next decade. The EU remains firmly committed to achieving climate neutrality by 2050, including the 119 Source data 2005-2023: JRC-IDEES, consistent with EUROSTAT data. Source projections 2024-2050: internal calculations and JRC CETO 2025, developed with POTENCIA. 25 intermediate target of a 90% reduction in net greenhouse gas emissions by 2040 .120 But i f decarbonisation remains at today’s pace and is not accelerated, the EU will still be able to achieve its emissions reduction targets, thanks to the EU ETS, but such targets will be met by reducing industrial production, as recent trends have shown. Looking at the iron and steel example, if the trend of industrial production between 2005 and 2023 persist, the production projection shows that the sector is expected to shrink by almost 60% by 2050 compared to the 2023 baseline. In parallel to the EU ETS, the CBAM will gradually replace free allowances to prevent carbon leakage and ensure that imports reflect an equivalent carbon cost. Its implementation from 2026 is expected to support the competitiveness of EU producers that invest in cleaner technologies. The 2025 CBAM review is also expected to tighten the system, but its impact cannot be quantified at this stage. The baseline therefore assumes continued ETS-driven decarbonisation reinforced by a progressively more stringent CBAM regime, though with re sidual uncertainty regarding its effectiveness. Annex 8 presents the details of the baseline scenario , and includes the analysis like the above for aluminium, cement, and chemicals. While industry is willing to invest in decarbonisation, and has taken important initial steps, concrete decisions risk not materialising fast enough to reduce emissions at the pace required to be on track to meet the EU climate targets. This is substantiate d by clean projects announcements as reviewed in Driver 3. Looking at each specific objective, the baseline scenario would result in no common definition, methodologies or minimum threshold for low -carbon industrial products. Furthermore, while existing public procurement rules establish how to buy, they fall short of addressing what to buy in terms of low-carbon criteria. Current green public procurement practices remain largely voluntary, sectoral, fragmented, and inconsistently applied across Member States. Voluntary resilience criteria are even less considered in the current procurement procedures, as they are a recent concept that will only become mandatory for some products from 30 December 2025 under the NZIA. Additionally, in the NZIA, resilience criteria refer to components, not specifically to the energy-intensive materials used. As such, the viability and competitiveness of European projects across the entire upstream value chain will continue to be undermined by the economic pressures outlined above and the lack of investments in innovation, resulting in a widened technological gap vis-à-vis a non-EU manufacturer. The International Energy Agency (IEA) indicates that China’s predominant role in global solar PV production will remain largely unchanged until 2035, with only a slight decrease as PV manufacturing facilities in other regions begin to materialize.121 While promoting resilience and diversification, t he NZIA does not ensure sufficient support for scaling up EU-based solar manufacturing. Its rules allow PV modules to qualify as “compliant” even if all components are sourced from Southeast Asia, where Chinese Tier 1 firms already operate large hubs. As a result, a product with no European-made content can still meet the NZIA criteria and undercut EU producers in price-sensitive auctions. In the EU battery ecosystem, manufacturing capacities for battery cells and other key components remain largely dominated by foreign companies. Currently, South Korean firms account for 82% of the installed battery cell production capacity, while European companies represent only around 8%. However, ongoing investments are set to significantly boost European production by 2030, with their share expected to rise to approximately 25% based on 120 European Commission (2025). The Clean Industrial Deal: A joint roadmap for competitiveness and decarbonisation, COM(2025) 85 final, 26 February 2025. 121 IEA (2024), Energy Technologies Perspectives 2024. 26 industry announcements. Despite this growth, Asian players, pushed by Chinese investments in the sector, will continue to lead, holding a combined 54% share of installed capacity. Notably, Chinese companies are projected to become the most dominant, with a 34% share, while joint ventures between European and Chinese firms are expected to contribute a further 7% to the total installed capacity. When it comes to key battery components, Chinese firms are expected to lead cathode active material production by 2030 with 44% of installed capacity, followed by the EU with 32% and South Korea with 19%. For anode active material s the projections are more diversified in terms of ownership with the installed capacity coming from companies from Australia and New Zealand (28%), followed by Europe (23%) and China (20%).122 While the efficiency of the permit granting procedures for some decarbonisation projects is expected to improve, most manufacturing industries are not covered under existing frameworks and can continue to face complex and lengthy permitting procedures. The proposal for Simplification of administrative burdens in environmental legislation 123 is expected to streamline environmental assessments, but the overall permitting process from start to finish, beyond environmental permits (such as construction, operational and safety, land use or zoning permits) remains an untargeted field for simplification for the industrial manufacturing. While the grids package will tackle grid planning to remove bottlenecks, the difficulty to de -risk investments and access funding would remain, with Member States struggling to identify relevant projects to focus their efforts on better framework conditions. Against this baseline, the competitiveness and decarbonisation of Europe’s manufacturing industries, notably EIIs and some clean energy technologies, is unlikely to improve in the coming years without further action. The Commission’s JRC has estimated that for each 1% loss of final demand in EIIs in the EU, the potential impacts would be the loss of 28 000 jobs, EUR 2 billion in value added and EUR 6.4 billion in turnover .124 The EU’s share in global manufacturing value added has already declined steadily over the past decade, while new investments increasingly flow to regions offering lower energy prices, faster permitting, and stronger industrial incentives. This erosion of industrial capacity risks turning Europe into a net importer of both clean and conventional industrial products, with strategic implications for economic security and the resilience of its value chains. 5.2 Description of the policy measures Table 1 summarises the main policy measures, which are further explained in Annex 9. Table 1: Main policy measures Specific objectives Measures considered Policy design elements (SO1) LAB 1 - Development of a low -carbon product label for all EIIs Focussed on principles LAB 2 - Development of a low -carbon product label for steel LAB 2.1 - Determination GHG -intensity and system boundaries LAB 2.2 - Classification LAB 2.3 - Ensuring data quality (SO2)125 LEAD_EII 1 - Low-carbon requirements on EIIs products used in public procurement and support schemes in selected downstream sectors Scope: EIIs (i.e. steel, cement and aluminium) outputs used in automotive and construction sectors Low-carbon: minimum percentage (%) of low-carbon steel in automotive and construction 122 European Battery Alliance and industry announcements. 123 COM(2025) 981 final 124 CARMEN is a linear model, where a 10% decrease/increase in global final demand would yield a result 10 times worse/better tha n the baseline. To facilitate understanding, a 1% reduction is used as a reference point, providing a more manageable and comparable outcome. See Annex 4 Section 2.4 for the original values on impact on global final demand. 125 A detailed overview of all LEAD measures including scope considerations and targets definition for specific objective 2 can b e found in Annex 9 27 LEAD_EII 2 – Low-carbon and Made in EU requirements on EII products used in public procurement and support schemes in selected downstream sectors % of low -carbon cement used in vehicles and construction projects Made in EU : minimum percentage (%) of materials produced in the EU in vehicles and construction projects should be made in EU Target: see table 3 below LEAD_EII 3 – Low-carbon and made in EU requirements for EII products placed on the market in selected downstream sectors LEAD_BAT 1 – Made in EU requirements in batteries for public procurement, auctions, and public support schemes Scope: Batteries Made in EU : minimum number of the main components of the battery end -product manufactured in the EU Target: see table 3 below LEAD_BAT 2 – Made in EU requirements in batteries placed on the market LEAD_SOL 1 – Made in EU requirements in solar PV systems for public procurement, auctions, and public support schemes Scope: solar PV systems Made in EU : minimum number of main specific components of the PV end-product manufactured in the EU Target: see table 3 below LEAD_SOL 2 – Made in EU requirements in solar PV systems placed on the market LEAD_VC 1 – Made in EU requirements for vehicle components for public procurements126 and support schemes Scope: Electric vehicle127 components (excluding batteries) Made in EU : minimum share (%) of EU -made components over total components, in value, excluding batteries.128 Target: see table 3 below LEAD_VC 2 – Made in EU requirements for vehicle components placed on the market (SO3) INV 1 – Guidance on voluntary FDIs conditionalities Scope: Battery supply chain and other critical supply chains. Conditionalities129: a. Ownership and structural requirements AND/OR b. Value added production (EU sourced inputs, EU - based staff recruitment) AND/OR c. Technological advancements (e.g. equipment ownership, intellectual property) INV 2 – Mandatory FDI conditionalities EU- wide (SO4) PERM 1 – One project-one digital procedure Scope: all industrial manufacturing sector s (NACE code C) • One project-one digital procedure for all permits, including relevant environmental assessments • Fully digitalised process • Standardised data sets130 • Technical assistance PERM 2 – One project –one digital procedure, and special focus on EIIs Scope: PERM 1 and, for EIIs, • Mirroring basic NZIA permitting provisions for all (Single point of contact, time limits) • “Overriding Public Interest” presumption • Regulatory sandboxes for Renewable fuels of non-biological origin (RFNBO) • Tacit approval at intermediate stage PERM 3 – Dedicated measures for industrial manufacturing clusters Scope: PERM 2 and in addition, for industrial areas: • Tacit approval for all manufacturing industries in areas 126 The definition of public procurement used here includes procedures that concern 1) contracts for the purchase, lease, rent or hire-purchase of vehicles and 2) the public service contracts having as their subject matter the provision of services that imply the usage of vehicles. To avoid distortions, vehicles first registered on the Union territory before the entry into force of the measure should be deemed to comply with the requirement until a certain date. 127 In the present document, ICE includes mild hybrids, and EVs include battery electric, plug-in hybrid and fuel-cell electric vehicles. However, the model used to assess the impact of the measures does not include the FCEVs due to the current statistical irr elevance. When referring to vehicles, the definition includes passenger cars, light commercial vehicles, buses and lorries. 128 Vehicle components are valued at ex -works prices. The methodology used in this Impact Assessment to determine the targets may be subjected to fine-tuning based on further development and additional information that may become available over time. 129 The list of incomplete but possible conditionalities considered for the legislative initiative is presented in Annex 9, while examples of conditionalities applied by third countries are provided in Annex 13. 130 Mandating the storage/depository and re-use of data in electronic forms for interoperability purposes. 28 • Priority assessment by Distribution System Operators of connection requests to energy infrastructure in acceleration areas • Environmental Impact Assessment derogation • Emission exemptions for construction phase for CCS related projects (SO5) AREA 1 - Recommend Member States to facilitate public funding for projects in industrial areas Criteria definition based on: • Economic security potential • Decarbonisation potential , including links with steel label • Deployment potential , including employment and skills considerations AREA 2 - Member States to designate industrial areas and facilitate access to public funding AREA 3 - Commission to designate industrial areas according to the selection criteria and giving the projects priority access to funds Structure of the policy options The POs are structured from a low degree of intervention (PO1) to a high degree of intervention on the measures proposed (PO3). Intervention should be understood in the context of each specific objective, e.g.: for permitting or the low -carbon label, each PO becomes increasingly more prescriptive in the requirements imposed on companies or Member States. In the case of FDI, the measures become more stringent due to their being binding, and for lead markets, the measures increasingly cover more and more market segments (from public procurement only to all products put on the market) either for low-carbon or for made in EU requirements. Table 2: Policy options to be assessed Specific objectives PO1 PO2 PO3 SO1- Low-carbon label LAB 1 LAB 2 SO2 – Lead markets LEAD_EII 1 LEAD_EII 2 LEAD_EII 3 EIIs Batteries LEAD_BAT 1 LEAD_BAT 2 Solar PV LEAD_SOL 1 LEAD_SOL 2 Vehicle Components LEAD_VC 1 LEAD_VC 2 SO3 – Foreign Direct Investment conditionalities INV 1 INV 2 SO4 - Speed-up and simplify permit-granting procedures PERM 1 PERM 2 PERM 3 SO5- Facilitate investment decisions in decarbonisation projects AREA 1 AREA 2 5.3 Options discarded at an early stage AREA 3 (SO5) would mandate the Commission to define industrial areas using the selection criteria and providing projects in these areas with preferential access to funding. This measure is discarded at an early stage as this would require amending other pieces of legi slation, most notable the ETS Directive for the Innovation Fund, where a revision is already foreseen for 2026. IAA is not the right vehicle to conduct such amendments. 29 Table 3: Overview of LEAD measures under SO2 Measures Design elements131 Requirement Market segment Scope & target LEAD_EII 1 Low-carbon: minimum percentage (%) of low-carbon materials used in construction and automotive • Public procurement • Public support schemes • Steel: 25% in 2030 • Cement (concrete132): 5% in 2030 • Aluminium: 25% in 2030 • Other EIIs: to be determined at later stage LEAD_EII 2 Low-carbon: minimum percentage (%) of low-carbon materials used in construction and automotive • Public procurement • Public support schemes • Low-carbon and made in EU Steel: 25% in 2030 • Low-carbon and made in EU Cement (concrete133): 5% in 2030 • Low-carbon and made in EU Aluminium: 25% in 2030 • Other EIIs: to be determined at later stage in delegated acts Made in EU : a minimum percentage (%) of materials produced in the EU used in construction and automotive LEAD_EII 3 Low-carbon: minimum percentage (%) of low-carbon materials used in construction and automotive • All products placed on the market in automotive and construction • Low-carbon Steel: 25% in 2030 • Low-carbon Cement (concrete134): 5% in 2030 • Low-carbon Aluminium: 25% in 2030 Made in EU : a minimum percentage (%) of materials produced in the EU used in construction and automotive • Made in EU Steel: 85% from entry into force • Made in EU Aluminium: 70% from entry into force • Made in EU Cement: 95% from entry into force LEAD_BAT 1 Made in EU : minimum four main components in EV batteries and three main components in battery energy storage systems (BESS) • Public procurement • Public support schemes • Auctions • EVs: Mandatory Made in EU requirements of at least four components at one year after entry into force, including the battery cell, increasing to 6 components after three years of entry into force, including the BMS and the CAM. • BESS: Mandatory Made in EU requirements of at least three components at one year after entry into force, including the battery pack and the BMS; increasing to 6 components after three years of entry into force, including the battery cell and the CAM. LEAD_BAT 2 • All batteries placed on the market LEAD_SOL 1 Made in EU : minimum number of main specific components in solar PV systems • Public procurement • Public support schemes • Auctions • PV inverter and at least two additional main specific components one year after entry into force. PV inverter and at least three additional main specific components three years after entry into force. LEAD_SOL 2 • All solar PV systems placed on the market LEAD_VC 1 • Public procurement136 131 EU content will be designed in line with the Union’s international commitments. Requirements will be of a temporary nature, include periodic review clauses, and feature safeguards in case of insufficient competition or supply constraints, ensuring proportionality and policy coherence. These elements are integral to all options considered. 132 For the objective of lead markets in the construction sector, the requirement may be established at the level of concrete, as the carbon impact of energy intensive materials depends heavily on the specific design and material mix. 133 Ibid. 134 Ibid. 136 The definition of public procurement used here includes: 1) procedures that concerns contracts for the purchase, lease, rent or hire-purchase of vehicles; 2) procedures that concern the public service contracts having as their subject matter the provision of services that imply the usage of vehicles. To avoid distortions, vehicles first registered on the Union territory before the entry into force of the measure should be deemed to comply with the requirement until a certain date. 30 Made in EU: minimum share in value (%) of EU -made components over total components, excluding batteries.135 • Public support schemes • EVs137: 70% at one year after entry into force (2027) and 75% by 2030 LEAD_VC 2 • All vehicles placed on the market 135 Vehicle components are valued at ex-works prices. 137 In the present document, ICE includes mild hybrids, and EVs include battery electric, plug-in hybrid and fuel-cell EVs. However, the model used to assess the impact of the measures does not include the FCEVs due to the current statistical irrelevance. When referring to vehicles, the definition includes passenger cars, light commercial vehicles, buses and lorries. 31 6 What are the impacts of the policy options? The impacts of the different POs are assessed below taking into account the results of the public consultation and based on internal analysis and external studies. Overall, the initiative is not expected to have an impact on fundamental rights. All measures that include or imply information sharing or reporting should be implemented in line with the principle of digital by default. 6.1 POLICY OPTION 1 6.1.1 Economic impacts 6.1.1.1 Impact on companies LAB 1 - Regarding the differentiation of low -carbon industrial products from conventional ones , PO1 develops a label on the carbon intensity of all energy intensive industrial products. It would have a demand -pull effect, encouraging energy -intensive companies to invest in low-carbon production processes. The label allows companies to gain a competitive edge by accessing new markets which require the use of such label , specifically those to be created under SO2 – Lead markets. This means the label can be used as a compliance instrument to meet the environmental requirements foreseen by public procurement rules or public incentives schemes , as analysed under SO2, measures LEAD_EII 1, 2 and 3. An EU wide label would also mean easier access to green finance or Environmental, Social and Governance (ESG)-linked loans. 61% (191 out of 314 respondents) to the Public Consultation support the introduction of an EU voluntary carbon intensity label, especially for its potential to boost transparency (n=195, 62%), differentiation (n=187, 60%), and uptake of green products (n=160, 51%). Companies that wish to certify their products would incur costs related to monitoring, reporting and verifying, and certifying carbon emissions. Therefore, complementary monitoring, reporting and verification is needed . For products where process emissions represent the majority of the carbon footprint , these should be limited as companies are already obliged to do so under the EU ETS. Likewise, if the companies that wish to certify their products are importers, they would have to face similar costs as thos e faced under the CBAM monitoring, reporting and verification. At the same time, the administrative costs of setting up specific product-labels covering all EIIs would be substantial and would increase significantly the complexity of implementation for regulators. Given the heterogeneity and complexity of EIIs and their value chains, a very wide range of product labels could be envisaged. For instance, today under the EU ETS there are 54 product benchmarks, used to determine how many emission allowances installations receive for free. At least as many product l abels would need to be developed, creating important administrative burden. These costs relate, amongst others, to producing and maintain ing a third-party verified carbon footprint certification system. LEAD_EII 1 introduces low-carbon requirements for EIIs materials used in construction and automotive in public procurement and public support schemes. This measure provides increased security for EIIs to commit decarbonisation investments. The potential of low-carbon demand creation depends on the downstream sectors where the requirements would apply, and the role public procurement and public support schemes play in those markets. 32 In the cement industry, public procurement represents approximately 31% of the overall European cement market.138 This significant share underscores the public sector’s leverage in securing the offtake of low -carbon cement in construction and infrastructure, driving broader market transformation within the cement industry. In the steel industry, however, public procurement, represents a smaller portion of the overall European steel market, accounting for around 11% of apparent steel consumption in the EU. 139 Aluminium is also used in public procurement and it is a light-weight material whose demand is increasing, primarily driven by automotive, building and construction and packaging. More concretely, considering the high shares of vehicles benefitting from public support schemes in the EU market, and the expected increase in aluminium shares in the future140, measures targeting public support schemes would be key to unlock low-carbon aluminium demand. Lead markets measure provides a clear and predictable demand signal for low -carbon materials used in publicly funded projects. Steel producers would be able to deliver certified low-carbon steel to industrial consumers that will benefit from more advantageous conditions to public tenders , and therefore an early market advantage during their decarbonisation. The automotive sector is expected to play a significant role in driving demand for low-carbon steel and aluminium, particularly due to lightweighting needs for electrification in vehicles . However, public procurem ent is not a huge market for the automotive sector, compared to buildings and infrastructure. Of the approximately 15 million passenger cars registered in the EU in 2018, only 0.5% to 3.5% were procured for public sector fleets. 141 Therefore, measures targeting the public sector alone are likely to have a limited impact on driving low -carbon demand for steel and aluminium . The situation is different regarding public incentives and support schemes in the Member States, where according to internal Commission analysis 70% of the automotive market benefits of some sort of support schemes across the EU . Only corporate vehicles registrations make up around 60% of car registrations in the EU.142 Introducing targets for the use of low-carbon materials in the construction and automotive sector would allow the steel and aluminium sectors to gain a green premium, which will partially be passed on into the price of final products (see Section 6.1.1.2). As a result, the steel and aluminium sectors could see an improvement of their sector’s value added. The benefits could reach EUR 686 million for the three EIIs (steel and aluminium EUR 241 million – 0.35%, cement EUR 445 million or 0.65%) combined throughout the EU, in 2030 compared to the baseline year.143 This predictability of future demand for low -carbon materials can help absorb part of the investment’s costs from the low -carbon technologies and has a high potential to further push investment decisions towards decarbonisation. As a matter of example, in the EU steel sector, there are currently at least 29 announced steel decarbonisation projects, with a combined potential capacity of additional 41 Mtonnes of low-carbon steel per year by 2030, that have not yet reached the final investment stage. To that end, the proposed lead market measures, based 138 Bellona Foundation (2024). Green Public Procurement of cement and steel in the EU: An overview of the state of play. 139 VUB Brussels School of Governance (2024). Public procurement of steel and cement for construction, assessing the potential of lead markets for green steel and cement in the EU. Bellona Foundation (2024). Green Public Procurement of cement and steel in the EU: An overview of the state of play. 140 European Aluminium (2023). Aluminium Content in Passenger Vehicles (Europe) - Assessment 2022 and Outlook 2026, 2030. 141 JRC (2022). Revision of the EU Green Public Procurement Criteria for Road Transport. 142 European Commission (2025). Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions Decarbonise Corporate Fleets, COM(2025)96 Final, 5 March 2025 143 Impacts are measured during 2025-2030. These figures result from a simulation of the FIDELIO model, when prices in the automotive and construction sectors are shocked by 0.225% and 0.4499 % respectively, and the resulting general equilibrium effects of higher prices on final demand, incomes and value added are computed. 33 on the current project pipeline, could unlock up to EUR 15.5 billion in investments144 covering approximately 15% of the sector’s EUR 100 billion total investment need by 2050, as estimated in the impact assessment forthe 2040 Climate Target Impact Assessment. 145, 146 Results from the Public Consultation show that here is widespread support (n=280, 89%) for stimulating demand for clean industrial products, including through public procurement ( n=259, 82%) and voluntary EU labelling (n=191, 61%). As part of the targeted stakeholder consultation (EIIs), out of the 62 total replies, 90% agreed that measures to stimulate demand for low -carbon industrial products are essential to drive decarbonisation. Only 4 respondents (6%) disagreed.147 In the non-ferrous metals sector, all 5 respondents raised serious concerns about substitution risks. In price - sensitive markets (automotive, packaging, construction), there is potential for users to switch from low -carbon aluminium or copper to cheaper, higher -emission alternativ es like steel or plastic. Steel stakeholders acknowledged conditional substitution risks. Of 18 responses, 4 state risks are low due to functional superiority of materials in many applications. LEAD_BAT 1 introduces made in EU requirements for four main components in EV batteries and three main components in Battery energy storage systems (BESS) for public procurement, auctions, and public support schemes starting one year after the entry into force of the legislation. These requirements would increase after three years into entry into force. These targets are not limited in time but remain, like all other requirements, subject to a review clause, and will promote the use of EU machinery and equipment when possible. Made in EU requirements will help ensure that existing manufacturing capacities for key battery components are fully utilized, while supporting the successful implementation of projects under construction and those that have been announced or put on hold. The EU battery ecosystem currently has a project pipeline, including expansions, projects under construction, and announced projects, totalling 775 GWh of battery cells, 874 GWh of CAM, 478 GWh of anode active materials (AAM), 663 GWh of separators, and 2 05 GWh of electrolytes. These figures exclude projects currently on hold. For battery cells, approximately 134 GWh of announced capacity is on hold, with an additional 100 GWh having been fully cancelled. In the case of CAM, cancellations total 513 GWh, while for AAM, around 100 GWh of capacity has either been paused or cancelled.148 By leveraging the size of the European market alongside support schemes, with European EV purchase subsidies totalling between EUR 14 billion and EUR 17 billion annually from 2021 to 2024149, Made in EU requirements will help strengthen the EU battery industry by ensuring that value creation takes place within the EU and by reducing strategic dependencies across the supply chain. This will level the playing field against heavily subsidi sed battery industries operating both overseas and in Europe, where some foreign companies maintain key stages of the value chain and the technological know-how in their home countries. Additionally, Made in EU requirements will protect the European battery industry from the disruptive impact of Chinese export restrictions on critical battery technologies and materials. 144 Estimate based on data from BloombergNEF’s Steel Decarbonization Project Database 1.0.5. The cumulative figures of 41 Mtpa of low- carbon steel capacity and the associated EUR 15.5. billion in investments represent only projects whose output meets the indi cative IAA’s carbon intensity label classes of performance (Class A-C). 145 European Commission (2024)., Commission Staff Working Document: Impact Assessment Report (Part 3), accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Securing our future - Europe's 2040 climate target and path to climate neutrality by 2050, building a sustainable, just and prosperous society, COM(2024) 63 final, pp.164-167. 146 Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B), p. 99. 147 One from the ceramics sector, one from the non-ferrous metals and two from other sectors. 148 European Battery Alliance and BloombergNEF. 149 MIT CEEPR. Global Clean Investment Monitor: Government Support for Electric Vehicles and Batteries. Data represents the EU-27 and the United Kingdom. – The value has been exchanged from USD to EUR. 34 By anchoring more stages of the battery value chain within Europe, this measure will not only reduce the battery industry’s exposure to geopolitical risks but also ensure that public support translates into industrial resilience and long-term competitiveness. The impact of Made in EU requirements also extends to the extraction and processing of critical raw materials, where creating strong and predictable demand is essential to de-risk investments.150 In public procurement and auctions, EVs are only marginally affected, except for urban buses, thus the impact will be limited to around 3.5% of the total EV demand151, whereas BESS have a bigger exposure due to its growing reliance on public auctions, which in 2024 accounted for 5% of the total BESS deployment. 152 The proposed phased approach to introducing Made in EU requirements in BESS would help mitigate the impact on prices while enabling the EU to gradually build up its domestic value chain. Based on the analysis on batteries for EVs in Annex 4, section 2.2, Made in EU requirements in public support schemes may raise passenger EV costs between EUR 360-900 in 2030, which could affect affordability and competitiveness in cost -sensitive markets. In 2024, all Member States had some type of tax benefit or purchase incentive for EVs 153, however this will slow down as EV uptake keeps growing. A phased implementation starting with Made in EU requirements for batteries of four components for EVs, including the battery cell, at entry into force, plus the support schemes themselves would help absorb the impact. According to industry announcements and demand estimates154, battery cell installed capacity in 2025 could meet around 90% of the EV battery demand. While actual production falls short of installed capacity, a significant share of EVs on the EU market are already powered by battery cells manufactured within Europe , indicating that the cost impact of local production is already being absorbed to a large extent by the market. LEAD_SOL 1 introduces Made in EU requirements for three main specific components in solar PV, starting one year after entry into force, and four main specific components three years after entry into force, in public procurement, auctions, and support schemes. Made in EU requirements will ensure the retention of existing manufacturing capacities for solar PV modules and inverters, while enabling the scaling -up of further components and supporting the implementation of both the current project pipeline and projects under construction or announced. The component related targets have been set taking into account the assessed project pipeline and thus introducing a Made in the EU requirement one year after the entry into force of the IAA would be feasible (see Annex 9 for detailed assessment). The impact of this measure would be to reduce the investment risks and improve market access for EU-based solar manufacturers . Companies willing to participate in tenders will have to localise manufacturing or partner with EU suppliers, hence supporting industry growth and job creation. This should therefore facilitate manufacturing projects reach final investment decision.155 Scaling up the industry here will also ensure investments also in innovation and research in Europe. At least 12 GW of manufacturing capacity is on hold and at least 4 GW is shut down due to insecure and unstable business case for manufacturing PV in the EU at the moment. Despite the existing challenges, a strong project pipeline exists which, if realised , could increase the manufacturing capacity by 2030 for ingot from less than 1 GW today to 20 150 The first list of EU strategic raw materials projects is expected to make a significant contribution to the EU’s demand for r aw materials needed for the batteries supply chain. 151 European Commission internal calculation 152 Statista. 153 ACEA (2024). Electric cars: Tax benefits and incentives (2024). 154 European Battery Alliance. 155 See Annex 11 for projected EU supply chain developments as a consequence of NZIA implementation and IAA measures. 35 GW, for wafers from less than 1 GW to over 30 GW, cells from 2 GW to over 30 GW, modules from 8 GW to over 40 GW, and inverters from around 80 GW to more than 100 GW.156 LEAD_VC 1 – The impact of LEAD_VC is assessing based on a model developed by the Commission’s JRC (For further information about the methodology and assumptions, see: Annex 4). As vehicle manufacturers will have the incentive to comply with the target to have potential access to public subsidies, the model projects an increase in EU vehicle component suppliers’ sales to the manufacturers of EUR 6.5 billion in 2027 and by EUR 6.9 billion in 2030 when aggregating the sales in all three vehicle segments .157 Following the sensitivity analysis carried out in Annex 15, the cross-region elasticity (i.e. substitution between EU- and non-EU-made EVs) is the parameter that affects mostly the results for EU EV manufacturers, vehicle component suppliers, and the value added generated. However, the values do not significantly affect the outcome of the policy's economic effects. INV 1 – Voluntary FDI conditions would create only limited and uneven effects: companies in Member States that apply the guidance may face modest requirements, while those investing elsewhere would see no change at all. While such measures could send a positive market signal, they would not prevent a ‘race to the bottom’ across the Single Market. However, the voluntary approach does not fix the core problems. Companies can simply avoid any obligations by choosing more permissive Member States, and even implementing Member States may pick and choose individual conditions, creating further fragmentation. This enables regulatory arbitrage and is likely to preserve superficial or assembly-only investment models, and fails to secure technology retention, local value -added or meaningful supply -chain integration—leaving strategic vulnerabilities essentially unchanged. PERM 1 - Streamlining permitting for decarbonisation projects in manufacturing industries would accelerate the authorisation of such projects and speed up the development of economies of scale for new generation of low -carbon manufacturing. However, these investments also depend on factors beyond the permitting framework, making quantification difficult. A joint, mandatory, digitally integrated assessment of the entire permit-granting process would reduce the administrative burden compared to fragmented procedures, thus lowering costs (e.g. environmental assessment costs 158) and saving time and money for companies. The introduction of e -permitting whenever missing could introduce cost -savings from 80 million (for a third of all industrial manufacturing) to EUR 240 million for all manufacturing industries in the EU, through the digitalisation of 5 permit-granting procedures.159 See Annex 4 Section 2.1 and Annex 15 for more information on the calculations. Cross-border businesses could further benefit from the Single Digital Gateway (SDG) 160, notably reducing time and money dedicated to gather information or completing administrative procedures. 64% of respondents to the Public Consultation (114 out of 179) agree that a fully digitalised permitting process is a relevant measure for accelerating permitting for industrial decarbonisation projects. Additionally, 61% (108 out of 178) support 156 European Commission – internal analysis. Summary - Net-Zero Technologies (NZT) Monitoring Dashboard - Power BI 157 In the HDV segment, the impact is difficult to assess due to the unavailability of data and the limitations of the applied mo del when it comes to estimating the current share of EU content in this vehicle segment. For this reason, the same assumptions are taken as for the passenger cars for the sake of this Impact Assessment. Given that anecdotal evidence suggests a higher market share for EU vehicle component manufacturers, it is expected that the costs estimated for the HDV sector represent the higher bounds of potential impacts. 158 As a single assessment report would be prepared. 159 A study on business procedures carried out to underpin the Single Digital Gateway impact assessment concluded that for 9 procedures, the cost savings for all EU businesses - if e-procedures were introduced where missing - would be in the order of of EUR 6.5 billion. For more information on how the estimate of EUR 240 million was derived, see Annex 4. 160 The Single Digital Gateway is a one-stop-shop for citizens and companies who want to work, study or do business in another EU country that provides (i) access to reliable information, (ii) online procedures and (iii) assistance services. By drastically red ucing the administrative burden and improving the European business environment, it is key to the smooth functioning of the Single Market; Regulation (EU) 2018/1724 of the European Parliament and of the Council of 2 October 2018 establishing a single digital gateway to provide ac cess to information, to procedures and to assistance and problem-solving services and amending Regulation (EU) No 1024/2012. 36 improved administrative cooperation through digital tools as a relevant approach. Further identified measures for speeding up permitting for industrial decarbonisation were single points of contact (83%, 136 out of 163), time limits for the permit granting process (88%, 149 out of 170), joint environmental assessment when required under multiple legal acts (76%, 133 out of 176) and tacit approval for certain administrative decisions (83%, 144 out of 138)). AREA 1 - Regarding the definition of criteria for industrial areas , the measures would recommend Member States to make use of the criteria defined in the IAA to focus on which projects to support under their national schemes. As this would be only a recommendation to Member States, it can be assumed that the effect on companies is likely to be limited and potentially fragmented across the EU Single market, with some limited support for projects and industrial sectors with strategic importance for the EU. 6.1.1.2 Impact on downstream sectors LEAD_EII 1 will have an impact on the cost of procuring low-carbon materials, as well as an impact on the final product pricing across the automotive and construction sectors. Automotive sector A 25% low carbon steel target would lead to a price increase for a midsize passenger vehicle of 0.125% increase in the average price of a vehicle161, resulting in a EUR 46.67 price increase per passenger vehicle and EUR 186.4 for heavy -duty vehicles. The results for low -carbon aluminium present similarly low impacts in the price of a vehicle with only a 0.1% increase162, or EUR 22.6, bringing the total cost per passenger vehicle at 0.225% increase for both the low-carbon steel and aluminium. The overall impact per passenger (light duty) vehicle would total to EUR 69.27. As a result of the modelling exercise, the value added of the automotive sector would be affected in a limited way, with losses of EUR 291 million for the entire sector . These losses are a consequence of the higher final vehicle price driven by the newly imposed green premium and the consequent decrease in the consumption of automotive and construction sectors. See Annex 4 Section 2.2 for more details on cost calculation. Following the sensitivity analysis for the corporate fleets expected in 2030, the costs could range from EUR 179.6 million up to EUR 417.13 million derived from uncertainties linked to the future cost of low -carbon steel, notably on the technology routes used to decarbonise. See Annex 15 for more information. Besides the premium linked to the use of low-carbon steel, vehicle manufacturers may need to adjust their supply chains to source the materials, which can lead to additional costs and logistical challenges. The effects of the supply chain adjustments will depend on the verification rules in place to comply with the requirements. In the case of steel, the approach established under the label on the carbon intensity (SO1) is based on third party verified data and on ensuring physical traceability. Construction sector Different estimates indicate that the premium associated with low -carbon steel in the construction sector can account for 0.25 % of total building costs, with some variations depending on the type of project. 163 In the case of low-carbon aluminium, in the absence of 161 JRC (2024). Draft preparatory study on iron and steel – ecodesign measures under the ESPR. See Annex 4 for more details. 162 T&E (2025). Reducing the carbon footprint of aluminium in cars: why and how?, 163 JRC (2024). Draft preparatory study on iron and steel – ecodesign measures under the ESPR; Global Efficiency Intelligence, TransitionAsia and Solutions for Our Climate (SFOC) (2024). Green Steel Economics. 37 construction sector specific estimates, the 0.1% price increase164 is also used. Similarly, as far as cement is concerned, estimates on the impact of using low -carbon cement or concrete on the final price of a house or construction project range would be of 0.10% for a 5% low-carbon cement target.165 Setting a 25% target for both low-carbon steel and aluminium, as well as a 5% target for low-carbon cement in public procurement is estimated to lead to a combined cost increase of less than 0.45% for a construction project. The construction sector would face a loss in value added of EUR 691 million by 2030, due to the requirements to source a share of low-carbon steel, aluminium and cement. Since the value of public support schemes available across Europe in the construction sector is not available, the full impact of the costs for this market segment cannot be provided at this stage. The impact of this proposed measure for the entire construction sector are reflected in Section 6.3.1.2. See Annex 4, Section 2.2, for cost calculation. It is also important to recall that the cost premium of producing low -carbon materials is expected to decline over time as related technologies mature, are being deployed at large scale and demand for low-carbon materials moves from niche, lead markets to larger scale markets. At the same time, conventional carbon -intensive product ion methods will become more expensive as CO 2 prices rise, narrowing the cost gap between conventional and low -carbon materials. See Annex 7 for more details on the projected cost evolution of clean technologies. In the context of the targeted stakeholder consultation, industry also reported marginal downstream cost effects from using low-carbon materials. This view was supported by 77% of the steel respondents.166 All 7 respondents from the cement industry agreed that low-carbon cement can be deployed with minimal or no material impact on the total construction costs. Administrative costs For steel, the label on the carbon intensity foreseen under LAB 2 would provide a reliable tool for participants in the tender to demonstrate compliance with low-carbon requirements for the material used in the automotive or construction projects. For cement, the standardisation request under the revised CPR has recently been adopted with a deadline for CEN of June 2027 to deliver the first new harmonised standards .167 Under these harmonised standards, CE marking will require the declaration of the GHG emissions in the declaration of performance and conformity and in a label on the packaging. This will offer a reliable basis for public authorities to ensure compliance with the relevant policy measure. Accordingly, this would add limited administrative burden compared to the baseline. LEAD_BAT 1 – Introducing Made in EU requirements for batteries will have a twofold impact on downstream sectors. First, it will lead to higher prices compared to low-cost battery imports with short term risks of delaying the energy transition. However, this must be considered in light of the EU’s existing battery production capacity, which reached approximately EUR 24 billion in 2023 168, with exports exceeding EUR 11 billion in both 2023 and 2024 169, demonstrating an already strong industrial base. Second, since foreign -made EVs and BESS are unlikely to meet the Made in EU thresholds for batteries, EU-made downstream products will benefit from the access to public support schemes, procurement, and auctions. Even if foreign producers attempt to comply, their costs are likely to be higher due to logistics and 164 T&E (2025). Reducing the carbon footprint of aluminium in cars: why and how. 165 Agora Industry (2024). Creating markets for climate-friendly basic materials. Potentials and policy options, p. 13. Bellona Foundation (2018). Building with Low Carbon Cement is Affordable, ,. 166 Respondents include companies from the steel value chain, trade association and think tanks 167 COMMISSION IMPLEMENTING DECISION of 28.7.2025 on a standardisation request to the European Committee for Standardisation as regards cement, lime and other hydraulic binders in support of Regulation (EU) 2024/3110 of the European Parliament and of the Council. 168 Ericher, M. et al. (2024). Les Themas de la DG. Deployment of electromobility: How to develop the European battery supply. 169 Bruegel Clean Tech Tracker and Eurostat. 38 limited integration of EU components, further reinforcing the competitiveness of an EU based battery downstream sectors. In 2024, the price increase for manufacturing the same battery product in the EU using local battery cells, CAM and AAM, compared to importing these components from China, ranged between EUR 16-30 per kWh depending on the maturity of the manufacturing company (see Annex 9). For example, looking at the impact on EVs, for an average passenger EV equipped with a 68-kWh battery pack, the estimated price increase in 2024 would range between EUR 653 and EUR 1 632. This corresponds to approximately 1.4% to 3.5% of the average retail price of an electric vehicle in Europe.170 Ongoing cost reductions in battery packs and cells are expected to gradually reduce the battery’s share of total EV and BESS costs, thereby diminishing the overall cost impact of Made in EU requirements on the downstream sectors. Global average lithium-ion battery pack prices fell by 20% between 2023 and 2024, and by a total of 86% from 2013 to 2024. The learning rate for batteries is estimated at 18% at the pack level and 24% at the cell level, meaning costs typically decline by 18% and 24% respectively each time cumulative production doubles.171 This suggests a continued and potentially accelerated decline in battery prices. Pack costs are projected to fall from EUR 98.9/kWh in 2024 to EUR 59.3/kWh by 2030 and EUR 46.4/kWh by 2035 (i.e., a 53% reduction). Similarly, cell prices are expected to drop from EUR 67/kWh in 2024 to EUR 36.9/kWh by 2030 and EUR 27.5/kWh by 2035 (i.e., a 59% reduction) while maintaining a typical cell-to-pack cost ratio of approximately 60:40 (see Annex 4 Section 2).172 LEAD_SOL 1 - Introducing Made in EU requirements criteria in public procurement, auctions, and public support schemes for solar PV might result in a short-term cost premium173, as EU-made modules currently have higher production costs than import ed ones. European panels with three components manufactured in Europe (which would be NZIA compliant) would cost around 19 €ct/Wp, while minimum sustainable price for production in China is estimated at 15.9 €ct/Wp174, despite Chinese panels currently being sold at levels of 8.7 €ct/Wp in Europe. Once Chinese products hit a sustainable level again175 the price difference between the Made in the EU module and an imported one will not be that disproportionate. At current levels of 8.7 €ct/Wp the price difference between Chinese products and NZIA-compliant products would impact the Levelized Cost of Energy (LCOE) by 0.75 €ct/kWh equal to an increase of 14.5% 176 at the level of the specific auction. Please see Annex 4 section 2.2. for further calculations. This means that profit m argins of utilities could be negatively impacted, with electricity prices for end consumers potentially increasing only very marginally as (i) Made in EU requirements would be applied only to a share of the auctions; (ii) gas power plants would remain the marginal source to set the electricity price most of the hours. Further, at end- consumer level, slight price increases can be accommodated by other means, such as levies and taxes. According to stakeholder input, the NZIA resilienc e requirements, applicable as of 30 December 2025 and foreseen to be implemented under the Fer X scheme in Italy, could lead to 170 European Alternative Fuels Observatory. Electric vehicle model statistics. 171 BloombergNEF (2024). 2024 Lithium-ion Battery Price Survey. 172 BloombergNEF (2024). 2024 Lithium-ion Battery Price Survey. 173 Bruegel (2024), Smarter European Union industrial policy for solar panels, Policy Brief , 08 February 2024. 174 SolarPower Europe (2025). New study reveals path to reshore solar manufacturing in Europe. 175 As currently Tier 1 Chinese manufacturers suffer vast annual losses in 2024 and 2025: Chinese PV Industry Brief: Top solar module makers report H1 losses – pv magazine International 176 SolarPower Europe (2025). Reshoring Solar Manufacturing to Europe. 39 an increase of approximately 15% in the auction -level LCOE, but only around 1% at the corresponding electricity price level. Overall, applying Made in EU requirements under LEAD_SOL 1 is estimated to generate the following additional cumulative costs by 2030 compared to the Baseline: approximately EUR 60 million in public procurement, EUR 580 million in auctions, and EUR 240 million in public support schemes. These costs reflect the price difference between PV modules manufactured in the EU using a mix of EU and Chinese components (IAA compliant), and the minimum sustainable PV module price in China177 for fully Chinese-made modules. If Chinese solar costs would remain closer to today’s price, these costs could be higher. The costs for downstream industrial and household consumers resulting from higher electricity prices could not be calculated with the models used for this impact assessment. Nevertheless, this cost premium would be reduced over time as EU manufacturers ramp up and as the cost of solar PVs, and therefore the share of their cost within a PV installation (household or utility -scale) decreases. Large‑scale solar parks may see bid prices rise as EU‑content requirements take effect. However, the baseline scenario of NZIA’s indicative benchmark of manufacturing capacity across net zero technologies to reach at least 40% of the EU’s annual deployment needs by 2030 will improve market predictability . Rooftop and commercial installers who buy panels in small lots could see retail module prices climb and potentially dampening uptake. However, since the module typically accounts for 25-30%178 of total installation costs, the impact on final consumer prices would remain limited and c ould be further mitigated through smart auction and procurement design to create different incentives and flexibility. In relation to cybersecurity, Made in EU requirements for inverters can boost local manufacturing and improve cybersecurity by keeping control of key technologies in Europe. This reduces risks from foreign cyber threats and protects energy infrastructure, making the EU safer and more resilient. Regarding the energy transition in the EU, the potential impact of Made in EU requirements in solar PV could lead to higher costs in the short term but will be beneficial in the mid to long- term. First, the requirements will significantly reduce Europe’s heavy import dependence— especially on China —thereby lowering risks of supply disruptions and enhancing solar PV rollout reliability , critical for achieving renewable targets. Second, they will trigger large investments in new manufacturing capacity, technology, and skills; and 3) it will ensure availability of the main specific components , in particular inverters , with high sustainability and quality standards that enable more resilient deployment, supporting grid stability and climate goals. Over time, this will make Europe a more energy secure space. In the absence of Made in EU requirements, Europe’s heavy reliance on China controlling over 90% of global solar photovoltaic (PV) manufacturing capacity across the whole value chain exposes the EU to significant risks. Negative actions by China —such as export restrictions, tariffs, or supply chain disruptions—could create severe supply shortages, resulting in delayed solar project installations and increased costs due to price spikes. These possible disruptions would likely slow down Europe’s renewable energy deployment, delay the achievement of the EU climate targets for 2030 and 2050, and, consequently, increase dependence on fossil fuels or less sustainable alternatives. Moreover, this dependency weakens Europe’s strategic autonomy in clean energy technologies, making the continent vulnerable to geopolitical tensions. Building a resilient EU manufacturi ng ecosystem through EU content requirements 177 Ibid. 178 SolarPower Europe (2025). Global Market Outlook for Solar Power 2025-2029. 40 is therefore essential to safeguard energy security and ensure a stable, affordable, and timely solar PV deployment. Concerning the impact of the Made in EU requirements on the affordability of energy, this is likely to be limited. In the EU electricity market’s marginal pricing model, the price is determined by the most expensive energy source needed to meet demand which typically includes fossil fuels such as coal, oil, and natural gas due to their higher operational and fuel costs. In June 2025, s olar energy was the main source of electricity generated in the EU (22%).179 Since the price formation is dominated by the most expensive energy source, a greater solar share tends to lower average prices when solar is generating because it displaces fossil fuel generation. Buying made in EU solar PV may lead to power producers passing on the cost to consumers but in a modest increase. This impact is expected to be small and much less volatile compared to the larger fluctuating cost related to fossil fuel consumption and CO2 ETS pricing. An example of how lead markets measures proved successful in the long run can be the feed - in tariffs models used by member States to support renewables deployment. In the past, Europe benefited from spillover effects of feed-in tariff policies like Germanys Renewable Energy Law (EEG). While the policy initially contributed to higher electricity prices for consumers, it ultimately generated net benefits by driving down costs for renewable technologies and accelerated large scale deployment. The guaranteed premium enabled the derisking of future investments, which led to a wide adoption of renewable energy projects as well as rapid expansions.180 LEAD_VC 1 - Given the estimated current level of 70% Made in EU in the EVs, the measure would not lead to any further compliance costs for EU EV manufacturers in 2027. As the target is increased to 75% by 2030, the measure would represent a cost increase of EUR 1.9 billion for EU EV manufacturers, which would be offset by the increase of sales. EU EV manufacturers are expected to benefit from a sales increase of EUR 13 .9 billion across all vehicle segments in 2027 and EUR 9 billion in 2030. The increase in sales is presumed to offset the cost increase for passenger cars and LCVs, however, not for HDVs. It is important to note that the numbers presented here are aggregated from all vehicle segments, and the measure would impact each of them to a different extent. As previously noted, for the HDV sector, due to the limitations of the model, the same assumptions are applied as for passenger vehicles. However, as the Made in EU in HDV is likely to be higher than the assumed requirements, the measure may result in zero cost implications for EU HDV manufacturers, while preserving the positive effect on sales. Finally, the measure is projected to lead to the generation of EUR 5.5 billion Global Value Added (GVA) in 2027 and EUR 4.5 billion in 2030 when assessing the impact, taking into account only the first tier of the value chain. When considering the entire value chain, the value added generated from the necessary intermediate inputs for EVs the value added can reach EUR 10.5 billion in 2027 and EUR 9.7 billion in 2030. Following a sensitivity a nalysis (See Annex 15 for more information), t he cross -region elasticity is the parameter that most affects the results for EU EV manufacturers, and the value added generated. However, the sensitivity analysis shows the robustness of the results, with values falling within a small range and not significantly affecting the policy's economic effects. 179 Eurostat (2025). Solar: main source of EU electricity in June with 22%. 180 The Federal Ministry for Economic Affairs and Energy (Bundesministerium für Wirtschaft und Energie ) webpage (2017). Fragen und Antworten zum Erneuerbare-Energien-Gesetz 2017. 41 INV 1 – The impact of conditions on investment would depend on the extent to which Member States take up the voluntary guidance. In the short term, the effects are likely to be limited, as companies would not be legally required to adapt their sourcing or production models. In Member States that do apply the guidance, some investors may be encouraged to increasing EU sourcing of components, materials or services , potentially creating spillovers through knowledge transfer and collaboration with EU -based firms. However, because the implementation of the guidance is voluntary and Member States may apply the guidance only partially, these positive effects would be uneven across the Union, with benefits concentrated in those countries that actively promote and monitor such conditionalities. In practice, the fragmented uptake would limit the overall capacity of the initiative to strengthen EU -wide industrial ecosystems. 6.1.1.3 Impact on SMEs LEAD_EII 1 – SMEs may have less capacity than larger firms to absorb temporary increases in material costs or to pass them on to customers, which could put pressure on their margins in the short term. However, these effects are expected to be limited, as the cost increase linked to low-carbon material requirements remain modest and as low -carbon products gradually become more available and price differentials narrow. LEAD_BAT 1 would directly support SMEs by boosting demand for locally produced battery packs, cells, components, and advanced materials. This would not only strengthen existing suppliers but also create market opportunities for emerging businesses in a nascent and growing strategic industry. As the European battery ecosystem expands, SMEs will be better positioned to scale, innovate, and integrate into regional and global value chains. Since this measure does not target private transactions, the impacts on the SMEs part of the road transport ec osystem using vehicles are expected to be limited. LEAD_SOL 1 will help channel public demand towards domestically built modules, which are predominantly produced by SMEs in Europe, catalysing the creation of additional manufacturing and installation roles. While a temporary slowdown in solar panel installations by SMEs may occur, the negative impact is expected to be limited and manageable, as Europe’s commitment to ambitious PV deployment targets remains firm and unchanged. In the mid to long term, these targets will continue to drive strong demand for installation services, ensuring SMEs can recover quickly and benefit from a sustained, growing market for solar deployment. INV 1 will have very limited effect on SMEs as the conditionalities would apply primarily to large foreign investors rather than smaller domestic firms and be limited to large investments. Where Member States choose to implement the guidance, SMEs located in those regions may benefit indirectly if inbound investors increase local sourcing or collaboration, but these effects would be uneven and dependent on national uptake. Given the voluntary nature of the measure and the fragmented application across the U nion, broader SME participation in strengthened industrial ecosystems would remain uncertain and geographically constrained. PERM 1 - The digitalisation of the permit-granting process with the Single Digital Gateway would benefit SMEs active on their domestic (national) market by gaining an easier access to other Member States for permit-granting submission. LEAD_VC 1 is expected to affect those EU based SMEs positively that are Tier 2 and Tier 3 suppliers of the industry due to the increased demand for vehicle components sourced locally. In quantitative terms, the impact on SMEs is covered under the impact on consumers section, as they are included in the definition of consumers, alongside private citizens. As Light, Medium, Heavy Commercial Vehicles, and Buses fall within the scope of the measure, 42 the effects described above for consumers in these vehicle segments, have to be assumed as impacting SMEs that typically purchase and operate these vehicles. 6.1.1.4 Impact on citizens and consumers LAB 1 – As explained under the economic impacts, this option would add complexity to the implementation of the existing framework and might create unnecessary confusion among consumers/businesses with a very wide range of labels on all EIIs. LEAD_EII 1 - Low-carbon requirements are applied to the steel and aluminium used in end- products (such as passenger cars) supported by public schemes. Therefore, the financial burden would mainly fall on Member States, if they decide to absorb the price increase, rather than on final consumers. As outlined in Section 6.1.1.2, the minor economic losses observed through the general equilibrium model point at a decrease in the consumption of automotive (EUR 84.4 million) and construction (EUR 59.4 million) goods, driven by the low-carbon cost increase, as one of the reasons for the value-added decrease of these downstream sectors. For a wider consideration on cost estimates, t he sensitivity analysis for the range of potential costs derived from low -carbon steel can present the following for passenger cars: EUR 91.7 million – EUR 212.87 million. See Annex 15 for more information. However, access to public schemes would be reduced to consumers willing to purchase a product containing low -carbon content. While no assumption can be taken on the level of public funding, public incentives in these products are already widely present in society as explained above. Only for internal combustion engine vehicles, a recent study estimated that subsidies for corporate vehicles alone amounted to EUR 42 billion in 2023. 181 Cost implications on the final products in automotive and construction 182 are outlined in Section 6.1.1.2. LEAD_BAT 1 - As outlined in Section 6.1.1.2, consumers would be affected by the possible price increases. However, since these are tied to public support schemes, the effect on final prices would be less pronounced and more gradually absorbed. By 2030, the adjustment costs for consumers will range between EUR 292-730 million (average EUR 511 million) for private consumers and EUR 0.9-2.2 billion (average EUR 1.55 billion) for corporate consumers (see Annex 4 Section 2). Given that EV subsidies have exceeded EUR 16 billion annually from 2021 to 2024183, these subsidies have the potential to financially compensate the income effect of the impact on the final consumers. LEAD_SOL 1 would likely bring a near‑term cost uptick. As mentioned above, even a moderate increase in EU module prices would result in a system cost increase of only around 5-15%, depending on the configuration and market conditions, to be weighed against the broader benefits of resilient, locally based manufacturing and reduced dependency on imports.184 Directing part of publicly backed demand toward European products would diversify supply and build (economic) security.185 As the measures target public procurement, auctions and public support schemes consumers would not be directly impacted by the price 181 ERM, T&E (2024). Company car fossil fuel subsidies in Europe. 182 Data on the percentage of the market potentially covered by public subsidies in construction was not available, therefore PO1 only counts with costs on public procurement for Member States. 183 MIT CEEPR. Global Clean Investment Monitor: Government Support for Electric Vehicles and Batteries. Data covers the EU and the UK. 184 European Solar Industry Alliance. Net Zero Industry Act: Positions on the Implementation for Photovoltaic Technologies, by Fraunhofer Institute for Solar Energy Systems ISE. 185 SolarPower Europe (2024). New Report: Growth of EU solar jobs stagnates as rooftop market slows ; European Commission webpage (2025). Solar energy. 43 increase and especially under the public support schemes, consumer purchases of EU made PV systems would be financially rewarded. LEAD_VC 1 is estimated to have two different effects: As EV passenger cars become more expensive from non-EU manufacturers, and ICE vehicles, being not affected by the measure, could benefit from a relative price advantage (prior application of the bonus schemes or subsidies) over EVs, there may be a partial product substitution of EVs with ICEs . However, as EV passenger cars produced by EU manufacturers will benefit from a relative price advantage following the reduction of price originating from the reallocated subsidies, this may lead consumers to prefer EV passenger cars produced by EU manufacturers (which increase their sales) over non -EU EV passenger cars (which reduce their sales). The latter effect crucially depends on the bonus schemes and conditional to the assumptions taken in this impact assessment and Annex 14 presents a counterfactual analysis on the potential price impacts when changing the amount of public subsidy allocated to EU EV manufacturers. In quantitative terms, when we look at the impacts in 2027, the average price increase (from both the potential reduction of price for EU manufacturers and price disadvantage for non-EU manufacturers), there would be an overall price increase of 0.4% for passenger cars, 0.5% for HDVs and there could be a reduction of 0.7% for LCVs. Looking at the impact in 2030, the price increase for passenger car rises to 1.2%, to 0.4% for LCVs and 1.2% for HDVs. As buyers of LCVs and H DVs are mostly economic operators, t he impact qualifies as impact on the downstream. Following the sensitivity analysis carried out in Annex 15, demand elasticity is the parameter that has the strongest impact on the results . However, it shows values falling within a small range and not significantly affecting the policy's economic effects. INV 1 – For citizens and consumers, the effects would be limited in the short term , as the measure’s voluntary nature means it would not immediately alter market prices or consumer costs. Where Member States do implement the guidance and attract additional investment, some localised benefits (such as job creation or opportunities linked to industrial activity) may occur, but these would be uneven and dependent on national uptake. Overall, the voluntary and fragmented application limits the likelihood of con sistent or EU -wide improvements for citizens and consumers. 6.1.1.5 Impact on competitiveness LEAD_EII 1 - EU producers of low-carbon materials would initially benefit from a first-mover advantage. However, many non -EU regions have also rapidly expanded their low -carbon production capacity and are well-positioned to compete on carbon-related requirements. As an example, according to Strategic Perspectives, China is expected to produce 105 Mtonnes of recycled steel by 2030186, positioning it to supply nearly half of the EU’s potential low-carbon steel demand, subject to the limits imposed by the forthcoming Regulation addressing global overcapacity.187 Any potential disadvantages for firms still relying on high-emission routes are expected to be temporary, as the gradual increase in low -carbon production reduces cost differentials across the sector. At the same time, the measure will create a more stable and predictable domestic market for European producers, allowing them to secure long -term contracts for low-carbon materials in public works and supported sectors. This internal market stimulus is expected to offset any small decline in export volumes, re inforcing industrial utilisation and accelerating investment recovery. In addition, by slightly increasing domestic output and reducing exposure to highly concentrated foreign supply chains in the supported 186 Strategic Perspectives (2025). Lead markets: driving net-zero industries made in Europe. 187 European Commission (2025). Proposal for a Regulation of the European Parliament and of the Council addressing the negative trade - related effects of global overcapacity on the Union steel market. COM(2025) 726 final. 44 segments, the measure provides a modest economic -security gain, lowering vulnerability to sudden price shifts, coercive practices or export restrictions from dominant suppliers. Compared to the baseline, EU-based EIIs – especially the frontrunners – are expected to benefit from the low-carbon requirement, however their competitive position would still remain at risk, primarily due to higher operational costs in the EU compared to other global regions. 188 Furthermore, as some sectors, such as steel, are significant exporters, their competitiveness on the global market might be affected to some extent, since customers in third countries may not face the same low-carbon requirements and might not be willing to pay for the green premium. However, requirements under this measure only apply to public procurement, and do not require a 100% shift to low-carbon production in 2030, giving producers flexibility to gradually adapt and ramp up the low-carbon production. Looking at the competitiveness of downstream customers, low-carbon requirements would apply indistinctively to all vehicle manufacturers that operate in the Single Market (both domestic and foreign ) that intend to participate in public support schemes or procurement. Therefore, the proposed measures will in principle preserve the level-playing field. However, given the significant share of vehicle registrations supported by public support schemes, it is reasonable to expect that introducing low -carbon steel and aluminium requirements as a condition for accessing such support would strongly incentivise vehicle manufacturers to adopt low-carbon materials across a significant part (if not the entirety) of their product portfolio, particularly for models intended for the EU ma rket. At the same time, there is a risk of losing competitiveness on third countries markets, especially if no similar low-carbon policies apply. Consequently, the absence of similar requirements in other world regions may put – in the short term – EU vehicle manufacturers in a condition of relative cost disadvantage and possible relocation of EU industry. Moreover, the risk of capacity constraints in the low -carbon steel and aluminium supply-chain should not be neglected: the moderate low-carbon ambition tabled under this measure is therefore based on the existing pipeline of projects, to prevent that risk. Besides, as low-carbon production scales up, premiums are projected to decline, reducing the competitiveness gap. In the medium term, the expansion of EU low -carbon capacity and declining green premiums are expected to strengthen the overall competitiveness of the European industrial base, enablin g it to compete globally on both cost and sustainability performance. LEAD_BAT 1 / LEAD_SOL 1 – Such measures would clearly benefit the situation of EU - based batteries and solar industry, creating the conditions to reinforce their competitiveness. In the case of solar PV, introducing Made in EU requirements for only a subset of the main components can limit the production cost difference with fully Chinese PV systems, since some components can be sourced in third countries. For example, producing a PV system with three EU-made components, includ ing the module and cell, while r elying on Chinese polysilicon, ingots, and wafers, would reduce the average cost to 19 €c/Watt-peak for a compliant PV system under LEAD_ SOL 1. Under LEAD_BAT 1, EU based battery manufacturers would benefit from an increased demand for EU made batteries through public procurement and public auctions, while also reducing the cost gap with battery imports which will cease to receive public subsidies. These competitiveness gains also translate into a modest improvement in economic security, as a larger share o f Europe’s demand would be met by domestic production rather than from highly concentrated foreign supply chains, reducing vulnerability to external price shocks, export restrictions or other coercive practices affecting strategic inputs. When increasing the cost of power generation technologies, this may also have a 188 See Section 2. This is partly because EIIs outside the EU generally face less ambitious decarbonisation targets and, therefore, require lower levels of investment. 45 moderate impact on clean energy deployment in the short term, and indirectly on the cost of electricity. However, electricity prices remain very largely determined by other components, such as the marginal source (usually gas). LEAD_VC 1 – The measures would create a stable lead market in the EU for European component manufacturers, leading to a stronger business case for manufacturing in the EU and providing European suppliers with greater scale and industrial capacities to compete on the global markets. The EU local requirement for EVs could gradually increase the reshoring of the global value chain and increase the EU production capacity to meet the new requirements. This gradual increase in domestic component production also brings a small b ut relevant economic security benefit, as reduced dependence on extra-EU suppliers in highly concentrated segments of the EV value chain lowers exposure to supply disruptions, price manipulation and other external shocks. The competitiveness effects on EU car manufacturers are also positive. On the EU market for EVs, EU car manufacturers could benefit from the policy as it creates a positive price differential vis-à-vis non-EU car manufacturers. The measure also reduces foreign competition, as the Made in EU requirements are likely to be more difficult to meet for non -EU car manufacturers as the initial level of Made in EU in their EVs is lower and they will likely not be eligible for subsidies. The effect will depend on the capacity of non-EU car manufacturers to absorb the non-eligibility of subsidies. On the non -EU market for EVs, EU car manufacturers would not be impacted as they only need to comply on the domestic market and can differentiate their production based on the destination market of each product. This assessment does not focus on potential action taken by trade partners in response, which are described below. INV 1 would have limited impact on the competitiveness of EU industries in scope , as any effect depends on whether Member States choose to apply the guidance. Where implemented, voluntary conditions may encourage some investors to embed more activities locally, which could support specific value-chain segments. However, these effects would be uneven, modest in scale, and constrained by the ability of investors to avoid such conditions entirely by locating in more permissive Member States. PERM 1 - Implementing the SDG will reduce the cost of doing business in the Single Market, administrative frictions, obstacles and therefore improve the overall competitiveness of businesses by facilitating cross-border administrative operations. 6.1.1.1 Impact on competition LEAD_EII 1 - Low-carbon requirements would apply uniformly to all participants in public procurement procedures and beneficiaries of public support schemes, ensuring that manufacturers of energy -intensive materials and downstream producers compete on equal terms. As such, the measure is not expected to distort competition among market participants that meet the low-carbon requirements, as long as strong and reliable verification mechanisms are in place. LEAD_BAT 1 / LEAD_SOL 1 Introducing Made in EU requirements is likely to reduce the overall pool of competitors for the segments targeted in this PO. As the number of EU businesses active in PV manufacturing is currently limited (approximately 150) 189, such 189 SolarPower Europe webpage. EU Solar Manufacturing Map. 46 requirements may initially lead to a concentration of the market among a smaller number of players. However, as investments in the European manufacturing landscape are expected to increase, new players (including through FDI) are likely to enter the market . Competition would, in this scenario, be limited to manufacturers with production located in Europe, who, to be competitive, would be expected to build up GW -scale capacities. This would result in fewer but larger players, rather than many small ones. Nevertheless, competition among these manufacturers is expected to ensure competitive pricing. Another key consequence is that this PO would ensure that Europe can at least partly rely on domestic technologies and jobs, which is essential to achieving climate objectives while reducing the risks associated with external dependencies. LEAD_VC 1 – The effects of the policy on total sales and consumer welfare depend on the level of market competition on both the supplier and final producer sides. There is a certain risk of captive market for vehicle components, however, it is considered unlikely g iven the dependence of suppliers from vehicle manufacturers. Regarding the EV producers, the EU EV car manufacturers will have a competitive advantage with respect to non-EU car manufacturers. However, if the EV market is very competitive, non -EU EV car manufacturers will absorb a share of their price increase to not pass through the full price increase to EU final consumers. As there are no market entry barriers, and given the overcapacity of supply in China, non -EU EV manufacturers are likely to compensate with aggressive discounts, hence competition would remain. INV 1 - Attracting FDI is important to strengthen innovation and competition in the Single Market. Since the measure is voluntary, implementation may remain highly uneven across Member States. Restrictive measures under conditionalities ( a) and (b) may limit companies’ freedom in supply chain choices. Where applied, certain conditions could marginally influence investors’ operational choices, but these effects would be limited and geographically concentrated. The ability of investors to choose Member States applying fewer conditions (or none at all) would encourage regulatory arbitrage and sustain divergent competitive environments across the Union, rather than ensuring a level playing field. 6.1.1.2 Impact on international trade LEAD_EII 1 is expected to shift trade flows only modestly, increasing trade with producers of low-carbon materials while reducing demand for high-carbon alternatives. Low-carbon steel and low-carbon aluminium or, to a lesser extent, cement produced in non-EU countries would likely be redirected to the EU, to meet such requirements in public procurement and support schemes. While cement trade at the borders of the EU increased since the 2008 crisis, volumes traded remain marginal with the EU cement industry remaining a net exporter. LEAD_BAT 1 / LEAD_SOL 1 / LEAD_VC 1 would likely reduce the import of solar PV cells and modules, batteries and their key components and vehicle components from non -EU countries, particularly from the single most dominant supplier, China , but also, from other partner countries. The trade balance for solar products could thus impr ove for the EU. The requirements could encourage FDI into the EU's manufacturing sector as companies look to set up operations within the region. This reconfiguration could impact the geography and logistics of global solar, battery and vehicle component s upply chains, as global suppliers adapt their supply chains to comply with EU requirements. It would also boost the EU’s environmental ambition by reinforcing key supply chains for clean energy and mobility transitions. 47 LEAD_VC 1, introducing a minimum share of Made in EU requirements for EVs sold in the Union, as a condition to access public procurements and subsidies, presents an opportunity to accelerate localisation, increase EU resilience, and reduce vulnerability to potential export restrictions or geopolitical leverage from dominant suppliers and level playing field, taking into account local content requirements applied on other markets. This could have an indirect effect on international trade , however, given the attractiveness of the single market and the global nature of most vehicles manufacturers, foreign producers would have a strong incentive to adapt, either by reconfiguring supply chains or by investing in local production to meet the requirement (also thanks to FDI conditionalities, if applied by the Member States under INV 1). The measure is tied to legitimate policy objectives such as security of supply, ability to decarbonise, as well as cybersecurity concerns linked to connected vehicle systems. INV 1 - As the measure remains voluntary, its impact on international trade would be limited, as companies would not be obliged at EU level to localise production or adjust sourcing patterns. In Member States that decide to apply the guidance, some investors may marginally increase EU -based activities, but these effects would remain partial and uneven. Because uptake is optional, any trade effects would be small and geographically concentrated, with no meaningful substitution of imports across the Single Market. Although the overall impact may remain contained, there is a risk that certain partners could introduce reciprocal or retaliatory conditions affecting EU investors. At the same time, given the non-binding nature of INV 1, significant reactions from trading partners are unlikely, as conditions would only apply where individual Member States choose to implement them. Any external response would therefore be limited and directed at specific national regimes rather than the EU as a whole. In the specific case of China, some temporary adjustment in investment behaviour could occur. Chinese companies with strong state backing or strategic technology interests may initially hesitate to invest under tighter localisation or value -added conditions. However, analyses 190 show that many Chinese industrial groups have progressively adapted to similar requirements when market access is sufficiently attractive. For instance, Chinese manufacturers in the battery and electric vehicle sectors have already expanded their use of E uropean suppliers and partnerships in order to comply with local content expectations. Therefore, while stricter conditionalities could shift a few planned projects to third countries with lighter rules (e.g. Türkiye or Morocco), well -designed measures are likely to enhance the overall quality of Chinese FDI by anchoring more R&I, jobs and supply-chain activity within the EU rather than deterring investment altogether. 6.1.1.3 Impact on Member States Financial implications LEAD_EII 1 – The cost implications of low-carbon requirements in additional public spending would be limited since the cost of steel and cement account for less than 1% of total public procurement expenditures across the EU , according to 2019 data.191 Setting a 25% target for low-carbon steel and aluminium used in automotive, building and construction projects, as well as a 5% target for low-carbon cement in public procurement, could generate an additional cost for public authorities, assuming that they are passed on to consumers, and public authorities 190 MERICS (2025). Chinese investment rebounds despite growing frictions – Chinese FDI in Europe: 2024 Update; Bruegel (2025). A smart European strategy for electric vehicle investment from China. 191 VUB Brussels School of Governance (2024). Public procurement of steel and cement for construction, assessing the potential of lead markets for green steel and cement in the EU.. 48 decide to cover them as the providers of the financial support for the schemes.192 Furthermore, a portion of public budgets could continue to offset some of the costs for consumers outlined in Sections 6.1.1.2 and 6.1.1.4 by incorporating them into public support schemes. For instance, in 2024, the EU has spent approximately €17 billion in subsidies to promote the purchase of electric vehicles.193 At the moment, there is public support to buy EVs for corporate purchases in all Member States and for consumers in 19 Member States. 194 In return, this investment could help stimulate job creation and foster the development of clean industries, the scale of the benefits depending on whether low -carbon materials are produced within the EU rather than imported from non-EU countries. At the same time, the increase in the price of end -goods publicly purchased or supported can result in governments deciding to spend less for such goods. This could result in reduction of consumption from governments of EUR 373 million in the construction sector, and 120 million in the automotive sector. For a wider consideration on cost estimates, the sensitivity analysis for potential costs derived from low-carbon steel and cement/concrete used in construction show that costs can vary from EUR 339.7 million to EUR 2 billion . For a wider consideration on cost estimates for automotive, notably public fleets , the sensitivity analysis for the low-carbon steel costs can range from EUR 14.04 million – EUR 32.59 million. See Annex 15 for more information. LEAD_BAT 1 – Made in EU requirements for batteries are anticipated to impact approximately 3.5% of the European EV fleet through private procurement and around 5% of BESS deployment via public auctions. Consequently, the total adjustment costs are estimated to range from EUR 132 million to EUR 331 million for EVs (average EUR 231.5 million) and EUR 26 million to EUR 66 million (average EUR 44 million) for BESS in 2030 (See Annex 4 Section 2). LEAD_SOL 1 – Due to the public procurement and public support schemes provisions requiring the purchase of EU Made products, the costs faced by public authorities and Member States will increase. However, public procurement is estimated to cover only around 3% of the solar market, auctions around 19% and public support schemes only 12%. In turn, Member States will benefit from several positive consequences in having increased manufacturing capacity in Europe, jobs creation and contributing to the achievement of European climate and energy targets through reduced emissions through transportation costs. It would also mean that the trade balance with Asia (with over EUR 4.5 billion in additional annual import costs) would be reduced and more wealth retained in Europe as well as job creation (more than 40 000 highly qualified jobs in manufacturing, equipment supply, and related industries) and halting foregoing tax revenues of over EUR 1 billion per year. If demand for EU-produced PV systems increases, this could temporarily result in a slight slowing down of deployment in the public - sector for the solar PV segment during the adjustment period . However, it is important to recognise that a significant portion of solar capacity deployment in the EU still depends on public support mechanisms, even when the installations are carried out by private entities. Consequently, a short -term price increase would likely translate into higher public financial support requirements to meet the EU’s renewable energy targets. Made in EU criteria could 192 The estimates are based on the following study: VUB Brussels School of Governance (2024). “Public procurement of steel and cement for construction, assessing the potential of lead markets for green steel and cement in the EU ”. Low-carbon steel and cement are defined in the referenced study as reducing emissions by at least 80% compared to current production methods. 193 MIT CEEPR. Global Clean Investment Monitor: Government Support for Electric Vehicles and Batteries, Data represents the EU and the United Kingdom. 194ACEA (2025). Electric cars: Tax benefits and incentives (2025). 49 initially pose procurement challenges for some Member States, requiring potential adjustments to national plans to meet renewable energy targets. Under LEAD_VC 1, as observed above, public support schemes currently used in the automotive industry will mitigate the potential adverse effects of LEAD_VC. (See: Assumptions) To reach this positive objective, as laid down in the assumptions, it is important that Member States re -distribute (at least, partially) the public subsidies that are no longer accessible to non-compliant manufacturers, meaning that the Member States would keep the volumes allocated to finance the strengthening of the EU industrial v alue chain. Since the assumptions are based on already existing schemes, the cost of public subsidies used for this Impact Assessment will not represent an increase in cost for Member States. Indeed, estimates indicate a saving budget for Member States of EUR 2.7 billion per year from 2027 to 2030, with a net present value of EUR 10.3 billion.195 Administrative burden LEAD_EII 1 - Public authorities can encounter increased administrative burden in ensuring compliance with low -carbon requirements for energy -intensive materials. Effective implementation depends on the availability of reliable and transparent standards, emissions accounting methodologies, and certification systems as well as guidance for Member States. LEAD_BAT 1 would increase the administrative burden on Member States to ensure compliance with the requirement. Rather than using a detailed value -based approach calculation, fixed component percentages would help lessen the administrative burden. INV 1 - As the measure is voluntary, Member States would face no obligation to adapt their national frameworks or establish new implementation mechanisms. Administrative impacts arise only where a Member State chooses to apply the guidance, in which case the additional burden would remain limited with respect to additional administrative costs for national authorities. In fact, the Commission’s Evaluation of the FDI Screening Regulation found only a ‘minimal financial burden’ for Member States.196 PERM 1 - Digitalising the permitting process would streamline transactions between public administrations and users, resulting in time savings for both parties. Moreover, the economic benefits for public authorities are greatest when digitalisation is implemented swiftly and covers a substantial number of transactions.197 The biggest beneficiary of these savings would be municipalities, as they normally carry the biggest burden in the permit-granting process. The type of costs initially incurred by public administrations would be investment costs during the development and implementation phase, which can also include transitional costs from the paper/offline to the digitalised process. In addition, additional operational costs for the management of the tool are also expe cted. A reorganisation of the administration in some Member States may be required and can be costly in the short term. In turn, this measure can avoid duplication of efforts, notably at the vari ous stages of environmental assessments. Similar digitalisation process es show net benefits for all relevant administr ative authorities (local, regional and national), even after the upfront cost of implementation for the first year.198 An upfront cost of EUR 16 000 to EUR 400 000 to digitalise a procedure, depending on whether 195 The estimates for the net present value assume a 2% intertemporal discount rate. 196 European Commission, Commission Staff Working Document – Evaluation of Regulation (EU) 2019/452 establishing a framework for the screening of foreign direct investments into the Union, SWD(2024) 23 final. 197 See Study on eGovernment and the Reduction of Administrative Burden, estimating that following the Danish Mandatory Digital Self - service approach was expected to produce annual savings for government for around EUR 6.5 billion at EU 28 level by 2017, while the United Kingdom Digital Government Strategy was estimated at around EUR 10 billion of annual savings. 198 See Study on eGovernment and the Reduction of Administrative Burden, estimating that following the Danish Mandatory Digital Self - service approach was expected to produce annual savings for government for around EUR 6.5 billion at EU 28 level by 2017, while the United Kingdom Digital Government Strategy was estimated at around EUR 10 billion of annual savings. 50 it’s a local or other type of procedures can be considered in this context. Estimates based on digitalisation of procedures can show savings up to EUR 1.3 billion per year for EU governments in efficiency savings.199 See Annex 4 for more information. However, accurate estimates are hard to quantify precisely, as they depend on the level of digitalisation of the relevant procedures, their complexity or number of relevant procedures. A small additional administrative cost can be expected when updating the Single Digital Gateway system to streamline the accessibility of information for cross-border users, updating the system to include the permit-granting process for manufacturing industries with a sectoral approach of EUR 20 000 per section for the Commission and up to EUR 40 000 for Member States, per section as well. For more information on aggregate cost calculations for the Single Digital Gateway amendments, see Annex 4 Section 2.1. The introduction of technical assistance for innovative projects will have positive impacts for the national authorities’ staff. Training on the most relevant innovative technologies will facilitate the treatment of permits and reduce the need to contact t he project promoter for additional clarifications. In this context, the role of INCITE is particularly relevant. 6.1.2 Social impacts LEAD_EII 1 – The creation of new demand for low -carbon materials is expected to spur investments in decarbonisation technologies. Analysis by think tank Strategic Perspectives estimates that introducing low -carbon requirements 200 for steel in public procurement could preserve approximately 4 500 additional jobs in the steel sector by 2030 compared to the baseline scenario.201 LEAD_BAT 1 - Made in EU requirements can play a critical role in safeguarding and expanding employment across the European battery value chain. By creating stronger demand for locally produced components, Made in EU requirements can help increase investments, secure existing jobs and stimulate further employment across upstream and downstream the battery value chain. The current battery project pipeline is expected to create 170 000 jobs by 2030.202 In the battery cell sector alone, currently announced gigafactories are expected to create up to 128 000 jobs. However around 85 000 of these jobs are considered to be at high or medium risk.203 LEAD_BAT 1 would help derisk these jobs, which currently amount to around 66% of the total jobs in the pipeline. LEAD_SOL 1 could deliver a substantial boost to employment. According to InnoEnergy, manufacturing 30 GW of solar panels annually in Europe alone would require 20 000 trained operators and technicians 204, underscoring the need for dedicated workforce development. In this context, Made in EU requirements would also help secure employment pathways for the growing number of skilled workers, including the 100 000 individuals the EU Solar Academy 199 Estimates based on digitalisation of procedures in the Netherlands, following a stakeholder consultation on the single digital gateway. These figures could be an overestimation, since costs and savings depend largely on the type of administrative procedure to be digitalised, the number of transactions/uses per procedure, amongst others. EUR-Lex - 52017SC0213 - EN - EUR-Lex 200 Defined in the referenced study as a maximum carbon intensity of 0.7 tonnes of CO2e/tonne of steel for flat products and of 0.35 tonnes of CO2e/tonne of steel for long products in 2030. 201 Strategic Perspectives (2025). Lead markets: driving net-zero industries made in Europe. Estimate from dataset used in report’s underlying analysis. 202 European Battery Alliance 203 T&E (2025). Europe’s automotive industry at a crossroads. 204 InnoEnergy, European Solar Academy. 51 aims to upskill in solar PV by 2027, ensuring that training efforts are matched with long -term industrial job opportunities.205 LEAD_VC 1 could stop, and possibly reverse, the trend of progressive job losses which has been materialising over the past years in the EU’s vehicle components supply chain .206 From this perspective, the minor vehicle price increases described above in the impact on consumers section, should be seen as irrelevant compared to the preservation of hundreds of thousands of high-quality jobs and a strong industrial base in the Union. F urthermore, the measure could create additional financial capacities for suppliers to be reinvested in future technologies. INV 1 - As the measure is voluntary, social impacts would be limited and depend entirely on whether Member States choose to apply the guidance. Where implemented, some projects may generate additional employment or higher-quality jobs linked to localised activitie s, but these effects would be uneven and confined to specific regions. In Member States that do not adopt the guidance, no material social impact would occur, resulting in an overall limited and fragmented effect on EU employment and working conditions. 6.1.3 Environmental impacts Introducing EU-wide labels for low -carbon energy intensive industrial products, as proposed in LAB 1, can improve the understanding of what constitute energy intensive products with lower environmental impact. However, the impact of an EU voluntary low -carbon product label depends on its ability to effectively stimulate demand for low -carbon products. This requires the label to provide buyers with credible information about the GHG emissions associated with the product. At the same time, its impact also dep ends on the ability of low - carbon producers to differentiate their products from conventional alternatives and to strengthen the business case for low-carbon production. The environmental impact of the different design elements for the low -carbon product label will depend on the scope of GHG emission information provided by the label and on its ability to ensure comparability across products as well as attractiveness and accessibility of such a label for different market players/products (e.g. non -EU manufactured products) . These specific aspects are assessed for steel under PO2 and PO3. Regarding other EIIs, it is expected that ongoing efforts to present the environmental performance of construction products would lead to lower environmental impact choices. For other sectors, ongoing initiatives, such as the upcoming ESPR delegated act on aluminium, could ensure a broad coverage of emissions and solid comparability, therefore providing strong incentives for decarbonisation. LEAD_EII 1 is expected to provide a clear demand signal for low -carbon materials, thereby encouraging investment and accelerating decarbonisation efforts. With a 25% target for low - carbon steel in automotive and construction , emission reductions would amount to approximately 3.37 Mtonnes CO₂ in 2030 alone. 207 Based on the 5% low-carbon target proposed for cement in 2030, the potential savings could reach 0.69 Mtonnes CO₂ for that year. Correspondingly, the 25% low-carbon target for aluminium could sav e 0.22 Mtonnes CO₂ in the year 2030. Combined, the potential savings for steel, cement and aluminium could reach 4.28 Mtonnes CO2 in 2030.208 These emissions savings amount to EUR 428 million (from EUR 205 According to Fraunhofer, at full GW-scale production, each GW of solar PV manufacturing capacity is estimated to generate around 1 065 direct full-time jobs, including approximately 70 in polysilicon, 75 in ingot production, 75 in wafering, 200 in cell manufacturing, 85 in solar glass, 200 in module assembly, and 360 in inverter production. This would result in an additional 1 598 of indirect jobs, bringing the total employment impact to roughly 2 663 jobs per GW. In terms of the policy segments assessed in the impact assessment, this corresponds to an estimated 5 193 jobs created by the public procurement provisions, 32 888 jobs by auctions, and 20 771 jobs by public support schemes. 206 In 2024 alone, automotive suppliers announced that 54 000 jobs will be cut, with most of these in the next two to five years. Source: CLEPA (2025). Job losses escalate as demand stays below expectations. 207 Calculations explained in Annex 4 Section 2.3. 208 Calculations explained in Annex 4 Section 2.3. 52 256 million to EUR 809 million depending on the cost of carbon used ). See Annex 4 Section 2.3 and Annex 15 for monetisation calculations in ranges following the sensitivity analysis. LEAD_BAT 1 - Under the Batteries Regulation, batteries manufactured in the EU must meet strict environmental standards throughout their life cycle, covering carbon footprint, responsible sourcing of raw materials, durability, safety, and high rates of collection, reuse, and recycling. Based on the 2023 EU grid, a battery manufactured in the EU would imply on average a 25% CO 2 emissions reduction compared to a Chinese manufactured battery using the average Chinese grid .209 These CO 2 reductions also apply across the upstream value chain.210 Localizing the production of battery cells and cathode active materials, including its precursor material, under PO1, rather than relying on imported Chinese products, could reduce CO₂ emissions by an estimated 25.6 Mtonnes overall in 2030 alone. These emissions savings amount to EUR 2.56 billion (EUR 1.5 billion- 4.8 billion), see Annex 4 Section 2.3 and Annex 15 for monetisation calculations.211 LEAD_SOL 1 - Due to the provisions of the NZIA on environmental sustainability, PV system production in Europe is expected to meet certain environmental standards across the entire value chain. While the NZIA criteria set an important standard for all products, promoting EU PV manufacturing can result in further positive environmental impacts through reduced logistics emissions, stronger regulatory frameworks, and more sustainable production practices overall. This in turn will facilitate meeting Europe’ emission reduction targets. According to the JRC, PV modules manufactured in Europe consistently demonstrate lower lifecycle emissions than those produced in more carbon -intensive electricity systems. This is primarily due to Europe’s cleaner energy mix during manufacturing, whic h is the dominant driver of global warming potential (GWP), as well as the use of materials from low-carbon supply chains and more advanced recycling practices. LEAD_BAT and LEAD_SOL 1 provisions may also risk having an impact on the pace of deployment of clean energy solutions, and therefore on overall emissions, which could not be quantified in the context of this Impact Assessment . However, the fact that these provisions are limited to publicly supported products attenuates this risk. PERM 1 - Streamlining provisions for permitting, notably through joint or coordinated environmental assessments, as provided by environmental law, will reduce administrative inefficiencies by identifying potential inconsistencies and in turn increase the quality o f the assessments. Moreover, introducing a set of standardised data sets, notably on submissions linked to environmental permits will enable their re-utilisation in other areas like environmental reporting. Being able to re -use the original and mos t environmentally sound information will benefit the quality of other assessments. Furthermore, the EU manufacturing industry represents 22.5% of the EU total GHG emissions. 212 Streamlining permitting procedures will accelerate the implementation of decarbonisation projects, therefore leading to an accelerated pace of GHG savings. LEAD_VC 1 - In Scenario 1, global greenhouse gas emissions from vehicle manufacturing decrease by 0.5 Mtonnes CO2e in 2027 and by 0.6 Mtonnes in 2030 due to shifts in production; they further decline by 0.1 Mtonnes due to reductions in international transport associated with EU imports. These emissions savings amount to EUR 70 million (EUR 42 million -132.30 209 T&E (2024). An Industrial blueprint for batteries in Europe. 210 EU CAM production achieves a 12% reduction in CO2 emissions, while battery materials such as lithium hydroxide, nickel sulphate, and manganese sulphate see reductions of up to 71%. 211 T&E (2024). An Industrial blueprint for batteries in Europe. 212 Eurostat. Quarterly greenhouse gas emissions in the EU. 53 million), see Annex 4 Section 2.3 for monetisation calculations and Annex 15 for sensitivity analysis on the ranges. In sum, the environmental effects remain limited and are very similar across LEAD_VC 1 and LEAD_VC 2. 6.2 POLICY OPTION 2 LEAD_BAT 1 / LEAD_SOL 1 / LEAD_VC 1 – the proposed policy measures under PO2 are the same as under PO1, and the impacts have been assessed under PO1. 6.2.1 Economic impacts 6.2.1.1 Impact on companies LAB 2 would introduce a label on the carbon intensity of steel only, covering emissions up to the hot -rolling production step (see more in Annex 12). The impact on steel companies would be overall positive, providing a reliable EU-wide methodology to calculate embedded emissions and support the creation of lead markets. Steel companies would be encouraged to certify their production with the label as it would provide a clear identifier for producers using low-carbon processes and therefore positively impact their ability to monetise their green premium towards potential customers. The classification system combined with the shape of the sliding scale, a clear presentation of the embedded emissions and the share of steel scrap, provides a fair treatment for all producers, acknowledging the dec arbonisation effort. See Annex 12 for extended description of the design elements under LAB 2 and their potential impacts. While the use of LAB 2 for steel is voluntary by design and therefore no additional costs are imposed on companies, the administrative costs have been estimated in a yearly approximate cost of EUR 6 700 per steel site 213, which could offset the administrative costs from using several other labels in the market for different products, to just one. LEAD_EII 2 introduces made in EU requirements in addition to the low-carbon requirements for steel, cement and aluminium used in the automotive and construction projects, purchased through public procurement or public support schemes. The impacts of low-carbon requirements for steel , cement and aluminium in public procurement and incentives have been addressed under PO1 , where the b enefits in terms of value added could reach EUR 686 million for the three EIIs combined, as a result of the requirements (see Section 6.1.1.1.). Introducing Made in EU requirements will ensure that a share of the demand for low -carbon energy intensive industrial products is met by domestic production, instead of imports from third countries. The Made in EU requirement s, however, are unlikely to create further economic benefits for the EII sectors. In the absence of well- established low-carbon supply chains for the ir materials, and assuming traditional supply chains are maintained, the proposed level of targets is lower than the share of EU’s domestic demand for these materials (in automotive and transport ) that is currently met by European production.214 Overall, it will help safeguard security of supply, guaranteeing a share of secure, low-carbon demand for domestic producers, and improve the resilience of low -carbon 213 The low-carbon steel label costs for businesses can be estimated using the cost structure from ResponsibleSteel. This estimate took the average between costs for normal and large companies 214 EU production is still able to cover between 80 and 90% of the EU’s domestic demand of steel and about 45% of the EU’s domestic demand of aluminium. COM(2025) 125 final 54 production of steel, aluminium and cement in their transition process where international competition and pressures will remain. Furthermore, such predictability of demand for low -carbon steel can help absorb part of the investment’s costs from the low-carbon technologies, potentially pushing investment decisions towards decarbonisation. In the EU steel sector, there are currently at least 29 announced steel decarbonisation projects, with a combined potential capacity of additional 41 Mtonnes of low- carbon steel per year by 2030, that have not y et reached the final investment stage .215 To that end, the proposed lead market measures, based on the current project pipeline, could unlock up to EUR 15.5 billion in investments 216 covering approximately 15% of the sector’s EUR 100 billion total investment need by 20 50, as estimated in the impact assessment for the 2040 climate target. . 217, 218 In contrast to the baseline scenario, where export -led overcapacity in third countries leads to artificially low prices (notably for steel) and causes EU job losses and plant closures, introducing Made in EU low-carbon requirements will help safeguard security, redirect demand towards domestic , cleaner producers, and improve the resilience and transition of sectors like steel or aluminium that have lost market share over the past decade. According to the targeted stakeholder consultation, support for stimulating demand for EU -made industrial products was broadly shared among respondents (86%; 53 out of 62 respondents). Support was widespread among sectors.219 SMEs also strongly supported lead markets for EU-made industrial products, i.e. micro businesses (6 of 7; 86%), small businesses (6 of 7; 86%) and medium-sized businesses (5 of 6; 83%). INV 2 - FDI conditions would be mandatory and applied consistently across the EU, resulting in more stringent requirements on companies in scope. Conditionalities such as value -added production and staffing requirements could increase costs by limiting options for raw materials, components or labour, while ownership, joint -venture and EU -content requirements would have the strongest operational and strategic impact . The benefits outlined in PO1 would be amplified, as consistent application would close loopholes, preventing invest ors from bypassing requirements by selecting investment locations with weaker or no conditionalities. For companies investing in or producing “strategic reinforcement” technologies, all core conditions would apply, creating a more rigid obligation set; for companies developing or manufacturing “other emerging key strategic sectors”, the requirement to comply with only a minimum subset of conditions would provide greater flexibility when adapting business models. In the short term, this may temporarily deter some investments in the EU for the concerned sectors, particularly those relying on imported intermediate goods or a global staffing model. However, OECD evidence shows that performance -based, transparent obligations (e.g. EU sourcing shares, local R&I, technology commitments) are compatible with sustained inflows.220 Over the medium to long run, companies adapting to these obligations are expected to embed more R& I and technology in their EU operations, making investments “stickier” and more resilient. International experience suggests that such measures can 215 Estimate based on BloombergNEF’s Steel Decarbonization Project Database 1.0.5. The cumulative figures of 41 Mtpa of low-carbon steel capacity and the associated EUR 15.5. billion in investments represent only projects whose output meets the indicative IAA’s carbon intensity label classes of performance (Class A-C). 216 Ibid. 217 European Commission (2024)., Commission Staff Working Document: Impact Assessment Report (Part 3), accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Securing our future - Europe's 2040 climate target and path to climate neutrality by 2050, building a sustainable, just and prosperous society, COM(2024) 63 final, pp.164-167. 218 Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B), p. 99. 219 All respondents from glass (4), pulp & paper (1) and ceramics (3) agreed. Among respondents from the iron & steel sector, 16 out of 18 agreed, while support was also strong among non-ferrous metals (4 out of 5) and cement (6 out of 7). The chemical showed lower agreement (2 out of 4). 220 Mistura, F. and C. Roulet (2019). The determinants of Foreign Direct Investment: Do statutory restrictions matter?, OECD Working Papers on International Investment, No. 2019/01, OECD Publishing, Paris, https://doi.org/10.1787/641507ce-en. 55 strengthen strategic value creation without deterring investment, provided they are implemented carefully (see Annex 13). PERM 2 has the objective to streamline and/or increase business certainty over the permitting process. In this context, energy intensive companies’ decarbonisation projects eligible for measures like a One stop shop (Single point of contact) or the permitting timelines could largely benefit from an improved efficiency for their businesses as outli ned in the findings of the Innovation Fund knowledge sharing report from 2025. 221 The measures would reduce the number of authorities to contact (which can in some cases reach 10), increase certainty over the timeline for the project from extreme cases lasting more than two years, and be reduced to a maximum of 18 months. Projects could also benefit from tacit approval, subject to conditions, on certain intermediary steps of their permitting process, which could help with the sequencing of permits and further incentivise public authorities to deliver timely feedback. Moreover, while not speeding up the environmental assessment itself, the presumption of overriding public interest could streamline the final stages of permit approval and increase business certainty . Additionally, enabling the testing of innovative technologies under the regulatory sandboxes for limited periods of time, regarding the production technologies for renewable and low-carbon hydrogen, will facilitate the testing of new generation technologies. Regulatory learning , as one of the main outcomes of regulatory sandboxes would enable authorities to improve the regulatory environment for upcoming technologies, and as a result improve their permitting framework. AREA 2 - The designation by Member States of industrial areas with investment projects that comply with the criteria presented in this option would allow for selected projects complying with the specified IAA criteria to increase visibility and facilitate their ac cess to finance. This would include easier access to public funding at EU and national level, without prejudice to State aid rules, as well as increased visibility vis-à-vis private investors. 6.2.1.2 Impact on downstream sectors LEAD_EII 2 - The impacts of low-carbon requirements for steel, aluminium and cement used for the end user of the materials, namely automotive and construction projects in public procurement and support schemes, have been addressed under PO1 (Section 6.1.1.2 estimates implications for the downstream sectors of about EUR 291 million loss of GVA for automotive and EUR 691 million loss of GVA for construction). Combining such low-carbon with Made in EU requirements in public procurement and public support schemes is expected to induce no further adjustment costs for the construction sector and automotive manufacturers. In fact, assuming current supply/ demand ratio is maintained, a high share of the steel and aluminium currently used in European vehicles and construction is already sourced from European production.222 Made in EU requirements will mostly act as a safeguard mechanism, to make sure that domestic producers , w hen investing in decarbonisation, benefit from a secure and guaranteed demand share. It should be noted that according to the modelling exercise, the definition of Made in EU assumed that demand is to be met by EU Member States and EEA, and therefore does not consider any imports which can alleviate the impacts to downstream sectors. 221 European Commission (2025). 2025 Annual knowledge sharing report of the Innovation Fund. 222 EU production is still able to cover between 80 and 90% of the EU’s domestic demand of steel and about 45% of the EU’s domestic demand of aluminium. COM(2025) 125 final 56 Construction: Over 30% of the EU’s steel demand comes from the construction sector, while for cement, construction represents 98% of the demand. As noted in the introduction of low - carbon requirements in PO1 , the cost increase for final products would be relatively small, since steel, aluminium and cement represent a fraction of the final product costs of, e.g. vehicles or infrastructure projects. Available estimates, as outlined in Section 6.1.1.2 confirm that, even combining the impact of low -carbon material requirements across several energy -intensive materials would have a moderate effect on the final cost of vehicles and construction projects, and therefore moderate impact in the sector’s value added. Administrative costs Administrative costs for ensuring conformity with the Made in EU measures could entail a higher impact than those observed in PO1 , due to the need to enforce the Made in EU . More concretely, applicable m easures could have significant impacts on the aggregated administrative costs for the construction sector, due to its size, in the EU to show compliance with the measures. To minimise these impacts, an exemption could be considered for micro and small companies as they are not expected to fundamentally impact lead market provisions due to the size of their projects. For most firms, these costs represent a minor fraction of total project expenses and are unlikely to affect investment or procurement decisions. Over time, the establishment of harmonised certification procedures and greater supplier familiarity with EU -origin rules should reduce administrative burdens and improve efficiency. The measure thus provides downstream actors with more stable and predictable sourcing conditions, while incentivising closer collaboration with EU-based suppliers. INV 2 - Regarding the FDI conditionalities, the voluntary approach assessed in PO1 would, under PO2, become mandatory EU -wide for the batteries segment and for the other strategic technologies in scope. In the short term, downstream sectors could face moderate cost increases if suppliers pass through compliance costs, particularly in batteries and other market segments where EU production capacity is not yet fully scaled. These transitional costs are expected to be contained if conditionalities are phased in gradually. As under PO1, the conditions with the strongest downstream impact are ownership, joint -venture and EU -content requirements, as these conditions shape suppliers’ sourcing strategies, cost structures and localisation decisions. Mandatory application across the Single Market would substantially strengthen EU value chains by encouraging more embedded upstream activities, accelerating technology and know- how transfers and improving the availability of EU-based suppliers - resulting in more tangible competitiveness gains for downstream sectors. Conditionalities linked to value -added production, supply -chain security or technology retention could raise the price of certain inputs, especially in the short term as local value chains adjust to the new demand created by the new FDI projects. Nevertheless, a more predictable and harmonised investment environment could lead to higher benefits for the industries in scope than the operati onal costs of mandatory investment conditionalities. For downstream sectors, the uniform EU framework reduces fragmentat ion, levels the playing field across Member States and enhances long -term supply -chain stability. Above all, they would contribute to harmonise the approach within the Single Market, thereby increasing the benefits across EU Member States. Experience from other regions suggests that comparable FDI measures can reinforce industrial linkages and supply chain resilience without harming investment flows (see Annex 13). 57 6.2.1.3 Impact on SMEs LAB 2 - SMEs in the steel value chain are expected to benefit from the low-carbon steel label obtained by large manufacturers, as it will promote and enhance market differentiation of low- carbon products across the supply chain. This, in turn, can provide SMEs a competitive edge by meeting the demand for low-carbon products, and accessing new markets which require the use of such label as a compliance instrument. LEAD_EII 2 will directly benefit EU SMEs in the steel, aluminium, cement , vehicle component manufacturers, as well as solar and battery manufacturers by creating more predictable demand for their European products. These requirements will not only strengthen existing manufacturers but also open new market opportunities for emerging businesses, especially within the growing battery ecosystem. As these industries expand, SMEs will be better positioned to scal e their operations and integrate into global value chains. As under option PO1, SMEs in selected downstream sectors are expected to be less able than larger firms to pass on to consumers or to absorb the extra costs. Even if limited, the cost increase will likely negatively impact their ability to export products. It may also be costly and time consuming for SMEs to demonstrate compliance with low - carbon and made in EU requirements. This burden could be eased through tailored support measures (such as clear guidelines, digital tools, and dedicated helpdesk) specifically for SMEs as well as by extending the validity periods of relevant certificates. Furthermore, in the case of the construction sector, small and micro companies (99% of construction companies) will be allowed to demonstrate compliance with the requireme nts via self -declaration, reducing the administrative burden. INV 2 - Mandatory conditionalities are expected to systematically increase opportunities for SMEs as suppliers to foreign investors. Because conditionalities apply across all key strategic sectors, the resulting localisation of R&I, manufacturing and procurement activities is likely to broaden SME entry points in multiple value chains rather than in isolated segments. This integration may require SMEs to meet higher quality and certification standards, potentially creating compliance costs and working -capital need s. Some SMEs may also need to scale production capacity or upgrade processes to meet the requirements of foreign investors adapting to the mandatory regime. Complementary support (e.g. supplier development programmes, technical assistance) will be critical to ensure SMEs can capture these opportunities. In the medium run, SMEs are expected to benefit from more predictable and stable demand, enhanced technological capabilities, and greater participation in global value chains. The uniform EU -wide application of conditionalities also reduces fragmentation, ensuring that SME opportunities are not limited to specific Member States, as would be the case under a voluntary regime. 6.2.1.4 Impact on citizens and consumers LAB 2 - The impact on citizens and final consumers of a label on the carbon intensity of steel would be marginal or indirect since steel is a business-to-business traded product between steel manufacturers and other companies, rather than to individual consumers. However, indirectly and through the supply chain, the info on the label could be transferred to consumers to inform about the carbon footprint of the material used in the final good. LEAD_EII 2 - The impacts are broadly similar to those described under PO1 , and driven by the low-carbon measures, rather than Made in EU requirements . As noted in Section 6.2.1.2, 58 the introduction of Made in EU measures would not necessarily add any extra costs for the final consumers, other than the low-carbon premium. PERM 2’s measures related to the presumption of overriding public interest might generate additional resistance by local communities affected by such projects, which can be mitigated by maintaining dialogue with local population. Similarly, strict deadlines for pe rmit granting would need to be achieved while ensuring proper consultation to prevent the risks of litigation. INV 2 - Consumers may face small, visible price increases in the short term (e.g. for EVs) as firms adapt supply chains to meet EU sourcing or staffing obligations. These transitional effects are expected to be modest and outweighed by longer-term benefits. Citizens will benefit from more secure access to critical products ( like batteries and EVs), higher-quality jobs located within the EU, and better protection against supply disruptions. Over time, conditionalities should also contribute to faster decarbo nisation, supporting the EU’s climate goals and strengthening public trust that the green transition delivers local value and industrial capacity. 6.2.1.5 Impact on competitiveness LEAD_EII 2 is not expected to have an impact on trade flows compared to PO1, considering that the Made in EU targets introduced fall within existing shares of EU demand met by domestic supply in the automotive and construction sectors. In fact, the made in EU measure would enhance competitiveness by securing a minimum low-carbon domestic demand, which is particularly important in a context where the decarbonisation of these industries can widen the cost gap with third country imports. Temporary administrative and certification costs linked to verifying Made in EU are expected to decline over time as procedures become standardised, strengthening predictability and supply -chain resilience.223 Additionally, the combination of low-carbon and made in EU requirements will ensure demand is met internally rather than through third country imports. Some of the costs may also be underestimated, as the modelling assumptions do not reflect potential changes in trade flows deriving from the Made in EU requirements while switching to low-carbon alternatives. As such, it is assumed that the supply chain structure and flows for the automotive and construction sectors would remain the same through the transition . It is possible however to consider that supply chain dynamics would result in downstream sectors preferring to source outside of the EU while shifting to low-carbon alternatives. Automotive: Considerations under PO1 are also valid under PO2. The Made in EU requirement introduced under PO2 is set to generate a positive impact on the competitiveness of domestic vehicle manufacturers that already source most of their steel inputs locally (see Section 6.2.1.3). INV 2 - Mandatory conditionalities would strengthen EU competitiveness by ensuring that inward FDI systematically contributes to local value creation, innovation, and industrial ecosystems. In the short run, compliance costs could erode margins for some investors. However, consistent EU -wide rules eliminate loopholes, closing opportunities for firms to bypass requirements and helping to level the playing field for both EU and foreign companies. Over time, the resulting knowledge transfer, technology retention and innovation spillovers are expected to reinforce EU technological leadership across the batteries and other key strategic sectors concerned, rather than in isolated value chains. 223 This assessment is consistent with the modelling framework used in COM(2025) 780 final, applying the same behavioural parameters and elasticity assumptions. More detailed results and the full calculation methodology are presented in Annex 11. 59 6.2.1.6 Impact on competition LEAD_EII 2 - As the low-carbon and made in EU targets are set in order to accommodate for existing and future EU low-carbon production while also considering the reasonable absorption of price increases in downstream sectors, the measure is not expected to distort competition among market actors that comply with these requirements. However, for products subject to Made in EU requirements for security or environmental reasons, competition would be limited to manufacturers located within the EU, thereby exclu ding non -EU producers up to the minimum content and narrowing the pool of eligible suppliers. INV 2 could further safeguard the Single Market from disruptions caused by foreign investments and promote more effective competition, due to its mandatory nature. By introducing harmonised conditions for investments in scope, the level playing field in the Single Market would be enhanced and give investors a single, predictable rulebook. This uniformity ensures fairer competition between investors, regardless of entry location. Practices in other jurisdictions demonstrate that well -designed FDI conditions can enhance fair competition and prevent market distortions linked to state-backed investors (see Annex 13). 6.2.1.7 Impact on international trade LEAD_EII 2 is not expected to have an additional impact on trade flows compared to PO1, considering that the Made in EU targets introduced fall within exis ting shares of domestic supply in the automotive and construction sectors. The EU’s cement industry is structurally domestic, with exports representing less than 3% of production and imports even smaller. Transport costs and product bulk make long -distance trade uneconomical. Even under a 5% low -carbon requirement, no material ef fect on trade flows or competitiveness is expected. Intra-EU trade flows of steel, aluminium and cement would increase due to the requirements in other EU countries to buy more Made in the EU steel, aluminium, and cement products. INV 2 - Compared with PO1, the mandatory nature of INV 2 could generate stronger short - term adjustments in trade and FDI flows, particularly where localisation or EU -content obligations alter sourcing patterns, but these effects would remain concentrated in the sectors covered. Its application must remain consistent with the EU’s international commitments on investment liberalisation. In most FTAs, the EU has already granted extensive market access and national treatment in non-services sectors, except for a few sensitive activities. As a result, FDI from these partner countries (representing most EU inflows ) would be exempt, limiting overall coverage. The measure would thus primarily apply to strategic investments from non - FTA countries where economic security risks are highest. However, both GATS and TFEU provisions allow restrictions on capital movements onl y under narrowly interpreted public policy or security exceptions, leaving limited room for measures justified purely on economic or industrial grounds. 6.2.1.8 Impact on Member States LAB 2 would increase the administrative burden for Member States, depending on the additional data requirements, accounting, reporting and verification system. However, as the label on steel will be built on existing EU ETS and CBAM verification rules, the burden on national authorities is expected to be limited, and even more so compared to LAB 1. LEAD_EII 2 - The financial burden on Member States of introducing low -carbon requirements for steel, aluminium and cement used in automotive and construction projects in 60 public procurement and incentives schemes has been assessed under PO1. Adding a Made in EU requirement will likely not lead to additional adjustment costs. However, it is likely to increase the administrative burden since public administrations would be required to establish systems for monitoring, verification, and enforcement of compliance. This will involve building on existing EU -level verification mechanisms or building new ones in case not in place yet. Effective implementation depends on the availability of reliable and transparent standards, emissions accounting methodologies, and certification systems as well as guidance for Member States. To support effective implementation, Member States will need to designate a competent authority to oversee the implementation process and ensure monitoring, verification and enforcement. For steel, the introduction of a label on the carbon intensity of steel (LAB 2) will provide a reliable tool for certification. It will also have to ensure that the certification system in place is properly enforced and monitored for fraud risk. Similarly, in the construction sector, for harmonised construction products the compliance with low-carbon requirements will have to be certified by a Declaration of Performance and Conformity, under the procedure established in the context of the Construction Production Regulation. INV 2 - For Member States, mandatory EU -wide conditionalities would bring higher administrative responsibilities for those Member States that currently do not screen incoming FDI. This will entail capacity -building and generate efficiencies by reducing fragmentation. Uniform conditionalities strengthen the consistency of the Single Market and reduce the administrative burden of divergent national practices, while ensuring that all Member States benefit from spillovers rather than competing against each other. Lessons from other economies show that coordinated frameworks for FDI screening can strengthen national capacities while preserving overall attractiveness to investors (see Annex 13). PERM 2 - Impacts linked to the “One project, one digital process” have already been outlined for PO1. Measures related to timeframes are expected to shorten procedures and would require additional administrative resources when the reason for delays is the lack of capacity. Still, the proposed time limits for decision -making are based on timeframes that are often already achieved and aim mainly to increase the predictability of the process for the most extreme cases. In addition, time limits can provide incentives to public authorities to consolidate internal processes. Tacit approval measures for intermediary steps of the permit granting process would not be applicable for Member States in which this option is not allowed by their legal system. No additional impact would be expected in those countries. This measure is in part introduced to facilitate the achievement of the time limits by streamlining sequential characteristics of certain permit-granting processes in other Member States. Some training for relevant authorities could be expected to fully incorporate the tacit approval into the permitting process. AREA 2 - Member States would need to provide the necessary resources to conduct the process to designate areas with relevant projects. Given that the Commission will provide them with guidance on how to do so, and that each Member State only assigns a limited number of such projects, the additional impacts on Member State administrations should be limited. Additionally, Member States will be able to draw on their experiences with Strategic Projects under the NZIA, where already decarbonisation projects have been designated as strategic. 61 6.2.2 Social impacts 6.2.2.1 Impact on employment LEAD_EII 2 would help boost European employment in EIIs. According to research by think tank Strategic Perspectives, implementing a 100% substitution of low-carbon and made in Europe requirements224 for steel could result in a 21% increase in e mployment in the steel sector by the year 2030 compared to a baseline scenario without such policies in place.225 INV 2 - Impacts described under PO1 remain valid for PO2 and are expected to contribute to an increase in employment and the creation of quality jobs. Mandatory measures would more effectively prevent companies from cir cumventing staffing requirements by removing the possibility for investors to choose Member States without such obligations , thereby better safeguarding the homogeneity of the Single Market. The implementation of these conditionalities would build on existing FDI screening structures in Member States, with designated authorities ensuring that employment and training commitments are met. This may require some procedural adjustments where Member States currently apply limited or no staffing-related conditions. 6.2.3 Environmental impacts LAB 2 would support the decarbonisation of the steel industry, which is one of the most emission-intensive industrial sectors, representing almost 20% of the industrial GHG emissions in the EU. In fact, the introduction of an EU-wide label based on reliable and verified data and a uniform methodology can improve the understanding of what constitutes steel with lower carbon footprint impact. The exact impact would depend on three key parameters: 1. The scope of the GHG emission information provided by the label. 2. The label’s ability to ensure comparability across products and producers. 3. The attractiveness and use of the voluntary label by companies. As explained in more detail in Annex 12, up to 78% of GHG emissions (in case of primary steel, up to 60% in case of secondary) can be covered by a label relying on direct industrial GHG emissions covered by EU ETS as well as indirect emissions from electricity, heat and hydrogen use. Besides, the comparability across products and producers can be effectively ensured by integrating classes of performance in the label, based on clear quantitative GHG - intensity thresholds. To maximi se the comparability of diverse production pathways, the performance class thresholds could be adjusted in line with the amount of scrap used. Multiple types of information, in addition to indicating a performance class under the classification system, could be added, such as the actual GHG emission intensity or the amount of recycled content used in the product. It must be noted that during stake holder consultations, the use of a sliding scale for differentiating the performance classes or of an alternative classification method not as a function of scrap was highly debated with no clear preference or compromise solution within industry. LEAD_EII 2 – could have a bigger environmental impact than PO1, as mandating made in EU requirements could lower transport emissions associated with imports. These are however not quantified in the calculation on reduction of GHG emissions , since they would require a 224 Defined in the study as a maximum carbon intensity of 0.7 tonnes of CO2e/tonne of steel for flat products and of 0.35 tonnes of CO2e/tonne of steel for long products in 2030. 225 Strategic Perspectives (2025). Lead markets: driving net-zero industries made in Europe. Estimate from dataset used in report’s underlying analysis. 62 comparison between the domestic and imported material under an established low-carbon methodology. PERM 2 - The designation of a one-stop-shop and streamlining of different assessments could prove to have a positive impact on the environment, as it enables a more comprehensive information base for decision -making. Moreover, by providing a set time limit of 18 m onths for decarbonisation of energy intensive industrial projects, the EU could gain up to 30 months of decreased emissions from industrial projects on the most extreme cases, thus speeding up GHG emission reductions.226 The use of the overriding public interest (OPI) provisions is allowed under the current environmental legislative framework. This provision does not prevent the need for planning and assessing environmental effects under relevant legislation (Water Framewo rk Directive, Habitats Directive,) and therefore does not necessarily accelerate the speed of the assessments. It will provide however the most favourable procedure available in Member States’ planning and permit -granting procedures, while requiring that a ll other conditions are also met . Overriding public interest considerations enable projects to go ahead upon some conditions even in case of a negative assessment for the project, so certain environmental impacts can be expected. However, any authorisation under the overriding public interest considerations must provide adequate compensation measures to offset environmental adverse effects, as provided in relevant legislation. Finally, regulatory sandboxes would be accompanied by a framework setting the nec essary limitations to prevent any unintended environmental consequences. Sandboxes would always be limited in time and scope, as well as accompanied by appropriate mitigation measures. 6.3 POLICY OPTION 3 6.3.1 Economic impacts 6.3.1.1 Impact on companies LEAD_EII 3 - extends low-carbon and Made in EU requirements to the steel, cement and aluminium used in all vehicles and construction products placed on the market. Extending requirements to all products in the automotive and construction sectors would drive the broader market transformation needed for systemic decarbonisation of EIIs, particularly in steel, where public procurement covers only a limited share of total consumption. By creating large-volume and predictable demand, these measures would send long -term market signals necessary to unlock investment in low-carbon technologies. This predictability of future demand for low -carbon steel can help absorb part of the investment’s costs from the low -carbon technologies and has a high potential to further push investment decisions towards decarbonisation. In the EU steel sector, there are currently at least 29 announced steel decarbonisation projects, with a combined potential capacity of additional 41 Mtonnes of low-carbon steel per year by 2030, that have not yet reached the final investment stage. To that end, the proposed lead market measures, based on the current project pipeline, could unlock up to EUR 15.5 billion in investments 227 covering approximately 15% 226 EIIs account for approximately 22% of the European Union's total greenhouse gas (GHG) emissions. Time gained through a more efficient permitting process will help to decrease the 22% and achieve wider climate targets earlier. 227 Estimate based on data from BloombergNEF’s Steel Decarbonization Project Database 1.0.5. The cumulative figures of 41 Mtpa of low- carbon steel capacity and the associated EUR 15.5. billion in investments represent only projects whose output meets the indi cative IAA’s carbon intensity label classes of performance (Class A-C). 63 of the sector’s EUR 100 billion total investment need by 20 50, as estimated in the impact assessment for the 2040 climate target. 228, 229 Furthermore, export-driven overcapacity in third countries today leads to artificially low prices (notably for steel) and causes EU job losses and plant closures. Therefore, this measure introduces higher Made in EU requirements (targets of 85% for steel, 95% for cement and 70% for aluminium) to help safeguard security, redirect demand towards domestic producers, and improve the resilience of sectors like steel or aluminium that have lost market share over the past decade. 209 There are two opposing effects of introducing Made in EU requirements. The first is the reduction in the production of cement, steel or aluminium due to the downstream sectors facing higher costs and reducing their demand for domestic production. Secondly , the cement, steel and aluminium industries will experience an increase in demand stemming from the Made in EU requirements as these would lead to replacing imports from non-EU countries by domestic production. Overall, the second effect is greater than the first and translates into higher value added for these sectors. Energy intensive sectors (cement, aluminium and steel) would benefit from higher targets under LEAD_EII 3, in a similar way as in LEAD_EII 2 but with a higher positive impact. In particular, for the EU cement industry, such benefits would represent 3.09% (EUR 2 079 million) of its total sectoral value added , while for the European steel and aluminium companies, it would account for 4.32% (EUR 2 883 million) of its total sectoral value added. In both cases, the results refer to the period 2025-2030, compared to a baseline scenario without IAA measures. Similarly to LEAD_EII 2, the benefits stemming from the increase in the demand for steel, cement and aluminium due to the Made in EU requirements overcompensate the reductions in the demand for steel, cement and aluminium from downstream sectors facing hig her costs. Moreover, the benefits are greater since the Made in EU requirements are extended to all products in the automotive and construction markets (not only public procurement and support schemes markets). When comparing LEAD_EII 3 and LEAD_EII 2, the FIDELIO model shows that the public market is an important driver of impacts of the proposed policy measures. This is particularly relevant for the steel and aluminium sectors, where public procurement and publ ic subsidies for automotive causes up to 73.84% of the total estimated positive impacts in both sectors in the period 2025-2030.230 In addition to the existing climate policies, introducing low -carbon requirements will help creating demand and accelerating investments, while Made in EU requirements would secure domestic market share for strategic materials, providing greater certainty for investment decisions, compared to the baseline. Redirecting demand to EU -based producers would also improve capacity utilisation - particularly in sectors that have seen notable declines between 2000 and 2021, such as cement, aluminium, and integrated steelmaking. LEAD_BAT 2 / LEAD _SOL 2 - Expanding Made in EU requirements to all products in scope (i.e. steel, cement and aluminium in automotive and construction; batteries and solar PV) placed on the market would increase demand for EU produced energy intensive materials, EU manufactured batteries and solar, with greater certainty for domestic investments. 228 European Commission (2024)., Commission Staff Working Document: Impact Assessment Report (Part 3), accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Securing our future - Europe's 2040 climate target and path to climate neutrality by 2050, building a sustainable, just and prosperous society, COM(2024) 63 final, pp.164-167. 229 Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B), p. 99. 230 According to European Commission estimates based on FIDELIO model (Rocchi, P. et al. 2025). 64 Looking ahead, Europe is not expected to meet its internal battery demand with domestic production only until 2030. 231 Therefore, the introduction of Made in EU requirements to products placed on the market had to take account of the time needed to reach operational status and reach full-scale production for battery investment. The current EU solar manufacturing capacity, mainly in critical components (e.g., wafers, cells, inverters), does not yet have sufficient scale to meet overall demand. As the non -public segment of the solar PV market accounts for around 65% 232 of the EU market, introducing mandatory minimum Made in EU requirements had to be carefully designed to avoid creating pressure on the EU supply chain. In conclusion, extending even partial Made in EU requirements to all products placed on the market at this stage carries some risks for the solar and battery industries, including potential market distortions, implementation challenges, and legal uncertainties. While such requirements could play a role in the future, their near -term application may generate more challenges than benefits unless carefully phased and supported by complementary measures. PERM 3 contains PERM 2 and therefore the same expected impacts. On top of this, it is expected to further facilitate the deployment of decarbonised projects in specific areas dedicated to industrial activity. The identification of geographical areas of industrial activity will promote industrial symbiosis and offer opportunities for collaboration between industries. Most notably, by being able to settle their projects in key areas of energy demand in the Member States, industry’s connection request to futur e energy infrastructure would become easier through the local synergies between generation and supply of electricity, potentially allowing for more efficient grid use and priority treatment for connection requests. Considering the electricity grid congestion issues and the lack of a hydrogen or CO 2 infrastructure, favouring a clustering approach is expected to attract industrial investments as it may allow for faster grid connection. Subjecting the entire plan designating the industrial clusters to environmental assessments can contribute to streamlining subsequent permitting steps. LEAD_VC 2 – The same assumptions apply as in LEAD_VC 1 (the increasing cost of EVs for EU car manufacturers is projected to be the same). However, in LEAD_VC 2, 100% of EVs put on the EU market will be affected. As vehicle manufacturers will have the incentive to comply with the target to have access to public subsidies, the model predicts an increase in EU vehicle component suppliers’ sales to the manufacturers of EUR 7.83 billion in 2027 and by EUR 8.2 billion in 2030 when aggregating the sales in all three vehicle segments. 6.3.1.2 Impact on downstream sectors LAB 2 would have same impacts as described under PO2. 231 Based on industry announcements, the EU is expected to reach an installed battery cell manufacturing capacity of 892 GWh by 2030, matching an estimated internal demand of 890 GWh. 232 Solar Power Europe input and Commission calculation. Based on the Public Consultation, 67% (210 out of 314 respondents) support industrial clustering as a solution to streamlining and improving the efficiency of the permit granting process. 65 LEAD_EII 3 - extending low-carbon and made in EU requirements to all products placed on the market will amplify the impacts described under PO1 /PO2 for the construction and automotive sectors. On the production side of the economy, the construction sector would see losses of their value- added reaching EUR 2.2 billion, while the automotive industry would see more moderate losses, of EUR 396 million. On the expenditure side, this translates into a reduction in consumption amounting to 564 million in the construction sector and 240 million in the automotive industry. These losses are a direct response to higher final good prices driven by the newly imposed green premium, and are partly driven by a decrease in the consumption of products of the automotive and construction sectors .233 More information on consumption patterns can be found in Section 6.3.1.3 and 6.3.1.7 , while further breakdown of cost calculation can be found in Annex 4 Section 2.2. Expanding Made in EU requirements to higher targets (85% for steel, 95% for cement and 70% for aluminium) and larger scope (i.e. to include all vehicles and construction projects placed on the market) would broadens the impact. The measure would cover a large share of industrial steel use and require a minimum EU-origin content in products placed on the EU market. However, downstream industries are expected to absorb these costs gradually through process optimisation and local sourcing efficiencies. In addition, greater reliance on EU-based suppliers will reduce exposure to import disruptions and long shipping lead times. For construction and automotive sectors, this stability translates into improved delivery reliability and long -term cost predictability, offsetting short-term compliance expenses. For the automotive industry, LEAD_EII 3 would determine the application of a minimum Made in EU requirement to the steel and aluminium used in the production of all vehicles placed on the EU market. In 2024, 28% of all vehicles registered in the EU market were imported from extra-EU countries.234 Those imported vehicles would also need to source from EU countries their steel and aluminium up to the minimum share required. While this is expected to translate into higher demand for EU EIIs producers, it would increase costs for automotive manufactur ers. In terms of value added, the impacts of introducing the policy measures foreseen under LEAD_EII 3 would have considerably less important effects (in relative terms) on the automotive sector than in construction, even when combining them across several energy-intensive materials. Specifically, this impact would represent an EU27 average of -0.80 % (or EUR 6 651 million for 2030) of the EU automotive sector’s value added for 2025-2030, with respect to a baseline scenario without IAA measures.235 Introducing a minimum Made in EU requirement for cement used in the construction sector would reduce the EU construction sector’s value added by an EU27 average of -1.69 % (EUR 13 996 million) for 2025-2030 with respect to a baseline where no IAA measures are applied.236 The overall negative impact primarily arises from the fact that downstream sectors—those with a larger economic contribution to the EU GDP than the cement, steel, and aluminium industries—face increased costs due to increased Made in EU requirements. There are however disparities across the cement -related products and across Member States. The EU has been consistently a net exporter of cement, while it relied on imports to meet its 233 Figures result from a simulation of the F IDELIO model, when prices in the automotive and construction sectors are shocked by 0.225% and 0.4499 % respectively, and the resulting general equilibrium effects of higher prices on final demand, incomes and value added are computed. 234 S&P Mobility. 235 According to European Commission estimates based on FIDELIO model (Rocchi, P. et al. 2025). 236 Ibid. 66 demand in clinker before the financial crisis and again in 2021. 237 In addition, Member States where there is a higher cross -border trade with third countries due to geographical proximity would be more affected . This is the case for Southern European regions, exposed to trading with Northern Africa, and Eastern European regions. It should be noted that in the modelling exercise, the relevant demand was only met by EU Member States supply and EEA countries, meaning that it does not consider any potential third country imports which could alleviate the impacts to downstream sectors assessed. Measures applicable to the construction sector could have significant impacts on the aggregated administrative costs for relevant companies in the EU to show compliance with the measures. To minimise these impacts, an exemption could be considered for micro and small companies as they are not expected to fundamentally impact lead market provisions due to the size of their projects. LEAD_BAT 2 / LEAD _SOL 2 - Unlike measures limited to public procurement or public support, this approach would affect the whole market. Higher battery prices would impact the affordability and uptake of EVs and BESS, potentially slowing down their deployment. This, in turn, may also affect demand for EU-made batteries, influencing the pace of new investments in battery manufacturing. Ensuring cost competitiveness alongside scaling up production capacity will therefore be key to sustaining demand growth and strengthening the investment case for EU battery manufacturing. Additionally, ensuring adequate supply would be a challenge. Current EU battery production capacity does not match projected demand, as outlined in the previous Section. This measure would require a timely scale -up to prevent the gap from driving up prices and delaying project timelines. As regards solar, the proposed measure could negatively impact downstream sectors involved in solar deployment. Increased regulatory complexity and increased investment costs in the short-term could slow down the development of utility-scale solar farms, with implications for project developers, engineering firms, equipment suppliers, and grid operators. While this may initially affect project pipelines, it can also encourage more resilient supply chains and greater transparency in the market. Buyers, parti cularly in offtake agreements or PPAs, may face increased due diligence obligations to certify compliance. LEAD_VC 2 – Similarly to LEAD_VC 1, given the estimated current level of 70% Made in EU in the EVs, the measure would not lead to any further costs for EU EV manufacturers in 2027 to comply. As the target is increased to 75% by 2030, the measure would represent a cost increase of EUR 2.36 billion for EU EV manufacturers, which on the other hand would be offset by the increase of sales . EU EV manufacturers are expected to benefit from a sales increase of EUR 16.7 billion across all vehicle segments in 2027 and EUR 10.7 billion in 2030. The increase in sales is presumed to offset the cost increase for pas senger cars and LCVs, however, not for HDVs. Finally, LEAD_VC 2 is projected to lead to the generation of EUR 6.6 billion Global Value Added (GVA) in 2027 and EUR 5.4 billion in 2030 when assessing the impact, taking into account only the first tier of the value chain. The positive impacts can also be perceived throughout the value chain for intermediate inputs, reaching this time higher benefits, EUR 12.6 billion in 2027, and EUR 11.5 billion in 2030 in value added. 6.3.1.3 Impact on citizens and consumers LEAD_EII 3 would have a much higher impact on consumers in terms of facing cost increase, as the associated ‘green premium’ is likely to be passed on to consumers via higher final good prices (until cost parity is reached). However, as outlined before, the low-carbon cost increase 237 Marmier, A. (JRC) (2023). Decarbonisation options for the cement industry. 67 per passenger vehicle for including a 25% target for both low-carbon steel and aluminium is considered minimal, EUR 69.27. However, th ese cost increases are projected to result in a reduction of consumption from household consumers of EUR 191 million in the construction sector, and 120 million in the automotive sector. Introducing requirements for low -carbon steel , aluminium and cement in the construction sector at large would have a higher impact on costs, due to the cumulation of the three materials used for construction. Nonetheless these costs remain limited, at 0.45% compared to its traditional alternatives. Similarly, public subsidies for renovations could offset part of these costs. PO3 raises the Made in EU targets for steel to 85%, aluminium to 70% and cement to 95%, going beyond existing sourcing levels from EU domestic suppliers for automotive and construction. Citizens and consumers will see further cost increases from the obligation to source European energy intensive industrial products, as automakers and construction companies would pass on the higher cost premium in the final selling price. LEAD_BAT 2 / LEAD_SOL 2 would lead to higher prices for downstream products, as described under PO1. As regards batteries, this could hinder the adoption of EVs and jeopardise the EU’s clean mobility objectives. For BESS projects, the increase in prices and the possible lack of supply could stop the momentum of the sector. As regards solar, citizens and consumers may face higher energy costs and reduced access to affordable solar solutions. Stricter obligations on installers or product specifications could drive up the price of residential solar systems, discouraging adoption by households. In turn, it risks slowing down the uptake of clean energy at the local level and limiting the benefits of lower electricity bills and energy independence for citizens. LEAD_VC 2 - The same assumptions apply as for LEAD_VC 1. In quantitative terms, when we look at the impacts in 2027, the average price increase (from both the potential reduction of price for EU manufacturers and price disadvantage for non-EU manufacturers), there would be an overall price increase of 0. 5% for passenger cars, 0. 1% for HDVs and there could be a reduction of 0.8% for LCVs. Looking at the impact in 2030, the price increase for passenger car rises to 1.4%, to 0.5% for LCVs and 1.3% for HDVs. 6.3.1.4 Impact on competitiveness LEAD_EII 3 - Given that a high share of the steel and aluminium used in vehicles produced in the EU is already sourced locally, the introduction of a higher Made in EU requirement in all products placed on the market is not expected to generate a significant impact on the global competitiveness of the EU vehicle manufacturers, at least in the short term. However, in the longer term, the Made in EU requirement could result in a limited capacity by EU vehicle manufacturers to find the required quality steel and alumini um from non -EU countries if domestic EII production is geared towards the specific needs of the EU market. However, a higher share of EU demand served by domestic steel, aluminium and cement producers under PO3 is expected to deliver a notable economic security gain, as reduced reliance on concentrated third-country suppliers lowers exposure to price manipulation, supply interruptions and coercive practices, thereby strengthening the resilience of the entire construction and automotive value chain. Under LEAD_EII 3, the stronger Made in EU requirement would result in a domestic steel price increase, producing a more visible but still contained effect on downstream industries. The measure would not materially affect investment or competitiveness in construction and 68 automotive sectors but would significantly reinforce the position of EU steel producers by redirecting part of export -oriented output to domestic projects. Total production would increase, improving utilisation of low -carbon capacity and supporting investm ent in cleaner technologies. As certification systems mature and compliance processes become more efficient, the temporary cost impact should diminish, consolidating a more resilient and competitive EU steel base . Once low -carbon technologies reach maturit y and scale, the competitiveness gap is expected to close. The EU’s cement industry is structurally domestic, with exports representing less than 3% of production and imports even smaller. Transport costs and product bulk make long -distance trade uneconomical. In aggregate terms, JRC estimations show that Made in EU requirements for steel and aluminium in construction, and automotive might trigger negative value -added impacts in the EU economy of -0.13%, over the period 2025-2030 (or EUR 15 202 million), and with respect to a baseline where no IAA measures are applied. LEAD_VC 2 – would have the same effect as described in PO1. 6.3.1.5 Impact on competition LEAD_EII 3 introduces Made in EU requirements for EIIs used in products placed on the market (in selected downstream markets), likely reducing eligible supplies for downstream sectors such as automotive, thereby restricting competition and limiting market access. LEAD_BAT 2 would limit access to the European market for manufacturers and suppliers located outside the EU, strongly reducing competition. Such measures would disadvantage companies located overseas and restrict , proportionally to the level of the Made in EU obligation, supplier diversity for the downstream users of batteries (i.e. automotive OEMs and BESS producers). Regarding LEAD_SOL 2, unlike public procurement, which can be monitored through clear compliance frameworks, private market transactions are highly fragmented and decentralised, making enforcement challenging. LEAD_VC 2 The reduced competitive pressure for both the suppliers of vehicle components and vehicle manufacturers that was described for LEAD_VC 1 is to be assumed also under LEAD_VC 2, with a higher effect under the latter measure. Overall, minimum Made in EU requirements imposed on all products put on the market (in selected downstream sectors) would distort competition by artificially favouring EU -made products over others, irrespective of market price, quality or existing contractual relationships, depe nding on the sectors. This potential detrimental effect might be exacerbated in sectors where EU production capacity is more limited, even if for those sectors the level of the content obligations is also lowered. 6.3.1.6 Impact on international trade LEAD_EII 3 – PO2 impacts remain relevant but are amplified, as the introduction of strengthened Made in EU requirements would have a more pronounced impact on international steel and aluminium trade. This change represents an adjustment of EU trade flows, as part of export-oriented output is likely t o be redirected to domestic consumption. However, the measure does not reduce total production capacity; rather, it reallocates supply to the internal market. The EU’s cement industry is structurally domestic, with exports representing less than 3% of production and imports even smaller. Transport costs and product bulk make long - 69 distance trade uneconomical. Even under a 5% low-carbon requirement, no material effect on trade flows or competitiveness is expected. Extra-EU economies would benefit from positive value -added gains in construction and automotive from an Made in EU requirement238 for steel and aluminium. These downstream sectors would possibly benefit from the increased availability of domestically produced EII inputs that previously were exported to the EU, which would result in lower prices for their inputs. LEAD_BAT 2 - Making market access conditional on Made in EU in batteries would directly affect imports from major global suppliers, particularly in Asia. The difficulty lies in WTO non-discrimination rules, as imported and EU -produced batteries are “like products” and a content condition would likely be contested. At the same time, Europe’s attractiveness as a fast-growing market means suppliers would have strong incentives to comply, either by adapting sourcing or investing in EU production facilities. Thi s creates an opportunity to accelerate localisation and reduce dependency on external supply. To strengthen the case, the measure would need to be tightly framed around essential security and resilience arguments, supported by evidence of risks such as export restrictions. Even if challenged, it could succeed in re-anchoring part of the battery value chain in Europe, though the political costs of trade disputes would need to be managed. LEAD_SOL 2 - Applying Made in EU conditions would have significant trade consequences, as the EU is highly dependent on imports, especially from Asia. WTO panels have already struck down comparable local content schemes in solar. The risk of legal and political retaliation is therefore high. Nonetheless, the scale of EU demand makes the market too important for global players to ignore. A requirement could trigger investment in EU manufacturing and create new industrial opportunities, provided it is careful ly designed and linked to legitimate policy objectives such as climate security and resilience. There is therefore a trade-off: the measure could be transformative for EU industrial capacity but would almost certainly provoke partner pushback. Managing thi s would require complementary diplomacy and perhaps transitional measures to avoid abrupt disruption of supply. LEAD_VC 2 - extending the Made in EU requirements to all EVs placed on the market in the Union would have a much more direct and wide-ranging effect on international trade. 6.3.1.7 Impact on Member States LEAD_EII 3 - introduces low -carbon and made in EU requirements for EIIs for products placed on the market, which will place additional responsibilities on Member States, as they would be required to establish systems for monitoring, verification, and enforcement of compliance. This will involve building on existing EU -level verification mechanisms or building new ones in case not in place yet. PERM 3 - Relevant impacts on Member States have already been assessed under PO1 and PO2. Increased administrative support needs from relevant national authorities could be expected in the assessment and designation of potential clusters at Member State level including setting up relevant procedures across diverse public sector competencies, in view of the priority assessment to grant the infrastructure connection and the environmental assessments of clusters’ plans. 238 EU content is defined as EU Member States and EEA countries . Moreover, the JRC results are modelled for construction and automotive, two sectors in total, which could have an impact on overall results. 70 LEAD_VC 2 – Similarly to LEAD_VC 1, as observed above public support schemes currently used in the automotive industry will mitigate the adverse effects of LEAD_VC. Since the assumptions are based on already existing schemes, the cost of public subsidies used for this Impact Assessment will not represent an increase in cost for Member States. 6.3.2 Social impacts LEAD_EII 3 - Made in EU measures would generate employment in the energy intensive sectors, notably 4 272 jobs in cement, and 3 762 in the steel and aluminium sectors combined, resulting from the increase in value added. In other words, the employment benefits are directly correlated to the increase in value for the covered sectors. At the same time, decreased value added in downstream sectors could lead to negative impacts on employment for those sectors but could not be quantified at this stage. LEAD_BAT 2 - As discussed under LEAD_BAT 1, Made in EU requirements would help anchor the 170 000 jobs expected to be created by the current battery project pipeline by 2030. However, this measure would not only safeguard those jobs, but it would also stimulate further employment across the value chain as additional production capacity would be needed to meet internal demand. LEAD_VC 2 – as noted in LEAD_VC 1, the measure could stop the trend of progressive job losses which has been materialising over the past years in the EU’s vehicle components supply chain. Furthermore, the measure could create additional financial capacities for suppliers to be reinvested in future technologies. 6.3.3 Environmental impacts LAB 2 would have same impacts as described under PO2. LEAD_EII 3 is expected to further contribute to the reduction of CO2 emissions from steel and cement since the provisions would impact the entire automotive and construction sectors. Low- carbon steel would account for emissions saving of 10.26 Mtonnes CO2, low-carbon cement for 2.22 Mtonnes CO2 and aluminium 1.1 Mtonnes CO2. In total, LEAD_EII 3 would contribute to the reduction of 13.58 Mtonnes CO2 emissions. These emissions savings can be valued at EUR 1.358 billion (EUR 814.88 million – 2.566 billion) for 2030, see Annex 4 Section 2.3 for monetisation calculations and Annex 15 for the emission ranges and monetisation. It also introduces a wider scope for Made in EU requirements, which, on the one hand, would increase environmental performance as EU producers tend to outperform international competitors in terms of emissions performance. 239 On the other hand, it may limit market competition, which could result in lowering the incentive to innovate and hence further decarbonise. LEAD_BAT 2 - Localizing the production of battery cells and cathode active materials, including its precursor material, under PO3 to meet the whole EU demand rather than relying on imported Chinese products, could reduce CO₂ emissions by an estimated 34.17 Mtonnes by 2030. These emissions savings have a value of EUR 3.4 billion (EUR 2 billion -6.4 billion), see Annex 4 Section 2.3 for monetisation calculations and Annex 15 for the sensitivity analysis. This does not account any potential slowdown of EV and BESS uptake, which would in turn have a negative environmental impact. 239 European EIIs have already decreased their GHG (greenhouse gas) emissions by almost 40% between 1990 and 2017, which is why Europe has a lower emissions intensity than the rest of the world for many sectors . Source: ERT (2024). Competitiveness of European Energy - Intensive Industries, pp. 7 and 38. For a detailed analysis on the GHG intensity of EU steel and its trading partners, see JRC129297. 71 PERM 3 increases climate benefits by further accelerating the decarbonisation projects through faster deployment, potentially accelerated grid connection as a result of clustering and through easier implementation in clusters areas, notably in their GHG performance. It als o introduces a single environmental assessment for the industrial clusters’ plans. To mitigate to the maximum any individual impacts by the projects, the plan would accompany the designation of such areas with the relevant mitigation and/o r compensatory measures for the industrial activities planned. This would ensure that any potential environmental impact is kept to a minimum. However, a derogation from individual environmental impact assessments will result in a less efficient identifica tion of environmental impacts associated with industrial activities in identified clusters. Hence, mitigation or compensatory measures are expected to be more challenging to implement at an adequate and sufficient level. Permitting under the IED would rema in at the installation level within clusters . The possibility to derogate from the temporary emissions occurring during the construction phase of a project with CCS would have negative impacts on the environment, for instance in terms of nitrogen emissions. The initial negative impact on the environm ent from this derogation should be considered against the climate improvements brought by the projects in the process of the decarbonisation of sectors with hard to abate emissions . The identification of these industrial clusters can contribute to wider decarbonisation efforts as regard to infrastructure planning. Easily identifiable points of considerable energy demand could speed up the deployment of future energy infrastructure, necessary for their decarbonisation efforts. LEAD_VC 2 - In Scenario 1, global greenhouse gas emissions from vehicle manufacturing decrease by 0.9 Mtonnes CO2e in 2027 and by 0.7 Mtonnes in 2030 due to shifts in production; they further decline by 0.1 - 0.2 Mtonnes due to reductions in international transport associated with EU imports. These emissions savings represent a benefit of EUR 90 million (EUR 54 million - 170 million), see Annex 4 Section 2.3 for monetisation calculations and Annex 15 for the sensitivity analysis. In sum, the environmental effects remain limited and are very similar across LEAD_VC 1 and LEAD_VC 2. 7 How do the options compare? 7.1 Effectiveness The assessment of effectiveness looks at the extent to which the general and specific objectives (SO) of the intervention, as described in Section 4, are met. SO1: Facilitate differentiation for low-carbon industrial products to increase their value and marketability: PO1 would be more effective than PO2 as it would develop low -carbon labels for all outputs of EIIs. This would increase transparency and help manufacturers of low- carbon industrial products in distinguishing their offerings from conventional alternatives, contributing to lead markets creation and, ultimately, the general objective of supporting the decarbonisation of EIIs. However, this would only be the case in the long term once labels have been properly established and the attractiveness and use of such labels confirmed. SO2: Boost demand for European low-carbon products and clean tech: PO2 is likely to be the most effective in meeting the objective of creating lead markets for European low -carbon industrial products and European clean technologies as well as vehicle components for EVs, as it would introduce low-carbon and Made in EU requirements in those market segments where the benefits would be the highest. By spurring demand, it would also contribute to attracting new investments in EIIs, batteries, solar PV and automotive components. PO3, could also be effective, as long as intr oducing EU requirements for products placed on the market are sufficiently progressive to address implementatio n challenges for the sectors considered, 72 especially for ‘nascent industries’ like batteries and solar PVs, where European manufacturers lack sufficient scale to ramp up production to meet the projected demand increase in the short to medium term. PO3 would also be challenging in terms of enforcem ent, affecting the effectiveness of the measure. By creating more predictable demand, PO2 will help absorb some of the investments costs from the low -carbon technologies, unlocking stalled and creating market signal for new investments in the sectors covered. The Made in EU and low-carbon requirements will create a pull effect in the market that will increase the share of domestic demand to be covered by cleaner and European production, establishing certainty for investments decisions. It facilitates the reduction of the green premium through strategic green public procurement , creating a market signal to trigger private capital, which remain the main driver be hind investments. As described in the Section 6, under impact on companies, the lead market measures on low - carbon steel could accelerate final investment decisions, unlocking up to EUR 15.5 billion 240 in investments, contributing to reduce the investment gap. SO3: Maximise the quality and benefits of foreign investment within the Single Market: Compared to PO1, PO2 is expected to deliver significantly greater effectiveness. Under PO2, all Member States would apply uniform, mandatory provisions, while the voluntary approach in PO1 would not ensure convergence, leaving scope for divergent national practices and competition based on lighter conditions. In both cases, the industries in scope are expected to cover batteries and possibly certain EIIs. SO4: Speed-up and simplify permits for industrial decarbonisation: PO2 and PO3 introduce additional and targeted measures to facilitate and speed up the business case (e.g. planning security and de-risking investments) of decarbonisation projects for EIIs, while PO1 only contains digitalisation and streamlining measures for all manufacturing industries. PO3 would be the most effective option since it includes measures from PO1 and PO2 and combines them with a clustering approach to reap benefits from a geog raphical concentration of industries, notably in terms of energy infrastructure synergies and rippled down indirect benefits for infrastructure design. SO5: Increase investment projects in industrial areas : PO2 would be more effective than PO1 in facilitating access to funding and accelerate investment decisions for industrial decarbonisation projects across the EU due to its binding nature. 7.2 Efficiency Efficiency refers to the ‘extent to which objectives can be achieved for a given cost (cost effectiveness). Efficiency also assesses to which extent options contribute to administrative and process efficiency (reaching objectives with the least administrative burden). The analysis below does not quantify the long-term benefits associated with economic security. 240 Estimated based on data from BloombergNEF’s Steel Decarbonization Project Database 1.0.5. The potential investment value of EUR 15.5. billion represents only projects whose output meets the indicative IAA’s carbon intensity label classes of performance (Class A-C). 73 Summary of costs and benefits of policy options for 2030, compared to the baseline (in million EUR)241 Difference to the baseline EUR in millions PO1 PO2 PO3 One Off Recurring One Off Recurring One Off Recurring Costs and benefits Member States Adjustment costs €0.00 €821.09 €0.00 €821.09 €0.00 €860.78 Administrative costs €0.00 €5.62 €0.00 €8.92 €0.00 €8.92 Administrative savings €0.00 €1,300.00 €0.00 €1,300.00 €0.00 €1,300.00 EU Commission Administrative costs €0.80 €0.13 €0.41 €0.18 €0.41 €0.19 Citizens Adjustment costs €0.00 €1,442.47 €0.00 €1,442.47 €0.00 €4,337.96 Administrative costs €0.00 €0.00 €0.00 €0.00 €0.00 €0.00 Businesses Adjustment costs* €0.00 €3,782.05 €0.00 €3,782.05 €0.00 €27,498.35 Administrative costs €0.00 €0.70 €0.12 €1.16 €0.12 €5.76 Administrative savings €240.00 €0.00 €240.00 €0.00 €240.00 €0.00 Increase in GVA/VA €0.00 €10,386.92 €0.00 €10,386.92 €0.00 €18,299.67 Other benefits GHG emission reduction savings €0.00 €3.058,23 €0.00 €3.058,23 €0.00 €4.865,13 Increase in jobs (not monetised) 143.852 148.352 €270.629 Total costs €0.80 €6,052.06 €0.53 €6,055.88 €0.53 €32,711.96 Total benefits €240.00 €14,745.15 €240.00 €14,745.15 €240.00 €24,464.80 Net benefits €239.20 €8,693.08 €239.47 €8,689.27 €239.47 -€8,247.16 241 Explanations and the breakdown of the calculations are detailed Annex 4. 74 [* A quantification of benefits derived from Made in EU provisions for solar and batteries sectors was not possible. Moreover, adjustment costs on foreign direct investment conditionalities were not possible either. Therefore, a comparison of costs and benefits is only partially reflected. LEAD_EII costs/benefits are reflected for 2030 compared to baseline year. ** PO1 and PO2 only reflect impacts on the shares of the market covered by public procurement in construction (LEAD_EII_1 and 2, in the absence of data of public schemes.] SO1: PO2 would be more efficient than PO1 as it would start by developing a label for one EII industry first, steel. Compared to other EIIs, steel is a relatively homogenous product, meaning the administrative costs of establishing an accounting methodology and ensure its implementation would be simpler, meeting the objective of supporting lead market policies faster, via a less burdensome process. Furthermore, by reusing most of the information that are collected through the EU ETS and CBAM, it would allev iate the administrative burden of reporting for both companies and authorities. Key differences between the individual options to design a low-carbon product steel label are presented in Annex 12. SO2: PO3 has been assessed as more costly to society at large (including Member States and European consumers) than PO1 and PO2 to meet the objectives of creating lead markets for EIIs. Costs under PO3 remain larger than PO1 and PO2 (which are similar) in particular in relation to the ambitious Made in E U provisions for steel, cement and aluminium and their impacts on downstream sectors. Based on policy and regulatory developments, such as the newly proposed trade measure for the EU steel sector, the level of ambition of the Made in EU provisions could be adjusted to fit new market realities. Conversely, it is not possible to fully quantify the positive externalities associated with long-term economic security benefits linked to the promotion of resilient European supply chains in strategic EII industries introduced in PO2 and PO3, notably in relation to external shocks. Overall, PO1 and PO2 result in similar net benefits . Some of the costs may also be underestimated under PO2, as the modelling assumptions do not reflect potential changes in trade flows deriving from the Made in EU requirements, given the assumed constant supply chain structure for the automotive and construction sectors (in absence of low -carbon supply chains) . It is possible to consider that supply chain dynamics would result in downstream sectors preferring to source outside of the EU while shifting to low -carbon alternatives. However, PO2 introduces a stronger positive externality of economic security mentioned before. Such benefits include, but are not limited, to job creation /retentions and more economic and social stability overall. Moreover, no quantification was possible on the benefits from Made in EU considerations for solar and battery manufacturing supply chains. Therefore, a full comparison between costs and benefits between the different POs and sectors included is not possible for all measures. In addition, PO2 will reduce the risks of supply chain disruptions and exposure to high-risk dependencies, or of third countries restricting imports of critical materials, leading to a more predictable and stable economic and social environment. While these effects cannot be reliably quantified, they constitute a real and material benefit of policy intervention. Predictability, access to inputs and strong supply chains are essential for the well-functioning and competitiveness of EU’s manufacturing industry . PO3 affects the entirety of the automotive and construction sectors both in terms of low-carbon and Made in EU requirements. The cumulative impacts of these measures will make PO3 more costly, with additional challenges on how to pass on these extra costs for downstream sectors. Similarly, for EIIs, solar, batteries, and vehicle components, PO2 leads to fewer costs for the downstream industry than PO3 and therefore impacts less on final consumers or public authorities. PO1, on the other hand, would have the least adjustment and administrative costs. Benefits increase as the level of ambition increases in the policy options. 75 SO3: PO1 is expected to cost less than a mandatory approach (PO2), due to lower administrative burden, as some Member States might decide not to adopt the guidance on conditionalities. At the same time, g ains (spillovers) are limited and uneven, leading to a low benefit-to-cost ratio overall. However, PO2 will have more impact in addressing the prevailing issues, as Member States will be required to enforce mandatory provisions more strictly, leading to higher market harmonisation. Accordingly, PO2 is expected to be more efficient in the medium- to long-term as systemic spillovers materialise, boosting resilience, innovation, and security of supply. SO4: PO3 combines the previous permitting provisions introduced under PO1 and PO2, adding benefits for industrial clusters. However, the benefits from industrial clusters can only materialise if a prior mapping and designation of a geographical area by the Member State (with an additional mobilisation of resources) has taken place. All POs will lead to efficiency gains from the one project, one digital process measure, present under each option. Digital improvements paired with data interoperability will increase data re-use for other reporting or permitting activities and potentially reduce unnecessary duplications in the permit gra nting process. PO2 would capitalise as much as possible on the existing NZIA provisions to meet the objective of facilitating permitting processes to accelerate the decarbonisation of manufacturing industries in Europe with special focus on EIIs. SO5: PO1 would minimise administrative burden, as it merely recommends using defined criteria for public support, leaving their application to Member States’ discretion. PO2 would require Member States to use these criteria to identify synergies with existing and future public funding opportunities, to facilitate access to funding for industrial projects in industrial areas. While this approach may entail higher administrative costs, it offers greater benefits by accelerating decarbonisation in targeted industries. Impact on various stakeholders depending on the Policy Options: Downstream sector - Automotive: Cumulative adjustment costs from LEAD market measures (LEAD_EII 2, LEAD_VC 1, LEAD_BAT 1) increase with each Policy Option, and are estimated at EUR 4.4 billion in PO1, EUR 4.4 billion in PO2, and EUR 14 billion in PO3, with most costs passed on to Member States and citizens as final consumers. The largest cost increases will affect the price of EVs, as per the “Cost increase per type of vehicle” table in Annex 4, Section 2.2 - which are often subsidized. However, subsidies limited to EU -made vehicles and reduced access for non -EU manufacturers to procurement and support schemes can improve EU competitiveness and keep consumer price impacts manageable. Furthermore, EU-made EVs are expected to increase their market share, generating about EUR 1.9 billion in additional value added in PO1 & 2, and EUR 2.25 in PO3 due to domestic content requirements for vehicle components , aiding the competitiveness of the sector and the green transition. Administrative costs remain low at about EUR 1 176 per company per year, and since most OEMs are large firms, the burden on SMEs is minimal. Downstream sector - Construction: Cumulative LEAD_EII costs also increase with each Policy Option and are estimated at EUR 691 million in PO1 and PO2, and EUR 16 billion in PO3. While the exact building price impact cannot be calculated, Member States and citizens are expected to absorb the costs, with 76 building prices projected to rise about 0.45% from low -carbon provisions under PO2 . Administrative costs are minimal at about EUR 882 per large and medium company per year. Downstream sector – Electricity utilities: The electricity utilities sector is anticipated to experience rising costs for solar PVs and BESS storage due to lead market provisions , as detailed in Annex 4 , Section 2.2, on the cumulative costs of the electricity sector. However, these costs are expected to have minimal impacts on electricity prices, as detailed in Section 6.1.1. Member States: Public administrations are expected to incur EUR 2.43 billion in additional administrative and adjustment costs in PO1, EUR 2.44 billion in PO2 and EUR 2.4 8 billion in PO3. However, permitting savings of EUR 1.3 billion reduce net costs to EUR 1.14 billion in PO1, EUR 1.14 billion in PO2 and EUR 1.18 billion in PO3, as per Annex 4, Section 2.2. With subsidy budgets freed up, these increases are considered manageable for national and local authorities. Citizens: Citizens will face higher vehicle and construction prices as shown in Annex 4, Section 2.2, though vehicle cost increases may be partly offset as explained in the automotive section. 7.3 Coherence In terms of overall coherence, the options are all seeking to reinforce the EU’s ability to meet the Clean Industrial Deal ’s objectives. Moreover, in terms of internal coherence, the options are built in a way that actions introduced to meet one specific objective, should not come at the expense of another specific objective. SO1: PO2 would be the most coherent with existing policies and strategies, such as the Steel and Metals Action Plan, as well as the Clean Industrial Deal which calls for an accelerated procedure to create a voluntary label for low -carbon steel. Coherence with other existing regulatory frameworks, namely ESPR is guaranteed by the complementarity by design of the two initiatives, with a logic of building blocks. Once the steel label under IAA is stabilised, it would be possible to complement it through the ES PR approach and enlarge the scope of products and emissions covered. Both will also benefit from the ongoing streamlining exercise on carbon accounting methodologies. SO2: All POs would meet the objectives without unduly undermining the EU renewable energy target, even if PO3 could have the greatest impact, as public intervention may not be in a position to smoothen the short-term impacts. Regarding EU requirements for batteries and solar PV, the gap analysis of this assessment demonstrates that the existing EU provisions under NZIA will not likely be sufficient to achieve the objective of creating European lead markets for clean technolog ies. Additional EU requirements, designed to complement or amend as relevant existing NZIA provisions, can better contribute to creating those European lead markets that in turn support the EU’s economic security of battery, solar technologies and automotive components. PO2 is coherent with the objectives set down in the Industrial Action Plan for the European Automotive Sector with respect to batteries and components. Similarly, for EIIs, the lead market measures would complement existing product policies, providing a targeted further demand-side incentive to decarbonise these industries, in line with buildings’ legislation notably. For steel in particular however, the new legislative instrument to address 77 global steel overcapacities, points, if adopted by co -legislators, to a possible risk of incoherence, with the blanket measures on Made in EU provisions for public support . Exemptions to WTO principles and FTAs should be invoked to justify the introduction of Made in EU requirements in public procurement and support schemes, which might be more difficult to justify if applied to all products (e.g. batteries, solar PV systems, vehicle components and steel/aluminium/cement in automotive and construction) put on the EU market (PO3) or without considerations for environmental performance. SO3: On conditionalities for FDI, voluntary measures (PO1) have fewer interlinkages with existing frameworks and could be interpreted in addition to prevailing legislation. It would be coherent with historic EU openness to FDI but in current times, but it would undermine coherence of the Single Market , leading to fragmentation: d ivergent application between Member States can create distortions and unequal benefits . Introducing mandatory conditionalities (PO2) to further harmonise the Single Market would be complementary to the existing FDI legal framework as it would focus on specific strategic industries only (e. g. batteries and possibly certain EIIs) and would be based on thresholds on the investment value, to limit the risk of overlaps. Mandatory requirements would be f ully coherent with the European Economic Security Strategy242: proactively strengthening Europe’s competitiveness, resilience and technological leadership, while protection is strengthened against risks. Finally, conditioning FDI in the manufacturing sector would risk going against the investment liberalisation commitments on market access and national treatment the EU has undertaken under some of its FTAs and relevant FTA partners would thus need to be exempted from investment conditions in these areas to maintain coherence. SO4: All options would include a measure targeting permitting for all manufacturing industries based on digitalisation of a unified permitting process, while building on sector specific legislation, including the upcoming Environmental permitting initiative (Environmental Omnibus) which will focus on environmental assessment specific items . For instance, PO2 complements the NZIA permitting provisions for EIIs and ensures a consistent approach in this regard by providing a level playing field. Moreover, the overall level of coherence with environmental legislation in PO2 and PO3 will be affected by any possible legislation on environmental simplification (omnibus), currently under preparation, which may require adjustments to the specific measures under the p referred PO presented in this impact assessment. PO3 could also partially overlap with the upcoming grid energy package, which aims at addressing grid infrastructure bottlenecks Finally, coherence will need to be ensured with the permitting reflections und er preparation as part of the Environment omnibus, which are however not subject to an impact assessment. SO5: Projects in industrial areas could tap into existing priority projects or areas under other EU legislation, such as the CRMA and the NZIA. However, care will be required to address the risk of confusion in the multiplication of labelling and in managing expectations by promotors on the benefits of being identified as priority projects. 7.4 Proportionality/Subsidiarity Regarding the proportionality of the measures to achieve the objectives of the initiative, the three POs follow a logic of increased level of intervention. PO1 establishes minimum provisions for market intervention (SO2, SO4), often relying on voluntary aspects of the measures for Member States (SO3, SO5). 242 European Commission (2023). Joint Communication to the European Parliament, the European Council and the Council on “European Economic Security Strategy”, JOIN(2023) 20 Final. 78 PO2 introduces a medium level of intervention, which increases the obligations on Member States and market operators. SO2 introduces made in EU requirements for low-carbon steel, aluminium and cement used in the construction and transport sector in public procurement and public support schemes, which are proportionate to the expected level of low-carbon capacities, based on current investment project pipelines . While the requirements are mandatory, they cover only a partial share of sourcing low -carbon materials and are gradually introduced only for products to be purchased thanks to public financing . This p rovides member States and business with some flexibility and adjustment time, to allow production ramp up and, ultimately, lowering the green premium. It also ensures that public money is spent to support the objective of EU industrial resilience and decarbonisation. PO2 corresponds to the most proportionate approach, considering market realities and calibrated against the sectors’ ability to fully scale up production for low -carbon steel, cement and aluminium, as well as domestic clean tech. PO3 establishes the highest level of intervention in the market, increasing the obligation not only on the Member States but also more substantially on market operators, especially downstream sectors that will have to comply with the mandatory minimum Made in EU requirements. Regarding SO4, requirements on permitting in PO2 and PO3 increasingly impose further obligations on Member States to streamline processes and time management. At the same time, they would both provide further discretion to Member States re garding permit-granting and the application of environmental legislation, which would make the options overall proportionate to the objectives. Table 4: Summary comparison of the options Impacts PO1 PO2 PO3 Effectiveness + ++ ++ SO1 ++ + SO2 + +++ ++ SO3 + +++ SO4 + ++ +++ SO5 + ++ Efficiency ++ +++ + SO1 ++ + ++ SO2 +++ +++ - SO3 + ++ SO4 ++ +++ ++ SO5 + ++ Coherence ++ +++ ++ SO1 ++ +++ SO2 +++ ++ + SO3 + ++ SO4 + ++ ++ SO5 + +++ Subsidiarity and proportionality ++ +++ ++ SO1 ++ +++ SO2 ++ +++ + SO3 + ++ SO4 + ++ ++ SO5 ++ ++ Summary comparison of options243 + +++ ++ 243 Increase sustainable and resilient industrial production in the industrial manufacturing with a special attention on EII sectors in the EU by supporting decarbonisation investments. 79 8 Preferred option Following the analysis of the impacts of each PO, as well as their ability to meet the general and specific objectives in the most effective and efficient manner while respecting proportionality, coherence and subsidiarity, this impact assessment considers that PO2 would be the preferred option. In that balance, PO2 would facilitate business and trigger investment decisions in the EU by streamlining permit procedures for the entire manufacturing sector, boosting demand for decarbonised materials and clean tech products in strategic value chains, and ensure an investment fra mework that protects against unfair global competition and support value-added creation in the EU. PO1 and PO3 present a similar impact in terms of proportionality/subsidiarity, however PO2 stands out with a more positive impact in terms of proportionality when introducing Made in EU in policy measures for public procurement and public support only. Regarding coherence, PO2 again presents a bigger positive impact, followed by PO3 and PO1. For SO2 however, coherence with the latest legislative proposals as well as with the EU’s international commitments would be better ensured by a combination of PO1 and PO2, potentially associating made in EU requirements for relevant EIIs with low - carbon ones. PO2 offers a good balance between effectiveness and efficiency. Although it demands resources from Member States and affects downstream sectors, it remains efficient for addressing the problem drivers , in particular when taking account of economic security considerations. PO3 would be more effective in achieving the objectives, but its possible efficiency is hampered by potential impacts on downstream sectors and consumers, and by the challenge in quantifying the positive externalities associated with supply security. While PO2 results in similar net benefits as PO1, PO2 will provide further long term benefits, increasing the EU economic security and resilience as the Union advances in its transition towards climate neutrality, notably of the energy intensive industries . These benefits are however difficult to quantify and thus are not reflected in the costs and benefits analysis under Section 7.2. Economic security translates, amongst others, into businesses and public authorities operating in a predictable economic environment, with reduced risks of supply chain shortages and disruptions, or of third countries restricting access to input materials for key strategic sectors. This would ultimately result in reduced economic and social instability. For citizens, this means stable access to resources, creation and retention of industry jobs, stable incomes, thereby contributing to social cohesion. PO3 is assessed as more effective to meet the SO4 (permitting). However, it would require additional resources and support for the mapping and identification of cluster areas. These additional resources could be overshadowed by the positive gains (efficien cy offered by the industrial clusters to attract new investments). PO3 also presents some overlaps with other environment or energy initiatives and as such PO2 may offer a slightly more balanced choice, with detailed specific measures to be considered at a later stage pending the environmental omnibus outcome. 8.1 REFIT (simplification and improved efficiency) The preferred policy option will aim at simplifying conditions for manufacturing industry in general, and EIIs in particular, to decarbonise and operate in Europe whilst maintaining environmental protection through facilitation of permitting processes. This is particularly the case thanks to the proposed measure to speed -up and streamline permitting provisions for businesses investing in decarbonisation delivering a lower regulatory burden. 80 For the FDI conditionalities, the uniform application of the conditions across the EU would largely prevent forum shopping and race to the bottom in attracting investments, while harmonising and simplifying the business conditions. The changes to existing legislation that this initiative would provide are limited to the NZIA and the measures are designed to consist in targeted amendments to existing provisions. This will reduce unnecessary regulatory costs and achieve a high degree of simplification in that a legally clear adjustment to reach the underlying policy objectives is made as early as possible, hence avoiding later changes and the related adjustment costs. Moreover, adjustments will be made as much as possible in line with t he existing provisions of the NZIA, reducing unnecessary regulatory cost through relying on the existing basic concepts of NZIA. 8.2 Application of the ‘one in, one out’ approach The initiative is in the scope of the “one in, one out” approach. The one–off administrative costs for businesses that would result directly with this initiative are limited and relate to: - The one-off FDI notification cost would amount to EUR 117 600 annualised at EUR 0.01 million per year. The recurring administrative costs for businesses that would result directly with this initiative are limited and relate to: - Demonstrating compliance with low -carbon and EU requirements for relevant downstream sectors would amount to EUR 1.16 million recurring administrative costs. The administrative cost savings for businesses that would result directly with this initiative relate to: - Cost savings of EUR 240 million for all manufacturing industries in the EU for the digitalisation of 5 permit -granting procedures, annualised at EUR 28.14 million per year. Overall, the initiative would result in EUR 2 6.97 million yearly administrative savings for businesses. The initiative does not foresee any administrative cost applicable to citizens. The adjustment costs that would result directly with this initiative amount to: - EUR 3 782 million for businesses. - EUR 1 442 million for citizens. A more detailed elaboration ( the specific split of FTEs by lead market provision ) of all calculations in this Section can be found in Annex 4. 9 How will actual impacts be monitored and evaluated? The Commission will carry out an evaluation of the effectiveness, efficiency, coherence, proportionality and subsidiarity of this legislative initiative and present a report on the main findings to the European Parliament, the Council, the European Economi c and Social Committee, and the Committee of the Regions four to six years after the date of application of the legislative act. This review mechanism is similar to the review mechanisms included in other Commission initiatives, such as the CRMA or the NZIA. The Commission and Member States will regularly monitor the application of the legal act, in particular the effectiveness of t he measures to increase competitiveness and invest in decarbonisation by the European industry. 81 In addition, the success of the initiative would be measured in terms of increased competitiveness and resilience (which is not easily measurable by a single indicator but relevant aspects, such as the share of EU manufacturing industry in total EU gross value added can be used as proxies), or in terms of the scale (in terms of amount of financial value) and speed (in terms of permitting timelines) of decarbonisation in vestments by the EU industry. Concretely, the following indicators to determine the initi ative’s success could be developed as follows: Table 5: Monitoring table of key performance indicators Specific Objective Indicator measured every second year Unit of measurement Data source Target General objective Manufacturing industry as % of EU total GVA % Eurostat 20% by 2030 (Aspirational target) General objective (decarbonisation) Carbon emissions/tonnes of EU EII production Tonnes CO2eq / tonnes of production Eurostat Reduction in line with climate targets General objective (resilience) EII Production volumes trends (steel, cement and aluminium) Output in each sector JRC Increase from 2025 values General objective (resilience) Value of EU domestic production /value of EU consumption of EII materials (steel, cement and aluminium) % Eurostat/ JRC Increase by 2029 General objective (resilience) Share of domestic production and/or capacities out of total EU demand in selected clean tech sectors (batteries, solar PV) % Mtonnes or GW (as relevant) Data providers for internal Commission analysis Increased capacities as mentioned in Anne x 9 SO1 Availability of a low-carbon label for relevant products that is supported by a robust verification mechanism Yes/no European Commission Label available by 2029 SO1 Number of companies who applied for the label Number Label certifier 11 (large) companies by site by 2030 SO2 Share of low-carbon steel and cement out of total sold on EU markets for automotive and construction % Stakeholder reporting As mentioned in Table 3 in Section 5.2 SO2 Value of EU domestic production for selected vehicle components / value of EU consumption of selected vehicle components % JRC’s internal methodology Stable domestic demand while reducing the import from 3rd countries. SO3 Inward FDI transactions of relevant sectors/businesses Number Eurostat and Orbis Stable transactions as year of entry into force SO3 Number of joint ventures on batteries Number Stakeholder survey SO4 Average permitting time Months Member States Survey Total of 18 months SO4 Share of digitalised permitting procedures out of all permitting procedures for industrial manufacturing % Single Digital Gateway Aspirational target of 75% by 2030 SO5 Industrial FIDs realised in the EU for industrial Number Member States 82 Specific Objective Indicator measured every second year Unit of measurement Data source Target manufacturing projects in relevant areas 83 Annex 1: Procedural information 1. Lead DG, Decide Planning/CWP references The Industrial Accelerator Act is part of the 2025 Commission Work Programme under the Commission’s priority ‘Simplifying rules and effective implementation’. The lead DG for this initiative is the DG for Internal Market, Industry, Entrepreneurship and SMEs (DG GROW). The Directorate in charge is Directorate I – Decarbonisation, Mobility, Raw Materials. The initiative is encoded in Decide Planning with the reference PLAN/2024/2611. 2. Organisation and timing The Secretariat -General set up the Inter -service Steering Group to assist in preparing the initiative in the first quarter of 2025. There have been three interservice steering group (ISSG) meetings (in March, May and August) and four rounds of written consultations. The last ISSG consultation meeting took place on 20 August 2025. Following the Board’s negative opinion, a fifth round of written consultation on the revised text was held. The Call for Evidence and Public Consultation for this initiative were published on 15 April and were open to feedback from all stakeholders for a period of twelve weeks, until 8 July. The timing for adoption of the new act by the Commission is the fourth quarter of 2025. 3. Consultation of the RSB An upstream meeting with the Regulatory Scrutiny Board took place on 23 May 2025. A meeting with the Regulatory Scrutiny Board to discuss the draft impact assessment took place on 24 September 2025. The Board issued a negative opinion on 26 September 2025. The recommendations of the Board were addressed in the revised impact assessment as follows: RSB recommendations: How they were addressed: (B) Summary of findings The Board notes the additional information provided in advance of the meeting and commitments to make changes to the report. However, the Board gives a negative opinion, because the report contains the following significant shortcomings: (1) The report does not sufficiently analyse how the problem would evolve over time and does not demonstrate to what extent this initiative is needed. (2) The report lacks an analysis of the market drivers and contribution of various drivers to the identified problems. An assessment of the availability of economically viable industrial decarbonisation technologies is missing. (3) The objectives are not defined in a S.M.A.R.T manner. See below under C.1 See below under C.2 See below under C.3 84 RSB recommendations: How they were addressed: (4) The report does not provide a sufficient assessment of the impacts of the proposed measures, including on the resilience of the manufacturing industry in the EU and on the foreign direct investments. (5) The report lacks an analysis of the total costs, their pass through, and the impacts on downstream sectors. See below under C.5 See below under C.6 (C) What to improve (1) A dynamic baseline regarding the decarbonisation and resilience of EU manufacturing industry, including energy intensive and clean tech, should be developed to make it clear how the problem would evolve without the proposed policy action. As the EU Emissions Trading System is there to provide incentives to decarbonise and CBAM is intended to protect against carbon leakage and establish the level playing the report should better explain the magnitude of the slow decarbonisation problem and to what extent an ‘acceleration’ is needed to meet the EU’s climate goals. The report should identify the resulting decarbonisation speed gap as well as gaps related to the resilience of manufacturing industry in the EU that need to be addressed by the additional policy measures. The dynamic baseline has been improved in Section 5.1 showing that, without further action, EU industry would risk continuing existing trends, i .e. decarbonising more by reducing industrial production than by using more efficient technologies, which would decouple emissions from production . Th is is illustrated in Section 5.1, Figure 9, which shows past and future trends for iron and steel, while the analysis for other EIIs is presented in Annex 8. The magnitude of the slow decarbonisation problem is described under Driver 3, where the analysis shows that in the past six years many announced decarbonisation projects have been cancelled or remain stalled before final investment decision (See Figure 2, 3 and 4). Similarly, Sub-problem 3 describes to what extent the cost and availability of low-carbon industrial technologies, as well as other barriers (Driver 5 and 6) are important factors determining the slow decarbonisation pace. A more comprehensive description of the EU Emissions Trading System as well of the CBAM and its forthcoming review is included in the baseline description. The decarbonisation speed gap is identified by looking at the causes of recent emissions trends (Figure 7, Section 2.3) . They show that over the past six years the emissions reduction was mainly driven by changes in the production activity level, rather than in emission intensity . This is further elaborated in Annex 7. The resilience gap is described by the re - drafted Sub -problem 2 , showing supply chain vulnerabilities (see number of cancellation or delay in 85 RSB recommendations: How they were addressed: the EU of several battery and solar PV projects ), as well as in the Section 2.3. (2) The report needs to identify all the problem drivers and to further investigate the causal links and contribution to the identified problem. The report should analyse more in -depth the availability and economic viability of industrial decarbonisation technologies. A more detailed analysis is also needed regarding the demand for low-carbon alternatives including related price elasticities and substitutability. The problem driver related to permitting should be clarified regarding the specificities and differences compared with other sectors. The analysis of drivers related to foreign investments and difficulty to de -risk investments should be deepened and go beyond the regulatory and public funding aspects. The correlation between the problems identified and their corresponding drivers have been modified to better reflect their connection to the limited business case for EU industry. Notably, how resilience plays a role in the competitiveness of European companies , with the introduction of a new Sub-problem 2 about ‘Supply chain vulnerabilities in strategic sectors and the related causes explained in Drivers 3 and 4. Regarding the availability of industrial decarbonisation technologies and demand for low - carbon alternatives, the analysis has been deepened by showing the heterogeneity of these technologies and their economic viability depending on factors such as the technology readiness level, the energy and raw materials needs, the CO 2 abatement costs. This is illustrated under Sub-problem 3, as well as further in details in Annex 7, where an overview of the cost evolution of the main industrial decarbonisation pathways, as well as total investments needs, for aluminium, cement, chemicals, steel and pulp and paper is provided. Regarding the demand for low -carbon alternatives , Annex 10 (Sub-problem 1, Driver 2) now contains an overview of existing green public procurement practices to illustrate similar initiatives. No information regarding the price elasticity of demand for the relevant low -carbon products could be determined. Therefore, we have assumed full cost pass-on when analysing the impacts of the policy options to final consumers. The analysis for the problem drivers has been revised to reflect the Board’s comments as follows: - Driver 4 on foreign investment s has been improved by bringing in concrete evidence from current practices in Europe vis -à-vis other regions in the world, and data that reflects the technological knowledge gap for batteries, and the impacts this has on wider socioeconomic benefits. Further information has been added in the Annex 13. 86 RSB recommendations: How they were addressed: - Driver 5 linked to permitting procedures has been improved by clarifying the complexities of permitting for industrial manufacturing vis -à-vis other sectors, especially with regards to their environmental impacts. - Driver 6 linked to investments has been widened to reflect larger struggles beyond public funding, to highlight other bottlenecks for projects to invest and take final investment decisions, such as access to energy infrastructure or other essential inputs, while taking account of other ongoing initiatives (3) The report should establish how the success regarding the general objective will look like and how it will be assessed including the timeframe. Based on the improved analysis of problem drivers, the specific objectives should be revised to better reflect how they contribute to the general objective. The specific objectives should be formulated in S.M.A.R.T. terms to allow for an improved analysis of the impact of options and for monitoring the progress on attaining the objectives. The general objective has been revised to ensure it can be measured. Specifically, it will be measure d by monitoring the carbon intensity of EII production, as well as production capacities and output for the EU in EIIs, certain clean tech and vehicle components . The general objective will also be assessed in combination with indicators for the specific objectives. Specific objectives in Section 4 have been aligned to individual problem drivers , and reformulated and clearly linked to indicators that measure the extent to which success has been achieved. Those indicators are included in Section 9 as well. The specific objectives are now formulated in a more S.M.A.R.T manner , notably improved on the measurability. (4) The measures considered should reflect the improved analysis of the problem and problem drivers. The selection of measures should be based on available evidence regarding the short and medium to long-term benefits of public intervention, in particular evidence how such interventions can cause the development of lead markets, including how CO 2 content requirements could affect demand patterns as well as innovation in the industry. The selection of measures should also better reflect related costs. The policy measures are now better aligned to the revised analysis of sub-problem and drivers. The vulnerability of certain strategic sectors and their supply chains is now explained by two specific drivers: the fragmented EU approach to foreign investments, and the loss of competitiveness due to fierce global competition. While the intervention logic and structure of the different policy options have remained the same, the impact of the measures, including the level and duration of the targets for the lead markets provisions, has been revised reflecting additional evidence and improved quantification of impacts for each measure. The intention of a review clause has also been added, making it clear that such measures on lead markets could be of a temporary nature. The link between each measure and the estimated cost has been better presented and clarified throughout the text, as well as substantiated further with aggregated 87 RSB recommendations: How they were addressed: costs for the policy measures at hand. Impacts are also aligned to their targets when relevant, notably the lead market measures. (5) The analysis of the impacts of the proposed measures and combined impacts of options should be strengthened including by quantifying overall costs and benefits to the extent possible. The report should establish a single appraisal period on which basis all costs and benefits are calculated. When it comes to the benefits, the analysis should be reinforced based on quantitative modelling to demonstrate to what extent it can be expected that the initiative will address any identified gaps in terms of speed of decarbonisation and contribute to EU economic security. The results of modelling including the impact on capital costs (CAPEX), operational costs (OPEX) and international competitiveness should be subject to sensitivity analysis and robustness of the projection should be clearly acknowledged. The analysis of the expected impact on FDI should be improved based on quantitative modelling distinguishing more clearly between the expected impacts in the short versus the medium to long run, taking into account the interplay of various measures. Individual costs and benefits for measures linked to every specific objective have been included under Annex 4 , to reflect all calculations relevant for the final table on costs and benefits reflected in Section 7.2. The chosen appraisal period is the year 2030 for the quantitative aspects, even if impacts could be of a longer nature. When relevant, qualitative elements are added regarding the long-term perspective. The analysis of the impacts for the Made in E U provisions for Energy intensive industries has been strengthened with a revised modelling exercise, adjusted to the Made in EU targets described in the impact assessment. A more accurate representation of the impacts can be found in Sections 6.2 and 6.3 , including comparison of impacts for the year 2030 . On this last point, to facilitate comparisons, quantitative impacts (costs and benefits) have been presented for the year 2030, while adding qualitative impacts for the longer-term perspective. The limitations inherent to the modelling have been better outlined in Annex 4, which also includes a more thorough description of the broader analytical approach followed in the different parts of the impact assessment. Some expected benefits, notably in terms of greater EU economic security, cannot be quantified with the modelling tools available for this impact assessment. The foreign direct investment measures’ analysis ha s been strengthened by a comparison with existing similar practices in other regions of the world, notably to address the possible impacts in terms of similar approaches that have been successfully implemented in major economies, demonstrating that such measures can enhance strategic value without deterring investment. See Annex 13. (6) The calculations of costs and their pass through to downstream sectors including to businesses, consumers and public administration for each policy option needs to be strengthened based on the clarification of the scope of the envisaged measures (i.e. public support/procurement and specific downstream sectors rather than all products put on the European market) and transparent assumptions used for the calculations. The calculations of costs for each policy option have been improved based upon available data, and the assumptions are more clearly and transparently reflected in Annex 4. The pass -through effects have been emphasized, following the assumption of full pass through to customers and public administrations, wherever relevant. 88 RSB recommendations: How they were addressed: In addition, it should be better explained how the possible inflationary effects were taken into account when considering the scope and parameters of the policy measures. The assessment of cost and benefits should allow to analyse and compare the effectiveness and efficiency of the options. The inflationary effects were also briefly explained , notably when presenting where relevant impacts on final products’ prices. The assessment of costs and benefits for each policy option was conducted for the year 2030 , while the Efficiency Section 7.1 now has a summary of all costs and benefits of the longer-term perspective for the different policy options. Annex 4 has individual tables per type of cost or benefit, for all relevant SOs, with the calculations used to reach the final summary Table of Section 7.1. (7) The simplification and burden reduction dimension of this initiative needs to be better analysed. The tables in annex 3 need to be revised to provide a clearer representation of the overall costs and benefits. The estimates of the administrative costs need to be revised to ensure a credible calculation of the net administrative burdens. The administrative burden reduction was emphasised in the one-in one -out table in Annex 3 , showing overall administrative savings for businesses, in particular from the permitting provisions. Overall administrative benefits derived from the digitalisation of permitting provisions has been adjusted , after reconsideration of the expected benefits from the Once Only Technical System for the permitting processes. Table I on the overview of benefits in Annex 3 was updated to reflect the appraisal period for 2030, where possible. Table II on the overview of costs was broken down by policy measure , and the quantification of costs was further expanded upon. The methodology Section of Annex 4 has been further developed, to transparently reflect the cost and benefit analysis of the different policy m easures assessed . Annex 4 now includes all relevant assumptions and calculations necessary t o understand the cost and benefit analysis. The one -in one -out table was significantly revamped , including the calculation on the net administrative burdens , by focusing more specifically on the expected impacts for the targeted stakeholder groups. The revised impact assessment was resubmitted , and the Board issued a second opinion (positive with recommendations) on 20 November 2025. In its opinion, the Board made further recommendations for improvement that were addressed as follows: RSB recommendations: How they were addressed: (B) Summary of findings The Board notes the improvements to the revised report responding to the Board’s previous opinion. 89 RSB recommendations: How they were addressed: However, the report still contains significant shortcomings. The Board gives a positive opinion with reservations because it expects the lead Service to rectify the following aspects: (1) The report does not sufficiently assess the expected impacts regarding the general objective to increase decarbonised and resilient industrial production in EIIs. The interplay with economic security implications is not sufficiently analysed. (2) The report is not clear to what extent the demand side measures are expected to address the consequences of identified problems. (3) The limitations related to the modelling are not sufficiently reflected; cost benefit calculations as well as impacts on consumers and the downstream sectors are not sufficiently robust. See below under C.1 and C.2 See below under C.1 See below under C.3 and C.6 (C) What to improve (1) The report should model how the demand for EU low-carbon products and clean tech industries is expected to increase thanks to the initiative and how the increased demand will enable investments in the sectors covered by the scope of the initiative. In addition, the expected investment increase should be put into perspective with the in vestments needed to reach the decarbonisation goals. The analysis has be en strengthened by better explaining in Section 7, under the comparison of options, that made in EU and low-carbon requirements will create a pull effect in the market by guaranteeing that a larger share of European demand is met by EU and low-carbon industrial products and technologies. While a new quantitative analysis was not possible due to the modelling limitation, additional explanations on how the increased demand will help absorb some of the investments costs from the low -carbon technologies has been added under Section 7.1 on Effectiveness. Concerning the link between the expected investment increase and the overall investments needs to reach the decarbonisation goals , a new quantitative analysis has been conducted in the impacts Section ( under PO1 and PO2, ‘Impact on companies’), which outlines the potential impact of the initiative on reducing the decarbonisation investment gap in the steel sector. The lead market measures on low-carbon steel could accelerate final investment decisions, unlocking up to EUR 15.5 billion in investments (or about 15% of the sector’s estimated investment need by 2040) (2) The report should demonstrate how the industries in the scope of the initiative are expected to evolve when the initiative will be implemented, in particular in terms of the size of the sector (production capacities and output) and the share of the EU demand covered by EU production. The report should provide a more detailed analysis of economic security implications. The evolution of the industries in scope has been further described in Section 2.1, 2.3, and Sections 6 and 7. Specifically for batteries and solar PV, new data have been highlighted on how EU production capacities are expected to ramp up, based on existing projects pipeline s. This can be found in Section 6, under impact on companies. Regarding economic security, f or each policy option, the competitiveness analysis now includes explicit economic security effects. However, the quantified cost–benefit analysis 90 RSB recommendations: How they were addressed: does not capture a central dimension of the problem, namely the reduction in the risk of supply disruptions and exposure to high-risk dependencies. These effects constitute a real and material benefit of policy intervention but cannot be reliably quantifie d for any of the policy options. As a result, interpreting the numerical comparison of costs and benefits in isolation could be misleading. Section 7 therefore clarifies that, while PO1 appears less cost ly in purely quantified terms, this assessment exclud es long-term economic- security benefits that are intrinsic to the policy objective. By contrast, PO2 delivers a clear increase in economic security by strengthening EU industrial capacity and reduce strategic dependencies. (3) The costs and benefits should be, to the extent possible, monetised, discounted and aggregated for each of the options for the whole appraisal period, which should be clearly established. In case a phased approach is envisaged, it should be captured by the modelling. The assessment of costs and benefits should allow to analyse and compare the effectiveness and efficiency of the options. The report should provide a clear distributional analysis, i.e. a distribution of the aggregated costs and benefits to the main groups of stakeholders. The costs and benefits have been updated and aggregated in the overview table present at the end of Annex 4, as well as in Section 7.2. A new zoom-in box has been added to Section 7.2, showing the aggregated costs and benefits for the main stakeholders’ groups (including downstream sectors, citizens and Member States). This can also be found in detail in Annex 4. It was not possible to calculate the yearly costs for each policy option, therefore the analysis for the year 2030 was maintained. (4) The newly added summary of estimated costs and benefits in 2030 ( Table 4) provides for an important difference in net benefits of the preferred policy option 2 (negative net benefit) and policy option 1 (positive net benefit). The report should justify why a less efficient option has been selected as the preferred one; this should be reflected also in the executive summary. The analysis should also build on an improved analysis of proportionality, in particular related to the scope of low-carbon content (all products placed on the market vs. products purchased thanks to public financing). Following an adjustment to the policy option design, the overall costs and benefits result in similar net benefits between PO1 and PO2. These result from lowering the Made in EU targets , to align them with the low -carbon targets. In the absence of established low-carbon supply chain s for cement, steel and aluminium, the analysis is based on the traditional supply chains for these materials , where today domestic EU materials producers are able to meet high shares of the demand for materials by the European automotive and construction sector. As a result, no increase in costs from Made in EU can be incorporated to PO2. The justification for selecting a n equally efficient option has been added in Section 8, where the reasons for the preferred Policy Option have been further expanded upon, showing how the long-term economic security benefits will mitigate the initial negative net benefit for 2030 . This is also further reflected in Section 7.2, under Efficiency considerations . This is now reflected in the executive summary as well. Additionally, the breakdown of costs associated with low-carbon content requirements, divided by public procurement, support schemes, and products placed on the market , is detailed in Annex 4, Section 2.2. This provides a better reflection of the impacts of each 91 RSB recommendations: How they were addressed: policy option as the requirements extend to a larger share of the market. The proportionality analysis has been improved under Section 7.4 explaining that starting with low -carbon requirements for all products placed on the market could have substantial impact on downstream sectors, with risks of imposing high costs or incentivising material substitution. Therefore, a more gradual option could be considered for the legal drafting , where the low-carbon requirements could initially be introduced on a reduced application scope. (5) The incoherence of the adjustment costs for business, as reported in the new summary Table 4 on the one hand, and in the one -in one-out section of the main report and in annex 4 on the other hand needs to be resolved. This incoherence has been addressed in the main text, as well as in Annex 3 and 4, where the data was aligned. (6) Both in the main text and the annexes, the limitations related to the modelling and the calculations as well as their robustness should be better reflected including in the comparison of options. Where significant uncertainties regarding key estimates are identified the report should provide a corresponding sensitivity analysis. In case a quantification and monetisation of benefits is not possible the report should provide a substantiated estimate to present the order of magnitude of expected benefits. The main text in the relevant impact sections and Annex 4 is now nuanced with the characteristics of the modelling exercises , and how the results should be framed. Further limitations on the calculations are outlined as well in the relevant impact sections and Annex 4, such is the case for digitalisation of permitting, where in the absence of permitting-specific analysis, certain assumptions need to be drawn to provide estimations for the benefits. A new Annex 15 has been developed. It introduces potential ranges of cost impacts, w here uncertainties over the price differentials could influence the choice of Policy Options. It presents a sensitivity analysis for some key parameters in the lead market measures: • Low-carbon measures for EIIs provide cost ranges, considering the uncertainty related to definitions of low -carbon, prices for decarbonised energy , decarbonisation costs and other variables. Due to these uncertainties, the low-carbon steel target would trigger a price increase ranging from 0.075% to 0.175% in the final price of the vehicle. The combination of low-carbon steel and cement would be projected to increase between 0.08% to 0.45% the final pric es of construction projects. • Batteries provides variables when manufactured in the EU with a cost differential ranging from a 26% to 50% increase. • Solar presents a more conservative estimate of a low deployment scenario in 2030. • Vehicle components present a sensitivity analysis on the set of elasticity parameters governing consumer behaviour. 92 RSB recommendations: How they were addressed: Additionally, some of the benefits present a wider range of potential scenarios: Environmental benefits also present the low (60 EUR tCO2eq) to high (EUR 189 per tCO2eq ) value used for 2030 to give an estimation of the monetisation range. Administrative savings also present a more conservative estimate, with the assumption that only a third of the manufacturing industries can carry out their transformation process by 2030 (and therefore undergo a new permitting process). Elements of the sensitivity analysis have been cross - referenced in the main report under Section 6. (7) The report should provide an analysis of the cumulative effects of costs increases (low-carbon, EU- made, energy, etc.) on consumers and downstream sectors and their competitiveness. It should also better analyse the potential impact that this can have for the energy transition in the EU as well as the impacts on the affordability of energy. The cumulative effects of the cost increases were further shown in Annex 4 and Section 7.2, where the competitiveness of the downstream sectors was addressed. Furthermore, the potential implications of the proposed policy instruments on the energy transition, as well as the affordability of energy , have been addressed in Section 6.1.1. (8) Regarding permitting for EIIs coherence shall be assured with other measures and initiatives on permitting. The impact on costs for administrations through the digitalisation of permitting should be better substantiated. Coherence with the Environmental Omnibus initiative on permitting is highlighted in the baseline, as well as in Section 7 for coherence. Moreover, estimates on the costs of digitalisation, even if outweighed by the benefits, are outlined in Section 6.1. Substantiated ranges are prese nted per procedure, depending on the type of process es at hand. A revised estimate of cost savings for administrations is presented, with the limitations that these figures entail, notably that they are extracted from assessments on different types of business proc esses, not necessarily linked to permitting. (9) Regarding the FDI conditionalities (measure INV 2) the report should specify what methodology, and criteria will be used for including strategic technologies or EIIs into the scope of mandatory FDI conditionalities. In addition, the report should provide more detail on the related safeguards, including how proportionality of the conditionalities wi ll be ensured and how the speed of phasing in the conditionalities will be determined. This has been addressed in Annex 9 ‘Overview of policy measures’, under SO3, INV 2 measure, by explaining that the Commission’s critical technology assessment methodology will be applied to identify the sectors in scope, that a coherent, uniform and proportionate set of conditions will apply to inbound investors in these designated sectors, and that the degree of obligation differs between strategic reinforcement technologies on the one hand and other emerging key strategic technologies on the other hand. (10) The report (as well as SME Check) should further clarify mitigation measures, in particular on micro and small enterprises in the construction sector. The mitigation measures for SMEs, in particular the reduction of the administrative burden for those operating in the construction sector, have been addressed in Annex 6 , the SME Check , as well as cross-referenced in Section 6 of the report. 93 4. Evidence, sources and quality Evidence and data that were used in this Impact Assessment included: a. Academic studies and literature on challenges faced by EIIs and clean technologies and possible policy measures, as well as existing position papers and other documents drawn up by relevant stakeholders. b. Newspaper articles and press materials. The references are cited in the main text of the report as appropriate. c. Internal studies and modelling exercises of Commission services, and notably of the JRC. The Impact Assessment further relies on the information received from consultation activities as detailed in the synopsis report contained in Annex 2 of this Impact Assessment. 94 Annex 2: Stakeholder consultation (Synopsis report) In the context of the Impact Assessment on the Industrial Accelerator Act, several consultation activities were conducted between April and July 2025. The purpose of the consultations was to collect evidence and views from a broad range of stakeholders, gi ving them an opportunity to provide relevant data and information on the problems and potential solutions in support of the decarbonation and competitiveness of industry, with a clear focus on energy intensive and clean tech industries. This Annex presents the results of the consultation activities carried out. The consultation activities included: - A Call for Evidence, published for feedback from 15 April 2025 to 08 July 2025 - A public consultation published in the “Have your say” portal, open to the public, containing multiple choice and open questions, running in parallel with the Call for Evidence. - A targeted consultation published in the “Have your say” portal, open for associations and companies from the energy intensive sectors - A reality check workshop, open only to companies from energy intensive sectors, including the possibility to submit position papers afterwards - A reality check workshop, open only to steel companies, on EU low -carbon product label for steel, including a survey and the possibility to submit position papers afterwards - A reality check workshop, open only to Member States, including the possibility to submit position papers afterwards. - A targeted consultation following the Automotive Action Plan to gather insights from the battery ecosystem and downstream sectors on the potential impact of EU content requirements for batteries. 1. Overview of the participants For all stakeholder activities, the main stakeholder groups addressed were: • National authorities of the Member States responsible for industrial policy, permitting procedures and public procurement • Non-Governmental Organisations representing civil society • Associations representing industry, businesses and professionals • Businesses, including SMEs • EU citizens • Think-tanks • Other The public consultation received 314 answers. The responses came mainly from business associations ( n=129, 41%), followed by companies ( n=120, 38%), non -governmental organisations, EU citizens, public authorities (n=11, 3%), trade unions, academic institutions, environmental organisations and other stakeholders ( n=15, 5%). 133 stakeholders attached a policy paper to their answers. Most respondents came from Belgium (29%, n=91), followed by Germany (13%, n=42), France (10%, n=32), Spain (6%, n=20), Netherlands (6%, n=18), Italy (5%, n=17), and Finland (4%, n=13), with responses from other Member States as well as non- Member States. Significant participation came from industrial respondents ( n=249, 79%), broken down into the following sectors: chemicals (n=24, 7.6%), steel (n=21, 6.7%), fuels (n=16, 5.1%), metals and mining ( n=11, 3.5%) , cement ( n=8, 2.5%), fertilizers and agriculture ( n=8, 2.5%), aluminium (n=5, 1.6%), pulp & paper ( n=5, 1.6%), ceramics ( n=4, 1.3%), glass ( n=6, 1.9%) 95 and lime sector ( n=1, 0.3%), as well as downstream sectors such as energy ( n=57, 18.1%) - including electricity (21 answers), clean tech ( n=15), gas & oil (n=7), hydrogen ( n=5), heat (n=4), solar (n=2), wind (n=2) and geothermal (n=1) -, waste management and recycling (n=11, 3.5%), construction (n=8, 2.5%), automotive ( n=5, 1.6%), batteries and storage ( n=4, 1.3%), and other (n=55, 17.5%). Figure 7: participation in the open public consultation by type of organisation Figure 8: participation in the OPC by sector For the targeted consultation, 62 answers were received, mainly coming from business associations/companies/business organisations (49 responses; 79%), followed by non - governmental organisations (8 responses; 13%), and other stakeholders (5 responses; 8%). Only 4 out of 62 responses (6%) came from SMEs. Among these, 2 respondents were from the cement industry, 1 from the steel sector, and 1 from the construction industry. 23 stakeholders submitted a policy paper following the targeted consultation, including the workshops. Replies came from various sectors, with the iron and steel sector contributing the most responses (17 replies, 34%), followed by cement (6 replies, 12%), non -ferrous metals (5 replies, 8%), glass and chemicals (4 replies each, 6%), and cer amics (3 replies, 5%). Only 1 reply (2%) was received from the pulp and paper sector. An additional 9 respondents (18%) selected “other”. 96 Figure 9: participation in the TC by type of organisation Figure 10: participation in the TC by sector The reality check with energy intensive companies gathered around 40 participants, from 27 companies across sectors such as steel, chemicals, cement, glass, refining, aluminium, fertilizers, paper, and lime. The reality check with steel companies on EU low-carbon product label for steel gathered 34 participants from 26 European steel companies and associations. Lastly, the reality check with Member States brought together 46 par ticipants across 17 Member States. For the targeted consultation on EU content requirements for batteries, 63 responses were received, primarily from companies (56 responses; 89%), followed by business associations and industry groups (3 responses; 5%), civil society organisations and NGOs (2 responses; 3%), and other stakeholders (2 responses; 3%). Among these, 15 respondents (24%) identified as part of the downstream sectors, including automotive and battery energy storage systems. Sectoral representation was diverse, with many stakeholder s active across multiple segments of the battery value chain. The most frequent mentions were in battery pack and recycling (each 37%), followed by battery cell and critical raw materials (each 29%), and battery management systems (26%). Other notable sect ors included cathode active materials (23%), anode active materials (18%), and various chemicals (11%) and machinery (8%) components. 97 2. Public consultation 2.1 Public Consultation Survey Overview The public consultation survey included questions on barriers to industrial decarbonisation, permitting for industrial decarbonisation projects, identifying and promoting priority decarbonisation projects, the creation and protection of European lead markets for low-carbon and EU made products, and foreign direct investments for decarbonisation. Barriers to industrial decarbonisation Industrial stakeholders identified several key barriers to decarbonisation . The most widely acknowledged challenge was lack of sufficient access to affordable and decarbonised energy – 266 (85%) out of 314 respondents, followed by unfair international competition from non-EU countries ( n=250, 80%), decarbonisation technologies not yet being widely available or deployed at scale ( n=198, 63%), high operational costs ( n=260, 83%), high capital costs (n=251, 80%) and high carbon abatement costs ( n=251, 80%) Permitting complexity and duration was perceived as a major obstacle by 256 respondents (82%). Furthermore, 146 respondents (46%) agreed that SMEs face greater decarbonisation barriers than larger companies, of which, 52% (91 out of 176) were SME respondents. Streamlining and speeding-up permitting procedures Stakeholders identified the permitting process as a major bottleneck to advancing industrial decarbonisation in the EU. Among all identified issues, the fragmented regulatory landscape and complexity of the process stood out as the most significant ( n=187, 60%). Of the 314 stakeholders surveyed, 218 (69%) agreed that permitting challenges are widespread across Member States. Furthermore, 222 respondents (71%) agreed that permitting challenges differ between Member States , highlighting fragmentation and nati onal-level variation in implementation. A large majority —266 out of 314 respondents (85%) —agreed that decarbonising energy -intensive industries requires addressing significant cross -border challenges. Based on the responses, the most reported permitting length across Member States falls within the range of 12 to 24 months. Grid access timelines vary by sector, with durations ranging from 15 months (pulp & paper, ceramics, lime) to 24 months in automotive. Energy and cement sectors face long waits of 80 to 100 and 40 to 80 months, respectively, while construction, waste management, and fertilisers often experience delays of 60 months or more. When asked about the reasonable maximum timeframe for an industrial decarbonisation project between submission of the permit application to the permit being granted was identified by 56 (18%) respondents as 12 months, followed by 53 (17%) suggesting 6 months. Other 65% of respondents did not provide an answer. Respondents pointed to Environmental Permits (158 respondents, 50%), Building or Construction Permits ( n=78, 25%), Grid Connection Permits (n=45, 14%) and Health & Safety Permits (n=33, 11%) as the main types of permits relevant to industrial decarbonisation projects. Permitting at the geographical cluster level received support from 210 respondents (67%) while the use of data repositories and spaces to improve permitting processes by re -using relevant datasets was supported by 196 respondents (62%). S implifying EU legislation to facilitate industrial permitting also received strong endorsement (n=258, 82%). 98 From the received answers, several preferred measures for speeding up the permitting processes were identified: single points of contact (136 out of 174 answers), time limits for the permit-granting process ( n=149, 81%), time limits for the environmental impact assessment (n=144, 79%), joint environmental assessment when required under multiple legal acts (n=133, 76%), tacit approvals for certain administrative decisions ( n=144, 83%), overriding public interest status when it exists in national law (n=108, 62%), fully digitalised processes (n=114, 64%), and improved administrative cooperation via digital tools (n=114, 64%). Identifying and promoting priority projects The majority of respondents agreed that limited access to private funding (194 out of 314, 62%), public funding (n=245, 78%), and transition finance ( n=196, 62%) is a major barrier to industrial decarbonisation. On risks associated with investing in industrial decarbonisation projects , market uncertainty was identified as the top risk (269, 86%), followed by regulatory uncertainty (n=260, 83%) and financial risk (n=243, 77%). 63% of respondents (197 out of 314) supported the introduction of a category of priority industrial decarbonisation projects , with targeted benefits. The preferred criteria for identifying priority projects were contribution to industrial decarbonisation ( n=100, 32%), to strategic value chains ( n=64, 20%), to industrial electrification ( n=9, 16%), economic importance (n=43, 14%) and expected increased demand for outputs (n=28, 9%). When looking at the benefits(s) strategic projects should receiv e, 117 (37%) agreed with faster permit-granting procedures, 113 (36%) with priority status for administrative procedures, 113 (36%) with better access to funding. Creation and protection of European lead markets for low-carbon products The vast majority - 280 (89%) out of 314 respondents - believed that measures to stimulate demand for clean industrial products are essential to drive industrial decarbonisation, backed by all industries. This was further supported by the lack of willingness among downstream sectors and consumers to pay a premium for clean industrial products ( n=253, 81%). When looking at the downstream sectors supporting the uptake of clean energy - intensive materials, the most important ones included construction and infrastructure (n=218, 70%), automotive ( n=196, 62%), clean energy technologies ( n=186, 60%), electrical and electronic equipment (n=136, 43%), defence (n=92, 30%) machinery (n=40, 13%), and other (n=72, 22%). Most respondents—259 out of 314 (82%) —agreed that public procurement is a significant driver for lead markets for European and clean industrial products. Additionally, 246 respondents (78%) believe that public procurement is too heavily focused on price rather than on non-price criteria. Non-price criteria identified for public procurement to help create lead markets included: resilience (n=53, 17%); environmental sustainability ( n=53, 17%); EU content ( n=44, 14%); employment and social requirements (n=22, 7%); and cybersecurity (n=10, 3%). EU label on carbon intensity of industrial products A majority of respondents (191 out of 314, 61%)244 agreed that introducing an EU voluntary label on the carbon intensity of industrial products would support the uptake of sustainable industrial products and the creation of lead markets. However, respondents were more sceptical about the label’s potential to curb the proliferation of labels and ensure a harmonised approach, 244 42 (13%) are neutral, 32 (10%) slightly disagree, 17 (5%) strongly disagree, 17 (5%) do not know and 17 (5%) did not respond 99 with only 129 respondents (41%) in agreement. Concerns about administrative and compliance costs were limited, as only 100 respondents (32%) believed that introducing a voluntary label would impose significant costs. On the added value of an EU label on carbon intensity of industrial products , respondents saw benefits in terms of increased transparency ( n=195, 62%), comparability and market differentiation ( n=187, 60%), and market uptake of greener products (n=160, 51%), while fewer agreed on its role in im proving access to green finance (n=136, 43%) or compliance with regulatory requirements (n=108, 35%). Foreign Direct Investments The majority of respondents (166 out of 314, 63%), out of which, the majority (136) being business associations and businesses - agreed that foreign direct investments are valuable for bringing capital into Europe that is otherwise unavailable within the EU, to increase industrial decarbonisation investments. Additionally, 147 respondents (47%) believed such investments are beneficial for transferring know-how on products or processes currently not available in the EU. A further 118 respondents (38%) saw va lue in these investments for enhancing supply security for EU customers by localising production closer to demand. Only 12 respondents (4%) considered foreign direct investment to play no role in advancing industrial decarbonisation investments. 172 (55%) out of 314 respondents found it useful to impose conditions on foreign direct investment from an internal market perspective. Further opinions on these conditions showed that 79% (102 out of 129) agreed on the requirement to perform research, development, and innovation activities in the EU, 74% (93 out of 126) found the requirement to perform value - added production in the EU (rather than mere assembly of imported components) useful, 73% (92 out of 126) of respondents find the requirement to form a joint venture with a European partner and/or restrict foreign ownership percentages useful, 71% (91 out of 126) found the requirement to source equipment and inputs in the EU useful, 70% (88 out of 126) agreed on the requirement to hire and train EU citizens as staff, 67% (84 out of 126) supported the requirement to transfer intellectual property rights and know-how to the EU investment and/or grant irrevocable licenses, 50% (64 out of 128) supported the requirement to supply EU customers, and 39% (50 out of 126) supported the requirement to appoint EU citizens to key management positions. 2.2 Industry Position Papers Overview As part of the Open Public Consultation, 142 policy papers were submitted, across a wide range of industries such as aluminium (2 responses), cement ( n=2) , chemicals ( n=10) , fertilizers (n=5), glass (n=2), metals (n=3), pulp &paper (n=2) , and steel (n=7), with downstream sectors represented by the automotive industry (n=1), batteries and storage (n=2), construction (n=2), energy, including clean tech manufacturers ( n=10), electricity ( n=8), gas & oil ( n=3), heat (n=2) and wind (n=3) - waste management & recycling (n=4) and other (n=54). Barriers to industrial decarbonisation Stakeholders across sectors cited high costs, regulatory uncertainty, and limited infrastructure as major obstacles to decarbonisation. Energy -intensive industries identified CAPEX and OPEX for new technologies—exacerbated by volatile energy prices—as key financial barriers. Many highlighted fragmented and unclear regulations across Member States. In sectors like metals, aluminium, and glass, current EU policies were seen as overly focused on breakthrough tech, neglecting scalable solutions. Steel stakeholders pointed to limit ed demand and lack of price premiums for low -carbon products. SMEs were also noted as challenged by complex permitting and funding systems. 100 Identifying and promoting priority projects There was strong support for the prioritisation of decarbonisation projects. Respondents emphasised the importance of eligibility criteria remaining broad and flexible to reflect the technological diversity and specific decarbonisation pathways across sectors. There was broad agreement that prioritised projects should benefit from simplified permitting, fast -track approval processes, and access to de-risking instruments such as public guarantees. Creation and Protection of European Lead Markets for Low-Carbon Products Stakeholders broadly supported the development of lead markets as a key mechanism to stimulate demand for low-carbon products and foster investment in decarbonised production, confirming the results of the Public Consultation. A majority welcomed the intro duction of low-carbon labels and minimum EU content requirements, although some expressed concern about possible market distortions and administrative burdens. Across sectors, there was strong support for harmonised environmental standards, including the a pplication of life -cycle assessment (LCA) methodologies and the integration of social and resilience criteria in procurement practices. While public procurement was broadly acknowledged as a potential driver of demand, several contributions pointed out that its current reach is too limited and must be complemented by initiatives for all products put on the market. Streamlining and speeding-up permitting procedures Permitting processes were identified across all sectors as one of the main challenges to the timely implementation of decarbonisation projects. Stakeholders described the permitting process as fragmented, non -transparent, and excessively slow. Particular c oncerns were expressed regarding the lack of uniformity across Member States and the complexity of navigating approvals for grid infrastructure, electrification, and hydrogen deployment. In response, there was a strong call for the creation of a streamlined EU -wide permitting framework, which includes digitalised processes, legally enforceable deadlines, and centralised contact points. This included support for tacit approval and fast trac king. There was also recognition that SMEs actors face disproportionately high administrative burdens under the current system, and that simplified procedures are needed. Foreign Direct Investments FDI was viewed as essential for scaling infrastructure and clean technologies. Stakeholders stressed aligning FDI with EU goals and safeguarding domestic standards. High energy costs and regulation could deter FDI without better risk-sharing tools. Stakeholders proposed several solutions, including the definition of clear sustainability benchmarks, incorporation of EU content requirements, and the design of FDI frameworks that complement rather than displace existing industrial capacities. 3. Targeted consultation for EIIs 3.1 Targeted survey Overview The targeted consultation questionnaire included questions on the creation and protection of European lead markets for low -carbon products, as well as the streamlining and acceleration of permitting procedures for industrial access to energy and decarbonisation. Creation and Protection of European Lead Markets for Low-Carbon Products 101 A large majority of respondents, 56 (90%) out of 62, agreed that stimulating demand for low - carbon industrial products is essential, with support consistent across company sizes and stakeholder groups. When looking at key design principles for low-carbon requirements, a technology-neutral, performance-based approach was backed by 13 respondents (21%) with another 13 (21%) stressing the need for regulatory flexibility. Lifecycle assessment methods were considered essential by 19 respondents (31%) and progressive tighten ing of benchmarks over time was proposed in 20 responses (32%). Green Public Procurement emerged as a key lever in 17 replies (27%), with calls for integrating CO₂ benchmarks, lifecycle crit eria, and EU -origin rules. Additionally, 10 respondents (16%) recommended harmonised labelling and certification, while financial support was emphasised in 15 responses (24%). Regarding the cost impact of low -carbon alternatives and downstream pricing , stakeholders across energy-intensive industries reported significant cost increases tied to low- carbon production—typically 10–50%, sometimes higher. However, most agreed the effect on final product prices is modest. By sector breakdown: • Cement: All respondents agreed low -carbon cement has little or no impact on construction costs. Studies show even doubling cement prices raises building costs by only 1–3%. • Steel: 14 of 18 (77%) respondents reported minimal downstream price effects from low-carbon steel, citing studies and internal data: <1% for an average car; 0.1–0.2% for buildings; 0.6–1.2% for industrial sites; 1.6 –5.5% for appliances and offshore wind; 0.15–0.5% for military vehicles. • Chemicals: Stakeholders noted variability across products; most estimates place end - product cost increases at 1–5%. • Ceramics: Producers anticipate significant value chain cost increases, stressing low price elasticity in key downstream sectors. • Glass, non-ferrous metals, pulp & paper: No figures or clear data. Risks of material substitution due to low -carbon requirements vary across sectors; however, most respondents agreed that the risks can be mitigated with lifecycle -based, material-neutral policies applied consistently across sectors and imports. Regarding social and economic impacts of low -carbon requirements, 45 (75%) out of 62 respondents saw long-term socio-economic benefits from low-carbon requirements. However, 27% warned of short -term risks, including higher production costs, investment pressure (CAPEX/OPEX), inflation, job losses, and delocalisation. Stakeholder views on the impact of low -carbon requirements on SMEs were mixed. 29 (47%) out of 62 respondents believed the requirements are supportive of SMEs, while 24 (39%) expressed concern over barriers such as high upfront costs, administrative burden, and limited access to finance or technical support. EU content requirements for industrial products Support for stimulating demand for EU-made industrial products was strong across stakeholder groups, with 53 (86%) out of 62 respondents in favour. Stakeholders showed a clear preference for defining “EU content” in industrial products based on value creation within the EU, with 51% supporting minimum percentage of the value creation (i.e. value of the final product compared to initial input) in the EU, followed by a minimum share of specific materials used in a product to be manufactured in the EU (23%), products to have proof of origin or traceability 102 certification showing compliance with EU content rules (10%) and specific production steps or final assembly taking place within EU (8%). Regarding the most appropriate policy instruments to introduce minimum EU content requirements, the responses favoured all forms of public funding and support schemes (35%), followed by private procurement (i.e., product requirements) (23%), and public procurement (19%). Stakeholder views on traceability of EU origin vary, with most supporting sector-specific or existing frameworks for practicality and enforceability. In cement, 43% supported traceability via tools like Environmental Product Declarations and origin disclosures under the CPR, while 29% viewed origin tracking as irrelevant. Ceramics unanimously supported direct application of EU Rules of Origin. In chemicals, 50% favoured sector -adapted Digital Product Passports, but 25% expressed uncertainty due to supply ch ain fragmentation. Glass stakeholders fully supported traceability using existing tools like CE marking and Declarations of Performance, especially with Digital Product Passports. In iron and steel, 72% backed traceability with the "Melted and Poured in the EU" rule, Mill Test Certificates, and Digital Product Passports, but warned of loopholes and complexity. Non -ferrous metals had 60% support for traceability through origin checks, mass -balance approaches, and import monitoring, with concerns over scrap-based supply chains. The sole pulp and paper respondent supported traceability using existing systems like the EU Deforestation Regulation, FSC/PEFC certifications, and Declarations of Compliance. When asked about the potential economic and social impacts of EU content requirements, the pulp and paper sector sole respondent was entirely positive across economic, employment, and SME impacts. Non -ferrous metals stakeholders were divided: 60% supported the economic shift, while 20% were cautious and 20% opposed, mainly due to concerns about cost pass - through. Iron and steel respondents were largely positive on economic (61%) and skills (50%) impacts, with a smaller share noting conditional effects or risks. In the glass sector, economic views were evenly split —positive, mixed, negative, and conditional (each 25%). Chemicals perspectives were cautious and design -dependent. Ceramics respondents were unanimously positive on economic impacts, with some also anticipating job benefits. Cement stakeholders expressed mixed views on economic impacts; half emphasi sed the need for upskilling, particularly in carbon capture and digital technologies, while a third considered skills impacts not relevant. Furthermore, 49% of respondents considered the introduction of EU content requirements for industrial products to be supportive of SMEs, with 47% SMEs agreeing as well. The identified downstream sectors where it be technically and economically feasible to apply minimum EU content requirements were reported as follows: Automotive & transport equipment is strongly supported by steel (88%) and non -ferrous (80%) respondents as a relevant downstream sector. B uildings & construction had the highest support, backed by all ceramics and most steel, cement, and non -ferrous stakeholders. Civil infrastructure & public works gained support from steel (81%) and non -ferrous (60%). Clean energy & renewables saw moderate backing from steel (44%) and non -ferrous (60%). Machinery, white goods & heavy equipment were supported by 50% steel and 40% non -ferrous. Defence & security received support from 38% steel and 40% non -ferrous. Packaging, co nsumer goods & glassware were backed by glass (75%) and 40% of non-ferrous respondents. Streamlining and speeding-up permitting procedures Most respondents (63%) agreed that the permitting measures under the Net Zero Industry Act are not enough to improve permitting conditions for energy intensive industries. Sectoral 103 support was high in glass, (100%), pulp and paper (100%), ceramics (100%), steel (72%), and non-ferrous metals (80%). The cement (43%) and chemical sector (25%) were however less aligned. Most stakeholders highlighted the need for further measures to improve the permitting processes, with 72% support for facilitating access to grid and relevant energy infrastructure, 67% advocating for the digitalisation of the permitting process, and 67% for tacit approval for specific steps or permits. Meanwhile, 64% expressed the need for targeted environmental derogations for industrial clusters and projects and 59% supported the wider use of overriding public interest provisions. Despite 2/3 of respondents indicating that tacit approval could be relevant to improve the efficiency of the permitting processes, only a few of them suggested specific steps: early procedural steps of the Environmental Impact Assessment (1 mention), environmental permits for known low-impact technologies (provided safeguards are in place) (1), changes to permits that will not increase the negative environmental impact (1), (low risk) modifications with limited impact (3), minor modifications to existing permits (1), renewed permits (1), non - critical administrative steps (completeness checks or intermediate reviews) (1), permitting for grid connection and land access (2), for iron & steel, the biomethane use (1), the for non-ferrous metals, the environmental permitting process (1). When asked which EU legislation presents the bigger hurdles when addressing the permitting granting processes for a decarbonised industrial investment, the main directives mentioned were: Industrial Emissions Directive (34% ), Water Framework Directive (19%), Environmental Impact Assessment Directive (6%), Birds and Habitats Directives (5%), followed by Ambient Air Quality Directive, Waste Framework Directive, and Natura 2000 (each 3%), and finally, Nitrogen emission impact calculations, Hydrogen Delegated Acts, BREFs, Air Quality Directives, and Waste Shipment Regulation (1% each).245 SMEs also reported various hurdles in the permit granting process for decarbonisation projects, including, from a regulatory perspective, complex and lengthy environmental assessments and other permitting processes (2 mentions), administrative delays and u nclear procedures ( n=2), unpredictable timelines ( n=1), lack of technical and general support / guidance (n=3), lack of early access to pre-consultation services or tailored regulatory advice ( n=1), complex documentation requirements and uncertainty about eligibility for permits or incentives ( n=2), with permitting rules being designed around large installations rather than SMEs ( n=2). On an internal level, they encounter high costs of compliance and consulting as well as limited internal capacity to navigate complex regulatory frameworks. 3.2 Reality Check with Industry on Industrial Accelerator Act Overview The consultation workshop with energy intensive industry representatives included preliminarily shared questions and discussion around the topics of (i) the creation of European lead markets for low -carbon products, with discussions on EU content, and (ii) streamlining and accelerating permitting procedures. Regarding the creation and protection of European lead markets for low -carbon products, during the workshop participants broadly confirmed the results of the targeted survey. They agreed that there is currently only a niche market for low -carbon products, as customers tend to be price sensitive, and few incentives exist for a green premium. In this context, supporting the creation of lead markets for low-carbon products will increase demand and production, thereby aiding the decarbonisation of energy -intensive industries. Public and private procurement, EU content targets, and low -carbon labels, however, must be tailored to 245 To note, some of the replies received via the consultation are not EU legislation per se but are covered by legislation mentioned earlier. 104 the needs and complexities of each industry and their supply chains. Participants noted varying demand shares currently met by public procurement, depending on the specific energy - intensive application in different end -use sectors, and mostly agreed that i ncentives for products put on the market are needed to grow the market for all industry players. They also confirmed that EU content requirements are important for ensuring that the market for low- carbon products is not undermined by non-EU competition. Concerning streamlining and speeding -up permitting procedures, participants acknowledged that, permitting bottlenecks can cause significant delays, extra costs, and uncertainty which leads to postponement in investment or even idle operations. Suggested solutions include a central authority for permitting, a one stop shop for permitting procedures, digitalisation, regulatory sandboxes, support for permitting new technologies, tacit approval if time limits are exceeded, fast track permitting processes for de carbonisation projects, one application covering multiple permits, and early -stage public participation to accelerate approvals. 3.3 Reality Check with Steel Industry on the Carbon Intensity Label Overview The consultation workshop with steel industry representatives included preliminarily shared questions and discussion on the development of an EU low-carbon product label for steel. Scope and methodology • Product Coverage: There was broad consensus from participants that hot -rolled steel should serve as the reference product for the label. Stakeholders supported a comprehensive emissions scope for the label, particularly including emissions resulting from relevant upstream processes such as the use of alloying elements. • Use of EU ETS Benchmarks: Stakeholders generally supported using EU ETS product benchmarks as the foundation for the label. However, they also called for the inclusion of additional upstream and indirect emissions not covered by these product benchmarks, and the need to align the approach with CBAM rules to ensure consistent treatment of imported steel. • Hydrogen: Stakeholders agreed that hydrogen-related emissions must be included in the carbon footprint calculation. They emphasi sed the need for harmoni sed EU-level rules to ensure consistency in the methodology. • CCUS: Captured and permanently stored CO₂ should be eligible for exclusion from the product’s carbon footprint, in alignment with the current EU ETS accounting rules. • Electricity: The role of electricity -related emissions is becoming increasingly significant. Stakeholders were divided on whether to use market -based data, average national grid mixes or an average EU-mix., • Scrap: there was agreement about that emissions from scrap should not be differentiated based on source (pre -consumer vs. post -consumer). Stakeholders cited concerns over traceability, verification challenges, and the risk of manipulation. Monitoring, Reporting, Verification, Certification • Data Reporting : Stakeholders emphasi sed the need for accurate and verifiable emissions data, with broad agreement on the importance of transparency. The use of primary data should be the priority, while possible default factors should be sufficiently conservative. • Baseline Data: Most stakeholders supported using a 12 -month average as the baseline for emissions reporting, with some flexibility allowed in cases of significant 105 transformation or process upgrades. Verification: There was consensus among stakeholders that verification procedures must be comparable to those under the EU ETS framework, especially if the label is to apply equally to EU and non-EU steel. • Certification: Some stakeholders recommended that certification responsibilities be assigned to existing EU ETS verification bodies, leveraging their established infrastructure and expertise. Larger companies indicated that they would be able to manage the administrative demands of regular audits under such a system. Label Design Elements The use of a sliding scale for differentiating the performance classes or of an alternative classification method not as a function of scrap was highly debated with no clear preference or compromise solution within industry. Supporters of the sliding scale which participated in the reality check view it as a fair mechanism for reflecting decarbonisation progress in pr imary steelmaking. Opponents on the other hand argued it could undermine the environmental value of secondary production, by diluting incentiv es for recycling and disadvantaging EAF producers. Some stakeholders were critical towards the idea of having two different classification systems, based on production route, as it would risk locking -in technological innovation. • Production Route Transparency : Some participants called for including production route, recycled content, and place of origin data on the label, alongside carbon intensity. • Harmonisation Needs: A consistent EU -wide methodology is necessary to build trust across markets and ensure clear messaging for both consumers and B2B customers. 3.4 Reality Check with Member States on Industrial Accelerator Act Overview The consultation workshop with Member States representatives included preliminarily shared questions and discussion around the topics of European lead markets for low-carbon industrial products and streamlining permitting procedures. Creation and protection of European lead markets for low-carbon products Member States welcomed the IAA's ambition to develop lead markets but emphasised the need for clarity of scope, particularly distinguishing IAA from the Net-Zero Industry Act (NZIA). The participants underlined the importance of alignment with existing EU legislation such as ESPR, Renewable Energy Directive, and Circular Economy initiatives. Several countries supported EU preference criteria in p rocurement, highlighting that minimum EU content requirements could drive market creation, especially in key sect ors like steel, cement, fertilizers, and batteries. Technological neutrality was broadly supported, with calls for verified and interoperable labelling systems that build on ETS data without adding new burdens. Concerns were raised about electricity access, calling for EU support in addressing grid capacity constraints. There was consensus on avoiding new regulatory burdens and instead simplifying existing frameworks to attract investments. Streamlining and speeding-up permitting procedures All Member States called for streamlined permitting but rejected hard deadlines, with some emphasizing outcome-focused simplification, preferring procedural flexibility over rigid timelines. Others highlighted the complexity arising from regional administrative structures, which must be respected in any EU -level initiative. Some Member States called for identification and removal of legal inconsistencies that delay permitting, while others warned 106 against creating new layers of bureaucracy. Digitali sation and standardised procedures were favoured, especially for environmental assessments, but cautioned that real-world constraints, such as limited regional capacity and financing, must be addressed. Beyond simplification, Member States raised practical implementation concerns. Some of them suggested narrowing IAA’s permitting acceleration to large -scale decarbonisation projects to avoid over - prioritisation, while others called for a horizontal simplifi cation approach, applicable to all decarbonisation projects. 4. Targeted consultation on the battery sector The consultation focused on the potential introduction of EU content requirements for the battery sector, including their definition, implementation through policy instruments, and expected impacts on competitiveness, pricing, and employment. Support for Policy Instruments Out of 63 respondents, a large majority supported the inclusion of EU content requirements in various policy mechanisms. Public funding and support schemes received the highest endorsement (45 responses; 71%), followed by public procurement and private procurement (each with 39 responses; 62%). Notably, 29 respondents (46%) supported the use of all three instruments simultaneously. Only 7 respondents (11%) expressed opposition to any form of EU content requirement. Definitions of EU Content Respondents provided varied interpretations of what constitutes “EU content” in the battery value chain. The most common definition was “components made in the EU” ( n=43, 68%), followed by “assembly in the EU” ( n=36, 57%). Less frequently cited were “bill of materials produced in the EU” ( n=14, 22%), “value generated in the EU” ( n=12, 19%), and “weight/volume generated in the EU” ( n=4, 6%). Only one respondent (2%) provided a definition that did not fit into these categories. Expected Impacts Stakeholders were asked to assess the expected impacts of EU content requirements in batteries across six dimensions: - Social Aspects (e.g. Jobs): 39 respondents (62%) anticipated very positive effects, with another 18 (29%) expecting positive outcomes. Only 5% saw no impact, and just one respondent (2%) foresaw negative consequences. - Economic Aspects (e.g. Profitability): 42 respondents (67%) expected positive or very positive impacts, while 12 (19%) anticipated negative effects. A small share (10%) saw no impact. - SMEs: 40 respondents (64%) viewed EU content requirements as beneficial to SMEs, while 3 (5%) expressed concern about negative impacts. 14% saw no impact. - Skills and Workforce Development : This dimension received strong support, with 30 respondents (48%) rating the impact as very positive and 26 (41%) as positive. No respondents anticipated negative effects. - Battery Price: Stakeholders expressed concern about cost implications. 26 respondents (41%) expected negative impacts on battery prices, with 5 ( 8%) anticipating very negative effects. Only 11 (18%) saw positive effects, and 15 (24%) expected no impact. - Downstream Product Price: 22 respondents (35%) anticipated negative impacts, and 4 (6%) expected very negative effects. Meanwhile, 20 (32%) saw no impact, and 10 (16%) expected positive or very positive outcomes. 107 Annex 3: Who is affected and how? 1. Practical implications of the initiative Businesses – particularly EIIs, battery manufacturers, solar manufacturers, and key automotive component industries – will benefit the most from the initiative. It aims at creating lead markets for European, low -carbon products, depending on the industry, through public procurement mandates and/or mandates for all products put on the market, supported by a low-carbon label (in the case of steel). For businesses that have already invested in decarbonisation, the impact will be felt in the short term, as markets for their products expand. For companies that have not yet invested in decarbonisation, IAA will provide an incentive on the demand side, increasing confidence in decarbonisation investments. The initiative will also accelerate manufacturing industry’s decarbonisation projects by speeding-up using tacit approval for intermediate steps (with certain limitations and safeguards), and simplifying permitting procedures, including by digitalisation of procedures. Decarbonisation will require high initial CAPEX as well as higher OPEX in the short and medium term. Some of these costs will be passed down the value chain – in the form of a “green premium” – to downstream sectors that have the capacity to absorb them to different degrees. Since most provisions focus on public procurement and public support schemes, these costs are likely to be absorbed by public administrations, but the extent and availability of such support will depend on national budgetary capacities and political priorities. In the long term, the cost premium associated with producing low-carbon materials is expected to decline as relevant technologies mature and demand for low -carbon materials transitions from niche lead markets to larger-scale markets, while in parallel carbon intensive products are expected to become more expensive as a result of the tightening of the EU’s climate policies, e.g. the EU ETS and CBAM. Citizens and consumers will benefit by having a more reliable access to low-carbon products, which will be easier to differentiate, thereby being able to make more sustainable consumer choices. Initially, final consumer goods containing low-carbon industrial products will be more expensive, but i n specific sectors analysed in the assessment (construction and automotive), the increase in the final product price will affect consumers only to some extent and until the lead markets become the norm. In the long term the green premium will be reduced, therefore consumers will benefit from that as well. Public procurement and public support schemes measure would support lead markets, entailing fiscal benefits for purchasing products containing low -carbon and EU content materials, which are , for example, already in place for EVs . Citizens will also benefit from improved information and, more broadly, carbon emissions reduction. Member States will play an important role in the implementation of this initiative. Public procurement and support schemes will contribute the most to the creation of lead markets of low-carbon, EU content products. Thereby, administrations will need to include these provisions in their procurement practices, including monitoring and reporting. Permitting provisions will also have to be implemented by Member States, where coordination across public authorities will be crucial. The financial burden associated with low -carbon requirements in public procurement procedures and support schemes would primarily fall on Member States and other public authorities, requiring a limited increase in public spending on low-carbon products. 2. Summary of costs and benefits I. Overview of Benefits (total for all provisions) – Preferred Option Description Amount Comments Direct benefits LAB 2 – Creation of label on carbon intensity steel Steel businesses: Will benefit from a certification that will allow the differentiation of low-carbon steel on the market and increased transparency, leading to a competitive edge, reduced administrative burden from the multiplications of labels, and possibility to derisk investment in decarbonisation and new markets (combined with LEAD_EII 2). Downstream businesses: Customers will benefit from increased transparency on low - carbon steel, which will help them reduce their scope 3 emissions and achieve their own decarbonisation goals. Public administration: Will benefit from a common European, pre-verified label on the carbon intensity of steel, which will provide a clear reference for assessing compliance with low-carbon requirements in public procurement rules. It would also create a level playing field acro ss the single market. It will eventually allow procedural and environmental costs saving. A label for low -carbon steel, through the standardisation and improved information on the carbon emissions impacts of steel, will increase the value and marketability of low-carbon steel, open new markets, derisk investment and increase access to green finance or ESG -linked loans, and create a level playing field between steel companies engaged in decarbonisation activities. LEAD_EII 2 - Increased demand for low -carbon EU EII products EII businesses: Benefits include value added increases, market certainty and increased demand for European, low-carbon EII products, thereby facilitating investment in decarbonisation by providing security of offtakes. In the long term, this will result in decreased production costs and greater competitiveness in global markets. The introduction of a 25% low -carbon steel, a 5% low-carbon cement and a 25% low- carbon aluminium target in relevant downstream sectors can result in the following yearly CO2 savings (2030): Steel: 3.37 Mtonnes CO2, Cement: 0.69 Mtonnes CO2 and Aluminium: 0.22 Mtonnes CO 2. Total: 4.28 Mtonnes CO2. It would also lead to the preservation of up to 4 500 new jobs in the steel sector. Low-carbon measures in steel, cement and aluminium would result in GVA EUR 241 million for steel and aluminium sectors, and GVA EUR 445 million for cement (EUR 686 million). Other benefits include preserving European industrial capacities in strategic sectors at risk of becoming too much imports dependent. See Annex 4 Section 2 for calculations of the benefits highlighted here. 109 I. Overview of Benefits (total for all provisions) – Preferred Option Description Amount Comments LEAD_BAT 1 - Increased demand for EU batteries Batteries manufacturing businesses : Secure demand for EU -made batteries and key battery components to develop a strong value chain and cut strategic dependencies for a sector crucial for achieving climate goals , defence applications, and the competitiveness of downstream sectors. The benefits of Made in EU on batteries include creating the market certainty needed to de -risk investments and anchor battery production along the supply chain within the EU. This measure would help anchor the total number of jobs expected under the current pipeline of projects, which stands at 170 000 by 2030, out of which around 85 000 are considered to be at medium or high risk. Additionally, LEAD_BAT 1 would result in 25.6 Mtonnes CO2 savings in 2030. Upstream businesses: Expected benefits for the batteries-related critical raw materials projects. A stable demand of critical battery components will allow to de -risk investments into upstream critical raw materials projects related to batter y materials. In the long term, the benefits include decreased production costs and greater competitiveness in global markets. Securing manufacturing at scale through IAA can help narrowing the cost gap with China by approximately 40%. LEAD_SOL 1 – Increased demand for EU solar manufacturing Solar manufacturing businesses: Offtakes for the EU solar manufacturing supply chain are expected to be secured, in alignment with the projected 2030 manufacturing capacity based on the project pipeline. With the LEAD_SOL 1 policy option, over 20 GW of the deployment of PV would be covered which helps ensure the current existing project pipeline (as per the European Solar Industry Alliance246) to be realised. Thus, this would help bridge the gap between EU manufacturing capacity and the demand for EU-made solar modules. The measures focused on public procurement/auctions, as well as public support schemes for solar manufacturing could result in a combination of 58 852 jobs. The benefits include increased demand for EU solar manufacturers and the preservation of existing EU production capacity while strengthening the business case for new manufacturing projects. Additionally, reduced investment risks will enable more solar manufacturing projects to reach their Final Inve stment Decision. Implications for consumers include more reliable delivery due to lower exposure to geopolitical or trade disruptions, easier warranty enforcement and repairs due to easier access to EU-firms/installers, increased traceability of material o rigin, lower environmental impact thanks to shorter transport distances, reduced risk of purchasing products linked to forced labour, and a contribution to strengthening local resilience and industrial sovereignty through job creation. 246 Meet our members – European Solar PV Industry Alliance 110 I. Overview of Benefits (total for all provisions) – Preferred Option Description Amount Comments LEAD_VC 1 – Increase demand for EU content in vehicle components The increase in EU content of EVs sold in the EU would lead to higher sales of EU components. Furthermore, the measure is projected to lead to the generation of EUR 10.5 billion Global Value Added in 2027 and EUR 9.7 billion in 2030 when assessing the impact, taking into account only the first tier of the value chain. Notably: LEAD_VC 1 would lead to an overall increase in sales for vehicle component suppliers (referred to as: “Companies”: EUR 6.5 billion in 2027 and 6.9 billion in 2030. The extra cost for the downstream sector (EU EV manufacturers) of EUR 1.9 billion in 2030 would be completely offset by the increase in sales of EUR 9 billion in 2030 across all vehicle segments. When it comes to the consumers, Made in EU compliant EVs gain a price advantage , and cars are assumed to become more affordable. The impact on EU automotive component suppliers should be positive in both scenarios due to increased sales to car manufacturers that sell in the EU market. In addition , for those EU manufacturers that comply with the requirements, the measure will not represent any additional adjustment costs, since the initial share of Made in EU content is estimated at 70%. Hence the first target would contribute to safeguarding the local vehicle component industry, while preventing further offshoring supply chains. The measure would imply an increase in costs (see: Section 6), however due to the increased sales of vehicles, the negative implications on the EU EV manufacturers would be mitigated. As the policy measure would apply indistinctively to EU and non - EU car manufacturers, the level -playing field would be preserved and EU EV manufacturers could gain competitive advantage in the EU single market , while not havi ng significant impact on the competition. Overall, benefits of the measure are significant, and it would contribute to safeguarding the EU industry, re -establishing a level playing field, while providing a competitive advantage for the EU EV manufacturers in the internal market. INV 2 – Maximise benefits of foreign investments in the EU via conditionalities EII Businesses: Benefits include securing critical technologies and intellectual property vital for European innovation and competitiveness. Companies are also expected to embed more R&I and technologies in their EU operations. Domestic value -added production encourages long -term investment and a more predictable investment environment, including for SMEs. The preferred option is not intended to deter investment but to enhance quality, stability, and long -term value of investments in the EU. Conditionalities aim to anchor foreign investors’ technological, R&I, and production activities within Europe, ensuring that the EU remains an attractive and predictable destination for strategic and high-quality investment. By enforcing legal certainty, the measure supports continued inflows of productive investment rather than restricting them. 111 I. Overview of Benefits (total for all provisions) – Preferred Option Description Amount Comments PERM 2 – Digitalisation of permitting procedures Industrial manufacturing businesses (NACE code C): Cost savings of EUR 240 million for all manufacturing industries (2.2 million) in the EU could be perceived for the digitalisation of 5 similar administrative processes.247 MS administrations : Digitalisation of permitting procedures per year in efficiency savings could lead up to EUR 1.3 billion for procedures with a volume of at least 100 000 transactions.248 AREA 2 - Member States to designate industrial areas and facilitate access to public funding Projects in industrial areas: Benefits include improved support for access to funding for decarbonisation projects, which is likely to accelerate investment decisions and support industrial decarbonisation efforts across companies in the EU. Indirect benefits Increased access to low - carbon products Citizen / Consumers : The steel label will provide transparency regarding the carbon intensity of steel content, supporting market differentiation for low-carbon products and enabling consumers to make more sustainable choices. Furthermore, when the label is linked to public support schemes, it can incentivise consumers to increase their demand for lower - carbon products. Employment LEAD_EII 2 – Low-carbon & Made in EU for EII products: increased stable demand for EU, low -carbon materials are expected to generate new employment opportunities linked to these technologies and supporting the industrial transition. Low-carbon steel requirements in public procurement could preserve up to 4 500 jobs by 2030. LEAD_BAT 1 – Made in EU for batteries: announced gigafactories expected to create by 2030 up to 85000 jobs LEAD_SOL 1 – Made in EU for solar manufacturers: In terms of the policy segments assessed in the impact assessment, this corresponds to an estimated 5 193 jobs created The IAA provisions will generally lead to new job creation in the industry field, plus upskilling and reskilling opportunities in relation to decarbonisation projects. 247 Commission estimations based on a study on business procedures carried out to underpin the Single Digital Gateway impact assessment concluded that for 9 procedures, the cost savings for all EU businesses - if e-procedures were introduced where missing - would be in the order of magnitude of EUR 7 billion. Procedures in the scope of the study were linked to ten tax procedures. An adjustment was made to reflect lower volume of processes, and to reflect industrial manufacturing companies only. 248 Estimates based on digitalisation of procedures in the Netherlands, following a stakeholder consultation on the single digital gateway. These figures could be an overestimation, since costs and savings depend largely on the type of administrative procedure to be digitalised, the number of transactions/uses per procedure, amongst others. EUR-Lex - 52017SC0213 - EN - EUR-Lex 112 I. Overview of Benefits (total for all provisions) – Preferred Option Description Amount Comments by the public procurement provisions, 32 888 jobs by auctions, and 20 771 jobs by public support schemes, with a total of 58 852 jobs. INV 2 - Conditions on value added production (R&I, engineering, domestic processing and manufacturing) could lead to more EU quality jobs. Particularly, staffing requirements and social protection conditionalities could lead to more employment. LEAD_VC 1 could stop, and possibly reverse, the trend of progressive job losses which has been materialising over the past years in the EU’s vehicle components supply chain. GHG emission reductions LAB 2 – Low-carbon steel label: will support the decarbonisation of the (high emissions) steel industry, covering up to 78% of steel emissions. LEAD_EII 2 – Low-carbon & Made in EU for EII products: Increased demand for low- carbon products will lead to carbon emission reductions for EII industries. Assuming low-carbon targets for steel , cement and can lead to GHG emission reductions of 4.28 Mtonnes CO2 in 2030, with a monetary value of around EUR 428 million per year. LEAD_BAT 1 - EU-made batteries emit ~25% less CO₂ than Chinese-made ones (based on average grid). Reductions extend across the upstream value chain and so boosting domestic supply chains create environment and climate benefits . This could lead to GHG emission reductions of 25.6 Mtonnes CO2eq in 2030, with a monetary value of EUR 2 560 million. LEAD_SOL 1 – Solar PV systems produced in EU must comply with strict environmental standards throughout their entire life cycle, including requirements on carbon footprint, which will have a positive environmental effect. LEAD_VC 1 - In the “Internal market reaction ” scenario of the presented analysis, global GHG emissions from vehicle manufacturing decrease by 0.5 Mtonnes CO2e in 2027 and by 0.6 Mtonnes in 2030 due to shifts in production; they further decline by 0.1 Mtonnes due to reductions in international transport associated with EU imports, with a total monetary value of EUR 70 million. Indirect positive effect on society at large by reducing industrial carbon emissions, with energy intensive industries accounting for almost 20% of industrial GHG emissions in the EU. 113 249 For the calculations of the costs, including the assumptions made, see Annex 4, under 2. Analysis of impacts 250 Recurring costs are yearly, unless otherwise stated. Applicable for citizens and businesses as well II. Overview of costs – Preferred option 249 SO Cost Type Citizens/Consumers Businesses Administrations (MS/COM) One-off Recurrent One-off Recurrent One-off Recurrent 250 LAB 2 Direct adjustment costs Direct administrative costs European Commission: 2 FTE (EUR 388 000 total) for developing the methodology for the low-carbon steel label LEAD_EII 2 Direct adjustment costs Selected downstream sector: Expected moderate but non- quantified impact from the potential readjustment of supply chains, including finding manufacturers for low-carbon/EU products, and manufacturing processes to ensure compliance with low- carbon and Made in EU requirements For energy intensive industries: limited increase in cost, Low-carbon measures: Automotive sector EUR 291 million from low-carbon steel and aluminium, The construction sector EUR 691 million from low-carbon steel, aluminium and cement, 114 II. Overview of costs – Preferred option 249 SO Cost Type Citizens/Consumers Businesses Administrations (MS/COM) One-off Recurrent One-off Recurrent One-off Recurrent 250 passed down to consumer Direct administrative costs 1 week FTE per year for the automotive sector for demonstrating compliance with low-carbon and made in Made in EU requirements (including for batteries and vehicle components) And ¾ weeks FTE per year for the construction sector 3/4 weeks FTE per year for automotive sector for demonstrating compliance with low-carbon content requirements And ½ weeks FTE per year for the construction sector With a total cost of EUR 1 million for affected OEM and construction companies Steel label certification: EUR 6 700 per site per year, with a total of EUR 154 100 for 23 steel sites Member States: 2 FTE (EUR 3.3 million total for all Member States) per year to design and monitor in relation to lead market provisions. (including for batteries and vehicle components) European Commission: 1 month FTE (EUR 16 167) per year for monitoring lead provisions (including batteries, solar and vehicle components) 115 II. Overview of costs – Preferred option 249 SO Cost Type Citizens/Consumers Businesses Administrations (MS/COM) One-off Recurrent One-off Recurrent One-off Recurrent 250 LEAD_BA T 1 Direct adjustment costs EVs: EUR 292- 730 million for public support schemes Selected downstream sector: Expected moderate but non- quantified impact from the potential readjustment of supply chains, including finding manufacturers for EU products, and manufacturing processes to ensure compliance with made in Made in EU requirements EVs: EUR 0.9-2.2 billion for public support schemes Member States total: Auctions for BESS: EUR 26-66 million Vehicle fleet EVs: EUR 132 – 331 million Direct administrative costs 1/2-week FTE (EUR 2 117 total for all companies) per year for demonstrating compliance with made in EU requirements Member States: 1/4 FTE (EUR 412 776 total for all Member States) per year to design and monitor in relation to lead market provisions LEAD_SOL 1 Direct adjustment costs EUR 241.8 million for public support schemes Selected downstream sector: Expected moderate but non- quantified impact from the potential readjustment of supply chains, including finding manufacturers for EU products, and manufacturing processes to ensure compliance with Made in EU requirements. Member States: EUR 60.45 million per year for public procurement EUR 382.85 million for auctions 116 II. Overview of costs – Preferred option 249 SO Cost Type Citizens/Consumers Businesses Administrations (MS/COM) One-off Recurrent One-off Recurrent One-off Recurrent 250 Direct administrative costs 1/2 week FTE (EUR 2 646 total for all companies) per year for demonstrating compliance with made in EU requirements Member States: 1/2 FTE per Member State (EUR 825 552 total for all Member States) per year to design and monitor in relation to lead market provisions LEAD_VC 1 Direct adjustment costs EVs: EUR 689.66 million Corporate fleet EVs: EUR 1.24 billion Downstream sector (OEMs): EUR 1.9 billion Vehicle fleet EVs: EUR 100.29 million Direct administrative costs INV 2 Direct adjustment costs Small price increase in the short term (e.g. ECs, buildings) as firms adapt supply chains to meet FDI conditionalities. Non quantified but limited costs of implementing FDI conditionalities such as value-added production, including staffing requirements For downstream sector, expected moderate and temporary cost increases if suppliers pass through compliance costs. Direct administrative costs 1 month FTE (EUR 117 600 total for all companies) for European Commission:3/4 FTE (EUR 145 000) per 117 II. Overview of costs – Preferred option 249 SO Cost Type Citizens/Consumers Businesses Administrations (MS/COM) One-off Recurrent One-off Recurrent One-off Recurrent 250 notification of Member State authorities for FDIs screening year to ensure implementation and operation Member States: 1 FTE (EUR 1.65 million total for all Member States) per year PERM 2 Direct adjustment costs European Commission: investment in the back-end SDG system EUR 20 000 European Commission: EUR 20 000 per year per section for expanding Annex I of the SGDR with permitting (Your Europe Portal) Member States: up to EUR 40 000 per year per section, with a total cost of EUR 1.08 million for all Member States Direct administrative costs AREA 2 Direct adjustment costs Direct administrative costs 1 FTE (EUR 1.65 million for all Member States) per year to designate 118 251 The annualised values were calculated using the one-off estimates from the main text, allocating them over a 10-year period and applying a 3% discount rate. II. Overview of costs – Preferred option 249 SO Cost Type Citizens/Consumers Businesses Administrations (MS/COM) One-off Recurrent One-off Recurrent One-off Recurrent 250 priority projects / acceleration areas and facilitate benefits III. Application of the ‘one in, one out’ approach – Preferred option(s) EUR in million One-off (annualised total net present value over the relevant period) 251 Recurrent (nominal values per year) Total Businesses New administrative burdens (INs) Total: EUR 0.01 million for FDI notification: Large Companies: EUR 0.0059 million SMES: EUR 0.0041 million LEAD_EII & LEAD_VC: • Automotive sector: EUR 0.0148 million (large companies) • Construction sector: EUR 0.988 million o SMEs: EUR 0.982 million o Large Companies: EUR 0.0067 million LEAD_SOL: EUR 0.0026 million (large companies) LEAD_BAT: EUR 0.0021 million (large companies) Total EUR 1.009 million for lead market provisions EUR 0.154 million for steel label certification (large companies) EUR 1.17 million 119 252 This is the annualised value corresponding to one-off cost savings of EUR 240 million under Annex 4 - savings for PERM. III. Application of the ‘one in, one out’ approach – Preferred option(s) EUR in million One-off (annualised total net present value over the relevant period) 251 Recurrent (nominal values per year) Total Total: EUR 1.16 million Removed administrative burdens (OUTs) Total: EUR 28.14 million252 for all manufacturing industries in the EU for the digitalisation of 5 permit-granting procedures: Large Companies: EUR 0.28 million SMEs: EUR 27.85 million Not available EUR 28.14 million Net administrative burdens* EUR - 28.13 million EUR 1.16 million - EUR 26.97 million Adjustment costs** EUR 3.7 million New adjustment cost Citizens New administrative burdens (INs) Not available Not available Removed administrative burdens (OUTs) Not available Not available Net administrative burdens* Not available Not available Adjustment costs** EUR 1.442 million 120 (*) Net administrative burdens = INs – OUTs; (**) Adjustment costs falling under the scope of the OIOO approach are the same as reported in Table 2 above. Non -annualised values; (***) Total administrative burdens = Net administrative burdens for businesses + net administrative burdens for citizens. 3. Relevant sustainable development goals IV. Overview of relevant Sustainable Development Goals – Preferred Option(s) Relevant SDG Expected progress towards the Goal DG #7 Affordable and clean energy, SDG #13 Climate action The creation of lead markets for EU solar manufacturing will enable the local development of clean and affordable energy. Similarly, ensuring demand for low -carbon, EU -made EIIs industrial products —including through the creation of a label for steel and co ntent requirements —will result in reductions in carbon emissions from the most hard-to abate sectors. SDG #8 Decent work and economic growth The implementation of IAA is expected to have a positive impact on employment, reskilling, and upskilling—particularly in EII industrial regions, as well as in solar, battery, and automotive parts manufacturing. This will also generate positive effects on the specific downs tream sectors targeted by IAA and, by extension, across the entire value chain. SDG #9 Industry, innovation and infrastructure The proposal is expected to strengthen EU industrial resilience by increasing demand for EU industrial products, supporting i nvestment in decarbonisation through the identification of industrial decarbonisation priority projects and foreign direct investment conditionalities, and ensuring faster decarbonisation processes by speeding up and facilitating permitting procedures. III. Application of the ‘one in, one out’ approach – Preferred option(s) EUR in million One-off (annualised total net present value over the relevant period) 251 Recurrent (nominal values per year) Total Total administrative burdens*** - EUR 28.13 million EUR 1.16 million - EUR 26.97 million Annex 4: Analytical method 1. Models used The analysis contained in this Impact Assessment builds on data collected from desk research (academic studies, economic reports, media items, input from stakeholder outreach activities) and Commission officials’ expert knowledge. In addition, the analytical framework used for some parts of this impact assessment builds on CARMEN, FIGARO, FIDELIO, SMILE EU, and SCAN. Information has been analysed against the main problems identified for the purpose of this initiative, the problem drivers as well as stakeholder positions. Whenever possible, the Impact Assessment provides a quantitative analysis of benefits and costs relating to the main economic, en vironmental and social impacts. The cost/benefit analysis, however, is not fully comprehensive due to data gaps, notably related to the short time available to request and collect information beyond questions identified early on in the call for evidence and the public consultation The views of stakeholders are transparently reflected in the Impact Assessment. 1.1. CARMEN CARMEN (Computable Analysis of the Regional Multipliers of the European economy) is a model developed by the European Commission’s JRC that allows for a wide range of policy relevant impact analyses at territorial and industry level. CARMEN is developed in a modular approach allowing, for the first time, to cluster groups of regions (e.g. regions with a significant share of high- tech component in their economy) throughout the EU and assessing the impacts of investments both in the regions inside and outside the cluster. CARMEN was used to evaluate the competitiveness gain of increased EU global market shares (e.g., 1%) in energy intensive industries. We have identified eight clusters, one for each EII by selecting the top 60 EU NUTS2 regions in terms of their total industry output. The EIIs cluster comprises the following industries: paper and paper products; coke and refined petroleum products; chemicals and chemical products; other non- metallic mineral products; cement (subset of other non-metallic products); basic metals; steel (subset of basic metals); aluminium (subset of basic metals). CARMEN253’s capability is to evaluate the short -term economic effects of external shocks, delivering outcomes with detailed insights by industry and specific regions. CARMEN’s main input is the FIGARO-REG Multi-regional Input -Output (MRIO) table, a comprehensive economic database that covers 240 EU regions (NUTS2), 48 non -EU regions (Norway and United Kingdom), and 16 main non -EU trading actors, with data for 56 industries (Garcia Rodriguez et al., 2023). The FIGARO-REG tables encompass a complete description of all bilateral trade flows between the above mentioned 288 regions, for intermediate and final uses, as well as with other non -EU countries. This allows to measure the gross value added (GVA 254) embodied in exports or in the final demand of specific products by NUT2 region. As such, it enables an understanding of the potential impact that economic shocks may have on activities in different regions. Therefore, the findings of this study here should be interpreted as a detailed snapshot of trad e in terms of value added, rather than as an analysis of the effects of policy shocks on GVA. Output multipliers measure the total change in production resulting from a one -unit change in the final use of a specific product. In this exercise, we calculated GVA multipliers as shown in Miller and Blair (2022) to estimate intraregional (i.e. regional value added generated within the energy - 253 Other modules are related to the territorial impact analyses of supply chain disruptions of economic activities (Rueda -Cantuche et al., 2024a) or the analysis of the EU regional trade exposure to specific protectionist measures of non-EU countries (Rueda-Cantuche et al., 2024b). 254 GVA is obtained as the sum of gross operating surplus, compensation of employees and other taxes less subsidies on production. 122 intensive industries cluster); interregional (i.e. regional value added generated by the interactions of the EIIs cluster with all non-energy-intensive industries outside the cluster) and feedback (i.e. value added generated by the interactions between non -energy-intensive industries outside the cluster) effects. 1.2. FIDELIO JRC contribution with the FIDELIO (Full Interregional Dynamic Econometric Long -term Input-Output) model FIDELIO stands for Fully Interregional Dynamic Econometric Long-term Input-Output model. It is a dynamic general equilibrium model developed by the JRC that has been used in this Impact Assessment to model the economic and competitiveness impacts of introducing Low-carbon and Made in EU requirements for steel , cement and aluminium in the construction and automotive industries in the EU .255 FIDELIO (Rocchi et al., 2025) 256 is a general equilibrium model which provides results based on external “shocks” to the economy, which are then transmitted to the rest of the economy according to the model specifications, using the Eurostat's official statistics on input- output tables for the European Union - FIGARO database (Rueda-Cantuche and Remond Tiedrez, 2019257). For simulating the impacts of low-carbon and Made in EU requirements for aluminium and steel, FIDELIO was used in combination with the FIGARO-E3 database ( Cazcarro et al., 2025 ); a disaggregation of the Eurostat’s global FIGARO input-output tables (Remond-Tiedrez and Rueda- Cantuche, 2019) that includes such materials explicitly represented. Two scenarios were modelled: • Scenario 1: the transition to low-carbon requirements within the FIDELIO framework is modeled as a shift towards higher -cost sustainable inputs. The "green premium" is incorporated into sectoral production costs by applying targeted cost shocks 258 to key industries (steel and aluminum procurement in the automotive sector (C29), as well as to cement, steel, and aluminum in the construction industry (F) ). The results are then implemented when public intervention is present i.e. in public procurement or public support schemes (LEAD_EII_1 and LEAD_EII_2), as well as for the entire market, irrespective of the public intervention in the automotive and construction sectors. (LEAD_EII_3) • Scenario 2: a ‘Made in EU’ scenario of 85% European content requirement for steel, 70% for aluminium and 95% for cement is implemented to construction and automotive production (LEAD_EII_3). The following assumptions were used: • EU Member States can do a different effort to achieve the EU target, notably influenced by what the previous EU content of their production activities was before the policy implementation. • Directly impacted downstream industries are automotive and construction. Temporal profile to reflect gradual implementation: - Scenario 1 assumes a gradual increase until 2030. 255 Further information on FIDELIO and its underlying equations and data can be found in the FIDELIO manual 256 Rocchi et al. (JRC) (2025). FIDELIO Manual: Model description, equations, data sources and econometric estimations. 257 Remond Tiedrez (Eurostat) (2019). European Union inter-country supply, use and input-output tables — Full international and global accounts for research in input-output analysis (FIGARO). 258 The calibration of these shocks resulted in estimated EU average price increases of 0.225% for automotive products and 0.45% for construction, reflecting the anticipated inflationary impact of the green transition. 123 - Scenario 2 assumes that the policy measure starts in 2025, gradually increasing until 2028, remaining constant until 2035 and fading from 2036 onwards. This reflects the anticipation of the activities by public authorities with the legislative proposal of the Commission adopted, but only a real entry into force of these provisions by 2028. The fact that this obligation fades post-2036 is here to reflect that such requirements will be subject to a review clause that could phase out these policy measures. 1.3. SMILE EU JRC contribution with the SMILE EU (Single Market Integration through a MIcroeconomic LEns) SMILE EU (Single Market Integration through a MIcroeconomic LEns) is a set of analytical and quantitative tools on market efficiency and microeconomic behaviour to provide tailor -made answers related to industrial, innovation and employment policies. At its core, t here is a macroeconomic model where economic outcomes are the result of microeconomic decisions made by heterogeneous firms and/or households. In SMILE EU, the micro drives the macro. The impact assessment builds on various tools developed within SMILE EU . It leverages the methodology developed to disaggregate input-output data, which provides science -to-policy evidence at a more granular level. JRC uses the econometric model behind to disentangle the production technology of EVs (electric vehicles) and ICE (internal combustion engine) vehicles from the macroeconomic industry C29 (Manufacture of motor vehicles, trailers and semi -trailers). The results also unveil the differences in the global value chain of EU car manufacturers when producing EVs as opposed to ICE vehicles. JRC utilised the modelling capabilities behind SMILE EU to account for how policy affects the microeconomic decisions of firms and households. Consumer reactions to prices, substitution between ICEs and EVs, and competition between EU and non-EU car manufacturers are crucial to get a comprehensive picture of the aggregate effects. The different mechanisms that come into place inform policymakers of the suitability of various instruments that can mitigate the side effects of the policy. As with any modelling exercise, the scenarios analysed are a simplification of the reality. In the case of vehicle components, only one “average” EV (and one average ICE) is modelled (full battery EVs cannot be differentiated from other EVs such as plug-in EVs or fuel cell EVs) . It is also assumed the same production technology (same input) to produce a vehicle over the year s. Nevertheless, some of the modelling assumptions are relaxed through the analysis of two different scenarios on vehicle components (accounting for different potential reactions of non-EU manufacturers) – see Annex 14 – and a sensitivity analysis of key parameters (elasticities of demand and of substitution) is performed – see Annex 15. 1.4. JRC-GEM-E3 JRC assessment of environmental impact LEAD_VC using the JRC-GEM-E3 model In a reference scenario which includes current policies259, the JRC -GEM-E3 model projects the emission intensity (emissions including from electricity use divided by output) in the “Manufacture of motor vehicles, trailers and semi-trailers” sector in regions from which the EU imports vehicles to be at least twice as high as in the EU in 2025. This efficiency gap is projected to increase over time as the emission intensity in the EU declines faster than outside the EU. This intensity does not 259 European Commission (2024). Commission Staff Working Document: Impact Assessment Report Part 1. Accompanying the document: Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions. Securing our future: Europe's 2040 climate target and path to climate neutrality by 2050, building a sustainable, just and prosperous society, SWD/2024/63 final. 124 contain the whole vehicle value chain. The difference in the emission intensity is used to calculate changes in emission from the production of vehicles. 1.5. SCAN SCAN (Supply Chain Alert Notification), developed by DG GROW, complements these models by monitoring supply chain distress across the EU. It is an indicator-based quantitative system designed to detect early signs of shortages or inflationary pressures in stra tegic products and sectors. The SCAN combines: • High-frequency indicators (Block 1), which track import prices and quantities using customs data updated every two weeks, identifying products that show a simultaneous rise in import prices and fall in import volumes as potential distress cases; and • Structural indicators (Block 2), which assess ex -ante risks based on import concentration (Herfindahl-Hirschman Index), dependency on non -EU suppliers, and substitutability with EU production, using COMEXT and PRODCOM data. At the sectoral level, the SCAN also integrates short -term business statistics and business surveys to identify industries where firms report material and equipment shortages, enabling a cross -check between quantitative and qualitative evidence. In this Impact Assessment, SCAN indicators were used to assess the exposure of the EU’s energy - intensive industries (EIIs) to external supply disruptions and dependencies 2. Analysis of impacts All costs in this Impact Assessment are presented for the year 2030. The Impact Assessment explores measures in a short to medium term to be re-evaluated in 2030 to assess the success of the measures. As such, 2030 is identified as key year to measure potential impacts on costs and benefits. Annex 15 provides a sensitivity analysis for some of the values analysed below to provide a full spectrum of potential cost impacts. 2.1. Administrative costs and benefits • For the purpose of this exercise, it is assumed that the one -off costs and savings occur in 2030. In reality, however, these are expected to be incurred closer to the date of entry into force. • Full Time Equivalents (FTEs were established based on internal Commission analysis. The hourly wage for Member States and businesses was estimated at EUR 29.4 /h. The European Commission costs per FTE are EUR 194 000/year.260 The number of companies participating in public procurement was assumed to be 18% of total companies operating in the EU.261 • LEAD_EII: The number of affected automotive, battery and solar manufacturing companies was estimated based on available data on companies present in the European market. The number of affected construction companies in the context of administrative costs are limited to large and medium sized companies, due to limited compliance requirements only applicable to large and medium sized companies. The administrative costs shown for automotive manufacturers combines all impacts derived from different measures on steel, batteries and vehicle components jointly, under the EII table below . Public procurement measures are limited to purchase/lease, not services. 260 Based on internal Commission documents. 261 Uni Europa (2025), European data shows: companies fear lowest price tendering 125 • LAB: While the use of LAB 2 is voluntary by design, compliance for LEAD_EII measures on low-carbon steel would require the use of the label, or equivalent , to show compliance with the low -carbon measures. In this regard, the costs for LAB have been assigned to relevant steel sites. The low-carbon steel label costs for businesses can be estimated using the cost structure from ResponsibleSteel. This estimate took the average between costs for normal and large companies, resulting in a yearly approximate cost of EUR 6 700 per steel site.262 Recurrent administrative costs of demonstrating compliance with steel label would be limited as companies are already obliged to report on relevant data under the EU ETS. • PERM: The cost savings from implementing a digitally integrated permit granting process are calculated based on the study on business procedures carried out to underpin the Single Digital Gateway impact assessment 263. It concluded that for 9 procedures, the cost savings for all EU businesses (EU business in 2023 represented 33 million enterprises 264), - if e- procedures were introduced where missing - would be in the order of magnitude of EUR 6.5 billion for domestic users (i.e. 433.3 million for the 2.2 million businesses in the manufacturing sector). Following an adjustment to the EUR 6.5 billion to assume an average of 5 permit - granting procedures (average number of permits requested for industry), and assuming the costs for all procedures is equal, this could translate into savings of EUR 240 million specifically for the manufacturing sector for an average of 5 procedures. • For administrations , benefits for national administrations from digitalising procedures proved difficult to assess, as the benefit figures can vary a lot (see tables 6.4 and 6.5 for the savings through digitalised procedures in the Single Digital Gateway Impact Assessment265).The reference values (EUR 79.4 million 266) come from The Netherlands , which equals 6.1% of the EU’s GDP.267 To have a more nuanced and proportionate representation between the different Member States and their economic sizes -as a proxy to the use of this permitting systems by companies - a calculation based on Netherlands GDP in relation to the EU total is done (6.1% out of the EU 100%). • It is difficult to give a meaningful figure for replacing an existing off -line procedure by an on-line version without considering the specific context of each Member Stat e, and their level of digitalisation. The costs of moving procedures online vary widely depending on the complexity of the procedure, the availability of digitalised process infrastructure, and whether we are talking about both front end (user interface) or both front end and back office (processing of the data by the administrations involved). • Moreover, i n the absence of concrete data on digitalisation of industrial permitting, an approximation is taken with the digitalisation of business procedures in the framework of the Single Digital Gateway Impact Assessment to give a range. LEAD_EII LEAD_EII Difference to the baseline PO1 PO2 PO3 Member States 262 Responsible Steel Certification: cdn.prod.website-files.com/6538e481169ed7220c330f0a/6602e990a68fb2bab0a7ce49_Certification-Fees.pdf 263 SWD/2017/0213 final - 2017/086 (COD) 264 Large businesses make up only 0.2% of EU enterprises - News articles - Eurostat 265 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52017SC0213#footnote176 266 https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52017SC0213#footnote176 267 https://european-union.europa.eu/principles-countries-history/eu-countries/netherlands_en 126 LEAD_EII Difference to the baseline PO1 PO2 PO3 Administrative costs (recurring) Low-carbon and Made in EU requirements in public procurement: 2 FTE (yearly) x 27 Member States Total cost: EUR 3.3 million (Vehicle requirements include batteries and vehicle components) Low-carbon and Made in EU requirements in public procurement: 2 FTEs (yearly) x 27 Member States Total cost: EUR 3.3 million (Vehicle requirements include batteries and vehicle components) Low-carbon and Made in EU requirements in public procurement: 2 FTEs (yearly) x 27 Member States Total cost: EUR 3.3 million (Vehicle requirements include batteries and vehicle components) Businesses Administrative costs (recurring) Low-carbon requirements: ¾ week FTE for automotive (low-carbon) No. of automotive OEMs: 13 (70 OEMs268 x 18%) ½ weeks FTE for construction (low- carbon) No. of construction companies: 1 121 (6 229269 large and medium sized companies x 18%) Total automotive cost: EUR 11 113 Total construction cost: EUR 659 277 Total cost: EUR 670 391 Low-carbon and Made in EU requirements: 1 week FTE for automotive (low-carbon + made in EU) No. of automotive OEMs: 13 (70 OEMS x 18%) ¾ weeks FTE for construction procurement (low-carbon + made in EU) For low-carbon reporting only, no. of FTEs as in PO1 No. of construction companies: 1 121 (6 229 large and medium sized companies x 18%) Total automotive cost: EUR 14 818 Total construction cost: EUR 988 916 Low-carbon and Made in EU requirements: For low-carbon + made in EU reporting, no. of FTEs as in PO2 No. of automotive OEMs: 70 No. of construction companies: 6 229 Total automotive cost: EUR 82 320 Total construction cost: EUR 5.49 million Total cost: EUR 5.57 million Low-carbon steel label: Certification: EUR 6 700/year No. of steel sites certified: 23 268 S&P Database 269 EUROSTAT (NACE Rev. 2) 127 LEAD_EII Difference to the baseline PO1 PO2 PO3 Low-carbon steel label: Certification: EUR 6 700 / year No. of steel sites certified: 4 (23 steel sites270 x 18%) Total cost: EUR 27 738 Total cost: EUR 1 million Low-carbon steel label: Certification: EUR 6 700 / year No. of steel sites certified: 23 Total cost: EUR 154 100 Total cost: EUR 154 100 European Commission Administrative costs (recurring) ½ month FTE Total cost: EUR 8 083 (Covering all lead market provisions) 1 month FTE Total cost: EUR 16 167 (Covering all lead market provisions) 1.5 month FTE Total cost: EUR 24 250 (Covering all lead market provisions) LEAD_BAT LEAD_BAT Difference to the baseline PO1 PO2 PO3 Member States Administrative costs (recurring) Made in EU requirements in public procurement/ auctions: BESS: ¼ year FTE Total cost: EUR 412 776 Made in EU requirements in public procurement/auctions: BESS: ¼ year FTE Total cost: EUR 412 776 Businesses Administrative costs (recurring) Made in EU requirements: BESS: ½ week FTE Made in EU requirements: BESS: ½ week FTE 270 The number of steel sites was based on internal Commission analysis of projected low-carbon steel projects in the EU 128 LEAD_BAT Difference to the baseline PO1 PO2 PO3 No. of companies affected: 4 (20 BESS manufactures271 x 18%) Total cost: EUR 2 117 No. of companies affected: 20 BESS manufactures Total cost: EUR 11 760 LEAD_SOL LEAD_SOL Difference to the baseline PO1 PO2 PO3 Member States Administrative costs (recurring) Made in EU requirements in public procurement/auctions: 1/2 year FTEs x 27 Member States Total cost: EUR 825 552 Made in EU requirements in public procurement/auctions: 1/2 year FTEs X27 Member States Total cost: EUR 825 552 Businesses Administrative costs (recurring) Made in EU requirements: 1/2 week FTE No. of companies affected: 5 (25 large utilities272 x 18%) Total cost: EUR 2 646 Made in EU requirements: 1/2 week FTE No. of companies affected: 25 large utilities Total cost: EUR 14 700 LAB LAB Difference to the baseline PO1 PO2 PO3 Businesses 271 Europe Battery Energy Storage System (BESS) Companies - Top Company List 272 SolarPower Europe webpage. Our Members. 129 Administrative costs EUR 0 EUR 0 (voluntary label ), however, the cost of steel label certification is included under LEAD_EII administrative costs, as steel sites must obtain low -carbon steel certification to comply with lead market provisions European Commission Administrative costs (one off) 4 FTE Total cost: EUR 776 000 2 FTEs Total cost: EUR 388 000 INV INV Difference to the baseline PO1 PO2 PO3 Member States administrations Administrative costs (recurring) FDI conditionalities 1 year FTE x 27 Member States Total cost: EUR 1.65 million Businesses Administrative costs (one off) EUR 0 (voluntary) FDI conditionalities 1 month FTE No. of companies affected: 25 battery companies273 for notification and documentation of compliance with conditionalities. Total cost: EUR 117 600 European Commission Administrative costs (recurring) ½ year FTE Total cost: EUR 97 000 3/4 year FTE Total cost: EUR 145 500 273 Operational, announced and under construction battery factories. Source: internal Commission documents 130 PERM PERM Difference to the baseline PO1 PO2 PO3 Member States Administrative costs (recurring) Single Digital Gateway: Up to EUR 40 000 annually per section x 27 Member States Total cost: EUR 1 080 000 million Administrative savings (recurring) Digitalisation of permitting procedures Up to 79.4 million274 for one Member State (the Netherlands as reference), which accounts for 6.1% EU GDP.275 Therefore, for the entire EU’s GDP, up to EUR 1.3 billion for Member State administrations. Total savings: Up to EUR 1.3 billion276 Businesses Administrative savings (one-off) Digitalisation of permitting procedures EUR 240 million, annualised at 28.14 million over a 10-year period European Commission Administrative costs (one-off and recurring) Single Digital Gateway: Investment in the back-end SDG system EUR 20 000 (one –off) EUR 20 000 for expanding Annex I of the SDGR with permitting (Your Europe Portal – recurring) Total cost: EUR 40 000 274 European Commission (2017) . Commission Staff Working Document - Impact Assessment Accompanying the D ocument. Proposal for a Regulation of the European Parliament and of the Council on establishing a single digital gateway , COM(2017) 256 final, Brussels, 2 May 2017 , table 6.6. 275 European Union webpage. Netherlands. 276 This figure could be an overestimation , as it is based on business procedures with a volume of at least 100 000 transactions and costs for the procedure at hand can vary greatly. The reference values (EUR 79.4 million) come from The Netherlands’s feedback to the Single Digital Gateway Impact Assessment. To have a more nuanced and proportionate representation between the different Member States and their economic sizes, we use the EU’s GDP as a proxy to the use of permitting systems by companies. A calculation based on Netherlands’s share of the EU’s GDP in relation to the EU total is done (6.1% out of the EU 100%. (79.4x100)/6.1= 1.3 billion). 131 AREA Difference to the baseline PO1 PO2 PO3 Member States Administrative costs (recurring) EUR 0 (voluntary) Designation of industrial area 1 FTE x 27 Member States Total cost: EUR 1.65 million Administrative costs total TOTAL Difference to the baseline PO1 PO2 PO3 One Off Recurring One Off Recurring One Off Recurring Member States EUR 0 EUR 5.62 million EUR 0 EUR 8.92 million EUR 0 EUR 8.92 million Businesses EUR 0 EUR 702 891 EUR 117 600 EUR 1.16 million EUR 117 600 EUR 5.76 million European Commission EUR 796 000 EUR 125 083 EUR 408 000 EUR 181 667 EUR 408 000 EUR 189 750 Total Administrative Costs EUR 796 000 EUR 6.45 million EUR 525 600 EUR 10.27 million EUR 525 600 EUR 14.87 million Member states EUR 0 EUR 1.3 billion EUR 0 EUR 1.3 billion EUR 0 EUR 1.3 billion Business EUR 240 million EUR 0 EUR 240 million EUR 0 EUR 240 million EUR 0 European Commission EUR 0 EUR 0 EUR 0 EUR 0 EUR 0 EUR 0 Total Administrative Savings EUR 240 million EUR 1.3 billion EUR 240 million EUR 1.3 billion EUR 240 million EUR 1.3 billion 132 2.2. Adjustment costs LEAD_EII Assumptions taken for adjustment costs for the automotive sector: Low-carbon provisions: Price increase: • The adjustment cost for a midsize passenger vehicle is estimated to range from 0.3% to 0.7% of the final price , with a 100% low -carbon steel depending on the decarbonisation pathway.277 A 25% low-carbon steel target would see a price increase ranging from 0.075% to 0.175% (EUR 28 – 65 per passenger vehicle). • Based on assumptions regarding future increases in the levelized cost of low -carbon aluminium production278, the use of 100% low -carbon aluminium is projected to increase the cost of a new EV by approximately 0.32%.279 Accordingly, a 25% low-carbon aluminium target would be expected to result in only a 0.08% to 0.10% or EUR 22.6 increase in the price of a new light commercial EV. • An average price increase of 0.225% is taken for the calculation of total cost s from low- carbon steel and aluminium . Therefore, a price increase of EUR 69.27 per vehicle can be expected for commercial and light commercial vehicles for both materials. • Final costs/benefits are calculated with the percentage change estimated of different sectors’ GVA from FIGARO data per Member State and monetised. Made in EU provisions: • Made in EU costs are obtained from the FIDELIO modelling results (please see Annex 4 section 1.2 for more information on the model used ) of the different sectors’ GVA, which are presented both in percentage compared to baseline and monetised. Assumptions taken for adjustment costs in the construction sector: Low-carbon provisions: Price increase: • Low-carbon steel estimates can result in a price increase ranging from 0.1% to 1.2% for public procurement works depending on the type (office buildings or steel halls) , based on 100% low-carbon steel.280 • An assumption is taken that the premium associated with low -carbon steel in the construction sector accounts for 1% of total building costs . Therefore, a 25% low -carbon steel target would lead to a price increase of 0.25% • Assumptions for low-carbon cement or concrete on the final price of a house or construction project can range from less than 1% to 3% increase for a 100% low-carbon cement or 277BCG (2022). Transforming the Steel Industry May Be the Ultimate Climate Challenge. 278 Mission Possible Partnership (2022). Making net-zero aluminium possible. An industry-backed, 1.5ºC-aligned transition strategy. 279 Underlying assumptions were that the average cost of an EV in 2030 is approximately EUR 28.500 (internal estimation, JRC) and an EV utilizes 0.31 tonnes of aluminium in 2030 (European Aluminium). The cost for ICE or other types of motors will be lower as the electric motor is a key driver for aluminium usage in the overall amount per car. 280 JRC (2024). Draft preparatory study on iron and steel – ecodesign measures under the ESPR; Global Efficiency Intelligence, TransitionAsia and Solutions for Our Climate (SFOC) (2024). Green Steel Economics. 133 concrete281. With 2% average increase, a 5% low -carbon cement target would result in a 0.10% increase in a construction project. • In the absence of construction -sector-specific data, the cost increase associated with low - carbon aluminium is assumed to mirror that observed in the automotive sector. On this basis, a price increase of approximately 0.1% is projected. • Based on the low-carbon targets proposed, the price increase for combining both low-carbon steel, aluminium and cement is therefore projected at an average 0.45%. Cost distribution: • No available information was found on the market segment covered by public support schemes for EU construction. Therefore, cost calculations are always a hard split between public procurement (PO1/PO2) and the full market (PO3). Made in EU provisions: • Costs linked to Made in EU measures are obtained from the FIDELIO modelling results (please see Annex 4 section 1.2 for more information on the model used) of the different sectors’ GVA, which are presented both in percentage compared to baseline and monetised. LEAD_EII Difference to the baseline PO1 PO2 PO3 Member States administrations Adjustment costs (recurring) Citizens/Consumer Adjustment costs (recurring) Businesses Adjustment costs (recurring) Low-carbon measures: Automotive EUR 291 million GVA Construction EUR 691 million GVA Low-carbon measures: Automotive EUR 291 million GVA Construction EUR 691 million GVA Made in EU measures: No GVA change282 Low-carbon measures: Automotive EUR 396 million GVA Construction EUR 2 229 million GVA Made in EU measures: EUR 6 651 million for automotive sector from Made in EU requirements 281 Agora Industry (2024). Creating markets for climate -friendly basic materials. Potentials and policy options , p. 13; Bellona Foundation (2018). Building with Low Carbon Cement is Affordable. 282 Assuming traditional supply chains for steel, aluminium and cement remain the same , the domestic supply for these materials is already higher than the proposed targets for PO2. Therefore, no additional costs would be expected from Made in EU requirements, only from the additional low- carbon cost. 134 LEAD_EII Difference to the baseline PO1 PO2 PO3 EUR 13 996 million for construction sector from Made in EU requirements LEAD_SOL Assumptions taken for adjustment costs: • Assumptions of a deployment rate of 65 GW by 2030, using 2024 deployment rates which could go down, in which case the costs would decrease respectively. • The costs associated with auctions and public procurement are assigned to Member States, while citizens and consumers are attributed costs related to public support schemes and the non-supported market. By the time the provisions enter into force we could expected that the Chinese solar module price stabilises to sustainable levels of 15.9 € ct/Wₚ • Under NZIA rules diversification would kick in and we assume this would come from Southeast Asia for which prices are calculated at 16.5 € ct/Wₚ for fully Southeast Asian solar modules. • Final price of EU modules will depend on the Member State application of the Competitiveness Fund options and CISAF , as it would impact CAPEX and OPEX of the manufacturers and thus the final price. But as this is uncertain, the SolarPower Europe and Fraunhofer study 283 offers the following minimum sustainable price (MSP) range: o 19 € ct/Wₚ: NZIA EU components with polysilicon and ingot wafer from CN. o 13.2 € ct/Wₚ: South East Asia ( SEA) cell and module with polysilicon and ingot wafer from CN. • The EU solar market is assumed to be split as follows: o Public procurement is assumed to account for 3% of the PV capacity deployed. o Renewable energy auctions are assumed to account for 19% of the PV capacity deployed. o Public support schemes are assumed to account for 12% of the PV capacity deployed. Two different price scenarios compare the cheapest al ternative for PV (e.g. Chinese imports) to a European NZIA-compliant PV with polysilicon and wafers / ingots from China. • 65 GW of Chinese modules: EUR 10.335 billion • 65 GW of European products with poly-wafer come from China: EUR 12.35 billion The delta between them is EUR 2.015 billion for 65 GW of solar PV, which is broken down per market segment as follows: • Public procurement: 0.03 × 2.015 = EUR 0.06045 billion • Auctions: 0.19 × 2.015 = EUR 0.38285 billion • Schemes: 0.12 × 2.015 = EUR 0.2418 billion • Private procurement: 0.66 × 2.015 = EUR 1.3299 billion LEAD_SOL Difference to the baseline PO1 PO2 PO3 Member States 283 SolarPower Europe and Fraunhofer (2025). Reshoring Solar Module Manufacturing to Europe. 135 Adjustment costs (recurring) Public procurement: EUR 60.45 million Auction margins decrease by: EUR 382.85 million Public procurement: EUR 60.45 million Auction margins decrease by: EUR 382.85 million Citizens/Consumer Adjustment costs (recurring) Public support schemes: EUR 241.8 million Public support schemes: EUR 241.8 million Other PV placed on the market: EUR 1.33 billion LEAD_BAT Assumptions taken for adjustment costs: • The total adjustment cost s compar e the average cost of manufacturing the same battery chemistries (i.e., localised battery cells, cathodes and anodes) in the current cheapest market, China, with those manufactured in the EU with a cost differential ranging from 26% to 50% (see Annex 9) . These costs do not take into account the phased approach , which would reduce the impact on prices during the first years of entry into force. o Battery cell manufactured in China by Tier 1 manufacturers (i.e., 60 EUR/kWh in 2024). o Battery cell m anufactured in in the EU with localised CAM (Cathode Active Material) and AMM, (i.e., 75.6-90 EUR/kWh). • Import costs of 10% over the total costs are assumed for the Chinese batteries. • Additionally, global price decreases in batteries have been accounted for, as these are expected to drop significantly in the upcoming years. As battery cell costs decline over time, the total cost differential with China is expected to decrease, ranging between 11 -21 EUR/kWh in 2028, 9-17 EUR/kWh in 2030, and between 6-12 EUR/kWh in 2035. • The baseline scenario assumes that only currently operational facilities and their expansions are considered active by 2030 (i.e. none of the current battery project currently under construction, announced or on-hold are considered). As a result, unmet demand is assumed to be covered by imports from China. • For BESS, since the requirements on the battery cell will enter into force by 2030 and the EU battery production is currently focused on EV batteries, the entire demand in the baseline scenario is assumed to be met through Chinese imports, and cost comparisons are m ade accordingly. • Adjustment costs are passed down from the downstream sectors or business to final consumers, this being either citizens or Member States. The costs are calculated based on demand projections for both EVs and BESS in kWh and manufacturing costs expressed in EUR/kWh. Therefore, final impact on price can be calculated for all applications by assuming the average battery power pack. Cost comparison 2024-2035 2024 2028 2030 2035 Cost difference EV passenger car (average 68 kWh) EUR 653-1632 EUR 457-1142 EUR 360-900 EUR 268-670 136 Cost difference EV truck (average 279 kWh) 284 EUR 2678- 6696 EUR 1875- 4687 EUR 1477- 3691 EUR 1099- 2747 Cost difference EV bus (average 441 kWh) EUR 4233- 10584 EUR 2964- 7409 EUR 2334- 5835 EUR 1737- 4342 Figure: Cost comparison for EVs equipped with batteries using EU-made battery cells with locally sourced CAM and AAM, compared to using Chinese imports. Total adjustment costs have been calculated based on the market distribution assumptions expressed below: • Assumptions of the market distribution between EVs o 3.5% through public procurement o 80.2% public scheme s, of which 60% are for corporate consumers and 20.2% for private consumers. o 16.3% through consumers. • Assumptions of the market distribution for BESS o 5% through BESS auctions o 95% through consumers (57% citizens and 38% companies) In LEAD_BAT 1, for those consumers , private or corporate, choosing to buy vehicles without European batteries, the price would not be impacted but would not benefit from a public subsidy either. This means that the total cost calculated for consumers is only a theoretical maximum , not considering consumer decisions, and based on the assumption that the demand side incentives will continue to cover part of the European EV demand. LEAD_BAT Difference to the baseline PO1 PO2 PO3 Member States administrations Adjustment costs (recurring) Auctions for BESS (5% of total BESS demand): EUR 26 – 66 million (average EUR 46 million) Public procurement for EVs (3.5% of total EV demand): EUR 132 – 331 million (average EUR 231.5) Auctions for BESS (5% of total BESS demand): EUR 26 – 66 million (average EUR 46 million) Public procurement for EVs (3.5% of total EV demand): EUR 132 – 331 million (average EUR 231.5) Citizens/Consumer Adjustment costs (recurring) Public subsidy schemes for EVs285 (20.2% of total EV demand): EUR 292-730 million (average EUR 511 million) BESS (57% of total BESS demand): EUR 282-706 million (average EUR 494 million) 284Weighted average truck battery pack size and cost, 2020-2024, IEA 285 We assume that there is public support to buy EV vehicles in Europe for corporate purchases. In contrast, public support is o nly available for consumers in Austria, Belgium, Croatia, Cyprus, Czechia, Estonia, France, Greece, Hungary, Ireland, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Slovenia, Spain, and Sweden (ACEA, 2025). Against this background, we estimate that LEAD_VC 1 would affect 80.2% of EV registrations, including 60.0% from corporate purchases, and 20.2% from consumers. 137 LEAD_BAT Difference to the baseline PO1 PO2 PO3 EVs (36.5% of total EV demand): EUR 0.5 – 1.3 billion (average EUR 0.9 billion) Businesses[5] Adjustment costs (recurring) Public subsidy schemes for EVs (60% of total EV demand): EUR 0.9-2.2 billion (average EUR 1.55 billion) BESS (38% of total BESS demand): EUR 107-268 million (average 187.5) EVs (60% of total EV demand): EUR 0.9-2.2 billion (average EUR 1.55 billion) LEAD_VC: The following assumptions have been taken to calculate adjustment costs: • On one hand, vehicles produced outside Europe will likely not be able to comply with the measure, given their current very low EU content (below 20%). On the other hand, vehicles produced in Europe will likely be able to comply with the measure, eventually at a cost, given their current EU content (70%). As a proxy, non -EU manufacturers will be assumed to be non-compliant, meaning that in this case, they will lose access to public procurement and the subsidies, whereas EU manufacturers will be assumed to be compliant, maintaining access to public procurement and the subsidies.286 • Non-EU manufacturers will face a relative price increase as a result of EU buyers losing access to public subsidies. • The public subsidies that are no longer accessible to buyers of non -EU manufactured vehicles are partially redistributed. The model assumes that 50% of this liberated amount is going to increase the available subsidies/vehicle for EU manufacturers.287 • There is an aggregate demand effect as the measure affects average price. • There is a substitution between ICE and EVs and substitution between EU and non -EU manufacturers • The presented scenarios take into account obligation to sell only zero -emission vehicles in 2035.288 • We consider for this impact assessment a 30% price premium for EU -manufactured components compared to import prices. • This calculation does not take into consideration the price increase as a result of Made in EU requirement on the electric batteries set out in LEAD_ BAT of this proposal nor in LEAD_EII. Non-EU vehicle manufacturers will not be able to access public procurements or benefit from support schemes. In the latter case, they will not be able to cover the loss of subsidies coming from 286 Definition of EU and non-EU manufacturers has been derived from PRODCOM and COMEXT databases. 287 As a baseline, this Impact Assessment assumes EUR 14 billion of public subsidies for passenger cars and LCVs, which is based on existing public support schemes already put in place. The findings of CEEPR in the Global Clean Investment Monitor: Government Support for Electric Vehicles and Batteries - CEEPR (2025). In the model, it is assumed that 50% of the subsidies that would have been used for non -EU manufacturers is redistributed among the EU manufacturers. The model is taking into account the fact that Member States may decide to allocate the liberated resources elsewhere, hence for the sake of a conservative calculation, it is assumed that only 50% of this liberated amount is used to subsidy EU manufacturers. 288 European Commission. Fit for 55. 138 the support schemes and the prices of their vehicles will increase by the amount of the lost subsidies. In other words, consumers will face a price increase equalling the lost subsidies for non-EU vehicles. Calculations are made for both 2027 and for 2030 – using the assumption that the share of made in Made in EU would increase gradually over time from 70% in 2027 to meet the second target of 75% set out for 2030. Under LEAD_VC 1, the measure focuses on vehicles that are impacted by public procurement and public subsidies. We estimate that this scenario would affect 83.7% of EVs put on the EU market, which includes all vehicles either publicly procured or supported by a public scheme in Europe.289 Under LEAD_VC 2, we assume that 100% of the EVs put on the market will be impacted. Light Commercial Vehicles (LCVs): In the case of LCVs290, due to the unavailability of data, for the sake of this Impact Assessment, the same assumptions apply as set out at the beginning of this Section. Heavy Duty Vehicles (HDVs): In the HDV 291 segment, the Impact is difficult to assess due to the unavailability of data and the limitations of the applied model when it comes to estimating the current share of Made in EU in this vehicle segment. For this reason, the same assumptions are taken as for the passenger cars for the sake of this Impact Assessment. 292 Anecdotal evidence suggests that the Made in EU in HDV is likely to be higher than the assumed requirements, consequently the measure may result in zero cost implications for EU HDV manufacturers, while preserving the positive effect on sales and overall competitiveness. It would also act as a safeguard mechanism in case of a sudden and rapid decrease in European market shares for components. When measuring the impacts for LEAD_VC, two scenarios were modelled to take into account uncertainties regarding the possible reaction of non -EU manufacturers: one purely based on the “Internal market reaction” and an alternative scenario in which “non-EU manufacturers absorb the price increase”. The scenario based on the “ Internal market reaction” was used to assess impacts through the Impact Assessment and are the costs and benefits reflected for final calculations in the adjustment costs table below, as well as final costs throughout all POs. However, for comparative analysis of both scenarios see Annex 14. Further assumptions taken into account to build the potential scenarios293: The economic impact depends critically on three elements that reflect the reaction of the agents: 289 We assume that public and corporate purchases account for 3.5% (JRC technical report, 2022) and 60.0% (COM(2025) 96 final), respectively, of total vehicle registrations in the EU, while the remaining 36.5% corresponds to consumer purchases. We assume that there is p ublic support to buy EV vehicles in Europe for corporate purchases. In contrast, public support is only availab le for consumers in Austria, Belgium, Croatia, Cyprus, Czechia, Estonia, France, Greece, Hungary, Ireland, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Slovenia, Spain, and Sweden (ACEA, 2025). Against this background, we estimate that LEAD_VC 1 would affect 83.7% of EV registrations, including 3.5% from public pro curement, 60.0% from corporate purchases, and 20.2% from consumers. 290 In this Impact Assessment, LCVs refer to Light Commercial Vehicles below 3.5 tonnes of GVW. 291 In this Impact Assessment, HDVs refer to 3 sub -categories: Medium Commercial Vehicles (between 3.5 and 32 tonnes of GVW), Heavy Commercial Vehicles (above 32 tonnes of GVW) and Buses (between 20 and 30 tonnes of GVW). 292 This means that a 70% share of EU content is assumed in the HDV segment as well. Furthermore, owing to limitations of data re garding the amount of public subsidies, for HDVs, we estimate a public subsidy of EUR 1 billion, taking into account already existing schemes in the EU Member States. 293 When measuring the impacts for LEAD_VC, two scenarios were modelled to take into account uncertainties regarding the possible reaction of non-EU manufacturers: one purely based on the “Internal market reaction” and an alternative scenario in which “non -EU manufacturers absorb the price increase”. The scenario based on the “Internal market reaction” was used to assess impacts through the Impact Assessmen t and are the costs and benefits reflected for final calculations. However, for comparative analysis of both scenarios see Annex 14. 139 • Price effect: Supposes that car manufacturers can pass through a potential increase in cost to prices. In that case, the demand for cars will reduce as the average car price increases. The price elasticity of demand captures this effect.294 • Product substitution : Supposes that a potential price increase occurs only in the EV segment, the one directly affected by the policy measure. In that case, there could be a substitution in demand for EVs over ICEs if mitigation measures not foreseen, as ICEs become relatively cheaper after the policy is implemented. The product's cross -price elasticity of demand captures this substitution effect. The following matrix of product cross- price elasticity of demand is assumed (Leard and Wu, 2023): price ICE EV quantitie s ICE -0.58 0.30 EV 0.50 -1.50 • Region substitution: Supposes that vehicles produced by EU manufacturers benefit from a relative price decrease in comparison with vehicles produced by non -EU manufacturers. This is determined on one hand by the loss of access to public subsidies by non -EU manufacturers, and on the other hand by the expected increase of the available subsidies/vehicle for vehicles produced by EU manufacturers. The region's cross -price elasticity of demand captures this substitution effect . The region substitution within one segment, i.e., ICE or EVs, i s larger than the product elasticity across the segments and assume the following matrix of region cross -price elasticity of demand (Leard and Wu, 2023): 20 price EU non-EU quantities EU -1.23 1.00 non-EU 1.00 -2.00 Furthermore, the following assumptions were taken into consideration when calculating the cost pass through: In 2030, EV car sales are expected to reach the following figures: Type of car PO1 & PO2 PO3 Passenger EVs 9 094 347 9 079 484 Light commercial EVs 1 107 046 1 107 463 Heavy duty EVs 156 333 158 009 The projected price increases are estimated at: Type of car PO1 & PO2 PO3 % increase Total increase % increase Total increase Passenger EVs 1.2% EUR 343 1.4% EUR 400 294 We assume a demand price elasticity for the car industry of -0.5 (Leard and Wu, 2023). This elasticity implies that a 1% increase in the average car price results in a 0.5% decrease in the number of cars sold in the EU. 140 Light commercial EVs 0.4% EUR 91.46 0.5% EUR 114 Heavy duty EVs 1.2% EUR 1300 1.4% EUR 1516.84 The cost distribution of the different market segments follows the same structure as under LEAD_EII for the automotive sector. To ensure consistency with the assumptions applied in LEAD_EII regarding vehicle cost impacts, the effect of subsidies has not been taken into account in the calculation below. For the purpose of the exercise, full cost pass through onto consumers is presumed. LEAD_VC LEAD_VC Difference to the baseline PO1 PO2 PO3 Member States administrations Adjustment costs (recurring) Public procurement for EVs (3.5% of total EV demand): EUR 100.29 million Public procurement for EVs (3.5% of total EV demand): EUR 139.97 Citizens/Consumer Adjustment costs (recurring) Public subsidy schemes for EVs (20.2% of total EV demand): EUR 690 million EVs (36.5% of total EV demand): EUR 1.37 billion Businesses Adjustment costs (recurring) Public subsidy schemes for EVs (60% of total EV demand): EUR 1.249 billion EVs (60% of total EV demand): EUR 2.49 billion Cumulative adjustment costs for citizens and businesses (corporate fleets) as consumers (LEAD_EII, LEAD_BAT, LEAD_VC, LEAD_SOL): Sector Impacted Stakeholders PO1 PO2 PO3 Automotive - passenger vehicles Citizens EUR 1.20 billion EUR 1.20 billion EUR 2.77 billion Automotive - corporate fleet Businesses295 EUR 3.09 billion EUR 3.09 billion EUR 11.27 billion 295 All cost results from LEAD_EII in the automotive sector have been allocated to the automotive industry, in the business category. However, some or all of these costs may be transferred to consumers (either citizens or companies for corporate fleets). 141 Subtotal – automotive (LEAD_EII, LEAD_VC, LEAD_BAT) EUR 4.29 billion EUR 4.29 billion EUR 14.04 billion Construction Citizens & business EUR 691 million EUR 691 million EUR 16.23 billion Electricity Citizens EUR 242 million EUR 242 million EUR 1.57 billion Cumulative adjustment costs for downstream sector296: Downstream sector PO1 PO2 PO3 Automotive (LEAD_EII, LEAD_VC, LEAD_BAT) EUR 4.41 billion EUR 4.41 billion EUR 14.20 billion Construction (LEAD_EII) EUR 691 million EUR 691 million EUR 16.23 billion Electricity utilities (LEAD_SOL, LEAD_BAT) EUR 729 million EUR 729 million EUR 2.91 billion Cost increase per type of vehicle (LEAD_EII, LEAD_BAT, LEAD_VC): Type of car PO1 PO2 PO3 Passenger EVs (LEAD_EII , LEAD_BAT and LEAD_VC) EUR 1 042.28 EUR 1 042.28 EUR 1 099.44 Heavy duty EVs (LEAD_EII , LEAD_BAT and LEAD_VC) EUR 4 353.38 EUR 4 353.38 EUR 4 570.07 Passenger ICEs (LEAD_EII) EUR 59.52 EUR 59.45 EUR 59.45 Heavy duty ICEs (LEAD_EII ) EUR 277.96 EUR 277.96 EUR 277.96 Cumulative administrative and adjustment costs, and benefits for Member States: Member States PO1 PO2 PO3 Adjustment Costs EUR 3 EUR EUR 296 Where the costs for the downstream sector are cumulative of the costs reflected under citizens & businesses, and Member State s, assuming cost increases are passed down to consumers. 142 Member States PO1 PO2 PO3 821 million 821 million 860 million Administrative Costs EUR 5.62 million EUR 8.92 million EUR 8.92 million Benefits EUR 1.3 billion EUR 1.3 billion EUR 1.3 billion Net benefits EUR 473 million EUR 469 million EUR 430 million Adjustment costs total Difference to the baseline PO1 PO2 PO3 Member States EUR 821 million EUR 821 million EUR 860 million Businesses EUR 3.7 billion EUR 3.7 billion EUR 27 8 billion Citizens EUR 1.4 billion EUR 1.4 billion EUR 4.3 billion Total Adjustment Costs EUR 6 billion EUR 6 billion EUR 32 billion 2.3. Benefits: environmental LEAD_EII, LEAD_BAT, LEAD_SOL and LEAD_VC: In relation to the monetisation of GHG emissions, a cost of carbon is used.297 Figures underpinning the analysis are below, with the central value used (as most consistent with the climate commitments) and the 2030 value used of 100 EUR per tCO2eq. This is an approximation, and no variation is made to reflect the time profile of when emissions will occur. Values in current EUR per tCO2 Low Central High Up to 2030 60 100 189 Post 2030 156 269 498 297 European Commission (2019). Handbook on the external costs of transport. 143 Summary of LEAD benefits: monetisation of GHG saved PO1 PO2 PO3 LEAD_EII (low-carbon steel, cement and aluminium) Steel: 3.37 Mtonnes CO2 (EUR 337 million) Cement: 0.69 Mtonnes CO2 (EUR 68 million) Aluminium: 0.22 Mtonnes CO2 (EUR 22 million) Total: 4.28 Mtonnes CO2 (EUR 428 million) Steel: 3.37 Mtonnes CO2 (EUR 337 million) Cement: 0.69 Mtonnes CO2 (EUR 68 million) Aluminium: 0.22 Mtonnes CO2 (EUR 22 million) Total: 4.28 Mtonnes CO2 (EUR 428 million) Steel: 10.26 Mtonnes CO2 (EUR 1 025 million) Cement: 2.22 Mtonnes CO2 (EUR 222 million) Aluminium: 1.1 Mtonnes CO2 (EUR 110 million) Total: 13.58 Mtonnes CO2 (EUR 1 358 million) LEAD_BAT 25.6 Mtonnes CO2 (EUR 2 560 million) 25.6 Mtonnes CO2 (EUR 2 560 million) 34.17 Mtonnes CO2 (EUR 3 417 million) LEAD_VC 0.7 Mtonnes CO2 (EUR 70 million) 0.7 Mtonnes CO2 (EUR 70 million) 0.9 Mtonnes CO2 (EUR 90 million) TOTAL 30.58 Mtonnes CO2 (EUR 3 058 billion) 30.58 Mtonnes CO2 (EUR 3 058 billion) 48.65 Mtonnes CO2 (EUR 4 865 billion) LEAD_EII Emission savings from low-carbon steel: • Low-carbon steel calculated at 0.575 t CO2 / t steel based on the Steel label methodology. o Based on the assumption that 50% of steel in 2030 will be produced via the primary route, and 50% via the secondary route. o Based on low-carbon steel label developed through the act, with the average primary steel emission factor at 0.9 t CO2 / t steel and secondary steel at 0.25 t CO2 / t steel. • Fossil fuel-based steel calculated at 1.06 t CO2 / t steel based on the Steel label methodology. o Based on the assumption that 50% of steel in 2030 will be produced via the primary route, and 50% via the secondary route. o Based on 2019 data of average primary steel emission factor at 1.8 t CO2 / t steel and secondary at 0.32 t CO2 / t steel.298 • Demand assumptions for 2030: o 37% of steel demand coming from construction 299, of which 11% can be attributed to public procurement.300 298VUB Brussels School of Governance (2024). Public procurement of steel and cement for construction. Assessing the potential of lead markets for green steel and cement in the EU. 299 EUROFER (2025). European Steel Figures 2025. 300 VUB Brussels School of Governance (2024). Public procurement of steel and cement for construction. Assessing the potential of lead markets for green steel and cement in the EU. 144 o 20% of steel demand coming from automotive301, of which 73.6% can be attributed to public procurement and subsidy schemes.302 o Total EU steel demand in 2030 estimated at 150 Mtonnes.303 Emission savings from low-carbon aluminium: • Based on the assumption that CO2 emissions from European primary aluminium production will decline by 36.9% of by 2030304 compared to the 2021 baseline, resulting in a cumulative reduction of 11 Mtonnes of CO2 between 2021 and 2030. • Considering the cumulative 11 Mtonnes CO 2 reduction from 2021 to 2030 , the yearly absolute emissions reduction is 1.22 Mtonnes CO2. • Demand assumptions for 2030: o 18% of aluminium demand coming from construction 305, of which 30 .2% can be attributed to public procurement.306 o 20% of aluminium demand coming from automotive 307, of which 73 .6% can be attributed to public procurement and subsidy schemes.308 o Demand for primary aluminium is assumed to be equal to supply, due to lack of granular data. Primary supply of aluminium in 2030 estimated at 3.6 Mt onnes,309 assuming no growth from the 2021 levels.310 Emission savings from low-carbon cement: • Internal analysis showed 44.47 Mtonnes CO2 of emissions for 100% low -carbon cement used in construction in 2030. • Demand assumptions for 2030: o Total EU demand for cement in construction in 2030 estimated at 160.7 Mtonnes.311 o 31% of cement used in construction is attributed to public procurement projects.312 LEAD_BAT Emissions for 2030 are estimated by calculating the projected share of battery demand in GWh for that year within the 2024–2030 period and applying it to the total aggregated CO₂ emissions savings compared to China for the same period, which amount to a total 133 Mtonnes of CO₂.313 • For PO1/PO2 emission savings would account to 25.6 Mtonnes CO2 savings or EUR 2.5 billion. • PO3 it would amount to 34.17 Mtonnes CO2 savings or EUR 3.4 billion. LEAD_VC Changes in GHG emissions due to the policy options come from three aspects. First ly, emissions during the manufacturing process influenced in both the EU and non -EU regions; reductions in emissions are driven by cleaner manufacturing in the EU compared to vehicle production outside the EU. Secondly, emissions from international transport emissions are influenced as EU imports 301 EUROFER (2025). European Steel Figures 2025. 302 European Commission internal analysis (2025). 303 OECD (2025). OECD Steel Outlook 2025. 304 European Aluminium (2023). Net-Zero By 2050: Science-Based Decarbonisation Pathways for The European Aluminium Industry. 305 Agora Industry (2024). Creating markets for climate-friendly basic materials. Potentials and policy options. 306 VUB Brussels School of Governance (2024). Public procurement of steel and cement for construction. Assessing the potential of lead markets for green steel and cement in the EU. The 30.2% share was calculated dividing the value of the public procurement construction industry EU by the value of the construction industry EU in 2019. 307 2025. Agora Industry (2024). Creating markets for climate-friendly basic materials. Potentials and policy options. 308 European Commission internal analysis (2025). 309 European Aluminium (2023). Net-Zero By 2050: Science-Based Decarbonisation Pathways for The European Aluminium Industry, p. 32. 310 Eurometaux and KU Leuven (2022). Metals for Clean Energy: Pathways to solving Europe’s raw materials challenge, p. 36. 311 Onestone Consulting (2023). The cement industry in Europe at the crossroads. Published in ZKG International. 312 Bellona Foundation (2024). Green Public Procurement of cement and steel in the EU: An overview of the state of play. 313 T&E (2024). An Industrial blueprint for batteries in Europe. 145 are affected. Finally, emissions during the use phase of vehicles are affected as the number of ICEs and EVs in EU sales is influenced; considering the higher fuel use emissions of ICEs compared to EVs. The impacts depend mostly on the reaction of foreign producers (Table 6). Table 6: Changes in global greenhouse gas emissions (Mt CO2e), JRC calculations based on emission projections from the JRC-GEM-E3 model. Internal market reaction LEAD_VC 1 LEAD_VC 2 2027 2030 2027 2030 Production -0.5 -0.6 -0.9 -0.7 Intl. transport -0.1 -0.1 -0.2 -0.1 Usage (passenger vehicles only) 0.8 0.1 1.0 0.1 Total 0.2 -0.7 -0.1 -0.8 The JRC-GEM-E3 reference scenario is in line with the trade projections used for analysis of policy options. International transport emissions due to all EU imports of “Manufacture of motor vehicles, trailers and semi -trailers” are calculated to be about 0.8 Mtonnes CO2 in 2025 and 2030. This is used to calculate the emission reduction in international transport, assuming reduced imports translate to emission reductions proportionally. For the utilisation phase, different lifetime emissions from fuel use for ICEs, PHEVs and ICEs are derived and multiplied with EU sales. 314 Emissions attributed to the substitution of vehicles are accounted in the year when vehicles are purchased. An increasing share of EVs in the fuel mix is considered in line with the CO2 standards for cars, implying a reduced impact in 2030 as substitution to ICE cars is increasingly limited. 2.4. Benefits: gross value added and employment Employment Table 7: Summary of LEAD benefits: jobs gained or preserved PO1 PO2 PO3 LEAD_EII Low-carbon steel: Up to 4 500 jobs (preserved) 315 Total: up to 4 500 jobs Made in EU cement: 4 272 jobs (preserved) Made in EU steel and aluminium: 3 762 jobs (preserved) Low-carbon steel: up to 4 500 jobs (preserved) 314 This is in line with the results for Buberger, J., Kersten, A., Kuder, M., Eckerle, R., Weyh, T., & Thiringer, T. (2022). Total CO2-equivalent life- cycle emissions from commercially available passenger cars. Renewable and Sustainable Energy Reviews, 159, 112158. Emissions from utilisation are only quantified for passenger cars. 315 Strategic Perspectives (2025). Lead markets: driving net-zero industries made in Europe. Estimate from dataset used in report’s underlying analysis. 146 PO1 PO2 PO3 Total: up to 12 534 jobs LEAD_BAT 85 000 jobs (new) 85 000 jobs (new) (More jobs expected but cannot be quantified) LEAD_SOL Public procurement: 5 193 jobs (new) Auctions: 32 888 jobs (new) Public support schemes 20 771 jobs (new) Total: 58 852 Public procurement: 5 193 jobs (new) Private procurement 114 243 jobs (new) Auctions: 32 888 jobs (new) Public support schemes 20 771 jobs (new) Total: 173 095 TOTAL 143 852 148 352 270 629 LEAD_EII: Employment benefits linked to Made in EU requirements for steel, aluminium and cement sectors are calculated based on the number of workers below and multiplied for each % of GVA gained from the made in EU measures outlined in Section 2.2 of this Annex. Table 8 shows impacts on employment, value added and output on energy-intensive industries for each 1%316 of their global final demand. Table 8: Top potential impacts for each 1% of global final demand in energy -intensive industries, JRC elaboration based on CARMEN results Industry impacted Employment (# workers) Value Added in EUR million Output in EUR million Paper and paper products 3 849 243 730 Refineries 7 216 585 2 161 Chemicals 8 370 702 1 935 Non-metallic mineral products (Total) 3 729 199 542 Non-metallic mineral products (Cement) 1 780 110 300 316 CARMEN is a linear model, where a 10% decrease/increase in global final demand would yield a result 10 times worse/better tha n the baseline. To facilitate understanding, a 1% reduction is used as a reference point, providing a more manageable and comparable outcome. 147 Industry impacted Employment (# workers) Value Added in EUR million Output in EUR million Basic metals (Total) 1 945 101 410 Basic metals (Steel Upper Value Chain) 714 38 188 Basic metals (Aluminium) 458 20 131 LEAD_SOL • At full GW-scale production, each gigawatt of solar PV manufacturing capacity is estimated to generate around 1 065 direct full-time jobs, including approximately 70 in polysilicon, 75 in ingot production , 75 in wafering , 200 in cell manufacturing , 85 in solar glass , 200 in module assembly, and 360 in inverter production . Applying an indirect jobs multiplier of 1.5, this results in an additional 1 598 indirect jobs, bringing the total employment impact to roughly 2 663 jobs per GW. • For private procurement, targeting the remaining market, 114 243 jobs could be created (should it apply to over 40GW). Value added Table 9: Summary of LEAD benefits in 2030 LEAD PO1 PO2 PO3 LEAD_EIII Low-carbon measures: GVA EUR 241 million for the steel and aluminium sectors GVA EUR 445 million for the cement sector Low-carbon measures: GVA EUR 241 million for the steel and aluminium sectors GVA EUR 445 million for the cement sector Made in EU measures: No GVA added Low-carbon measures: GVA EUR 327 million for the steel and aluminium sectors GVA EUR 1 509 million for the cement sector Made in EU measures: GVA EUR 2 883 million for the steel and aluminium sector from made in EU requirements GVA EUR 2 079 million for the cement sector from made in EU requirements LEAD_VC EUR 9.7 billion in Value Added EUR 9.7 billion in Value Added (value chain for intermediate inputs) EUR 11.5 billion in Value Added (value chain for intermediate inputs) TOTAL EUR 9.7 billion EUR 10.41 billion EUR 12.57 billion Environmental and value-added benefits total 148 TOTAL Difference to the baseline PO1 PO2 PO3 Total Monetised Benefits (not including admin savings in Section 2.1 of this same Annex) EUR 12.47 billion EUR 14.13 billion EUR 17.17 billion 2.5. Final costs and benefits Table 10: Aggregated overview of costs and benefits Difference to the baseline EUR in millions PO1 PO2 PO3 One Off Recurring One Off Recurring One Off Recurring Costs and benefits Member States Adjustment costs €0,00 €821,09 €0,00 €821,09 €0,00 €860,78 Administrative costs €0,00 €5,62 €0,00 €8,92 €0,00 €8,92 Administrative savings €0,00 €1.300,00 €0,00 €1.300,00 €0,00 €1.300,00 EU Commission Administrative costs €0.80 €0.13 €0.41 €0.18 €0.41 €0.19 Citizens Adjustment costs €0,00 €1.442,47 €0,00 €1.442,47 €0,00 €4.337,96 Administrative costs €0,00 €0,00 €0,00 €0,00 €0,00 €0,00 Businesses Adjustment costs €0,00 €3.782,05 €0,00 €3.782,05 €0,00 €27,498.35 Administrative costs €0,00 €0,70 €0,12 €1,16 €0,12 €5,76 Administrative savings €240,00 €0,00 €240,00 €0,00 €240,00 €0,00 Increase in GVA/VA €0,00 €10.386,92 €0,00 €10.386,92 €0,00 €18.299,67 Other benefits GHG emission reduction savings €0,00 €3.058,23 €0,00 €3.058,23 €0,00 €4.865,13 Increase in jobs (not monetised) 143.852 148.352 270.629 Total costs €0.80 €6,052.06 €0.53 €6,055.88 €0.53 €32,711.96 Total benefits €240,00 €14.745,15 €240,00 €14.745,15 €240,00 €24.464,80 Net benefits €239.20 €8,693.08 €239.47 €8,689.27 €239.47 -€8,247.16 150 Annex 5: Competitiveness check 1. Overview of impacts on competitiveness Dimensions of Competitiveness Impact of the initiative (++ / + / 0 / - / -- / Not available) References to sub-sections of the main report or annexes Cost and price competitiveness 0 6.1.1.1; 6.1.1.2; 6.1.1.3; 6.2.1.1; 6.2.1.2; 6.2.1.3. International competitiveness + 6.1.1.1; 6.1.1.6; 6.2.1.6; 6.2.1.8. Capacity to innovate + 5.2; 6.1.1.1; 6.1.1.7; 6.1.1.2. SME competitiveness + 6.1.1.4; 6.2.1.4. Synthetic assessment Cost and price competitiveness The impacts on cost and price competitiveness primarily arise from the creation of lead markets (SO2) and maximising benefits of foreign investments in the EU (SO3). In terms of lead market development, low-carbon requirements for EIIs for products put on the market will affect product prices across various downstream sectors. However, as outlined in Section 6, available estimates suggest these impacts are expected to remain limited: • 0.225% increase in price increase in the cost of passenger vehicles from low-carbon steel and aluminium. • 0.45% total increase price construction project from low-carbon steel, aluminium and cement: Over time, the cost premium associated with low -carbon materials is expected to decline 317, while carbon-intensive production methods will likely become more expensive due to rising CO₂ prices – gradually narrowing the cost gap between conventional and low -carbon alternatives. Therefore, the impact on costs and prices will be visible in the short term, while in the long term it will tend to neutralise, helping companies to improve their competitiveness. Introducing Made in EU requirements in EIIs, batteries and solar panels for public procurement, auctions and public support schemes will also have cost implications – although the phased approach would ensure that the costs of the final product are not significantly increased. • Using EU made battery cells with both local cathode and anode active materials would increase total downstream products costs if compared with China by approximately 16- 30 EUR/kWh. However, due to projected price decreases in battery cells the total cost differential with China is expected to decrease, ranging between 11 -21 EUR/kWh in 2028, 9-17 EUR/kWh in 2030, and between 6-12 EUR/kWh in 2035. Similarly, Made in EU requirements for solar PV would modestly increase the overall cost of a PV module in public procurement, public support schemes and auctions. 317 As related technologies matures and demand for low-carbon materials move from niche, lead markets to larger scale markets. 151 • Chinese solar modules are currently offered in Europe at approximately 8.7 €ct/Wp, which is significantly below their estimated sustainable production cost of 15.9 €ct/Wp in China and 16.5 €ct/Wp in Southeast Asia. By comparison, a module manufactured in the EU compliant with the Policy Option 1 and 2 (ie combining EU manufacturing of inverters, cells and modules with Chinese polysilicon, ingot and wafers) is estimated to cost around 19 €ct/Wp. Once Chinese market prices return to their sustainable level, the price differential between EU -made and imported modules would therefore be moderate rather than disproportionate. While a price gap with non -EU imports may initially persist, this is expected to narrow as European manufacturers scale up, vertically integrate and improve cost competitiveness. Regarding FDI conditionalities, measures that may restrict supply based on value -added production or securing critical value chains may raise the price of certain products, particularly in the short term, as local supply chains adjust to new FDI -driven demand. However, a more harmonised and predictable investment framework is expected to yield longer -term benefits for industry, including on their competitiveness in strategic supply chains, outweighing the operational costs of complying with such conditionalities. Streamlined permitting provisions will also accelerate decarbonisation investments across industrial manufacturing sectors, facilitating compliance with EU climate objectives and increasing the shift towards a low - carbon economy. The preferred policy option is expected to significantly strengthen the competitiveness of EU EIIs and clean tech manufacturers (batteries and solar cells) by securing demand and supporting investment within EU value chains (SO2). Low-carbon requirements for EIIs would send strong market signals to drive investment in low-carbon technologies by creating stable demand. Nevertheless, less stringent requirements in other regions could create export disadvantages for EU companies. Made in EU requirements for EIIs in public procurement and support schemes will redirect demand toward EU producers, reduce reliance on imports support import substitution and help shield EU EIIs from unfair competition, in combination with existing trade defence instruments. While these measures are expected to boost job creation and regional growth, they may not fully prevent resource shuffling, given the global role of some partner countries. Regarding Made in EU requirements in batteries, these measures would boost demand for EU- made batteries, helping to secure ongoing projects and attract future investments in the sector, fostering a more vertically integrated value chain and reducing strategic dependencies on third countries. In solar manufacturing, Made in EU requirements are expected to drive scale -up and lower costs through large -scale manufacturing, vertical integration and innovation, and foster a resilient industrial ecosystem. Applying such requirements in public tenders would incentivise EU-based investment and improve supply chain security, in line with broader industrial policy objectives. Overall, Made in EU requirements, by creating strong and predictable demand, help ensure that the EU builds competitive supply chains, contributing to its resilience and strategic autonomy. Should trading partners impose countervailing measures, this could however negatively impact the EU industry’s competitiveness on global markets. FDI conditions (SO3) are also expected to strengthen the long -term competitiveness of the European industries by securing access to critical technologies and intellectual property, offering immediate market advantages and improve their position within key value chains. Owner ship and joint venture requirements would support the development of strategic value chain segments in the EU. 152 Combined with value added production and securing technological advancements, these measures can deliver lasting, structural benefits for EU industrial competitiveness. Permitting measures (SO4) will reduce regulatory uncertainty and enable economies of scale for next - generation low-carbon manufacturing, further improving EU industrial competitiveness. Capacity to innovate Developing a common EU label on the carbon intensity of steel (SO1) will increase customer awareness and preference for low -carbon steel, driving demand for these products. This will, in turn, encourage companies to invest in cleaner production technologies, fostering innovation in the industry. (SO2) By anchoring guaranteed offtake, low-carbon and Made in EU requirements in EIIs and clean tech manufacturing can serve as catalyst of domestic investment and manufacturing expansion - laying the foundation for sustained innovation. As European industrial ecosystems grow, companies are better equipped to develop, commercialise, and scale innovative solutions. FDI conditions (SO3) are expected to strengthen the EU’s capacity to innovate by securing access to critical technologies, IP, and value chains. While they may place some limits on business models, these measures would promote value retention in the Single Market and give European companies greater access to advanced technologies and know -how - key drivers of long-term innovation and competitiveness. (SO4) Permitting measures will support innovation by relying on technical assistance by the European Commission to Member States for first -of-a-kind decarbonisation projects, as currently the case through INCITE, or the Technical Support Instrument, helping to streamline approvals and accelerate deployment. Additionally, regulatory sandboxes for innovative technologies (such as renewable hydrogen pro duction) could ensure these innovations are future-proof while maintaining regulatory safeguards. SME competitiveness Made in EU requirements in public support schemes and procurement will encourage localisation and partnerships with EU suppliers, opening up new market opportunities - particularly in batteries and solar, where SMEs play a major role. While low -carbon requirements may impose higher costs on SMEs compared to larger firms, these impacts are expected to be limited (SO2). FDI conditionalities will largely affect larger enterprises, but SMEs could benefit indirectly through increased activity in value chains ( SO3). Permitting reforms, including digitalisation and streamlined procedures, will reduce administrative burden and improve cross -border access, supporting SME competitiveness across the Single Market (SO4). 2. Competitive position of the most affected sectors Energy intensive industries Annex 7 provides an overview of the competitive position of EIIs. As outlined in the problem section318, the competitiveness challenges facing EU EIIs are driven by a combination of economic and geopolitical factors - most notably high energy costs, global non -market overcapacity, and unfair competition. Production declines have been observed in several sectors, including refineries, glass, ceramics, with the most severe impacts in steel, chemicals, 318 And complemented in Annex 7. 153 and aluminium. Risks related to global overcapacity are particularly evident in steel, refineries, and aluminium; they are also present at a regional level in cement and ceramics and are growing in the chemicals sector. The impact of declining production in energy -intensive industries is unevenly distributed across the Union. Analyses show that manufacturing employment in EIIs is regionally concentrated319, with certain NUTS -2 regions highly exposed to further industrial decline. In regions where basic metals, chemicals, or non -metallic minerals account for a large share of manufacturing employment, additional closures could translate directly into local jo b losses and widening regional disparities. Figure 11 Regional manufacturing employment share: manufacturing of chemicals and chemical products (left) and basic metals (right) Solar The EU’s competitive position in the solar sector is increasingly weakening, as it struggles to compete with Chinese manufacturers who dominate global production and drive prices below cost through overcapacity. Between 2021 and 2023, the EU imported nearl y 190 GW of PV modules, almost double what was installed, leaving massive stockpiles and pushing local producers out of the market. Meanwhile, Chinese firms are expanding production in countries like Vietnam and Malaysia to avoid U.S. trade barriers, further intensifying global competition. Batteries The EU’s battery sector is losing ground when it comes to competitiveness, as it faces intense pressure from overseas manufacturers who dominate global production. Massive overcapacities in China have led to a surge of cheap imports into Europe, underminin g local producers and distorting market dynamics. Additionally, competitors in Asia benefit from vertically integrated value chains, enabling them to scale rapidly and reduce costs across production stages. In contrast, many European battery projects have been delayed or cancelled due to deteriorating market conditions and uncertain policy support. As the Act aims to create lead markets for the above-mentioned sectors, their competitiveness will be positively affected. 319 Chief Economist Unit, DG GROW, based on Eurostat regional structural business statistics (sbs_r_nuts2021). 154 Annex 6: SME Check OVERVIEW OF IMPACTS ON SMES Relevance for SMEs Based on SME filter and the ISSG discussion, this initiative is relevant for SMEs, as they represent up to 99% of companies from the manufacturing and EII sectors, as well as for clean tech (solar and batteries) and automotive (vehicle components). (1) IDENTIFICATION OF AFFECTED BUSINESSES AND ASSESSMENT OF RELEVANCE Are SMEs directly affected? In which sectors? Yes, SMEs are directly affected by the preferred policy option. All SME manufacturing industries will benefit from the permitting measures for decarbonisation projects. This would impact notably those companies in the manufacture of wood and of products of wood and cork (except furniture), manufacture of wearing appare l and textiles, repair and installation of machinery and equipment or manufacture of fabricated metal products (except machinery and equipment), where the share of SMEs in the sector is the highest in the EU. For measures impacting energy intensive industries, such as the creation of lead markets, SMEs represent 99% of companies active in the entire EIIs ecosystem and account for 51% of employees, 31% of the EIIs ecosystem turnover and 37% of value added. Made in EU requirements in solar, batteries and key vehicle components will also impact SMEs, where they represent 80% of solar and 99% key vehicle components sector respectively. The introduction of low-carbon and Made in EU requirements (SO2) in EIIs, batteries, solar cells, and key vehicle components will affect SMEs in downstream sectors, most notably in the construction, automotive and potentially wind energy. Estimated number of directly affected SMEs Manufacturing sector: The potential number of impacted SMEs within the scope of the permitting provisions would be more than 2 million, corresponding to the broad number of SMEs active in the manufacturing sector.320 Energy intensive industries: In 2022, the estimated number of SMEs in EIIs was 577 796.321 Solar manufacturing: SMEs represent 80% of the membership in ESIA. 322 The majority of the EU manufacturing segment and projected projects consist of SMEs. The installation sector is also largely made up of SMEs (rooftop and small commercial segments). 320 Eurostat 2022. 321 Industrial Ecosystem key SME figures 2025, link: SME Performance Review - European Commission 322 INNO/Solar Alliance webpage. Meet our members – European Solar PV Industry Alliance. 155 Batteries: SMEs accounted for 43% of respondents in the targeted battery survey. Automotive: SMEs represent around 99% of all companies (i.e. 1 .8 million companies) operating in the automotive sector and are responsible for 26% of the value added.323 They are however not expected to be directly affected as lead market provisions would apply to original equipment manufacturers. Construction: 99% of construction companies are SMEs (i.e. 5.29 million companies) .324 However, only a subset of companies would be affected by the lead market provisions, the ones in the lead on new building or infrastructure projects. Estimated number of employees in directly affected SMEs Manufacturing sector: Estimated number of employees in these SMEs would be more than 15 million, roughly half of the employment of the manufacturing325 EIIs: In 2022, SMEs were estimated to employ approximately 3.91 million people, accounting for 50.5% of total employment in EIIs.326 Solar: Although SME -specific data is not available, the solar sector employed 648 000 people in 2022.327 Batteries sector: Data currently not available. Automotive: SMEs employ around 1.5-2 million people in direct car manufacturing (roughly 60-70% of the total direct employment in the sector), and an additional 6 -8 million jobs in related industries, such as automotive services, trade, and distribution.328 Wind energy: The exact number of jobs related to wind power in SMEs is not known. However, overall, in 2022, wind energy sustained 300 000 jobs in the EU.329 Construction: SMEs employed 20.6 million people in 2022, representing 76.5% of the employment in the construction sector.330 Are SMEs indirectly affected? In which sectors? What is the estimated number of indirectly affected SMEs and employees? This initiative is expected to indirectly affect SMEs in the value chain of EII and clean tech manufacturing, especially in the downstream part, such as the finishing steps of the production process or road transport. It is not possible to estimate the number of indirectly affected SMEs and employees, since these span across a wide number of downstream sector players. (2) CONSULTATION OF SME STAKEHOLDERS How has the input from the SME community been taken into consideration? Are SMEs’ views different from those of large businesses? (Yes/No) The Open Public Consultation (OPC) received 176 answers from SMEs, out of a total of 314 (56%). When analysed alongside large companies’ responses, there was substantial alignment, indicating that both small and large companies face similar decarbonisation challenges. This coherence also applies to the solutions considered by the IAA, which would seemingly benefit both SMEs and large enterprises. While the level of support varied slightly throughout the consultation, alignment remained on most points detailed in the OPC analysis set out in Annex 2. Some differences were however observed, especially in the context of permitting, with a higher percentage of SMEs responding to the permitting questions and showing a stronger support for the 323 Euroclusters and RESIST (2023). Future challenges for SMEs in automotive, transport and mobility vehicle production and their manufacturing suppliers. 324 European Commission (2023). Transition Pathway for Construction. 325 Eurostat 2022 326 Industrial Ecosystem key SME figures 2025, link: SME Performance Review - European Commission 327 SolarPower Europe (2023). EU Solar Jobs Report 2023. 328 Euroclusters and RESIST (2023). Future challenges for SMEs in automotive, transport and mobility vehicle production and their manufacturing suppliers. 329 WindEurope webpage. Wind energy and the economy. 330 European Commission (2025). SME Performance Review - Annual report on European SMEs. 156 proposed solutions. This is further supported by the results of the targeted consultation, where respondents highlighted that SMEs typically have fewer resources to manage the administrative workload and costs associated with the permitting processes. Furthermore, in the section on identifying and promoting industrial decarbonisation priority projects, most SMEs (90, 96%) favour improved access to funding - an option that ranked lower among general respondents. This is followed by support for faster permit -granting procedures (85, 90%) and priority status for administrative procedures (81, 86%). In comparison, only 50% of large companies selected faster permitting, suggesting again that permitting is a more pressing issue for SMEs. (3) ASSESSMENT OF IMPACTS ON SMES331 What are the estimated direct costs for SMEs of the preferred policy option? Qualitative assessment Assuming the low -carbon steel label ( SO1) applies to the most energy -intensive stages of steel production, it is likely to affect primarily the largest steel producers, which typically are not SMEs. Costs impact for SMEs is thus expected to be marginal. Low-carbon and Made in EU requirements ( SO2) will however imply costs for SMEs, when procuring low-carbon and EU-made products. However, these costs are expected to be distributed across the value chain and leading only to a limited increase in the final price. These costs are expected to be passed on to consumers or absorbed by economic operat ors or public authorities – though SMEs may be less able to do so than larger firms. Made in EU requirements in solar cells ( SO2) may lead to a temporary slowdown in solar panel installations by SMEs. This impact is expected to be limited and manageable, as Europe’s commitment to ambitious PV deployment targets remains firm and unchanged. Conversely, it will support the establishment of manufacturing SMEs. Quantitative assessment There is no available data on price increases specific to SMEs, however, the financial impacts of the policy measures, as outlined in Annex 3, are expected to apply to SMEs to a similar extent as to other (large) companies. What are the estimated direct benefits/cost savings for SMEs of the preferred policy option? Qualitative assessment SMEs are expected to benefit directly from an expanded market for their European, low-carbon products, and indirectly through their role in the supply chains of larger companies. As outlined in Annex 3, these benefits—excluding those related to FDIs—are anticipated to apply to SMEs in the same way as to (large) companies. Permitting measures are expected to deliver significant cost savings and benefits for SMEs ( SO4), by speeding-up and facilitating the administrative process (see, also below on administrative burden reduction), while also creating legal certainty. The definition of criteria for priority projects ( SO5) is expected to facilitate access to funding for decarbonisation projects, including those led by SMEs. This is likely to accelerate investment decisions and facilitate the participation of SMEs in industrial decarbonisation efforts across the EU. Quantitative assessment Provisions on permitting will apply to all manufacturing and EII SMEs, which stand to benefit from administrative cost savings, as detailed in Annex 3 and reflected in the 35% burden reduction target outlined below. What are the indirect impacts of this initiative on SMEs? By improving the competitiveness of EIIs and clean tech ecosystems, which are largely composed of SMEs, this initiative is expected to generate positive spillover effects for SMEs operating across 331 The costs and benefits data in this annex are consistent with the data in annex 3. The preferred option includes the mitigati ng measures listed in Section 4. 157 related value chains. Improved market conditions, increased demand, and enhanced innovation capacity will help SMEs grow, scale, and better integrate into domestic and international markets. (4) MINIMISING NEGATIVE IMPACTS ON SMES Are SMEs disproportionately affected compared to large companies? No If yes, are there any specific subgroups of SMEs more exposed than others? This initiative is expected to lead to additional administrative costs for companies, particularly within downstream sectors such as automotive and construction , which will be required to demonstrate compliance under lead market provisions (LEAD) and notify authorities under FDI conditionalities (INV). As can be seen from the table above, the majority of companies operating in the manufacturing sector are SMEs. For PO2, under LEAD_EII measures, SMEs will face some administrative costs due to demonstrate compliance reporting. In the construction sector, where the Act may impact up to 921 948 companies, only large and medium-sized companies are proposed required to demonstrate compliance, excluding small and micro companies (totalling 915 729). This aims to reduce the administrative and financial burden on SMEs. In other sectors such as automotive and energy, most companies complying with the measures are expected to be large organisations, as outlined in the company size breakdown in Annex 3. The administrative cost per company remains minimal, at EUR 882 per year for construction companies, and EUR 1176 per year for automotive. These total administrative costs for SMEs, calculated at EUR 982 191 annually, will be outweighed by permitting savings, calculated at EUR 27.85 million annually , leading to total net savings in administrative costs for SMEs of EUR 26.86 million. PO1 and PO2 will result in lower administrative costs for SMEs, as lead market provisions are limited to public procurement and public support schemes. Meanwhile, in PO3, those costs would increase, as lead market provisions expand to products placed on the market. Have mitigating measures been included in the preferred option/proposal? (Yes/No) Yes, some SMEs, such as the small and micro companies operating in the construction sector, could use self-declaration to demonstrate compliance with low-carbon and Made in EU requirements. CONTRIBUTION TO THE 35% BURDEN REDUCTION TARGET FOR SMES Are there any administrative cost savings relevant for the 35% burden reduction target for SMEs? Permitting measures under the preferred policy option (SO4) are expected to deliver administrative cost savings relevant for the 35% burden reduction targets for SMEs. SMEs consistently cite red tape as a major barrier to offering services across borders. Streamlining procedures - particularly through the digitalisation of permit -granting processes under the SDG - can significantly ease this burden. Moreover, by providing access to clear information on rules and procedures, the SDG can help SMEs— who often lack the resources of larger firms - better navigate and seize opportunities in the Single Market. 158 Annex 7: Sectoral analyses The following subsection outlines a sectorial analysis and, where possible, the readiness and cost evolution of industrial technologies utilised to decarbonise energy intensive industries processes. According to an internal JRC analysis, a common dominator across all the EIIs considered is that the promising decarbonisation technologies are either not cost competitive in the current scenario or have not reached sufficient technology readiness levels (TRLs). Furthermore, the a nalysis clearly outlines the need for future large -scale investmen t to transition these sectors and its industrial applications. For the iron and steel sector only, the impact assessment for the 2040 Climate Target plan an investment need of EUR 80 billion between 2031 and 2040 and EUR 100 billion between 2031 and 2050 . 332, 333 No clear indication can be derived from the projections on to when the various decarbonisation technologies are reaching cost parity with the conventional technologies, as these depends on many parameters, varying according to the specific technology pathway. However, according to the analysis, there is a correlation between the attractiveness of these CAPEX intensive investments and a sufficient high ETS price in 2030. 1. Energy intensive industries For the purposes of this impact assessment, we consider the following energy -intensive industrial sectors and their related products: chemicals, steel, pulp and paper, plastics, oil and gas refining, cement, non -ferrous metals, glass, and ceramics. Their production process is characterised by the highest energy consumption and emissions intensity, accounting for a significant share of the EU’s industrial GHG emissions. These sectors hold strategic importance for EU value chains and autonomy, providing input materials to downstream sectors and key net -zero technologies. They involve processes with hard-to-abate emissions that make decarbonisation costly and challenging and contribute substantially to economic activity and employment.334 In 2021, energy intensive industries (EIIs) contributed EUR 549 billion in added value (corresponding to 4.55% of EU value added) and employ 7.8 million people in Europe.335 The map below shows that EIIs are present throughout Europe:336 332 European Commission (2024)., Commission Staff Working Document: Impact Assessment Report (Part 3), accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Securing our future - Europe's 2040 climate target and path to climate neutrality by 2050, building a sustainable, just and prosperous society, COM(2024) 63 final, pp.164-167. 333 Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B), p. 99. 334 European Commission (2019). Masterplan for a competitive transformation of EU energy-intensive industries enabling a climate-neutral, circular economy by 2050. 335 European Commission (2021).. Commission Staff Working Document. For a resilient, innovative, sustainable and digital energy-intensive industries ecosystem: Scenarios for a transition pathway, SWD(2021) 277 final. 336 JRC (2025). Energy and Industry Geography Lab (EIGL). 159 Figure 12 – Facilities of Energy-intensive industries in the EU, JRC/EIGL, 2025 1.1. Aluminium Key facts EU aluminium market: valued at EUR 40 billion,337 1 million direct and indirect jobs. 338 In 2023, the EU produced 0.925 Mtonnes of primary 339. EU aluminium exports in 2024: EUR 18.4 billion, imports: EUR 29.5 billion. Major trading partners: UK, USA, Switzerland and China.340 Key challenges High energy costs, unfair global competition, including market-distorting tariffs and persistent overcapacity in some producing countries. Aluminium production has decreased with jobs being lost, and permanent loss of production capacity - with 50% of primary production capacity being idled since 2021. 341 EU share of global primary aluminium production only represents 3.8%. 342 EUs primary and secondary aluminium production covers 46% of the region’s domestic demand 343 whereas a demand growth until 2050 is expected by 33%.344 In 2023, the EU aluminium industry emitted approximately 6.6 Mtonnes of CO₂ 345 in the production of primary aluminium. In line with EU climate goals, the aluminium industry is shifting toward cleaner production through different decarbonisation pathways, including increasing recycling rates and improving energy efficiency. 346. To deploy further decarbonisation technologies, an investment of EUR 33 billion and additional R&I efforts are required347. Since 1990, the aluminium industry reduced its CO2 emissions by 53%.348 337 European Aluminium (2024). The Strategic Role of European Aluminium. 338 European Aluminium (2024). The Strategic Role of European Aluminium. 339 JRC analysis based on JRC IDEES 2026 Database. 340 Eurostat (2025). EU recorded a trade deficit of €11.1 billion in aluminium. 341 European Commission (2025). A European Steel and Metals Action Plan, COM(2025) 125 final, 19 March 2025. 342 European Commission (2025). A European Steel and Metals Action Plan, COM(2025) 125 final, 19 March 2025. 343 European Commission (2025). A European Steel and Metals Action Plan, COM(2025) 125 final, 19 March 2025. 344 Eurometaux and KU Leuven (2022). Metals for Clean Energy: Pathways to solving Europe’s raw materials challenge. 345 European Aluminium (2025). Environmental Profile Report 2024 V.2.0 – Executive Summary. 346 JRC (2026). Mapping the transition of the EU aluminium industry to carbon neutrality. 347 European Aluminium (2024). Our Policy Recommendations for an Ambitious Clean Industrial Deal and Metals Action Plan. 348 Eurometaux webpage. About our industry. 160 Cost evolution In detail, the CAPEX figures for smelters (Inert Anodes, CCS) are based on greenfield investments. Conversely, CAPEX for alumina refining (Boilers, MVR, Electric Furnaces) is calculated assuming brownfield investments (retrofitting existing facilities). CAPEX estimates for downstream segments like semi -fabrication and recycling are explicitly noted as approximations based on thermal energy share relative to calcination, reflecting a lack of publicly available data. Table 11 below displays the decarbonisation pathways for the EU aluminium industry, which primarily focuses on switching to low -carbon electricity, adopting inert anodes in smelting, and transitioning high-temperature thermal processes (refining, casting, recycling) from fossil fuels to electric or hydrogen-based systems. The CAPEX estimates are primarily sourced from techno-economic models, converted to cost per tonne of annual aluminium (Al) or alumina capacity, with costs generally referenced to EUR 2022 prices. In detail, the CAPEX figures for smelters (Inert Anodes, CCS) are based on greenfield investments. Conversely, CAPEX for alumina refining (Boilers, MVR, Electric Furnaces) is calculated assuming brownfield investments (retrofitting existing facilities). CAPEX estimates for downstream segments like semi -fabrication and recycling are explicitly noted as approximations based on thermal energy share relative to calcination, reflecting a lack of publicly available data.349 Table 11: CAPEX estimates for the aluminium industry compiled by the JRC, 2025 Technology Pathway Current Value/Reference CAPEX (per tonne capacity) CAPEX in 2030 (per tonne capacity) CAPEX in 2040 (per tonne capacity) CAPEX in 2050 (per tonne capacity) Primary Smelting: Inert Anodes (IA)350, 351 EUR 6 309.1/t Al (Greenfield investment, 2022 prices). TRL 7. EUR 6 309.1/t Al (Mass deployment expected to begin around 2035). Costs expected to remain stable after full commercialisati on. Full market coverage expected 2040– 2045. Costs expected to remain stable after full commercialisati on. Primary Smelting: Carbon Anode + CCS352, 353 TRL 9 (CCS component) / TRL 3-4 (Smelter integration). EUR 6 688.6/t Al (Greenfield investment, 2022 prices) Commercial readiness expected by 2035. EUR 6 688.6/t Al. EUR 6 688.6/t Al. Alumina Refining: Electric Boiler EUR 30.7/t Al (Brownfield retrofit, 2022 prices). TRL 9 (Mature). EUR 30.7/t Al. Deployment expected from 2025. EUR 30.7/t Al. EUR 30.7/t Al. 349 Mission Possible Partnership (2022). Making Net-Zero Aluminium Possible. An industry-backed, 1.5-aligned transition strategy. 350 European Aluminium. (2023). Net-Zero by 2050: Science-based decarbonisation pathways for the European aluminium industry. 351 Mission Possible Partnership (2022). Making Net-Zero Aluminium Possible. An industry-backed, 1.5-aligned transition strategy 352 Ibid. 353 Zore, L. (JRC) (2024). Decarbonisation Options for the Aluminium Industry. 161 Technology Pathway Current Value/Reference CAPEX (per tonne capacity) CAPEX in 2030 (per tonne capacity) CAPEX in 2040 (per tonne capacity) CAPEX in 2050 (per tonne capacity) (Digestion)354, Alumina Refining: MVR (Digestion) 355, 356, 357 EUR 76.9/t Al (Brownfield retrofit, 2022 prices). TRL 7–8. EUR 76.9/t Al (Commercial readiness 2027). Deployment grows significantly towards 2030. EUR 76.9/t Al MVR systems play a dominant role in digestion by 2050. EUR 76.9/t Al. Alumina Refining: Electric Furnace (Calcination)358 TRL 4–5 (In trial phase). EUR 155.6/t Al (Brownfield retrofit, 2022 prices). Commercial readiness expected 2030. EUR 155.6/t Al (Full market penetration expected by 2040). EUR 155.6/t Al. General High Temp: Electric Furnace (e.g., Remelting/Cast House)359, 360 TRL 9 (Heating technologies exist) EUR 31.3–EUR 38.3/t Al (Brownfield estimate for Cast House/Anode Paste, 2022 prices). Commercial readiness 2030. EUR 31.3–EUR 38.3/t Al. EUR 31.3–EUR 38.3/t Al. General High Temp: Hydrogen Furnace (e.g., Remelting/Cast House)361 TRL 8 (High maturity in other sectors). EUR 15.1–EUR 18.4/t Al (Brownfield estimate for Cast House/Anode Paste, 2022 prices). Commercial readiness 2035. EUR 15.1–EUR 18.4/t Al. EUR 15.1–EUR 18.4/t Al. Total Investment Needs (TCI) for EU Transition 354 European Aluminium (2023).Net-Zero by 2050: Science based decarbonisation for the European aluminium industry. 355 European Aluminium. (2023). Net-Zero by 2050: Science-based decarbonisation pathways for the European aluminium industry. 356 Mission Possible Partnership (2022). Making Net-Zero Aluminium Possible. An industry-backed, 1.5-aligned transition strategy. 357 Zore, L. (JRC) (2024). Decarbonisation Options for the Aluminium Industry. 358 European Aluminium (2023). Net-Zero by 2050: Science-based decarbonisation pathways for the European aluminium industry. 359 Ibid. 360 Zore, L. (JRC) (2024). Decarbonisation Options for the Aluminium Industry 361 European Aluminium (2023). Net-Zero by 2050: Science-based decarbonisation pathways for the European aluminium industry. 162 The EU aluminium industry will need approximately EUR 33 billion in cumulative investments for new technology deployment between 2021 and 2050 to meet the 1.5°C scenario, with about EUR 22 billion (67% of the total) expected between 2031 –2040. This investment peak is primarily directed towards greenfield smelter facilities with inert anode technology. These figures exclude R&I costs and necessary energy system developments, such as grid upgrades and new renewable capacity, which will also drive up the overall cost. 1.2. Cement Key facts EUR 25.8 billion sales and EUR 8.5 billion Gross Value Added (cement and clinker) in 2022, 40.3 thousand direct jobs in 2023, plus 14.5 million in construction, 161.1 Mtonnes production in 2023 362, main EU producers: Germany, Italy, France, and Spain. 363 EU exports in 2022: EUR 1.1 billion, imports: EUR 0.7 billion. Major trading partners: Türkiye, Egypt, China, and Ukraine.364 Key challenges High energy costs, tightening environmental regulations, and declining construction demand. Production volumes decreased by 3.3% between 2022 and 2023. The EU cement industry emits over 120 Mtonnes of CO₂ annually.365 In line with EU climate objectives, the industry is moving toward cleaner production through several decarbonisation pathways,366 including the use of alternative fuels, process electrification, deployment of carbon capture, utilisation and storage (CCUS)367, and clinker substitution with low -carbon materials.368 These approaches aim to cut emissions across key production stages, from raw material processing to downstream applications in construction. The investment need is estimated at EUR 94.4 billion by 2050. Key challenges to achieve decarbonisation include limited availability of proven low -carbon alternatives at scale, insufficient CO₂ transport and storage infrastructure, and the technical difficulty of reducing process -related emissions from clinker production. Cost evolution Table 12 below synthesizes these CAPEX estimates for main decarbonisation pathways in the EU cement industry. Unless otherwise specified, the specific CAPEX values for capture technologies are derived from techno-economic assessments based on a 1 Mtonne clinker/year reference plant capacity, with base costs set to EUR 2014.369 362 Cembureau (2025). Cembureau Key Facts & Figures 363 Onestone Consulting (2023). The cement industry in Europe at the crossroads. Published in ZKG International. 364 Cembureau (2023).Cembureau, Activity Report 2023. 365 JRC (2021). Deep decarbonisation of industry: The cement sector. 366 JRC144123 (2026). Mapping the transition of the EU Cement Industry to Carbon Neutrality. 367 JRC (2024). The role of carbon capture across hard-to-abate industries in the EU. 368 Cavalett, O. (2024). Paving the way for sustainable decarbonization of the European cement industry. Nat Sustain 7, 568–580 (2024). 369 ECRA (2022). ECRA Technology Papers. 163 Table 12: CAPEX estimates for the cement industry compiled by the JRC, 2025 Technology Pathway Current Value (per tonne clinker capacity) CAPEX in 2030 (per tonne clinker capacity) CAPEX in 2040 (per tonne clinker capacity) CAPEX in 2050 (per tonne clinker capacity) Post- Combustion Capture (MEA) 370, 371 EUR 28.6/t clinker (Base Case, 2014). TRL 8–9. Expected to remain stable or decrease slightly after initial deployment and learning curves. Expected to remain stable/mature. Expected to remain stable/mature. Chilled Ammonia Process (CAP) 372, 373, 374 EUR 36.4/t clinker (Base Case, 2014). TRL 7–8. Expected to decrease due to learning curve assumption of 1% per year up to 2030. N/A (Deployment expected post- 2025/2030). N/A Membrane- Assisted Liquefaction (MAL)375, 376 EUR 46.7/t clinker (Base Case, 2014). TRL 4–5. Projected costs highly sensitive to maturity and demonstration efforts. TRL >8 expected 2030– 2040. Potential for maturity by 2040. N/A Oxyfuel Technology377, 378 EUR 35.0/t clinker (Base Case, 2014). TRL 6. EUR 220-EUR 250 million (Total Investment, 2 Mtonnes clinker/y). EUR 200-EUR 230 million (Total Investment, 2 Mtonnes/y capacity). EUR 200-EUR 230 million (Total Investment, 2 Mtonnes/y capacity). Calcium Looping (CaL) - Tail-End379 EUR 330–EUR 495 million (Total Investment, 2 Mtonnes clinker/y, 2020 prices). TRL 7– 8. EUR 330–EUR 450 million (Total Investment, 2 Mtonnes clinker/y, 2020 prices). TRL >8 expected 2025. EUR 330–EUR 450 million (Total Investment, 2 Mtonnes clinker/y, 2020 prices). EUR 330–EUR 450 million (Total Investment, 2 Mtonnes clinker/y, 2020 prices). 370 Voldsund et al. (2019). D4.6 CEMCAP comparative techno-economic analysis of CO₂ capture in cement plants. 371 ECRA (2022). ECRA Technology Papers. 372 Voldsund et al. (2019). D4.6 CEMCAP comparative techno-economic analysis of CO₂ capture in cement plants. 373 ECRA (2022). ECRA Technology Papers. 374 IEAGHG (2013). Deployment of CCS in the Cement Industry. 375 ECRA (2022). ECRA Technology Papers. 376 Voldsund et al. (2019). D4.6 CEMCAP comparative techno-economic analysis of CO₂ capture in cement plants. 377 Ibid. 378 ECRA (2022). ECRA Technology Papers. 379 Ibid. 164 Technology Pathway Current Value (per tonne clinker capacity) CAPEX in 2030 (per tonne clinker capacity) CAPEX in 2040 (per tonne clinker capacity) CAPEX in 2050 (per tonne clinker capacity) Calcium Looping (CaL) - Integrated380 EUR 44.9/t clinker (Base Case, 2014 prices). TRL 6–7. TRL >8 expected 2030. Investment ranges (New Install., 2 Mtonnes clinker/y, 2020 prices): EUR 300– EUR 425 million. Expected stability/maturit y post-2030. Expected stability/maturit y post-2030. Indirect Calcination (e.g., LEILAC) 381, 382 CAPEX range: EUR 90–EUR 135 million (Leilac unit only, 1.2 Mtonnes clinker/y). TRL 6–7. EUR 220–EUR 290 million (Total Investment New Install., 2 Mtonnes clinker/y, 2020 prices). TRL >8 expected 2025. Expected stability after commercialisati on. Expected stability after commercialisati on. Alternative Cements: LC3 (Limestone Calcined Clay Cement) 383 Investment for calcined clay unit (New Install., 2 Mtonnes clinker/y, 2020 prices): EUR 20–EUR 40 million EUR 20–EUR 40 million. EUR 20–EUR 40 million. EUR 20–EUR 40 million. Waste Heat Recovery (WHR) 384, 385 EUR 15–EUR 30 million (Installation Cost, constant price from 2015 to 2050). TRL 9. EUR 15–EUR 30 million. EUR 15–EUR 30 million. EUR 15–EUR 30 million. 380 Ibid. 381 Ibid. 382 Leilac (2023). A techno-economic analysis of the Leilac technology at full commercial scale. 383 ECRA (2022). ECRA Technology Papers. 384 Ibid. 385 Marmier, A. (JRC) (2023). Decarbonisation options for the cement industry. 165 Figure 13: Evolution of CCS and non-CCS based cement production costs in Europe under different CO2 price scenarios386 Total Investment Needs (TCI) for EU Transition Initial investments in the 2020s are crucial for scaling up these technologies and achieving cost reductions through learning -by-doing. Early initiatives are focused predominantly on CO₂ capture and associated infrastructure, while higher estimates include broader technological transformations such as alternative raw materials, fuel changes, and process electrification. The corresponding estimation are a TCI of EUR 16-22 billion387 on the low estimate and EUR 40- 80 billion 388 on the more holistic view. Between 2030 and 2040, the cement industry is anticipated to invest heavily in deep decarbonisation technologies. The materialisation and attractiveness of these CAPEX intensive investments is heavily linked to constant EU ETS price of EUR 100-150/tCO₂ from 2030. These carbon price levels have often been cited as a critical enabler. Mature CO₂ capture technologies have stable costs, while newer ones like Calcium Looping may see CAPEX reductions over time. However, the sheer scale of investment required to retrofit or replace existing capacity may offset these savings. Beyond plant -level CAPEX, significant investments are needed for shared CO₂ transport and storage infrastructure, as well as new energy infrastructure (e.g., hydrogen pipelines, renewable electricity grids) to support decarbonised cement plants. 1.3. Ceramics Key facts EUR 25.5 billion revenue in 2022 employing 338 thousand direct jobs ,389 172 Mtonnes production in 2023, main EU producers: Italy, Germany, France, and Spain. 390 EU exports in 2022: EUR 10.2 billion, imports: EUR 4.4 billion. Major trading partners: USA, Switzerland, UK and Türkiye.391 Key challenges 386 Mission Possible Partnership (MPP), E3G and the Industrial Transition Accelerator (ITA) (2025). Building the EU’s Clean Industrial Future: Unlocking Investment through Lead Markets. 387 ECRA (2022). ECRA Technology Papers. 388 Voldsund et al. (2019). D4.6 CEMCAP comparative techno-economic analysis of CO₂ capture in cement plants. 389 European Commission webpage. Ceramics. 390 Market Data Forecast (2025). Europe Ceramic Tiles Market. 391 Cerame-Unie webpage. Ceramic Industry. 166 High energy costs, competition from low-cost producers in emerging economies, supply chain disruptions, and stringent environmental regulations. Production volumes decreased by 2 –3% between 2022 and 2023.392 The EU ceramic industry emits over 20 Mtonnes of CO₂ annually.393 In line with EU climate goals, the sector is transitioning toward more sustainable production through trajectories such as electrification of kilns, fuel switching to low -carbon gases or hydrogen, implementation of energy efficiency measures, and the integration of circular raw materials and recycling practices.394 These measures aim to reduce greenhouse gas emissions across manufacturing processes and product life cycles. Main decarbonisation challenges include high investment needs to retrofit existing facilities, limited technological readiness of electric and hy drogen kilns at industrial scale, insufficient infrastructure for clean energy supply, and the technical complexity of maintaining product quality under altered processing conditions. 1.4. Chemicals Key facts EUR 655 billion sales in 2023 395, 1.2 million direct jobs. 396 218 Mtonnes production of industrial chemicals in 2023, main producers: Germany, France, The Netherlands, Italy and Belgium. EU exports in 2023: EU 523 billion, import s: EUR 325 billion. Major trading partners: USA, Switzerland, UK, and China.397 Key challenges High energy costs, weak demand, increased regulatory pressure, and global competition. Production volumes have decreased by 14% between 2021 and 2023 putting at risk up to 200 000 jobs.398 The chemical industry is the third-largest source of global CO₂ emissions, after the cement and steel sectors. In 2022, the EU chemical industry emitted 104 Mtonnes CO2 equivalent. In line with EU climate goals, the sector is shifting toward cleaner production through different decarbonisation pathways, including electrification of processes, deployment of low -carbon hydrogen, implementation of carbon capture, utilisation and storage (CCUS),399 and increased use of circular feedstocks and recycling. 400 These approaches aim to reduce greenhouse gas emissions across core chemical production processes, interconnected value chains, and end - use applications. The main barrier to decarbonising is the high investment requirement. In the impact assessment for the 2040 climate target, the estimated investment needs for decarbonisation in the chemical sector average EUR 13 billion per year for the 20 year period of 2031-2050, summing to around EUR 260 billion by 2050.401 Additional challenges include limited availability and scalability of low -carbon technologies, insufficient infrastructure for clean energy supply, and the complexity of electrifying high-temperature chemical processes. 392 Blog Sicer (2024). From the record of 2022 to the decline of 2023: fluctuations in the Italian Ceramic Industry. 393 Cerame-Unie webpage. Continuing our Path towards Climate Neutrality - Ceramic Roadmap 2050. 394 JRC (2026). Mapping the Transition of the EU Ceramics Industry to Carbon Neutrality. 395 Statista. Revenue distribution of the chemical industry in the European Union from 2016 to 2022, by country. 396 Statista. Number of employees in the European Union's chemical industry from 2008 to 2023. 397 Statista. Revenue distribution of the chemical industry in the European Union from 2016 to 2022, by country. 398 Commission staff working document, impact assessment report, Securing our future Europe's 2040 climate target and path to climate neutrality by 2050 building a sustainable, just and prosperous society, SWD/2024/63 final. 399 JRC (2024). The role of carbon capture across hard-to-abate industries in the EU. 400 Cefic (2024). 2024 Facts and Figures of the European Chemical Industry. 401 European Commission (2024). Commission Staff Working Document: Impact Assessment Report (Part 3), accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Securing our future - Europe's 2040 climate target and path to climate neutrality by 2050, building a sustainable, just and prosperous society, COM(2024) 63 final, p. 167. 167 Cost evolution Table 13 below synthesizes the available CAPEX data for key chemical industry decarbonisation pathways, primarily derived from techno -economic modelling assumptions hydrogen cost projections. However, the estimated CAPEX for decarboni sation technologies in the EU chemical industry vary widely depending on the technology's maturity, the reference year used for the cost calculation, and whether the costs refer to process equipment (PCE), total installed cost (CAPEX), or costs per unit of capac ity ( EUR/Mtonne product or EUR/kW power). Table 13: CAPEX and PCE for the chemical industry compiled by the JRC, 2025 Technology Pathway Current Value (Reference Year) CAPEX/PCE in 2030 CAPEX/PCE in 2040 CAPEX/PCE in 2050 Electrolyser Systems (Installed CAPEX, per kWel)402,403 EUR 2 250/kW (Low-Temp, 2024 estimate, typical project). EUR 5 400/kW (High- Temp SOEC, 2024 estimate). EUR 600–EUR 800/kW (System Cost, projection). Conventional parts should be below EUR 1 000/kW (Alkaline) and EUR 1 500/kW (PEM). Expected continued decline due to mass manufacturing. Expected convergence around EUR 500/kW(ALK/P EM) to EUR 600/kW(SOE). Partial Electrified Steam Cracking (High Value Chemicals, PCE/Mtonnes capacity)404 EUR 265/Mtonnes (PCE, Million 2019 prices). EUR 265/Mtonnes (PCE, Million 2019 prices). EUR 265//Mtonnes (PCE, Million 2019 prices). EUR 265/Mtonnes (PCE, Million 2019 prices). Fully Electrified Steam Cracking (High Value Chemicals, PCE/Mtonnes capacity)405 Not yet commercially mature (TRL expected 2035). Not widely available or modelled at cost/capacity until post-2035. EUR 522/Mtonnes (PCE, Million 2019 prices). EUR 522/Mtonnes (PCE, Million 2019 prices). CO₂ Hydrogenation to Methanol (CCU route, PCE/Mtonnes capacity)406 EUR 289/Mtonnes (PCE, Million 2019 prices). EUR 287//Mtonnes (PCE, Million 2019 prices). EUR 282/Mtonnes (PCE, Million 2019 prices). EUR 277/Mtonnes (PCE, Million 2019 prices). 402 Hydrogen Europe (2024). Clean Hydrogen Production Pathways - Report 2024. 403 Fuel Cells and Hydrogen Joint Undertaking (2014). Development of water electrolysis in the European Union. 404 CEFIC webpage. The carbon managers - iC2050 model. 405 Ibid. 406 Ibid. 168 Technology Pathway Current Value (Reference Year) CAPEX/PCE in 2030 CAPEX/PCE in 2040 CAPEX/PCE in 2050 Chemical Recycling (Plastic Waste Pyrolysis, PCE/Mtonnes capacity)407 EUR 1 453/Mtonnes (PCE, Million 2019 prices). EUR 1 180/Mtonnes (PCE, Million 2019 prices). EUR 958/Mtonnes (PCE, Million 2019 prices). EUR 958/Mtonnes (PCE, Million 2019 prices). Carbon Capture (Amine Capture) (PCE/Mtonnes CO₂ capacity) 408, 409 EUR 292/Mtonnes CO₂ (PCE, Million 2019 prices). EUR 287/Mtonnes CO₂ (PCE, Million 2019 prices). (Targeted CAPEX reduction: 20%). Expected further reduction based on innovation targets. EUR 278/Mtonnes CO₂ (PCE, Million 2019 prices). EUR 278/Mtonnes CO₂ (PCE, Million 2019 prices). (Targeted CAPEX reduction: 50%). Total Investment Needs (TCI) for EU Transition To facilitate the transition to a low -carbon future, the primary chemicals sector globally requires over $6.5 trillion in additional cumulative investments by 2050, with the majority directed towards green ammonia (60%) and green methanol (27%). This split can be justified by the fact that ammonia is expected to be the world’s most produced chemical by 2030.410 In Europe, the chemical sector alone will need EUR 318 billion referenced to EUR 2019 in cumulative discounted capital investments (CAPEX) between 2019 and 2050, under a "Base Case" scenario. Investment urgency in Europe is critical, as 58% of the continent's primary production capacity needs reinvestment by 2035, risking fossil fuel lock -ins. Consequently, the majority of significant investments in abatement solutions are anticipated to occur between 2030 and 2040. 1.5. Plastics Key facts EU plastics production in 2024 was 54.6Mtonnes, with a turnover of €398 billion, 1,5 million direct jobs in over 50.000 companies and a trade deficit of 1,6Mt onnes, with 19.5Mt onnes exported and 21.1Mtonnes imported. Key challenges EU plastics production has experienced a sustained decline, falling from 62.3 Mtonnes in 2018 to 54.6 Mtonnes in 2024. This trajectory includes a 13% reduction in output over the past two years alone, without any increase in recycling capacity. Europe's share of global plastics 407 Ibid. 408 Ibid. 409 A.SPIRE aisbl (2021). SPIRE. Processes4Planet 2050 Roadmap. 410 JRC (2026). Mapping the transition of the EU ammonia industry to carbon neutrality. 169 production has contracted from 22% in 2006 to 12% in 2024, and the EU has transitioned to a net importer of both plastics resins and finished goods. These market dynamics affect and challenge the entire plastics value chain in the EU, including primary manufacturers, compounders, processors, and recyclers, thereby creating risks for established industrial supply networks within the EU. Cost of low-carbon plastics Low-carbon plastics carry a cost premium relative to fossil -based virgin alternatives. Mechanically recycled plastics, the lowest-cost low-carbon option, exhibit a premium of 10 - 15% when destined for specification-grade applications. 411 However, market prices for certain mechanically recycled plastics are currently lower than for virgin alternatives but the total cost to end-users tend to be at parity or exceeds virgin plastic prices due to additional requirements including certification, quality assurance protocols, and audit procedures. 412 413 Current price levels are to be considered with caution, as g lobal over-supply and market disturbances have introduced significant market volatility for both recycled and virgin materials , reducing also transparency of future cost trajectories. Mechanical recycling is projected to achieve cost parity with virgin fossil plastics by 2035, contingent upon increasing costs for CO2 emissions and fossil fuel inputs. The timeline for chemical recycling is longer; competitive positioning could be achieve d once cumulative global volume reaches 650Mtonnes of polyolefins recycled through pyrolysis 414, calling for policy incentives to accelerate the cost convergence with fossil counterpart. Bio-based plastics carry currently a premium of 20-50% but are already established on markets. The proposed measures To support decarbonisation of the EU plastics sector and ensure sustained production capacity in EU, “Made in EU” and low-carbon requirements could be proposed with the aim to create demand for low -carbon plastics that incentivise industrial investment and subsequent cost reductions. The plastics products considered in this analysis are within the construction sector, which is the second-largest plastics consumer in Europe using 20% of plastics production (10- 11Mtonnes annually). Plastic pipes, insulation materials, and window/door frames account for 60% of plastics consumption in the construction sector. These products can be effectively addressed with proportionate admi nistrative complexity and deliver a meaningful impact for the plastics supply chain. These are also long-lived applications, likely to result in permanent emission reductions. Public procurement and works represent approximately 40% of the addressed market (i.e. plastics in construction). Application of the 30% European low-carbon content requirement is projected to generate EU -made low -carbon plastics demand of approximately 0.8 Mtonnes annually415. Projects receiving public subsidies will create additional demand, but an estimation of volumes contain significant uncertainty regarding leverage ratios and supported project typologies post- 2030. A very approximative estimate of this additional demand, assuming focus on renovation 411 ING Economics Department, "How the plastics industry can go green and at what cost". Available at: think.ing.com/articles/how -the- plastics-industry-can-go-green-and-at-what-cost/ 412 bvse Market Report – Plastics 2025. Available at: plasticker.de/docs/preise/bvse_market_report_plastics_2025_05.pdf 413 European Environment Agency, "Competitiveness of secondary materials". Available at: eea.europa.eu/en/circularity/thematic - metrics/business/competitiveness-of-secondary-materials 414 Packaging Gateway, "Europe chemical recycling vs virgin plastics". Available at: packaging -gateway.com/news/europe-chemical- recycling-virgin-plastics/ 415 Based on volume in construction sector of 11Mt, a 60% share of the 3 product categories, a 40% share of public procurement, and the 30% target for the products covered. 170 and larger share of thermal insulation compared to piping and frames, is a range of 0.3-0.9 Mt of low -carbon plastics demand416. The design of p ublic support measures will impact this estimate significantly, driving investments to any combination of, for example, insulation, heating, ventilation, renewable installations, and holistic renovation of the building envelope. In total, this measure could generate additional demand of 1.1-1.7 Mt for EU-made low-carbon plastics. While this represents 11 -17% of current recycling volumes (10.6 Mt in 2024), it provides a meaningful incentive to maintain and expand the low -carbon plastics supply chain within th e EU. Such supply chain development is also expected to stimulate additional voluntary demand for low-carbon plastics from private sector actors. The projected additional demand requires investments of at least €1.5-2.6 billion into production capacity, based on established investment parameters for mechanically recycled plastics. The annual trade balance is expected to improve with €1.1 -1.7 billion, a ssuming substitution of virgin imports at €1,000 per tonne. Cost of measures The cost impact on the covered construction activity is limited, as plastics represent only 2-4% of total building costs 417, the proposed three products cover 60% of plastics and analysed targets apply to 30% of that plastic. In favourable market conditions the costs for low-carbon plastics could approach parity with conventional alternatives. However, in the initial years of implementation a 10 -20% premium is likely, set by mechanical recycling cost levels, which when applied to total construction costs implies an overall increase of 0.036-0.14% 418. Benefits of measures The societal benefits, including employment creation, emissions reductions, and reduced waste disposal costs, are expected to generate a positive economic case at the societal level well before cost parity is achieved at production plant level. The measures contribute to robust industrial supply chains and reduced dependencies on fossil inputs, the main intended impacts. But these are joined by several other benefits. The impact on direct employment is significant, with projected job creation of 29 000-45 000 positions, applying the sector average employment ratio per unit capacity. The substitution of fossil-based plastic will reduce annual CO2 emissions with 3-4,8Mt419. The increase in procurement costs is to a large share borne by the contracting or supporting public authorities. These authorities will in most cases benefit from several meaningful positive effects within their jurisdictions: 416 The estimate is strongly influenced by assumptions on the building renovation rate, and availability and form of public financing. The total renovation activities in scope are difficult to assess due to many and heterogeneous public support programs. Annual renovation needs are estimated at €300bn but has a €165bn financing gap, which indicate that significant renovation volume will exist beyond 2030 . If annual €20bn publicly supported renovation materialise post-2030, and is in scope of this regulation, with an average share of 15-19% of spending into the 3 plastic products at an average cost of €1500/t, the plastics demand is 2-2,5mt, whereof 30% is 0,6-0,76Mt. However, with the large uncertainty on the assumptions and support programs a significantly larger bracket of 0,3-0,9Mt is considered. https://energy.ec.europa.eu/topics/energy-efficiency/financing/financing-building-renovations_en https://energy.ec.europa.eu/topics/funding-and-financing/recovery-and-resilience-facility-clean-energy_en 417 The plastic sector turnover share, based on 10Mtonnes, of the construction sector turnover of €1500bn is a function of the mix of different products, resulting in plastic sector turnover of between €30bn and €60-70bn. The lower bracket is set by plastic pipes in civil engineering and profiles at €3000/ton, and the upper bracket by higher-spec insulation at €6000-7000/ton in product market value. This is 2-4% of the total construction sector turnover. [sources: https://www.ela.europa.eu/sites/default/files/2023 -09/ELA_construction-sector-report-2023.pdf ; https://www.teppfa.eu/about-us ; https://www.eurowindoor.eu ; https://publications.jrc.ec.europa.eu/repository/bitstream/JRC108692/kj1a28816enn.pdf ; https://www.acrplus.org/docs/2024104804_guide - en.pdf] 418 The bracket is a calculation of the values referenced in text, with 0.036-0.14% calculated as [0.02*0.6*0.3*0.1 - 0.04*0.6*0.3*0.2]. 419 Based on 1.1-1.7Mt /13*37, extrapolating from a national transition scenario: CE Delft, "Mandatory percentage of recycled or bio -based plastic" (Dutch Transition Agenda for Plastics). [cedelft.eu/wp- content/uploads/sites/2/2022/03/CE_Delft_200289_Mandatory_percentage_of_recycled_or_bio-based_plastic_Def.pdf] 171 • Economic development: Activities linked to the low -carbon plastics supply chain are generating economic value, employment, and tax revenues. • Climate action: The emission reductions contribute to voluntary or mandatory climate targets through more sustainable building stock. • Waste management: Enhanced recycling addresses plastic disposal challenges and reduces associated waste management costs. Administrative burden Manufacturer compliance costs wil l remain limited, primarily because Regulation (EU) 2024/3110 (Construction Products Regulation) already mandates the underlying product information infrastructure, including Digital Product Passports (DPP) and environmental declarations. Certification and verification requirements at manufacturer level will have minimal impact on product costs, with a likely range of 0,02-0,05% additional cost420. Additional administrative cost for the public authorities will be generated from costs for procurement staff training, tender specification updates, bid evaluation and monitoring for compliance, but these costs are very limited as this regulation add only one element into an existing set of requirements and does not necessitate introduction of new systems or major procedures. 1.6. Glass Key facts EUR 6.3 billion in glass sales in 2021 421, 178 500 direct jobs 422, 37 Mtonnes production in 2023423, main EU producers: Germany, France, Italy and Poland. 424 EU exports in 2023: 3.4 Mtonnes, imports: 4.9 Mtonnes. Major trading partners: China, UK and Switzerland.425 Key challenges High energy costs and intense international competition. As a result, production volumes decreased by 18% since 2022, with a steady decline in employment since 2019.426 The EU glass industry emits approximately 22 Mtonnes of CO₂ 427. In line with EU climate goals, it is shifting towards cleaner production through different decarbonisation pathways, including shifting to electric and hybrid furnaces, greater use of renewable energy, improved recycling systems, and innovation in glass design to support circularity.428 This industry faces significant barriers in implementing these measures, including high capital and operational expenditure and complex EU regulatory requirements.429 420 As example, annual certification and verification costs of €40,000 for a 100,000 ton facility would increase plastics production costs by €0.40 per tonne, equivalent to 0.04% for a polymer priced at €1,000/t. 421 JRC Analysis. 422 statistical-report-glass-alliance-europe.pdf. 423 Ibid. 424 Tendate. Global Glass Exports by Nation in 2023 -. 425 Glass Alliance Europe (2025). Statistical Report 2024 -2025.https://www.wko.at/bgld/industrie/glasindustrie/statistical- report-glass-alliance-europe.pdf 426 Ibid. 427 European Commission (2022). How LIFE is reducing emissions from glass production. 428 FEVE (2024). One destination, multiple pathways: How the European container glass industry is decarbonising glassmaking. 429 FEVE (2024). One destination, multiple pathways: How the European container glass industry is decarbonising glassmaking. 172 1.7. Pulp and paper Key facts EUR 100 billion sales430 in 2023, 180 000 direct jobs431, 47.6 Mtonnes production432 in 2023, roughly 22% of global paper production433, main EU producers: Sweden, Finland, Portugal and Germany.434 EU exports in 2023: 23.2 Mtonnes, imports 10.7 Mtonnes. Major trading partners: other European countries, Asia and Latin America.435 Key challenges High energy costs and geopolitical instability potentially affecting trade and supply chains.436 Although paper and board output declined in 2022 -23 due to weakened demand, production increased by 5.2% in 2024.437 In 2023, the EU pulp and paper industry emitted approximately 33 Mtonnes of CO₂.438 In line with EU climate goals, the sector is shifting toward cleaner production through different decarbonisation pathways, including deployment of heat pumps, electrification, energy efficiency improvements 439, carbon capture and storage (CCS), and a switch to renewable energy.440 However, significant implementation challenges exist. Key barriers include capital intensive infrastructure and high upfront costs for new technologies, as well as legal uncertainty and complexity.441 So far, the sector reduced its CO₂ emissions by 46% since 2005.442 Cost evolution Table 14 below includes the Capital Expenditure cost estimates for the key decarboni sation technologies applicable to the EU pulp and paper industry. Since the sector prioritizes process heat, energy efficiency, and Carbon Capture and Storage (CCS), most cost estimates are given as unit costs for essential equipment (e.g., boilers or heat pumps ) or as inputs for determining the total capture cost (Total Capital Requirements (TCR) or Nth-of-a-Kind (NOAK) estimates. Table 14: CAPEX for the pulp and paper industry compiled by the JRC, 2025 Technology Pathway Current Value/Reference CAPEX CAPEX in 2030 CAPEX in 2040 CAPEX in 2050 Biomass Boiler (New Installation)443 850 EUR/kWth (Reference cost for boiler). 850 EUR/kWth (Costs for mature, deployed technology typically considered stable). 850 EUR/kWth. 850 EUR/kWth. 430 Cepi (2023). Key Statistics 2023 - European pulp & paper industry, 431 Ibid. 432 Ibid. 433 European Commission webpage. Pulp and paper industry. 434 Cepi (2024). Key statistics 2023 - European pulp & paper industry. 435 Cepi (2024). Press release: In a very difficult context, pulp and paper industry has shown resilience in 2023. 436 EMGE (2025). EMGE Paper and Pulp Industry Outlook: 2026. 437 Cepi (2024). Press release: In a very difficult context, pulp and paper industry has shown resilience in 2023. 438 Reinvent webpage. Paper. 439 Cepi (2023). Press release: Pulp and paper manufacturers are innovating their way out of CO2 emissions. 440 Lipiäinen, S. et al. (2023). Decarbonization Prospects for the European Pulp and Paper Industry: Different Development Pathways and Needed Actions, Energies, 16(2), 746. 441 Engie Impact (2024). Overcoming Decarbonization Hurdles in the Pulp and Paper Industry. 442 Cepi (2025). Press Release: Pulp and Paper Industry Showcases Commitment to Phase out Fossil Energies, at European Parliament Event. 443 ECN, TNO and PBL Netherlands Environmental Assessment Agency (2019). Decarbonisation options for the Dutch paper and board industry. 173 Technology Pathway Current Value/Reference CAPEX CAPEX in 2030 CAPEX in 2040 CAPEX in 2050 High- Temperature Heat Pumps (HTHP)444, 445 EUR 300–EUR 1 000/kWth (Estimates for systems like reverse-Rankine cycle, typical project range). Maximum acceptable specific CAPEX threshold for economic viability in Sweden is up to EUR 1 600/kW. Broad deployment requires significant cost reductions. Expected stability after deployment and cost optimisation. Expected stability after full technological maturity. Electric Boiler (Direct Electrification) 446 Requires significant investments in electricity grid connections, which acts as a barrier. Cost remains largely dependent on required grid upgrades. Cost remains largely dependent on required grid upgrades. Cost remains largely dependent on required grid upgrades. Carbon Capture (PCC - Amine/Carbonate) 447, 448 CAPEX calculated using Nth-of-a- Kind (NOAK) factors, meaning current costs are likely higher than estimates. NOAK costs are assumed, reflecting a high level of maturity where technology is expected to be deployed. Expected CAPEX stability, as major cost reductions (learning curve of 1%) are primarily assumed only until TRL 8 is reached, typically before 2030. Expected CAPEX stability. Total Investment Needs (TCI) for EU Transition To achieve its GHG emission reduction targets by 2030 the European pulp and paper industry estimates a TCI of EUR 24 billion is needed throughout the 2020s. Of this amount, EUR 6 billion is allocated to immediate emission reduction measures, while EUR 18 billion is earmarked for further technological advancements and infrastructure upgrades. A significant portion of these investments will target advanced CO 2 capture technologies. However, these estimates are considered optimistic compared to near-term implementation, because the current estimates assume a more mature technology base than likely to be available in the short term. 444 Ibid. 445 Ciambellotti et al. (2024). High-Temperature Heat Pumps for Electrification and Cost -Effective Decarbonization in the Tissue Paper Industry. 446 ECN, TNO and PBL Netherlands Environmental Assessment Agency (2019). Decarbonisation options for the Dutch paper and board industry. 447 ACCSESS (2024). Providing access to cost-efficient, replicable, safe and flexible CCUS. D5.3 Advanced capture configurations for selected pulp and paper plants incl. technoeconomic analysis. 448 ECRA (2022). ECRA Technology Papers. 174 1.8. Refining Key facts EUR 487 billion sales in 2022 449 130 000 direct jobs, 602.8 Mtonnes production of refined petroleum products in 2022, Germany, Italy, the Netherlands, and Spain. 450 EU exports in 2021: EUR 186 billion, imports: EUR 150 billion. Major trading partners: USA, Norway, Middle East and Russia.451 Key challenges Dependency on crude oil imports, exposure to global price volatility, and increasing regulatory pressure to decarbonise. Production volumes have decreased by 8% between 2022 and 2023.452 EU refineries emit approximately between 150 and 200 Mtonnes of CO₂ per year. 453 In line with EU climate goals, refineries are transitioning toward cleaner production and de - fossilisation of their products through several decarbonisation pathways, including fuel switching to low -carbon hydrogen, electrification of heat processes, depl oyment of carbon capture, utilisation and storage (CCUS), and increased production of advanced biofuels and synthetic fuels. The estimated investment requirement is EUR 650 billion by 2050. Main decarbonisation challenges include the limited availability of low-carbon technologies at scale, underdeveloped infrastructure for clean hydrogen and CO₂ transport and storage, and the complexity of adapting current assets to new energy systems. 1.9. Steel Key facts Third-largest global steel producer (7-8% of global production) after China and India 454, EUR 177 billion of Gross Value Added in 2024, 298 000 direct and 1 550 000 indirect jobs, 130 Mtonnes production, main EU producers: Germany, Italy, Spain and France. 455 EU exports in 2024: 16.7 Mt onnes, and imports: 27.4 Mtonnes of finished steel products Türkiye, South Korea, India, Vietnam, China, Taiwan) for imports, and USA, Türkiye and Switzerland for exports.456 Key challenges High energy costs, unfair competition, increased import pressure resulting from global overcapacity and low demand for green steel. 457 As a result, production volumes have decreased by 34 Mtonnes since 2018, and nearly 100 000 jobs have been lost over the past 15 years.458 Capacity utilisation has dropped to an unsustainable level of around 65% 459 compared to the minimum 85% to remain competitive under market conditions. While Europe was a net exporter of steel in 2012, by 2022 imports had surged to EUR 20 billion - an increase of 640%.460 449 ERT (2024). Europe’s energy transition: ERT releases analysis on the EU’s competitiveness for energy-intensive industries and state of energy infrastructure. 450 T&E (2023). The ‘biofuels first, e-fuels later’strategy of European refining sector. What future for European refining? 451 Insight EU Monitoring (2024). Eurostat reports drop in imports of energy products to the EU. 452 Eurostat webpage. EU imports of energy products. 453 Sector Analyses (2024). Chemical Industry. 454 Eurofer (2025). European Steel in Figures 2025. 455 Ibid. 456 Ibid. 457 Deloitte (2023). Steel – Pathways to decarbonization. 458 Steel Times International (2024). European steel industry facing irreversible decline, says Eggert. ERT (2024). Competitiveness of European Energy Intensive Industries. 459Eurofer (2024). European Steel in Figures. 460 UN Comtrade data; ERT (2024). Competitiveness of European Energy-Intensive Industries. 175 In 2023, the EU steel industry emitted approximately 49.15 Mtonnes of CO₂.461 In line with EU climate goals, the steel industry is shifting toward cleaner production through different decarbonisation pathways, including electric furnaces, such as direct reduced iron (DRI) and electric arc furnaces (EAF), as well as the implementation of carbon capture and storage (CCS). 462, 463, 464 These technologies aim to reduce greenhouse gas emissions across the production processes, as 95% of emissions come from the steelmaking, finishing and distribution. The main barriers to decarbonisation include limited availability of green infrastructure , the need for capital investment until 2030 estimated at over EUR 31 billion and EUR 54 billion for operating expenditure (OPEX) ,465 lack of market demand for premium -priced green steel, varying maturity levels of decarbonisation technologies, and regulatory uncertainty, particularly regarding the ongoing CBAM/ETS implementation standards.466 Cost evolution Table 15 below and its subsequent data presents CAPEX as (1) the specific CAPEX per tonne of annual crude steel capacity, adjusted for inflation to the base year (EUR 2022 or USD/EUR 2023), and (2) the projected specific capital costs associated with future technology maturity by 2030, 2040 and 2050. Certain decarbonisation technologies within the steel industry like DRI in combination with EAF have been around for decades, however the utilisation of hydrogen has yet to be seen on an industrial scale. In comparison, certain CCS and electrolysis technology pathways are currently projected to not reach necessary industrial scale before the beginning of the 2030s, which is reflected in the high prognosed CAPEX. Table 15: CAPEX estimates for the steel industry compiled by the JRC, 2025 Technology Pathway CAPEX (Current Value/Reference) CAPEX (2030) CAPEX (2040) CAPEX (2050) H-DRI-EAF (Integrated DRP + EAF) (Excluding Electrolyser)467, 468 EUR 592/t (Literature Median, 2022 prices) EUR 751/t (Announced Projects Median, 2022 prices) $75 – $85/t (Crude steel capacity, specific capital costs for facilities) N/A N/A H-DRI-EAF (Including Integrated Electrolyser)469, 470 EUR 886/t (Literature Median, 2022 prices) EUR 1 600/t (Announced Projects Median, 2023 prices) Up to EUR 1 000/t (Upper bound scenario estimate, including electrolysis unit) Expected to decrease due to anticipated electrolyser cost reduction Expected to decrease due to anticipated electrolyser cost reduction BF-BOF + CCS (73% Capture)471 TRL 3–4 (Pilot stage) $34 – $66/t (Crude steel capacity, specific capital costs) (Expected Readiness: 2030–2035) N/A N/A 461 World Steel (2025). Sustainability Indicators Report 2025. 462 JRC144070 (2026) Mapping the Transition of the EU Steel Industry to Carbon Neutrality. 463 JRC (2024). The role of carbon capture across hard-to-abate industries in the EU. 464 Deloitte (2023). Steel – Pathways to decarbonization. 465 Eurofer (2025). Low-CO2 emissions projects in the EU steel industry. 466 Deloitte (2023). Steel – Pathways to decarbonization. 467 Huttel A, Lehner J. (2024). Revisiting investment costs for green steel: Capital expenditures, firm level impacts, and policy implications. 468 Agora Industry, Wuppertal Institute and Lund University (2024): Low-carbon technologies for the global steel transformation. A guide to the most effective ways to cut emissions in steelmaking 469 Huttel A, Lehner J. (2024). Revisiting investment costs for green steel: Capital expenditures, firm level impacts, and policy implications. 470 Agora Industry, Wuppertal Institute and Lund University (2024): Low-carbon technologies for the global steel transformation. A guide to the most effective ways to cut emissions in steelmaking. 471 Ibid. 176 Technology Pathway CAPEX (Current Value/Reference) CAPEX (2030) CAPEX (2040) CAPEX (2050) HIsarna + BOF + CCS (93% Capture)472 TRL 5–6 (Pilot plant status, development unclear) $41 – $85/t (Crude steel capacity, specific capital costs) (Expected Readiness: 2030–2035) N/A N/A NG-DRI-EAF + CCS473, 474 N/A (TRL 8–9) $77 – $90/t (Crude steel capacity, specific capital costs for facilities) N/A N/A Near-Zero Emissions Scrap EAF475 TRL 9 (Ready) $22/t (Crude steel capacity, specific capital costs) N/A N/A Molten Oxide Electrolysis (MOE) 476 TRL 3–4 (Pilot Plant) Not applicable (Not available at necessary scale before 2030) Expected Readiness: 2035– 2040 $60 – $122/t (Crude steel capacity, specific capital costs) Alkaline Electrolysis (AEL-EAF) 477 TRL 4 (Moving to TRL 6 with support) TRL 7 aimed by 2030 (Medium scale pilot plant) Commercial readiness (TRL 9) expected by 2040 $75 – $152/t (Crude steel capacity, specific capital costs) 472 Ibid. 473 Ibid. 474 IEAGHG (2024). Clean Steel: An Environmental and Technoeconomic Outlook of a Disruptive Technology March 2024. 475 Agora Industry, Wuppertal Institute and Lund University (2024): Low-carbon technologies for the global steel transformation. A guide to the most effective ways to cut emissions in steelmaking 476 Ibid. 477 Ibid. Figure 14: Levelized cost of net-zero and unabated materials in the EU, including the carbon price, 2024 Levelized Cost of Net-Zero Materials (BNEF 2024) 177 Figure 15: Evolution of green and grey steel production costs in Europe under different CO2 price scenarios 478 Total Investment Needs (TCI) for EU Transition Based on the analysis above as well as other projections, the total investment (TCI) for transitioning the European steel industry would require enormous scale. In order to convert 30% of listed European steelmakers' production capacity to the (H-)DRI-EAF route by 2030 it would require between EUR 12.1 billion and EUR 20.2 billion TCI, depending on whether electrolysis capacity is included. 479 By 2050, the projected cumulative TCI required to commercialise low-carbon steel technologies and replace existing plants is estimated to be between EUR 70 billion and EUR 100 billion.480 2. Automotive industry Key facts The automotive industry has traditionally been a cornerstone of the European economy. It serves as a major employer (accounting for 6.1% of total EU employment, directly impacting around 1.7 million people), and it contributes significantly to value added (accounting for 8% of the total manufacturing value added within the EU) and is a net exporter of vehicles and car parts (with a EUR 117 billion surp lus in extra -EU trade). 481 Moreover, the EU automotive industry is a global leader in R&I investment, making up 36.5% of the EU's corporate investment.482 The EU automotive supply industry has combined sales of EUR 250 billion with a manufacturing presence in most Member States, and more than EUR 50 billion exports. Over the past years, the European automotive industry has been investing in the development of cleaner vehicles and innovative automotive components that are key to improve the environmental performance of such vehicles (through, e.g. increased range, bett er energy efficiency, or higher usage of sustainable material and processes). 483 These components have 478 Mission Possible Partnership (MPP), E3G and the Industrial Transition Accelerator (ITA) (2025). Building the EU’s Clean Industrial Future: Unlocking Investment through Lead Markets. 479 Huttel A, Lehner J., Revisiting investment costs for green steel: Capital expenditures, firm level impacts, and policy implic ations. https://www.diw.de/de/diw_01.c.901042.de/publikationen/diskussionspapiere/2024_2082/revisiting_investment_costs_for_green_steel__ca pital_expenditures__firm_level_impacts__and_policy_implications.html 480 Somers, J. (JRC) (2022). Technologies to decarbonise the EU steel industry. 481 Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B), p. 140. 482 European Commission, Joint Research Centre (2024) EU Industrial R&D Investment scoreboard , Publications Office of the Euro pean Union 483 Such key components include, among others, controllers, transformers, electric motors, charge ports and chargers, AC/DC conve rters, power inverters, alternators, control units that are essential for the operations of the powertrain, regenerative braking sy stems, thermal 178 the potential to contribute to decarbonisation by enabling optimi sed routing and optimi sed traffic flow, reducing congestion and lowering emissions, improving energy efficiency through optimised speed, acceleration, and braking, facilitating the adoption of electric and hybrid vehicles through optimised charging strategies and energy management. However, the transition to zero -emission vehicles and the increasing role of software and electronics also change value chain patterns and provide opportunities for new players from third countries calling into question historical industry patterns, including the appeal of supply chain regionalisation484. As a consequence, traditional European leadership in the global automotive market is being diminished, as shown in Figure 16. The EU's share of the global automotive market has declined from 24% in 2010-14 to 22% in 2022. Meanwhile, China has increased its influence and surpassed Europe to become the world's largest car producer and a key supplier of critical components for electric vehicles (EVs), such as batteries. China's market share grew from 20% in the 2010-14 period to 26% in 2022. The United States has also seen a slight increase in its market share. Conversely, other countries, notably Japan (included in the Rest of the World category), have experienced losses, with Japan's market share dropping from 12% to 7% during the same timeframe. Figure 16: Global automotive market in value JRC calculations based on Eurostat's FIGARO data485 The JRC analysed the EU value content in the EU automotive production. The left panel of figure 17 shows the evolution of the origin of the inputs used by the industry (excluding batteries) between 2010 and 2022, broken down by country of origin. While the European automotive industry still primarily relies on EU -manufactured inputs, this proportion has decreased, reducing the EU value content of the automotive sector from 89% in 2010 to 85% in 2022. This trend indicates a growing reliance on production inputs from non -EU countries, particularly from China, where sourcing has almost doubled (increased by 1.9 times) during that period. When zooming in on the EU production of motor vehicles only, it appears that 85% of the components of an EU -made internal combustion engine (ICE) car comes from the EU, while it is only 70% for an EU -made EV (right hand side Figure 17).486 We can note in particular the increased dependency on China (4.2 times) in EVs production compared to conventional ICE vehicles. management systems, transmission systems, fuel -cells, hydrogen storing and fuelling systems; but also connected and automated driving (CAD) systems (software and hardware) such as cameras, lidars, radars, ultrasonic sensors, vehicle -to-everything (V2X) com munication systems, navigation and mapping systems, human -machine interface (HMI) systems, vehicle -to-grid (V2G) systems, advanced driver - assistance systems (ADAS). 484 China’s subsidies, price and technical advantage, and overcapacity in parts of the industry keep Chinese vehicles and compone nts cost- competitive despite shipping costs, localization advantages, and trade barriers. China and the Future of Global Supply Chains, Rhodium Group, 4 February 2025 485 Data refers to Industry C29 (NACE Rev. 2.1) Manufacture of motor vehicles, trailers, and semitrailers. 486 This finding is consistent with other studies that estimate the EU's value content at approximately 85 –90% for ICE vehicles and 70–75% for EVs. Source: McKinsey (2024). Europe's economic potential in the shift to electric vehicles. 179 Figure 17: Origin of the EU car components used in the manufacturing industry: over time (left) and by type of vehicle (right)-JRC estimates based on Eurostat's FIGARO data487 EVs have a greater dependence on third countries for any segment or component (inputs) compared to ICE cars (See: Figure 18). Figure 18: Foreign input reliance by sector, JRC estimates based on Eurostat's FIGARO data488 The increased dependence on non -EU manufactured inputs in the production of EVs may originate from two reasons: • A technological shift as the production of EVs may depend, further than ICE vehicles, on industries or technologies where the EU has a comparative disadvantage; and • A value chain shift as the production of EVs may have come with a shift of EU manufacturing value chain in favour of non -EU inputs. The JRC has shown through a counterfactual analysis of EU -manufactured EVs (where the EU content of the EV inputs would be th e same as that of ICE inputs, except for batteries and electric components) that the primary reason for the reduction of EU content in the 487 ICE includes mild hybrids. EV includes battery electric and plug-in hybrid electric vehicles. 488 Sectors were aggregated following the Eurostat technological intensity classification for the manufacturing segments and the Eurostat knowledge-intensive services (KIS) for the services segments. Only direct effects of the value chain are considered. 180 manufacturing of EVs inside the EU is due to a shift in the value chain in favour of vehicle components coming from outside of the EU. These findings highlight an outsourcing trend that affects the entire EV value chain, which goes far beyond battery and electric component production. Over the past years, import of automotive parts from China increased by around EUR 4 billion, affecting all vehicle component sub-sectors, but some are much more impacted than others (it is in these sub -sectors that most of the restructuring underway since 2024 is concentrated): +300% for gearboxes, +270% for bumpers, +195% for tyres and transmissions and +60% for shock absorbers and airbags . Consequently, the trade balance for automotive components is deteriorating very rapidly: from a surplus of EUR 4.6 billion in 2019 to a deficit of around EUR 4.9 billion in 2025. All sub-sectors are now in deficit. At the same time, weaker than expected demand for EVs has created overcapacities for EV components and led to a sharp reduction in investment, hampering the long -term industrial capacities, and Chinese export restrictions on rare earths have created huge supply chain risks, while there is an increasing trend of non-EU manufacturers opening assembly plants within the EU, where they produce vehicles with an initial EU content of less than 30%. Key challenges EU vehicle components manufacturers face increasing cost competitiveness challenges compared to low -cost locations in the European neighbourhood or in Asia and stagnating or decreasing sales volumes in the EU. In addition, due to the pressure to reduce pri ces, vehicle manufacturers increasingly import cheaper components from overseas suppliers. This increasing reliance on foreign components points towards significant risks to EU technology sovereignty and the urgent need for targeted policy intervention to safeguard the industry alongside decarbonisation efforts. Vehicle components: the example of tyres Tyres are a key automotive component, not only for vehicle control, safety and comfort, but also for (environmental) performance and efficiency. EU tyre production is recognised globally for its high standards of safety, performance, and technological adva ncements. As shown on Figure 19 (left hand side), which displays trade data as a percentage of production sold (in value), the EU's share of tyre imports from outside the EU is larger than its exports, and the gap between these two figures has been increasing over time. Imports from outside the EU rose significantly from EUR 881 million in 2010 to EUR 1.360 million in 2024, while the dependence on Chinese tyres notably increased from 29% in 2010 to 58% in 2024 (Figure 19, right hand side). Figure 19: Tyres trade relative to production sold (left) and extra-EU imports composition in 2010 and 2024 (right), JRC estimates based on PRODCOM489 and (left) and COMEXT490 (right) data 489 Data refers to Industry 22.11.11.00 (NACE Rev. 2.1) New pneumatic rubber tyres for motor cars. 490 Data refers to Industry 40.11.10 (HS nomenclature) New pneumatic tyres, of rubber of a kind used on motor cars. 181 The rise in imports compared to the production sold can be attributed to price differences between domestic production and international trade. The increasing production price differential indicates that the cost of production in the EU has risen more quickly than the cost of imports (Figure 20). This trend has resulted in the EU losing its competitive edge. Similarly, while the cost of exports has increased at a faster rate than the cost of imports, the price difference is even more significant. These data suggest that tyres produced in the EU are more expensive than those from foreign manufacturers (in the range of 20-50% in the last decade). Figure 20: Tyres EU price differentials relative to imports, JRC estimates based on PRODCOM data 3. Clean energy technologies According to the IEA, the global market for key clean energy technologies like solar PV, batteries, as well as wind and electrolyser, are projected to triple in the next decade. 491 While these technology all face similar competitiveness challenges, this assessment is focuses on solar PV and batteries because the combination of high global overcapacities, being commoditised products, and high dependencies of the EU’s consumption on one single sources of supply is unique to these technologies. This level of concentration poses significant risks to the secure supply of PV modules and has widened the price gap between EU and Chinese producers. 492 3.1. Batteries Key facts In 2024, the EU imported approximately EUR 28 billion worth of batteries, with 79% coming from China and 5% from South Korea as the second biggest battery exporter.493 The value of European battery production was EUR 24 billion.494 Batteries accounted for 91% of new clean tech investment in Europe in 2024 495. The EU currently has 34 lithium-ion battery cell manufacturing projects across operational, under construction, and announced .496 However, only 27% of the announced manufacturing capacity is considered low risk. Although the EU reached 188 GWh of installed battery cell capacity in 2024, and has over 750 GWh in the pipeline, 238 GWh worth of planned projects have been cancelled or delayed. The battery cell sector supports around 128 000 jobs, of which 66% are at medium or high risk. 497 Upstream the value chain, battery key components face the same problems. 491 IEA (2024). Energy Technology Perspectives 2024. 492 European Commission (2025). Communication from the Commission providing updated information to determine the shares of the European Union supply of final products and their main specific components originating in different third countries under Reg ulation (EU) 2024/1735 (C/2025/3236). Official Journal of the European Union C, 2025/C 3236. https://eur-lex.europa.eu/eli/C/2025/3236/oj/eng 493 Bruegel. European Clean Tech Tracker. 494 Ericher, M. et al. (2024), Les Thémas de la DGE: Deployment of electromobility: how to develop the European battery supply? 495 BloombergNEF (2025). Energy Transition Investment Trends in Europe 2025. 496 T&E (2024). An Industrial Blueprint for Batteries in Europe. 497 Idem. 182 When comparing EV and battery subsidies across the three major battery manufacturing regions (China, Europe, and the US) clear strategic differences emerge. Between 2018 and 2024, China led with an average of USD 22.4 billion annually in subsidies, followed by Europe with USD 13.8 billion, and the US with USD 6.1 billion498. However, while China and the US increasingly directed their support toward manufacturing by allocating over 50% of their subsidies to industrial development, the EU and its Member States have focused on demand- side measures, with 89% of its subsidies going to EV purchase incentives. In 2024, the EU spent USD 18 billion on EV purchases but only USD 2.5 billion on manufacturing, both for EVs and batteries. In contrast, China invested USD 17.5 bi llion in manufacturing, including USD 7.3 billion specifically for batteries, and the US allocated USD 8.6 billion to battery production alone. These targeted manufacturing subsidies have enabled Chinese and American manufacturers to attract bigger investments than the EU, scale up production, reduce costs, and strengthen their positions in global supply chains. Meanwhile, Europe is spending significant amounts on EV and battery subsidies, but with less strategic impact on its own manufacturing base. The EU’s focus on purchase subsidies inadvertently benefits non -EU manufacturers, who can offer lower prices and ca pture EU - funded demand, while European manufacturers struggle to compete on costs and scale. Without Made in EU requirements, public funds risk flowing abroad, undermining the EU’s industrial competitiveness and long-term strategic autonomy. Key challenges Europe’s battery sector faces deep structural challenges. Technological development within the EU’s battery ecosystem is not progressing rapidly enough to secure strategic autonomy, increasing the risk of long -term dependency on imports. Despite efforts to scale up domestic production, EU manufacturers struggle to compete with aggressive pricing from third-country producers, particularly from China, which benefit from bigger subsidies, significant manufacturing overcapacities, lower energy and material costs, and vertically integrated supply chains. China currently dominates global battery manufacturing, accounting for 85% of installed production capacity (4 534 GWh)499, despite having an end use demand of only 850 GWh.500 3.2. Solar Key facts Between 2020 and 2022, rapid capacity expansion in the solar PV sector created severe global oversupply, with crystalline silicon module manufacturing capacity reaching over 1.4 TW in 2024, twice the forecast demand for 2025, driving module prices down by 50% in 2023. China controls over 80% of global PV manufacturing across all segments, with the top nine producers, seven of them Chinese supplying more than 60% of modules worldwide. Since 2012, US trade policy has excluded solar products made in China, pro mpting Chinese manufacturers to establish module and cell factories in Southeast Asia to serve the US market. However, following 2025 investigations, the US imposed duties of 70% to 700% on imports from four Southeast Asian countries. In response, Chinese firms are considering manufacturing bases in the Middle East and North Africa, though direct US investments remain limited. This dominance, combined with intense price competition, has triggered financial losses, mass layoffs, and factory closures globally, with 2025-2026 expected to remain difficult. The EU is particularly exposed, importing 94% of its PV modules and cells, 79% of wafers, and 50% of 498 MIT CEEPR (2025). Global Clean Investment Monitor: Government Support for Electric Vehicles and Batteries. 499 BloombergNEF. 500 Volta Foundation (2025). 2024 Battery Report. 183 inverters from China, and faces higher energy, labour, and capital costs, smaller -scale production, and limited supply chain integration. Although the EU projects by 2030 to expand PV ingots from almost nothing today to 25 GW, PV wafer capacity from almost nothing today to 34 GW, PV cells from 2 GW to over 30 GW, and PV modules from 12 GW to more than 40 GW, achieving supply security will re quire accelerating this build -out, securing vertical integration, and developing large -scale factories to withstand co ntinued Chinese price pressure.. The solar energy has experienced remarkable growth in recent years, driven by technological advancements and decreasing costs, positioning solar energy as a pivotal component in the global shift towards renewable energy sources. 501 Thanks to technological improvements and falling costs, solar energy is becoming increasingly competitive, making it one of the most appealing options in the global energy landscape.502 Key challenges Chinese manufacturers have sharply decreased the prices to reach unprecedented low levels of EUR 0.06/W in Europe by the end of 2024.503 Given this is reported to be below manufacturing costs, as a result, t he profit margins of the largest Chinese solar manufacturers have sharply declined, as firms compete on price to defend their market share. Willingness of consumers to carry the price difference between EU and Chinese production is lacking. Although the planned expansion of PV manufacturing capacity in the EU is encouraging 504, it must accelerate and secure full vertical integration as well as creation of large-scale factories to withstand continued Chinese price dumping. An expansion of the supply chain will result in decreased price levels of European producers, so that a price level in the long-term can be reached which consumers would be willing to pay. 501 European Commission (2025). Report from the Commission to the European Parliament and the Council: Progress on competitiveness of clean energy technologies. 26.2.2025 COM(2025) 74 final. 502 JRC. Clean energy technology observatory. 503 PV Magazine (2024). Solar modules now selling for less than €0.06/W in Europe. 504 PV wafer capacity planned to expand from less than 1 GW today to around 8 GW in 2030, PV ingots capacity from less than 1 GW to around 6 GW, PV cells capacity from around 2 GW to more than 20 GW, PV module capacity from around 8 GW to more than 30 GW. 184 Annex 8: Interplay with other legislation and policies and baseline scenario 1. Interplay with existing initiatives The two tables below summarise the main instruments with which this initiative interplays. The detailed interactions are subsequently presented. Table 16: Interplay with existing EU instruments Climate Climate Law, EU Emission Trading System, Industrial Emissions Directive, Carbon Border Adjustment Mechanism. Energy Electricity and gas Market Regulations and Directives, the Renewable Energy Directive, the Energy Efficiency Directive, the Energy Performance of Buildings Directive, the Gas and Hydrogen Decarbonisation Package , Electricity Market Design, Action Plan for Affordable Energy. Permitting Strategic Environmental Assessment Directive, Environmental Impact Assessment Directive, Industrial and Livestock Rearing Emissions Directive, Habitats and Birds Directives, Water Framework Directive, Net Zero Industry Act, Critical Raw Materials Act, Grids Package Product Construction Product Regulation (CPR), Energy Performance of Buildings Directive , Batteries Regulation, Ecodesign for Sustainable Products Regulation. Competition Clean Industrial Deal State Aid Framework, Climate, Energy and Environmental Aid Guidelines, Important Projects of Common European Interest (IPCEI) , Competition rules and enforcement. Transport Alternative Fuels Infrastructure Regulation, ReFuelEU Aviation, FuelEU Maritime , CO 2 Standards for Cars and Light Commercial Vehicles Regulation, Cooperate Clean Fleet Regulation, Battery Booster. Trade Trade Defence Instruments, Steel and Metals Action Plan, Foreign Direct Investment Regulation. Funding Current multiannual financial framework, Industrial Decarbonisation Bank, Horizon Europe, Research Fund for Coal and Steel, Innovation Fund, Recovery and Resilience Facility, post-2027 MFF, European Competitiveness Fund. Table 17: Interplay with ongoing and announced initiatives Ongoing Proposal for a Regulation on the End -of-Life Vehicles Proposal for Ecodesign and Energy Labelling rules for PV modules New harmonised standard on cement GHG emissions To be adopted in 2026 Circular Economy Act Electrification Action Plan Strategic Roadmap for digitalisation and AI in the energy sector Automotive Action Plan Strategy on Heating and Cooling Revision of the Public Procurement Framework Cloud and AI Development Act Non-exhaustive overview of existing instruments This initiative is one of the key deliverables of the Clean Industrial Deal, aiming to complement and build upon existing legislation and policy framework relevant to EIIs: 1. The European Climate Law505 enshrines in legislation the EU’s commitment to reach climate neutrality by 2050 and the intermediate target of at least 55% net GHG emissions reduction by 2030, compared to 1990 levels. In July 2025, the Commission 505 Regulation (EU) 2021/1119 establishing the framework for achieving climate neutrality and amending Regulations (EC) No 401/2009 and (EU) 2018/1999 (‘European Climate Law’). 185 proposed an amendment to the European Climate Law (ECL) introducing a 2040 EU climate target of 90% reduction in GHG emissions, compared to 1990 levels. In December 2025, the Council presidency and the European Parliament’s representatives reached a provisional agreement on the amendment. ➔ IAA aims to contribute to achieving the Climate Law’s commitment by supporting decarbonisation investment in industry. 2. The EU E mission Trading System506 (EU ETS) is the main climate policy instrument to reduce GHG emissions in the power sector and energy intensive industries operating in Europe. While the EU ETS remains an important cornerstone for reducing industrial emissions cost -effectively, it is not sufficient on its own to create a market for low-carbon products and address the broader structural challenges faced by EIIs, for instance due to these sectors’ exposure to international competition and limited capacity to pass carbon costs through to the consumer . ➔ IAA’s measures, notably on lead markets, complement the price signal provided by the EU ETS. The EU ETS MRV system is used to verify data under the label on steel. 3. In 2023, the Carbon Border Adjustment Mechanism Regulation507 (CBAM) entered into force in its transitional phase with the aim of subjecting the import of certain carbon-intensive products from third countries to a financial adjustment equivalent to the carbon price paid under the EU ETS for the production of these products. The CBAM covers the following energy -intensive sectors: iron and steel, cement, fertilisers, alumin ium, and hydrogen. It will start having financial implications in its definitive phase as of 2026. The CBAM financial adjustment for imports will be phased in gradually until 2034, in parallel to the gradual phasing out of ETS free allowances for the sectors covered. ➔ The CBAM MRV approach is used to allow importers to comply with the label on steel. 4. The Industrial and Livestock Rearing Emissions Directive 508 (IED) lays down rules on integrated prevention and control of pollution arising from industrial activities and designed to prevent or, where that is not practicable, to continuously reduce emissions into air, water and land, to prevent the generation of waste, improve resource efficiency, and to promote the circular economy and decarbonisation, in order to achieve a high level of protection of human health and the environment taken as a whole. It applies to the industrial activities giving rise to pollution referred to in its Annexes I and Ia, notably to EII. Approximately 37 000 industrial installations are subject to permitting requirements under the Directive. In a 2024 revision to the Directive a new Innovation Centre for Industrial Transformation and Emissions (INCITE) will gather information on innovative pollution contro l solutions and transformative technologies, helping to speed up their development . Additionally, new flexibilities in permitting will allow frontrunners to test and deploy emerging techniques and will facilitate deep industrial transformation, including EII. The IED requires Member States to make the operation of an installation subject to obtaining a permit containing conditions set in accordance with the principles and provisions of the IED. The permit con ditions should take into account the environmental performance of an installation, including emissions to air, water and soil. In that regard, the permit should include emission limit values. ➔ IAA suggests INCITE to 506 Directive 2003/87/EC establishing a system for greenhouse gas emission allowance trading within the European Union. 507 Regulation (EU) 2023/956establishing a carbon border adjustment mechanism. 508 Ibid. 186 provide assistance for innovative projects. IAA provisions on permitting could help streamline the implementation of the IED. 5. The Strategic Environmental Assessment Directive 509 (SEA) provides a set of procedural rules to integrate environmental considerations into their preparation, adoption and implementation of public plans and programmes by national authorities, including for land-use. For example, national authorities have to examine reasonable alternatives and take account effects on the environment including biodiversity, soil, water, air. 6. The Environmental Impact Assessment Directive510 (EIA) requires Member States to make projects likely to have significant effects on the environment, because of their nature, size or location, subject to consent and an assessment by a competent national authority (i.e. a permit). To get a permit, the EIA Directive requires e.g. the preparation of an environmental impact assessment report and the carrying out of consultation of the authorities, the public and, where relevant, other Member States affected by the project. Under the EIA Directive a depending on the ir likely significant impact on the environment, certain projects are subject to a mandatory assessment while for others a determination by a competent authority is required to decide if the project shall be subject to an assessment. ➔ the IEA directive is at the core of the permitting provisions IAA aims to streamline, notably through digitalisation provisions, and to be able to reuse data sets. 7. The Habitats511 and Birds 512 Directives require Member States to prevent significant negative effects on protected species and habitats in Natura 2000 sites (there are also some species protection obligations applicable also outside the sites). To that end, industrial related projects that are likely to have a significant effect on such a site, must be subject to an appropriate assessment. The competent national authorities can, based on the assessment, agree to the project it is does not adversely affect the integrity of the site concerned. In exceptional cases, developments that could have an adverse effect on a protected site can still go ahead under certain conditions, i.e., lack of alternatives, justification by imperative reasons of overriding public int erest and compensatory measures; in c ertain cases , an opinion of the Commission prior to the authorisation by the Member State’s authorities may be required. The assessment of impacts on Natura 2000 can be carried out in a coordinated procedure or jointly with the environmental assessment under the EIA Directive. ➔ provisions on overriding public interest under IAA would put such projects under the specific requirements for the presumption of overriding public interest. 8. The Water Framework Directive513 provides that the deterioration of the ecological status of a body of water is only allowed where justified by overriding public interests or societal benefits, where no feasible environmental alternatives exist, and where mitigation measures are taken. I n light of this requirement, projects potentially affecting bodies of water, including raw materials projects, need to be subject to 509 Directive 2001/42/EC on the assessment of the effects of certain plans and programmes on the environment. 510 Directive 2011/92/EU on the assessment of the effects of certain public and private projects on the environment (codification). 511 Council Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora. 512 Directive 2009/147/EC of the European Parliament and of the Council of 30 November 2009 on the conservation of wild birds (Codified version). 513 Directive 2000/60/EC establishing a framework for Community action in the field of water policy. 187 assessment and permitting procedures (which may be integrated with the EIA procedure set out above). ➔ relevant in IAA context for projects subject to the WFD with respect to permitting provisions. 9. The main energy frameworks relevant for EIIs include the Electricity and gas Market Regulations and Directives 514, the Renewable Energy Directive 515, the Energy Efficiency Directive 516 the Gas and Hydrogen Decarbonisation Package.517 The third revision of the Renewable Energy Directive518 (RED III) set the EU ambitious target to achieve a share of 42.5% of renewables in final energy consumption. By 31 December 2027, the European Commission is entitled to table an amendment proposal covering the post-2030 period, taking into account the latest and relevant scientific data, and touching on National Energy and Climate Plans, the effects of the implementation of GHG and sustainability criteria on renewable fuels of non -biological origin (RFNBOs) and recycled carbon fuels, and technology developments. By virtue of art. 22a, industrial sectors are included in the scope of the RED III. Accordingly, Member States shall strive to increase the share of renewables in final industrial energy consumption by an annual average of 1.6% for the periods 2021-2025 and 2026-2030. At a more granular level, national governments will have to attain a share of RFNBOs – such as renewable hydrogen - from the total industrial hydrogen consumption of 42% in 2030 and 60% in 2035. This obligation applies to government and not to industries as such. Member States are now in the process of implementing these provisions. ➔ IAA’s provisions on regulatory sandboxes would interact with the hydrogen package and renewable energy directive, since derogation to the application of the two delegated acts on hydrogen would be envisaged. 10. The Electricity Market Design 519 is the main instrument to regulate electricity market functioning. As such, it influences the price paid and conditions for access to electricity for energy intensive industries as well as for other energy users. The 2024 Electricity Market Design Reform brought new requirements setting clear deadlines for replies to a grid connection request, within 3 months, as well as on transparency regarding available grid capacities. The reform followed up on existing requirements in the legal framework guaranteeing open and non -discriminatory access to the electricity grid. 11. The Action Plan for Affordable Energy 520, adopted in February 2025, includes three flagship measures that are particularly relevant to industry: (1) lowering energy bills, (2) accelerating the roll-out of clean energy and electrification, with completed 514 Directive (EU) 2024/1788 on common rules for the internal markets for renewable gas, natural gas and hydrogen, amending Directive (EU) 2023/1791 and repealing Directive 2009/73/EC and Regulation (EU) 2024/1789 on the internal markets for renewable gas, natural gas and hydrogen, amending Regulations (EU) No 1227/2011, (EU) 2017/1938, (EU) 2019/942 and (EU) 2022/869 and Decision (EU) 2017/684 and repealing Regulation (EC) No 715/2009 515 Directive (EU) 2018/2001 on the promotion of the use of energy from renewable sources. 516 Directive (EU) 2023/1791 on energy efficiency and amending Regulation (EU) 2023/955 (recast). 517 Directive (EU) 2024/1788 on common rules for the internal markets for renewable gas, natural gas and hydrogen, amending Directive (EU) 2023/1791 and repealing Directive 2009/73/EC (recast) and Regulation (EU) 2024/1789 on the internal markets for renewable gas, natural gas and hydrogen, amending Regulations (EU) No 1227/2011, (EU) 2017/1938, (EU) 2019/942 and (EU) 2022/869 and Decision (EU) 2017/684 and repealing Regulation (EC) No 715/2009 (recast). 518 Directive (EU) 2023/2413 amending Directive (EU) 2018/2001, Regulation (EU) 2018/1999 and Directive 98/70/EC as regards the promotion of energy from renewable sources, and repealing Council Directive (EU) 2015/652 519 Directive (EU) 2024/1711 amending Directives (EU) 2018/2001 and (EU) 2019/944 as regards improving the Union’s electricity ma rket design and Regulation (EU) 2024/1747 amending Regulations (EU) 2019/942 and (EU) 2019/943 as regards improving the Union’s electricity market design 520 An Action Plan for Affordable Energy, COM(2025) 79 final, 26.2.2025 188 interconnections and grids, as well as clean manufacturing, and (3) ensuring well - functioning gas markets. 12. The Ecodesign for Sustainable Products Regulation 521 (ESPR) establishes a framework for setting performance and/or information requirements to improve the environmental sustainability and circularity of products placed on the EU market, with the aim, inter alia, of extending their lifetime, increasing recyclability, and recycled content. ESPR also a ims at making information relevant to life cycle sustainability of products available along value chains to businesses, consumers and authorities through Digital Product Passports and/or through the introduction of labels. The ESPR facilitates consu mer choice and encourages the take -up of more sustainable and energy -efficient products. Iron and steel as well as aluminium fall under the ESPR scope as ‘intermediate products’ and have been included in the ESPR and Energy Labelling Working Plan 2025-30, adopted in April 2025, with a tentative timeline of 2026. 522 For some of the products to be covered by a delegated act as mentioned above, implementing acts will also be adopted to set public procurement criteria to create lead markets. ➔ IAA’s provisions on the steel label risk overlapping in timeline with the development of a delegated act on steel under ESPR. However, the preferred policy option on the steel label is built so as to be an important) building block of the broader methodology underpinning the ESPR requirements on steel. As such, it is coherent to start with a label with the emission boundaries envisaged under IAA to be further developed and complemented by additional elements under the ESPR. (See par. on ‘Interplay with existing initiatives’ below for more details). 13. The Construction Product Regulation523 (CPR) lays down harmonised rules for the marketing of construction products in the EU. It ensures the smooth functioning of the single market of construction products. It is the regulatory tool to address the environmental sustainability of construction products with the same ambition as the ESPR. Manufacturers are obliged to declare the GHG emissions of their products and will make them available to professionals, consumers and authorities through Digital Product Passports. The GHG emissions of construction products are used for the life- cycle calculations at building level required by the Energy Performance of Buildings Directive. ➔ Lead market provisions for construction under IAA will align with initiatives under the Construction Product Regulation, in particular the harmonised standard on GHG emissions. See below for more details. 14. The Energy Performance of Buildings Directive 524 (EPBD) recognises that buildings are responsible for greenhouse gas has introduced life cycle GWP of building, indicating the building’s overall contribution to emissions before, during, and after their operational lifetime. The directive will decarbonise the building stock, going beyond that lead to climate change, including the focus on building operational greenhouse gas emissions, by introducing as well as the considera tion of the life - cycle global warming potential (GWP) of buildings. Life -cycle GWP takes into account the greenhouse gas emissions embodied in construction products and 521 European Commission (2024). Regulation (EU) 2024/1781 establishing a framework for the setting of ecodesign requirements for sustainable products, amending Directive (EU) 2020/1828 and Regulation (EU) 2023/1542 and repealing Directive 2009/125/EC. 522 European Commission (2025). Communication from the Commission: Ecodesign for Sustainable Products and Energy Labelling Working Plan 2025-2030. COM(2025) 187 final. 523 Regulation (EU) No 305/2011 laying down harmonised conditions for the marketing of construction products and repealing Council Directive 89/106/EEC. 524 Directive (EU) 2024/1275 on the energy performance of buildings (recast). 189 encourages exemplary design options and choices of materials. The directive introduces mandatory calculation and disclosure of. The revised EPBD includes information obligation, meaning it requires the life-cycle GWP of new buildings. In addition, Member S tates are required to draw up national roadmaps by to be calculated and disclosed in the energy performance certificate (EPC) of the building: a) from 1 January 2027 on the introduction of limit values on the life -cycle GWP of 2028, for all new buildings f rom with a useful floor area larger than 1 000 m2; (b) from 1 January 2030, for all new buildings. ➔ Achieving the limit values on the GWP will benefit from IAA’s provisions on low -carbon requirements for products in construction sector. See below for more details. 15. The Batteries Regulation525 takes a comprehensive life-cycle approach addressing the entire value chain of batteries, encompassing sourcing, manufacturing, use, and recycling. It gradually introduces product requirements, including restrictions on hazardous substances, minimum recycled content, carbon footprint, performance and durability standards, and labelling. It also obliges the use of responsibly sourced raw materials. Additionally, the Regulation establishes specific collection, recovery, and recycling targets for different types of batteries. Furthermore, it ensures access to crucial data across the value chain through the Digital Battery Passport, fostering efficient and circular bat tery use. ➔ The Batteries Regulation provides for the framework to set the environmental ambition for EU battery manufacturing, allowing lead market provisions under IAA to focus on Made in EU requirements, when justified. 16. The Critical Raw Materials Act 526 (CRMA) ensures EU access to a secure and sustainable supply of critical raw materials, strengthening all stages of the European value chain, diversify the EU’s imports to reduce strategic dependencies, improve EU capacity to monitor and mitigate risks of disruptions to the supply of critical raw materials, and improve circularity and sustainability. The CRMA includes within scope several energy-intensive sectors, namely copper, aluminium and silicon metal. It establishes simplified permitting procedure s and sets selection criteria for designating strategic projects. 17. The Alternative Fuels Infrastructure Regulation527 (AFIR) is aimed at expanding and standardising the infrastructure for alternative fuels across the EU. It seeks to ensure the availability of essential infrastructure, such as EV recharging pools and hydrogen refuelling points, along the main transport corridors and other strategic locations. 18. ReFuelEU Aviation Regulation528 sets out mandates to increase the production and supply of sustainable aviation fuels (SAF) within the aviation sector in refineries in the EU. The Regulation mandates the blending of SAF with conventional jet fuels which will reduce the carbon footprint of aviation fuels and of air travel by more than 60% by 2050. The regulation establishes the Flight Emissions Label (FEL) 39 which 525 Regulation (EU) 2023/1542 concerning batteries and waste batteries, amending Directive 2008/98/EC and Regulation (EU) 2019/1020 and repealing Directive 2006/66/EC. 526 Regulation (EU) 2024/1252 establishing a framework for ensuring a secure and sustainable supply of critical raw materials and amending Regulations (EU) No 168/2013, (EU) 2018/858, (EU) 2018/1724 and (EU) 2019/1020. 527 Regulation (EU) 2023/1804 on the deployment of alternative fuels infrastructure. 528 Regulation (EU) 2023/2405 on ensuring a level playing field for sustainable air transport (refuelEU aviation). 190 regulates the accounting and display of flight emissions and will allow airlines showcase their purchases of SAF produced in refineries and other production sites. 19. The FuelEU Maritime Regulation529 targets the maritime sector, promoting the use of cleaner energy and curbing greenhouse gas emissions from ships. It sets stricter limits on the carbon intensity of the energy used by ships, encouraging the transition to alternative fuels such as biofuels, hydrogen, and ammonia. FuelEU Maritime is designed to align the shipping industry with the EU’s climate goals, ensuring maritime transport contributes to reducing overall carbon emissions. ➔ The above three legislations directly affect the EU refineries sector in terms of lead market provisions and justify why IAA does not include low -carbon obligations for refined fuels. 20. The current multiannual financial framework 530 (MFF), the EU's long -term budget, leverages the financial capacity of the Union and runs until the end of 2027. The broader financial architecture of EU spending programmes includes loans, guarantees and financial instruments backed by the EU budget, mobil ises co - financing from Member States and beneficiaries and unlocks private investments. With the Strategic Technologies for Europe Platform 531 (STEP) Regulation, the EU is redirecting funding from 11 different financing programmes towards industrial projects across three critical technologies: digital technologies and deep -tech innovation; clean and resource-efficient technologies; and biotechnologies. 21. The objective of the EU’s Foreign Direct Investment Regulation 532 (FDI) is to make sure that the EU is better equipped to identify, assess and mitigate potential risks to security or public order, while remaining among the world’s most open investment areas. It creates a cooperation mechanism where Member States and the Commission can change information and raise concerns to specific investments; allows the Commission to issue opinions when an investment threatens the security or public order of more than one Member State; and sets certain requirements for Member States that wish to mai ntain or adopt a screening mechanism at national level. It fully applies since 11 October 2020 . ➔ Under IAA, possible conditions for foreign investments are related but not overlapping with the FDI regulation, as the policy objective is significantly different: national security and public order for the FDI Regulation, and single market functioning for IAA. see below for additional elements. 22. In July 2025, the Commission put forward comprehensive proposals for the post- 2027 MFF533 and for the next generation of financial programmes. As announced in President von der Leyen's Political Guidelines, the Commission has notably proposed a European Competitiveness Fund with a total envelope of EUR 409 billion will boost support to research, innovation, development and deployment. It will draw together EU investment to accelerate the scaling-up, manufacturing and deployment of strategic technologies in Europe. It aims to bolster the competitiveness of European companies and strengthen the EU’s industrial base, by supporting Made in 529 Regulation (EU) 2023/1805 on the use of renewable and low-carbon fuels in maritime transport, and amending Directive 2009/16/EC. 530 Council Regulation (EU, Euratom) 2020/2093 laying down the multiannual financial framework for the years 2021 to 2027 531 Regulation (EU) 2024/795 establishing the Strategic Technologies for Europe Platform (STEP) 532 Regulation (EU) 2019/452 establishing a framework for the screening of foreign direct investments into the Union. 533 Proposal for a Council Regulation COM/2025/571 final, laying down the multiannual financial framework for the years 2028 to 2034 191 EU technologies, products and services. The Fund, operating under one rulebook, will offer a single gateway to funding applicants, will simplify and accelerate EU funding and catalyse private and public investment. 23. The new proposal for an Industrial Decarbonisation Bank will be based on the Innovation Fund, additional revenues resulting from parts of the ETS as well as InvestEU. The bank will aim at supporting projects with carbon emission reduction as a metric to enable technology -neutral support across industrial secto rs, including through carbon contracts for difference. As announced in the Clean Industrial Deal, it will be integrated in the governance of the ECF. 24. Competition rules and enforcement protect fair competition in the Single Market and incentivise companies to innovate and become more efficient. The Clean Industrial Deal State Aid Framework (CISAF) adopted on 25 June enables necessary and proportionate State aid that crowds in private investment for projects contributing to the objectives of the Clean Industrial Deal, while preserving the level playing field and European cohesion. In particular, the CISAF simplifies State aid rules in five main areas: (i) the roll-out of renewable energy and low -carbon fuels;(ii) temporary electricity price relief for energy -intensive users to ensure the transition to low -cost clean electricity; (iii) decarbonisation of existing production facilities; (iv) the development of clean tech manufacturing capacity in the EU, and; (v) the de-risking of investments in clean energy, decarbonisation, clean tech, energy infrastructure projects and projects supporting the circular economy. Furthermore, the State Aid Guidelines for Climate, Energy and Environmental protection (CEEAG) remain an important instrument to assess the compatibility of aid in the field of industrial decarbonisation. 25. Trade defence instruments such as anti-dumping and anti-subsidy measures as well as existing steel safeguard are primarily applied for the products produced by the energy-intensive industries such as steel, non-ferrous metals, ceramics and others. In the Steel and Metals Action Plan (SMAP)534, the Commission committed to propose, a measure replacing the steel safeguards (which expires on 30 June 2026). The Commission has now adopted this proposal addressing the negative trade -related effects of global overcapacities on the Union steel market 535, which is under consideration by the co-legislators. It maintains tariff-rate quotas (TRQs) for a wide range of steel products, introduces a “melt and pour” information requirement and caps TRQ volumes at the average level of 2013 imports to prevent structural increases in import penetration. These provisions strengthen the safeguard’s effectiveness against trade diversion and circumvention while preserving predictability for downstream users. ➔ The IAA’s lead market measures complement the safeguard by steering market demand towards low -carbon and EU-produced steel, ensuring that trade protection and decarbonisation objectives reinforce each other rather than act in isolation. 26. Under its free trade agreements (FTAs), the EU generally commits to investment liberalisation in the manufacturing and energy sectors, granting foreign investors broad market access and national treatment. In manufacturing, the EU typically 534 European Commission (2025). A European Steel and Metals Action Plan. COM(2025) 125 final, 19 March 2025. 535 European Commission (2025). Proposal for a Regulation of the European Parliament and of the Council addressing the negative trade - related effects of global overcapacity on the Union steel market. COM(2025) 726 final. 192 ensures full liberalisation across virtually all subsectors, meaning foreign investors can establish and operate businesses under conditions no less favourable than domestic firms, with minimal reservations. In the energy sector, the EU’s commitments are m ore nuanced (including a chapter on energy and raw materials) where it maintains certain reservations linked to public services, nuclear energy, and security of supply. Across both sectors, the EU’s approach in FTAs is to lock in an open and predictable in vestment regime while retaining the right to regulate in sensitive areas, particularly regarding environmental protection, public safety, and strategic resources. Moreover, the EU is bound by its international commitments on investment under WTO law, in particular under GATS and TRIMs. In addition, most modern EU FTAs include a dedicated chapter on public procurement, granting partner countries access to public contracts at central and sub -central levels under transparent and non -discriminatory conditions, in line with the WTO Government Procurement Agreement (GPA) principles. These commitments ensure that suppliers from FTA partner countries can participate in EU public tenders on equal footing with EU operators for the covered entities and contract types, effectively opening a portion of the EU procurement market to foreign competition while maintaining the possibility to exclude non-covered sectors or apply exceptions linked to security and public policy.➔ IAA’s measures are framed so as to exclude countri es with which the EU has free trade agreements (FDI provisions) or to benefit from exemptions under the EU’s international obligations (Made in EU requirements) 27. The proposal for a Corporate Clean Fleet536 Regulation, adopted in December 2025, aims at supporting the decarbonisation of the road transport sector by accelerating the shift to zero-emission vehicles in corporate fleets stimulating the market uptake of zero-emission vehicles and safeguarding the competitiveness and sustainability of the European road transport sector. In this context, the introduction of a sustainability and Made in EU requirement is currently under consideration ➔ In order to be in a position to align requirements on strengthening domestic value chains in the automotive sector with the IAA, the Commission will rely on delegated acts to set up a methodology for determining the criteria for a car or van to be considered made in EU. 28. As set out in Article 7a of the CO2 standards for light-duty vehicles Regulation, the Commission is developing a harmonised methodology for the assessment and the consistent data reporting of the full life-cycle CO2 emissions of passenger cars and light commercial vehicles537, so that manufacturers may voluntarily report on such emissions. Furthermore Article 5 of the regulations introduces measures to booster the new car category called ‘ small zero -emissions vehicles ’ which may receive additional CO2 credits if made in the EU. Additionally announced was the to creation of uptake for made in the EU and low-carbon steel through an additional crediting system.➔ The Industrial Accelerator Act is also expected to develop a label on the carbon intensity of industrial products, starting with steel, as well as parameters for Made in the EU”. This will be relevant to rely on these developments as appropriate, to ensure consistency of the methodologies. It is equally valid for the reference to Made in the EU” for small electric cars. 536 Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Decarbonise Corporate Fleets, COM(2025) 96 final, 5 March 2025. 537 Regulation (EU) 2019/631 setting CO2 emission performance standards for new passenger cars and for new light commercial vehicles, and repealing Regulations (EC) No 443/2009 and (EU) No 510/2011 (recast). 193 29. The Commission also put forward an Action Plan for the chemical sector 538, a sector-specific Omnibus, as well as a Chemicals Industry Package adopted end of 2025, as part of the Clean Industrial Deal, with the aim to maintain critical production capacities in Europe and boost investments for the modernisation and competitive transition to net -zero. ➔ IAA therefore does not include targeted measures for the chemicals sector, which will be implemented more directly under the forthcoming package. 30. In the Automotive Action Plan539, the Commission announced that, in cooperation with Member States and the industry, conditions for inbound foreign investments in the automotive sector to further increase their added value for the EU. This will likely include conditions with respect to EV batteries. The Commission further announced European content requirements for batteries and other vehicles components to boost the global competitiveness of the sector. ➔ The legislative arm of this initiative, in relation to batteries, addressed under IAA, according to the preferred policy option put forward in this impact assessment. 31. The Grids Package announced as part of the Clean Industrial Deal will ensure cross- border integrated planning and delivery of projects, especially on interconnectors, and facilitate access to affordable, secure and clean energy. It proposes measures to accelerate the upgrading, digitalisation and expansion of the European grid infrastructure. It removes grid bottlenecks, accelerate permitting for grids, renewables and storage, and increase s overall efficiency, while promoting more robust interconnections. With its main focus on electricity, it also cover s hydrogen and other infrastructure categories included in the framework for trans -European energy networks (TEN-E). Moreover, to tackle increasing grid connection queues in several EU countries, Guidance on grid connections is part of the Grids package, to provide best practices on how to ensure accelerated grid connection for demand as well as generation and storage. To support existing legal requirements, the Commission published a guidance on anticipatory investments in grid infrastructure, addressing also access of industry in time and in capacity requested.➔ The European Grids Package addresses issues related to access to grid infrastructure for industrial decarbonisation projects. Interac tions exist with a policy measure discussed under PO3 on permitting for IAA, since they could be better addressed under the grids package. 32. Simplification of administrative burdens in environmental legislation (Environmental Omnibus): the Commission adopted an Omnibus package in the environmental sector in December 2025, which includes provisions to simplify and accelerate environmental permitting and environmental assessments provisions. Overview ongoing initiatives The IAA needs to ensure consistency with upcoming related initiatives, notably: • The proposal for a Circular Economy Act, scheduled for adoption in 2026, will create demand for secondary materials and a single market for waste, notably in relation to critical 538 European Commission (2025). Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - A European Chemicals Industry Action Plan. COM/2025/530 final, 8 July 2025. 539 European Commission (2025). Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Industrial Action Plan for the European automotive sector, COM(2025) 95 final, 5 March 2025. 194 raw materials. It will address supply and demand side measures. On the demand side, it might include mandatory, targeted, impactful and implementable requirements for public procurement of circular goods, services and works that can stimulate EU demand. ➔ The circular economy act may promote the recycling of EII products, creating synergies with the decarbonisation efforts put forward by IAA • As set out in Article 7a of the CO2 standards for light -duty vehicles Regulation, the Commission is developing a harmonised methodology for the assessment and the consistent data reporting of the full life-cycle CO2 emissions of passenger cars and light commercial vehicles, 540 so that manufacturers may voluntarily report on such emissions. • The Commission plans to propose Ecodesign541 and Energy Labelling 542 rules for PV modules and inverters sold in the EU. These measures would concern the efficiency, durability, reparability and recyclability of products, to ensure that the devices deployed are environmentally sustainable. Requirements on the carbon footprint of PV modules are also being prepared. However, such requirements would not look at the origin of the products, nor include any mandate to support Europe an manufacturing. ➔ Like for batteries, this initiative will address the environmental performance of PV modules, while IAA focuses on Made in EU aspects. • The Commission also put forward an Action Plan for the chemical sector543, a sector- specific Omnibus, as well as a Chemicals Industry Package by the end of 2025, as part of the Clean Industrial Deal, with the aim to maintain critical production capacities in Europe and boost investments for the modernisation and competitive transition to net-zero. ➔ IAA therefore does not include targeted measures for the chemicals sector, which will be implemented more directly under the forthcoming package. • Expected for Q1 2026, the Electrification Action Plan will address system -level challenges and focus on barriers and incentives in different sectors: industry, transport and buildings. It will put forward measures targeted at these sectors based on their electrification potential. The Plan will also set out t he necessary conditions on the generation side to achieve its objective, with growing and diversified renewable electricity matching demand. • In the Automotive Action Plan 544, the Commission announced it will propose, in cooperation with Member States and the industry, conditions for inbound foreign investments in the automotive sector to further increase their added value for the EU. This will likely include conditions with respect to EV batteries. The Commission further announced European content requirements for batteries and other vehicles components to boost the global competitiveness of the sector. ➔ The legislative arm of this initiative, in relation to batteries, would be addressed under IAA, according to the preferred policy option put forward in this impact assessment. The Grids Package announced as part of the Clean Industrial Deal will ensure cross -border integrated p lanning and delivery of projects, especially on interconnectors, and facilitate access to affordable, secure and clean energy. It will propose measures to accelerate the upgrading, digitalisation and expansion of the European grid infrastructure. It will remove grid bottlenecks, accelerate permitting for grids, renewables and storage, and increase overall efficiency, while promoting more robust interconnections. With its main focus on electricity, it will also cover hydrogen and 541 Official Journal of the European Union (2024 ). Regulation (EU) 2024/1781 establishing a framework for the setting of ecodesign requirements for sustainable products, amending Directive (EU) 2020/1828 and Regulation (EU) 2023/1542 and repealing Directive 2009/125/EC. 542 Official Journal of the European Union (2017). Regulation (EU) 2017/1369 setting a framework for energy labelling and repealing Directive 2010/30/EU. 195 other infrastructure categories included in the framework for trans -European energy networks (TEN-E). Moreover, to tackle increasing grid connection queues in several EU countries, Guidance on grid connections will be part of the Grids package, to provide for best practice on how to ensure accelerated grid connection for demand as well as generation and storage. To support existing legal requirements, the Commission published a guidance on anticipatory investments in grid infrastructure, addressing also acc ess of industry in time and in capacity requested.➔ The European Grids Package is expected to address issues related to access to grid infrastructure for industrial decarbonisation projects. Interactions exist with a policy measure discussed under PO3 on permitting for IAA, since they could be better addressed under the grids package. • The upcoming revision of the Public Procurement Framework in 2026 will review the possibilities to use criteria for sustainability, resilience and European preference in EU public procurement for strategic sectors. The revision will assess, consolidate and clarify the interactions between public procurement provisions across different pieces of legislation, to simplify application by contracting authorities. ➔ Consistency between the sectorial measures set out in the IAA on what to buy and the overarching framework will have to be ensured. • The proposed new End-of-Life Vehicles (ELV) Regulation will require manufacturers to use a certain percentage of recycled plastic when designing and constructing new vehicles. Minimum requirements for the use of recycled steel and aluminium may be introduced at a later date, thereby reducing the carbon footprint of new vehicles. • By the end of 2025, the Commission will conduct a comprehensive review of CBAM, accompanied by an anti-circumvention strategy. It will also present a legislative proposal on extending the scope to certain downstream products in the steel and aluminium sectors that contain a significant share of at least one of the goods within the scope of the CBAM and to strengthen anti-circumvention measures. Moreover, the Commission announced in July 2025 to propose a measure by the end of the year to address the problem of carbon leakage for CBAM goods that are exported. • The Strategic Roadmap for digitalisation and AI in the energy sector (announced for Q1 2026) is a key deliverable of the Action Plan for Affordable Energy. It will leverage AI-driven solutions to offer secure, clean and competitively priced energy to all consumers. Smart integration of energy storage and demand side flexibility will bring substantial system benefits and reduce consumer bills. Data-driven services and analytics will optimise energy generation, transmission and consumption, while AI-powered digital twins will be at the core of system operations and maintenance. Interplay between IAA and the NZIA The Net Zero Industry Act545 (NZIA) sets out measures to stimulate investment in net -zero emissions technologies, including provisions for energy -intensive industry transformative projects – projects that deliver significant and lasting reductions in greenhouse gas emissions. It offers benef its such as accelerated permitting procedures and the designation of strategic project status. Furthermore, the NZIA sets the goal for net -zero technologies manufacturing capacity, including batteries and solar, to reach at least 40% of EU annual deploymen t needs by 2030. 545 Regulation (EU) 2024/1735 on establishing a framework of measures for strengthening Europe’s net -zero technology manufacturing ecosystem and amending Regulation (EU) 2018/1724. 196 The construction or conversion of certain energy -intensive plants in the steel, aluminium, non- ferrous metals, chemicals, cement, lime, glass, ceramics, fertilisers, pulp and paper sectors are also in the scope of the NZIA. However, they need to meet two cumulative criteria to qualify: • The future production of the energy intensive industry decarbonisation project facility is a priori relevant for net-zero technologies (e.g. steel is used for wind towers.) • The project needs to have significant and permanent reduction of CO2 emissions that is technically feasible. Amongst others, the regulation covers several permitting measures that energy -intensive industry decarbonisation projects can benefit from: • Single Point of Contact as coordination point for all permitting processes. • Timelines for permit-granting process depending on production volume (if GW) of the plant • Bundling or coordination of environmental assessments whenever several assessments are required. • Strategic project status for some projects, which in turn grants them shorter timelines, automatic consideration of highest national importance and public interest, and when relevant may be considered as well as being of Overriding public interest (OPI). • Authorities to consider NZIA potential for zoning planning provisions. Moreover, whenever Member States decide to do so, they can designate Net Zero Acceleration Valleys: obligation to perform a Strategic environmental assessment for the area, consideration of projects to be in the public interest and may be considered to be of overriding public interest, as well as dedicated single points of contact. Importantly, the NZIA regulation also introduces its “Access to Markets” chapter. This chapter introduces the mandatory use of non -price criteria for the public procurement of net -zero technologies, for renewable energy auctions, and for other forms of public intervention aiming to support the purchase of net -zero technology final products. One of the non -price criteria is resilience; where there is a high dependency from a single source of supply for a certain net - zero technology or component, contributing to resilience means to diversify away from that dominant source of supply. Hence, any potential interplay with IAA provisions on sourcing components and technologies needs to be taken into account. At the same time, while NZIA provisions strengthen resilience in reducing the dependency from a single source of supply, they do not directly support manufacturing in the E U – which is needed as argued earlier in this impact assessment. Other non -price criteria include, depending on the context, cyber security, environmental sustainability, and innovation. Interplay of the preferred policy option (PO2) with existing and upcoming initiatives The measures that are part of the preferred policy option (PO2) fit with the existing and upcoming initiatives in the following way: • As far as SO1 is concerned, the development of a label on the carbon intensity of steel will provide a first, voluntary and EU certification to disclose the carbon footprint of steel products, covering scope 1, scope 2 and other emissions (hydrogen use, heat) up until the level of the hot rolling production step, as explained in Annex12. This will send an important signal to the market, aiming at accelerating investment decisions. The methodology developed under IAA will constitute a building block of the upcoming full LCA methodology currently being developed under the ESPR, in view of the Delegated Act setting information and/or performance requirements of the environmental footprint of steel products. Once the mandatory ESPR requirements will be adopted, the voluntary st eel label will feed into the ESPR criteria, becoming an 197 integral part of the methodology, so that producers will not have to face two different carbon footprint calculation methods. Furthermore, the ESPR requirements will go beyond carbon emissions including other relevant environmental impacts (i.e. recycled content, substances of concern). allowing consumers to see the comprehensive product environmental footprint. • For SO2, the measures introducing low-carbon and Made in EU requirements for some energy-intensive materials in targeted downstream sectors, as well as Made in EU requirements for batteries, solar PV and vehicle components in the public procurement market will anticipate the use of sustainability and resilience/ EU preference criteria that will be streamlined as part of the upcoming revision of the Public Procurement Framework. The revision will clarify the interaction betw een sectorial provisions across different pieces of legislation, ensuring a common approach and to simplify application by authorities. Concerning the introduction of low -carbon content requirements for the steel and cement placed on the market, these measures will be complemented by the d ownstream sectors specific regulations. Specifically, in the building and construction sector, the IAA measures will be complemented by the CPR obligations to disclose the environmental footprint of construction products, as well as the EPBD provisions req uiring Member States to develop national roadmaps introducing limit values on the life -cycle Global Warming Potential (GWP) of buildings, which will benefit from the IAA provisions introducing lead markets on low- carbon steel and cement. Finally, the achievement of the low-carbon target will also be influenced by the effects of the ETS on the decarbonisation technologies, as well as the effective implementation of CBAM to mitigate the risk of carbon leakage. • For SO3, the proposed investment conditionalities under IAA would apply in addition to the existing FDI framework, with a specific sectoral scope and Single Market considerations. Moreover, countries that the Union have existing FTAs with would be excluded from the conditionalities to comply with the provisions set therein. Compliance with further international obligations will also be considered. • For SO4, the simplification of permitting provisions align with the Environmental Omnibus package which the Commission adopted in Q4 2025. • For SO5, introducing a set of criteria for identifying priority industrial areas would help Member States identify relevant projects and create synergies with existing funding programmes, to facilitate access to public funding, without prejudice to the State aid regime nor to the specific eligibility criteria of each funding programme . At EU level, the Commission would consider these criteria for the revision of t he Innovation Fund calls and the upcoming Decarbonisation Bank. A link would be established between the IAA criteria and the Competitiveness Seal of the European Competitiveness Fund, presented as part of the MFF legislative proposal. 2. What is the baseline? Detailed description EIIs such as steel, aluminium, cement and chemicals form the backbone of the European economy. They are indispensable for the green and digital transitions and thus for Europe’s long-term competitiveness and economic security. Strengthening these sectors c ontributes directly to the “Promote” pillar of the European Economic Security Strategy, which aims to reinforce the EU’s capacity to innovate, invest, and maintain leadership in strategic value chains. However, over the past two decades, EIIs have faced persistent competitive pressures: high energy costs, global overcapacity, and delayed investment in low -carbon technologies. These conditions have resulted in a contraction of EU industrial production, ri sing import dependence, and limited technological renewal. The outcome is not only a decarbonisation gap, 198 but also an economic-security gap, a growing divergence between the EU’s industrial trajectory and the level of domestic capacity needed to sustain secure, climate -compatible and competitive supply chains. To better understand the immediate competitiveness challenges, Figure 21 zooms in on recent years (2019 -2024) and compares production trends of EIIs with those of the wider manufacturing sector. While broader manufacturing has returned to its pre -crisis production levels, EIIs have declined. Since 2022, high energy prices, weaker demand and stronger global competition have driven a sharper contraction in EII output, which now stands well below its pre-pandemic level.546 The transition will entail higher adjustment costs for EIIs in the short term, as production processes, energy inputs and supply chains adapt to stricter carbon pricing and new regulatory standards. Yet delaying this transition would result in much higher costs in the medium term— through stranded assets, lost technological leadership, and deepened reliance on foreign clean- tech suppliers. In line with the Clean Industrial Deal, the baseline thus reflects a credible but demanding pathway in which European in dustry follows through on the 2040 and 2050 emission-reduction commitments, recognising that this is the only sustainable route to competitiveness and climate neutrality. Figure 21: Production volume index for EIIs and other manufacturing, European Commission internal analysis The main text of the impact assessment presented the dynamic baseline and decarbonisation gap for all EIIs, illustrated by the iron and steel sector 547. Figure 22 below shows a clear slowdown since 2023 548, with the number of new final investment decisions ( FIDs) and projects entering construction falling by roughly 40% compared with 2022 –2023 levels. This confirms that while the decarbonisation pipeline is expanding, actual delivery of low -carbon steel capacity has stagnated. 546 EII sectors include C171, C19, C20, C231, C233, C234, C235, C244, all other manufacturing sectors form the comparison group. For each group, the production volume index is value-added weighted: each sector’s index is multiplied by its share of total group value added (average 2021–2023). The weighted sector indices are then summed and rescaled so that 2019-Q1 = 100. 547 See Section 5.1 What is the baseline from which options are assessed? in the main text. 548 BloombergNEF, Decarbonizing Steel Project Database (1.0.5), 2025. Commission analysis. 199 Figure 22: Annual announcements vs FIDs in EU steel projects (BNEF, 2025) The remainder of this Annex provides the same methodology more details for aluminium, cement, and chemicals. For each sector , the historical data (2005 -2023) on production and emissions were compiled. Then, a linear extrapolation was performed on production, anchored in the 2023 value, using the slope derived from the historical regression. Emissions are not extrapolated, but taken directly from JRC model projections 549, which already capture technological assumptions and EU climate -policy consistency . These are aligned with EU - wide climate-policy assumptions and the decarbonisation trajectory consistent with the EU Green Deal. This methodology ensures analytical consistency: extrapolated production trends capture the economic reality of EU industries under current investment conditions, while JRC projections provide the climate -policy reference for emission reductions. The resul ting combination highlights the gap between policy -driven decarbonisation assumptions and market -driven industrial decline. Aluminium As shown in Figure 23, EU primary aluminium production has fallen sharply, particularly since 2022, due to high electricity prices and limited access to affordable renewable energy. If the current trend continues at the same historical rate, marked by sustained cost pressures and no major new primary smelting capacity, Europe would lose approximately 42% of its aluminium production by 2050. The JRC emission pathway shows a more pronounced reduction, driven by assumed electrification and efficiency improvements. The resulting gap indicates that, without further support, EU aluminium may decarbonise statistically only because production declines, not because cleaner processes are deployed. 549 Source data 2005-2023: JRC-IDEES, consistent with EUROSTAT data. Source projections 2024 -2050: internal calculations and JRC CETO 2025, developed with POTENCIA. 200 Figure 23: Aluminium: production and CO₂ emissions including projection pathways . JRC analysis, based on IDEES and JRC CETO 2025 Cement As shown in Figure 24, cement production and emissions have historically evolved together, with modest efficiency improvements but limited process innovation. If the trend continues , the production projection, extrapolated from historical data, suggests a substantial 73% by 2050 compared to the 2023 baseline. In contrast, the JRC emission projection assumes wider fuel substitution and gradual introduction of carbon capture, leading to a faster decline. This highlights the growing gap between modelled decarbonisation potential and the sector’s limited investment reality. Figure 24: Cement: production and CO₂ emissions including projection pathways 201 Chemicals As shown in Figure 25, the chemical sector presents a mixed picture. While aggregate output has remained broadly stable since 2005, this masks a structural shift within the sector. Production of basic chemicals has declined or relocated outside the EU, driven by high energy and gas prices, limited feedstock availability and stronger global competition. At the same time, specialty and downstream chemical segments have remained relatively resilient but ac count for a much smaller share of total energy use and emissions. The extrapolated projection therefore assumes a continuation of this dual trend: gradual contraction of energy -intensive base chemicals combined with modest growth in lower-emission, higher-value segments. As a result, overall industrial output decreases slowly, and aggregate emissions decline only moderately. By contrast, the JRC emission projection reflects a policy -consistent decarbonisation path, assuming large -scale electrification of process heat, adoption of alternative feedstocks (such as green hydrogen), and wider deployment of carbon-management technologies. The divergence between the extrapolated and modelled trends highlights the sector’s core challenge: under current conditions, emission reductions are achieved mainly by reducing production of basic chemicals, not by transforming production technologies at scale. Figure 25 Chemicals production and CO₂ emissions including projection pathways. JRC analysis, based on IDEES and JRC CETO 2025 Driver 1/ SP1/SO1: Challenges in distinguishing low -carbon industrial products from high-carbon alternatives : The baseline scenario would result in no common definition, methodologies or minimum threshold for low -carbon industrial products. Under the ESPR, there is a mandate to set specific performance and/or information requirements e.g., on the environmental and/or carbon footprint of a product from a life-cycle perspective, as conditions to place products on the market. These mandatory requirements, whe n in place, will certainly help to provide comprehensive information to customers and, potentially, performance at products level, e.g. steel containing products. Regarding the specific case of cement, as announced in the Clean Industrial Deal, the CPR will introduce a label for cement in 2027 when the new – to be developed – harmonised standard will be made mandatory. However, current rules do not have specific obligation on the public procurement side, nor introduce minimum performance requirements. 202 Driver 2/SP1/ SO2: Limited willingness to pay a premium for low -carbon industrial products: While existing public procurement rules establish how to buy, they fall short of addressing what to buy in terms of low -carbon criteria. Current green public procurement practices remain largely voluntary, fragmented, and inconsistently applied across Member States. Only a few national or local authorities systematically integrate non price low -carbon criteria into procurement processes for construction products or in frastructure projects. 550 Resilience criteria are even less considered in the current procurement procedures, as they are relatively new. Furthermore, in the NZIA, resilience criteria refer to components, not specifically to the energy-intensive materials used. As the Commission is expected to propose a revision of the Public Procurement Framework in the last quarter of 2026, consistency between the sectorial measures set out in the IAA on what to buy and the overarching framework will have to be ensured. The revised EPBD 551 has introduced an obligation to calculate and provide information on the life cycle GWP of buildings, including the emissions embodied in construction products. It will be important to ensure consistency between measures proposed for low-carbon construction materials in IAA and the obligation under the EPBD. When it comes to vehicles, the proposed End -of-Life Vehicles (ELV) Regulation includes the possibility to establish requirements for vehicle manufacturers to use recycled steel and aluminium.552 However, due to their timing and/or voluntary nature, none of the mentioned initiatives can be expected to produce tangible effects in terms of increased demand of green steel and aluminium in the short term. Driver 3/ SP2/SO2: European industry loss of competitiveness due to fierce global competition and value chain dependencies: The viability and competitiveness of European projects across the entire upstream value chain are undermined by the economic pressures outlined above, resulting in a widened technological gap vis -à-vis non -EU manufacturers. While the Battery Regulation and the NZIA, including the Implementing Act on actions and draft Implementing Act on sustainability in public procurement, as well as the Ecodesign and Energy labelling requirements for photovoltaic modules and inverters establish important frameworks for en vironmental standards and for reducing strategic dependencies on single countries, they do not sufficiently address the economic pressure faced by domestic battery and solar PV producers. This is because the NZIA resilience criterion may lead to increased imports from Asian countries such as Vietnam, Malaysia, Thailand and Cambodia – whose PV projects pipeline is largely owned and controlled by Chinese manufacturers.. 553Furthermore, the NZIA framework does not cover the entire spectrum of vehicle components that can contribute to the decarbonisation of road transport not only in terms of reduced vehicle’s emissions, but also in terms of optimised traffic flows. Driver 4/SP2/SO3: A fragmented EU approach towards foreign investments : under the baseline scenario, the EU risks continued fragmentation of the Single Market due to non - harmonised investment conditions, potentially only attracting low value -added activities in sectors where the EU faces a significant technological gap. Under the current framework, Member States with an FDI screening mechanism may screen FDI554 under the FDI Screening Regulation (EU) 2019/452, but only on grounds of security or public order. This mechanism enables the EU to block or condition transactions that raise national security concerns. In 2023, only 18 Member States had screening mechanisms in place. France, Germany, Italy and Spain 550 Implementing the OECD Recommendation on Public Procurement in OECD and Partner Countries. 551 Directive (EU) 2024/1275 (“recast EPBD”). 552 In addition, the CO2 Emission Performance Standards for Cars Regulation also empowers the Commission to develop a methodology that could allow manufacturers to voluntarily report on the life-cycle emissions of vehicles. 553 IEA (2024). Energy Technology Perspectives 2024. 554 Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union 203 together made up nearly 70% of all cases. These larger Member States not only screen the most but are also the most active in imposing mitigating conditions where risks are identified .555 What it does not provide for is a tool to shape the quality of FDI, among others: systemically incentivizing knowledge transfer, technology diffusion, or local value chain creation in the Single Market. Driver 5/SP3/SO4: Lengthy, fragmented and uncertain permitting procedures for decarbonisation projects. While the efficiency of the permit granting procedures for some energy intensive industry decarbonisation projects is expected to improve following the implementation of the NZIA, most manufacturing industries are not covered under existing frameworks and can continue to face complex and lengthy permitting procedures, since no initiative has so far addressed horizontally the permitting problem at large. Driver 6/SP3/SO5: Difficulty to access resources (e.g. inputs and funding) would remain in the baseline scenario. While several initiatives aim at identifying key projects that could benefit from EU support, introducing criteria for identifying priority industrial decarbonisation projects could help Member States identify relevan t projects and focus their attention on creating better framework conditions to facilitate access to public funding, without prejudice to the State aid regime nor to the specific eligibility criteria of each funding programme. Against this baseline, we can conclude that the competitiveness of all manufacturing industries, notably energy intensive industries and some clean energy technologies, is likely not to improve in the coming years without further actions, with significant economic, social and environmental implications. The JRC has estimated that for each 1% loss of global final demand in energy-intensive industries, the potential impacts on employment would be losing 28 000 jobs, EUR 2 billion in value added and EUR 6.4 bi llion in turnover. 556 Further competitiveness losses would prevent investment in decarbonisation, affecting the EU’s ability to achieve its climate objectives. 555 European Commission (2025). Report from the Commission to the European Parliament and the Council - Fifth Annual Report on the screening of foreign direct investments into the Union. COM(2025)632 final. 556 CARMEN is a linear model, where a 10% decrease/increase in global final demand would yield a result 10 times worse/better tha n the baseline. To facilitate understanding, a 1% reduction is used as a reference point, providing a more manageable and comparable outcome. 204 Annex 9: Overview of policy measures SO1: Enable differentiation for low-carbon industrial products to increase their value and marketability Establishing a low-carbon product labelling system would allow for the differentiation of low- carbon industrial products from high-carbon ones to increase their value and marketability. 557 This measure would develop a labelling system that attributes GHG emissions emitted during the various stages of the manufacturing process to the industrial products, resulting in a clear GHG intensity per product, based on a harmonised and transparent methodology. Various design elements need to be considered. In addition to this GHG -intensity metric, the assessment will include other elements, such as the categorisation of the product’s GHG - intensity according to a predefined classification system (e.g. establishme nt of classes of performance) or the inclusion of further elements such as the share of recycled materials used in the production process. To establish the label, the Commission will set up rules for determining the GHG -intensity, including system boundaries and calculation methodologies, as well as rules for ensuring high- data quality via verification and certification. For their development , maximum use will be made of existing detailed GHG reporting rules, such as the ones included under the ETS framework or the related CBAM methodology. To avoid any discrimination, labelling should not result in a treatment of imported products less favour able than that accorded to domestic products. LAB 1 - Development of a low-carbon product label for all EII Given the diversity and high complexity of the manufacturing industry, a wide range of product labels could be envisaged. This measure would establish several product -specific and reliable labels that would cater for the specificities of each of the EIIs a nd attribute GHG emissions from the manufacturing phase to industrial products. Given the broad scope of sectors and related products, this option would have a horizontal approach, establishing in the legislation only the broad principles of the labelling systems, including elements on GHG certification methodologies, the rules on verification and certification and, when possible, the rules for setting up the classification systems. As a next step, product specific rules and values would be developed only in a second stage, via implementing and delegated acts or a review of the basic act. LAB 2 - Development of a low-carbon product label for steel This measure would develop the general principles of a low -carbon labelling system and operationalise such principles to develop a low -carbon product label for the intermediate product of steel, covering production steps up to hot -rolling steel. Compared to LAB 1, this measure would have a narrower scope, but a more in -depth approach, as all elements relating to the determination of the G HG-intensity of steel products, the verification and certification rules, and the possible classification system for steel would be frontloaded and included in the legislative initiative. This initial focus on steel is justified by the fact that the steel industry is one of the most emission-intensive industrial sectors, representing almost 20% of the industrial GHG emissions in the EU. Furthermore, most of the GHG emissions of the sector (up to 60- 80%) can be attributed to the industrial production stages covering up to hot-rolling steel, which most products have to go through regardless of whether the production route is based on iron 557 See, Section 2.3.1, Driver 1. 205 ore input, or as steel scrap input. The table below shows the design elements that will be analysed in Annex 12 to develop a low -carbon product label for steel, based on three main aspects: Table 18 Development of low-carbon product GHG label for steel LAB 2.1 – Determination GHG-intensity and system boundaries CALC1 System boundaries and calculation methodologies in line with free allocation rules under ETS and embedded emissions under CBAM methodology CALC2 System boundaries in line with ETS scope, limited nr. of key indirect emissions CALC3 Wider life cycle system boundaries included in scope, in line with draft Product Carbon Footprint (PCF) method developed by JRC under ESPR LAB 2.2 – Classification CLAS1 No classification CLAS2 One classification system without (CLAS2.a) or with (CLAS2.b) a sliding scale CLAS3 Two different classification systems per steel production route CLAS4 Classification system based on steel quality LAB 2.3 – Ensuring data quality DATA1 Label for EU steel producers only, based on self -declared emissions and production volumes DATA2 Label for EU steel producers only, with third -party verification and certification DATA3 Label for EU steel producers and importers, with third-party verification and certification SO2: Boost demand for European low-carbon products and clean tech As established in the problem section, low -carbon industrial products are not yet produced at the necessary scale to compete with conventional products. The demand and willingness to pay for such materials remain uncertain, making producers hesitant to invest in scaling up their production. Demand-side measures can break the chicken and egg problem. Lead market initiatives have been introduced around the world to incentivise cleaner alternatives by ensuring a demand, notably through green public procurement policies. See Annex 10 for more information. It must be recalled that all measures considered under SO2 would be subject to a review clause about 5 years after entry into force of this legislation, to ensure whether such measures remain necessary to achieve the policy objectives of this initiative. Energy intensive industries Scope considerations for LEAD_EII 1, LEAD_EII 2 and LEAD_EII 3 The most energy - and carbon -intensive sectors include steel, non -metallic minerals and chemicals (and their derivatives such as plastics and fertilisers). Steel and cement alone account for more than 6% of the EU’s annual GHG emissions, and as such are considered in priority in the development of lead markets for low-carbon products. In addition, aluminium should also be included in the scope consideration given its recognition as a strategic material in the Critical Raw Material Act, its demand increase driven by the green transition needs, as well as its emission intensity. 558 While the chemicals industry is the third largest industrial contributor to GHG emissions, the development of robust specific low-carbon criteria for chemicals and derived products (e.g. plastics) presents significant challenges, in 558 EU production of primary aluminium is about 6.8 kg of CO2 per kg of primary aluminium. Source: Zore, L. (JRC) (2024). Decarbonisation Options for the Aluminium Industry. 206 particular due to the heterogeneity of the sector and its outputs, which may require a more tailored approach , targeted to specific market segments, such as pla stic products used in construction. Other energy intensive sectors should be considered as appropriate. For these energy intensive materials, the relevant downstream sectors should be identified to support the creation of lead markets. Suitable lead markets to stimulate demand for low-carbon materials are generally downstream industries where the share of energy-intensive input in total production value is relatively small (thus reducing the impact of any price premium) while output volumes are sufficiently large to support the scaling-up of low-carbon production.559 Figure 26: Breakdown of energy intensive materials (steel, cement and aluminium) use in downstream sectors 560 Based on the figure above, the automotive and construction sectors, major consumers of cement, aluminium and steel , can play a key role in driving decarbonisation across these industries since the costs of their end products is minimally driven by the shares of the material, but rather from other value-added activities related to how these products are designed and manufactured.561 In the automotive and construction sectors, low -carbon requirements could be introduced through different intervention areas, depending on the level of ambition pursued: • Public procurement: requiring contracting authorities to incorporate low -carbon criteria (as a technical requirement or award criteria) into public procurement procedures related to the use of energy intensive materials in certain selected downstream sectors. • All public support schemes (incentives, grants, subsidies, tax benefits): requiring Member States to integrate low -carbon criteria concerning the use of a minimum share of energy intensive materials (e.g. steel) in selected downstream sectors, subject to public support schemes (e.g. tax incentives for purchasing an EV), without prejudice to State aid rules. • Products placed on the market (product regulation/internal market rules): establishing minimum mandatory low-carbon requirements for energy intensive materials (e.g. steel) used in products (e.g. vehicles) placed on the EU market – which manufacturers must comply with. Other sectors were identified due to their potential relevance, but not considered for measures at this stage: 559 Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B), p. 111. 560 JRC analysis. Source: Analysis based on data from European Aluminium (2023), CemBureau (2025), EUROFER (2025). The data used correspond to the following years: NA for aluminium, 2023 for cement, 2024 for steel. 561 Deloitte (2025). Mobilizing consumer demand for sustainable investments. 207 The wind energy sector also emerges as a relevant downstream sector for energy intensive industries and in particular steel. The EU plans a significant expansion of wind energy capacity to meet its climate objectives and wind turbines are highly steel -intensive, with steel requirements estimated at 107 -132 tonnes per MW, making it a relevant sector for decarbonisation, beyond its direct contribution as a clean energy technology. At the same time, also the impact of potential measures on the competitiveness of the sector would need to be assessed. Similarly, the European defence industry is expected to grow substantially in the coming year, driven by increased government spending and a focus on strengthening defence capabilities. In the defence sector, the cost impact of using low -carbon steel and aluminium in a military tank is estimated to remain below 1% by 2030.562 Based on the Open Public Consultation, the most important downstream sectors supporting the uptake of clean energy-intensive materials were identified as construction and infrastructure (218, 70%), automotive (196, 62%), defence (92, 30%), machinery (40 respondents), electrical and electronic equipment (136, 43%), and clean energy technologies (186, 60%). LEAD_EII 1 - Low-carbon requirements for EIIs outputs in public procurement and support schemes (no Made in EU requirements) This policy measure introduces low -carbon requirements in public procurement and support schemes for steel, cement and aluminium used in selected downstream sectors. Targets setting The 2030 low-carbon (LC) target for steel is calculated as the ratio between the expected LC production capacity that is committed or under construction and the projected total production in 2030 for the relevant sector. This ensures that the target reflects the credible supply base likely to be available by 2030 and excludes projects still at the announceme nt or feasibility stage. Under this measure, a specified share of materials used in publicly financed projects or supported activities must come from low-carbon production routes, as defined in LAB 2.2. The share would increase progressively over time through a review clause, in l ine with climate targets and the expected ramp-up of LC capacity. The objective of this measure is to stimulate demand for low-carbon steel, providing a market signal that justifies continued investment in industrial decarbonisation while remaining manageable given current supply constraints and costs differentials. BloombergNEF data563 shows that 61 new European low-carbon steel projects are currently ongoing and can be classified between L abel A –C, following the classification system proposed in Annex 12, with a material capacity amounting to 75.4 Mtonnes per year. However, only 23 of these projects, equivalent to 29.7 Mtonnes per year, have reached a committed or under-construction stage. These are the projects most likely to be operational by 2030. Around 41.4 Mtonnes of potential capacity remain in earlier planning or feasibility stages and are at risk of delay or non-realisation. Targets 562 Analysis by Industrial Transition Accelerator (ITA) and Third Generation Environmentalism (E3G). 563 BloombergNEF (BNEF), Decarbonised Steel Projects Database, Version 1.0.5 (2025). Commission analysis. 208 Regarding steel, the target is calculated by dividing the committed low-carbon capacity of 29.7 Mtonnes by the projected total EU-27 steel production of 134 Mtonnes in 2030 (based on the OECD Steel Outlook 2025564, excluding the United Kingdom’s 4 Mtonnes of output reported in World Steel in Figures 2025 565, and not taking into account possible effects from the proposal for a Regulation addressing the negative trade -related effects of global overcapacity on the Union steel market 566). This results in an estimated low -carbon share of about 2 2% of total EU production in 2030. On this basis, a low-carbon requirement of 25% by 2030 is proposed for public procurement and support schemes , ensuring an ambitious yet achievable target that reflects expected industrial deployment while stimulating early market demand. Regarding cement, FID projects for low-carbon cement are estimated to produce 2.3 Mtonnes in 2030567, which is equivalent to a 1% of EU overall production. A more ambitious target, also considering the size of the construction market, could make some of the announced capacity materialise earlier. Therefore, a low-carbon requirement of 5% cement target in 2030 seems opportune. Such target will be subject to review overtime, based on the pace at which low - carbon capacity comes online. Regarding aluminium, the target is based on primary production and derived from the following assumptions. First, European primary aluminium supply in 2030, including production in the UK, Norway, and Iceland, is assumed to remain constant 568 at current capacity levels of approximately 3.6 Mt 569. Furthermore, a recent industry analysis of decarbonisation pathways for European primary aluminium production estimates total emissions reduction for primary aluminium by approximately 36.9% in 2030 compared with baseline 2021.570 This corresponds to around 11 MtCO2e emissions in 2030. On this basis, the average CO2 emission intensity of European primary aluminium in 2030 is assumed to be 3.27 tCO2e. per tonne of primary aluminium. While European primary aluminium supply is considered to remain stable, aluminium demand in Europe is projected to increase to around 16 Mt by 2030, with some of the predicted growth to be generated by aluminium replacing other materials 571. Under these assumptions, low - carbon aluminium produced via the primary route could supply approximately 22.5% of total European demand in 2030 572. Accordingly, a target of 25% in 2030 is considered both appropriate and achievable, as it is closely aligned with the projected availability of low-carbon primary aluminium. Proposed measure under EII_1 This measure proposes a low -carbon content target of 25% for steel publicly procured in the selected downstream sectors in 2030, where low -carbon steel is considered compliant with classes A to C of the voluntary label designed in LAB.2. A review clause wi ll be included for after 2030, based on projected supply of low -carbon steel, projects that have reached final investment decisions, and the general imports share. Participants in public tenders would be 564 OECD (2025). OECD Steel Outlook 2025. 565 World Steel Association (2025). World Steel in Figures 2025. 566 European Commission (2025). Proposal for a Regulation of the European Parliament and of the Council addressing the negative trade- related effects of global overcapacity on the Union steel market. COM(2025) 726 final. 567 Mission Possible Partnership (MPP), E3G and the Industrial Transition Accelerator (ITA) (2025). Building the EU’s Clean Industrial Future: Unlocking Investment through Lead Markets. 568 Eurometaux and KU Leuven (2022). Metals for Clean Energy: Pathways to solving Europe’s raw materials challenge. 569 European Aluminium (2023). Net-Zero By 2050: Science-Based Decarbonisation Pathways for The European Aluminium Industry. 570 Ibid. 571 European Aluminium (2022). Circular Aluminium Action Plan - A Strategy for Achieving Aluminium’s Full Potential for Circular Economy by 2030. 572 Where 22.5% is calculated by dividing the projected increase in EU aluminium demand in 2030 (16 Mtonnes) with the projected supply low-carbon capacity (3.6 Mtonnes) by 2030. 209 asked to demonstrate compliance with the low-carbon requirement by using the steel label (or, potentially, an equivalent certification). For cement, this measure proposes a low -carbon content target of 5% for cement/concrete publicly procured in construction in 2030. As for steel, a review clause will be introduced to review the target level after 2030, depending on market developments. This target is based on current final investment decision projects for low -carbon cement, estimated to produce 2.3 Mtonnes in 2030, which is equivalent to 1% of EU overall production. The specific design of the ambition level will reflect the methodological approach followed under the CPR. For aluminium, the measure proposes a low-carbon content target of 25% for aluminium publicly procured in construction and selected downstream sectors in 2030. Similarly to cement, a review of the post-2030 target level will be conducted , based on market developments. This target is based on the 2030 availability of EU supply of low-carbon primary produced aluminium. The underlying design of the ambition level will reflect the methodological approach followed under the ESPR. Table 19: Overview of LEAD_EII 1 Requirement Market segments Energy intensive material Targets Low-carbon requirement Public procurement Public support schemes Steel 25% in 2030 Cement (concrete573) 5% in 2030 Aluminium 25% in 2030 LEAD_EII 2 – Low-carbon requirements for EII outputs and minimum Made in EU requirement for EIIs in public procurement and support schemes Scope considerations for LEAD_EII 2 Based on sectoral analysis described in Annex 7, steel , aluminium and cement are considered high-potential sectors for this measure as the market share of EU producers has been declining substantially in the past 10 years, making them particularly at risk of de - industrialisation. To address these challenges, the measure couples the low-carbon requirements with minimum Made in EU requirements in public procurement and support schemes. Targets Under this option, the low-carbon and made in EU requirement would apply to steel products in public procurement and public support scheme ensuring that at least 25% of the steel used in the automotive and construction sectors as part of public procurement and support schemes in 2030 is of European origin and is compliant with the classes A to C as defined under LAB.2. This corresponds to the domestic supply of approximately 35.1 Mtonnes per year (29.7 Mtonnes from EU production). Given the potential for uptake of low -carbon steel is different in these two market segments, there is higher potential to use low -carbon EAF steel in construction, versus low-carbo primary route-based steel in automotive. A minimum Made in EU requirement ensuring that the low -carbon steel used in publicly financed projects originates from EU or EEA producers. To introduce minimum Made in EU requirements in public procurement in line with international commitments for EIIs but with maximum use of exemptions from those 573 For the objective of lead markets in the construction sector, the requirement may be established at the level of concrete, as the carbon impact of energy intensive materials depends heavily on the specific design and material mix. 210 international commitments, the following design elements on how to define “EU content” will be considered: • Minimum percentage of the value creation (i.e. value of the final product compared to initial input) to take place in the EU • Minimum share of specific materials used in a product to be manufactured in the EU • Specific production steps or final assembly must take place in within EU Analysis on the target for EU low-carbon requirements for cement and steel is carried out under LEAD_EII 1. Overview of LEAD_EII 2 Table 20: Proposed targets under LEAD_EII 2 Requirement Market segments Energy intensive material Targets Low-carbon + Made in EU requirement Public procurement Public support schemes (in selected downstream sectors) Steel 25% in 2030 Cement (concrete) 5% in 2030 Aluminium 25% in 2030 LEAD_EII 3 –Low-carbon and EU content for EIIs in products placed on the market (in selected downstream sectors) This policy measure extends the scope of low -carbon and Made in EU requirement beyond public procurement and support schemes to include selected downstream sectors placing products on the market. It combines the low-carbon requirement within that low-carbon share, thereby incentivising both the use of decarbonised materials and their European production across industrial value chains. The targets are determined based on projected EU production capacity and demand and have been set at a level that is intended to be both ambitious and achievable. The measure would be implemented up to 2030, with a review clause allowing the targets and coverage to be adjusted based on realised production capacity and market developments. Table 21 Projected European production and demand in million tonnes for selected EII products, Commission internal analysis Material Steel Aluminium Cement 2030 Expected production 134 9 197 Expected demand 176.52 16 160.7 % of EU production that can cover demand 75.9% 68.75% 122.6% Table 22: proposed targets under LEAD_EII 3 Requirement Market segments Energy intensive material Targets Low-carbon + Made in EU requirement All products placed on the market (in selected downstream sectors) Steel 25% in 2030 Cement (concrete) 5% in 2030 Aluminium 25% in 2030 Steel 85% from entry into force 211 Made in EU requirement All products placed on the market (in selected downstream sectors) Cement (concrete) 95% from entry into force Aluminium 70% in 2030; Clean technologies LEAD_BAT 1 - Made in EU requirements in batteries for public procurement, auctions, and public support schemes Driver 3 under Sub -problem 1 is particularly relevant to the batteries industry, which is why Made in EU requirements are the only policy option assessed. As outlined in the baseline, low- carbon requirements for batteries are already addressed under existing legislation, namely the Battery Regulation. This measure would introduce Made in EU requirements, in line with international commitments, for batteries in public procurement, auctions and public support schemes with a particular focus on EVs and BESS. Under this measure, ‘ Made in EU requirement’ refers exclusively to content originating within the EU and potentially EEA. Scope considerations The battery value chain is complex, and the final product consists of key components and materials, each of which constitutes a distinct finished product originating from upstream sectors which are often located in different countries. The final battery product is composed of the following 10 components, as listed in the Commission Implementing Regulation 2025/1178: battery pack, battery module, battery cell, cathode active material (CAM), anode active material (AAM), separator, electrolyte, battery management system (BMS), battery thermal management system (BTMS), and current collectors . Therefore, LEAD_BAT 1 considers which product step would most benefit from the introduction of an Made in EU requirement. First, the requirement will be assessed at the level of the battery final product using a component-based approach. This means that a specified number of the battery’s components must be manufactured within the EU and possibly EEA, including certain mandatory components. An additional list of components ranging from precursor active materials to critical raw materials could be introduced through a delegated act to ensure coverage of the entire battery value chain. At this stage, there is insufficient data and cost analysis to justify the inclusion of upstream segments or to establish reliable EU content targets. Importantly, this extended list could not apply exclusively to EU -based production but could also include EU plus other regions’ sourcing, depending on local manufacturing capacities and global supply dependencies. Second, the requirement should follow a phased implementation. Given that the maturity of the battery value chain varies significantly across its different segments, Made in EU requirements should be phased in progressively, with an initial focus on the most developed segments of the value chain: the production of battery cells. As upstream manufacturing capabilities (e.g. active materials, separators, electrolytes) develop withi n the EU, content requirements could gradually extend to these components. This time phased approach ensures that requirements are realistic, enforceable, and aligned with industrial development of the battery sector. EVs: Mandatory Made in EU requirements of at least 4 components at one year after entry into force, including the battery cell, increasing to 6 components after three years of entry into force, including the BMS and the CAM. 212 BESS: Mandatory Made in EU requirements of at least three components at one year after entry into force , including the BMS; increasing to 6 components after three years of entry into force , including the battery cell and the CAM. Targets The targets set are based on projected installed capacity for battery components, derived from industry announcements 574, and compared against total European demand EVs and BESS batteries. This approach is conservative, as Made in EU requirements will not apply to the entire demand of EV and BESS batteries. Additionally, all projects currently on-hold have not been accounted for. Midstream value chain Battery cells will become a mandatory requirement for EVs one year after entry into force. For BESS, the mandatory requirement for battery cell s will apply once a robust EU -based battery cell manufacturing capacity for stationary storage is established for which further investments will be needed. In 2027 and 2028, projected installed battery cell capacity is expected to reach 379 GWh and 504 GWh, respectively. This would be sufficient to meet 93% and 98% of the combined internal demand for EVs and BESS. Specifically, EV battery demand is projected to reach 353 GWh in 2027 and 453 GWh in 2028, meaning that installed capacity alone could fully meet EV demand in both years. These figures include operational, under - construction, and announced projects. Even if announced projects are excluded, the remaining operational, including expansions, and under-construction capacity would still cover 93% and 98% in 2027 and 2028 of EV demand. The installed production capacity of the EU plus the EEA countries could already cover 97% of EV demand in 2027 and 103% in 2028. Looking ahead, battery cell capacity including announced projects is expected to meet 108% of total EV and BESS demand by 2029. If announced projects are excluded, this threshold would be reached by 2030, with installed capacity covering 103% of total demand. 575 Although the EU is approaching self -sufficiency in this segment , it is still reliant on imports and additional investments will still be necessary to keep up with demand increases and the development of next-gen batteries. Upstream value chain Unlike battery cells, many CAM and AAM projects are still at the announcement stage. In 2027 and 2028, total CAM capacity is expected to reach 587 GWh and 797 GWh, covering 144% and 154% of demand. However, when considering only operational, including expansions, and under-construction projects, coverage drops to 99% and 89%. By 2030, total CAM capacity would cover 1 19% of demand, but only 77% if announced projects are excluded. For AAM, total projected capacity reaches 255 GWh and 411 GWh in 2027 and 2028, covering 62% and 80% of demand. Yet, operational and under -construction capacity only covers 12% and 14%, respectively. By 2030, total capacity would cover 60% of demand, while operational and under-construction projects would only reach 9%.576 Separator and electrolyte capacity is concentrated in a few large -scale projects. Separator capacity is expected to meet 102% of demand by 2030, while electrolyte capacity covers 100% of demand in 2025 and 57% by 2030, indicating a lack of long-term investments.577 Downstream value chain 574 European Battery Alliance, BloombergNEF and European Commission internal analysis. 575 BloombergNEF and European Battery Alliance 576 Ibid. 577 BloombergNEF 213 Battery pack and battery module capacity in the EU battery module is distributed and developed across Europe, with many automotive OEM manufacturers handling these processes locally. The EU’s capacity for pack assembly currently stands over 102 GWh 578, which includes approximately 54.8 GWh dedicated to EV-only applications, 11 GWh for BESS-only systems, and 37 GWh for mixed-use applications (both EV and stationery). In addition, another 316 GWh are currently in the pipeline , comprising 268.45 GWh for EV -only applications, 8 GWh for BESS-only systems, and 40 GWh for mixed -use applications.579 Any Made in EU requirement on cells will most likely lead to modules and packs also being manufactured within the EU, since they have to include the EU-made cells in the final product. Additionally, the EU counts with a significant number of companies producing BMS, at least 32580, and BTMS, with two EU-based firms ranked among the five largest globally581, spanning over 10 Member States and providing solutions both for EVs and BESS. In terms of production costs, the EU battery industry reflects a mix of start -ups still refining their manufacturing processes and well -established companies with existing overseas operations. Production costs between these companies vary depending on thei r level of maturity and stage in their ramp up phase. Currently, battery manufacturing in the EU is generally more expensive than in markets like China or the United States. This is primarily due to lower levels of manufacturing subsidies 582, elevated material prices for which the EU is dependent on third countries, which account for 55% of the production costs, and higher energy and labour costs, which account for 15% and 13% of production costs, respectively.583 In 2023, on average, European battery production costs 584, were almost 50% higher than in China for the same chemistry. However, there is potential for innovation in the battery manufacturing sector in the EU which could cut the cost gap with China by 40% .585 Additionally, economies of scale are essential for producing batteries competitively, as battery production, driven by fierce cost competition and global overcapacities, is often a low margin business that requires extreme precision and efficiency, and th erefore high yields and automation.586 This underscores the strategic importance of rapidly scaling up European production to be able to reduce the cost gap with overseas markets. It is estimated that an EU based battery cell manufacturer could reach a 26% cost difference when producing the sa me battery chemistry under the same conditions and using localised CAM and AAM .587 Battery cells, and its components, remain the most expensive part of a battery, amounting to around 68% of the total costs in 2024. These estimates do not account for additional factors such as higher logistics costs from China, import tariffs, and higher profit margins outside the EU. In fact, import costs represent around 10% of the total costs of imported batteries.588 While certain steps of the battery value chain are more developed, the EU battery ecosystem already has production capacity across the entire value chain, and this capacity is expected to 578 Up to six operational projects do not have available information on their installed capacities. Current installed capacity for modules and packs must absorb both EU made and imported cells. 579 Battery Pack Manufacturing Assets, BloombergNEF 580 BMS Manufacturers, Battery News 581 Top Companies in Battery Thermal Management System Industry, Markets and Markets 582 MIT CEEPR. Global Clean Investment Monitor: Government Support for Electric Vehicles and Batteries. In 2024, Europe allocated approximately EUR 2.15 billion in subsidies for both electric vehicles and battery manufacturing. By comparison, China and the United States allocated EUR 6.32 billion and EUR 7.4 billion, respectively, for battery manufacturing alone. 583 IEA (2024). Energy Technology Perspectives 2024. 584 Battery manufacturing cost differentials are assessed at battery cell level and include battery cells as well as cathode and anode active materials. These components account for the largest share of total battery costs and also due to their energy-intensive nature and the importance of manufacturing efficiency, they are where cost disparities between China and other regions are most pronounced. Costs for s eparators, electrolytes, current collectors, and other upstream materials are based on global average estimates. 585 IEA (2024), Energy Technology Perspectives 2024. 586 Intercalaction Station, 2023 587 Battery Report 2024, Volta Foundation. Model parameters: same yields, factory automation, material margins ; no import tariffs or local premiums on materials and region-average energy prices. 588 IEA (2024). Energy Technology Perspectives 2024. 214 grow significantly in the coming years. The targets are designed to allow for flexibility while ensuring that critical components are manufactured within the EU. These targets will help ensure that current industry announcements materialize, while also att racting additional investment into the sector, particularly in battery technologies and chemistries that require greater development within the EU. LEAD_BAT 2 - Made in EU requirements in batteries placed on the market Scope considerations In addition to the measure described in LEAD_BAT 1, this measure would introduce Made in EU requirements for batteries used in EVs and energy storage systems in in batteries placed in the market. It would establish a market entry requirement for all EVs, and BESS placed on the EU market. LEAD_SOL 1 - Made in EU requirements in solar for public procurement, auctions, and public support schemes This measure proposes to cover the entire solar PV value chain, addressing not only the final product but also the key components that comprise it. The provisions are to kick in with entry into force of IAA. The solar PV final products and their key components are defined in the NZIA Implementing Act on main specific components.589 The measure introduces a requirement that solar PV systems and their main components are manufactured in the EU and is designed in alignment with the access to markets provisions as per the NZIA. Considering the dependencies related to solar PV technologies 590, the inclusion of countries which are part of the GPA591 or with which the EU has entered an FTA592 (including GPA and FTA countries in the content requirement would significantly reduce the measure’s added value compared to relevant provisions under NZIA. Consequently, this alterative will not be further assessed, and the requirements will focus exclusively on EU content only. Choice of measure The EU solar PV market is divided into utility-scale, commercial & industrial (C&I) rooftops, and residential rooftops, with emerging specialty products (agrivoltaics, vehicle-integrated PV, space PV) remaining niche.593 • Utility-scale PV: around 40-45% of annual additions 2025–2030 • C&I Rooftops: around 30-40% of additions, varying by country • Residential Rooftops: 10-20% of additions mid-2020s, recovering towards 2030 Share of PV deployment covered by public procurement, auctions and public schemes based on industry estimates provided during the NZIA drafting. • Across Member States, public procurement is assumed to account for 3% of the PV capacity deployed. 589 C(2025) 9033 final ANNEX 590 Highlighted in the Commission Communication on shares of the Union supply under NZIA; Communication of the Commission of 23 May 2025 providing updated information to determine the shares of the European Union supply of final products and their main specific components originating in different third countries under Regulation (EU) 2024/1735 on establishing a framework of measures for strengthening Europe’s net-zero technology manufacturing ecosystem (Net-Zero Industry Act). 591 Parties to the GPA include Armenia, Australia, Canada, Chinese Taipei, EU, Hong Kong SAR, Iceland, Israel, Japan, Liechtenste in, Moldova, Montenegro, New Zealand, North Macedonia, Norway, Singapore, South Korea, Switzerland, Ukraine, United Kingdom, and the United States. 592 An mapping of the EU’s trade agreements is available at 0e05d6f3-64f5-4661-ae0c-aefb68094d19. More information is available at https://policy.trade.ec.europa.eu/eu-trade-relationships-country-and-region/negotiations-and-agreements_en. 593 SolarPower Europe (2025). Reshoring Solar Manufacturing to Europe. 215 • Across Member States, renewable energy auctions are assumed to account for 19% of the PV capacity deployed. • Across Member States, public support schemes are assumed to account for 12% of the PV capacity deployed. Relevance of public procurement: Public procurement is emerging as a crucial tool to shape demand for EU-made solar products. Whilst the overall market share of public procurement in solar is limited, with growing deployment of solar on public buildings and infrastructure, aligning procurement practices with industrial policy objectives can provide predictable, large- scale demand for European manufacturing. Relevance of public support schemes: Public support schemes, such as subsidies, grants, and tax rebates for solar PV, can play a vital role in promoting EU-made technologies. Authorities designing these schemes must incentivise the purchase of solar products that meet the Made in EU requirements as set out in the table. This can be done by offering additional financial bonuses or making EU content a condition for eligibility. Relevance of auctions: Auctions represent a critical market segment for solar PV as they provide a structured and predictable pathway for large -scale deployment. They offer developers clear visibility on future demand and long-term offtake certainty, which is essential for mobilising investment in capital-intensive infrastructure. Trade aspects The EU is a net importer of all key components across the solar PV value chain. At present, the majority of PV modules deployed in the EU are imported, and domestic production of modules remains limited. As a result, imports of PV cells and upstream components remain correspondingly low. Given the sequential nature of the PV value chain, meaningful imports of PV cells will only materialise once EU module production has been scaled up. Likewise, significant imports of PV wafers will only occur once PV cell production has been reshored to Europe. According to the Commission Communication on shares of Union supply, in 2023 the EU supply of PV technologies was extremely reliant on Chinese imports. For the following components, the share of Union supply from China was the following one: • PV modules and PV cells: 94% • PV inverters: 50% • PV wafers: 79% Targets proposed under IAA Following considerations apply: • Component based approach, i.e. requiring a certain number of components to be manufactured in the EU instead of a percentage • Phased in approach: first step with entry into force, second step for 2030 • The targets are not limited in time but subject to the general review clause. • Gigawatt scale production and innovation should be encouraged as well as products and components using EU equipment for the production. • The mandatory components have been chosen to keep cost increase limited and focus on steps with most added value and with most job creation. Public procurement, auctions and support schemes: • One year after entry into force : 3 main specific components to be made in EU, out of which inverter mandatory 216 • Three years after entry into force: 4 main specific components should be made in EU of which cell, inverter mandatory. Manufacturing capacity targets in view of expected deployment In 2024, 65 GW on new solar PV was installed in the EU, a 4% growth rate from 2023.594 Reaching the objective of 700 GW of deployed solar capacity by 2030, set out in the EU solar energy strategy 595 under REPowerEU, requires maintaining a pace of 60 GW per year until then. Figure 27: Manufacturing capacity of solar PV components vis a vis PV deployment covered by the Industrial Accelerator Act, today-2030, Net-Zero Technology Manufacturing Dashboard Notes: Deployment covered by Industrial Accelerator Act IAA) includes public procurement, renewable energy auctions and public support schemes. FID = Final Investment Decision. The line referring to “Deployment covered by IAA” in the graph above represents the amount equivalent to the share of the annual deployment market covered by the market segments to which the Made in the EU requi rements would apply to ( public procurement, auctions and support schemes). • Ramping up manufacturing capacity of PV modules is fast, therefore a Made in EU requirement to be introduced one year after entry into force of the Act would be feasible. • By 2030, the EU has sufficient manufacturing capacity to fulfil the deployment covered by IAA through the whole value chain, provided that the right measures (like Made in EU requirements) are put in place. Operational capacity can fulfil the following percentages of current PV deployment covered by IAA: • Polysilicon: >100% • Ingot: 0% • Wafer: 0% • Cell: 10% • Module: >50% • Inverter: >100% 594 PV Magazine (2024). EU solar installations hit 65.5 GW in 2024, says SolarPower Europe. 595 European Commission (2022). Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - EU Solar Energy Strategy, COM/2022/221 final. 217 Capacity expected to be operational one year after the entry into force of IAA (i.e. 2028, operational + FID + under construction capacity) could fulfil the following percentage of PV deployment covered by IAA: • Polysilicon: >100% • Ingot: 0% • Wafer: 1% • Cell: >60% • Module: 80% • Inverter: >100% Further components from the list in the Communication on main specific components under the Net-Zero Industry Act can be used to meet the targets of LEAD_SOL 1.596 Capacity expected to be operational in 2030 (operational + FID + under construction + announced capacity) could fulfil the following percentage of PV deployment covered by IAA: • Polysilicon: >100% • Ingot: >100% • Wafer: >100% • Cell: >100% • Module: >100% • Inverter: >100% Further components from the list in the Communication on main specific components under the Net-Zero Industry Act can be used to meet the targets of LEAD_SOL 1.597 In public procurement procedures, contracting authorities must limit reliance on overconcentrated supply chains and impose contractual obligations if more than 50% of a main specific component originates from a single third country. Public procurement is emerging as a crucial tool to shape demand for EU-made solar products. LEAD_SOL 2 - Made in EU requirements in solar PVs placed on the market In addition to the measure described in LEAD_SOL 1, this measure introduces Made in EU requirements for solar PV also in private procurement, in addition to public procurement and support schemes - to further strengthen EU manufacturing. To ensure effective implementation, manufacturers would be required to document the EU content of their products, including sourcing, production, and assembly data. Compliance could be verified through regular reporting and independent audits, with a clear methodology for calculating EU value added. Enforcement could include penalties for non-compliance, ensuring transparency and consistency across both public and private procurement markets. Phased in approach To mitigate potential supply chain disruptions, Made in EU requirements can be phased in gradually, aligning with the feasible expansion of manufacturing capacity within the EU. This staggered approach would help ensure that the requirements are not only realistic and enforceable but also in sync with the actual industrial development of the EU solar PV sector. 596 European Commission (2025), Communication from the Commission providing updated information to determine the shares of the European Union supply of final products and their main specific components originating in different third countries under Reg ulation (EU) 2024/1735 on establishing a framework of measures for strengthening Europe’s net -zero technology manufacturing ecosystem (Net -Zero Industry Act), C(2025) 3236, 18 June 2025. 597European Commission (2025), Communication from the Commission providing updated information to determine the shares of the European Union supply of final products and their main specific components originating in different third countries under Reg ulation (EU) 2024/1735 on establishing a framework of measures for strengthening Europe’s net -zero technology manufacturing ecosystem (Net -Zero Industry Act), C(2025) 3236, 18 June 2025. 218 Made in EU requirements could be phased in gradually, starting with low thresholds and less complex value chain segments, then expanding and rising over time as EU production capacity develops. Alternatively, rules could apply only once minimum capacity is in place, with voluntary commitments from large buyers encouraged in the meantime. LEAD_VC 1 – Made in EU requirements in vehicle components for public procurements and support schemes Driver 3 under Sub-problem 2 is relevant for automotive components, which is why Made in EU requirements are the only policy option assessed. As explained in the baseline, resilience criteria laid down by the NZIA framework do not cover the entire spectrum of vehicle components that have the potential to contribute to the decarbonisation of road transport, nor do they address sufficiently the economic pressure (cost disadvantage) faced by domestic automotive component suppliers. In line with this driver, this measure would introduce Made in EU requirements for automotive components, as the minimum share (%) of EU -made components over total components in value, excluding batteries. in public procurement and public support schemes. Scope considerations The EU content in a passenger car sold on the EU market may differ significantly depending on the model and type of vehicle considered and where it has been produced. Estimates from the JRC indicate that the EU content in passenger cars produced in the EU has been gradually decreasing over time and represented in 2022 on average 70% of the car's value in the case of an EV (excluding the battery) while it was totalling 85% of the car's value for an internal combustion engine (ICE) car.598 It should be noted that passenger cars not produced in the EU have lower shares of EU content compared to the ones produced in the EU 599, however the battery is assessed in a different provision (LEAD_BAT). Implementing a 70% Made in EU requirement for EVs sold in the EU upon the introduction of the measure could help reverse the erosion of EU content of EVs observed over the last decade, bringing it closer to that of ICEs. The requirement could then be gradually increased to 75% by 2030. A crucial aspect of vehicle components production regarding its complex value chain must be taken into consideration: the final vehicle component product is often composed of key sub - components and materials (or software), each of which constitutes a disti nct finished product originating from upstream sectors (tier 2 or 3 suppliers), sometimes located in different countries. If we take, for instance, the example of an electric motor, the final product may include a stator and rotor, a shaft, bearings, brack et, terminal box (T -box) seat and its cover, washer, pre-load spring, external fan and its cover. At the same time, the proposed measure has to be based on criteria that are relatively simple to implement and limit the administrative burden of each player of the value chain. The Made in EU requirement on vehicle components should offer sufficient freedom to OEMs regarding their sourcing strategy (make or buy and choice of suppliers) and provide sufficient freedom to Tier-1 suppliers regarding their own sourcing strategy (make or buy and cho ice of tier 2+ suppliers). The metrics used to assess the EU content threshold should be defined as the minimum share (%) of EU -made components over total components, in value, excluding batteries. The EU 598 These estimates are in line with the ones provided by McKinsey: 85 -90% and 70 -75% of EU content for an ICE and a battery electric vehicle, respectively, produced in Europe in 2023. https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/europes- economic-potential-in-the-shift-to-electric-vehicles 599 For instance, McKinsey estimated 20% of EU content for a battery electric vehicle imported in Europe in 2023: https://www.mckinsey.com/industries/automotive-and-assembly/our-insights/europes-economic-potential-in-the-shift-to-electric-vehicles 219 content definition should remain as close as possible to the existing rule of origin methodology referring to “last substantial transformation” to limit additional administrative activities to both OEMs and suppliers. EVs600: at least 70% EU -made components over total components, in value, excluding batteries one year after entry into force and 75% by 2030. LEAD_VC 2 - Introduce Made in EU requirements in automotive components for public procurements, public support schemes and all vehicles placing on the market. Scope considerations In addition to the measure described in LEAD_VC 1, this measure would introduce Made in EU requirements for automotive components not only in public procurement and public support schemes, but also to placing on the market. EVs601: at least 70% of the total value of a vehicle one year after entry into force and 75% by 2030. SO3: Maximise the quality and benefits of foreign investment in the EU INV 1 – Guidance on voluntary FDI conditionalities This measure would entail issuing a non-binding, soft law instrument (e.g. guidelines) calling upon Member States to impose conditionalities on FDI for industries falling into scope (e.g. batteries and potentially certain energy intensive industries), provided these are compatible with provisions of EU law governing, for instance, free movement of capital and mergers.). The guidelines would urge that Member States impose conditionalities in their national regimes covering FDI, including sectoral rules (for the sectors covered). INV 2 – Mandatory FDI conditionalities EU-wide Moving from “policy-by-project” to “policy-by-principle” is essential to retain as much added value from foreign investments as possible. Instead of negotiating conditionalities case by case, the EU will define clear, horizontal criteria for FDI in strategic sectors to align investor incentives with EU resilience targets while providing predictability for companies. This measure will impose mandatory rules on FDIs for the industries in scope, namely battery supply chain (especially batteries for EVs) and other critical technologies in strategic sectors . Determining which sectors fall under mandatory FDI conditionalities is anchored in the established framework for identifying technologies critical to economic security .602 The Recommendation on critical technologies 603 requires an assessment based on three narrowly defined criteria: 1) the enabling and transformative nature of the technology, 2) the risk of civil–military fusion, and 3) the risk of misuse for human -rights violations. This is complemented by a systemic v ulnerability analysis examining chokepoints, EU comparative position, supply-chain concentration, threat actors and global interdependencies. Applying this methodology, we can define a list of sectors for which it is justified that they are included in the scope of mandatory FDI conditionalities. 600 This category includes BEVs and PHEVs. The target reflects on the aggregated value and the weighted average of both BEVs and PHEVs. 601 This category includes BEVs and PHEVs. The target reflects on the aggregated value and the weighted average of both BEVs and PHEVs. 602 European Commission (2023). Joint Communication to the European Parliament, the European Council and the Council on “European Economic Security Strategy”, JOIN(2023) 20 Final. 603 Commission Recommendation C(2023) 6689 on critical technology areas for the EU's economic security for further risk assessment with Member States. 220 Safeguards and proportionality are ensured through the design of the conditionalities themselves. In line with the Commission’s requirement that protective measures be precisely targeted and proportionate to the risks identified, the legal provision applies a coherent, uniform set of conditions that applies to inbound investors in these designated strategic sectors . However, the Act differentiates the degree of obligation between two groups of technologies to align proportionality with the intensity of risk s identified . For strategic reinforcement technologies, vulnerabilities are acute, structurally embedded and linked to highly concentrated global supply chains. In these sectors, inbound investors must comply with all conditions, as flexibility would weaken the EU’s capacity to retain critical technology, secure supply chains and reduce exposure to foreign leverage. By contrast, for other emerging key strategic sectors, risks remain significant but more heterogeneous or forward-looking. To avoid hampering scale-up and innovation in areas where Europe still needs to deepen its capabilities, investors must meet with a subset of the conditions. This calibrated flexibility preserves a meaningful economic security baseline while maintaining openness to investment essential for technological development. Through this two -tier structure, the Act applies strict conditionality where the Union cannot tolerate vulnerabilities, and targeted flexibility where it strengthens competitiveness without undermining economic security. The scope of the conditions would exclude FTA countries. These rules would either: • Directly apply to FDIs covered in the measure OR • Create an obligation for Member States to scrutinise FDIs above a certain threshold in the above-mentioned scope and prescribe conditionalities for that investment. Under both options, such conditionalities are: a. Ownership and Structural requirements This option group of conditionalities includes measures that control the ownership structure and relations of foreign investments within the EU to maintain local interests. Ownership control requirements would introduce limits on non -European ownership/control for industries in scope (e.g. maximum 49% of the JV or EU firm can be owned by a non -EU based company or person). In addition, joint venture requirements could oblige FDI to partner with an EU firm, including a cap on their ownership control. The legal provisions would have to consider control relations from third countries. Applicable foreign investments would either have to obtain prior approval from Member States or Member States would implement compliance measures horizontally. b. Value added production This group of conditionalities concern requirements to ensure that foreign investments lead to value added production, including R&I, engineering activities, domestic processing and manufacturing while incentivizing local sourcing and production of intermediate goods. Such requirements may include using (a certain percentage) of EU -produced equipment and consumable inputs, aimed at boosting domestic industries in the upstream value stages, as well as to ensure independence of the investment from the origin country (and the investor’s other operations) to increase supply resilience. The quality of value chains should also be considered 221 to avoid foreign investments extracting value with minimal contribution to the internal market, for instance by only assembling readymade components imported from abroad. Further to the above, staffing requirement, job creation and social protection conditionality could also be prescribed in IAA, as long as this does not to discrimination within the Single Market. This entails a requirement to actively recruit, hire, and train local workers and to ensure the creation of quality jobs in the EU, including via at least a certain percentage of the total workforce being composed of EU- residents. For acquisitions, this would include the protection of existing jobs. Moreover, conditions may consider specifying that key managerial positions, such as executive roles and board are filled with EU nationals or residents. c. Technological advancements These conditions should ensure that foreign investors contribute to the technological advancement in the EU by making their proprietary technologies or IP available to local firms, institutions, or joint ventures. Agreements facilitating such technology and know-how sharing with EU entities may be considered as market entry conditionalities. Licensing terms could also include co -development or training to maximise the domestic innovation capacity and promote value retention in the internal market. Moreover, further conditions could be added on securing EU value chains by requiring foreign investors to sell to EU -based costumers, with the aim of ensuring availability of the products in the EU. This is only/most relevant if there is a structural or te mporary shortage of these outputs (e.g. a foreign mining operation in the EU for a critical raw material should sell the mine output to EU customers). 222 SO4: Speed-up and simplify permits for industrial decarbonisation PERM 1 – One project-one digital procedure a. Introduction of permitting provisions for all manufacturing industry projects on: To streamline permitting processes in the Union, Member States would be required to take the following concrete measures for any new (or reconverted) industrial manufacturing projects (NACE Section C) under the scope. No additional requirements would be requested from these manufacturing projects to benefit from measures below, since they would be considered as standard measures to improve the competitiveness of European manufacturing companies. The potential measures include: • Applying a joint procedure combining all relevant permits like building or construction permits, including potential environmental assessments (i.e. those required by the EIA, Habitats, Birds, Water Framework, Seveso and Industrial Emissions Directives) for a given project; • Make permitting procedures fully digitalised , including submission of evidence by expanding the scope of the Single Digital Gateway Regulation; additionally, national authorities would need to standardise data sets in environmental permits to increase interoperability and the storage/depository and the re-use of data in electronic forms; • Mandate minimum data interoperability sets for storage and reuse in other reporting or permitting activities; • European Commission to provide technical assistance for innovative technologies in decarbonised projects. PERM 2 – One project –one digital procedure, and special focus on EIIs This includes the measures outlined in PERM 1 above, and additionally, the measures explained below. EIIs should demonstrate a specific level of decarbonisation effort, (e.g. "significant and permanent GHG emissions reductions”) to qualify for these additional, cumulative benefits: b. Mirroring basic NZIA permitting provisions for the EII decarbonisation projects that do not fall under the NZIA scope, including: • Designation of an authority to fulfil the role of ‘one-stop shop’ and be the sole point of contact for project promoter. • Time limits of 18 months: adhering to specific time limits for different stages of the permit granting procedure, and other measures linked to basic permitting provisions. To benefit from the NZIA provisions, an energy -intensive industrial decarbonisation project needs to fulfil two conditions: (i) the project has to manufacture a product or component that is a priori relevant to the supply chain of a net-zero technology and (ii) has to reduce emission rates of CO 2-eq of industrial processes significantly and permanently to an extent which is technically feasible. The evaluation and final decision, however, remain a prerogative of the national authorities. Therefore, industri es that do not fulfil these conditions can continue to face complex and lengthy permit-granting processes. c. Presumption of “Overriding Public Interest” principle: 223 To achieve the decarbonisation of the energy intensive industries in Europe, while enabling a security of supply of essential materials and avoiding dependencies from other regions of the world, energy intensive decarbonisation projects would be presumed to be of overriding public interest. As such, they should qualify for the most favou rable procedure available in their planning and permit -granting procedures. For example, under Article 6(4) of the Habitats Directive this concept implies that the competent national authorities have to make their approval of the plans and projects in ques tion subject to the condition that the balance of interests between the conservation objectives of the Natura 2000 site affected by those initiatives and the imperative reasons weighs in favour of the latter. d. Regulatory sandboxes for energy intensive industries: Regulatory sandboxes enable the competent authorities to exercise a degree of flexibility to allow participant/innovators to test innovative technologies or products in real world environment and conditions for a limited period of time under appropriate supervision of one or more competent authorities . The outcomes of these regulatory sandboxes should be established to enable experiences and regulatory learnings to be collected and shared across the EU. This would allow a limited derogation from specific le gislation, such as: Delegated Regulation (EU) 2023/1185 and 2023/1184 (RFNBO DAs). e. Tacit approval: The lack of an administrative reply of the relevant administrative bodies within a certain time limit or specific intermediary steps could be considered as approved for relevant EII decarbonisation projects. This provision would be accompanied by safeguards to ensure that such measures have minimal to no unintended impacts to the environment, safety or health of the population. Such a provision would not apply to decisions/permits required under relevant EU environmental law. Similarly, it would not apply to final decisions/permits on the outcome of the permit-granting procedure, which shall be explicit. PERM 3 – Dedicated measures for industrial clusters This option includes all measures from PERM 1 and 2 above, and additionally, the measures explained below. EIIs must demonstrate a specific level of decarbonisation effort, (e.g. "significant and permanent GHG emissions reductions”) to benefit from these additional measures. This measure opens the possibility for Member States to designate “Industrial Decarbonisation clusters” as geographical areas of industrial presence where projects can access several benefits. They are “ go-to areas” which are particularly suitable areas for the installation of newly decarbonised industrial manufacturing facilities or reconversion of the existing ones already operating in the perimeter. These areas of industrial symbiosis can foster the exchange of raw materials, waste, and energy flows to improve their resource efficiency, and environmental performance. f. Tacit approval The lack of an administrative reply of the relevant administrative bodies within a certain time limit or specific intermediary steps could be considered as approved for projects within the industrial cluster. Such a provision would noy apply to decisions/permits required under relevant EU environmental law. It should not apply to final decisions/permits on the outcome of the permit-granting procedure, which shall be explicit. 224 g. Priority assessment by Distribution System Operator (DSO) for connection requests to energy infrastructure (i.e. electricity and /or hydrogen) located in industrial clusters. Member States would notify the distribution system operator whenever industrial clusters are established, providing that the estimated industrial activity justifies an energy infrastructure connection (electricity grid, hydrogen pipeline or others). Secondly, the assessment of the cluster connection would be evaluated as a matter of priority by the DSO, considering the decarbonisation needs of the industrial sector as one of the largest CO2 emitters of the Union. h. Derogation from Environmental Impact Assessment provisions for projects in industrial clusters In this context, they shall be exempted, when relevant, from the requirement to carry out a dedicated environmental impact assessment under Directive 2011/92/EU, provided that these projects comply with certain safeguards. There is however an obligation to perform a Strategic environmental assessment for plans dedicated to the designation of such clusters. i. Exemptions for construction phase First stages of environmental assessments like Natura 2000 examines the likelihood of a plan or project having significant effects on the environment. In this context, the project’s examination involves the construction works. Targeted amendments to Art. 2 (1) of Directive 2011/92/EU and Art. 6(3) of the Directive 92/43/EEC could be introduced to exempt the temporary emissions taking place during construction phase of projects with CCS in their design. SO5: Increase investment projects in industrial areas This specific objective defines criteria for identifying industrial decarbonisation projects in areas, to facilitate access to public funding. The objective criteria would be set horizontally and take into account: a) the project’s economic security potential for the EU, b) its decarbonisation potential, c) its contribution to the EU’s strategic autonomy and d ) its deployment potential. The economic security potential for the EU would take into account the project’s value added, including in other EU Member States, and its contribution to an entry -level transition plan as well as to strategic value chains. The deployment potential should take into account the label being developed under SO1, for the carbon intensity of the sectors covered, primarily steel, insofar the industrial project can demonstrate the low-carbon production meet the classification set by the label, and could also reflect wider social aspects, such as skills. The majority of respondents to the Open Public Consultation, 197 (63%) out of 314, support the introduction of a category of priority industrial decarbonisation projects, supported by targeted benefits, with the goal of accelerating the EU’s industrial decarbonisation efforts. The preferred criteria for identifying priority projects were: contribution to industrial decarbonisation (100 (32%) out of 314 respondents), contribution to strategic value chains (64, 20%), contribution to industrial electrification (9, 16%),) economic importance (43, 14%) and expected increased demand for outputs (28, 9%). AREA 1 – Recommend Member States to facilitate public funding for projects in industrial areas This measure would recommend Member States to apply criteria defined IAA for public support measures for decarbonisation projects, without prejudice to State aid guidelines. This means Member States, if they follow the recommendation, would apply the criteria to select priority projects, for example, with regard to national funds supporting decarbonisation. To support consistent implementation and reduce administrative burden, the Commission could 225 provide technical assistance or a dedicated toolkit to help Member States apply the criteria effectively, also covering the carbon intensity criteria of SO1. In addition, peer learning and the exchange of best practices would be encouraged - through mechan isms such as annual forums, workshops, or the creation of a knowledge hub - fostering a shared approach and greater coherence across national funding programmes. AREA 2 – Member States to designate industrial areas to facilitate access to public funding Under this second measure, in addition to what is described in AREA 1, the criteria defined under IAA for industrial areas would be used to identify synergies with existing and future public funding opportunities, with the aim of facilitating access to finance for industrial decarbonisation projects in relevant industrial areas. Under this measure, Member States would be required to apply these criteria to identify relevant priority industrial areas under IAA, with the designation verified by the Commission. The Commission will issue guidance on how to apply these criteria. Furthermore, Member States would be required to take these priority projects into account when programming their EU shared -managed funds a t national and regional level, ensuring stronger alignment between EU and national funding strategies. At EU level, the Commission would take into account these criteria and the areas/projects selected under them , for the revision of existing funds and programmes, most notably the Innovation Fund calls and the upcoming Decarbonisation Bank. To the extent possible, a link would be established between the IAA criteria for the designation of the priority projects and the Competitiveness Seal of the European Competitiveness Fund, presented by the Commission as part of the next MFF legislative proposal. AREA 3 – Commission to designate industrial areas according to the selection criteria and giving the projects priority access to funds Under this third measure, the Commission would establish a process to use these criteria to designate priority projects according to the selection criteria. These projects would then receive an automatic preferential access (via e.g. a fast -track procedure, or a ring-fenced envelope, or preferred status in scoring) to existing and future EU funds. [Option discarded early on] 226 Annex 10: Extended information on the problem section This annex further describes and brings additional evidence to the overarching problem that this initiative seeks to address, namely the need for the EU industry, and in particular EIIs, to decarbonise their processes and products while addressing the global competitiveness challenge. 1. An industrial fabric at risk The different challenges described in Section 2 and below, from high energy price to regulatory burdens, contribute to undermining the EU industrial fabric and affect multiple energy - intensive sectors. Overall, European industrial slowdown is confirmed by data showing that over 50% of the electricity demand reduction that occurred between 2021 and 2023, at the peak of energy crisis, was due to industrial decline, following several production curtailments and plant closures, in some cases temporary, in others permanent.604 The Commission’s JRC has tracked the general announcements of EIIs on plant developments. In the steel industry, a clear negative trend is evident with 33% more plant closures and layoffs announced than new plant constructions or reopening, indicating significant challenges. Similar trends can be observed in the recycling industry, as no new plants are being announced but one project has been cancelled. In other EII industries like glass, ceramics and refractory, and pulp & paper the analysis shows a more even split between the announcements. Out of roughly 250 European decarbonisation projects since 2018, about 68% are still at the announcement or concept stage, with no final investment decision yet taken. Only around 28% have reached construction or operation, while 4% have been cancelled or suspended.605 This is consistent with Figure 28 focusing on aluminium, cement and steel sectors, which show that while Europe hosts a significant share of the global clean industrial project pipeline, only a limited proportion has reached final investment decision.606 604 Eurelectric (2025). Power Barometer. 605 European Commission, JRC internal analysis based on Europe Media Monitor. 606Mission Possible Partnership (MPP), E3G and the Industrial Transition Accelerator (ITA) (2025). Building the EU’s Clean Industrial Future: Unlocking Investment through Lead Markets. 227 Figure 28:Comparison of the European and global clean project pipeline Regarding steel, Hydrogen-based Direct Reduced Iron – Electric Arc Furnace (DRI –EAF) routes dominate the technological pipeline, accounting for more than 70 % of total planned capacity, yet less than a quarter of that capacity is under construction. Figure 29: Technological split of EU low-carbon steel projects by stage (% of capacity), Commission elaboration on BNEF data For instance, ThyssenKrupp announced plans for 11 000 lay-offs in Germany in December 2024. In November 2024, ArcelorMittal postponed its decarbonisation investments across Europe, and in April 2025, it informed unions of the elimination of 630 jobs at its seven sites in northern France, representing just under 10% of the workforce. 607 Additionally, Liberty Ostrava announced bankruptcy in the Czech Republic in June 2024. The European aluminium sector presents warning signs of a de -industrialisation, having permanently lost a significant part of its production capacity. M ore than 50% of primary 607 RTL Today - Steel sector crisis: ArcelorMittal says to cut some 600 jobs in France. 228 aluminium production capacity has been idled since 2021 and, sin ce 2020, twenty European aluminium, silicon and zinc facilities have been shut down.608 Meanwhile, the European chemical industry faces an unprecedented crisis and structural disadvantages compared to its international competitors. These include both cost and no -cost factors. Due to these competitive pressures, production utilisation rates ha ve stagnated at an unprofitable 74-75% range, significantly below the historical averages of 81.5%. This has led to an unprecedented wave of closures with 11 Mtonnes of capacity announced for shutdown over the past two years, ten times higher than the average annual variation of the past decade.609 The glass sector is also struggling as it faces declining demand, stalled investment and shrinking European capacity, with several plant closures reported since the start of 2025.610 For example, O-I Glass announced the closure of a facility in Europe, affecting 170 workers.611 Figure 30: Extra-EU trade balance for energy intensive industries, in constant 2015 billion USD, 2012 -2022, A comprehensive overview of the Energy Intensive Industries ecosystem, OECD 2025. When zooming into the projects marked as cancelled, closed or postponed, ten high-level cases can be identified across the chemicals, refining, lime and fertilisers sectors. These include BP’s H₂-Fifty electrolyser in Rotterdam (NL), which was put on hold until the Dutch government transposes the Renewable Energy Directive; SGL Carbon’s Lavradio carbon -fibre site in Portugal, closed in 2024; and Solvay Chemicals Finland’s hydrogen -peroxide project in Voikka, postponed despite Innovation Fund support. Three Carmeuse “Columbus” pilot projects in Belgium were cancelled in 2024, and UPM’s biorefinery in Leuna (DE) was postponed from its planned 2024 start -up. Achema’s 213 MW green -hydrogen project in Lithuania was postponed and its EUR 122 million Just Transition Fund grant withdrawn, while Raffinerie Heide’s 30 MW Westküste 100 electrolyser and Dow Böhlen’s 120 kt advanced - recycling plant were both cancelled. Finally, Uniper’s Chemelot syngas facility in the Netherlands was cancelled in May 2025. Competitiveness challenges are also visible further down the value chain. According to a report by CLEPA, at least 600 000 jobs will be lost on the 2 .4 million directly employed by the European automotive sector during the next 5-10 years.612 2. What are the sub-problems and their drivers? 608 European Commission (2025). A European Steel and Metals Action Plan, COM(2025) 125 final, 19 March 2025. 609 Cefic, Advancy (2025). The Competitiveness of the European Chemical Industry. 610 Glass for Europe (2025). Glass for Europe Board Directors discuss the EU's lack of competitiveness and circularity at first 2025 meeting. 611 O-I Glass to Close European Facility, Approves Severance Plan - MarketWatch. 612 CLEPA, Strategy& (2022). Electric Vehicle Impact Assessment Report 2020-2040. 229 The Section 2 analyses the three different sub-problems related to the EU’s limited business case for EU EIIs to decarbonise; each sub -problem and their drivers are further supported by evidence in the sections below. Sub-problem 1: Limited demand for European low-carbon industrial products at current prices Driver 1 (market failure): Challenges in distinguishing low-carbon industrial products from high-carbon alternatives Section 2 addresses the lack of harmonised carbon accounting methodology, with a plurality of ongoing initiatives seeking to define what constitutes a “low -carbon” industrial product by establishing methodologies and performance criteria. For certain products, such as hydrogen, EU legislation already provides legal definitions for what can be considered renewable or low-carbon, along with associated certification systems. However, for most industrial semi-finished and finished products (i.e. cement and steel), there is no consensus yet on what qualifies as low -carbon, nor is there EU legislation providing a legal definition for it nor how to label it. This lack of agreement reflects a fragmented approach to distinguishing low-carbon industrial products from high-carbon alternatives. This difficulty in differentiation at the manufacturing level carries over into the consumer market. Low -carbon industrial products are often very similar to their conventional counterparts in terms of chemical composition and material properties. Generally, there is no easy tangible way for customers to distinguish between low-carbon and conventional products. For example, rod steel produced through low-carbon processes typically has the same strength and fracture resistance as steel made using con ventional methods. Similarly, many chemicals from low-carbon processes and non-fossil feedstocks—including those derived from recycled waste, biomass, and Carbon Capture Utilisation “CCU” technologies —are identical to those produced through established fossil -based routes. While this may not hold true for all products/materials—for instance, low -carbon cement might be produced without clinker or with clinker substitutes — there is generally no easy visual or tangible way for customers to distinguish between low-carbon and conventional products. Existing methodologies to assess the carbon footprint embedded in product, in particular the LCA Environmental Footprint methods, are not widely used as a regulatory basis for environmental declarations, but they are increasingly applied by industry . As a result, while these methods are well known and used within companies, t . he reliability and comparability carbon content claims still depend on the consistency and verification of data across all steps of the supply chain. Driver 2: Limited willingness to pay a premium for low-carbon industrial products Section 2 addresses the higher costs for producing low -carbon products often faced by EIIs, using the example of steel and cement. For instance, low -carbon cement, costs approximately EUR 30 more per tonne than high-carbon cement, representing an average 20% premium that is often unaffordable for small -scale buyers such as individual homebuilders. 613 In the steel sector, some large customers, particularly in the automotive industry, have demonstrated a willingness to pay green premiums of EUR 300 –400 per tonne when traceability and compliance with sustainability criteria can be ensured. However, outsid e of these early adopters, price sensitivity remains high, limiting demand for cleaner materials. 613 ERT (2024). Competitiveness of European Energy-Intensive Industries. 230 This price difference is also evidenced for other sectors such as chemicals, for which the use of decarbonisation technologies is expected to significantly increase operational expenditures (discounted OPEX estimated at EUR 1.86 trillion for the 2019 –2050 period).614 This would result in significant cost differentials between low-carbon and conventional chemical products. For example, chemically recycled PET 615 via solvolysis616 is estimated at EUR 2 100 –2 200 per tonne, compared to approximately EUR 1 500 per tonne for food-grade virgin PET.617 This weak market response is further exacerbated by low consumer awareness, the absence of mandatory climate performance standards, and a lack of effective incentives. Currently, there are no binding rules at EU level requiring the use of low -carbon materials in most industrial sectors, nor is there a systematic approach to offset green premiums through public procurement or targeted support. EU practice Across the EU, several Member States have introduced national or regional initiatives to stimulate demand for low-carbon industrial products through public procurement and targeted incentives, yet these approaches remain fragmented and call for greater harmonisation. France provides an additional EUR 1 000 ecological bonus for EVs assembled in Europe and equipped with a European battery, directly linking green incentives to local production. 618 Germany has integrated strict carbon -intensity thresholds for steel and cement in major infrastructure projects such as the U5 metro line in Hamburg619, achieving substantial emission reductions while signalling clear demand for low -carbon materials. Overall, the use of low - carbon steel is a requirement in all tenders, with a maximum carbon intensity of 500 kg CO2/tonne. For cement, the strategy focuses on using concrete with low -clinker cement, anticipating the further development of low -carbon cement (including CCS). 620 The project plans to use 100% green concrete and 75% green steel and will require approximately 4 million cubic meters of concrete and 600 000 tonnes of steel.621 It is thereby sending a strong signal to the industry regarding the demand for low -carbon industrial products. Berlin’s procurement regulation further mandates environmental criteria for public tenders above EUR 50 000, leading to both emission cuts and significant cost savings. Studies have shown that the State of Berlin has managed to reduce its GHG emissions by 47% and that green public procurement has led to an annual cost reduction of 3.8% (approximately EUR 38 million annually), 622 mostly coming from the use of recycled materials such as concrete or road surface materials.623 In the Netherlands, green and circular procurement has been applied to large infrastructure projects624 such as the Cruquius Bridge renewal, using lifecycle assessment tools 625 and environmental cost indicators to drive sustainability and lower long-term maintenance costs.626 614 CEFIC webpage. The Carbon Managers – iC2050 model. 615 Polyethylene terephthalate “PET”. 616 Chemical process where polymers are broken down into oligomer or monomer building blocks, by means of a solvent. 617 Internal Commission estimates based on the upcoming JRC study on the “Economic viability of chemical recycling”, due for publ ication by the end of the year. 618 Increase in the subsidy for the purchase of an electric vehicle that meets European production criteria from 1 October – Press – Ministry of Finance. 619 Hochbahn webpage. May we introduce? Germany's largest underground railway project! 620 Strabag webpage. Factsheet: Großprojekt U5 Hamburg. 621 Ibid. 622 SEI (2023). Green Public Procurement: a key to decarbonizing construction and road transport in the EU. 623 Senatsverwaltung für Wirtschaft, Energie und Betriebe, 2017. 624 The Environmental Cost Indicator is defined through a life cycle assessment (LCA) expressed in euros; it analyses the environmental impact of a supply, work or contract over different life stages and expresses the expected social costs of reversing these environmental impacts. The lower the ECI value, the more durable. Source: PIANO (2024). Purchasing with the Environmental Cost Indicator. 625 SEI (2023). Green Public Procurement: a key to decarbonizing construction and road transport in the EU. 626 European Commission webpage. Competitive dialogue for a circular and sustainable bridge. 231 Spain’s Catalonia region 627 and Italy628 have introduced broad green public procurement frameworks, embedding environmental clauses in a growing share of contracts. While these measures demonstrate growing national efforts to reward low -carbon production, their varying criteria and scope risk creating fragmentation across the Single Market, underlining the need for greater coherence and harmonisation. Third countries Several major third country economies have taken targeted action to overcome the limited market willingness to pay a premium for low -carbon industrial products. The United States has implemented the Federal Buy Clean Initiative, requiring the use of low -carbon steel, concrete, asphalt, and flat glass in federal procurement, which together represent nearly all materials used in public construction. The initiative has already driven the development of over 17 000 new Environmental Product Declarations and is estimated to reduce emissions in the relevant sectors by up to 10% annually, with even greater reductions expected once private- sector spillovers are included.629 Canada has followed a similar path, progressively linking access to public contracts to the use of domestic and low -carbon materials. Its 2025 Interim Reciprocal Procurement and Buy Canadian policies630 prioritise Canadian-produced steel, aluminium, and softwood lumber in federally funded projects, using public procurement as a driver of clean and resilient industrial capacity.631 In India, the government strengthened its Domestically Manufactured Iron & Steel Products Policy in 2025 to introduce mandatory local-content requirements in public procurement above a set value threshold 632. This complements the broader Public Procurement Order and the Production Linked Incentive (PLI) Scheme aimed at encouraging localisation, technology development, and decarbonisation in strategic sectors such as automotive and steel.633 In May 2024, Indonesia adopted Presidential Regulation No. 46 of 2025 mandating that all government entities and state-owned enterprises prioritise domestic products with at least 25% local content in procurement and infrastructure projects. The measure seeks to strengthen the country’s manufacturing base, reduce reliance on imports, and leverage public spending to build industrial resilience, addressing the subproblem of weak alignment of public procurement with strategic autonomy and industrial competitiveness objectives under the driver Public demand and procurement.634 Finally, China’s subsidies, price and technical advantage, and overcapacity in parts of the industry keep Chinese vehicles and components cost -competitive despite shipping costs, localisation advantages, and trade barriers .635 In September 2025, the Chinese State Council released a notice outlining the implementation of domestic product standards and related 627 Ibid. 628 Ibid. 629 ITA (2024). Green Demand Policy Playbook. 630 Government of Canada webpage. Interim Policy on Reciprocal Procurement. 631 Government of Canada webpage. Buy Canadian Policy. 632 Government of India, Ministry of Steel webpage. Policy for providing preference to domestically manufactured iron and steel products in government procurement (DMI&SP). 633 Government of India, Ministry of Finance (2018). Department of Expenditures ; Government of India , Ministry of Heavy Industries webpage. Product Linked Incentive (PLI) Scheme for Automobile and Auto Components Industry. 634 Petromindo.com (2025). New regulation requires minimum 25% local input in public projects. 635 Rhodium Group (2025). China and the Future of Global Supply Chains; Pardi, T. et al. (2025). Made in Europe. Local Content Policy for the European Automotive Industry. Actes du Gerpisa, Volume 44. Gif-sur-Yvette: Gerpisa – The International Network of Automobile. 232 policies in government procurement. This notice grants a 20% price evaluation preference to domestic products over non-domestic ones.636 Taken together, these examples show that major trading partners are actively using public procurement and localisation policies to stimulate demand for low -carbon and domestically produced industrial goods, ensuring that producers are rewarded for cleaner and more resilient production even when consumers or markets are unwilling to pay a premium. Sub-problem 2: Supply chain vulnerabilities in strategic sectors Driver 3: European industry loss of competitiveness due to fierce global competition and value chain dependencies Clean tech products, such as batteries, as well as certain automotive key components (e.g. clean vehicle’s powertrain or connected and flexibility automated driving systems), play a crucial role in advancing decarbonisation efforts, significantly mitigating GHG emissions linked to industrial processes637 by supporting the widespread adoption of EVs, while also enabling the integration of renewable energy sources into the grid, benefitting from low electricity price periods and lowering peak demand at high price periods. Section 2 analyses the EU battery ecosystem’s struggle to ramp up production as it remains largely dependent on critical components from these third countries, which have already vertically integrated their value chains. Although the EU has reached a batte ry cell installed capacity of around 188 GWh in 2024, several planned projects totalling 238 GWh have already been cancelled or put on hold with no confirmed timeline for resumption. 638 Europe’s technological capacities in the battery value chain are not emerging fast enough, increasing the risks of becoming fully dependent on imports, putting at risk the strategic objectives of a net - zero-emission emissions, strategic autonomy in the energy sector and a competitive automotive sector. EU ambitions to rebuild its domestic PV manufacturing capacity are undermined by the Chinese oversupply and continuously falling prices, exacerbated by higher energy, labour and capital costs, smaller factory scales, and limited supply chain integration in the EU. Comparing the cost structure, a fully EU -made PV module component production from Polysilicon to is estimated at around 30.8€c/Watt peak. The costs can be reduced by 25% throughout all component manufacturing stages if the production is at scale (i.e. Gigawatt - scale), reaching a level of 25.5€c/Watt peak and showing that producing at Giga-watt scale in Europe is key to reduce the production costs. At the same time, the production costs for fully Chinese PV modules are estimated to be at 15.9 €c/Watt peak. T his cost difference is driven by higher expenses in equipment (+40%), building and facilities (+110%), labour (+280%), and materials (+50%). However, the profit margins of the largest Chinese solar manufacturers have sharply declined, as firms aggressively compete on price to defend their market share. The EU’s reliance on China for supply of solar components leaves the EU vulnerable to disruption and price shocks. The profit margins of the largest Chinese solar manufacturers have sharply declined, as firms aggressively compete on price to defend their market share. T he 636 State Council General Office, China (2025). Notice of the General Office of the State Council on the Implementation of Domestic Product Standards. https://www.gov.cn/zhengce/content/202509/content_7042999.html 637 Batteries can play a significant role by allowing a constant and reliable clean power supply. Additionally, it can support the electrification of industrial logistics and transport. 638 Similarly, for key battery components such as cathode active materials (CAM) and anode active materials (AAM), a total of 513 GWh and 110 GWh of planned capacity have been cancelled, compared to an estimated current installed capacity of just 88 GWh and 6 GWh respectively. Source: European Battery Alliance. 233 EU’s reliance on China for supply of solar components leaves the EU vulnerable to disruption and price shocks. Overall, when examining the levelized cost of production (LCOP) for some selected energy intensive materials and clean technologies across countries and regions (below Figure 31 ), China has the lowest production costs for all clean energy technologies and most materials considered. Regional cost differences are generally more pronounced for materials than for clean energy technologies, with the LCOP being among the lowest in Chin a for steel and aluminium. Regional variations in the LCOPs, excluding any explicit financial support, result mainly from differences in operational costs, notably energy and labour, which generally constitute the largest share of the total costs.639 Figure 31: Levelized cost of production for selected clean energy technologies and materials by county/region, 2023 (IEA, Energy Technology Perspectives2024) Figure 32 on “Demand for EU made PV components stimulated by NZIA and IAA vs manufacturing capacity, 2030” below shows how much demand is likely to be created by the NZIA Access to Markets provisions vs. the proposed IAA provisions in relation to the project pipeline for 2030. The introduction of EU content criteria through IAA would mean that a stronger market signal would be sent which would facilitate the EU project pipeline to realise and project promoters to reach FID. EU should be able to develop sufficient capacity for all components according to the current state of the project pipeline, apart from solar glass. Here however, the introduction of such criteria would send a strong market signal for new projects to develop. Figure 32: Demand for EU made PV stimulated by NZIA and IAA vs. manufacturing capacity, 2030 639 IEA (2024). Energy Technology Perspectives 2024, p.75. 234 The NZIA is expected to contribute to the expansion of manufacturing capacity in Europe, with the aim of reaching at least 40% of the annual deployment needs for net -zero technologies through manufacturing capacity in the Union by 2030. However, there is a risk that for certain steps of the battery and PV value chains, the current NZIA provisions are insufficient to fully address the scale of the challenges described in Section 2.2.1. and meet the strategic objective of building a resilient and competitive domestic value chain. This is because, for certain stages of PV and battery manufacturing, the NZIA resilience criterion, which emphasizes diversification, may not lead to a significant increase in domestic production. Instead, it is expected that imports from Asian countries such as Vietnam, Malaysia, Thailand and Cambodia – whose PV projects pipeline is largely owned and controlled by Chinese manufacturers and whose price competitiveness is second only to China. - will rise to offset the reduction in solar PV imports to the EU from mainland China.640 While Vietnam, Thailand, and Malaysia together account for close to 8% of global manufacturing capacity, most of these facilities are Chinese-owned and were developed to serve the US market in response to its restrictions on imports from China. This indicates that apparent diversification in production locations does little to reduce strategic dependence on China and thus, dependence on Chinese manufacturers is likely to persist. Regarding batteries, Asian manufacturers are already shifting their strategies to capture overseas markets, where profit margins are higher. By 2030, China is projected to maintain a dominant position across the entire battery value chain, accounting for 75% of global installed battery cell capacity. Additionally, Chinese companies are actively diversifying their midstream battery production by expanding into low -risk, cost-competitive countries such as Morocco, South Korea, and Indonesia. These three count ries are projected to surpass the EU in production capacity. Additionally, due to the nature of batteries as components integrated into downstream final goods, primarily EVs and BESS, they often fall outside the scope or are only marginally impacted by certain resilience measures under the NZIA, such as in auctions or public procurement. Furthermore, the NZIA framework does not cover the entire spectrum of vehicle components that can contribute to the decarbonisation of road transport not only in terms of reduced vehicle’s emissions, but also in terms of optimised traffic flows.641 Besides, the NZIA does not sufficiently address the economic pressure faced by domestic automotive component suppliers and the economic security issues attached to it. Driver 4: A fragmented EU approach towards foreign investments The existing toolbox on inbound foreign investments includes instruments concerning security aspects FDI (e.g. FDI Screening Regulation) and other instruments that target specific risks (e.g. the Foreign Subsidies Regulation to combat foreign subsidies that distort the EU internal market, and the Merger Control Regulation ensuring effective competition for concentrations), as well as other policy instruments that may be used to affect foreign investments (e.g. EU Funding instruments and the State Aid framework). However, the FDI Screening Regulation (EU) 2019/452 does not address the impact of foreign investment on the Single Market or allow the EU to impose conditions that maximise economic and strategic value —such as commitments to local R&I, technology transfer , or skills development. Over 60% of foreign-led industrial decarbonisation projects in the EU lack such commitments. Despite the EU’s attractiveness for FDI, it lacks tools to ensure that investments 640 IEA (2024). Energy Technology Perspectives 2024. 641 NZIA does not cover, for instance, brakes with drag reduction technologies, or thermal management systems), nor either essential connected and automated driving (CAD) systems. 235 support industrial, technological, and environmental goals, particularly given the growing role of state-controlled investors. By 2024, 24 Member States had national screening mechanisms (up from 14 in 2021), yet screening practices remain uneven, with only 9% of cases subject to conditions and 1% blocked. This leaves vulnerabilities across the Single Market. The gap is most acute in strategic sectors such as batteries and EIIs, where the EU risks losing technological and intellectual property control and becoming a “low-value assembly location” in clean tech value chains. The FDI inflow to Europe, compared to the total global FDI inflow, has seen a decrease in the past decade from 23% of all global FDI in 2011 ($408 billion) to only 10% ($168 billion) in 2021.The year 2022 even witnessed negative FDI inflow to Europe, which means that foreign investors divested more FDI from Europe than they invested in Europe during this period. When comparing FDI inflows in 2022 against 2017, it becomes apparent that Europe is the only region with major decreases in FDI inflow ( -31pp), whi le China (+4pp) and the US (+10pp) were able to increase FDI inflow.642 Figure 33: Overview Europe’s FDI inflow from 2017-2022, ERT Competitiveness of European Energy-Intensive Industries (2024) While foreign investment is entering the Single Market, the conditions attached to these investments differ significantly among Member States. The absence of a harmonised approach and standardised conditions allows large investments to “forum-shop” and exploit the specific circumstances of individual Member States, ultimately undermining the interests of the Single Market. This results in a “race to the bottom,” where public funds are used to attract investors without ensuring adequate returns in the form o f local economic development, skills, or innovation. Other limitations arise under the Foreign Subsidy Regulation, as the Commission can only set conditions to the investment to remedy the actual or potential distortion in the internal market stemming from a foreign subsidy and ensure a level playing field. Other purposes and policy objectives can only be taken into account in the balancing test, as the Commission can assess whether the negative distortive effects of the foreign subsidy are outweighed by positive effects in relation to policy objective of the Union. Section 2 explained that a large part of the leverage resulting from the EU’s attractiveness as an investment destination cannot be effectively exercised by individual Member States acting on their own. As evidence to this challenge, Table 2523643 can be seen as an illustration of the more benefits secured to investment in the US vs. the EU battery value chains. 642 ERT (2024). Competitiveness of European Energy-Intensive Industries. 643 T&E (2025). Assembly plant or battery powerhouse? Analysis of foreign battery investments in EU. 236 Table 2523: T&E Briefing (February 2025) – Assembly plant or battery powerhouse? Analysis of foreign battery investments in EU. Sub-problem 3: Industrial decarbonisation technologies are not deployed at scale Decarbonisation requires large upfront capital costs (CAPEX) due to the need for new equipment, new or upgraded technologies, including electrification and flexible demand, hybrid technologies and process changes. The operational costs (OPEX) of producing w ith greener technologies for early adopters are uncertain when technologies are not mature and are higher than those of traditional technologies644, as long as electricity and low-carbon fuel prices remain high in Europe and higher in comparison with fossil fuels prices. For instance, estimates suggest that green steel production would be approximately 17% more expensive in Europe compared to the US and Saudi Arabia in 2030. 645 The competitive disadvantage that certain EIIs, like steel, suffer from would therefore remain even after decarbonising. Furthermore, these technologies have very long payback times and are often unavailable at large scale 646. The unfavourable price ratio between electricity and fossil fuels and the uncertainty about future evolution of the price ratio, risk delaying investments in electrification and energy efficiency technologies including for industrial processes. See more in Annex 7 Driver 5: Lengthy , fragmented and uncertain permitting procedures for decarbonisation projects Section 2 assesses the issues revolving around the permit -granting process for industrial manufacturing activities. The evidence on permitting brought forward by the public consultation can be completed by a survey by BusinessEurope, which found that 83% of companies claimed that the complexity and duration of permitting is an obstacle to investing in Europe, and 53% co nsider it as a “serious problem”. Companies have reported waiting periods of over a year for permit 644 ‘First-mover disadvantage’, which generally refers to higher costs and uncertainties for early adopters, due e.g. to technology and performance risks, higher technology costs, smaller production scale, less developed infrastructure (electricity supply, hy drogen, CCS), evolving methodologies (including definitions of low-carbon production and low-carbon products), and unrewarded knowledge externalities (learning) that benefit later adopters . Source: Draghi, M. (2024). The future of European competitiveness: In‑depth analysis and recommendations (Part B), p. 99. 645 ERT (2024). Competitiveness of European Energy-Intensive Industries. 646 For additional background on decarbonisation technologies, see Annex 7. VW + Gotion Partnership Gotion + Inobat JV Stellantis + CATL JV Tesla + CATL (US) Ownership structure VW holds 26.47% in Gotion Gotion: 80% Inobat: 20% Stellantis: 50% CATL: 50% 100% owned by Tesla (including equipment) IP or technology transfer provisions “Limited” Some ✓ Local supply chain Local workforce Local R&I centre Some, including local schools No known provisions ✓ Equal decision - making on battery side ✓ 237 approvals, with some delays extending up to six years, for more complex projects like carbon capture and storage (CCS).647 Permitting procedures for new or modernised manufacturing facilities were highlighted as time-consuming, costly and requiring the interaction with numerous public administrations648 More concretely, permitting is one of the challenges for projects deploying innovative solutions, and on occasion identified as a risk of not meeting financial closure within the four- year deadline. Often, the permitting process is highlighted as very demanding and time - consuming. It is an issue for many projects in the Fund portfolio, with 68% identifying it among the top challenges and more than 10% of the projects identifying it as their primary challenge. About half of the projects report a concrete risk of being delayed because of difficulties obtaining the required permits or challenging permitting procedures.649 Addressing these procedural inefficiencies will be essential to meet Europe’s climate and industrial goals. Best practices • EasyPermits is a web -based digital permitting solution built on AWS cloud. It digitalizes the administrative permitting process end -to-end and functions as a digital one-stop-shop by automating workflows, improving and standardizing the collection and management of information and fosters collaboration and transparency across the permitting agents, the project developers and the local community. At its core, it is a workflow management solution as it can be customised to match the regulatory requirements of the permitting process. It is also a document management solution with the possibility to define templates for specific documents and the possibility to have version control making it easier to navigate through various versions of specific documents. Estimates include a 50% reduction in manual effort in repeated low -value tasks such as finding the latest version of the document without having to go through emails and paper-based folders, keeping all documents for one application organised in one place, sharing review comments on specific parts of specific documents. Ability to process as many as 3x as many applications concurrently. • In the context of the Single Market Enforcement Taskforce (SMET), Member States reported on the progress of introducing five permitting solutions (One stop shops, clear deadlines and information, tacit approvals and digital permitting) to improve permitting for renewable energy power generation (wind, solar). The report confirmed that the permit -granting process had become more efficient in most EU countries, to various extents depending on the Member State. Similar positive consequences are shown through t he implementation of the Critical Raw Materials Act permitting provisions (Single Points of Contact, timelines). Similarly, a good example of digitalised and unified permitting comes from the Environment and Planning Portal in the Netherlands, where promot ers can see if and what environment and planning permits are required. Additionally, the Environment and Planning Portal can be used to apply online for an environment and planning permit or submit a notification. All these elements will be better highligh ted to more clearly justify the choice of the preferred policy measures in the impact assessment. 647 Business Europe (2024). Licence to transform – SWOT analysis of industrial permitting in Europe. 648 European Commission (2025). Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - The 2025 Annual Single Market and Competitiveness Report. SWD(2025) 11 final and SWD(2025) 12 final. 649 European Commission (2025). 2025 Annual Knowledge Sharing Report of the Innovation Fund – Derisking Innovative Low-Carbon Technologies. 238 Driver 6: Difficulty to access resources (e.g. inputs and funding) Clean industrial technologies face substantial economic barriers to deployment, primarily due to long payback periods driven by high capital expenditure (CAPEX) and elevated operating costs (OPEX). These cost burdens are compounded by market uncertainties making large-scale industrial decarbonisation investments high-risk. The scale of investment required is significant. Decarbonising Europe’s energy -intensive industries (EIIs) will require approximately EUR 1.7 trillion by 2050. In the cement sector alone, achieving net -zero targets calls for EUR 94.4 billion in investment, which equates to EUR 4.70 for every EUR 1 in annual revenue. More broadly, the decarbonisation of the EU’s four largest EIIs (chemicals, basic metals, non -metallic minerals, and pulp & paper) is estimated to cost EUR 500 billion over the next 15 years.650 Despite this urgent need, the financial environment in Europe remains less favourable than in competing regions. Section 2 demonstrates the limited amount of public funding available to decarbonisation under directly managed EU funds notably, expect for the Innovation Fund. Beyond the direct decarbonisation prioritisation of the latter, funding for decarbonisation is also available in the RRF, InvestEU and cohesion policy funds. Under the Recovery and Resilience Facility (RRF), EUR 97 billion are targeted to the decarbonisation of industry and clean tech (incl. EUR 23 billion for R&I initiatives) and more than EUR 2 billion for developing green skills and jobs for the clean economy. The Just Transition Fund (JTF) focuses EUR 19 billion of investment specifically for the transformation of the regions with coal and carbon intensive industry most affected by the green transition. Nevertheless, the funding from these sources is linked to different criteria and eligibility requirements. Additionally, EU support for clean technologies is often fragmented and limited in scope, particularly lacking in OPEX assistance, which is crucial for addressing ongoing cost differentials between green and conventional technologies. In comparison, the U. S. Inflation Reduction Act (IRA) has already catalysed $129 billion in private clean tech investments since 2023, offering significantly more generous and streamlined support. EU clean tech financing is estimated to be five to ten times smaller than the U. S. effort. Global competition further intensifies these challenges. Chinese clean tech manufacturers benefit from state subsidies up to four times greater than those available in the EU, enabling them to offer battery cells 20 – 35% cheaper and solar panels 35–65% cheaper than their European counterparts... Some Member States have begun piloting Carbon Contracts for Difference (CCfDs), which provide 15-year subsidies to cover the cost gap for green technologies achieving at least 90% GHG reduction. However, th ese initiatives remain limited in scale and administratively complex, slowing their rollout.651 Results from the Open Public Consultation conducted a part of this initiative show that only a few public funds are considered relevant in supporting industrial decarbonisation projects, particularly the Innovation Fund (226, 72%) and Member States funding (238, 76%), with only a minority considering other funding instruments such as Horizon Europe, InvestEU, RRF or Cohesion Funds relevant. Furthermore, access to funding remains a key concern, with 78% (245 out of 314) citing lack of public funding and 62% (196) pointing to difficulty accessing transition 650 ERT (2024). Competitiveness of European Energy-Intensive Industries. 651 Deloitte (2024). Carbon Contracts for Difference (CCfDs) as an instrument of choice. 239 finance. Additionally, 77% (243) identified financial risk as a significant factor when considering investment in industrial decarbonisation. 240 Annex 11: Extended information on the impacts (Section 6) POLICY OPTION 1 Economic impacts See Section 6 of the Impact Assessment: In addition: Impact on companies LEAD_EII 1 - Given the significant number of vehicle registrations supported by public support schemes, introducing low -carbon steel and aluminium requirements as an eligibility condition would likely create a significant market signal - providing a strong incentive to vehicle manufacturers to source these materials at scale. Figure 34 shows estimates of how much the adoption of 100% green steel affects end -product pricing across various industries. 652 The targets proposed for low -carbon steel in automotive and construction have followed an adjustment for a lower share of low- carbon steel. For more information on the calculations for the cost calculation based on the target, see Annex 4 Section 2. Figure 34: Product cost increase after switching to 100% green steel. Respondents from the targeted stakeholder consultation have provided estimates of the impacts of low -carbon requirements on cost of products: (i) less than a 1% increase in the price of an average car, while enabling CO₂ savings of up to 1.5 tonnes per vehicle; (ii) cost increases of 0.1–0.2% for buildings, 0.6–1.2% for industrial sites, and 1.6–5.5% for steel-intensive sectors such as household appliances and offshore wind infrastructure; (ii) in the defence sector, the reported cost impact for military vehicles ranged from 0.15% to 0.5%. LEAD_BAT 1 - Based on the Public Consultation, all 4 respondents from the batteries and storage sector strongly support measures to stimulate demand for clean industrial products and consider public procurement a significant driver for low-carbon products. Similarly, all 4 respondents agree that the introduction of an EU voluntary label on carbon intensity will support the creation of lead markets for sustainable industrial products. RECHARGE, the Advanced rechargeable & Lithium Batteries Association - in its submitted position paper - also supports the introduction of Made in EU requirements as a “a powerful 652 JRC (2024). Draft preparatory study on iron and steel – ecodesign measures under the ESPR. 241 industrial policy instrument” that can “incentivise production, sourcing, and value creation of key technologies within the EU (...) while reducing dependence on imported battery components and raw materials, helping mitigate supply chain vulnerabilities”. Furthermore, the respondents to the consultation are in favour of public procurement as a driver for lead markets, with RECHARGE supporting “non -price award criteria in public tenders, such as sustainability, resilience, and supply chain security”. LEAD_SOL 1 would boost EU local production, strengthen energy security, and decrease reliance on imports, especially from China. Consequently, it would help preserve existing EU production capacity and strengthen the business case for new manufacturing projects. Chinese players are also considering establishing themselves in Europe under the condition that there is a favourable policy framework in place to support EU manufacturing and ensure offtake for EU made products, for example through Made in EU requirements. This could further support bringing advanced capabilities and scaled production systems to Europe. Moreover, it would send a strong investment signal, helping to secure financing and accelerate additional capacity development. Made in EU requirements can stimulate the growth of domestic PV manufacturing by linking market deployment incentives to domestic production. E.g. in Türkiye, a local content premium introduced in 2013 and subsequent tenders for full value - chain capacity led to a rapid expans ion of domestic manufacturing, reaching over 9 GW by 2023. Similarly, South Africa uses local content requirements (LCRs) in government procurement to promote domestic production of PV components, helping to structure an emerging local PV industry and integrate it into regional and global value chains. In both cases, LCRs serve as a strategic tool to scale up manufacturing ca pacity while fostering industrial development.653 INV 1 - As regards indirect costs of deterring certain FDI transactions by applying restrictive criteria for investments, the Commission Evaluation on FDI Screening Regulation 654 considered these to be negligible, despite the theoretical possibility of conditions deterring certain investments. Accordingly, it can be assumed that the indirect impacts for voluntary conditions established under PO1 would also be negligible. Conditionalities which might restrict supply or demand under value added production or securing critical value chains, could entail raising the price of certain products. LEAD_VC 1 (In the case of LEAD_VC, the section on companies refer to the vehicle suppliers) EU suppliers in the “Internal market reaction” scenario655 in EUR billion 2027 2030 Passenger cars sales increase 5.9 6.0 LCVs sales increase 0.5 0.8 HDVs sales increase 0.192 0.131 653 PV Magazine (2024). PV Manufacturing in Europe: Ensuring Resilience through Industrial Policy. 654 COMMISSION STAFF WORKING DOCUMENT EVALUATION of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investments into the Union Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on the screening of foreign investments in the Union and repealing Regulation (EU) 2019/452 of the European Parliament and of the Council - Publications Office of the EU. 655 The JRC analysis presented an alternative scenario. For comparative analysis, see: Annex 14 242 As a result of the measure, the introduction of Made in EU requirement for vehicle components of EVs sold in the EU will lead to higher sales of EU components suppliers in all vehicle segments. In quantitative terms, this means that: • For passenger cars: the sales of EU suppliers to EV manufacturers are expected to rise by EUR 5.9 billion in 2027 and by EUR 6 billion in 2030. Th is sales increase for EU suppliers come from the sales increase of EU made vehicles and the increase of EU content in those vehicles. • For the LCV segment: the measure would lead to an increase in the sales of EU suppliers to EV car manufacturers would be expected to rise by EUR 0.5 billion in 2027 and by EUR 0.8 billion in 2030. • For HDVs: the sales of EU suppliers to EV HDV vehicle manufacturers are expected to rise by EUR 192.4 million in 2027 and by EUR 131.1 million in 2030. PERM 1 – Periodical technical assistance from the Commission to national authorities is expected to support the permit-granting process for first of a kind and innovative projects, with training on emerging decarbonisation technologies helping to clarify procedures and reduce uncertainty in permitting. In this context, the Innovation Centre on Industrial Transformation and Emissions (INCITE) will identify and evaluate innovative techniques, giving scientific and independent information.656 Moreover, s upport for further measures to improve the permitting process was high in the Targeted Consultation , with 67% (42) advocating for the digitalisation of the permitting process. AREA 1 - Regarding the definition of criteria for projects in relevant areas, the measures would recommend Member States to make use of the criteria defined in the IAA to decide which decarbonisation projects to support under their national support programmes. In the Open Public Consultation , 76% of respondents regarded Member States funds as relevant for industrial decarbonisation projects, making it the most relevant category of public funding. As it is only a recommendation to Member States, it can be assumed that they use the priority criteria lightly. Where they apply them, it is likely to lead to an increase in support for projects with strategic importance for the entire EU (which are someti mes underrepresented in current support schemes by Member States). However, due to the non -binding nature, the effect on companies is likely to be limited and potentially fragmented across the Single Market. Impact on downstream sectors LEAD_EII 1- The automotive sector is expected to play a significant role in driving demand for low-carbon steel. However, public procurement is not a huge market for the automotive sector, compared to building s and infrastructure. Of the approximately 15 million passenger cars registered in the EU in 2018, only 0.5% to 3.5% were procured for public sector fleets.657 Therefore, measures targeting the public sector alone are likely to have limited impact on driving low-carbon demand for steel. The situation is different regarding public incentives and support schemes in the Member States. Corporate vehicles registrations make up around 60% 656 The revised Industrial Emissions Directive contributes to de -risk investments as it sets up a new Innovation Centre on Industrial Transformation and Emissions (INCITE). The most effective and viable innovative techniques could be incorporated in the Sevilla process for the development of environmental norms. 657 European Commission (2022). Revision of the EU green public procurement criteria for road transport. 243 of car registrations in the EU. 658 Regarding EVs, there is public support to buy EVs for corporate purchases in all Member States and for consumers in 19 Member States.659 Regarding internal combustion engine vehicles, a recent study estimated that subsidies for corporate vehicles alone amounted to EUR 42 billion in 2023. 660 Introducing low -carbon steel requirements in a non -discriminatory State-aid compliant manner as an eligibility condition would send a strong market signal, incentivising vehicle manufacturers to source these materials at scale . There is, however, a risk of material substitution, where procurement requirements or support schemes could shift demand from one material to another. In the automotive sector, low-carbon requirements applied to steel may indirectly increase demand for aluminium, and vice versa. While low-carbon requirements for aluminium ar e not being considered as part of this assessment, due to the lack of an existing low-carbon definition, they could be defined at a later stage, or as part of other ongoing policy initiatives. LEAD_VC 1 (in the case of LEAD_VC, downstream sector refers to automotive manufacturers) EU EV manufacturers in the “Internal market reaction” scenario in EUR billion 2027 2030 Passenger cars cost increase 0.0 1.6 sales increase 12.3 7.7 LCVs cost increase 0.0 0.2 sales increase 1.2 1.3 HDVs cost increase 0.0 0.13 sales increase 0.41 -0.0002 Given the current 70% made in EU content, the measure would not lead to any further costs for EU EV manufacturers in 2027 in either of the vehicle segments, while it would lead to an overall increase in sales for these companies. In quantitative terms, this means that: • For passenger cars: as an effect of the measure, EU EV manufacturers will benefit from an increase in sales of EUR 12.3 billion in 2027. To comply with the 75% target proposed for 2030, EU EV manufacturers are expected face a relative cost increase of EUR 1.6 billion, however this would be offset by the EUR 7.7 billion increase in sales. • For LCVs: EU manufacturers of EV light commercial vehicles would benefit from an increase in sales of EUR 1.2 billion in 2027. In 2030, EU manufacturers would face a relative cost increase of EUR 0.2 billion, however this is expected to be offset by the EUR 1.3 billion increase in sales. • For HDVs: EU EV HDV manufacturers would benefit from an increase in sales of EUR 414.9 million in 2027. However, in 2030, EU EV HDV manufacturers are projected to face a cost increase of EUR 131.4 million. This cost increase may be accompanied by a minor sales reduction ( -0.2 million euro). The relative price advantage of EU EV 658 European Commission (2025). Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of Regions, Decarbonise Corporate Fleets, COM(2025)96 final, 5 March 2025. 659ACEA (2025). Electric cars: Tax benefits and incentives (2025). 660 ERM (for T&E) (2024). Company car fossil fuel subsidies in Europe. 244 HDVs (as opposed to non-EU EV HDVs) determined by the measure in the initial years after its introduction, leads to increased sales in the period between 2027 and 2029, and these increased sales are larger than (and could potentially offset) the assumed increased cost.661 Global Added Value: Value Added in EUR billion Internal market reaction scenario 2027 2030 automotive 3.0 1.9 intermediate 2.5 2.6 Global value added - Only first round of Value Chain 5.5 4.5 Global value added - Estimated all Value Chain 10.5 9.7 Furthermore, the measure is projected to lead to the generation of EUR 5.5 billion Global Value Added in 2027 and EUR 4.5 billion in 2030 when assessing the impact, taking into account only the first tier of the value chain.662 When considering the entire value chain, the value added generated notably from the necessary intermediate inputs for EVs can reach EUR 10.5 billion in 2027 and EUR 9.7 billion in 2030. Impact on consumers and citizens INV 1 would have limited effects on citizens and consumers as it would target investments above a certain threshold. Nevertheless, condition (b) could affect citizens by securing investments with a value -added production, including R&I, engineering activities, domestic processing and manufacturing. This, together with potential staffing requirements prescribed under the same condition, could lead to the creation of quality jobs in the EU. Despite PO1's potential to harmonise staffing requirements on the single market, its voluntary nature poses implementation challenges and may lead to further fragmentation and a race to the bottom in staffing conditions across Member States concerning FDI. LEAD_VC 1 EU consumers in the “Internal market reaction” scenario 2027 2030 Passenger cars EVs price changes (%) 0.4% 1.2% EVs sold change (thousand) -71.0 -76.3 LCVs EVs price changes (%) -0.7% 0.4% EVs sold change (thousand) 14.3 2.1 HDVs EVs price changes (%) 0.5% 1.2% EVs sold change (thousand) 1.0 -1.7 661 It is important to note that for the calculation, it is assumed that the allocated subsidy is kept constant over time, but as projected sales keep increasing, over time, the subsidy may become insufficient to compensate for the cost increase. 662 Global Value Added (GVA) refers to the total economic value generated by the projected production of EU EV manufacturers and the EU suppliers, as well as further intermediate inputs necessary to increase the Made in EU requirement of the measure and increase production of EU EVs 245 As EV passenger cars produced by EU manufacturers will benefit from a relative price advantage following the reduction of price stemming from the reallocated subsidies, this will lead consumers to prefer EV passenger cars produced by EU manufacturers (which increase their sales) over non-EU EV passenger cars (which reduces their sales). In quantitative terms, this means: • For passenger cars: As average prices663 of EVs passenger cars are going to increase by 0.4% in 2027 and by 1.2% in 2030, this is expected to lead to a reduction in EV passenger cars purchases by 71 000 vehicles in 2027, and 76 300 vehicles in 2030 if no mitigation measures put in place. The des cribed phenomenon will have two different effects: • As EV passenger cars become more expensive for non-EU manufacturers, and ICE vehicles, being not affected by the measure, could benefit from a relative price advantage (prior application of the bonus schemes or subsidies) over EVs, and this could result in partial product substitution of EVs with ICEs.664 • For LCVs, the impact is similar: prices of EVs light commercial vehicles are going to decrease by 0.7% in 2027 and then slightly increase by 0.4% in 2030, and this is expected to lead to an increase in EV light commercial vehicles purchases by 14 300 vehicles in 2027, and 2 100 vehicles in 2030. • For HDVs: Prices of electric HDVs are going to slightly increase by 0.5% in 2027 and then increase by 1.2% in 2030. These prices variations are going to have a minor effect on EV HDV purchases in 2027, when sales will still slightly increase by 1 000 units, and lead to a decrease in purchases of EV HDVs by 1 700 units in 2030. The impact crucially depends on the bonus schemes and the assumption that only half of the total subsidies received by non -EU EV makers will be reallocated . Hence, a counterfactual analysis has been performed: If all subsidies were reallocated from non -EU to EU EV manufacturers, the average price of EVs for consumers would decrease: • For passenger cars: by 0.8% in 2027, and the increase in 2030 would be more muted at 0.4%. • For LCVs: by 2.4% in 2027 and 0.8% by 2030, with a corresponding larger increase in the number of EV LCVs sold. • For HDVs: by 0.3% in 2027 and only increase by 0.8% by 2030, with a corresponding larger increase of EV HDVs sold in 2027 and a smaller reduction of sales in 2030. Impact on competitiveness LEAD_EII 1 - While low -carbon requirements in public procurement and support programmes may help lower the green premium overtime - thereby improving the business case for industrial decarbonisation investments - for certain products where imports penetration is already high, this demand is likely to be partially met by non-EU producers whom, by having large overcapacities, will be able to redirect their low -carbon production to the EU market, limiting the benefits for EU industry. 663 As a result of the reallocation of subsidies, EU manufacturers reduce the price of their vehicles, but they do not compensate for the high price increase that the non-EU manufacturers would face as a result – further incentivising compliance to this measure. 664 This effect could disappear if ICE vehicles were also made subject to the EU content requirement under LEAD_VC 1 246 Impact on competition LEAD_EII 1 - Regarding the creation of lead markets, low-carbon requirements would apply uniformly to all participants in public procurement procedures and beneficiaries of public support schemes, ensuring that manufacturers of energy -intensive materials and downstr eam producers who bid in public procurement and will have to comply with the target compete on equal terms. In some sectors, however, there might be competition between companies that are subject to public procurement rules and companies that are not. An example are offshore wind auctions, where publicly owned utilities subject to Directive 2014/25/EU compete with private developers and investors. In such cases, measure LEAD_EII 1 that targets public procurement, but not private procurement, would distort competition between those types of bidders. LEAD_SOL 1 - As regards solar PV, applying Made in EU requirements in public tenders would provide a strategic incentive for investment in EU -based solar manufacturing while offering greater supply chain security and alignment with broader industrial policy objectives. Without such measures, the lack of willi ngness among consumers and offtakers to pay a premium for EU-made panels will continue to hinder market uptake, leaving the EU exposed to strategic vulnerabilities from over-reliance on a single supplier country. A fully EU-made module amounts to manufacturing costs at around 2 5.5 ct/Wp, whilst a minimum sustainable PV module price for modules from China is estimated at 15.9 ct/Wp and from Southeast Asia at 16.5 ct/Wp665. However, PV modules from China and SE Asia are currently sold a t half the minimum sustainable price , at 8-10 €ct/Wp, below manufacturing costs. China is able to maintain a cost advantage due to lower labour, land, and energy costs, state subsidies, and rapid efficiency gains.666 Nevertheless, a 30-40% reduction in EU module costs by 2030 is considered achievable under favourable conditions, potentially bringing prices down to 15–19 ct/Wp, depending on the number of components manufactured in Europe. With the right support and enabling conditions, much of the cost gap with China could be closed. Key drivers include gigawatt-scale production, vertical integration, automation, access to low- cost energy, and strong policy backing through instruments such as the NZIA, Innovation Fund, CCfDs, and resilience auctions. If realised, these measures could make EU solar manufacturing cost-competitive by 2030, strengthening the sector’s resilience and strategic autonomy. However, since LCOE calculations exclude taxes, grid tariffs, and retail mark -ups, the final cost increase for the consumer would likely be much smaller, estimated at around 1–2%. Impact on Member States Financial implications LEAD_EII 1 - In financial terms, Member States spent an estimated 13.4 billion EUR on steel and cement for public construction projects in 2019. 667 This represented about 3% of the total investment in construction procurement for that year. In the broader context of public spending, the cost of steel and cement accounted for less than 1% of total public procurement expenditures across the EU in 2019 - indicating that, on average, the cost of basic materials remains relatively limited in public budgets. Steel accounts for only about 1.8% of total construction procurement spending, indicating a modest cost share. As for cement, Member 665 SolarPower Europe (2025). New study reveals path to reshore solar manufacturing in Europe. 666Fraunhofer ISI (2025). Photovoltaics Report; SolarPower webpage. Rebuilding European solar manufacturing; ESMC (2020). ESMC Policy Proposals for the EU Strategy for Solar Energy. 667 VUB Brussels School of Governance (2024). Public procurement of steel and cement for construction, assessing the potential of lead markets for green steel and cement in the EU. 247 States spent around EUR 5 billion on procurement of cement as part of the overall public procurement of construction in 2019. This represents only 1.1% of total construction cost.668 LEAD_VC 1 – The effects of the policy on total sales and consumer welfare depend on the level of market competition on both the supplier and final producer sides. Regarding the EU suppliers for EV car manufacturers, if their market is highly competitive, companies will likely reduce their prices to capitalise on the increased demand and sales. However, the policy could reduce foreign competition for EU suppliers of EVs, as the made in EU- content requirements for EVs come into effect. Under LEAD_VC 1, as observed above, public support schemes currently used in the automotive industry will mitigate the adverse effects of LEAD_VC. (See assumptions in Annex 4 Section 2) To reach this positive objective, as laid down in the assumptions, it is important that Member States re-distribute (at least, partially) the public subsidies that are no longer accessible to non-compliant, meaning that the Member States would keep the v olumes allocated to finance the strengthening of the EU industrial value chain. Since the assumptions are based on already existing schemes, the cost of public subsidies used for this Impact Assessment will not represent an increase in cost for Member States. Indeed, estimates indicate a saving budget for Member States of EUR 2.7 billion per year from 2027 to 2030, with a net present value of EUR 10.3 billion.669 Administrative burden LEAD_SOL 1 - To reduce administrative burden for Member States and ensure policy coherence, relevant NZIA requirements, particularly those relating to non -price criteria such as sustainability and resilience in wind energy auctions and public procurement, would need to be gradually superseded by corresponding IAA provisions. This transition should account for the time required to adapt administrative procedures, in addition to the adaptation time necessary for industry. Social impacts See Section 6 of the Impact Assessment. LEAD_EII 1 - The targeted stakeholder consultation found that, across industrial sectors, 75% of respondents acknowledge long term social benefits. However, 27% warn of short-term economic risks, i.e. rising production costs and investment pressures, leading to potential inflation, job losses or delocalisation. • Cement: all 7 respondents expect positive social impacts, such as job creation. • Steel: 13 out of 14 responses expect positive impact such as gains in skilled employment. LEAD_BAT 1 / LEAD_SOL 1 send a market signal that stabilises demand giving employers and vocational training providers the certainty they need to develop targeted curricula, launch apprenticeships and upskilling programmes, and build advanced manufacturing competencies across the region. INV 1 - Conditions requiring that investments generate value -added activities, such as R&I, engineering, domestic processing, and manufacturing, could significantly increase EU skill 668 Ibid. 669 Ibid. 248 capacities and create high -quality jobs. Staffing requirements and social protection conditionalities would ensure that FDIs actively recruit, hire, and train local workers, enabling local communities to benefit directly from employment opportunities. However, making these conditionalities voluntary under PO1 could reduce their potential impact as it still allows competition among Member States based on weaker employment conditions, despite offering some harmonisation compared to the baseline. Environmental impacts See Section 6 of the Impact Assessment. LEAD_BAT 1 - In Producing cells locally in Europe, compared to China, can reduce carbon emissions by 20–40% on average. Additionally, onshoring cathode production could deliver a further emissions reduction of up to 20% .670 Increasing EU -based production is therefore expected to deliver additional indirect climate and environmental benefits. Figure 35 Climate benefits of onshoring the battery value chain LEAD_VC 1 – In the Internal market reaction scenario, global greenhouse gas emissions from vehicle manufacturing decrease by 0.5 Mtonnes CO2e in 2027 and by 0.6 Mtonnes in 2030 due to shifts in production; they further decline by 0.1 Mtonnes due to reductions in international transport associated with EU imports. In 2027, substitution from EVs to ICEs could lead to higher emissions from the fuel use of new passenger cars (1 Mt) this effect almost disappears in 2030. POLICY OPTION 2 Economic impacts See Section 6 of the Impact Assessment. 670 Ibid. 249 Impact on downstream sectors INV 2 would have limited short-term impact on the downstream sectors, however in a medium to long-term perspective, the faster and more meaningful transfer of know -how, technologies and skills would result in stronger EU based value chains. This in turn would provide downstream sectors with additional supply options and overall higher resilience of the whole value chain s improving their competitiveness. This is particularly true for condition (c) ensuring that foreign investors contribute to technological advance ment in the EU by making their proprietary technologies or IP available to local firms, institutions, or joint ventures. On the other hand, it would lead to administrative costs for businesses. By analogy, the Commission Evaluation on FDI Screening Regulation 671 analysing the functioning and effectiveness of thereof identified limited costs for businesses. Impact on SMEs INV 2 - The analysis under PO1 remains valid, with no substantial costs for SMEs as investments not achieving a minimum threshold will be excluded from FDI conditionalities, though the indirect benefits listed in PO1 are likely to be more substantial and more predictable if mandatory measures are applied. Moreover, establishing a mandatory threshold for Member States to apply would likely to promote a more homogenous Internal Market investment framework vis-á-vis SME effects. Impact on Member States PERM 2 - Additionally, a One Stop shop as a sole point of contact for decarbonised energy intensive industrial projects does not necessarily introduce an additional burden, since similar structures already exist in the context of the implementation of other legisla tion for some energy-intensive industrial projects (namely, the NZIA). The most efficient decision would be to use the same designated authority, which would not entail any additional costs and reduce uncertainty over who the designated authority is. Impact on international trade INV 2 – In addition to what is described in Section 6 of the Impact Assessment, mandatory conditionalities would have to consider the international trade obligations undertaken by the Union, such as the WTO framework and FTAs. Therefore, any investment conditionality would have to be targeted, proportionate and justified on legitimate grounds to comply with these obligations, while FTA countries would be exempted from the scope of the conditionalities. The impact of conditionalities on FDI inflow can be inferred from an example of Chinese investments in the EU. The analysis shows that, although there was an initial reliance on imports from China during the early stages of Chinese greenfield investments, sourcing from European suppliers has gradually increased over time. For example, at the BYD electri c bus factory, local supplier sourcing grew from an initial 20% in 2017 (the year the factory opened) to between 30% and 50% by 2019. BYD has also signed sup ply agreements with other European firms, indicating a willingness to integrate local supply chains into its strategy. Similarly, staffing has gradually shifted towards more local employment. Therefore, FDI conditionalities around Made in EU requirements and staff requirements may be effective or 671 European Commission (2024). COMMISSION STAFF WORKING DOCUMENT EVALUATION of Regulation (EU) 2019/452 of the European Parliament and of the Council of 19 March 2019 establishing a framework for the screening of foreign direct investme nts into the Union Accompanying the document Propos al for a Regulation of the European Parliament and of the Council on the screening of foreign investments in the Union and repealing Regulation (EU) 2019/452 of the European Parliament and of the Council - Publications Office of the EU. 250 acceptable for foreign investors, such as Chinese firms, as they are already being partially implemented.672 Social impacts See Section 6 of the Impact Assessment. Environmental impacts See Section 6 of the Impact Assessment. In addition: Positive impacts on CO2 emissions for steel and aluminium are most notably seen in residential buildings, primarily due to differing design and construction approaches between residential and non -residential sectors. In non -residential construction, a steel -concrete skeleton structure is commonly employed for lo ad-bearing functions, featuring reinforced concrete ceilings and steel beams, complemented by prefabricated façade elements that enhance energy efficiency but do not contribute structurally. In contrast, residential buildings tend to use bricks or wood for load-bearing walls, which also enhance energy efficiency, with less frequent use of façade elements. As a result, transitioning to more low -carbon and bio - based solutions is likely to be more appealing and feasible in the residential sector, where these materials and methods are already more familiar. INV 2 - The environmental effects of mandatory FDI conditions are expected to be similar to those described under PO1, but likely greater due to the mandatory implementation by Member States. POLICY OPTION 3 Economic impacts See Section 6 of the Impact Assessment. In addition: Impact on companies LEAD_VC 2 (EU vehicle component suppliers) Table 24 Benefits for EU suppliers from LEAD_VC 2 measures EU suppliers in the “Internal market reaction” scenario In EUR billion 2027 2030 Passenger cars sales increase 7.0 7.1 LCVs sales increase 0.6 1.0 HDVs sales increase 0. 23 0.16 672 MERICS (2025). Chinese investment rebounds despite growing frictions – Chinese FDI in Europe: 2024 Update; Bruegel (2025). A smart European strategy for electric vehicle investment from China. 251 Similarly to LEAD_VC 1, the introduction of made in EU requirement for vehicle components of EVs sold in the EU will lead to higher sales of EU components suppliers in the E V manufacturers across all vehicle segments. The sales of EU suppliers to EV car manufacturers are expected to rise: • For passenger cars: by EUR 7 billion in 2027 and by EUR 7.1 billion in 2030. • For LCVs: by EUR 0.6 billion in 2027 and by EUR 1 billion in 2030. • For HDVs: by EUR 229.8 million in 2027 and by EUR 156.6 million in 2030. The sales increase for EU suppliers come from the sales increase of EU made vehicles and the increase of EU content in those vehicles. PERM 3 - Support for further measures to improve the permitting process was high in the Targeted Consultation, with 72% (45 respondents) of industry respondents in support of facilitating access to grid and relevant energy infrastructure. The creation of these clusters would promote and facilitate integrated energy planning for industrial areas as well as the promotion of partnerships and exchanges of best practices supporting the transition of industrial areas. Meanwhile, 64%, 40 respondents to the targeted consultation, expressed the need for targeted environmental derogations for industrial clusters and projects. AREA 2 - As part of the Open Public Consultation, 63% (197 out of 314 respondents) think that support the introduction of a category of priority industrial decarbonisation projects, supported by targeted benefits, will have a positive effect on their decarbonisation efforts. Priority projects are supported by SMEs (61%) and EII sectors such as steel (66%), cement (56%), chemicals (79%) and fertilisers (100%). The preferred criteria for identifying priority projects were: contribution to industrial decarbonisation (32%, 100 out of 314 respondents), contribution to strategic value chains (64, 20%), contribution to industrial electrification (9, 16%), economic importance (43, 14%) and expected increas ed demand for outputs (28, 9%). Benefits most preferred by the participants were better access to funding (65% - 117 out of 175), faster permit -granting procedures (113, 67%) and priority status for administrative procedures (113, 65%). Amongst SMEs, 96% (90 out of 94) referred to better access to funding. Impact on downstream sectors LEAD_VC 2 EU EV manufacturers in the “Internal market reaction” scenario In EUR billion 2027 2030 Passenger cars cost increase 0.0 2.0 sales increase 14.7 9.2 LCVs cost increase 0.0 0.2 sales increase 1.5 1.5 HDVs cost increase 0.0 0.16 sales increase 0.49 -0.0003 252 Similarly to LEAD_VC 1, given the current 70% EU content, the measure would not lead to any further costs for EU EV manufacturers in 2027 across all segments. As an effect of the measure, EU EV manufacturers would benefit from an increase in sales of: • For passenger cars: EUR 14.7 billion in 2027. • For LCVs: EUR 1.5 billion in 2027. • For HDVs: EUR 495.7 million in 2027. However, to comply with the 75% target proposed for 2030, EU EV manufacturers will face a relative cost increase of: • For passenger cars: In order to comply with the 75% target proposed for 2030, EU EV manufacturers will face a relative cost increase of 2 billion, projected to be offset by the EUR 9.2 billion increase in sales. • For LCVs: 0.2 billion, expected to be offset by the EUR 1.5 billion increase in sales. • For HDVs: 157 million euro. This cost increase is going to be accompanied by a minor sales reduction (-0.3 million euro). The relative price advantage of EU EV HDVs (as opposed to non -EU EV HDVs) determined by the measure in the initial years after its introduction, leads to increased sales in the period between 2027 and 2029, and these increased sales are larger than (and could potentially offset) the assumed increased cost. Global Added Value: Value Added in EUR billion Internal market reaction 2027 2030 automotive 3.6 2.2 intermediate 3.0 3.1 Global value added - Only first round of Value Chain 6.6 5.4 Global value added - Estimated all Value Chain 12.6 11.5 The measure is projected to lead to the generation of EUR 6.6 billion Global Value Added in 2027 and EUR 5.4 billion in 2030 when assessing the impact, taking into account only the first tier of the value chain. Similarly to the first policy option, in LEAD_VC 2 the positive impacts can also be perceived throughout the value chain for intermediate inputs , reaching this time higher benefits, EUR 12.6 billion in 2027, and EUR 11.5 billion in 2030 in value added. Impact on consumers and citizens LEAD_VC 2 EU consumers in the “Internal market reaction” scenario 2027 2030 Passenger cars EVs price changes (%) 0.5% 1.4% EVs sold change (thousand) -84.8 -91.2 LCVs EVs price changes (%) -0.8% 0.5% EVs sold change (thousand) 17.1 2.6 253 HDVs EVs price changes (%) 0.6% 1.4% EVs sold change (thousand) 1.2 -2.0 Similarly to LEAD_VC 1, described phenomenon will also have the above indicated two different effects. As average prices673 of EVs passenger cars are going to: • For passenger cars: increase by 0.5% in 2027 and by 1.4% in 2030. This is expected to lead to a reduction in EV passenger cars purchases by 84 800 vehicles in 2027, and 91 200 vehicles in 2030 if no mitigation measures put in place. • For LCVs: decrease by 0.8% in 2027 and then slightly increase by 0. 5% in 2030, and this is expected to lead to an increase in EV light commercial vehicles purchases by 17 100 vehicles in 2027, and 2 600 vehicles in 2030. • For HDVs: slightly increase by 0.6% in 2027 and then increase by 1.4% in 2030. These prices variations are going to have a minor effect on EV HDV purchases in 2027, when sales will still slightly increase by 1 200 units, and lead to a decrease in purchases of EV HDVs by 2 000 units in 2030. If all subsidies were reallocated from non -EU to EU EV manufacturers, the average price of EVs for consumers would decrease: • For passenger cars: by 0.8% in 2027, and the increase in 2030 is more muted at 0.4%. • For LCVs: by 2.4% in 2027 and 0.8% by 2030, with a corresponding larger increase in the number of EV LCVs sold. • For HDVs: by 0.3% in 2027 and only increase 0.8% by 2030, with a corresponding larger increase of EV HDVs sold in 2027 and a smaller reduction of sales in 2030. LCV and HDV sections of the cost on consumers may be considered impact on the downstream sector, as most of LCVs and HDVs are purchased by downstream economic operators. Social impacts See Section 6 of the Impact Assessment. Environmental impacts See Section 6 of the Impact Assessment. LEAD_VC 2 Global greenhouse gas emissions from vehicle manufacturing decrease by 0.9 Mtonnes CO2e in 2027 and by 0.7 Mtonnes in 2030 due to shifts in production; they further decline by 0.1 - 0.2 Mtonnes due to reductions in international transport associated with EU imports. In sum, the environmental effects remain very similar across LEAD_VC 1 and LEAD_VC 2. 673 As a result of the reallocation of subsidies, EU manufacturers reduce the price of their vehicles, but they do not compensate for the high price increase that the non-EU manufacturers would face as a result – further incentivising compliance to this measure. 254 Annex 12: Development of a low-carbon product label for steel 1. Description of the design elements Overview of policy options and policy scenarios used for the analysis The following table provides an overview of the policy options for the low -carbon product GHG label for steel presented under LAB 2. This annex further describes the policy options in this section and retained for assessment in Section 2. Table 25: Overview of policy options assessed Development of low-carbon product GHG label for steel Baseline Existence of private GHG product labels, published ETS -installation emissions, planned work under the ESPR Determination GHG- intensity CALC1 System boundaries and calculation methodologies in line with free allocation rules under ETS/CBAM methodology CALC2 System boundaries in line with ETS scope, limited nr. of key indirect GHG emissions included CALC3 Comprehensive life cycle system boundaries, including upstream and downstream GHG emissions, via the Product Environmental Footprint (PEF) method Classification CLAS1 No classification / carbon footprint information only CLAS2 One classification system without (CLAS2.a) or with (CLAS2.b) a sliding scale CLAS3 Differentiated classification systems per production route (CLAS3.a) or according to the shape of the final product (flat/long) (CLAS3.b) Ensuring data quality DATA1 Label for EU steel producers only, based on self-declared emissions and production volumes DATA2 Label for EU steel producers only, with third-party verification and certification DATA3 Label for EU steel producers and importers, with third-party verification and certification Determination of the greenhouse gas intensity The determination of the greenhouse gas intensity of a product – here defined as t CO2eq/ tonne of steel - is the crucial element of any carbon footprint label, as it provides the quantitative base upon which the label is built on. For a low-carbon steel product label, this entails the following interrelated elements: 1. Product in scope of the label: Steel is sold in a wide variety of products forms, ranging from flat products like hot rolled coil to long products such as bars and wire rods. The chemical composition of these products may vary, by factors such as the inclusion of alloys and the electromagnetic properties of the steel. Theoretically, a steel label can therefore be applied to different products, leading to different label units (e.g. to of coil, flat steel). After feedback from stakeholders and comparison wit h existing initiatives, hot rolled carbon steel was chosen for the current proposal of label. This will ensure most of the steel production is covered. High alloy steel would not be covered for now as their carbon footprint are significantly impacted by the emissions linked to alloys which are mostly imported, and little data is available. 2. Covered processes and associated emissions under the label : Emissions from steel production occur at various stages in the value chain. In addition to the direct GHG emissions from production facilities, there are also indirect emissions linked to, for example, electricity consumption and to mining of raw material inputs, transport of 255 intermediates and pre-processing (e.g. coal, alloys, scraps) and the end-of-life phase of steel products. 3. Calculation methodology: The actual calculation of the covered GHG emissions and production volumes needed to determine the GHG intensities can be done using different methodologies. The M onitoring, Reporting and Verification (MRV) rules developed in the context of free allocation under the EU ETS provide a detailed description of the emission calculation method. CBAM emission calculation methods for extra-EU countries are also based on the methodology of the ETS. 4. Relevant baseline period : the relevant temporal unit for the determination of the greenhouse gas intensity need to be chosen , outlining the period used to measure and assess the greenhouse gas intensity. Different approaches can be used to determine the greenhouse gas intensity. The following options are assessed: Option 1: ETS/CBAM aligned scope and calculation methods, baseline based on annual data (CALC1) The covered processes and associated emissions are aligned with the product benchmarks being developed under the EU ETS free allocation rules for the steel sector. They would typically cover the direct emissions associated with the reported emissions under the EU ETS, notably related to the relevant steel product benchmarks (coke, agglomerated iron ore, hot metal production, EAF carbon steel and EAF high alloy steel.) as included in the table in annex 12.a to this document. The total GHG emissions per steel product are determined as the sum of the relevant production steps covered by product benchmarks. Since the CBAM methodology is also largely based on these product benchmarks, this method also ensures alignment with the CBAM rules. Option 2: ETS/CBAM scope and methods, complemented by a limited number of additional key indirect emissions. Limited flexibility for baseline determination would also be included. (CALC2) As in Option 1, the covered processes and associated emissions are aligned with the EU ETS product benchmarks, while the relevant product units also refer to crude steel production. In addition to CALC1, key indirect emissions from electricity, hydrogen, a nd heat use are included within the scope, as well as the emissions from the hot rolling. The baseline period can be disaggregated from annual installation -level data to more granular segments, provided a clear intertemporal and/or physical unit demarcation can be demonstrated. Option 3: LCA scope (CALC3) Both the scope of the processes and emissions covered, and the calculation methods are based on the Product Environmental Footprint (PEF) method, extending the scope to all relevant upstream (e.g., extraction of input materials, pre-processing of scraps, manufacturing of alloys and other ancillary chemicals) and downstream (linked to e.g. recycling activities) emissions. Classification In addition to the robust calculation of GHG intensities per tonne of product, a possible second element of a label is the development and use of classification classes based on these GHG intensities. In its most basic form, this classification could distinguish between steel that meets the requirements for low-carbon steel and all other steel not meeting the requirement. In a more advanced form, several performance classes could be established, linking specific GHG - intensity thresholds to corresponding performance categories. 256 These classification classes could be the same for all steel products covered by the label, or different labelling “families” could be developed per product group. In the context of a low- carbon product label for steel, the following elements can be distinguished. 1. Possible distinction by production route : Steel can be made starting from iron ore (primary route) or by utilising recycled steel scrap (secondary route). Both production routes lead to crude steel, but the production processes and emission intensities are fundamentally different. Based on the production routes and making use of the definitions under the product benchmarks in t he EU ETS, it would be possible to distinguish between to two broad label categories: • Primary steelmaking, covering both the Blast Furnace/ Basic Oxygen Furnace (BF/BOF) route and the Direct Reduced Iron (DRI) route in line with the relevant benchmarks for primary production under the ETS (coke, agglomerated iron ore, hot metal production) • Secondary steelmaking in an Electric Arc Furnace (EAF), in line with the relevant EAF benchmarks under the ETS (EAF carbon steel/EAF high-alloy steel) On the other hand, it would also be possible to combine all steel production within one label category, irrespective of the production pathway. As structurally, primary steel production is much more carbon intensive than secondary steel production, within this approach one would have to decide whether an adjustment for the scrap share would be needed, for example via a sliding scale, where a performance class become more stringent as the share of scrap increases. Especially if no GHG emissions are allocated to the use of scrap in the determination of the GHG -intensity, a well calibrated sliding scale for the determination of the performance classes could capture the gradual impact of using more or less scrap, reflecting the different starting point of the two production routes. Furthermore, the primary and secondary production routes will eventually start to overlap when primary steelmaking decarbonises, given that the decarbonisation of the primary steelmaking route will likely include the use of DRIs, which typically produce sponge iron which needs further treatment in an EAF to produce crude steel. 2. Possible distinction by the quality of the end -product: the performance and quality characteristics of steel vary according to its chemical composition. Adding alloy elements can improve the quality of steel, leading to a differentiation between carbon steel, high alloy steel and stainless steel. As these hig h-alloy steel grades, typically produced in an EAF, have a higher emission intensity, a quality -based differentiation within the label could be considered. The EAF product benchmarks under the ETS account for this difference, given the distinction between EAF carbon steel and EAF high alloy steel. 3. Possible distinction by the two main products categories : Flat products and long products have different applications, while also the production processes differ. Different approaches can be used for a classification. The following options are assessed: Option 1: No classification (CLAS1) In this option, the steel label would be limited to one single metric, expressing the ton nes of GHG emissions per tonne of steel. There would be no linked predefined performance 257 categories linked to this metric, providing flexibility to other policy instruments, such as the ESPR, to develop such classes or thresholds to qualify as low-carbon steel. Option 2.a: One classification system without a sliding scale (CLAS2.a) In this option, one classification system would be developed for the labelling of steel, defining specific GHG-intensity thresholds. All steel up to the production step covered by the system boundaries would be subject to the same thresholds and classification system, irrespective of its production route or quality. Option 2.b: One classification system with a sliding scale (CLAS2.b) In this option, one classification system would be developed for the labelling of steel as in CLAS2.a, but the more scrap is used, the more stringent (i.e. less t CO2eq/ tonne of steel) the thresholds become. As such, this classification could account for the inherent GHG impact of scrap, and for the difference between producing primary steel and steel via scrap -based technologies. Option 3.a: Differentiated classification systems per production route/steel quality (CLAS3.a) In this option, differentiated classification systems are developed for primary and secondary steel production. It is then further differentiated by steel quality, with the main metric being the content of alloy within the steel. Therefore, four distinct low -carbon steel classifications are developed, i.e. primary-low alloy, primary-high alloy, secondary-low alloy, secondary-high alloy. Option 3.b: Differentiated classification systems per production type (CLAS3.b) Instead of distinguishing based on the production route, this option provides a different classification system according to the final shape of the steel products, categorizing them as flat or long steel products. Flat products include slabs, hot rolled coil and plates and are predominantly used in automotive, pipes and tubes and constructions . Long products such as bars and wire rods are typically used in the construction, mechanical engineering and automotive industries.674 Ensuring data quality A third aspect of a labelling system is securing the credibility , reliability, consistency and accuracy of the underlying reported data and resulting GHG -intensities and/or resulting label classifications. To prevent greenwashing and ensure the consistent and comparable application of the methodology an appropriate level of control should be applied, involving different actors. The applicant itself may report the required data and cal culate the resulting GHG -intensities through self-declaration. A certification body may perform checks on the submitted data, e.g. to avoid procedural inconsistencies. External -third party verification of the application by accredit verifiers may be required, assessing the correct use of the methodology and reported data. This element of the label is also linked to the eligibility to apply for the label: for steel for which all production steps are performed within the EU, detailed GHG emission s for production within specific installation boundaries and corresponding production dat a are available and reported in the framework of the free allocation rules under the EU ETS. For 674 JRC (2020). Production costs from iron and steel industry in the EU and third countries. 258 steel imported on the EU market, and for production steps taking place outside EU, the current information availability is lower but can increase as CBAM is implemented , potentially requiring extra procedures to ensure high data quality. Based on these elements three options emerge: Option 1: Label for EU steel producers only, based on self-declared emissions and production volumes (DATA1) In this option, only EU steel manufacturers would be allowed to apply for the label. Applicants report their GHG-intensities through self-declaration to a certification body, based as much as possible on validated data under the ETS, that performs basic procedural checks on the submissions and subsequently certifies the relevant GHG-intensity and/or label classification. As the bulk of the data is based on already verified and validated data under the ETS, no further verification is needed. Option 2 : Label for EU steel producers only, with third -party verification and certification (DATA2) As in option 1, only EU steel manufacturers would be allowed to apply for the label. However, an additional verification of the submitted applications and data / calculations therein is required, performed by an independent third -party verifier. Based on the verified application, the independent third-party certification body approves the reported GHG -intensity and/or label classification and issues the label. Option 3 : Label open for all sellers of steel on the EU market , with in-debt third-party verification and certification (DATA3) In this option, the eligibility is linked to whether the steel is placed on the EU market, regardless of the place of production. This would allow imported steel on the EU market to be labelled under the system. As in option 2, third party-verification and certification are required. As mentioned in Section 6.2.1.8, Member States will also have to ensure that the certification system in place is properly enforced and monitored for risks of fraud. 2. What are the impacts of the policy options? This section assesses the impacts of the development of an EU voluntary low -carbon product label for steel and goes on to assess the impacts on the design aspects: the determination of the greenhouse gas intensity, the classification, the verification and certification, and the eligibility. Environmental impacts Currently over 150 steel label initiatives have been developed worldwide. While these labels offer significant opportunities for producers to demonstrate the carbon intensity of their products, the landscape is highly fragmented. Differences in methodologies, end products and scope of emissions considered make it impossible to compare labels. This lack of consistency can undermine credibility, leads to greenwashing concerns and ultimately hinder the development of lead markets for low-carbon steel. Introducing a standardised EU -wide label, enshrined in EU law, based on a credible and transparent methodology, can help address these issues, boost the demand for low -carbon steel and therefore have a positive impact on the business case for decarbonisation of steel production in the EU. 259 Moreover, the introduction of an EU -wide label based on reliable and verified data and a uniform methodology can improve the understanding of what constitute steel with lower environmental impact. However, the environmental benefits of an EU voluntary low -carbon product label for steel depends on its ability to effectively stimulate demand for low -carbon steel. This requires the label to provide buyers of steel with credible information about the GHG emissions associated with the prod uct. At the same time, its impact also depends on the ability of low -carbon producers to differentiate their products from conventional alternatives and to strengthen the business case for low -carbon production. The positive GHG impact of the different design elements for the low-carbon product label is therefore assessed by: 1. The scope of the GHG emission information provided by the label; 2. The label’s ability to ensure comparability across products and producers. Determination GHG-intensity a. Scope of the GHG emission information In CALC1, the GHG-emission intensity is limited to the GHG emissions covered by the productions steps of the EU ETS system. For the production of the steel via the primary production route, this includes the processes and covered emissions by the cokes production, the production of agglomerated iron and the emissions in the blast furnace and blast oxygen furnaces. For the secondary production route, this scope covers the direct emissions in the electric arc furnaces. Based on calculations made by the JRC, this scope covers for average production processes 74% of the direct GHG emissions of the total LCA of primary steel production via the classic BF/BOF route. As for secondary steel production, these direct ETS reported emissions only cover 18% of the total LCA GHG emissions , though the LCA emissions of this route are typically much lower than the classic BF/BOF route.675 CALC2 provides in particular for the secondary steel production route a much larger share of the total LCA GHG emissions, demonstrating in particular the impact of electricity use. Furthermore, CALC2 also covers GHG emissions from hydrogen, a key future en ergy carrier and reduction agent for iron production via the (primary) Direct Reduced Iron route, which is expected to be one the major low-carbon technologies for steel production for the future. CALC3 provides total GHG emissions of the full product life cycle (LCA basis). Compared to the more limited scopes of CALC1 and CALC2, for the primary steel production route the majority of the GHG emission relate to emissions related to coal extraction, and to a lesser extent to emission related to oxygen production needed for the BOF technology. As for secondary steel production, the major source of additional emissions is linked to the extraction of alloys, which are usually used in EAF secondary steel production. Table 26:Overview of emissions coverage Option676 CALC1 CALC2 CALC3 Processes and emissions covered Direct industrial GHG emissions covered by ETS CALC1 scope, and indirect GHG from electricity, heat and H2 use Cradle-to-gate LCA GHG emissions 675 For this calculation, ETS coverage is limited to the scope of the key ETS product benchmarks for the steel sector, excluding for example ETS-covered products such as lime that is only used in small quantities in the steel making process. 676 According to Eurofer’s European Steel in Figures 2025 report, in 2024, 44.6% of EU-manufactured steel was produced via the Electric Arc Furnace route, while 55.4% came from the Blast Oxygen Furnace and other routes. 260 Coverage of total LCA GHG primary production for crude steel (BF -BOF route)677 74% 1492 kg CO2eq/ t crude steel 78% 1567 kg CO2eq/ t crude steel 100% 2017 kg CO2eq/ t crude steel Coverage of total LCA GHG secondary production for crude steel678 18% 86 kg CO2eq/ t crude steel 60% 286 kg CO2eq/ t crude steel 100% 479 kg CO2eq/ t crude steel The additional hot rolling step is part of 4 out the 6 main current initiative for steel labelling679. This can be considered also as a representative steel product and integrating the bulk of GHG emissions, which is why the product in scope for the label was chosen as hot-rolled steel. b. Comparability of the GHG-intensities CALC1 aligns its scope with the combined scope of the steel product benchmarks under the EU ETS. Therefore, the base unit for the GHG intensity determination is crude steel, manufactured both via the primary and the secondary route. The covered processes a nd associated emissions to be used for the determination of the GHG -intensity are well - documented within the ETS relevant legislation, which ensures comparability across different steel products. However, by excluding a key indirect emission source such as the GHG emissions related to electricity consumption, the fairness of the comparison across production routes can be questioned and can potentially create an uneven playing field. CALC2 builds its methodology on the ETS product benchmarks and CBAM as in CALC1, and it adds a limited number of relevant indirect emissions. This approach keeps the high level of comparability and consistent system boundaries across products as in CALC1, while the inclusion of the indirect emissions allows for a more com plete assessment of GHG intensities across different products, though this addition does require a consistent methodology to measure electricity related emissions. The emissions not covered , compared to an LCA are in majority linked to the extraction of coal, iron ore and alloys where less primary data under the control of the steel manufacturer/importer are available. CALC3 draws the most complete assessment of the LCA GHG emissions for the steel products and enables the most complete comparison in terms of GHG-intensity. However, in contrast to CALC1 and CALC2, no direct and verified data from the ETS are used, which may lead to lower overall data-quality and accurateness. Any such label will likely need to r ely to a much larger extent on estimates, assumption and default values, as well on MRV systems that are not regulated in a manner as consistent as under the EU ETS. Classification In CLAS1, the label information is limited to indicating the GHG-intensity of the product, without attributing it to a specific performance category. While the GHG-intensity on itself provides precise GHG information, the lack of a standardised classification system and a clear definition of a low-carbon products, transfers the burden of interpretation to the end-user of the product. This limits the effectiveness of the label as a standalone policy instrument. In this 677 Based on internal Commission calculations. 678 Based on JRC calculations performed in the framework of ESPR activities. 679 JRC (2025). Defining low-carbon emissions steel: A comparative analysis of international initiatives and standards. 261 option, complementary policy instruments could be introduced to define harmonised performance categories. The uniform approach and broad scope of the label under CLAS 2.a increases its useability and usefulness as a stand -alone policy instrument. However, given primary and secondary steel production are assessed under the same classification system, it becomes difficult for primary steel producers to reach high performance classes, given the actual difference in emission intensity between two production routes. As a result , it would reduce the attractiveness of the label for primary route steel producers, limit ing the uptake and the market information it can bring and limiting the decarbonisation of the primary production, which cannot be entirely substituted by secondary production. In the latter case it would reduce the information provided through the label to end consumers. CLAS 2.b addresses this challenge by adjusting the performance class thresholds in line with the amount of scrap used. As such, it could serve as an attractive alternative classification system for both primary and secondary steel producers, and it addresses the complexity of the different production routes and the scrap use and addresses the increase interlinkage between both routes in the medium term (i.e. new production ways through DRI and EAF) . It allows primary producers to claim also best of class performance. However, setting the exact coefficients of the sliding scale performance classes could complicate the labelling system. Moreover, following CLAS 2.b the classification is not only solel y based on GHG-intensities but also recycled content (i.e. scrap use), which may complicate the understanding and thus underlying logic of low -carbon product labelling system. Furthermore, some may claim it rewards the more resource intensive primary production route. By having separate classifications systems for primary and secondary steel making, CLAS3.a acknowledges the fundamental differences between the production technologies and provides both primary and secondary steel producers with the opportunity to be categ orized in high performance classes. This system would compare steel products within the different production routes. However, CLAS3. A would not compare the two production routes directly, risking that the classification system could be considered overly d isaggregated. This could also risk undermining the incentive to use recycled scrap in steelmaking, and it could be considered to be not futureproof, as the sharp distinction between primary and secondary production routes are blurring with the introduction of DRI -based steelmaking that combines both the use of primary resources, i.e. iron ore, and the need for EAF steelmaking. The same reasoning largely goes for CLAS 3.b, which proposes different classification systems according to the final shape of the steel product. As flat products are predominantly manufactured through the primary production route while long products are typically produced via the secondary production pathway, the resulting classification classes would in practice be rather similar to a system based on production routes- in particular in the near future. However, the inherent technologically neutral characte r of this option appears to be more future proof than option 3.a. Several existing steel labelling initiatives have introduced 4 to 5 classes and sliding scales (see table below) 262 Table 27: Cross comparison matrix of initiatives and standards that set thresholds for the definition of “low-carbon steel”680681 681 JRC (2025). Defining low-carbon emissions steel: A comparative analysis of international initiatives and standards. 263 Ensuring data quality In DATA1, the strong reliance on the responsibility and correct conduct of the applicant may undermine the credibility of the label. While the use of previously verified data under the EU ETS could provide a certain degree of assurance in terms of data accuracy , the lack of an additional verification of the GHG intensity at product level poses a risk, in particular if the scope of the emissions would be extended beyond the ETS product benchmarks. This option might therefore increase fraud and greenwashing risks and might undermine the effectiveness of the label. DATA2 addresses these risks and provides more certainty and adds credibility to the label calculations and underlying data, due to the extra step of the external verification. It therefore increases the usefulness and potential effectiveness of the label. DATA3 enlarges the scope of the label beyond the EU borders, potentially also increasing its impact and contributing to aligning the EU label with other labelling worldwide initiatives. For extra -EU steel manufacturers, the possible use of already reported and verified data is more limited, requiring a more thorough verification and certification to reduce the risks on fraud. CBAM will be a source of relevant information for extra-EU applicants from 2026, therefore it should be required to be used if option DATA3 is retained. Administrative impacts The credibility of any label stands or falls with the quality, robustness and transparency of the underlying data, allowing for a harmonised representation of GHG intensities of steel products. Reporting, verification, and label issuance all involve time a nd financial costs, for both the applicants, potential verifiers and public authorities. On the other hand, a well -designed label can also reduce administrative burdens, for example by providing transparent market information that lowers the information costs for potential buyers of low-carbon products. As the label is conceived as a voluntary instrument, its administrative impact for manufactures of steel products as whole is expected to be limited. Only interested applicants will perform the necessary steps to acquire a label, based on an internal cost -benefit analysis. Furthermore, as the label aims to set a credible standard for labelling initiatives, its existence might even avoid the need to invest in other labelling initiatives, or in other ways to publicly disclose the lower GHG intensities to potential buyers. Determination GHG-intensity Since CALC1 mainly builds on ETS/CBAM reported data, its additional administrative burden to gather data for producers from an EU installation will be limited. Within the framework of the application for free allowances under the ETS, EU steel producers already possess the relevant historical data and are familiar with the specific product benchmark boundaries. For EU steel producers that do not carry out all relevant production steps themselves, e.g. they purchase coking coal for use in their steel production facility, the label calculations will be more complex. In these cases, it would be necessary to demonstrate the GHG intensities of the purchased input materials. Also, by using annual average GHG emission intensities, consistent with the reporting under the ETS free allocation rules, the additional cost impact of data gathering/calculation of the labelling requirements is limited. Historical data have already been verified under the ETS . The need for control and verification will be defined by the label verification criteria. The cost of it would be expected to be limited. 264 CALC2 also builds on ETS/CBAM data, adding a limited amount of indirect emission sources to the calculations of the GHG -intensity. Provided these indirect sources refer to key inputs such as electricity and/or hydrogen use, one could assume that these data are readily available for applicants for the label or that reliable default values can be utilised. The possibility to have a more segmented baseline period for the determination of the GHG-intensity adds complexity to calculation and might require additional verification steps in addition to the information that would already be available through the EU ETS free allocation. The LCA methodology to be used under CALC3 could rely on ETS/CBAM reported emissions and builds on the PEF methodology, requiring detailed data from a very comprehensive scope including complexity and variation of the production processes and possibility to use a mass balance approach . Thus, the effort (time/cost) of verification and certification of the label calculations would be increased versus CALC1/2 which mostly rely on already verified data. Classification CLAS1, limiting the label information to stating a products’ GHG-intensity without further classification, avoids the definition of thresholds within the legislation and marginally simplifies the certification process. However, compared to other options there may be additional administrative burden that is put on the potential users of the label , if these actors should interpret the level of GHG performance themselves based on the reported numbers. It is also not a solution to the main problem as it does no t provide any threshold/definition of low-carbon steel failing to create a reliable label to stimulate its lead market. CLAS2.a and CLAS2.b avoids this latter impact, as the clear classification classes increases the usefulness for label users. CLAS2.b cou ld allow to report next to the class, also additional information, notably the exact carbon intensity as well as the share of scrap input in the steel manufacturing process, adding an extra reporting element. Under CLAS3.a the most disaggregated classification system is proposed, also requiring the reporting of more detailed product data (such as quality), and the verification of these elements. The additional data need for CLAS 3.b is more limited. Ensuring data quality As DATA1 relies on self-declaration of the GHG-intensities by the steel manufacturers without an independent verification , the administrative burden is minimized compared to an option with more stringent verification and certification requirements as in DATA2. In this latter option, both setting up the verification rules and nominating the certification body(is), as well as the implementation of the procedures, contribute to the administrative burden. However, relying on existing rules, procedures, verifiers and other parties e.g. from the EU ETS, can help to minimise this burden. In DATA3, the most stringent verification mea sures are required to ensure data quality, particularly due to the lack of readily available data reported through the ETS. For extra-EU manufacturers, some necessary data for determining GHG intensities will be collected under CBAM, given its alignment with the ETS product benchmark methodology. However, data quality under this option may vary among applicants, necessitating a more comprehensive and rigorous verification and certification scheme, which would i ncrease the administrative burden both for applicants, as well as for verifiers and regulators. 265 Coherence with other elements of the regulatory framework The proposed label has some clear linkages with both existing and future policy instruments, with two focus areas. The EU ETS is the main climate policy instrument to reduce GHG emissions in energy intensive industries operating in Europe. By putting a price on GHG emissions, it incentivizes manufacturers covered by the system to invest in low-carbon technologies and reduce emission in a cost efficiency way, and it is therefore a supply side measure. At the same time, detailed and accurate monitoring, reporting and verification of GHG emissions is a cornerstone of the system. Installations report annually their GHG emissions at i nstallation level. In addition, industrial installations applying for free allowances also report periodically on their production volumes and associated emissions, following the structure set out under the ETS Free allocation rules. The development of a l abel aims to boost the demand for low -carbon products, and as such it complements the focus on the supply-side from the EU ETS. At the same time, the label can make use of similar calculations done under the ETS Free Allocation Rules and under CBAM. Under both policy instruments, installation -wide emissions are attributed to specific products: while under the ETS rules these products refer to specific productions steps (‘product benchmarks’), under CBAM the GHG emissions are attributed to relevant end produ cts, The label can build on these methodologies, ensuring a coherent approach. Second, the determination of the GHG intensities for the proposed label can also be a building block itself for other GHG emission reporting initiatives within the broader EU regulatory framework. In particular the option to include product life cycle GHG emissions as an information or performance requirement under upcoming ESPR product delegated acts such as for steel or aluminium and the requirement to include climate data in future mandates under the CPR such as for cement can be an opportunity to exploiting synergies, allowing them to use the steel label as modular data input being as needed complemented by further LCA data. Thereby ensuring consistency and harmonisation with other relevant EU policies. Determination GHG-intensity In CALC1, as also discussed under 0, the use of the ETS calculation rules and system boundaries of the Product Benchmarks developed under the Free Allocation Rules, ensures a high level of consistency of the proposed label with the ETS and CBAM methodology. While the label calculations would imply some extra steps compared to the reporting under the Free Allocation Rules, including a more regular reporting of the data, the basic methodology is very similar, including the use of average annual data. CALC2 is also broadly coherent with the ETS and CBAM methodology, but by adding additional covered processes it adds some complexity. In addition, in particular the allowed flexibility to have a more segmented baseline period for the determination of the GHG-intensity deviates from the approach under the ETS. The use of the LCA calculation methodology proposed under CALC3 is not consistent with the current approach under ETS and CBAM but can build on it , as showed by the currently ongoing work in the ESPR context. In CALC 3 notably, the delineation of the scope would be of importance to ensure comparability of GHG intensity across different production routes. As for the role of the low-carbon product label as a building block of other parts of the regulatory framework, options covering a larger part of the total LCA GHG emissions (such as CALC2 and CALC3) have a large potential to be consistent with regulatory initiatives focusing on total LCA GHG emissions. 266 Classification Regarding classification, the coherence with the regulatory framework is mainly referring to its potential role as a building block for other parts of the regulatory framework. If no classification system would be linked to the label, as foreseen under CLA S1, other policy instruments need to develop their own classifications, potentially diverging among different instruments. The establishment of classifications as under CLAS2 and CLAS3 increase the usefulness of the label with other policy instruments, for instance as a criterion in public tendering, increasing its value and potential coherence with the regulatory framework as a whole. Ensuring data quality By restricting the eligibility to EU manufactured products, that can be expected to report most of the relevant data within the EU ETS framework, DATA1 ensures a high level of compatibility with the ETS. This also opens the possibility for further alignment, e.g. by some targeted modifications to the Free Allocation Rul es under the ETS that improve the reporting frequency and data quality for the resulting GHG-intensities, which presently is required to be at least every 5 years. However, the limited verification and certification on the self -declared GHG-intensities might limit the usefulness of this option for other policy instruments, as e.g. for linking to tax or subsidy schemes a high degree of certainty on the exact GHG -intensities is needed and risks on fraud increase. DATA2 addresses this latter element, by requiring more stringent verification and certification procedures. However, as with DATA1 the restricted EU- production coverage may limit the relevance of the label for applications such a linking with the upcoming ESPR requirements (applying to all products placed on the market) or with public procurement criteria. As for DATA3, a direct link with the ETS is not possible, as the extra - EU producers are not covered by the system. This might however partly be addressed through CBAM. At the same time, by extending the scope, DATA3 potentially increases the usefulness of the low -carbon product label and allows for aligning it with other policy instruments and internationally developed standards. 3. How do the options compare? Key differences between the individual options to design a low -carbon product label are summarised in the following tables The baseline option of having no EU low-carbon product label sets the comparison reference for the different options. Table 28: Comparison of impacts for the GHG-intensity options29 Key impacts Determination GHG-intensity CALC1 CALC2 CALC3 Environmental impact + Limited GHG coverage, good comparability ++ Good GHG coverage, good comparability +++ Full GHG coverage Administrative impact ++ + Based on ETS data/verification, but limited - Comprehensive and more complex reporting leads to 267 Key impacts Determination GHG-intensity CALC1 CALC2 CALC3 Limited data gathering and verifications costs as based on ETS reporting number of indirect emissions requires extra reporting higher data gathering and verification costs Coherence with other parts of the regulatory framework ++ Compatible with ETS and CBAM + Largely compatible with ETS and CBAM, + Not linked to ETS/CBAM, alignment with other LCA based legislation Table 30: Comparison of impacts for the classification options 31 Classification CLAS1 CLAS2.a CLAS2.b CLAS3.a CLAS3.b Environmental impact + Lack of classification limits the effectiveness of the label + Uniform classes might disadvantage primary producers and limit uptake ++ Sliding-scale compares across steel production methods, remaining technologically future-proof + Separate primary/secondary classification might limit future proofness ++ Flat vs long distinction remains technologic ally neutral Administrative impact - Interpretation of label on users ++ Separate classes increase the usability ++ Separate classes increase the usability + More disaggregated categories increase reporting requirements ++ Two different classificati on systems for flat vs long products increase the usability of the label Coherence with other parts of the regulatory framework + Single metric could be useful for other policy instruments ++ Classes increase the usability ++ Classes increase the usability ++ Classes increase the usability ++ Classes increase the usability Table 32: Comparison of impacts for the data quality options 33 Data quality DATA1 DATA2 DATA3 Environmental impact 0 + ++ 268 Data quality DATA1 DATA2 DATA3 Risk of greenwashing Verification increases credibility of the label Potential impact beyond EU borders Administrative impact ++ Self-declared data minimizes admin burden + Verification and certification can build on ETS approach - Rigorous verification and certification needs for extra- EU Coherence with other parts of the regulatory framework 0 Fully compatible with ETS, more limited compatibility with other instruments + Compatible with ETS, extra verification increases usefulness for other instruments ++ No direct link with ETS, label could serve procurement and align with other labels 4. Preferred option Following the analysis of impacts and comparison of options, the preferred policy option would be CALC2, CLAS2b and DATA 2. The development of a low -carbon product label is one of the initiatives included in the communication on the Clean Industrial deal, aimed to allow industrial producers to distinguish carbon intensity of their industrial production and to benefit from targeted incentives. As such, the development of the label itself and in particular its effectiveness is linked to other elements of the regulatory framework, and in the proposal for an Industrial Accelerator Act. At the same time, the establishment of the labe l will be coherent with ongoing initiatives on developing comprehensive LCAs (to be used in ESPR and CPR). The preferred option achieves the objective at the least costs by optimising its leverage of the existing data sources and frameworks of the ETS and CBAM . The selected system boundaries allow for a meaningful comparison of the carbon intensity of most steel products put on the EU market, without requiring overly detailed data. The choice of an adapted sliding scale ( see classification paragraph) allows for an effective measure, which can compare all production routes of steel and take into account the transformation of the sector in the medium and long term where primary and secondary production will be more and more intertwined. Determination of GHG intensity In line with the aims of developing a feasible and impactful product label, with limited administrative impact, the GHG intensity of the steel should be as much as possible calculated using relevant existing product benchmarks established under the EU ETS framework. In addition to these direct industrial GHG emissions, a limited number of key indirect emission sources should be included, i.e. electricity and hydrogen. The relevant GHG -intensity should be calculated in a straightforward way, with annual aver ages as the preferred approach. However, in some cases a more granular segmentation might be allowed, provided a clear intertemporal and/or physical unit demarcation can be demonstrated. Classification To maximi se the effectiveness of the low-carbon product label and increase its possible usefulness for other policy instrument, classes of performances should be integrated in the 269 label, based on clear quantitative GHG-intensity thresholds. To maximise the comparability of diverse production pathways and account for the inherent GHG emissions included in scrap, it is recommended to adjust the performance class thresholds in line with the amount of scrap used. However, the exact shape of the curve and the scrap adjustment should be defined in a way that avoids unintended consequences, maximises environmental benefits and still provides sufficient incentives for decarbonisation for both technologies . At the same time, it could be envisaged that the label provides multiple types of information: in addition to indicating a performance class under the classification system, it could also show the actual GHG emission intensity and/or the amount of recycled content used in the product. For illustration purposes, the figure below provides an initial indication about what the label could look like, at least in its basic elements. The actual levels, the steepness of the curves and the (potential) flattening of the curve require further analysis . Besides the curves, some reference scenarios are added; t he dots reflect the emission intensities of specific technology scenarios, with calculations based on the system boundaries of the preferred options of the impact assessment and including the h ot rolling step, as this was widely supported by the industry. Figure 36: Sliding scale Table 34: Production route details Production route kgCO2/ ton Scrap input Scrap input Remarks BF-BOF route AVG emissions 1898 15% 15% Based on average emissions from ETS installations (2016-2017) BF-BOF route BM emissions 1547 15% 15% Based on ETS benchmark values, for the period 2021 - 2025 BF-BOF route AVG emissions + CCS 1365 15% 15% Based on ETS values and scientific literature BF-BOF route BM emissions + CCS 1226 15% 15% Based on ETS benchmark values and scientific literature DRI NG EU MIX 842 0% 0% Based on information from MIDREX DRI and scientific literature 270 Production route kgCO2/ ton Scrap input Scrap input Remarks DRI NG EU MIX CCS 542 0% 0% DRI FF H2 EU MIX 1405 0% 0% DRI RES H2 RES ELEC 247 0% 0% 50/50 H2 DRI RES SCRAP 170 50% 50% Project with 50% renewable hydrogen DRI and 50% scrap with lower assumptions on fossil fuel injections – hot rolling process is assumed to be 0 for this modelling exercise EAF EU MIX (2025) 256 100% 100% Own elaboration and 2025 EEA EU mix EAF EU MIX (2030) 207 100% 100% Own elaboration with 2030 EU mix EAF World MIX (2025) 312 100% 100% Own elaboration with 2025 World mix EAF RES ELEC 164 100% 100% EAF RES ELEC Low 72 100% 100% Assumption of lower fossil fuel injections and hot rolling emissions EAF World MIX (2025) Low 240 100% 100% EAF EU MIX (2030) Low 136 100% 100% The sliding scale proposed is slightly adapted, to enable a fair comparison between primary and secondary steel producers. While the idea of the sliding scale is to make the threshold of a certain class stricter the more scrap is used, primary production usually involves a certain share of scrap between 10% to 20% - “pure” primary production (i.e. without any scrap) is unlikely. To reflect this, a flat curve is proposed for projects with low amount of scrap input (inferior or equal to 20%), with the thresholds staying the same for scrap input of 0% to 20%. This will also incentivise primary producers to take higher share of scrap in their production. To have a level playing field for secondary producers and encourage overall secondary production, for production where most of the input is scrap (>90%), the thresholds for CLASS A and B being already very ambitious can also be more lenient. Key assumptions include: • RES ELEC means 100% renewable electricity – where emissions from electricity are assumed to be 0. The EU MIX (2025) scenario assumes the carbon intensity mix from the latest numbers from the EEA682 and the World mix are from the 2025 Global Ember electricity review.683 The EU mix of 2030 draws from the Impact assessment on a 2040 Climate Target684. 682 European Environment Agency (2025). Greenhouse gas emission intensity of electricity generation in Europe. 683 EMBER (2025). Global Electricity Review 2025. 684 European Commission (2024). Commission staff working document impact assessment report, part 1, accompanying the document Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions: Securing our future, Europe's 2040 climate target and path to climate neutrality by 2050, building a sustainable, just and prosperous society, SWD/2024/63 final 271 • Renewable hydrogen impact is assumed to be 0. For fossil fuel hydrogen (FFH2), the world average of the IEA685 based on steam methane production without CCS is used. • The Low scenarios represent lower emissions linked to fossil fuel injection in the electric arc furnace and lower emissions linked to hot rolling. Those scenarios were added due to very wide range of possible emissions linked to fossil fuel injection in an EAF and lack of diverse sources of specific data on hot rolling. • For BF-BOF, as no project specific data is publicly available, CCS numbers are based on theoretical potential capturing rates 686 and exclude emissions linked to the transformation and transportation of the CO 2. It does not consider possible changes to the use of waste gases and potential increase in electricity uses due to the use of CCS. • For natural gas DRI (NG DRI), CCS is based on theoretical capture rates 687 averaged from information by MIDREX, one of the main DRI technology providers. It also excludes emissions linked to transformation and transportation of CO2. • All hot rolling numbers are derived from LESS Ensuring data-quality To ensure credible and reliable data underpinning the GHG intensities, it is recommended to require separate verification and certification for the GHG intensities developed as part of the label. For data already reported under the EU ETS and CBAM, a simplified procedure could be considered. Furthermore, it is recommended to establish a label that is open both for steel products manufactured inside and outside the EU, increasing its potential impact and alignment with global initiatives and given sufficient data verification rules are in place. 685 IEA (2023). Comparison of the emissions intensity of different hydrogen production routes, 2021. 686 Fan, Z., Friedmann, S.J. (2021). Low-carbon production of iron and steel: Technology options, economic assessment, and policy . Joule, Volume 5, Issue 4, 21 April 2021, pages 829-862. 687 IEEFA (2024). Carbon capture for steel? 272 Annex 12a: Relevant steel production product benchmarks under the ETS Primary steel making Coke production What? Coke-oven coke (obtained from the carbonisation of coking coal, at high temperature) or gas- works coke (by -product of gas -works plants) expressed in tonnes of dry coke, determined at the discharge of the coke oven or gas-works plant. Lignite coke is not covered by this benchmark. Coking in refineries is not included but covered by the CWT methodology for refineries. Which emissions and processes covered? All processes directly or indirectly linked to the process units coke ovens, H2S/NH3 incineration, coal preheating (defreezing), coke gas extractor, desulphurisation unit, distillation unit, steam generation plant, pressure control in batteries, biological water treatment, miscellaneous heating of by-products and hydrogen separator are included. Coke oven gas cleaning is included. Agglomerated iron-ore production What? Agglomerated iron -bearing product containing iron ore fines, fluxes and possibly iron - containing recycling materials with the chemical and physical properties such as the level of basicity, mechanical strength and permeability required to deliver iron and necessary flux materials into iron ore reduction processes. Expressed in tonnes of agglomerated ore as leaving the agglomerated iron ore production plant. Agglomerated iron ore returned to t he production process is not to be considered as part of the product. Which emissions and processes covered? All processes directly or indirectly linked to the production of agglomerated iron ore are included. Hot metal production What? Iron produced from iron ores for primary steelmaking including (a) liquid iron saturated with carbon for further processing, considered as product of blast furnaces, and expressed in tonnes of liquid iron at the exit point of the blast furnace, excluding liquid iron produced from sponge iron under (b); (b) sponge iron at the exit point of a direct reduced iron reactor and expressed in tonnes of sponge iron at the exit point of the direct reduced iron reactor. Similar products such as ferroalloys are not covered by this product benchmark. Residual material and by-products are not to be considered as part of the product. Which emissions and processes covered? All processes directly or indirectly linked to the process units blast furnace, hot metal treatment units, blast furnace blowers, blast furnace hot stoves, direct reduced iron reactor, electric arc furnace and electric smelting furnace for sponge iron, bas ic oxygen furnace, secondary metallurgy units, vacuum ladles, casting units (including cutting), slag treatment unit, burden preparation, BF and other gas treatment units, dedusting units, scrap pre -heating, coal drying for PCI, vessels preheating stands, casting ingots preheating stands, compressed air production, dust treatment unit (briquetting), sludge treatment unit (briquetting), steam injection in BF unit, steam generation plant, converter BOF gas cooling and miscellaneous are included. Secondary steel making EAF carbon steel What? Steel containing less than 8% metallic alloying elements and tramp elements to such levels limiting the use to those applications where no high surface quality and processability is required and if none of the criteria for the content of the metal alloying elements and the steel quality for high alloy steel are met. Expressed in tonnes of crude secondary steel ex-caster. Steel produced from sponge iron already covered under the hot metal benchmark is not covered by this benchmark. All processes directly or indirectly linked to the process units electric arc furnace, secondary metallurgy, casting and cutting, post-combustion unit, dedusting unit, vessels heating stands, casting ingots preheating stands, scrap drying and scrap preheating are included. Processes downstream 273 of casting are not included. For the purpose of data collection, the total electricity consumption within the system boundaries shall be considered. Which emissions and processes covered? All processes directly or indirectly linked to the process units electric arc furnace, secondary metallurgy, casting and cutting, post -combustion unit, dedusting unit, vessels heating stands, casting ingots preheating stands, scrap drying and scrap preheat ing are included. Processes downstream of casting are not included. For the purpose of data collection, the total electricity consumption within the system boundaries shall be considered. EAF high-alloy steel What? Steel containing 8% or more metallic alloying elements or where high surface quality and processability is required. Expressed in tonnes of crude secondary steel ex-caster. Steel produced from sponge iron already covered under the hot metal benchmark is not covered by this benchmark. Which emissions and processes covered? All processes directly or indirectly linked to the process units electric arc furnace, secondary metallurgy, casting and cutting, post -combustion unit, dedusting unit, vessels heating stands, casting ingots preheating stands, slow cooling pit, scrap drying and scrap preheating are included. The process units FeCr converter and cryogenic storage of industrial gases are not included. Processes downstream of casting are not included. For the purpose of data collection, the total electricity consumption within the system boundaries shall be considered. 274 Annex 13: Overview of third countries conditionalities for FDI The impact of FDI conditionalities can be better understood by referring to existing measures in other economies, notably the United States’ Inflation Reduction Act (IRA) of 2022, Canada’s ‘Made in Canada Plan’ of 2023, and China’s long -standing investment conditionalities dating back to the 1990s. Each model shows how linking investment incentives to local content, labour, and environmental standards can lead to increased industrial resilience, skilled and well-paid employment, and strengthening of local supply chains. United States The IRA of 2022 in the USA directs nearly EUR 378 billion in federal funding to clean energy, with the goal of substantially lowering carbon emissions. The funds are delivered through a mix of tax incentives, grants, and loan guarantees. 688 However the access to the se funds is linked to locally sourced input requirements as well as labour a nd environmental conditionalities. Many subsidies require “Made in America” inputs or assembly, for example, grid-scale renewable projects using domestically produced steel, iron, and components .689 Furthermore, projects must meet Prevailing Wage and Apprenticeship (PWA) criteria, where workers must be paid local prevailing wages , and a certain percentage of workforce must be qualified apprentices. As a result, foreign investors are transferring technology, building factories, and cultivating a skilled workforce in the U.S. This strengthens innovation in the clean tech sector, including batteries as well as enhances industrial security and resilience . These investments are also anchoring full domestic supply chains, including raw materials mining and processing. For example, in 2023, 40% of critical minerals for EVs were sourced and processed in the US or permitted jurisdictions, and 50% of battery co mponents were domestically produced or assembled.690 Positive social outcomes include the creation of over 26 000 new jobs691 through foreign automotive and battery investments, with wage requirements ensuring fair pay . Investments are also building local production capabilities, including R&I centers, meaning more knowledge transfer and local supplier linkages. Canada Similarly, Canada has also introduced conditionalities connected to labour and environmental standards, as well as local content requirements to support local industry . A particularly noteworthy example is the environmental conditionality put on the production of clean hydrogen in Canada. 692 The 2023 federal budget presented in 2023 earmarks EUR 54 billion worth of tax credits and infrastructural investment to encourage investment in low -carbon electricity, manufacturing, and other green industrial activity (‘Made in Canada plan’). 693 These investments are subject to similar conditionalities as those outlined in the case of the United States. As a result, Canada has seen, over EUR 15 billion in announced EV and battery- related investments .694 Projects such Volkswagen’s PowerCo 695 and Stellantis and LG 688 European Commission (2025). COMMISSION STAFF WORKING DOCUMENT Key Performance Indicators (KPIs) /Overview of Resilience Measures by Selected Global Players. 689 European Parliament (2023). EU’s response to the US Inflation Reduction Act (IRA). 690 Energy Monitor (2023). Weekly data: US outpaces EU in the race to build EV batteries. 691 Ibid. 692 Ibid. 693 European Commission (2025). COMMISSION STAFF WORKING DOCUMENT Key Performance Indicators (KPIs)/Overview of Resilience Measures by Selected Global Players 694 Battery Industry (2025). Canadian government announces $25m of EV investments. 695 Volkswagen Group (2023). Volkswagen-backed PowerCo SE reaches significant milestone in St. Thomas gigafactory project. 275 investment for a 45 GWh plant 696 created an estimated 4 000 direct and several thousand indirect well -paid jobs . This marks a big shift for Canada, which had virtually no battery manufacturing before 2022. China China has applied FDI conditionalities for decades as a tool for technology acquisition and industrial upgrading. Since the 1990s, foreign firms in key sectors such as automotive, rail, and energy were required to meet local content thresholds (up to 80 –90%) face high tariffs on imports. 697 In wind power, similar requirements mandated at least 70% domestic production This resulted in foreign companies like VW, GM, Siemens, and Vestas having cultivated local supplier networks and transfer supply chain know-how throughout the years.698 In parallel, technology transfer requirements obliged foreign companies to share patents, establish R&I centres, and train local engineers. These measures were enforced through joint venture rules and licensing conditions. 699 This long-term strategy generated vast knowledge spillovers, localised supply chains, and propelled China to global leadership in clean energy and advanced manufacturing. 696 Stellantis (2022). Stellantis and LG Energy Solution to Invest Over $5 Billion CAD in Joint Venture for First Large -scale Lithium-ion Battery Production Plant in Canada. 697 F. Scheifele, M. Bräuning, B. Probst (2022). The impact of local content requirements on the development of export competitiveness in solar and wind technologies. Renewable and Sustainable Energy Reviews. , 698 Ado, R., (2013), Local Content Policy and the WTO Rules of Trade-Related Investment Measures. 699 Railway Technology (2017). The importance of China’s high-speed tech transfer policy. 276 Annex 1 4: Extended information on the scenarios in the LEAD_VC cost absorption As noted in Annex 4, to assess the potential impact, LEAD_VC looked into 2 scenarios for costs absorption to take into account uncertainties regarding the possible reaction of non -EU manufacturers: In the Internal market reaction scenario, non-EU vehicle manufacturers will not be able to access public procurements or benefit from support schemes. In the latter case, they will not be able to cover the loss of subsidies coming from the support schemes and the prices of their vehicles will increase by the amount of the lost subsidies. In other words, consumers will face a price increase equalling the lost subsidies for non -EU vehicles. This scenario is considered the most favourable scenario for EU EV manufacturers and suppliers, but the least favourable for the consumers. The non-EU manufacturers absorb the price increase scenario is based on the same assumptions as Internal market reaction scenario: non-EU vehicle manufacturers will not be able to access public procurements or benefit from support schemes. However, in the latter case, the non -EU manufacturers fully absorb the loss of subsidies so that the price of their vehicles does not increase. In other words, non-EU vehicle manufacturers apply a discount on their vehicles for consumers to compensate for the loss of subs idies following the entry into force of the measure. However, such a behaviour would inevitably come with significant financial challenges for non-EU manufacturers. This scenario is considered the least favourable scenario for EU EV manufacturers and suppliers, but the most favourable for the consumers. While the Internal market reaction scenario is the one reflected through out the Impact Assessment, this Annex 14 retains the second scenario for comparison and information purposes to explore different market possibilities. 1. Made in EU requirements in vehicle components for public procurements and support schemes Impact on vehicle component suppliers EU suppliers in the “non-EU manufacturers absorb the price increase” scenario 2027 2030 Passenger cars sales increase - billion euro 0.9 1.6 LCVs sales increase - billion euro 0.1 0.2 HDVs sales increase - billion euro 0.026 0.031 In the non-EU manufacturers absorb the price increase scenario, the sales increase of EU suppliers is expected to be more limited, rising only by EUR 0.9 billion in 2027 and EUR 1.6 billion in 203 0. Sales of EU suppliers are lower in this than in the Internal market reaction scenario because the increase in sales of EU EVs will be lower in the Non-EU manufacturers 277 absorb the price increase scenario (see sales increase in the impact on the downstream sector). It is because non-EU car makers absorb the price differential , which reduces their margins to limit the substitution of consumers from non -EU (with a price increase after the measure) for EU (with a price decrease after the measure) that happen in Internal market reaction. In this scenario the sales increase of EU suppliers in the LCV vehicle segment is expected to be more limited, rising only by EUR 0.1 billion in 2027 and EUR 0.2 billion in 2030. Furthermore, the sales increase of EU suppliers is expected to be more limited, rising only by EUR 25.6 million in 2027 and EUR 30.9 million in 2030 for HDVs. Impact on downstream sector (automotive manufacturers) In both scenarios, given the current 70% made in EU, the measure would not lead to any further costs for EU EV manufacturers in 2027. For passenger cars: u nder the Non-EU manufacturers absorb the price increase scenario, if we assume that non -EU manufacturers fully absorb the relative price increase, EU EV manufacturers will still benefit from a sales increase of EUR 2 billion thanks to the price differential between EU and non-EU manufacturers as a result of reallocation of subsidies. In this scenario, the proposed target for 2030 will lead to a cost increase of EUR 1.5 billion, however, the projected sales increase will be limited to EUR 0.1 billion. The sales increase is lower in this scenario because the sales price differential between EU and non-EU cars will be zero as non -EU manufacturers internally absorb the policy. In this scenario, the price - differential is larger than in the Internal market reaction scenario. Under this scenario, the non- EU EV manufacturers reduce their margins to absorb the price differential, hence it will come at a cost for them, hence it comes at a higher cost for non-EU manufactures. However, as there are still large positive benefits in 2027 for the EU manufacturers, cumulative gains may still be positive even under the Non-EU manufacturers absorb the price increase scenario. For LCVs: if we assume that non -EU manufacturers fully absorb the relative price increase, EU manufacturers of light commercial vehicles will still benefit from a sales increase of EUR 0.3 billion in 2027. In this scenario, the proposed target for 2030 will lead to a cost increase of EUR 0.2 billion, whereas the projected sales increase will be limited to EUR 0.1 billion because non-EU manufacturers would need to reduce their margins to absorb the price differential. EU EV manufacturers in the “non-EU manufacturers absorb the price increase” scenario In EUR billion 2027 2030 Passenger cars cost increase 0.0 1.5 sales increase 2.0 0.1 LCVs cost increase 0.0 0.2 sales increase 0.3 0.1 HDVs cost increase 0.0 0.13 sales increase 0.055 -0.17 278 Under the Non-EU manufacturers absorb the price increase scenario, if we assume that non -EU manufacturers fully absorb the relative price increase, EU EV HDV manufacturers will still benefit from a sales increase of EUR 54.9 million. In this scenario, the proposed target for 2030 will still lead to a cost increase of EUR 129 million, and this is going to be accompanied by a projected sales reduction for EU EV HDV manufacturers ( -172 million euro) as a worst -case scenario. As sales of electric HDVs increase over time, the amount of subsidy taken into account in the assumptions may be insufficient to offset the negative impact of this measure. Global Added Value: Value Added in EUR billion Non-EU manufacturers absorb the price increase 2027 2030 automotive 0.5 0.0 intermediate 0.4 0.7 Global value added - Only first round of Value Chain 0.9 0.7 Global value added - Estimated all Value Chain 1.8 2.1 Furthermore, the measure is projected to lead to the generation of EUR 0.9 billion Global Value Added in 2027 and EUR 0.7 billion in 2030 when assessing the impact, taking into account only the first tier of the value chain.700 Impact on consumers EU consumers in the “Non-EU manufacturers absorb the price increase” scenario 2027 2030 Passenger cars EVs price changes (%) -1.6% -0.2% EVs sold change (thousand) 127.7 10.1 LCVs EVs price changes (%) -2.0% -0.6% EVs sold change (thousand) 18.5 8.2 HDVs EVs price changes (%) -0.4% 0.6% EVs sold change (thousand) 0.6 -2.0 Under Non-EU manufacturers absorb the price increase scenario, if we assume that non -EU manufacturers fully absorb the relative price increase, the price of EVs is expected to decrease by 1.6% by 2027 and by 0.2% by 2030. Consequently, consumers are going to be impacted positively, and the sale of EVs is going to increase by 127 700 vehicles in 2027 and by 10 100 vehicles in 2030. For LCVs, prices are going to decrease by 2% in 2027 and by 0.6% in 2030. The sales of EVs are going to increase by 18 500 vehicles in 2027 and by 8 200 vehicles in 2030. 700 Global Value Added (GVA) refers to the total economic value generated by the projected production of EU EV manufacturers and the EU suppliers, as well as further intermediate inputs necessary to increase the Made in EU requirement of the measure and increase production of EU EVs 279 For HDVs, prices are going to slightly decrease by 0.4% in 2027 and then increase by 0.6% in 2030. The sales of EV HDVs are going to slightly increase by 600 vehicles in 2027 and then decrease by 2 000 units in 2030. Impact on emissions In the Non-EU manufacturers absorb the price increase scenario, production and transport emissions are almost unchanged compared to the Reference. In 2027, substitution from EVs to ICEs could lead to higher emissions from the fuel use of new passenger cars (1 Mt) in Internal market reaction , but to lower emissions (2. 8 Mt) in Non-EU manufacturers absorb the price increase; this effect almost disappears in 2030. In sum, the environmental effects remain limited and are very similar across LEAD_VC 1 and LEAD_VC 2. 2. Introduce Made in EU requirements in automotive components for public procurement, public support schemes and all vehicles placing on the market. Impact on EU vehicle component suppliers EU suppliers in the “Non-EU manufacturers absorb the price increase” scenario In EUR billion 2027 2030 Passenger cars sales increase 1.1 1.9 LCVs sales increase 0.2 0.3 HDVs sales increase 0.031 0.037 In LEAD_VC 2, the impacts are similar as under LEAD_VC 1: • For passenger cars, In the Non-EU manufacturers absorb the price increase scenario, the sales increase of EU suppliers is expected to be more limited, rising only by EUR 1.1 billion in 2027 and EUR 1.9 billion = in 2030. • For LCVs: the sales increase of EU suppliers is expected to be more limited, rising only by EUR 0.2 billion in 2027 and EUR 0.3 billion in 2030. • For HDVs: the sales increase of EU suppliers is expected to be more limited than the alternative scenario, rising only by EUR 30.6 million in 2027 and EUR 37 million in 2030. Impact on downstream sectors EU EV manufacturers in the “Non-EU manufacturers absorb the price increase” scenario in EUR billion 2027 2030 Passenger cars cost increase 0.0 1.8 sales increase 2.4 0.1 LCVs 280 cost increase 0.0 0.2 sales increase 0.4 0.2 HDVs cost increase 0.0 0.15 sales increase 0.066 -0.21 Under Non-EU manufacturers absorb the price increase , if we assume that non -EU manufacturers fully absorb the relative price increase, for passenger cars, EU EV manufacturers will still benefit from a sales increase of EUR 2.4 billion. In this scenario, the proposed target for 2030 will lead to a cost increase of EUR 1.8 billion, however, the projected sales increase will be limited to EUR 0.1 billion. The sales increase is lower in this scenario because the sales price differential between EU and non-EU cars will be lower. For LCVs: manufacturers will still benefit from a sales increase of EUR 0.4 billion in 2027. In this scenario, the proposed target for 2030 will lead to a cost increase of EUR 0.2 billion, whereas the projected sales increase will be limited to EUR 0.2 billion. For HDVs: EV manufacturers will still benefit from a sales increase of EUR 65.6 million. In this scenario, the proposed target for 2030 will still lead to a cost increase of EUR 154.1 million, and this is going to be accompanied by a projected sales reduction for EU EV HDV manufacturers (EUR -206 million). Global Value Added Value Added in EUR billion Non-EU manufacturers absorb the price increase 2027 2030 automotive 0.6 0.0 intermediate 0.5 0.8 Global value added - Only first round of Value Chain 1.1 0.8 Global value added - Estimated all Value Chain 2.1 2.5 Furthermore, the measure is projected to lead to the generation of EUR 1.1 billion Global Value Added in 2027 and EUR 0.8 billion in 2030 when assessing the impact, taking into account only the first tier of the value chain. Impact on consumers and citizens EU consumers in the “Non-EU manufacturers absorb the price increase” scenario 2027 2030 Passenger cars EVs price changes (%) -1.9% -0.2% EVs sold change (thousand) 152.6 12.1 LCVs EVs price changes (%) -2.4% -0.7% EVs sold change (thousand) 22.1 9.8 HDVs EVs price changes (%) -0.5% 0.8% 281 EVs sold change (thousand) 0.7 -2.4 Under Non-EU manufacturers absorb the price increase , if we assume that non -EU manufacturers fully absorb the relative price increase, the price of passenger and LCV EVs is expected to decrease: For passenger cars: by 1.9% by 2027 and by 0.2% by 2030. Consequently, consumers are going to be impacted positively, as the sale of EVs is going to increase by 1 52 600 vehicles in 2027 and by 12 100 vehicles in 2030. For LCVs: by 2.4% in 2027 and by 0. 7% in 2030. The sales of EVs are going to increase by 22 100 vehicles in 2027 and by 9 800 vehicles in 2030. For HDVs: by 0.5% in 2027 and then increase by 0. 8% in 2030. The sales of EV HDVs are going to slightly increase by 700 vehicles in 2027 and then decrease by 2 400 units in 2030. Impact on emissions In Non-EU manufacturers absorb the price increase , production and transport emissions are almost unchanged compared to the Reference. In 2027, substitution from EVs to ICEs could lead to higher emissions from the fuel use of new passenger cars (0.8 Mt) in Internal market reaction, but to lower emissions (2.2 Mt) in Non-EU manufacturers absorb the price increase; this effect almost disappears in 2030. 282 Annex 15: Sensitivity analysis: costs and benefits Where uncertainties are identified regarding the impact of cost and benefits of different measures, this annex presents a sensitivity analysis and provides ranges of estimates to present the order of magnitude. This Annex builds on the main data sets outlined in Annex 4 but presents a wider depiction of impacts. The values used in Annex 4 for the total costs and benefits calculations are also reflected below for information, while the sensitivity analysis ranges are presented in italics. However, for LEAD EII the sensitivity analysis differs from adjustment costs modelled by FIDELIO and presented throughout the Impact Assessment. The analysis below are theoretical maximum costs based on the expected vehicle deployment of 2030, and the average price of a vehicle in the EU. Both results, those from FIDELIO and sensitivity analysis below, use the same price increase from using low-carbon steel as a starting point, but are analysed differently. Administrative savings • PERM: The cost savings from implementing a digitally integrated permit granting process are calculated based on a study on business procedures carried out to underpin the Single Digital Gateway impact assessment 701. It concluded that for 9 procedures, the cost savings for all EU businesses (EU business in 2023 represented 33 million enterprises702), - if e-procedures were introduced where missing - would be in the order of magnitude of EUR 6.5 billion for domestic users (i.e. 433.3 million for 2.2 million businesses in the manufacturing sector). Following an ad justment calculation to the EUR 6.5 bn to assume an average of 5 permit - granting procedures, and assuming the costs for all procedures is equal, this could translate into savings of EUR 240 million specifically for the manufacturing sector for an average of 5 procedures. • The s ensitivity analysis is carried out with the assumption that only a third of the manufacturing industries can carry out their transformation process by 2030. In that range, the savings are reduced to 80 million as shown below. PERM Difference to the baseline PO1 PO2 PO3 Businesses Administrative savings (one-off) Digitalisation of permitting procedures EUR 240 million Sensitivity: EUR 80 million – EUR 240 million Adjustment costs 701 SWD/2017/0213 final - 2017/086 (COD) 702 Eurostat (2024). Large businesses make up only 0.2% of EU enterprises. 283 Assumptions taken for adjustment costs for the automotive sector: LEAD_EII Low-carbon provisions (steel costs only): Price increase: • The adjustment cost for a midsize passenger vehicle is estimated to range from 0.3% to 0.7% of the final price, with a 100% low-carbon steel depending on the decarbonisation pathway.703 A 25% low -carbon steel target would see a price increase ranging from 0.075% to 0.175% (EUR 28 – 65 per passenger vehicle). • Heavy duty vehicles will see a price increase calculated as EUR 25.89 increaser per tonne of steel times 7.2 704 (amount of steel in tonnes present in a heavy weight vehicle). Cost distribution: • The number of passenger cars and light commercial vehicles purchased in 2030 is projected to reach 12.8 million. This total is made of 11 million passenger cars, plus 1.8 million light commercial vehicles. Additionally, heavy duty vehicles will reach 382 000. 705 • By 2030, passenger vehicles sales are expected to break down as follows: 60% corporate 36.5% private purchases by citizens , and 3.5% public procurement . It is assumed that heavy-duty vehicles are procured only by businesses and Member States. Costs are therefore split between “impacts to downstream sectors” for corporate and “impacts on citizens” for private households throughout Section 6 and the breakd own of costs in the individual tables. The distribution of the different market segments is as follows: o 3.5% through public procurement o 70.1% through public support schemes o 26.4% through private purchases. • In the context of this exercise’s cost distribution, it is assumed that the market share, including the split between corporate fleets and private purchases, as well as the share covered by public support schemes, remains unchanged for 2030 • As the exact amount of subsidies that will potentially cover the green premium cannot be estimated in this analysis, nor the absorption of costs by the manufacturer’s, these figures represent a theoretical maximum cost. LEAD_EII Difference to the baseline PO1 PO2 PO3 Member States administrations Adjustment costs (recurring) Sensitivity analysis: Vehicle fleet EUR 14.04 million – EUR 32.59 million706 Sensitivity analysis: Vehicle fleet EUR 14.04 million – EUR 32.59 million707 Sensitivity analysis: Vehicle fleet EUR 14.04 million – EUR 32.59 million708 Citizens/Consumer 703 BCG (2022). Transforming the Steel Industry May Be the Ultimate Climate Challenge. 704 Based on JRC modelling of LEAD_VC impacts. 705 Based on JRC modelling of LEAD_VC impacts. 706 A 25% low-carbon steel target would see a price increase ranging from 0.075% to 0.175% (EUR 28 – 65 per passenger vehicle). 707 A 25% low-carbon steel target would see a price increase ranging from 0.075% to 0.175% (EUR 28 – 65 per passenger vehicle). 708 A 25% low-carbon steel target would see a price increase ranging from 0.075% to 0.175% (EUR 28 – 65 per passenger vehicle). 284 LEAD_EII Difference to the baseline PO1 PO2 PO3 Adjustment costs ((recurring) Sensitivity analysis : Passenger cars: EUR 91.7 million – EUR 212.87 million Sensitivity analysis : Passenger cars: EUR 91.7 million – EUR 212.87 million Sensitivity analysis : Passenger cars: EUR 130.8 million – EUR 303.68 million Businesses Adjustment costs (recurring) Sensitivity analysis: corporate fleets EUR 179.6 million – EUR 417.125 million Sensitivity analysis: corporate fleets EUR 179.6 million – EUR 417.125 million Sensitivity analysis: corporate fleets EUR 256.3 million- EUR 595.04 million TOTAL (sensitivity) Automotive: 285 million – 662.6 million Automotive: 285 million – 662.6 million Automotive: 401 million- 931 million LEAD_SOL Two different price scenarios compare the cheapest alternative for PV (e.g. Chinese imports) to a European NZIA- compliant PV with polysilicon and wafers / ingots from China. • 65 GW of Chinese modules: EUR 10.335 billion. For 58 GW EUR 9.222 billion. • 65 GW of European products with poly-wafer come from China: EUR 12.35 billion. For 58 GW EUR 11.02 billion. The delta between them is EUR 2.015 billion for 65 GW of solar PV, which is broken down per market segment as follows: • Public procurement: 0.03 × 2.015 = EUR 0.06045 billion • Auctions: 0.19 × 2.015 = EUR 0.38285 billion • Schemes: 0.12 × 2.015 = EUR 0.2418 billion • Rest of the market: 0.66 × 2.015 = EUR 1.3299 billion The sensitivity delta following the more conservative estimate of deployment, is 1.798 billion for 58 GW which is broken down per market segment as follows: • Public procurement: 0.03 × 1.798 = EUR 0.05394 billion • Auctions: 0.19 × 1.798 = EUR 0.3416 billion • Schemes: 0.12 × 1.798 = EUR 0.2157 billion • Rest of the market: 0.66 × 1.798 = EUR 1.18 billion 58 GW is based on solar capacity deployment projection in 2030 709. Although there is no low scenario for 2030, it has been extrapolated from the low scenario of years 2026-2028. LEAD_SOL Difference to the baseline PO1 PO2 PO3 Member States Adjustment costs (recurring) Public procurement: EUR 60.45 million Public procurement: EUR 60.45 million 709 SolarPower Europe (2025). Reshoring Solar Manufacturing to Europe. A cost gap analysis and a policy impact simulation. 285 LEAD_SOL Difference to the baseline PO1 PO2 PO3 Auction margins decrease by: EUR 382.85 million Sensitivity: Public Procurement: EUR 53.04 million- 60.45 million Auction margins decrease by: EUR 341.6 million -EUR 382.85 million Auction margins decrease by: EUR 382.85 million Sensitivity: Public Procurement: EUR 53.04 million- 60.45 million Auction margins decrease by: EUR 341.6 million -EUR 382.85 million Citizens/Consumer Adjustment costs (recurring) Public support schemes: EUR 241.8 million Sensitivity: Public support schemes: EUR 215.7 million - EUR 241.8 million Public support schemes: EUR 241.8 million Other PV placed on the market : EUR 1.3299 billion Sensitivity: Public support schemes: EUR 215.7 million - EUR 241.8 million Other PV placed on the market : EUR 1.18 billion - EUR 1.3299 billion TOTAL sensitivity EUR 610.34 million – 685.1 million EUR 1.79 billion – EUR 2.01 billion LEAD_BAT Assumptions taken for adjustment costs: • The total adjustment costs compare the average cost of manufacturing the same battery chemistries (i.e., localised battery cells, cathodes and anodes) in the current cheapest market, China, with those manufactured in the EU with a cost differential ranging from 26% to 50%. These costs do not take into account the phased approach, which would reduce the impact on prices during the first years of entry into force. o Battery cell manufactured in China by Tier 1 manufacturers (i.e., 60 EUR/kWh in 2024), o Battery cell m anufactured in in the EU with localised CAM and AMM, (i.e., 75.6-90 EUR/kWh). • Additionally, global price decreases in batteries have been accounted for, as these are expected to drop significantly in the upcoming years. As battery cell costs decline over time, the total cost differential with China is expected to decrease, ranging between 11- 21 EUR/kWh in 2028, 9-17 EUR/kWh in 2030, and between 6-12 EUR/kWh in 2035. 286 LEAD_BAT Difference to the baseline PO1 PO2 PO3 Member States administrations Adjustment costs (recurring) BESS: average EUR 46 million EVs: average EUR 231.5 Sensitivity: Auctions for BESS: EUR 26 – 66 million Public procurement for EVs: EUR 132 – 331 million BESS average EUR 46 million) EVs: average EUR 231.5 Sensitivity: Auctions for BESS: EUR 26 – 66 million Public procurement for EVs: EUR 132 – 331 million Citizens/Consumer Adjustment costs (recurring) EVs: average EUR 511 million Sensitivity EVs710: EUR 292-730 million EVs: average EUR 0.9 billion BESS average: EUR 494 million Sensitivity: EVs : EUR 0.5 – 1.3 billion BESS : EUR 282-706 million Businesses[5] Adjustment costs (recurring) EVs: average EUR 1.55 billion Sensitivity EVs : EUR 0.9-2.2 billion EVs average : EUR 1.55 billion BESS : EUR 187.5 million Sensitivity : EVs: EUR 0.9-2.2 billion BESS : EUR 107-268 million 710 We assume that there is public support to buy EV vehicles in Europe for corporate purchases. In contrast, public support is only available for consumers in Austria, Belgium, Croatia, Cyprus, Czechia, Estonia, France, Greece, Hungary, Ireland, Lithuania, Luxembourg, Malta, the Netherlands, Poland, Slovenia, Spain, and Sweden (ACEA, 2025). Against this background, we estimate that LEAD_VC 1 would affect 80.2% of EV registrations, including 60.0% from corporate purchases, and 20.2% from consumers. 287 LEAD_BAT Difference to the baseline PO1 PO2 PO3 TOTAL sensitivity EVs 1.3 billion – 3.26 billion BESS: EUR 26 – 66 million EV : 1.5 billion- 3.8 billion BESS : 415 million – 1.04 billion LEAD_VC In the LEAD_VC analysis, the most critical parameters are the elasticities governing consumer behaviour. We consider the demand elasticity of vehicles to capture the effect of prices on quantities (price effects), the cross-product elasticities to capture substitution between ICE and EV, and the cross -region elasticities to capture substitution between EU - and non-EU-made EVs. These elasticities determine EV demand, the type of purchased vehicles (ICE vs. EV), the source of those vehicles (EU vs. non -EU), and their evolution in the aftermath of a policy intervention that alters relative prices. We define these elasticities more formally and provide the preferred values used in the impact assessment in Annex 4. In what follows, we do a sensitivity analysis on the set of elasticity parameters, decreasing and increasing them by 0.1, one by one: • Demand elasticity ranges from -0.4 to -0.6, with a preferred value of -0.5. • Cross-product elasticities: ▪ EV vs. ICE ranges from 0.2 to 0.4, with a preferred value of 0.3. ▪ EV vs. EV ranges from -1.6 to -1.4, with a preferred value of -1.5. • We adjust the other two elasticities (ICE vs. ICE and ICE vs. EV) that are not critical for the analysis to preserve the demand elasticity in its preferred value of -0.5. • Cross-region elasticities: • Non-EU vs. EU ranges from 0.9 to 1.1, with a preferred value of 1.0. • EU vs. EU ranges from -1.1 to -1.3, with a preferred value of -1.2. • EU vs. non-EU ranges from 0.9 to 1.1, with a preferred value of 1.0. • We adjust the non-EU vs. non-EU elasticity to preserve the preferred demand elasticity of -0.5. The following table summarises the results of this sensitivity analysis for LEAD _VC 1 under the “Internal market reaction” scenario in 2030. Demand Cross- product Cross- region Overall Impact on EU EV manufacturers Passenger cars Sales (billion euro) 6.0-6.0 5.9-6.0 5.6-6.3 5.6-6.3 LCVs Sales (billion euro) 0.8-0.8 0.8-0.8 0.8-0.8 0.8-0.8 HDVs Sales (billion euro) 0.12-0.14 0.13-0.14 0.12-0.14 0.12-0.14 TOTAL Sales (billion euro) 6.9-7.0 6.9-7.0 6.5-7.3 6.5-7.3 Impact on vehicle component suppliers Passenger cars Cost (billion euro) 1.6-1.6 1.6-1.6 1.6-1.6 1.6-1.6 Sales (billion euro) 7.6-7.7 7.6-7.7 7.0-8.3 7.0-8.3 288 Demand Cross- product Cross- region Overall LCVs Cost (billion euro) 0.2-0.2 0.2-0.2 0.2-0.2 0.2-0.2 Sales (billion euro) 1.3-1.3 1.2-1.3 1.1-1.3 1.1-1.3 HDVs Cost (billion euro) 0.13-0.13 0.13-0.13 0.13-0.13 0.13-0.13 Sales (billion euro) (–0.01)-0.01 (–0.01)-0.01 (–0.02)-0.02 (–0.02)-0.02 TOTAL Cost (billion euro) 1.9-2.0 2.0-2.0 2.0-2.0 1.9-2.0 Sales ( billion euro) 8.9-8.9 8.9-9.0 8.1-9.5 8.1-9.5 Value Added Automotive (EV manufacturers and component suppliers) 1.9-1.9 1.9-1.9 1.8-2.0 1.8-2.0 Intermediate (out of automotive sector) 2.6-2.6 2.6-2.6 2.3-2.8 2.3-2.8 Global value added - Only first round of Value Chain 4.5-4.5 4.5-4.5 4.1-4.8 4.1-4.8 Global value added - Estimated all Value Chain 9.7-9.7 9.6-9.8 8.8-10.3 8.8-10.3 Impact on consumers Passenger cars EVs price changes (%) 1.2%-1.2% 1.2%-1.2% 1.2%-1.2% 1.2%-1.2% EVs sold change (thousand) (–88.4) -(–64.3) (–76.4) -(–76.2) (–77.8) -(–74.9) (–88.4) -(–64.3) LCVs EVs price changes (%) 0.4%-0.4% 0.4%-0.4% 0.4%-0.4% 0.4%-0.4% EVs sold change (thousand) 2.0-2.3 2.1-2.5 0.0-4.3 0.0-4.3 HDVs EVs price changes (%) 1.2%-1.2% 1.2%-1.2% 1.2%-1.2% 1.2%-1.2% EVs sold change (thousand) (–1.8) -(–1.5) (–1.7) -(–1.7) (–1.8) -(–1.6) (–1.8) -(–1.5) TOTAL EVs price changes (%) 1.2%-1.2% 1.2%-1.2% 1.2%-1.2% 1.2%-1.2% EVs sold change (thousand) (–88.2) -(–63.5) (–75.4) -(–75.9) (–72.2) -(–79.5) (–72.2) -(–79.5) The cross -region elasticity is the parameter that most affects the results for EU EV manufacturers, vehicle component suppliers, and the value added generated. Demand elasticity is the parameter that most affects consumer behaviour. However, the sensitivity analysis shows the robustness of the results presented in the impact assessment, with values falling within a small range and not significantly affecting the policy's economic effects. Environmental benefits LEAD_EII, LEAD_BAT, LEAD _SOL and LEAD_VC: In relation to the monetisation of GHG emissions, a cost of carbon is used 711. Figures underpinning the analysis are below, and the 2030 value used of EUR 60-189 per tCO2eq used to give an estimation of the benefit range. 711 European Commission (2019). Handbook on the external costs of transport. 289 This is an approximation, and no variation is made to reflect the time profile of when emissions will occur. Values in current EUR per tCO2 Low Central High Up to 2030 60 100 189 Post 2030 156 269 498 PO1 PO2 PO3 LEAD_EII (low- carbon steel and cement) Total steel, cement and aluminium: 4.28 Mtonnes CO2 (EUR 428 million) Sensitivity: EUR 256 million to EUR 809 million Total steel, cement and aluminium: 4.28 Mtonnes CO2 (EUR 428 million) Sensitivity: EUR 256 million to EUR 809 million Total steel, cement and aluminium: 13.58 Mtonnes CO2 (EUR 1 358 million) Sensitivity: EUR 814 million to EUR 2 566 million Similar question LEAD_BAT 25.6 Mtonnes CO2 (EUR 2 560 million) Sensitivity: EUR 1 530 million to EUR 4 830 million 25.6 Mtonnes CO2 (EUR 2 560 billion) Sensitivity: EUR 1 530 million to EUR 4 830 million 34.17 Mtonnes CO2 (EUR 3 400 million) Sensitivity: EUR 2 050 million to 6 450 million LEAD_VC 0.7 Mtonnes CO2 (EUR 70 million) Sensitivity: EUR 42 million to EUR 132 million 0.7 Mtonnes CO2 (EUR 70 million) Sensitivity: EUR 42 million to EUR 132 million 0.9 Mtonnes CO2 (EUR 90 million) Sensitivity: EUR 54 million to EUR 170 million TOTAL 30.58 Mtonnes CO2 (EUR 3 058 million) Sensitivity: EUR 1 830 million to EUR 5 780 million 30.58 Mtonnes CO2 (EUR 3 058 million) Sensitivity: EUR 1 830 million to EUR 5 780 million 48.65 Mtonnes CO2 (EUR 4 865 million) Sensitivity: EUR 2 910 million to EUR 9 195 million 290 Annex 16: Net-Zero Technologies While the impact assessment report focuses on batteries and PV technologies, this Annex expands the scope of the analysis to the additional net-zero technologies for which Made in EU requirements have been proposed. Specifically, it provides detailed information and a comprehensive cost -benefit analysis that includes wind energy, nuclear fission energy technologies, heat pumps, electricity grid technologies, solar thermal technologies and electrolysers. This expanded assessment not only illustrates the rationale behind the design of Made in EU requirements for each of these technologies but also evaluates a range of socioeconomic impacts. It considers factors such as manufacturing capacity availability and geographic variations in production costs and other pertinent dimensions, offering insights into the feasibility and impact on consumers. By delving into these pertinent dimensions, the Annex aims to provide a more nuanced understanding of both the potential benefits and challenges associated with regional manufacturing mandates for emerging net-zero technologies. Identification of NZIA main specific components to be covered by Made in EU requirements The Net-Zero Industry Act defines main specific components of net-zero technologies as those components essential for manufacturing the final product. To ensure the EU is resilient in the deployment of net-zero technologies, it is fundamental to develop a diversified supply of main specific components. A further level of ambition that also aims at leveraging the energy transition as an industrial opportunity to create jo bs and create added value within the EU – which is a necessary factor to gain broad consensus on the energy transition – entails that the EU produces some of these essential components domestically. Reshoring the entire supply chain at once is impractical; it must be carefully managed to avoid supply-demand imbalances that could hinder technology deployment. A strategic and gradual approach to reshoring is essential, which prioritizes components for which the EU is best fit to compete. This has been the guiding element in the definition of the draft ‘Made in EU’ requirements in the Industrial Accelerator Act ( IAA). The methodology relied on two steps: first identifying competitively producible components and then verifying sufficient manufacturing capacity is available. The degree of competitiveness of the EU in producing net-zero technologies main specific com ponents has been analysed comparing the levelized cost of production (and its underlying drivers such as capital costs, labour costs, operational costs and energy costs) in the EU and overseas. Such assessment aimed at ensuring that the proposed made in EU requirements are tailored and guarantee proportional investments without excessive expense (see Section ‘Assessment of socioeconomic implications of IAA provisions related to net -zero technologies’ ). Once the strategic components have been identified, the status and projected evolution on manufacturing capacity in the EU has been assessed vis-à-vis expected demand to ensure realistic made in EU ambitions (see section ‘EU capacity to supply its demand for net -zero technologies’). When manufacturing capacity falls short of demand, made in EU requirements have been either postponed or adjusted to prevent demand-supply imbalances and longer lead times. In such cases, requirements may be generalized to promote flexibility: rather than stipulating that specific components like PV cells must be EU-made, the requirement could be "one component should be made in the EU." This flexibility encourages the industry to produce competitively viable components while adapting to capacity constraints. This section outlines for various net -zero technologies how strategic components that should feature Made in EU requirements have been identified. 291 PV Cells and modules are crucial stages in the PV value chain, offering significant added value and job creation opportunities712, making them strategic priorities for EU industries to leverage the benefits of PV adoption. Additionally, cells and modules have the lowest energy intensity in the PV value chain. With EU energy prices higher than those of many competitors, the EU is most likely to be competitive in producing components of lower energy intensity, such as PV cells and modules. The PV inverter industry in the EU is well -established but faces growing competition from third countries. Inverters are also a crucial component from a cybersecurity standpoint. As such, PV inverters should be prioritized as a strategic component, ensurin g they are manufactured within the EU. Therefore, building on the analysis on the design of policy measure conducted in Annex 9 of this report, Made in EU requirements for solar PV could initially target inverters, modules, and cells. However, due to capacity constraints, as determined by conservative assessments of projected manufacturing capabilities, this requirement would be adjusted to: "inverters and at least two main specific compo nents." This flexible approach prioritizes strategic components while allowing for the production in the EU of other main specific components (e.g. solar glass, PV trackers, and polysilicon) to meet demand effectively. Heat pumps Heat pumps assembly is neither energy-intensive nor labour-intensive, indicating that the EU can undertake this phase domestically without significantly increasing costs 713. The majority of heat pump production costs stem from the manufacturing of key components, particularly compressors, which make up approximately 70% of the cost differential across countries. Producing affordable heat pumps requires large -scale compressor production to achieve economies of scale, ideally in locations with lower energy costs. Consequently, Made in EU requirements are proposed only for the final assembly of heat pumps, excluding other main specific components. The current heavy reliance on compressors from China will be addressed through the NZIA's resilience contribution, aiming for supply chain diversification toward third countries with lower energy costs than the EU. Thus, Made in EU requirements for heat pumps could initially focus on final assembly. However, due to limited manufacturing capacity for air -to-air heat pumps, the focus will be on hydronic heat pumps, which have sufficient manufacturing capacity that risks underutilization if proposed measures i n the IAA are not implemented. While manufacturing capacity for hydronic heat pumps already exists (see Section‘EU capacity to supply its demand for net -zero technologies’), the Made in EU requirements are suggested to take effect three years post-adoption to level the playing field and allow companies with less presence in Europe to adapt. Electrolysers In hydrogen electrolysers, the stack is the most strategic component because it houses the core elements essential for the electrochemical process. The assembly of the stack is characterized by relatively lower energy and labour costs, making the EU compet itive in this stage of the value chain. Moreover, there is already ample manufacturing capacity in the EU (see Section ‘EU capacity to supply its demand for net-zero technologies’), which risks being underutilized 712 Bruegel (2024). Smarter European Union industrial policy for solar panels 713 International Energy Agency (2024). Energy Technology Perspectives 2024 292 if the proposed measures in the IAA are not executed. Therefore, Made in EU requirements are explicitly established for the electrolyser stack. The bipolar plate ranks next to the stack in terms of production cost share for electrolysers 714. This plate, made from metal, graphite, or composite materials, does not offer significant added value in its production. Due to its energy -intensive manufacturing process, the EU is unlikely to produce it competitively, thus it should not be regarded a strategic component necessitating Made in EU requirements. Separators, membrane electrode assemblies, electrodes, gaskets, and porous transport layers constitute a relatively small portion of electrolyser production costs. Therefore, also in light of the fact that Made in EU requirements for bipolar plates are excluded, setting such requirements for these components would not lead to the cost increase presented in Figure EL for ‘non-stack equipment’. Given that these components should be subject to Made in EU requirements, and given the existing EU manufacturing capacity to meet current demand - with the potential for quickly scaling up to meet the 2030 demand (see Figure EL in Section ‘EU capacity to supply its demand for net -zero technologies’) - the IAA's proposed requirements could have been framed to explicitly include these components. However, this presents challenges due to differing main specific components across various electrolyser types covered in NZIA, making explicit references com plex. Instead, stating “stack and at least two additional main specific components of the electrolyser originate within the Union” offers needed flexibility. While the proposed Made in EU requirements align with the number of components to be diversified away of the dominant supplier in the NZIA, EU electrolyser producers have consistently warned that the NZIA's ambition is insufficient and diminishes the protection that was provided in the second Innovation Fund hydrogen auction. Batteries As analysed in Section 5.2 and subsequent Annex 9 of this impact assessment report, the LEAD_BAT policy measure proposes Made in EU requirements for up to six main specific components among the ten listed in the Commission Implementing Regulation 2025/1178 . While there is flexibility regarding which main specific components may comply with the requirements, t hree of them are explicitly mentioned as mandatory , meaning the y shall be originated from the EU : the battery cell, the cathode active material (CAM) and the Battery Management System (BMS). Battery cells are the fundamental components of a battery, where chemical energy is stored and transformed into electrical energy. This component is key for battery innovation, as it continually enhances energy density and safety. Furthermore, battery cells make up for around 70% of the total battery price. For Electric Vehicle (EV) batteries, a conservative assessment of operational and under construction manufacturing capacity in the EU indicates that it is possible to satisfy the made in EU requirements for battery cells one year of entry into force of the IAA. For stationary battery energy storage systems (BESS), the Made in EU requirements are proposed to kick in three years after the entry into force of the IAA, when a robust EU - based battery cell manufacturing capacity for stationary storage is expected to be established. Additionally, although battery cell production in the EU is more expensive than in Asian countries, an increase in the scale of production and an improvement in the manufacturing processes is expected to bring down battery cell manufacturing costs in the EU, closing the competitiveness gap considerably715. 714 Bloomberg New Energy Finance (2024). Electrolyzer Price Survey 2024: Rising Costs, Glitchy Tech 715 International Energy Agency (2025). What Next for the Global Car Industry 293 The BMS is essential for ensuring the safety and efficiency of batteries by overseeing their overall state and controlling factors such as charge balance and temperature. BMS systems often include connectivity features for real -time monitoring, which make them important for energy security to protect data integrity and prevent tampering. Therefore, for BESS Made in EU requirements are proposed to kick in one year after the entry into force of IAA. For EV batteries, the requirement s are proposed from three y ears after the entry into force of IAA, giving more flexibility and time to battery manufacturers. The Cathode Active Material (CAM) in a battery significantly influences its performance, as the type of material used affects energy density, cycle life, and thermal stability. Besides, the CAM accounts for the largest cost share of the battery cell. Given the importance of the CAM, both technologically and economically, Made in EU requirements are proposed for both EV batteries and BESS. Such requirements are proposed to apply from three years after entry into force of the IAA recognising that although some manufacturing capacity of CAM in the EU is already operational, this has to expand to fully meet the expected demand. Besides the Made in EU requirements explicitly to battery cells, BMS and CAM, requirements have also been set for an additional number of generically defined main specific components. This is meant to provide flexibility to manufacturers to choose which components are better off manufactured in the EU. Given that the Made in EU requirements are set for battery cells, it is expected that battery modules, battery pack s, and battery thermal management systems will be also made in the EU (as there is already sufficient manufacturing capacity) thus complying with the requirements of “three additional main specific components originating in the EU”. When it comes to other downstream main specific components, it is worth noting that the EU already has operational manufacturing capacity in separators, electrolytes and Anode Active Materials, and there are announcements to expand these capacities (see Annex 9). Wind The manufacturing of wind turbines is highly adapted to the specific project, i.e. far less commoditised than other net-zero technologies like solar PV and batteries. At the same time, quality requirements are very high, and the production of wind turbines and their components is very knowledge-intensive. The energy intensity is high for the manufacturing of components like blades or permanent magnets. For most other components like e.g. gearboxes or drivetrains, a higher share of energy is required for pro ducing the primary materials than for producing the components out of the primary materials. Generally, the material cost accounts for more than half of the cost of the final turbine. The labour intensity varies by component, with e.g. the blade being a main specific component of wind turbines with relatively high labour intensity. These aspects – high material intensity, high knowledge intensity, varying labour and energy intensity – determine how the supply chains that shape the EU’s wind energy deployment look today: a strong footprint in the EU with international supply chains fo r input materials and specific components. At the same time, China has wind manufacturing overcapacities and is pushing further into international markets. Looking at deployment, the EU’s current deployment can for most components (except e.g. permanent ma gnets and foundations, while the capacity to produce foundations will be expanded) be supplied from producers in the EU, while the deployment needed to reach the 2030 renewable energy goals could not be met by domestic production, except for nacelles and towers (see Figure W in Section ‘EU capacity to supply its demand for net -zero technologies’ ). Currently, high dependencies from a single 294 country of supply exist for permanent magnets (China, 93%) which require access to the necessary input materials and energy716. The high dependency on permanent magnets needs to be addressed gradually, as it is done in the NZIA. Further to that, based on the above considerations it is deemed appropriate to require that one year after the IAA’s entry into force one main specific components of the wind turbine originates in the EU, and two years later two main specific components. This maintains EU value chains, as well as ensuring high flexibility to source in a way that aids the overall competitiveness of the European wind industry and ensures the necessary deployment. Nuclear fission energy technologies Europe possesses world‑class expertise in nuclear fission energy technology, yet the EU supply chain has been eroded by decades of under‑investment. To meet the growing demand for nuclear power while advancing the broader goals of European autonomy and tec hnology sovereignty, the supply chain must be revitalised. Targeted Made in EU requirements can, over the long term, contribute to rebuild a competent, resilient and autonomous nuclear‑sector supply base without compromising the availability of critical co mponents or the overall functioning of the market, especially at a time when nuclear generation is expected to expand. Therefore, a rather cautious strategy is proposed that (i) limits the scope to a reduced set of main specific components and (ii) introdu ces a sufficient transition period. This approach minimises short‑term cost spikes and gives manufacturers sufficient time to adapt, ensuring a smooth and sustainable upgrade of the EU nuclear supply chain that is crucial for the upcoming years to properly address the electrification challenges of the European economy. Made‑in‑EU content requirements are, in principle, vital for every main specific component because of the sensitivity of nuclear assets and the need to revitalise the European supply chain. However, to avoid supply‑chain bottlenecks, preserve fair competition among the few existing players, and compensate for the absence of detailed data on cost differences across regions, the proposed requirements have been deliberately softened and framed in a way that eases compliance. As a result, the Made in EU obligat ions apply to only four main specific components out of seven, without explicitly referring to any of those components - to provide extra flexibility to manufacturers - and will become operative three years after the IAA enters into force. The proposed Made in EU obligations are fully achievable, as the EU has sufficient manufacturing capacity to meet its immediate deployment needs for all main components, except two in the short term, and is projected to fully satisfy its needs by 2030 (see Figure NU in Section ‘EU capacity to supply its demand for net-zero technologies’). Solar thermal In solar thermal systems, the solar thermal collector is the most strategic main specific component, responsible for capturing and converting solar energy into heat. Its manufacturing process involves the highest added value and highest job creation opportunities within the solar thermal sector. The production of solar thermal technologies is primarily driven by material costs, which tend to be consistent across regions, indicating that the EU can competitively manufacture these products. As explained in Se ction ‘Assessment of socioeconomic implications of IAA provisions related to net -zero technologies’, regional cost differences in producing complete solar thermal systems are limited and are largely offset once transportation 716 European Commission (2025). Communication from the Commission providing updated information to determine the shares of the European Union supply of final products and their main specific components originating in different third countries under Reg ulation (EU) 2024/1735 on establishi ng a framework of measures for strengthening Europe’s net -zero technology manufacturing ecosystem (Net -Zero Industry Act). 18.6.2025 C/2025/3236 295 costs are considered. Therefore, limiting Made in EU requirements exclusively to the solar thermal collector further reduces risks of cost disparities. Given the already ample manufacturing capacity in the EU (refer to Figure ST in Section ‘EU capacity to supply its demand for net-zero technologies’), these requirements could be enforced immediately upon entry into force. Electricity grid technologies EU grid technology and cable manufacturers are global leaders in their fields. However, rising component costs, extended procurement lead times, and a backlog of orders have created supply chain voids that China is strategically positioned to fill. This dy namic intensifies national security risks due to the growing reliance on China, including potential vulnerabilities to espionage, economic coercion, and military threats. The significance of this risk is heightened given that certain electricity grid technologies are complex electronic systems that communicate, can be remotely controlled and updated by software throughout their lifetime. These devices can be compromised during production, as cybersecurity vulnerabilities can be introduced through supply chain breaches with hardware or software tampered during production, testing, or distribution. Such breaches are included via "hardware Trojans" or pre- installed backdoors that enable remote exploitation without the need for external network access, and cyber attackers might use them to manipulate power flows and disrupt grid stability. For instance, around 80% of all new PV systems in Europe are now equipped with inverters from China 717. Companies like Huawei and Sungrow control 170 GW of solar PV capacity remotely, totalling over 200 GW when accounting all Chinese brands - equivalent to the output of 200 nuclear power plants. Ensuring EU origin for electricity grid technologies significantly mitigates the risk of compromised hardware or software being exploited in cyberattacks and thus safeguards the EU energy security and ensure strategic autonomy. In line with the Joint Communication on strengthening Economic Security718, Made in EU requirements for net -zero technologies aim to support the development of trustworthy suppliers of critical subcomponents within the EU. Technologies like inverters, converters, electric cabinets, and other technologies to digitalize the grid are connected grid electricity technologies critical for the energy system and must be protected from risky software and firmware updates, remote access vulnerabilities, and supply- chain dependencies. Similarly, electric charging technologies for transport are crucial for cybersecurity due to their connectivity and integration with broader power grids and payment systems. Power cables are especially critical as they form the backbone of electricity transmission and distribution, ensuring the stable and efficient delivery of electricity across regions, and any compromise can have widespread impacts on energy security and infrastructure integrity. Therefore, the IAA proposes targeted Made in EU requirements for these electricity grid technologies to enter into force three years after adoption. Acknowledging the lack of precise data on EU manufacturing capacity and production cost differences across regions for some of these devices, this cautious timeline is intended to provide manufacturers flexibility to adapt to the requirements and prevent supply bottlenecks, the formation of oligopolies and disproportionate cost increases. Besides, for electricity grid technologies where shortages of supply have been identified Made in EU requirements have not been proposed. 717 European Solar Manufacturing Council (2026). Updated Recommendation for the Commission to publish Guidance on improving Cyber Security for Solar PV and Battery Storage 718 European Commission (2025). Joint Communication to the European Parliament and the Council – Strengthening EU economic security. 3.12.2025 296 EU capacity to supply its demand for net-zero technologies Net-zero technologies in the EU face manufacturing challenges posed by global competition, and particularly by China. European producers often struggle to remain cost-competitive: solar PV modules imported from China are sold at prices that are roughly hal f the production cost and only about one-third of the break-even level needed for EU firms to sustain their operations. Chinese wind turbines are 10 –45% cheaper than European equivalents. In batteries, China dominates 86% of global cell supply and controls over 90% of key materials, while Chinese electrolysers are sold 33–50% cheaper than EU equipment. EU manufacturing in solar PV is limited primarily to modules, inverters, and polysilicon, while the battery manufacturing landscape is heavily dominated by Asian companies. At the same time, several technologies reveal a problem of overcapacity within Euro pe itself. Heat pump factories can deliver more than 6 million units per year, exceeding the estimated 5 million needed annually by 2030, leaving many lines idle. Electrolyser plants likewise suffer from low utilisation, running at just below 20% of their nameplate capacity in 2024. In batteries, announced projects could boost capacity from 188 GWh in 2024 to 872 GWh by 2030, yet more than 250 GWh of planned projects have already been cancelled due to weak demand for EU batteries. This reflects the volatili ty of EU policy signals and the limited coordination between deployment needs and industrial production capacity. Electrolysers The deployment of electrolysers in the EU is characterised by a significant gap with ambitions, primarily due to delays in renewable hydrogen projects. Currently, EU manufacturing capacity can sufficiently meet deployment demands for most elements within the electrolyser value chain, except for bipolar plates and diaphragms (see Figure EL). These components can be swiftly scaled up once market signals are established. The Made in E U requirements for electrolysers can be met already in the short -term and would contribute to develop a resilient and robust hydrogen economy. Figure EL: Manufacturing capacity of hydrogen electrolyser components vis a vis deployment needs, 2025 and 2030 Source: European Commission (2026)719 Heat pumps 719 European Commission (2026). Net-Zero Technology Monitoring Dashboards 297 Following the RepowerEU initiative, numerous industry stakeholders have proactively increased heat pump manufacturing capacity across the EU to accommodate anticipated demand surges. Although the EU heat pump assembly ecosystem is now characterized by overcapacity, particularly for hydronic heat pumps, there remains a notable deficit in manufacturing essential components such as compressors and four -way valves, which are predominantly imported from China (see Figure HP). To enhance supply chain resilience a nd reduce dependency on external sources, it is critical to strategically diversify the supply of these components. The resilience contribution in the context of the Net-Zero Industry Act (NZIA) is the main measure to achieve such diversification. In addit ion, encouraging the assembling of heat pumps within the EU will minimize the risk of national initiatives fragmenting the Single Market, ensuring a more cohesive and robust approach to heat pump deployment across Member States. Figure HP: Manufacturing capacity of heat pump components vis a vis deployment needs, 2025 and 2030 Source: European Commission (2026)688 Nuclear fission energy technologies Throughout this decade, the EU is poised to satisfy its nuclear fission energy technologies deployment needs with sufficient manufacturing capacity (see Figure NU). For each main specific component of nuclear fission energy technology, at least five suppliers exist across the EU. However, short-term fulfilment of demands for nuclear fuel elements and steam generators with domestic production might be challenging. The nuclear component manufacturing ecosystem is not as developed as it was thirty years ago, due to a three-decade shortage of new nuclear fission energy projects that resulted in many original equipment manufacturers for the EU nuclear fleet disappearing. The EU nuclear supply chain relies heavily on a limited number of suppliers concentrated in a handful of countries, principally France, Germany, Italy, Spain, Sweden, Romandia, Slovakia and the Czech Republic, each hosting specialized factories for nuclear components. Besides, the production market's limited appeal—arising from high costs, technological barriers, and limited deployment —creates an environment that does not encourage the entrance of new market actors. Therefore, Made in EU requirements should not be introduced before 2030 to guarantee a level playing field in a sector that demands adherence to specific nuclear codes. Moreover, these requirements should apply only to new nuc lear plants, ensuring there is adequate time to align the compatibility of reactor designs with 298 components developed in Europe, while thereby avoiding disruption of established supply chains with limited flexibility. Figure NU: Manufacturing capacity of nuclear components vis a vis deployment needs, 2025 and 2030 Source: NuclearEurope Solar thermal technologies The EU has robust manufacturing capacity for solar thermal collectors (see Figure ST). In 2024, the capacity significantly exceeded current deployment needs, with EU companies planning expansions to boost exports. The European industry specializes in flat plate collectors, while has limited capacity to manufacture vacuum tube collectors, which are largely imported from China. Notably, the absorber (the part of the collectors that absorbs the solar heat) is predominantly produced in Europe. Figure ST: Manufacturing capacity of solar thermal components vis a vis deployment needs, 2025 and 2030 Source: European Commission (2026)688 Wind technologies According to WindEurope, the EU currently has adequate manufacturing capacity across the wind technology value chain to meet its current deployment needs inside the EU (see Figure W), which are however not meeting the deployment needs to comply with the 20 30 goals. 299 Hence, further capacity expansion beyond present plans is needed. Chinese wind turbine manufacturers are working towards expanding in the EU market, exemplified by MingYang's collaboration with Italian firms. The NZIA's resilience contribution has prompted some EU companies to receive manufacturing requests from Chinese OEMs. Figure W: Manufacturing capacity of wind components vis a vis deployment needs, 2025 and 2030 Source: Wind Europe (2025), How much can Europe manufacture and install? Electricity grid technologies EU electricity grid technologies are projected to witness substantial expansion to enable the clean energy transition. Significant developments and massive investments are needed across manufacturing and infrastructure enhancement to ensure readiness for future energy demands. The EU has a sizable production base for electricity transmission and distribution cables, enabling it to closely meet deployment needs. For high voltage, extra-high voltage and medium voltage array subsea cables, the EU and the United Kingdom combined currently have a conservative estimate of manufacturing capacity of about 7 700 km/year 720. This is measured against an average projected demand from 2026 to 2040 of about 8 200 km/year721, largely based on political decisions rather than committed orders , suggesting a potential shortage of about 550 km/year. However, this short-term deficit is expected to be swiftly addressed by the planned manufacturing capacity expansions. Existing EU cable manufacturers have committed to invest over EUR 4 billion to expand their manufacturing capabilities, aiming to significantly increase manufacturing capacity of subsea cables by 2030. With these investment plans expected to be realized in the next few years, manufacturing capacity will reach about 12 500 km/year698, thus significantly exceeding deployment needs, which are projected to increase by 40% in 2030 722. For high voltage direct current underground cables, the EU has a manufacturing capacity of about 3 500 km/year. This is measured against an average projected demand from 2026 to 2040 of about 2 300 km/year, which suggests that the EU has sufficient capacity to fully meet its domestic deployment needs. In addition, Europe is already home to several well-established companies in the subsea cable manufacturing industry, along with even more in the onshore cable sector, fostering healthy 720 4c Offshore (2025). Transmission and Cables Outlook Q3 2025 721 4c Offshore (2025). Database 722 DSO Entity (2025). ENTSO-E, Europacable, DSO Entity and T&D Europe publish Joint Roadmap for Future Proof Grids 300 competition. In niche markets where oligopolies might arise due to Made in EU requirements, the geographic scope of the Made in EU concept serves to mitigate such risks. The EU also has a robust power electronics sector with capabilities in design, production, software development, and maintenance. Where EU manufacturing capacity related to electricity grid lags behind is in transformers: domestic supply of transformers is tight because of limited manufacturing capacity, which causes long lead times for transformers to be installed723. Socioeconomic implications of IAA proposed measures related to net- zero technologies Electrolysers Today, entirely EU-made electrolysers have a CAPEX 50% more expensive than electrolysers imported from China, and by 2030 they are projected to be twice as expensive (see Figure ELY2). While this presents a cost challenge, EU-made electrolysers offer higher efficiency and lifecycle performance724. Despite higher CAPEX, the superior efficiency and longer durability of entirely EU -made electrolysers translate into smaller differences in hydrogen production costs: a conservative analysis finds that from now until 2050 hydrogen produced with EU - made electrolysers w ill cost less than 10 % more than hydrogen produced using Chinese electrolysers725. Moreover, as explained in Section ‘Identification of NZIA main specific components to be covered by Made in EU requirements’, the IAA proposes to set Made in EU requirements only for a subset of electrolysers’ main specific components, which will significantly minimise impact on cost. Procurement decisions favour lower upfront costs, which risk accelerating market share losses for EU manufacturers in a critical ph ase up scale, which highlights the importance of strategic investments and policy initiatives that emphasize quality and performance. Figure EL: Price of stack and non-stack components of electrolysers based on origin Source: BloombergNEF690 Heat pumps The International Energy Agency indicates that producing heat pumps in the EU is generally more costly compared to other countries (see Figure HP2). Specifically, a hydronic heat pump entirely manufactured in the EU can cost twice as much as one made in Ch ina and 10% more 723 BloombergNEF(2025). Power Transformer Trends 2025 724 Bloomberg New Energy Finance (2025). Electrolysis System Cost Forecast 2050: Higher for Longer 725 The levelised cost of hydrogen produced with EU-made electrolysers is estimated at 5.8 EUR/kg, whereas for electrolysers with components sourced from China to an extent that fulfils the IAA requirements, the cost is calculated to be at 5.3 EUR/kg. 301 than one manufactured in Japan. Similarly, air-to-air heat pumps produced in the EU cost about twice as much as their Chinese and Japanese counterparts. However, when considering installation costs and ancillary services, the price difference for consumers purchasing a heat pump is smaller, thereby having limited influence on consumer choice. Moreover, as explained in Section ‘Identification of NZIA main specific components to be covered by Made in EU requirements’, the IAA proposes to set Made in EU requir ements only for the final assembly of heat pumps, excluding other main specific components, which will significantly minimise impact on cost. Figure HP2: Levelised cost of production for heat pumps in selected countries/regions by type, 2023 Source: International Energy Agency726 In response to the slower deployment of heat pumps and increased imports, EU manufacturers have had to cut jobs or starting partial unemployment, affecting more than 1000 employees in 2023 and more than 7000 in 2024 (European Heat Pump Association, 2025). Implementing Made in EU requirements can play a crucial role in safeguarding existing jobs, fostering new employment opportunities, and encouraging investment. According to the EHPA, the sector employs approximately 430 000 people in the EU, with a significant portion of direct jobs tied to manufacturing. Given that the manufacturing ecosystem consists of around 250 sites across the EU, often in rural areas and constituted by SMEs, encouraging EU production would bolster local economies and small businesses. Nuclear fission energy technologies According to trade statistics from 2025, fuel elements imported from Russia were about 10% cheaper than those produced in the EU, while those imported from the US were 30% cheaper727. In contrast, fuel elements imported from the UK were 70% more expensive than those made in the EU. The cost of producing nuclear fission energy technologies main specific components in the EU differs from other regions due to several key factors. For instance, compared to Asian manufacturers, EU labour costs today are generally higher because the salari es of the highly qualified professionals required for specialised engineering tasks are higher. Compliance with stringent regulatory and safety standards add s another layer of expense, as significant investment is needed for specialized testing and certification processes. Furthermore, energy prices in the EU are generally above the EU average, impacting the energy costs of manufacturing processes especially for some nuclear main specific components. Consequently, for a limited transitional period imposing Made in EU requirements is expected to increase the production cost of these component s. However, labour costs in Asia are already trending upward, and energy prices are expected to stabilise at levels comparable to those in the EU, which will narrow the cost gap over time. Moreover, while in the short‑term energy and labour costs play against the EU competitiveness in producing nuclear fission energy technologies, 726 International Energy Agency (2024). Energy Technology Perspectives 2024 727 EUROSTAT (2026). COMEXT database 302 this will partially be offset by the Union’s emphasis on technological innovation and advanced‑manufacturing techniques. These innovations boost production efficiency and enable the delivery of components that meet the highest standards of quality and safe ty. In addition, any cost premium should be weighed against the long‑term benefits of investing in safety, reliability and the overall resilience of the nuclear‑energy supply chain. The nuclear sector in the EU employs approximately 500 000 people, including 230 000 in direct positions within the sector. Notably, many of these jobs are highly specialised and require advanced skills, underscoring the importance of maintaining such expertise in the EU - especially to effectively manage strategic assets like nuclear fission power plants. Solar thermal technologies Manufacturing solar thermal technologies within the EU is generally more expensive than in many other global regions. As per Solar Heat Europe, the complete solar thermal system with flat plate collectors has a production cost in the EU about 40% higher th an in China and approximately 20% higher than in Turkey. Similarly, the entire solar thermal system with vacuum tubes has a production cost in the EU about 35% higher than in China and 20% higher than in Turkey. These cost differences primarily stem from regional variations in the prices of materials such as glass, copper, and aluminum. Despite these disparities, the bulky nature of solar thermal products often eliminates the price advantage of imported products due to the higher transportation costs, historically enabling EU producers to remain competitive. However, these dynamics are shifting as fierce competition fr om third -country producers begins to affect certain EU Member States. By improving key competitiveness drivers and implementing policy measures such as local content requirements, the EU can better maintain its competitive edge while supporting domestic industry growth and stability. Finally, as explained in Section Identification of NZIA main specific components to be covered by Made in EU requirements, the IAA proposes to set Made in EU requirements only for solar thermal collector, excluding other main specific components, which will significantly minimise impact on cost. The industrial ecosystem for solar thermal technologies is widespread across the EU, with a high concentration of companies located in Greece and in Cyprus 728. Around 90% of such companies are SME. The sector employs around 10000 people in the EU729. Electricity grid technologies Manufacturing high voltage and extra -high voltage subsea and underground cables is not a labour-intensive process, instead materials costs account for the lion share of total production costs. Since these materials are globally traded and typically exhibit limited price variation across regions, differences in production costs are expected to be relatively small. Although some Asian countries may benefit from lower energy and CAPEX costs, these advantages should largely be offset by transportation costs to Europe, especially considering the need for specialised vessels with high operational costs. However, trade statistics indicate that in 2025 high-voltage power cables imported from China were 20% cheaper than those manufactured in the EU730. This price differential is unlikely to be solely attributed to production cost drivers, suggesting the possible presence of direct or indirect State aid compensatio ns and/or price dumping practices by extra-EU producers. 728 Solar Heat Europe (2026). Market Data 729 Roca Reina, J.C., Taylor, N., Volt, J., Carlsson, J., Georgakaki, A. et al., Clean Energy Technology Observatory: Solar Thermal Energy in the European Union - 2025 Status Report on Technology Development, Trends, Value Chains and Markets , Publications Office of the European Union, Luxembourg, 2025, https://data.europa.eu/doi/10.2760/8841716, JRC143924. 730 EUROSTAT (2026). COMEXT database 303 For other electricity grid technologies, trade statistics depict a mixed picture . Devices manufactured in the EU are generally more expensive than imports from China but are cheaper compared to imports from other third countries. Specifically, for converters, devices imported from China in 2025 were about 30% cheaper than their EU-manufactured counterparts, while devices imported from Thailand were about 20% more expensive than EU-manufactured ones. Similarly, electric cabinets imported from China in 2025 were almost 40% cheaper than those manufactured in the EU, while devices imported from Turkey were slightly more expensive than EU-manufactured ones. Wind technologies The price gap between Chinese wind turbines and Western turbines ranges between 10% and 45%. Interest for Chinese turbines in diverse markets is hence growing, and Chinese manufacturers use strategic pricing (including deferred payment) to enter new markets. In that, the price difference is also due to market entry strategies and might not remain this high. Additionally, Chinese manufacturers offer larger wind turbines than those produced and offered by EU manufacturers. On the other hand, wind turbine production and the broader wind energy industry deliver substantial economic benefits to the EU: according to WindEurope, the sector had an annual turnover of EUR 60 billion, 65% of this adding value to the EU economy, in 2019. The sector represents 300.000 jobs in the EU. A strong European wind supply chain, with roughly 250 factories and major turbine OEMs holding a large global market share, boosts local industry, high-value jobs, and regional development while generating taxes (EUR 5 bn in 2019) and supporting exports. According to WindEurope, wind farms pay €2.3/MWh in local taxes on average. Impact on electricity prices Assessing the impact of establishing Made in EU requirements on solar PV, wind, and nuclear sectors on electricity prices is challenging. Although the previous paragraphs indicate that these requirements could lead to not -negligible CAPEX increases, their effect on the levelized cost of electricity is mitigated. For instance, if a PV module is assembled in the EU, using EU - produced PV cells and solar glass, along with three main specific components diversified according to the NZIA resilience requirements, its levelized cost of electricity (LCoE) would be 6 EUR c/kWh. This represents a modest increase from the levelized cost of electricity of 5.2 EUR c/kWh for PV modules at current market prices 731. An onshore wind turbine with two main specific components produced in the EU would have a LCoE 4% higher than an equivalent turbine with those components supplied from China (i.e. 48 EUR/MWh and 46 EUR/MWh respectively). Similarly, a nuclear fission power plant with four main specific components produced in the EU is expected to have a LCoE 1% higher than an equivalent power plant with those components supplied from extra-EU countries (i.e. 79 EUR/MWh and 78 EUR/MWh respectively ). Despite this rise, the impact on the merit order in the power market is minimal. PV, wind or nuclear would only set the electricity price during limited hours of exclusive clean energy production. Even then, the resulting price increase would be limited and overall, electricity costs would remain significantly lower than those determined by fossil fuel generators. Although Made in EU requirements might lead to higher costs in renewable energy auctions, as explained in the impacts Section of the report, understanding the extent to which these costs might be transferred to consumers through additional levies or surcharges on electricity bills is complex. This depends on various factors, including auction types (such as feed -in tariffs 731 SolarPower Europe and Fraunhofer ISE (2025). Reshoring Solar Manufacturing to Europe. 304 versus contracts for difference), specific auction designs, the level of renewable energy penetration, wholesale market conditions, and cost allocation mechanisms. In 2024, taxes and levies - the typical means for recovering the cost of renewable auctions - accounted for approximately 20% of total electricity prices on average in the EU732, indicating that any pass- through effects on consumers would remain limited. Similarly, while Made in EU requirements for electricity grid technologies are expected to result in increased costs in public procurement, determining how the potential higher CAPEX is passed on to consumers is not straightforward. Once the additional costs associated to the fulfilment of Made in E U requirements for electricity grid technologies are taken into consideration, the levelized cost of the electricity network is expected to increase from 22.7 EUR/MWh to 23-23.4 EUR/MWh (an increase between 1% and 3% )733. To put this in perspective, for an average household such an increase translates into an additional EUR 1-3 per year in network charges on the electricity bill. The role of public procurement, auctions and public schemes in deploying net-zero technologies Electrolysers Public procurement, auctions and public support schemes to households account for almost none of the deployed electrolyser capacity. Most of the current capacity has been supported through State Aid, while programs such as Horizon Europe and the Innovation Fund have also contributed. Although auctions for hydrogen have been conducted, no capacity has yet been deployed through this method. Heat pumps While precise data on the share of heat pump deployment covered by public procurement, auctions, and public support schemes is unavailable, it is evident that public support schemes currently play the most significant role in heat pump deployment. Though auctions are not yet implemented, they are anticipated to gain relevance, also as part of the Innovation Fund auction to decarbonise industrial heat 734. Public procurement, although presently modest in scale, is expected to become increasingly significant, especially in light of the Energy Performance of Building Directive, which aims to bolster energy efficiency and heat pump use. Nuclear fission energy technologies Though exact data is lacking, the deployment of nuclear fission power plants typically includes various forms of State aid, mainly through Article 107 of the TFEU. Public procurement is pivotal in this sector, as utilities are mandated by Procurement Directive 2014/25/EU to follow public procurement procedures when sourcing nuclear components. In practice, public utilities and partially public utilities often regard public procurement rules overly restrictive, especially for critical products and equipment, possibly leading them to seek exemptions based on national security or technology exclusivity. Solar thermal technologies While precise deployment data through public procurement, auctions, and public support schemes is not available, public support schemes are evidently the primary in solar thermal 732 EUROSTAT (2026). Electricity price statistics 733 Calculated including, beyond the EUR 1.2 trillion investment required in electricity grid by 2040 (as outlined in the European Commission’s European Grids Package , COM(2025) 1005 final ), the additional investment necessary to deploy power cables, inverters, converters and Electric Vehicle Supply Equipment manufactured within the EU instead of imported from third countries. 734 European Commission (2025). Commission publishes Terms and Conditions for the first pilot auction for industrial heat decarbonisation with a budget of €1 billion 305 technologies deployment. Though auctions are not yet implemented, they are anticipated to gain relevance, also as part of the Innovation Fund auction to decarbonise industrial heat 695. Public procurement, although presently modest in scale, is expected to become increasingly significant, especially in light of the Energy Performance of Building Directive, which aims to bolster energy efficiency and solar thermal systems. Wind technologies Auctions are the predominant allocation mechanism for wind energy in the EU, accounting for about 60% of total wind energy deployment depending on the year. Exact data on public procurement of wind energy is not available, but while Denmark prominently uses it and Finland makes limited use of it, other Member States reliance on public procurement to deploy wind energy is negligible. Publicly owned utilities are also found to apply public procurement to deploy wind energy, however no data is available on the size of that market. Member States other than Denmark generally rely on auctions to deploy wind energy. Public support schemes hold little relevance for onshore and offshore wind energy deployment. Electricity grid technologies In the EU, most deployment of electricity grid technologies is done by Transmission System Operators (TSOs), which are normally public undertakings that operate through public procurement processes abiding to Regulation 2014/25/EU. Notably, over 70% of new transmission cables are expected to comply with these public procurement rules. At the European distribution network level, approximately two -thirds of the European electricity grid infrastructure is operated by 19 corporate groups from the energy sector. Of these, 11 are majority publicly owned and eight are privately owned. At prese nt, this means that approximately 2.837 million kilometers of distribution networks are operated by the 11 public operators and 4.813 million kilometers by private suppliers. EU trade balance Electrolysers In 2024, nearly 90% of electrolysers deployed in Europe were domestically manufactured. Nevertheless, there is a significant risk of increased reliance on Chinese imports, which could jeopardize the EU’s security of supply. This concern is underscored by comparing current and projected global supply and demand trends, alongside China's dominance. Chinese production capacity exceeds 50% of global production , its projected production significantly exceeds its domestic deployment targets and foreseeable demand, which could influence international markets and trade dependencies 735. To mitigate these risks, the EU must strategically bolster local production to develop a robust domestic supply chain. Heat pumps The EU is a net importer of hydronic heat pumps (EUR 580 million in 2024), mainly from China. However, this EU trade deficit does not yet indicate concerning dependencies: the EU relied on third countries for 22% of the total EU supply in 2023736. In contrast, the EU exhibits pronounced dependency for air-to-air heat pumps (EUR 560 million of trade deficit in 2024), mainly from China, due to limited domestic manufacturing capacity. 735 International Energy Agency (2024). Energy Technology Perspectives 2024 736 European Commission (2025). Communication from the Commission providing updated information to determine the shares of the European Union supply of final products and their main specific components originating in different third countries under Reg ulation (EU) 2024/1735 on establishing a framework of measures for strengthening Europe’s net -zero technology manufacturing ecosystem (Net -Zero Industry Act). 18.6.2025 C/2025/3236 306 Nuclear fission energy technologies The EU is a net importer of nuclear fission fuel elements (EUR 63 million in 2024), mainly from Russia. Imports of other fission nuclear components to the EU remain limited, correlating with the restrained nuclear deployment within the region. Solar thermal technologies The EU is a net exporter of solar thermal technologies (EUR 170 million in 2024), mainly to Switzerland. This positive trade balance highlights the quality and innovation within the EU's solar thermal sector, suggesting opportunities to further expand export markets. Wind technologies The global market share of EU manufacturers is declining rapidly: from 30% in 2022 it fell to 23% in 2023, while Chinese manufacturers increased their share from 46% to 55%. EU companies continue to dominate in the EU with a market share of 89% in 2023. The EU is still a net exporter of wind turbines and many of its underlying components. However, it faces a severe dependency for permanent magnets (used in wind turbine generators), which are almost entirely imported from China. Electricity grid technologies The EU faces a trade deficit for inverters and converters, importing large volumes of these products from China. For most other electricity grid technologies, the EU has a positive trade balance, exporting mostly to the Unites States and the United Kingdom. However, for certain electricity grid technologies there is a significant risk of increased reliance on Chinese imports, which could jeopardize the resilience, reliability and cyber -security of the EU electricity system. For instance, for high voltage, extra-high voltage and medium voltage array subsea cables China has developed a manufacturing capacity (about 11 000 km/year 737) more than twice higher than its foreseeable domestic demand (about 4 700 km/year738). Moreover, this surplus in Chinese production closely matches the total EU annual demand , suggesting a possible strategic positioning by China to potentially expand its presence in the European market. Administrative costs The assessment of administrative costs incurred by Member States and businesses due to the implementation of the Made in EE requirements for electrolysers, heat pumps, nuclear fission energy technologies, solar thermal technologies, wind technologies and electricity grid technologies has estimated recurring costs to be approximately EUR 5 million. Most of such administrative costs is associated to Member States (EUR 4.95 million), while businesses account for about EUR 45 000. Table ADMS offers a detailed breakdown of administrative costs for Member State by net - zero technology, while Table ADBU provides a similar overview for businesses. Table ADMS – Administrative costs for Member States associated to the implementation of the IAA Made in EU requirements for net-zero technologies beyond batteries and solar PV Net-zero technology Administrative costs (recurring) Electrolysers ¼ FTE x 27 Member States 737 4c Offshore (2025). Transmission and Cables Outlook Q3 2025 738 4c Offshore (2025). Database 307 Total cost: EUR 412 800 Heat pumps ¼ FTE x 27 Member States Total cost: EUR 412 800 Nuclear fission energy technologies ¼ FTE x 27 Member States Total cost: EUR 412 800 Solar thermal technologies ¼ FTE x 27 Member States Total cost: EUR 412 800 Wind ¼ FTE x 27 Member States Total cost: EUR 412 800 Electricity grid technologies 1 FTE x 27 Member States Total cost: EUR 1 651 100 Table ADBU – Administrative costs for Businesses associated to the implementation of the IAA Made in EU requirements for net-zero technologies beyond batteries and solar PV Net-zero technology Administrative costs (recurring) Electrolysers ½ week FTE Nr companies affected: 4 (20 large companies x 18%) Total cost: EUR 2 100 Heat pumps ½ week FTE Nr companies affected: 29 (160 large companies x 18%) Total cost: EUR 16 900 Nuclear fission energy technologies ½ week FTE Nr companies affected: 4 (20 large companies x 18%) Total cost: EUR 2 100 Solar thermal technologies ½ week FTE Nr companies affected: 22 (120 large companies x 18%) Total cost: EUR 12 700 Wind ½ week FTE Nr companies affected: 4 (20 large companies x 18%) Total cost: EUR 2 100 Electricity grid technologies ½ week FTE Nr companies affected: 8 (40 large companies x 18%) Total cost: EUR 4 200 Full Time Equivalents and number of affected companies are estimated using the same methodology and assumptions described in Annex 4 Section 2.1. --- [Remiss - Executive summary of the impact assessment.pdf] EN EN EUROPEAN COMMISSION Brussels, 4.3.2026 SWD(2026) 72 final COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing a framework of measures for the acceleration of industrial capacity and decarbonisation in strategic sectors and amending Regulations (EU) 2018/1724, (EU) 2024/1735 and (EU) 2024/3110 {COM(2026) 100 final} - {SEC(2026) 70 final} - {SWD(2026) 70 final} - {SWD(2026) 71 final} 1 Executive Summary Sheet Impact assessment for the Industrial Accelerator Act A. Need for action Why? What is the problem being addressed? The overarching problem this initiative aims to address is the need to strengthen the EU industry’s competitiveness and resilience in the context of increased global pressure, while accelerating the decarbonisation of its processes and products. It is fostered by three sub -problems: limited demand for European low -carbon industrial products, supply chain vulnerabilities in strategic sectors and net -zero technologies, and industrial decarbonisation technologies not yet being deployed at scale. The EU manufacturing sector is the largest employer (18.7%) and value -added provider (24.1%) . However, the EU industry is losing ground. Manufacturing as a share of EU GDP declined from 17% in 2000 to 14% in 2024. Low investment levels, along with challenges such as slow economic growth, unfair international trade and competition, the need for decarbonisation and technological competition, affect the competitiveness of EU industry and impact the business case for investing in European low-carbon technologies. The global market for net-zero technologies is projected to nearly triple by 2035. While their deployment in the EU is progressing, the EU’s global market share is declining, and domestic manufacturing capacity remains limited . Furthermore, economic security is a central pillar of EU industrial policy, with key technologies underpinning the green and digital transition, which are currently exposed to strategic dependencies and supply chain risks. Without a competitive and decarbonised industrial base, the EU will not achieve the objectives of the Clean Industrial Deal and the Economic Security strategy. What is this initiative expected to achieve? The general objective is to increase resilient and decarbonised industrial production in the EU manufacturing industry, with a special attention on E nergy Intensive Industries (EIIs), net-zero technologies, and automotive industry in their contribution to Europe’s competitiveness, economic security, and sustainable economic growth. The general objective is broken down into five specific objectives: (SO1) Facilitate differentiation for low-carbon industrial products to increase their value and marketability (SO2) Boost demand for European low-carbon products and net-zero tech (SO3) Maximise the quality and benefits of foreign investment in the EU (SO4) Speed-up and simplify permits for industrial decarbonisation (SO5) Increase investment projects in industrial acceleration areas What is the value added of action at the EU level? While national measures may address parts of the challenge, they risk fragmenting the Single Market and undermining collective effectiveness. Given that supply chains are deeply integrated across Member States, a coordinated EU-level approach is essential to promote resilience, industrial decarbonisation and a level playing field. It enables economies of scale, proposes solutions that fit the scope of the problem and helps prevent inefficiencies and duplication. B. Solutions What legislative and non-legislative policy options have been considered? Is there a preferred choice or not? Why? 2 The policy options are organised in three main sets of policy measures (POs), with each measure corresponding to a specific objective (SOs). Policy option 1 (PO1) proposes, under (SO1), a carbon intensity label for energy-intensive sectors. SO2 aims to create lead markets, by introducing low carbon requirements for energy intensive materials (steel , cement and aluminium) used in selected downstream sectors (automotive and construction) in public procurement and support schemes. It also proposes introducing made in EU requirements for batteries, solar PVs and vehicle components in public procurement and support schemes . SO3 introduces guidance on voluntary conditions for foreign direct investments in the battery supply chain . To streamline permitting (SO4), the option proposes a unified digital procedure for all permits, applicable to the entire manufacturing sector. SO5 recommends to Member States to facilitate public funding for priority projects in industrial areas. Policy Option 2 (PO2) builds upon the first option by broadening the scope and requirements. SO1 mandates a specific carbon intensity label for steel, with detailed rules that can later be expanded to include other energy- intensive materials. Regarding lead markets (SO2), low-carbon and made in EU requirements are introduced for steel, cement and aluminium used in selected downstream sectors (automotive and construction) in the context of public procurement and support schemes . Conditions for specific investments under SO3 are mandatory rather than voluntary. SO4 increases support for the permitting process by introducing additional measures dedicated to EIIs. Lastly, SO5 requires, instead of recommends, Member States to designate industrial areas. Policy Option 3 (PO3) further extends the previous two options. SO2 on lead markets extends the low-carbon and made in EU requirements for the steel, cement and aluminium used in the s elected downstream sectors , namely the automotive and construction products place d on the market . It also extends the made in EU requirements for batteries, solar PVs and vehicle components to all products placed on the market . SO3 on permitting introduces dedicated measures for industrial areas. SO5 requires the Commission to designate industrial areas according to selection criteria and give priority projects access to funds. Following the analysis of the impacts of each policy option, as well as their ability to meet the objectives and their interaction with existing and planned EU initiatives, the IA considers PO2 to be the preferred option. Overall, PO2 achieves the objectives in the most effective and efficient manner (as the cost -benefit differences with PO1 are minimal) and contribute to administrative and process efficiency . For the quantified elements, PO2 incurs net overall benefits, which are higher than PO3, but slightly lower than PO1 and the estimated costs are expected to be offset by long-term benefits related to economic security and resilience. However, part of the impacts on downstream sectors and supply chains, positive and negative, could not be quantified due to lack of data. Overall, PO2 facilitates the business case and triggers investment decisions in the EU by streamlining permit procedures for the entire manufacturing sector, boosting demand for European decarbonised materials and net-zero tech products in strategic value chains, and ensure an investment framework that supports value-added creation in the EU. Additionally, PO2 will more effectively mitigate risks of supply chain disruptions and import restrictions by third countries, essential to preserve the economic security of the Union which would suffer large losses from such systemic shocks. Predictability, access to inputs, and strong supply chains are crucial for the competitiveness and well-functioning of EU's industry. Other benefits include, but are not limited to, job creation and upstream growth in gross value added, leading to more economic and social stability overall. It offers the most balanced approach between effectiveness and efficiency, as well as coherence and proportionality. Who supports which option? An open public consultation and several targeted ones were organi sed to gather feedback from all relevant stakeholders. Overall, industry was supportive of the initiative and of provisions facilitating the permitting procedures for industrial manufacturing projects. The steel sector supports a label but debates some of its parameters and the design of the classification system. Steel, cement and aluminium sectors, solar, batteries, and vehicle component manufacturers stand to benefit directly from the IAA and were supportive of the made in EU and low carbon content requirements to support the creation of European lead markets for low -carbon industrial products and net-zero tech. However, some other EIIs may have diverging views regarding the introduction of low- carbon and made in EU requirements. On the other hand, public authorities' views were split, particularly concerning permitting provisions covered under PO2 and PO3 , notably for lead market provisions, as it would increase their administrative burden. C. Impacts of the preferred option 3 What are the benefits of the preferred option (if any, otherwise main ones)? PO2 is expected to bring economic benefits for the targeted EIIs and net-zero tech sectors, as it will create demand for European low carbon industrial products and batteries, solar PVs and vehicle components. For example, an increase in GVA of approximately EUR 445 million is expected for the cement industry and EUR 241 million for the steel and aluminium sectors in 2030. Furthermore, the entire EV automotive value chain, including intermediate inputs, is projected to see an increase in value added of around EUR 10.5 billion from entry into force of the vehicle component measures. Manufacturing industries will also benefit from time and costs savings from the e-permitting provisions, potentially reaching up to EUR 240 million cost savings for the digitalisation of permitting procedures. Benefits for industry will include employment opportunities. For example, it is estimated that introducing lead market provisions will generate and maintain 148 352 jobs in 2030. Lastly, the IAA will contribute to the EU climate targets by accelerating decarbonisation projects, leading to estimated GHG emissions reduction of 30,58 Mtonnes CO2eq for PO2 in 2030 only, equivalent to roughly EUR 3 058 million in savings. What are the costs of the preferred option (if any, otherwise main ones)? The downstream sectors will experience higher production costs due to lead market conditionalities. Adjustment costs for automotive OEMs from low-carbon and made in EU requirements could result in a EUR 291 million GVA loss while the construction sector could see a EUR 691 million GVA loss. For example, a vehicle's price might increase by 0.225% (EUR 69.27) due to low carbon steel and aluminium provisions, and a passenger EV car by 2.2%EUR 630 due to Made in EU batteries requirements in 2030. The construction cost of a building is expected to rise by 0. 45% from the use of low carbon products such as steel , aluminium and cement . Made in EU requirements for solar PV and batteries will also lead to cost increases for all consumers, estimated at EUR 685 million for solar PVs and EUR 2 338 million for BESS/EVs. Public procurement and subsidies could cover a significant portion, reducing the cost impact on citizens. Businesses will face recurring administrative costs, mainly for compliance with lead market provisions, totalling around EUR 1.2 million for PO2, potentially offset by permitting digitalisation savings. T hese additional costs will decline in the midterm , as production costs lower due to economies of scale and cost parity with carbon intensive products is reached. How will businesses, SMEs and micro-enterprises be affected? Businesses of all sizes in the targeted industries will gain from an expanded market for low carbon products and benefit from cost and time savings associated with a faster and simplified permitting process. Industry consultations revealed that SMEs face bigger challenges in permitting due to limited administrative resource. However, businesses in the downstream sector, such as automotive and construction, could incur additional costs (see above costs of the preferred option) related to low carbon and/or EU content requirement, including increased material costs . These increased costs for downstream sectors , however minimal, will be felt more s trongly by SMEs. More concretely, the lead market measures are likely to increase administrative costs to demonstrate compliance reporting, whenever mitigation measures envisaged for the proposal are not enough. Will there be significant impacts on national budgets and administrations? Public administrations are expected to incur higher costs in public procurement and support schemes, along with additional administrative expenses for monitoring, reporting, and compliance. Annual administrative costs may increase by up to 8.92 million EU-wide, though these are anticipated to be offset by permitting -related savings. Public procurement costs are projected to rise in all Member States, due to the impact of content requirements. Will there be other significant impacts? The Industrial Accelerator Act is expected to enhance the competitiveness of EU EIIs, solar, batteries and vehicle components manufacturing industries by securing demand for their products , as well as EU’s economic security and resilience. International trade flows would be affected, lowering dependencies and favouring foreign investments in the EU with higher value-added creation. Potential negative reactions from some trading partners could result in competitiveness challenges for EU industry on global markets. D. Follow up When will the policy be reviewed? 4 An evaluation should be carried out three years after entry into force, with an explicit review clause applying five years after entry force.