Draft Parliament report advances lead markets for clean industry in Europe
The materials in a school, hospital, bridge, train station, or apartment block carry a significant emissions footprint, and Europe buys a lot of those materials, including steel, cement, plastics, chemicals, through public projects.
That gives policymakers a powerful tool: use public demand to help create markets for cleaner industrial products in Europe.
That is exactly what the Industrial Accelerator Act is meant to do, and the European Parliament has now published its draft report on the Commission’s proposal. This legislation is key to develop lead markets and ensure that predictable demand support the deployment of clean production of key products in Europe.
The comprehensive draft report addresses several key shortcomings of the IAA proposal and represents an important step in the right direction
Progressively increasing ambition
The EU will need the lead markets to progressively become the de facto markets to reach climate neutrality by 2050. While the draft doesn’t bring the procurement requirements up to the number needed, it does provide a welcomed progressive increase in the share of decarbonised materials required over time. This is important to ensure that the decarbonised products get an indication that increased production will be required to fulfil future requirement, rather than only a static goal.
We would however encourage a more ambitious growth trajectory for steel and cement procurement, bringing the requirement to 100% by 2040.
Inclusion of plastics in construction
The EU consumed 56.2 Mt of plastics in 2024, accounting for an estimated 24 MtCO2e in greenhouse gas emissions, and the construction sector accounted for 24% of plastic demand. Expansion of the proposal to cover key applications like pipes, insulation and window/doorframes, which together accounted for 60% of demand from the construction sector, is therefore an important step to create the demand for decarbonised plastics in Europe and start expanding the IAA proposal to the chemical sector. We welcome the introduction of the procurement mandate set at 30%, and would encourage the inclusion of a clear growth trajectory on the obligation to mirror those which are now set out for the other products covered.
Setting a realistic framework on costs
While the initial proposal allowed for projects to bypass the decarbonised products requirement if the cost difference exceeded 25%, the draft brings that number to 40% until further decision by the Commission, and, importantly, clarifies that this increase is on the full contract value, not on the specific material. This distinction is important as using decarbonised steel or cement would represents an increase of less than 5% for buildings or automobiles, even if the decarbonised steel and cement themselves are more expensive.
Chemicals
While the draft report improves the wording on chemicals, further clarity could be provided to ensure chemicals are properly covered by the IAA. The expansion to include both sustainable and low carbon sources is welcome, but could be broadened to explicitly cover low carbon production of chemicals irrespective of feedstock, as decarbonisation can take different pathway.
We also welcome the indication on the timeline expected from the Commission to consider expanding the IAA to chemicals. On the positive side, the draft also explicitly refers to fertilisers: a sector that would greatly benefit from future inclusion in the IAA framework.
Recognises the risk of a delayed definition for low carbon
The draft report recognises that the procurement mandates are inoperable without a clear definition for ‘low carbon’. As the regulation currently relies on forthcoming definitions under other legislation, the draft report requires the Commission to adopt delegated acts outlining the required carbon footprints for relevant products to be considered as low carbon if the anticipated definitions are not in effect by 31st December 2027. This is a welcome step to avoid delay in delivery, but we would encourage that – rather than developing new definitions – the Commission should calibrate the interim definition so they are no less ambitious than existing carbon intensity bandings which are already in widespread use. For example, those outlined in Principle 10 of Responsible Steel and within the GCCA Low Carbon Ratings for cement and concrete – for both considering materials achieving the two highest performance classes to be low carbon.
Greater coverage across public intervention
While the proposal’s public intervention requirement covered at least 45% of the total national budget spent on relevant support schemes, the draft brings that number to 90%, which would provide a welcomed increase in the coverage of support schemes.
Expansion into the private sector
The increased quotas and material coverage for the public sector are a welcome step in the right direction but while public procurement and public support schemes represent an important initial lead market for low-carbon products, the bulk of demand originates in the private sector, which represents 89% of steel demand and 69% of cement. The IAA should progressively introduce private sector mandates starting from 2032, to add the scale public procurement alone cannot provide and allow demand-side mechanisms to play a role in sectors where public entities are not major players.
The draft report is a positive step in the right direction, but it is only a draft and will be serving a basis for MEPs to table amendments and for the upcoming discussions in the Parliament to amend the legislative proposals.
