A spectre is haunting Europe: the spectre of a stalled green transition. There is a piece of legislation moving through the institutions in Brussels that most people have never heard of. One that will shape how the Old Continent heats its homes, powers its factories and manages its energy costs for the next decade and beyond.
It is called the Industrial Accelerator Act (IAA), and it forces a choice the bloc has been reluctant to state plainly: that it cannot, right now, run its energy transition both quickly and on its own terms. It must choose.
The EU narrative “has shifted from climate change to strategic autonomy and security,” Alessandro Torello, Director for Energy and Climate at Brussels-based Rud Pedersen consultancy, told Energy Connects. “And more recently, because of the war in Iran, the security argument is even stronger than the climate argument. What we need to keep an eye on is that third element — affordability. The economics, the cost, must go along with the speed of the transition.”
“Because of the war in Iran, the security argument is even stronger than the climate argument. What we need to keep an eye on is that third element — affordability. The economics, the cost, must go along with the speed of the transition.”
- Alessandro Torello, Director for Energy and Climate at Rud Pedersen consultancy
The Act’s central mechanism is a “Made in EU” requirement: public money — government procurement contracts, renewable energy auction subsidies, support schemes — would increasingly have to be spent on equipment produced in the EU. If the transition is being funded by citizens’ taxes, it should generate jobs and factories at home. But for the technologies that matter most, those factories are not ready. China currently fills the gap, and the EU does not control the terms on which it does so.
The Brussels-based Commission formally tabled the IAA proposal in March. It is now being negotiated between the 27 governments and EU institutions and will not be finalised before late 2027, with transition periods ranging from one to six years depending on the technology.
Decarbonisation, competitiveness, and economic security “are not easy to reconcile,” said Marc Vanheukelen, a former EU Ambassador to the World Trade Organization and EU climate envoy. “You have to make trade-offs.”
The offshore wind test
Nowhere is the challenge sharper than in offshore wind. The EU plans to build roughly 109 gigawatts of new offshore capacity by 2035, but the supply chain to deliver it is dangerously thin. There are only three significant European turbine manufacturers — Vestas, Siemens Gamesa, and GE Vernova. More than 90% of the permanent magnets that go inside those turbines are produced in China, a dependency that runs all the way down to the extraction and processing of the required rare earth material.
When Beijing tightened export licenses on rare earth magnets in 2025, exports fell by three-quarters, and several European carmakers were forced to halt production. The wind sector has so far been less directly exposed — but as offshore construction accelerates, its dependence on those inputs will deepen at exactly the wrong moment.
The gigawatt target looks considerably harder under a strict Made in EU framework. “If the pylons you need for windmills become more expensive, that will probably slow down their deployment,” Vanheukelen told Energy Connects. “All else equal, the Made in Europe provisions of the IAA will slow things down further.”
Permitting backlogs
You cannot build a sovereign manufacturing base for wind turbines if the wind farms themselves keep getting stuck in planning.
Italy, the EU’s third-largest economy and second-biggest manufacturing power, is the starkest illustration.
On 16 June the country’s main business lobby Confindustria called on Prime Minister Giorgia Meloni’s government to declare a renewable energy emergency, warning that some 4,000 permits for renewable projects totaling 130 gigawatts are currently blocked. Without urgent action, manufacturers will leave for countries with lower energy costs.
Permitting backlogs and grid delays are slowing renewable deployment across the bloc. A “Made in EU” requirement is a difficult sell when demand is not growing fast enough to justify the investment it is supposed to unlock.
Trade pressure and escape clause
The Act faces significant external pressure. China has warned that its rules discriminate against foreign producers and violate international trade commitments. “It is almost certain that China will take countermeasures — export restrictions as well as import restrictions,” said Vanheukelen. “And then we will see whether the EU has the stamina to say: we are going to go on regardless.”
The “Made in EU” definition itself is fiercely contested. France wants strict EU-only rules. Germany favors a broader model including countries that signed trade agreements with the Union such as the United Kingdom and Japan. There is also a financial escape valve. If the cost premium of sourcing Made in EU products exceeds 25%, public authorities could revert to third-country suppliers. “There is a clear willingness to privilege European production,” said Vanheukelen, “but not at any cost.”
“There is a clear willingness to privilege European production, but not at any cost.”
- Marc Vanheukelen, former EU Ambassador to the World Trade Organization and EU climate envoy
The role of the 2022 energy crisis
The Act descends from the Clean Industrial Deal proposed by the Commission last year, and before that from the Net Zero Industry Act — Europe’s answer to the American Inflation Reduction Act and the subsidy race it triggered. But the political wind behind it was sharpened by the 2022 energy crisis, when Russia’s invasion of Ukraine exposed how dangerous it is to depend on a single supplier for an essential resource.
That urgency is already fading. The Middle East conflict has temporarily reversed that trend. But Torello cautions against assuming external shocks produce durable policy. “The European Parliament members will vote taking into account what happens the night before if something big happens — in terms of trade, in terms of the EU-China relationship.”
And “if there are big protests from end users saying the products I have to buy are becoming much more expensive, they will go to the Commission and to national governments — not to the European Parliament,” Vanheukelen noted.
When IAA meets AI and…nuclear
IAA and AI share more than a vowel or two. Both represent domains where Europe nurses ambitions while harboring deep external dependencies — with the speed-versus-sovereignty dilemma playing out in almost identical terms.
“If you want data centres in the EU, you need a lot of electricity,” said Torello. “You need to scale that up quickly and massively.”
AI-driven electricity demand will press nuclear back onto the agenda whether Europe is ready or not. Nuclear “used to be a dirty word. Now it has become generally accepted again,” said Vanheukelen. Whether small modular reactors can come on stream before the demand wave hits is another matter. “There might be a timing problem,” he said.
Energy Connects includes information by a variety of sources, such as contributing experts, external journalists and comments from attendees of our events, which may contain personal opinion of others. All opinions expressed are solely the views of the author(s) and do not necessarily reflect the opinions of Energy Connects, dmg events, its parent company DMGT or any affiliates of the same.
