Tag Archives: net zero

From Policy to Production: The EU’s Industrial Accelerator Act

The journey was long and the debates fierce. While the European Commission had initially scheduled its official presentation for November 25, 2025, it was only on March 4, 2026, that the Industrial Accelerator Act (IAA) was finally unveiled.

Justified by the imperative of economic security, this initiative marks a major turning point in the Union’s economic strategy. It aims to strengthen supply chain resilience while safeguarding the continent’s industrial capacity.

First mentioned in the Clean Industrial Deal under the name Industrial Decarbonisation Accelerator Act, the text was intended to stimulate demand for clean European products by introducing sustainability, resilience, and European preference criteria into both public and private tenders.

Although the final regulation has dropped the “decarbonisation” label, it retains its core essence. The Commission has set an ambitious sovereignty target: to increase the share of manufacturing industry to 20% of European GDP by 2035.

However, this text is the result of a laborious compromise. In the face of reluctance from certain Member States and internal tensions between several Directorates-General, some flagship measures had to be substantially reworked before reaching this final version.

Streamlining Industrial Procedures

Several measures within the IAA aim to facilitate and strengthen the deployment of industrial manufacturing capacities.

Facilitating Permit-Granting Procedures

This applies specifically to permit-granting procedures for industrial manufacturing and decarbonisation projects. Member States are required to establish a single application procedure, grouping all necessary permits within one application, accessible through a single access point.

A designated competent authority, responsible for coordinating the process, has 45 days to either acknowledge the application as complete or request any missing information. At the same time, all energy-intensive industry decarbonisation projects benefit from preferential treatment: they must be able to rely on the accelerated procedures provided for by the NZIA (Net-Zero Industry Act), as well as the environmental assessment streamlining measures proposed by the Commission in February.

Creation of Industrial Manufacturing Acceleration Areas

The regulation also mandates each Member State to designate industrial manufacturing acceleration areas on its territory.

Designed as true clusters of “industrial symbiosis,” these areas must provide a reinforced competitiveness framework. This includes the streamlining of procedures and the pooling of infrastructure, as well as access to financing, support for research and innovation, and the provision of a skilled workforce.

These areas are intended to prioritize manufacturing sites for sectors identified as strategic, namely:

Certain energy-intensive industries: manufacture of paper, coke and refined petroleum products, chemicals, rubber and plastic products, other non-metallic minerals, and basic metals;
The automotive industry: manufacture of motor vehicles, trailers, and semi-trailers;
Net-zero technologies identified in the NZIA (notably batteries, solar PV, and hydrogen).

Developing Demand for Clean European Products

One of the primary objectives of the IAA is to foster the emergence of lead markets for certain products in strategic sectors by imposing European origin requirements, low-carbon intensity criteria, or a combination of both.

An Outward-Looking European Preference

Arguably the most sensitive point of the text, the Commission’s proposal outlines, for the first time, the contours of a European preference (outside the field of defense). The IAA thus conditions access to certain public procurement contracts or public support schemes on compliance with a European origin criterion for the products supplied.

Regarding industrial production, only a few specific products are targeted:

Concrete and mortar, as well as any product whose performance depends mainly on these materials (including clinker and cement), intended for buildings and infrastructure. The required share of European origin is set at 5%.
Aluminium, and products whose performance depends mainly on it, used in buildings, infrastructure, and the automotive sector. The European origin threshold here is 25%.

For the automotive sector, the origin criterion applies only to pure electric vehicles (PEV), off-vehicle charging hybrid electric vehicles (OVC-HEV), and fuel-cell electric vehicles (FCEV) that are purchased, leased, rented or hire-purchased.

To satisfy this criterion, several conditions are set, such as final assembly within the Union, the integration of at least three main specific battery components originating in the EU, or a ratio where the total ex-works price of vehicle components (excluding the battery) originating in the Union represents at least 70% of the total ex-works price of all components. Specific conditions are also provided for small electric vehicles in the new M1E category, introduced during the automotive package of December 2025.

However, far from Chinese-style protectionism or the “Buy American Act,” this European version represents a middle ground between the need for protection expressed by part of European industry and the commitment of certain Member States to international trade.

This balance relies on several limitations, whether in the scope of public procurement and public support schemes affected by this European preference (see Articles 11 and 12), or in the actual location of the production country.

Indeed, Articles 8 and 9 specify that content originating from partner third countries (signatories of a free trade or customs union agreement, or parties to the WTO Agreement on Government Procurement) is deemed to be of Union origin.

Introduction of Low-Carbon Content Requirements

The IAA also imposes carbon emission requirements for certain products supplied in the context of public procurement or projects benefiting from public support. These requirements target concrete, mortar, and aluminium under the same conditions as the European origin criterion, but also include steel. Indeed, the proposed regulation stipulates that at least 25% of steel (as well as any product whose performance depends mainly on this material) intended for buildings, infrastructure, and motor vehicles, must meet low-carbon criteria.

The framework for assessing this low-carbon character varies depending on the nature of the products:

For construction products: it will be determined based on harmonised technical specifications or European Technical Assessments (ETA) adopted under the Construction Products Regulation (CPR).
For other products: the assessment will be based on the ecodesign requirements set by the ESPR (Ecodesign for Sustainable Products Regulation).

Enhanced Screening of Foreign Direct Investment

While remaining open to Foreign Direct Investment (FDI), the EU is establishing – via the IAA – a stricter framework for large-scale projects in strategic sectors (batteries, electric vehicles, photovoltaics, and critical raw materials).

From now on, any investment exceeding €100 million in a sector where a single third country controls more than 40% of global manufacturing capacity is subject to explicit approval. This decision falls either under a competent national authority, which each Member State is required to designate, or directly under the European Commission.

To be granted the authorization, the investment must satisfy at least four of the six compliance criteria established by the regulation. These criteria concern:

The degree of control exercised by the foreign investor over the European entity;
Guarantees for the protection of intellectual property;
The share of research and development expenditure localized in Europe;
The proportion of the workforce employed within the Union;
The level of sourcing of inputs of European origin.

If you would like to discuss the impact of the EU’s Industrial Accelerator Act in more detail, please do get in touch with the GK team or our European partner, Euros / Agency.

Oil’s not well for Net Zero: what do the new fossil fuel licenses mean for emissions targets?

GK interns Olivia Warr and Yusaf Hassan take a deep dive into what the new North Sea oil and gas exploration licenses mean for the UK’s net zero targets.

The Prime Minister’s announcement that the Government would grant 100 new North Sea oil and gas licenses was met with dismay by both climate activists and the Opposition, with Shadow Climate Change Secretary, Ed Miliband, arguing that Sunak’s “weak and confused policy… will do nothing for our energy security and drive a coach and horses through our climate commitments”.

The Prime Minister positioned the move as a refusal to bow down to dictators threatening the UK’s energy security. However, the announcement comes amid a broader shift under Sunak’s watch to less enthusiasm for costly green policies following the Conservative Party’s narrow win in the Uxbridge and South Ruislip by-election – largely attributed to the unpopularity of Labour Mayor Sadiq Khan’s ULEZ expansion. Having already spent months criticising Labour over funding links to activist group Just Stop Oil, No.10 sees the cost of meeting certain green commitments as a clear attack line for the upcoming election season.

The Conservative Party’s messaging will have to be precise, however, to not risk losing control of the narrative. Net zero has huge support among the electorate (a recent YouGov poll had support for the 2050 target at over 70%) and among a large portion of backbench Conservative MPs. If the Prime Minister is seen to be reneging on the Government’s emission-cutting commitments, it could become disastrous for his electoral prospects. What he hopes to exploit, though, is the unease about personal lifestyle or financial implications of certain policy initiatives – as evidenced by the strength of opposition to the ULEZ policy expansion. Sunak hopes to portray himself as the common-sense candidate during a cost-of-living crisis; not taking radical action to hurt people’s bank accounts and showing Keir Starmer to be in the pocket of climate radicals who will hurt the economy for their own agenda.

He will be nervously gauging the reaction of his party. Already, the influential Conservative MP, Chris Skidmore, who recently completed an independent review of the Government’s net zero policies, has slammed the plan, stating it is “on the wrong side of the future economy”. Tory MPs at risk from Liberal Democrat challengers at the next General Election may also be concerned about the opinions of their environmentally conscious constituents. Young people, too, are unlikely to be enamoured by Sunak’s pivot as mainland Europe feels the heat of the climate crisis.

The extent to which Labour can attack the Government’s policy is limited, however, after the Party confirmed they would not revoke any of the licenses issued. This has been seen by some as implicit approval of the plan and perhaps an indication that they quietly also see it as a necessary evil to ensure energy security.

But to what extent will the policy announcement achieve its energy security objectives?

The claim made by the Government is that sourcing oil and gas closer to home would reduce emission production by three to four times whilst lowering import costs. Sunak argues that, given the UK is still forecast to be reliant on fossil fuels for one quarter of its energy needs by 2050, the new licenses would not jeopardise the net zero target. Meanwhile, investing in a Carbon Capture Cluster (CCS) through the Acorn Project in Scotland provides the infrastructure to decarbonise North Sea activity, mitigating those emissions that will result from the new drilling sites, while also generating jobs and investment in Northern Scotland.

However, Sunak’s proposal raises some questions. In terms of tackling the cost-of-living crisis and cementing energy security, there’s no guarantee that the newly extracted oil and gas will be cycled directly into the UK market to provide any benefits. The Climate Change Committee in their 2023 report to Parliament suggested there would be minimal impact on domestic prices from this investment. The North Sea Transition Authority (NSTA) also explained that it would take a minimum of five years before sites could become operational – reducing the short-term benefits of the scheme. Furthermore, while the £1 billion dedicated to the CCS is a mitigatory step in reducing emissions, Sunak has refused to be drawn on whether the development of the infrastructure will be sufficient to match the increased emissions, nor has he committed the extraction licences to be conditional on the emissions’ removal.

It remains to be seen whether the current Government – or indeed any future governments – will be able to make significant progress towards the legally-binding net zero target with the lighter touch, less intrusive approach that Sunak is leaning towards in his bid to keep voters onside, or whether the Prime Minister will be forced to take more dramatic, potentially unpopular, action to ensure the goal is met. The UK’s reputation as a global leader in setting climate change goals is strong, following on from a successful COP summit in Glasgow two years ago, but its ability to deliver on them hangs in the balance.

GK Insight: What does the Liz Truss premiership mean for the UK’s net zero agenda?

GK consultants Sam Tankard and Milo Boyd assess the potential ramifications of a Liz Truss government for the UK’s net zero commitments, and what conclusions can be drawn from the ministers appointed at the Department for Business, Energy and Industrial Strategy. Take a look at the analysis here: What does the Liz Truss premiership mean for the UK’s net zero agenda?

Demystifying ‘net zero’: How to invest in the future

‘Net zero’ has become very topical and an increasingly mainstream issue. As one of the Government’s flagship policies, the Net Zero Strategy and related initiatives, such as the Heat and Buildings Strategy, may encourage many businesses and investors to look more closely at Government activity in decarbonisation and energy efficiency.

Last month, GK Strategy hosted a roundtable discussion with keynote speaker, Dr Alan Whitehead MP, Shadow Minister for Energy and the Green New Deal. As ESG specialists, GK pride ourselves on working with investors and organisations that value and demonstrate the importance of sustainability policies.

We strongly believe that the investment community has a vital role to play in the net zero agenda.

GK co-founder and executive chairman, Robin Grainger, asked Dr Whitehead and other participants some important questions about what ‘net zero’ looks like practically, how the investment community can help the Government achieve its targets, and what is the new Government’s take on the net zero agenda.

Beginning the discussion, it was clear that net zero policies are here to stay. The shadow minister expressed his desire for a greater adoption of net zero as a ‘state of being’ rather than simply being an aspiration. He said that it should become a constant in the economy, and ultimately the basis upon which the entirety of the economy operates.

Dr Whitehead outlined where he thought the UK was doing well and where it was lagging behind. He said that one area which required much more attention was that of land use, and land use change, to ensure that food systems were resilient to shocks.

He went on to say that the UK was generally performing quite well on low carbon energy, partly due to some very ambitious plans from the Government. He also noted that the UK was beginning to develop a more effective carbon capture and storage economy, which would be particularly important for high-emitting industries in the future and could eventually be used to support hydrogen production.

The Government came in for criticism on its attitude towards infrastructure, arguing that it was not realistic enough, and did not account for the need to have necessary infrastructure in place well before the net zero goal of 2050.

The Labour frontbencher stated he believed that the UK is also ‘woefully deficient’ with regard to its grid system as a result of the historic focus on fossil fuel-orientated energy, which has meant that the increasingly necessary transmission of clean, renewable power from the British coastlines to inland regions is made more difficult.

We also heard Dr Whitehead explain Labour’s proposals for net zero, which were firmed up at the recent Labour Party Conference in Liverpool last month. Labour would support the current landscape by:

creating a £180 billion green investment fund that would drive development of infrastructure, lead the electric vehicle (EV) revolution, and help Britain lead the world in hydrogen;
giving more of a focus to the demand side of energy, seeking to use energy in a smarter way through a big retrofit programme;
joining up more of the thinking currently emerging from Government, simultaneously aiming to ensure that projects could be run at the local level.

Comparing this to the new Conservative Government under Prime Minister Liz Truss, there seems to be a greater Labour commitment to the net zero agenda. These measures targeting investment, especially in the demand side of energy, and associated job creation, seem like a good start.

With the Truss Government’s approval rating, and that of the whole Conservative Party, declining sharply in recent weeks, it would be useful for investors and businesses to begin, or continue, their dialogues with influential Labour policymakers.

The discussion last month cemented the fact that net zero policymaking is here to stay, even under a pro-fracking Truss Government, and certainly under a Labour administration. Private equity firms and other investors should take government policies seriously and consider investing in the ‘green transition’. Dr Whitehead advised against investing in the ‘brown economy’ and into areas that are likely become stranded assets.

He concluded that it will hardly be a ‘feast or famine’ situation for the investment community as the UK continues to transition to a fully green economy. In his view, there would undoubtedly be many opportunities that will arise with the advent of a green economy, with new markets opening up and new technologies to support.

GK provide expert advice for investors and business leaders looking to take advantage of the green economy; to learn more about it and the transition to net zero, please contact milo@gkstrategy.com.

About GK Strategy

GK Strategy is a political consultancy based in the heart of Westminster. We support private equity in their due diligence process by advising on deals and producing political due diligence reports, identifying any risks to an asset in the deal process.

GK Strategy also provide strategic communications support to companies once the deal process is complete.