Industrial Decarbonization: EU Coalition Pushes for Lead Market Measures in IAA

Coalition Calls for Robust Demand-Side Policies

Back in early February, a group of 40 European and global outfits—helmed by Hydrogen Europe, Zero Emissions Platform (ZEP), E3G and the Clean Air Task Force (CATF)—sent a letter to the European Commission. Their ask? That the upcoming Industrial Accelerator Act (IAA) pack some real punch on the demand side. Because without firm green public procurement rules, unified low-carbon standards and private sector quotas, EU-made green steel and clean fertilizers will keep carrying a wallet-busting premium compared to high-carbon imports.

They say these lead market measures are the secret sauce to de-risking investments in fresh production hubs, hydrogen valleys and carbon capture roll-outs. Clear market signals from Brussels could turbocharge industrial decarbonization and keep Europe on track for those ambitious net-zero targets.

Driving Green Hydrogen Products

They’ve got three game-changers in mind when it comes to low-carbon products:

• Green hydrogen – part of the ongoing hydrogen production revolution, it’s crafted via electrolysis using renewable power and doubles as a versatile energy carrier and industrial feedstock.
• Low-carbon steel – produced using hydrogen-based direct reduction of iron ore, it only gives off water vapor, not CO₂, when melted in an electric arc furnace.
• Clean fertilizers – whipped up by blending green hydrogen with nitrogen from the air via the Haber-Bosch process, kicking grey ammonia (from natural gas) to the curb.

All these hydrogen valley projects dotted around Europe need solid customer commitments to thrive. Without policy safety nets, those regional hubs end up with idle electrolyzers, underused storage and patchy distribution networks—pushing scale-up out of reach and hiking up costs.

Building on the Clean Industrial Deal

The IAA is basically the follow-up to the EU’s Clean Industrial Deal and its Competitiveness Compass, both rolled out in early 2025 to help nudge Europe toward climate neutrality by 2050. They build on the earlier Net Zero Industry Act and take cues from the Draghi Report, which flagged industrial resilience as a must-have after the energy market shocks post-Ukraine crisis.

Once the public consultation wrapped up in July 2025—with pretty much everyone from industry, NGOs and member states weighing in—the Commission pushed the draft from December 2025 back to February 2026. And it’s telling that heavy hitters like France, Germany and Italy are all in on strong demand-side measures, showing there’s wide political backing for policies that drive market pull for clean industrial outputs.

Key Milestones

• July 2025: public consultation on the IAA wraps up.
• February 2026: draft proposal lands.
• Post-publication: the European Parliament and Council dive into debates and amendments.

These steps sketch out a speedy timeline as policymakers and industry players race to nail down the Act’s final form.

Potential Impacts and Risks

The signatories reckon that bold lead market measures could unlock billions in private investment, spark new jobs in steel, fertilizer and hydrogen valleys, and boost Europe’s edge over the US and China. On top of that, bringing supply chains closer to home would shore up economic resilience and inch the EU toward its 55% emissions cut by 2030.

On the flip side, a watered-down IAA might push back the net-zero transition, crank up Europe’s dependence on carbon-heavy imports and leave local firms vulnerable to offshoring. Shoppers could see steeper price tags if green hydrogen and other low-carbon products don’t get enough demand-pull. Plus, patchy policies across member states could gum up the single market and blunt the impact of the Carbon Border Adjustment Mechanism.

Stakeholder Insights

Laurent Donceel, who heads Transport, Industrial Policy and Sustainability at Hydrogen Europe, keeps hammering home that the IAA needs bold, binding rules to back up those fledgling net-zero industries and lock in Europe’s clean-tech lead. Meanwhile, the Zero Emissions Platform (ZEP) cautions that without harmonized standards and clear demand signals, investors will see low-carbon projects—like hydrogen production and CCS—as too big of a gamble.

The Clean Air Task Force (CATF) and its allies echo these warnings: if the demand-side bits fall flat, the Act’s whole objective—supercharging industrial decarbonization—could be in jeopardy. They note that the US and China aren’t standing still—they’ve already waved through hefty support for clean industrial investments. Europe can’t afford to drag its feet and risk losing market share.

On top of that, a chorus of industry players is pushing the Commission to sync the IAA with the EU’s Carbon Border Adjustment Mechanism (CBAM). The idea is simple: craft a cohesive policy package that truly rewards low-carbon products—whether they roll off European assembly lines or cross the border.

What’s Next for the IAA

The European Commission plans to roll out its proposal by late February 2026 as part of its annual Work Programme—putting a spotlight on measures to ramp up private-sector uptake of clean technologies. In the European Parliament, lawmakers have already signaled support for beefed-up demand-side clauses, while Council negotiations are zeroing in on procurement thresholds and eligibility criteria.

Keep an eye on a few deal-breakers: fast-track permitting for big industrial decarbonization projects, clear low-carbon labels on products like steel and cement, and firm procurement quotas for green goods. Those pieces will make or break whether the IAA delivers the market certainty developers and investors crave to go all in.

Looking at the finish line, it really boils down to how binding those demand-side measures are. That will decide if Europe locks in its spot as a global leader in industrial decarbonization or concedes territory to rivals. The next few weeks of haggling are make-or-break for carving out a rulebook that’s ambitious yet doable—setting the stage for a resilient, low-carbon industrial future.