The European Commission will present the Industrial Accelerator Act. What does this mean for Poland?
On Wednesday afternoon, the Vice-President of the European Commission for Industrial Prosperity and Strategy, Stéphane Séjourné, is to present the IAA (Industrial Accelerator Act), an act on industrial acceleration. Previously, the presentation of the document – originally scheduled for the end of January – was postponed several timesdue to the lack of consensus within the EC – the trade directorate, among others, was in opposition.
Presenting a legislative initiative is the first step, the next step will be to present it to the ambassadors of EU countries in Brussels on Friday. Then the EU Council and the European Parliament will prepare their negotiating mandates, and then a common EU text of the document will be developed – the final one.
It is to be a regulation, so it will be directly applicable, but it will also require the development of detailed secondary legislation. Our sources estimate that the regulation could realistically enter into force in 2027.
Europe's reaction to US protectionism and China's expansionism
IAA is the EC's response to the current geopolitical situation. The growing uncertainty in this area and the accompanying increase in protectionism and self-confidence of the USA, as well as the expansionism of China, which spends 4 percent. GDP to subsidize its industry. The latter results in the loss of jobs in Europe, which in turn raises political risks involving the increase in the popularity of extreme forces. Moreover, all this is taking place in the context of the crisis of the World Trade Organization (WTO).
The philosophy that guides the Commission can be summarized as follows: We are open, but not naive, we need to equalize the opportunities for European industry and its position in the face of – above all – Chinese, unequal competition.
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The IAA consists of four pillars
The IAA consists of four pillars. The first one is a proposal called “Made in Europe”, i.e. European preference in public procurement. It applies to public procurement in selected strategic areas, such as energy-intensive sectors (steel, aluminum and cement), the automotive sector (public subsidies are to be available here to encourage consumers to buy European cars) or the clean technology sector (photovoltaics, wind energy, nuclear, heat pumps and batteries).
The EC wants the EU to regain its lost position to China in areas such as photovoltaics and the battery industry, as well as to maintain the current advantages of, for example, European producers of electrolyzers used to produce hydrogen..
The Vice-President of the European Commission for Industrial Prosperity and Strategy, Stéphane Séjourné, was responsible for the preparation of the Industrial Accelerator Act
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Alexandros Michailidis / Shutterstock
As for energy-intensive sectors, the intention is to stimulate investments in their decarbonization.
According to this concept, e.g. 25 percent publicly ordered steel or aluminum for e.g. construction purposes will have to have a low carbon footprint.
However, “Made in Europe” de facto means not only the EU countries and the European Economic Area, but probably also such allied countries as Canada, Japan, South Korea and the USA. If this were confirmed, it would mean that, for example, Polish plans to develop nuclear energy together with the Americans are not threatened by this initiative.
At the same time, some components for such investments will have to be produced in Europe to stimulate the European value chain. However, it will be possible to waive this requirement if a Member State demonstrates that it will significantly delay the investment process or be physically unfeasible.
The example of nuclear fuel – in the case of which the EU wants to become independent from Russian supplies – shows that it is very difficult to build a European value chain. The aim of the IAA is therefore to draw conclusions from this lesson, among others successive building of European potential and independence.
The second pillar of the IAA concerns investment. According to it, foreign investments in strategic sectors worth over EUR 100 million are to be subject to the requirement to share technologies, employ local workers or create joint ventures with European companies.
In this matter, the EU wants to repeat the method used by China in recent decades. The EU greatly needs to acquire know-how in areas such as the above-mentioned photovoltaics or battery industry. At the same time, local labor markets and production are to be supported by promoting local content – the idea is that some of the components used for the investment come from Europe.
China is very dependent on the export of clean technologies, so the current moment is conducive to regaining know-how in this area and ensuring good jobs in Europe.
The legal framework on this issue is necessary for European business to be able to negotiate good terms with the Chinese. For example, in Spain there are factories that are de facto entirely Chinese, including thousands of employees. At the same time, they benefit from the benefits of the EU single market. This is about to change – Chinese investments are supposed to create added value for the European ecosystem.
The next pillar concerns the so-called permitting, i.e. a system for issuing permits for investments in decarbonization, including energy-intensive production.. Such projects are to receive a complete set of permits much faster than today – the maximum time is to be 18 months. Additionally, the permitting process is to be digitized, and data and information once obtained by a given public entity cannot be required again by another institution. In the case of these investments, the “one project – one procedure” principle will apply, which means that the developer will be able to apply for all permits in one procedure.
The last pillar assumes the creation of Industrial Accelertion Areas.. The Commission hopes that this will support the creation of industrial clusters.
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The idea is that Member States could designate economic zones in which industry would have a guaranteed connection to the network, better access to financing and critical raw materials.
Additionally, in the middle of the year, the EC is to present a proposal for a center for critical raw materials, which will constitute a kind of safety cushion for the European industry in the event of a repeat of 2025, when China significantly tightened the rules for exporting these raw materials to the EU.
Experts indicate what Poland should fight for
The president of the Reform Institute, Aleksander Śniegocki, estimates that the Industrial Accelerator Act may become an impulse for the development of industrial production in Europe, and Poland has a chance to be one of the beneficiaries of the wave of reshoring under the slogan “Made in Europe”.
— We have a strong industrial base, competences and experience that allow us not only to attract investments in strategic sectors – from clean technologies, through new mobility, to defense – but also to build and strengthen our position in global supply chains. However, the condition is that the government in Warsaw takes specific actions – argues Śniegocki.
As he points out, companies need not only European regulations, but also a long-term industrial strategy with instruments for financing investments and stabilizing operating costs.
He adds that IAA can also be used to modernize that part of the Polish industry that is ready to switch to clean production technologies. Green public procurement may be a key tool here. However, the condition for the effectiveness of this tool in Poland is national support, including infrastructure development, stable regulations and transformation financing mechanisms.
— For example, cement plants will be more willing to invest in CCS installations if they are sure that in the next few years, low-emission cement will be rewarded in public investments, and the state will coordinate the construction of infrastructure for the transmission and storage of CO₂ – concludes Śniegocki.
The chemical industry is one of the hardest hit by the flood of Chinese competition
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muph / Shutterstock
Kamil Laskowski, an expert from the Instrat Foundation, is much more skeptical. He thinks that The Industrial Accelerator Act “will take into account the interests of French or German companies, not Polish ones”. In his opinion, this is how the low-emission and European requirements in public procurement, which the act is intended to introduce, should be understood.
– Poland does not want to participate in shaping the EU industrial policy, and those who are absent are wrong – comments Laskowski. After all, he adds, “Polish industry is European, but not always clean compared to other EU countries.”
— The requirement for the origin of industrial production should therefore not cover the entire Union, but be limited to the origin of the supplier from the Member State where the tender is held.. The Polish voice on this matter must be heard in Brussels, postulates the Instrat expert.
But also, he emphasizes, “our government must finally start ambitiously supporting clean industrial technologies in the country so that this voice is taken seriously.”
The Polish Chamber of Chemical Industry lists risks and proposes solutions
We also asked the Polish Chamber of Chemical Industry (PIPC) for a preliminary assessment of the direction of the proposed solutions. According to its experts, the proposal to include the chemical, refining and selected materials sectors in the catalog of strategic sectors should be positively assessed.
— At the same time, the status of the strategic sector itself does not mean a real strengthening of competitiveness — admit PIPC experts.
As they indicate, unofficial documents include, among others: requiring a certain percentage of low-emission plastics in construction projects. — Such solutions may in practice become a condition for access to the public procurement market, and not just an investment impulse. The final effect of the IAA will therefore depend on the design of demand mechanisms and the way of defining and measuring the low-emission nature of products. – they emphasize.
As they point out, the methodology for calculating emission intensity is also particularly important. If – as available materials suggest – it included emissions from earlier stages of the value chain and emissions attributed to the national energy mix, then the competitiveness of products could depend to a large extent on systemic conditions, and not solely on the technological efficiency of the installation.
— In the case of countries with a more emission-intensive energy mix, this creates a risk of perpetuating structural competitive imbalance within the single market – warn representatives of the chemical industry.
During the last Competitiveness Council, Poland presented a balanced position on the so-called European preference. It was indicated that the mechanism of European preferences should have a “whole of Europe approach” nature – support convergence and cohesion of the single market, and not penalize a company for different starting points in its energy mix.
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— Preferences cannot perpetuate structural asymmetries, but should create a real equal field of competition throughout the EU – emphasize PIPC experts.
As they argue, the criteria should not be based solely on emission parameters and alternative reference points should be sought.
They suggest an approach in which companies operating in accordance with EU regulations would be naturally rewarded, and non-EU entities – if they wanted to benefit from preferences – would have to demonstrate compliance with equivalent standards, rather than competing solely on lower costs resulting from less demanding regulations.
The Polish Chamber of Chemical Industry positively assesses the announced simplification of permit procedures and the linking of the IAA with EU financial instruments. — Properly designed, they can actually reduce investment risk and accelerate the modernization of industrial installations, he believes.
