Introduction

The European Commission tabled the Industrial Accelerator Act on March 4^th, 2026. Its key political focus is industrial and climate policy, rather than security driven. However, given that its central aim is to ensure that certain key – strategic – manufacturing industries remain and further develop in the EU, it equally has important and potentially positive security of supply consequences.

A summary of the proposed measures

The Industrial Accelerator Act (‘IAA’) is possibly one of the most complex pieces of legislation put forward by the Commission in recent years. In addition to stand-alone provisions, it would amend a number of other legal acts, most importantly the Net-Zero Industry Act and the Foreign Direct Investment Regulation.

Whilst a full picture of the IAA is beyond the scope of this contribution, it may be summarised as follows:

Low-carbon lead markets for strategic key industrial materials.

Whilst the EU’s decarbonisation policies have led to placing a carbon price on industry, and especially the energy intensive sector, it has not succeeded in developing a sizeable low-carbon manufacturing sector in this area because, notably, there is very little demand for (relatively expensive) low-carbon industrial inputs.

The first element of the IAA is, therefore, to create ‘lead markets’ for some key industrial inputs – notably steel, cement and aluminium. The Commission proposes that, where Member States undertake a public procurement procedure or public support scheme (e.g. for the construction/renovation of buildings) for any product whose performance depends mainly on these products a certain percentage of steel (25%), cement (5%), and aluminium (25%) must be low carbon (as defined under existing and forthcoming delegated acts).  Derogations may be applied where this would result in increased costs (25-30%).

EU origin requirements for strategic key industrial materials

EU energy intensive industry has been under considerable competitive pressure for some time – steel production has declined by almost 20% over the last decade, aluminium by around 40%, and chemicals by around 15%. A significant element of this is due to the relatively high energy costs in the EU, although the decarbonisation-related costs, notwithstanding the CBAM, surely play a part.

At the same time, it is increasingly recognised that the EU needs to retain capacity in these industries, for a variety of industrial, social and strategic reasons.

The obvious solution to this would be to set tighter import quotas or tariffs, like the US. But such measures would be clearly WTO incompatible, and the EU has always striven to respect its requirements.

The IAA seeks to square this circle by requiring that at least 5% of all cement and 25% of all aluminium that is the subject of a procurement procedure or support scheme where the “any product whose performance depends mainly on the material concerned” test is met, is of ‘Union Origin’.

The term ‘Union Origin’ flows through the IAA and varies slightly depending on the subject matter (procurement procedure, subsidy scheme etc…) and product in question. However, generally speaking Union Origin encompasses (i) products made in the EU and (ii) products made in countries that either have a Free Trade Agreement (‘FTA’) with the EU or have ratified the UN Agreement on Public Procurement (‘APP’) and providing that for such countries the Commission has not, by delegated act, placed them on a ‘black’ list of parties that fail, in reality, to give the EU reciprocal access to procurement procedures/public subsidy schemes.

The list of countries that have signed an FTA or have ratified the APP is in fact very wide, and in reality includes practically all the EU’s major trading partners with the notable exception of China.

Extending the Net-Zero Industry Act to give greater protection to EU origin ‘Net-Zero’ technologies

When the EU launched its initial push to renewable energy more than 20 years ago, it was based on sustainability and industrial grounds – aimed at creating jobs in the EU in emerging green technology sectors. This has remained an argument for continuing the Net-Zero push, notably in the Green Deal.

Whilst this has to a certain extent been realised, notably in the wind industry, generally speaking, it has created jobs in China and not in the EU. Today, we see this trend accelerating as China takes increasing shares in wind, electrolysers, and dominates the batteries sector.

The IAA takes the starting point that the EU needs to retain these industries.

The NZIA, adopted in 2024, provides a first response to this challenge. In the event that one single country has more than a specified high percentage (generally ~50% plus) of the market for a wide list of key strategic technologies and their key components, Member States must give a disadvantage to products from these countries in public procurement and support schemes.

The IAA proposes to expand this and either exclude (procurement, support to manufacturing) or require a disadvantage to (support schemes concerning batteries, PV, H2, wind), products coming from non-EU Origin countries. The proposal covers the following sectors – batteries, PV, heat pumps, wind, and nuclear.

Again, there is the possibility for Member States not to apply these requirements when it would result in disproportionate additional costs (+20-25%).

Given that basically only China is in principle not covered by the definition of ‘EU Origin’, if adopted, the IAA would exclude, to a greater or lesser extent, Chinese manufactured products in these key technological sectors from publicly supported markets.

However, a key question to be raised here is what will be the real effect of the provision? If Chinese goods are nonetheless 20-25% cheaper than EU origin ones, they will still gain market share in the EU – the only change will be more expensive products in the EU.

The Foreign Direct Investments Regulation

The Foreign Direct Investments Regulation (‘FDI’) was adopted in 2019 in response to rising foreign acquisitions in critical infrastructure and technologies. It essentially (I) creates an EU cooperation and information‑sharing mechanism on FDI , (II) sets minimum standards for national FDI screening systems, and (III) enables the European Commission and other Member States to comment on transactions screened nationally.

The IAA proposes to amend this, notably to prevent Chinese firms from getting around the proposed NZIA-related proposals referred to above for imports, by setting up subsidiaries in the EU. Furthermore, it seeks to ‘turn the tables’ on China, which in the past required EU companies investing in China in high-tech sectors to do so via JVs and to commit to technology transfer.

Where a non-EU company with more than 40% of global manufacturing capacity in defined sectors – batteries, EVs, PV and critical raw materials (the list may be extended by delegated act) – wishes to invest in the EU (via acquisition or greenfield investment), with a value above €100 million, Member States must (I) require that the investor commit to employing at least 50% of EU workers across all categories, and (II) impose at least 3 of the following 5 conditions for the investment:

• Control limitation: not exceeding 49% of share capital, voting rights or equivalent ownership interests in Union targets or assets.
• Investment via a joint venture with EU entities – holding no more than 49% shares and ensuring effective EU participation in management, technology transfer and capacity‑building.
• IP and know‑how licensing to EU target; pre‑existing EU IP remains exclusively EU‑owned; newly developed IP is jointly owned.
•  ≥1% of EU revenues annually reinvested in R&D in the Union, applied pro rata to control.
•  Published strategy prioritising EU sourcing, with a 30% minimum EU input target for products sold in the Union.

Specific provisions apply to vehicles – where Member State provide public support to vehicles, notably for corporate cars and vans, ‘made in the European Union’ requirements are proposed.

Comments and observations

Getting the balance right between a huge range of conflicting objectives when proposing such a change in direction for the EU is really difficult. Balancing the need to protect EU industry, keeping the costs of decarbonising our economy as low as possible, developing new high-tech EU industry and preventing it being destroyed in infancy by imports, complying with the WTO whilst being ambitious in a world where others simply ignore it, is an impossible circle to square easily and simply.

This explains quite how complex and difficult to unravel this proposal is. Nonetheless given the reaction of China to the proposal, there are strong grounds to believe that it will have an effect.

As much as anything, the proposal would create an EU framework for the future regulation of trade and competition in strategic sectors – it is proposed that the sectors and requirements set out in the proposal would be developed over time by delegated act.

As such, the proposal has much to recommend it, whilst one must inevitably regret that it is necessary.

Ultimately, whether the version that is eventually adopted succeeds in catalysing a renaissance in EU manufacturing industry remains to be seen (the IAA proposes a headline target that manufacturing should represent a 20%+ share of EU GDP by 2035 (correcting a downwards trend and compared to around 14% today)). It is plausible that Chinese companies accept the +/-25% competitive disadvantage in tenders and support policies as the ‘cost of doing business’ in the EU and nonetheless continue to dominate these growth sectors, undermining EU industrial policy. At this point, anti-dumping law would need to be a clear focus for the EU.

But irrespective of these concerns, one thing is clear; doing nothing is not a reasonable option for the EU, in terms of societal development, industry and security, and the approach proposed by the Commission may well be the least-worst option available to the EU at this moment in time.

Specifically in terms of security, if the Act succeeds in its underlying objectives – growing EU industry in key strategic sectors – it will certainly have a positive impact in this respect. Again, whilst many uncertainties remain quite how effective this will be, the proposal certainly represents a balanced and reasonable attempt to positively address this challenge.

When war with Iran erupted on 28 February 2026, attention initially focused on oil markets and geopolitical escalation. Beneath the headlines, however, a quieter yet equally critical disruption began to unfold: a shock to global gas supply chains. For Europe, already in the midst of reshaping its energy system, the war has exposed a new layer of vulnerability.

The European Union (EU) has made significant efforts to reduce its dependence on Russian gas, replacing it with diversified imports, particularly liquefied natural gas (LNG). This strategy has improved resilience. Yet the war with Iran has revealed a new reality: Europe’s gas security is now closely tied to global maritime routes and geopolitical stability far beyond its borders.

The current crisis is global. The closure of the Strait of Hormuz, a narrow waterway through which around 20% of global LNG exports pass, has had immediate consequences for energy markets. Qatar, one of the world’s largest LNG exporters, depends on this route for its shipments. During the winter of 2025–2026, approximately 7% of Europe’s LNG imports came from Qatar. While this may appear modest, even small disruptions can have outsized effects in a tight market. The situation worsened when Iranian attacks damaged gas infrastructure. Qatar reportedly lost up to 17% of its LNG export capacity, with recovery likely to take years. What might have been a short-term disruption has therefore become a longer-term structural constraint.

Since 2022, the EU has made notable progress in strengthening its gas supply system. It has diversified supply sources, expanded LNG import infrastructure, and reduced gas demand through efficiency measures. These efforts have paid off. Despite the current crisis, there is no immediate risk of gas shortages. The European Commission has confirmed that, while supplies are tight, overall security of supply remains intact.

This resilience, however, comes with a trade-off. Europe has become more dependent on global markets. LNG is flexible and can be sourced from multiple regions, but it is also subject to intense international competition and vulnerable to transport disruptions. As the Agency for the Cooperation of Energy Regulators (ACER) notes, this shift has increased exposure to global price volatility and logistical risks.

The most immediate impact of the war has been on prices. European gas prices surged sharply after the conflict began, with benchmark TTF prices rising by around 70% within days.

Asia, which relies heavily on LNG imports, has been even more affected by disruptions to Middle Eastern supply. As a result, Asian buyers have been willing to pay a premium to secure cargoes, creating an unprecedented price gap. LNG prices in Asia have reached record levels above European benchmarks.

The crisis struck just as Europe emerged from winter with low gas storage levels. By the end of March 2026, storage facilities in several EU countries were below 30% capacity. Storage acts as a buffer against supply shocks; when levels are low, the system becomes more fragile. Europe now faces the difficult task of refilling storage ahead of the next winter season in a highly competitive global market. Meeting storage targets may require significantly higher LNG imports, potentially at much higher prices.

The impact of the war extends far beyond energy markets. Rising gas prices feed directly into inflation. The European Commission estimates that the EU has already spent an additional €24 billion on fossil fuel imports since the start of the conflict. Industries that rely heavily on gas, such as chemicals, manufacturing, and fertilisers, are particularly vulnerable.

Given these pressures, why has Europe not experienced a full-blown supply crisis? The answer lies in preparation and the structural changes implemented in recent years.

First, the EU has diversified its supply sources. The United States has become the largest LNG supplier, accounting for around 30% of total gas imports, reducing dependence on any single region.

Second, Europe has expanded its LNG infrastructure. New terminals and increased capacity have enabled higher import volumes, ensuring that gas can be delivered where it is needed.

Third, demand reduction measures have played a crucial role. Since 2022, the EU has significantly reduced gas consumption, easing pressure on the system.

Finally, market integration allows gas to flow across borders within the EU, helping to balance supply and demand between Member States.

Together, these factors have created a system capable of withstanding shocks. Nevertheless, the war with Iran is a stark reminder of Europe’s ongoing vulnerability. The EU still imports the majority of its energy, around 57% of total consumption. As long as this remains the case, external shocks will continue to pose risks.

The current crisis has reinforced the urgency of accelerating the energy transition. Moving away from fossil fuels is not only a matter of climate policy, but also of security.

The European Commission’s AccelerateEU strategy highlights several key priorities: expanding renewable energy investment, accelerating electrification across sectors, and increasing energy efficiency. These measures aim to build a more resilient energy system that is less exposed to global market volatility. The challenge for policymakers is to strike the right balance, ensuring that the system remains both flexible and secure.

The war with Iran is unlikely to be resolved quickly. Even if the Strait of Hormuz fully reopens, damage to infrastructure and disruptions to supply chains will take time to repair. Markets are already pricing in a prolonged period of tight supply.

For Europe, this means continued uncertainty. The coming months will be critical. The ability to refill storage, secure LNG supplies, and manage demand will determine how effectively the EU can navigate the next winter.

The war with Iran is reshaping Europe’s understanding of energy security. It is no longer sufficient to diversify suppliers or build infrastructure alone. Energy security is now a global issue, shaped by geopolitical events thousands of kilometres away. Europe has shown that it can adapt, having weathered multiple crises and built a more resilient system. Yet as long as the EU remains dependent on imported fossil fuels, it will continue to be exposed to external shocks.

The path forward is clear, even if challenging: reduce dependence, accelerate the transition, and build an energy system that is not only resilient, but truly secure.

Security of energy supply has traditionally been understood in terms of availability: ensuring that sufficient volumes are physically present in the system. Price, in this context, was largely a reflection of scarcity. Today, however, the issue is not only whether energy is available, but under which conditions it can be accessed.

We can understand this shift in recent developments. Tensions affecting key transit routes, particularly in the Middle East, have raised concerns about energy security. Yet these concerns emerge in a context where no immediate major physical gas supply shock is observed. Volumes remain available, demand has not declined (OIES, 2026), but the system is not necessarily stable. And this reflects a more profound structural change.

As we have argued in recent joint work, since now price shocks in Europe’s gas system are not necessarily proportional to physical disruptions (Sesini and Kneebone, 2026), Europe can face a gas crisis without a gas shortage. The reason is that vulnerability no longer sits primarily in physical supply volumes, but in the mechanisms that connect supply to demand.

As a result of policy responses to the 2022 crisis, today Europe is more deeply embedded in global gas markets, where supply is more flexible but more contested, and where access to the commodity is increasingly mediated through price, altering the nature of exposure and transforming risk from volumes to prices. In this context, volumes still matter, but they are no longer sufficient on their own: disruptions do not need to remove physical supply to generate stress. In fact, they operate through expectations, logistics and competition for marginal volumes.

This mechanism is not specific to gas but reflects dynamics across globally traded energy markets (e.g., oil markets). A significant share of flows transits through a limited number of maritime chokepoints, one of which is the Strait of Hormuz, alone accounting for about one-fifth of global oil trade (EIA, 2023). Disruptions affecting these routes do not necessarily eliminate resources, but they affect the conditions under which those resources move. Delays, rerouting or higher transport costs can quickly translate into price volatility. Price, in this context, becomes the primary transmission channel of geopolitical risk.

This has important implications for how security of supply is understood. A system may be diversified across suppliers, yet remain highly exposed to global price formation. Replacing pipeline dependence with maritime dependence shifts the location of vulnerability rather than removing it. At that point, security of supply, therefore, becomes less about the availability of volumes per se, and more about the conditions under which those volumes can be secured and priced over time.

This shift complicates policy choices. During the 2022–2023 crisis, large-scale interventions to shield consumers from high prices were justified by the magnitude of the shock. Today, in globally integrated systems, price signals are not a side effect but a coordinating mechanism. High prices attract supply; suppressed prices may divert it elsewhere.

Yet, not all forms of dependence are equivalent. When risk is mediated through prices, the structure of supply determines the degree of exposure to global volatility. Systems with a higher share of domestically controlled energy sources are structurally less exposed to external price shocks. This is not because they are insulated from global markets, but because price shocks are less likely to translate into payments to external suppliers. This distinction is not captured by simple price comparisons, but becomes critical in systems where vulnerability operates through volatility rather than physical scarcity.

Paying for imported fuels implies a continuous external financial outflow, while investing in domestic energy systems retains value within the economy. This has implications not only for how security of supply is managed, but also for how it is valued. If exposure materialises through price volatility and access under uncertainty, then security cannot be assessed solely through cost metrics such as €/MWh. To this end, systems that reduce exposure to external shocks, through diversification, storage, or domestic energy production, generate a form of value that is not fully captured in market prices. They reduce volatility, enhance system stability and retain economic activity within the system.

In that sense, security of supply should not be factored in merely as a constraint on efficiency, but as a form of system value, a social dividend, that accrues over time by reducing exposure to uncertainty and the associated cost of instability. If security was once defined by the availability of volumes and now increasingly determined by the conditions under which those volumes can be accessed and stabilised over time, it is likely to evolve further, towards a broader system dimension, where the ability to manage exposure to price volatility and uncertainty becomes a defining feature of energy system design.