The European Commission’s long-awaited Industrial Accelerators Act (IAA) confirmed a shift in the EU’s approach to steel public procurement rules, prioritizing low-carbon production criteria over strict “Made in EU” origin requirements. The IAA did not provide any precise labelling for low-carbon steel as widely expected, Fastmarkets learned on Wednesday March 4.
The IAA, published on Wednesday, introduced demand-side measures designed to strengthen strategic industrial value chains while accelerating decarbonization across energy-intensive sectors such as steel, cement and aluminium.
Softer “Made in EU” rules for steel confirmed
The final text generally confirms an earlier leaked draft seen by Fastmarkets that suggested public procurement would require only low-carbon steel, removing the strict EU-origin requirement.
Public procurement procedures would require that at least 25% of the steel used in buildings, infrastructure and transport projects be low carbon. A parallel 25% threshold would apply to aluminium.
But the wording differed for the two materials. For steel, the text specifies that “at least 25% of the total volume of steel used shall be low carbon.” For aluminium, it states that “at least 25% of the total volume of aluminium used shall be low carbon and of Union origin.” This confirms a rules-of-origin requirement for aluminium that is not present for steel.
This means the IAA effectively removes a potential double requirement that would have obliged public projects to use steel that was both low carbon and produced within the EU.
The Commission explained that strict origin requirements for steel procurement were not considered necessary in the final proposal, partly because other policy tools are already addressing trade distortions in the steel market. These include existing and proposed steel safeguard measures as well as the EU Carbon Border Adjustment Mechanism (CBAM), Fastmarkets understands.
The new trade regime set to replace existing safeguard measures for steel imports as of July 1 suggests nearly a 50% quota reduction for steel imports, Fastmarkets reported.
Companies from non-EU countries covered by the EU’s international procurement commitments, such as the World Trade Organization (WTO) Government Procurement Agreement or bilateral trade agreements, may participate in EU procurement markets under existing rules. At the same time, the Commission retains the possibility to restrict access where necessary to protect the EU’s economic security or supply-chain resilience, Fastmarkets understands.
No clear low-carbon steel labelling
The IAA did not provide any clear labelling for low-carbon or green steel, despite expectations in earlier drafts.
Low-carbon steel will instead be defined through emissions accounting frameworks aligned with existing EU climate policies, including the EU Emissions Trading System and the CBAM.
The reference to a sliding scale for emissions performance has also been narrowed in the final text. Earlier drafts seen by Fastmarkets suggested that the mechanism would apply across all hot-rolled steel products, including both flat and long steel. The published proposal limits its scope to “product categories that typically require primary steel production [blast furnace-basic oxygen furnace route, BF-BOF], as necessary.”
This wording indicates that the system is designed to account for differences in scrap availability between production routes. Steel grades that rely more heavily on primary BF-BOF steelmaking — where scrap share in the raw materials mix is technically limited — may therefore receive adjusted emissions thresholds compared with electric-arc furnace (EAF) steelmaking.
In Europe, around 80% of carbon steel long products are produced via the EAF route, while more than 90% of flat products are produced using the BF-BOF route, industry sources estimate.
This suggests that the adjustment mechanism will apply mainly to flat steel products, where primary steelmaking remains dominant and scrap usage is more constrained.
Potential impact
Industry participants said the regulation could still stimulate demand for low-carbon steel through public infrastructure projects, although they expressed disappointment over the lack of clear labelling for low-carbon steel.
A lack of unified definitions has been considered one of the barriers to green-steel uptake, making the label an important step toward market clarity, sources said.
Steelmakers across Europe are investing billions of euros in decarbonization technologies, including EAFs and hydrogen-based direct-reduced iron (DRI) modules, but have repeatedly warned that demand signals for green steel remain insufficient. Several projects have been revised or scrapped, Fastmarkets reported.
Public procurement is therefore viewed as one of the most effective tools available to stimulate green-steel uptake.
“If authorities do not push for green steel use through public procurement, then green steel will remain a niche market,” one European mill source said.Fastmarkets has two different assessments for low carbon steel premiums, based on production route and emissions thresholds
Fastmarkets’ methodology defines European green flat steel as “steel produced with Scope 1, 2 or 3 emissions at a maximum of 0.8 tonnes of CO2 per tonne of steel.” For this assessment, scrap-based production and steel made using hydrogen-based DRI are considered.
Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe was unchanged at €100-150 ($118-177) per tonne on Thursday February 26.
Fastmarkets defines reduced carbon flat steel in Europe as steel produced with scope 1,2,3 emissions of 1.4-1.80 tonnes of CO2 per tonne of steel. This assessment captures blast-furnace produced steel with reduced CO2 emissions.
Fastmarkets’ assessment of the flat steel reduced carbon emissions differential, exw Northern Europe was €0-50 per tonne on February 26, also stable week on week.
