A leaked draft of the EU’s Industrial Accelerator Act (IIA), seen by Fastmarkets on Thursday January 22, sets out plans to accelerate decarbonization across strategic sectors, including steel, as part of a broader push to strengthen EU industrial competitiveness.
The IIA, part of the Commission’s Clean Industrial Deal, was originally due for publication in December, before being pushed to January 29 2026 and then to February 25, sources said.
The proposed regulation targets energy‑intensive industries, with steel singled out to be a priority due to declining production, rising imports, global overcapacity and a widening cost gap with competing regions since 2021.
More than half of announced decarbonization projects across energy‑intensive sectors, including steel, remain unimplemented because of high costs, weak demand signals and lengthy permitting procedures.
According to the draft, the EU’s share of global industrial value added fell to 14.3% in 2020, down from 20.8% in 2000, while production in energy‑intensive industries has “substantially decreased since 2021.”
Steel capacity utilization was described to be “unsustainably low,” and import penetration continues to rise, particularly in basic metals.
“Without decisive action, the EU risks further de‑industrialization precisely at a time when global partners are accelerating their industrial strategies and weaponizing their industrial successes,” the document says.
The draft calls on EU institutions and Member States to ensure manufacturing accounts for at least 20% of EU gross value added by 2030.
EU‑27 crude steel output reached 129.5 million tonnes in 2024, up 2.6% year on year but still well below pre‑2022 levels amid high energy costs, weak demand and ongoing economic headwinds, data from the European steel industry association EUROFER shows.
In early December EUROFER said in its fourth quarter market outlook that apparent steel consumption is projected to grow only modestly by 3% in 2026, leaving it well below the pre-pandemic levels. EUROFER also confirmed its earlier projection for 2025 of a 0.2% drop in apparent steel consumption to 128 million tonnes.
While both steel production and consumption in the EU have declined, imports have continued to gain market share, crowding out domestic supply, sources said.
EUROFER data shows carbon steel imports into the EU reached 26.36 million tonnes in 2024, up by 6.4% from 24.78 million tonnes in 2023. Over the first three quarters of 2025, carbon steel imports totaled 19.9 million tonnes.
Imports are currently estimated to account for around 25% of the EU flat steel market, industry stakeholders said.
Public procurement to drive low‑carbon steel demand
Under the leaked draft, minimum low‑carbon and “Made in EU” requirements would apply to steel used in construction and transport projects receiving public procurement or public financial support.
Unlike earlier policy discussions, these requirements would be limited strictly to public intervention, rather than steel sold on the wider market, a move the Commission says avoids disproportionate costs for downstream users, while helping create European-led markets.
Market participants generally agreed that public procurement would be essential to scale demand.
“Green steel will only spread through the supply chain once it becomes part of public procurement,” a German distributor said.
A mill source in Europe said, “if authorities do not push for green steel use through public procurement, [green steel] will remain a niche market.”
The draft aligns the entry into force of both the low‑carbon and EU‑origin requirements for steel to 2030, aiming to ensure demand visibility and support early‑stage markets.
Steel and cement are identified as priority materials because together they account for more than 6% of EU greenhouse gas emissions. Steel has also suffered a “substantial decline in EU market share” over the past decade, leaving the sector more exposed to further capacity loss. Market sources confirmed that integrated steel mills have operated at around 70% utilization at best in recent years.
Voluntary EU‑wide carbon‑intensity label
A voluntary EU‑wide carbon‑intensity label for steel is a central feature of the proposal. The label would rely heavily on existing EU Emission Trading System (ETS) data to minimize administrative burden and would be used in public procurement, public support schemes and investment frameworks.
Steel used in construction will fall under the low‑carbon definition of the Construction Products Regulation. Other steel products will be covered by ecodesign‑linked implementing rules, according to the document.
A lack of unified definitions has been a key barrier to green steel uptake, making the label an important step toward market clarity, sources said.
Fastmarkets has launched two low‑carbon steel assessments since 2023, differentiating based on 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.”
Fastmarkets’ weekly assessment of the green steel domestic, flat-rolled, differential to HRC index, exw Northern Europe, was €100-150 ($117-176) per tonne on Thursday, narrowing from €100-170 per tonne the preceding week.
Demand for green steel has so far been niche and fragmented across Europe, with market participants highlighting the need for clear labelling and public procurement rules to boost buying interest.
Fastmarkets’ assessment of the flat steel reduced carbon emissions differential, exw Northern Europe, was €40-50 per tonne on January 22, stable over the recent week.
Fastmarkets’ methodology defines reduced carbon emissions flat steel as steel produced with carbon emissions thresholds of 1.4-1.8 tonnes of CO2 per tonne of steel,
Amid the lack of a clear definitions and standards for green steel, 30-40% decarbonized steel was suitable choice for many buyers, sources said.
One source pointed out that in some cases suppliers were selling reduced carbon steel without any premium, for marketing purposes.
Currently, 60% of the steel produced in Europe originates from the integrated blast furnace/basic oxygen furnace route (BF-BOF). Standard carbon emissions from this production route amount to around 2.0-2.2 tonnes of CO2 (direct and indirect emissions), according to the Institute for Energy Economics and Financial Analysis (IEEFA)Streamlined permitting for decarbonization projects
The leaked draft proposes a streamlined permitting framework for steel decarbonization projects, explicitly extending key provisions of the Net-Zero Industry Act (NZIA) to energy-intensive industries, including steel.
Under the proposal, steel decarbonization projects would benefit from:
– Single permit applications covering all authorizations
– Mandatory digital permitting and data reuse
– Legally binding decision timelines, aligned with NZIA rules
– Tacit approval at intermediate stages, except where environmental impact assessments apply
– A presumption of overriding public interest for large-scale projects such as hydrogen-based DRI and electric-arc furnaces
The Commission said permitting delays and regulatory uncertainty have been a key factor behind postponed or stalled final investment decisions for low-carbon steel projects.
Steel projects located in designated industrial acceleration areas would benefit from additional advantages, including prioritized infrastructure assessments and coordinated timelines for grid and energy connections.
Scrap availability and raw materials security
The leaked draft also places a strong emphasis on access to secondary raw materials, particularly steel scrap, as a key enabler of the EU’s industrial decarbonization strategy.
Many EU blast furnaces (BFs) are reaching end-of-life and need replacement or upgrades. Over 50% of EU blast furnaces are due to be retired before 2035, stakeholders estimate. EU producers now face critical decisions on whether to re-invest in existing asset base or pursue decarbonized alternatives.
In recent years, major European steelmakers have announced ambitious decarbonization strategies mainly using the same approach, aiming to replace BF-BOF capacity with electric arc furnaces (EAFs) and hydrogen-fueled direct-reduced iron (DRI) modules.
The first wave of EU’s announced green steel DRI/EAF projects has already faced increasing pressure relating to raw materials availability and energy pricing. DR-grade pellet, high-quality scrap, and reliable renewable electricity remain critical constraints for scaling low-carbon output, Fastmarkets reported
Member States are encouraged to take “appropriate measures” to ensure that scrap metals and other secondary raw materials generated within the EU – including steel, aluminium and copper scrap, as well as black mass, are, where economically viable, first made available for recovery, recycling or re-use within the Union.
According to the draft, priority should be given to supplying industrial installations and projects located in designated industrial acceleration areas, reflecting the Commission’s concern over growing competition for scrap and the risk of export-driven shortages.
Access to scrap is outlined in the document as a strategic issue for steelmaking, particularly as the EU transitions toward EAF steel production, which relies heavily on steel scrap.
Global overcapacity and economic security concerns
The Commission repeatedly links steel to broader economic security concerns, warning that persistent vulnerabilities in strategic supply chains could “weaken the economy, slow down investments and ultimately undermine public support for the transition.”
Global overcapacity, particularly in steel, is cited as a growing risk, alongside widening cost gaps with other regions and high energy prices.
“If these supply chains are not secured and protected, significant economic and societal risks could emerge, including disruption of public order in the Union,” the draft reads.
While the Industrial Accelerator Act does not introduce new steel trade defense measures directly, it is designed to operate alongside existing instruments, including trade defenses and CBAM, to reinforce EU steel competitiveness.
The draft remains subject to change ahead of formal adoption.
