The European Commission is planning to introduce “Made in EU” requirements across a wide range of strategic sectors, from chips, cars, and chemicals to quantum technologies and renewable energy. 

The law aims to protect Europe’s industries against Chinese and US competition, while at the same time speeding up decarbonisation and electrification of energy-intensive industries and other sectors. 

In a leaked draft text, seen by EUobserver, public support and procurement for sectors such as chips, cars, chemicals, and quantum technologies would be restricted to products manufactured within the European Union. 

Electric vehicles would need at least 70 percent of components (excluding the battery) to come from European production, while batteries and solar panels must gradually increase the share of EU-made components over three years.

Low-carbon steel, cement, aluminium, and plastics used in construction and automotive sectors would also be favoured in public contracts.

On clean technologies, the Industrial Accelerator Act (IAA) proposes minimum EU-content rules for batteries, solar PV systems, electric vehicle components, solar thermal systems, heat pumps, onshore and offshore wind, nuclear fission, and hydrogen. 

In the leaked draft, which can still be subject to changes, solar PV panels would need at least two additional key components to be EU-made, rising to three components after three years. 

Batteries would follow a similar path, gradually increasing the share of EU-made cells, cathode materials, and other main components.

Solar and batteries

The law builds on the former European Central Bank chief Mario Draghi’s report on European competitiveness, which calls for targeted industrial policies.

Economist Lukas Bertram of the ZOE Institute, which published a report on the issue on Tuesday (17 February), told EUobserver recently that ‘Made in EU’ tools carry both “big potential and big risks” and should be “targeted.”  |

Draghi, for his part, previously warned that ‘Made in EU’ policies should avoid sectors where European manufacturers lag behind, such as solar.

“For some technologies, like solar panels, foreign producers are so far ahead that attempting to capture production in Europe would only slow decarbonisation,” he told the European Parliament.

The commission frames the law as a response to “existential threats” to Europe’s economic security, citing China’s dominance in batteries, solar PV, and critical raw materials. 

By 2035, Brussels wants manufacturing to account for 20 percent of EU GDP, up from 15 percent today.

But the wide-ranging proposals have also drawn criticism.

A recent Bruegel commentary argued that “’Made in Europe’ requirements could raise costs for export-oriented industries, and would actually slow down Europe’s industrial transformation, and ultimately, the clean-energy transition. 

“Europe’s clean value chains benefit from foreign expertise,” the Brussels-based think-tank warned in a policy note last week, adding that overly-strict local content rules risk undermining innovation and global competitiveness.