What does the Industrial Accelerator Act mean for green hydrogen?

Europe continues to position itself as a global frontrunner in catalysing markets for green hydrogen and its derivatives by deploying robust policy frameworks, demand-side mandates, and large-scale funding mechanisms. This was further reinforced this week when the European Commission proposed the Industrial Accelerator Act (IAA). In line with the recommendations of the Draghi report, the IAA introduces targeted ‘Made in EU' and / or low-carbon requirements for public procurement and public support schemes. These will apply to selected strategic sectors, notably steel, cement, aluminium and cars, establishing a framework that can be extended to other energy-intensive sectors such as chemicals. While the proposal still needs to be approved by member states and the European Parliament, the IAA has significant implications for green hydrogen as a critical input for decarbonising these industries.  

It complements other initiatives on carbon pricing (including CBAM), cross-border infrastructure development and supporting early offtake agreements, accelerating investment and establishing the commercial foundations for green hydrogen–based value chains.  

There are two particular issues that warrant close attention. The first is a provision that requires European green hydrogen projects that receive EU subsidies through auctions to use EU-made electrolysers. Third countries that have a free trade agreement with the EU are equally deemed to be of “union origin”, including the UK, Norway, Japan, Singapore and India (once the recently concluded deal is ratified). As hydrogen insight have noted, the rules seem to exist primarily to exclude equipment made in China — the biggest competitor to European-made electrolyser manufacturing. They also exclude stacks made in the United States. While welcoming the IAA, major European electrolyser makers issued a statement saying that the proposed law “falls short on critical points”, including a clear definition of “made in Europe” and calling for stronger mandates where public money is involved.  

A second key issue relates to the standards and certifying schemes that will be used to certify green and “low -carbon” feedstock and products. In the steel industry, for example, the IAA will require at least 25% of all steel or steel products procured by public bodies to be low-carbon from 1 January 2029. Similarly, 25% steel used in projects that are in receipt of state subsidies must meet the same low-carbon standards. This includes steel used in construction, infrastructure and other equipment. The EU is yet to fully define what qualifies as ‘low carbon steel’, although alignment with the methodologies used for CBAM are expected. This is expected to be further clarified in a forthcoming delegated act under the Ecodesign for Sustainable Products Regulation (ESPR). This again highlights the importance of GH2’s ongoing work related to hydrogen standards (as per the Green Hydrogen Standard) and the recently launched Green Iron Principles.

Sam Bartlett,

Director of Standards, GH2