A coalition of transport and environment groups, car manufacturers, and cleantech industries has issued an open letter urging the European Commission to expand state aid eligibility to cleantech manufacturing. The call comes after the Commission proposed the Industrial Accelerator Act (IAA) on 4 March 2026, which targets lifting industrial manufacturing to 20% of EU GDP by 2035 and introduces "Made in EU" requirements for public support.
The letter argues that current state aid rules are too restrictive, limiting the bloc's ability to scale up production of batteries, solar panels, and other clean energy components. Without broader access to public funding, signatories warn, the EU risks falling short of its electrification targets and losing ground to competitors like China and the United States.
Transport & Environment (T&E), which coordinated the letter, emphasized that cleantech manufacturing requires significant upfront capital investment that private markets alone cannot provide. The group contends that state aid should be treated as a strategic tool to build domestic supply chains rather than a market distortion, especially as the EU seeks to reduce dependence on imported technologies.
The IAA's "Made in EU" requirements are intended to tie public support to local production, but industry leaders say the scope of eligible sectors must expand. Currently, the proposal mainly covers early-stage R&D and demonstration projects, not full-scale manufacturing facilities. The open letter calls for the Commission to include commercial-scale cleantech factories under the new framework.
A counter argument holds that broad state aid could lead to overcapacity and market inefficiencies. Critics, including some EU member states, caution that pouring public money into cleantech manufacturing risks creating a subsidy race that could distort the single market. They argue that targeted support for innovation and infrastructure—rather than production—would be more fiscally sustainable and less likely to provoke trade retaliation.