Made in Europe Requirements in Public Procurement

The report examines the potential for the European Union to use local content requirements (LCRs) in public procurement to drive decarbonization and industrial resilience. It analyzes LCR frameworks in China, India, and Canada, noting that while these tools can create predictable demand for low-carbon industries, they risk increasing costs, reducing competition, and triggering trade retaliation. The authors argue that LCRs should only be used in strategic sectors where specific preconditions—such as high market leverage and strong climate gains—are met, and must be tied to ambitious, performance-based environmental criteria rather than origin alone. The report specifically evaluates the steel, cement, and clean technology sectors, concluding that while LCRs can support resilience, they must be carefully designed to avoid protecting high-emission producers or hindering the import of essential green intermediate goods.

• The proposed Industrial Accelerator Act (IAA) of March 2026 introduces limited local content and low-carbon requirements in specific sectors, such as requiring 25% of steel and aluminum in automotive and construction procurements to be low carbon, and 5% of concrete and mortar to be both low carbon and of Union origin.
• LCRs can lead to higher procurement costs and reduced competition; DG Trade estimated that domestic content requirements could cost European businesses approximately EUR 10 billion annually due to higher input prices and administrative burdens.
• Case studies of China, India, and Canada show that these countries use price preferences (often 10% to 20% of contract value) and eligibility restrictions to favor domestic suppliers, though none of the reviewed systems include environmental or sustainability criteria.
• In the steel sector, LCRs should play a secondary role to embodied carbon limits and circularity criteria, as restricting imports of transportable green iron could undermine the EU's decarbonization strategy due to limited domestic renewable electricity.
• For cement and concrete, which are typically sourced locally, the report suggests prioritizing green criteria and emission-intensity limits over origin requirements, noting that green premiums are often under 1% of total construction costs.
• In the clean technology sector, LCRs are primarily used to address supply chain resilience and reduce dependency on single third countries, particularly China, for technologies like solar PV and batteries.
• The report recommends that LCRs only be implemented if four preconditions are met: sufficient public buyer market leverage, strong climate and circularity benefits, improved supply chain resilience, and a proportionate, legally robust design.
• To avoid protecting high-emission producers, LCRs must be tied to ambitious, performance-based environmental criteria, such as emissions thresholds and circularity standards.

APA

Kapetanakis, M., & Bechauf, R. (2026). Made in Europe Requirements in Public Procurement. International Institute for Sustainable Development. https://www.iisd.org/system/files/2026-05/made-in-europe-public-procurement.pdf

Chicago

Kapetanakis, Michail, and Ronja Bechauf. Made in Europe Requirements in Public Procurement. International Institute for Sustainable Development, 2026. https://www.iisd.org/system/files/2026-05/made-in-europe-public-procurement.pdf.

Wikipedia

{{cite report |last1=Kapetanakis |first1=Michail |last2=Bechauf |first2=Ronja |title=Made in Europe Requirements in Public Procurement |publisher=International Institute for Sustainable Development |date=May 2026 |url=https://www.iisd.org/system/files/2026-05/made-in-europe-public-procurement.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{kapetanakis2026made, author = {Kapetanakis, Michail and Bechauf, Ronja}, title = {{Made in Europe Requirements in Public Procurement}}, institution = {International Institute for Sustainable Development}, year = {2026}, month = may, url = {https://www.iisd.org/system/files/2026-05/made-in-europe-public-procurement.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }