• Commission draft would mandate EU sourcing for public procurement of batteries, solar, wind and EV components
• Rulebook ties industrial policy to climate transition and geopolitical competition with China
• €100 million ($116 million) foreign investments in strategic sectors would face new localization conditions

The European Commission is preparing a legal proposal that would require governments across the bloc to purchase green technologies with minimum Made in Europe content. The objective is to reinforce local supply chains for batteries, solar and wind components, electric vehicles, cables and charging systems, while reducing exposure to Chinese imports and protecting Europe’s industrial base amid rising energy costs and new tariffs from Washington.

The draft text, viewed by Reuters, described a strategic need to ensure that Europe’s climate transition acts as a driver of competitiveness rather than a catalyst for de industrialisation. It stated that the EU must act strategically to secure and further strengthen its industrial base, long term competitiveness and ensure that the climate transition becomes an engine of industrial prosperity rather than a source of de industrialisation.

New Procurement Criteria For Batteries And EVs

Battery systems purchased through public procurement would need to be assembled within the European Union twelve months after the legislation enters into force. In the first phase, the requirements would apply to assembly plus selected components, including the battery management system. Two years after entry into force, criteria would tighten further by extending Europe made conditions to more core components, including cells. The phased approach reflects both industrial capacity and the sensitivity of global battery value chains.

The Commission’s sourcing rules would also extend to electric vehicles and associated charging infrastructure. Governments procuring EV charging networks would be required to favour Europe made components and labour from the outset. Brussels aims to protect Europe’s competitive edge in wind turbine technology and to avoid repeating earlier experiences in the solar sector, where Chinese manufacturing captured the bulk of global value.

Strategic Warning On Industrial Value Share

The draft contained a warning that Europe’s share of global industry gross value fell from 20.8 percent in 2000 to 14.3 percent in 2020. The decline sharpened concerns that Europe’s industrial competitiveness has deteriorated under the combined strain of high energy prices, increasing Chinese competition, and new tariff policy from the United States. The Commission argued that green industrial strategy and public procurement rules should be treated as part of Europe’s geopolitical and economic toolkit.

Industrial Policy Meets Investment Screening

In addition to procurement rules, the proposal would introduce new investment screening criteria. Foreign direct investments above €100 million ($116 million) in designated strategic sectors would not be approved unless they met localization requirements tied to Europe made components and EU labour. This links industrial policy to national security and supply chain resilience, two themes that have grown more prominent across Western policy frameworks since the pandemic.

The proposal also contemplated minimum shares in public contracts for low carbon industrial goods produced inside the EU. Such provisions echo elements of the US Inflation Reduction Act, though the European approach relies more heavily on public procurement and investment screening than direct tax credits.

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Divisions Among Member States

The plan has already divided EU capitals. France has championed the strategy, arguing that Europe must defend its industrial capabilities as climate and energy transitions accelerate. Paris views local content rules as essential to preserving strategic autonomy across batteries, renewables and electric mobility.

Sweden and the Czech Republic have warned that buy local rules risk inflating tender prices and undermining competitiveness across the bloc. Their governments argue that Europe should pursue global efficiency and free trade where possible. Others fear retaliatory trade measures if the EU imposes overly restrictive sourcing criteria.

Implications For Investors And Supply Chains

For corporate executives and institutional investors, the proposal reflects an accelerating shift toward climate industrial policy, with state procurement acting as a market maker for decarbonisation technologies. Compliance, origin tracing, and eligibility for public tenders could become commercial differentiators for manufacturers and developers operating in Europe.

Battery makers, EV suppliers and renewable component manufacturers may benefit from greater policy visibility and demand certainty. At the same time, governments will need to assess the fiscal and inflationary implications of more restrictive procurement rules. The investment screening provisions could reshape deal flows, particularly for Asian investors with ambitions in European clean energy markets.

Global Significance

The Commission’s move contributes to a broader rearrangement of global clean tech supply chains as governments compete to secure production capacity for the energy transition. With China still dominant in batteries and solar panels, and the United States leaning into tariffs and fiscal incentives, Europe is seeking its own industrial footing. Negotiations with member states and the European Parliament will define the final scope, but the direction is unambiguous: climate policy and industrial strategy are increasingly intertwined, with public procurement emerging as a core instrument of geopolitical competition.

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