A MAPPING OF EU INDUSTRIAL AND INNOVATION POLICY · TOMAS WYNS RESEARCHER, VRIJE UNIVERSITEIT BRUSSEL OCTOBER 2017 23 Rue de la Science – 1040 Brussels – Belgium +32 2 89 49 308

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AMAPPINGOF EUINDUSTRIAL ANDINNOVATIONPOL ICY AN I 2 4 C & VUB - I E S WORK ING P APE R TOMASWYNS RESEARCHER,VRIJEUNIVERSITEITBRUSSEL OCTOBER 2017

23 Rue de la Science – 1040 Brussels – Belgium +32 2 89 49 308 www.i2-4c.eu

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I24C – Industrial Innovation for Competitiveness


FOR EWORD OnSeptember18,2017,afewdaysafteritwasflaggedbyPresidentJunckerinhisStateoftheUnionaddress to the European Parliament, the European Commission formally launched itscommunication on “Investing in a smart, innovative and sustainable Industry - A renewed EUIndustrial Policy Strategy.” Although understandably broad in scope, the communicationincorporates deep decarbonisation consistent with the Paris Agreement objective of net zeroemissions by mid-century as a central goal; and in doing this, it emphasises the economicopportunityandneedfor innovationarisingfromthis,bothofwhichareareflectionofthenewagendaforclimateactionglobally.Fromaneconomicandsocialperspective,thequestionfortheEU is howbest towin the clean industrial ‘race to the top’ thathasnowbeen launchedand isaccelerating–andwhatpoliciesarenecessaryforthisfortheEUtosucceed.TheCommissioncommunicationisrelativelyweakinthatrespect;itprovidesanoverviewofcurrentinitiatives,butdoesnotsetoutafurtheragendaonaprocessthatisalsoacentralcomponentofthe‘FutureofEurope’,andonethatwillneedtobefullyaddressedwithinthatbroaderdebatetoo.Itnonethelessprovidesausefulstartingpointforthisreflectionanddebateabouthowtodevelopandimplementatransformativeindustrialdecarbonisationstrategyfor2050thatisfullyintegratedinawidereconomictransformation.Sinceitsinceptionin2015,i24chas,togetherwiththeInstituteforEuropeanStudiesattheVrijeUniversiteit Brussel, been investigating and considering what an industrial strategy for Europewouldhavetocontain–andindeedcallingforthedevelopmentofjustsuchastrategy.Itiswithinthiscontextthatthisworkingpaper,“AmappingofEUIndustrialandInnovationpolicy”,assessesthedevelopmentsinEUindustrialandinnovationpolicysincethebeginningofthe21stcentury,upuntiltoday.OurobjectiveinundertakingthismappingistobetterunderstandthestateofplayofEUindustrialandinnovationpolicy.Thepaperprovidesahigh-levelinventoryofEUinitiativesandidentifiesthenumberandtypeofactivities,theinstitutionalresponsibilities,theirgovernanceandevolutionovertime.TheworkingpaperconcludesthatinthelastdecadeEUindustrialpolicyhasbeenrelativelyconsistent, but that there are further options for greater ambition, and streamlining of policyinitiativesandpossibilitiesofsynergiesbetweenEUandmemberstateinitiativestofullyenabletheindustrialtransitiontowardsanet-zeroeconomyin2050.

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CONT EN T

FOREWORD.................................................................................................................................2

CONTENT...................................................................................................................................3

GLOSSARY..................................................................................................................................4

1.INTRODUCTION.......................................................................................................................5

1.1.SCOPEOFTHEPAPER...............................................................................................................5

1.2.ANALYTICALAPPROACH..........................................................................................................5

2.MAPPINGEUINDUSTRIALPOLICYRELATEDINITIATIVES..........................................................7

2.1.STRATEGICINITIATIVES............................................................................................................7

2.1.1.EUIndustrialpolicyinthe21stcentury.............................................................................7

2.1.2.Mappingofstrategicinitiatives........................................................................................9

2.1.3.Insights...........................................................................................................................11

2.2.MAPPINGOFGOVERNANCEINSTRUMENTS..................................................................................12

2.2.1.Monitoringandreporting...............................................................................................12

2.2.2.Othergovernanceinstruments.......................................................................................14

2.2.3.Insights...........................................................................................................................15

2.3.MAPPINGOFENABLINGINSTRUMENTS......................................................................................16

2.3.1Analysisoftheinitiatives.................................................................................................16

2.3.2.Recommendations..........................................................................................................19

2.4.REGULATORYINSTRUMENTS...................................................................................................20

3.CONCLUSIONSANDRECOMMENDATIONS.............................................................................21

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G LO S SAR Y

DGGROW TheEuropeanCommission’sDirectorate-GeneralforInternal

Market,Industry,EntrepreneurshipandSMEs EIB EuropeanInvestmentBank EIP EuropeanInnovationPartnerships EFSI EuropeanFundforStrategicInvestments EIF EuropeanInvestmentFund ETP EuropeanTechnologyPlatforms Horizon2020/FP8 TheEU’sResearchandInnovationframeworkprogrammeforthe

period2014-2020 Innovfin EUFinanceforinnovators(financingtoolsmanagedbythe

EuropeanInvestmentBank) KET KeyEnablingTechnologies KIC KnowledgeandInnovationCommunities MFF Multi-annualFinancialFramework,theEUbudget NER300 NewEntrantsReserve300.AfundundertheEUETS(2012-2020)

tosupportcarboncaptureandstorageandinnovativerenewableenergy

REFIT RegulatoryFitnessandPerformanceProgramme SET-plan StrategicEnergyTechnologyPlan SILC SustainableIndustryLowCarbonprogramme SPIRE SustainableProcessIndustrythroughResourceandEnergy

Efficiencypublicprivatepartnership TFEU TreatyontheFunctioningoftheEuropeanUnion TRL TechnologyReadinessLevel(1-9)

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1.Introduction

1 . 1 . S CO P E O F T H E P A P E R ThisworkingpaperhighlightsthefirstinsightsthatresultfrommappingtheEU’sindustrialpolicyandinnovationinstrumentsthathavebeenappliedsincethebeginningofthe21stcentury,withfocusonthecurrentEUbudgetperiod(2014-2020).Themainscopeoftheanalysis is theEuropeanUnion’s (EU)manufacturing industry,but itgoesbeyond these classical industrial sectors by taking into account the broader areas that have animpactonindustrialsectors(e.g.valueandsupplychains).Theinstrumentsconsideredformappingdoalsoindirectlyordirectlylinktoclimatechange,competitiveness,energy,resourceefficiencyandcirculareconomy,investment,SME,skillsandinnovationpolicy.Finally,frameworkandhorizontalinstrumentsandthemes(e.g.socialandregionalfunds,tradeandinternalmarket)arealsoincludedduetotheirimpactorconnectiontooneormoreoftheabove-mentionedpolicyareas.TheobjectiveofthisanalysisistocreateaninventoryofEUinitiativesandidentifythenumberandtypeof activities, the institutional responsibilities, their governance andevolutionover time (inparticularsince2008).Thiswillenablesomefirsthigh-levelinsightsintotheEU’sindustrialpolicy,in particular the identification of areas where streamlining of activities can be realised, theidentification of industrial policy gaps (e.g.marketization of R&D) and possibilities of synergiesbetweenEU(andnational)initiatives.

1 . 2 . A NA L Y T I C A L A P P ROACH ThemappingEU instrumentsconsistedof identifyingandtaggingrelevantEU levelactivities (onindustrial policy in the broad sense) to four broad areas; umbrella initiatives and strategies,governanceandrelatedtools,enablinginstrumentsandfinallyregulatoryinstruments.Strategic initiativesare broad action plans or policy sets often announced under the form of acommunicationoftheEuropeanCommissionandsometimesfollowedupbylegalinitiatives.Thisalsoincludesinitiativesthatarenotdirectlyaimedatindustrybut(can)haveanimportantimpactonindustrialactivities(e.g.theEnergyUnion).Governance instruments representmonitoring instruments,observatories,high level groupsandtaskforcesthate.g.provideinputtoEUinstitutions,strategiesandpolicyinitiatives.Theanalysisofgovernanceinstrumentslooksatthreeareas;innovation,competitivenessandinvestments.Enablinginstrumentsarefundsandfinancinginstrumentsintheareasofinvestmentandinnovation

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intheEU,includingfacilitationoffinanceandinvestments.RegulatoryinstrumentsareEUlaws(in)directlyimpactingindustrialcompetitivenessandinnovationpotential (e.g. internal market, trade, …). A full inventory of regulatory instruments affectingindustryisbeyondthescopeofthispaperduetothelargesizeanddiversityofregulationsinandacrossdifferentsectors.Ahighlevelandholisticanalysiswillbegiven,followedbyadiscussiononlinksbetweenregulationandinnovationinindustry.Thispaperdoesnotdirectlyaddresstheeffectivenessoftheinstrumentsthemselves.Thiswouldrequireanin-depthauditofthedifferentinstruments.Furthermore,someoftheinstrumentsarerelativelyneworintheprocessofbeingimplemented,preventingacompleteassessment.However,followingthemappingoftheEUindustrialpolicyinitiatives,anin-depthassessmentofthedifferentprojectsand(theeffectiveness)oftheirlinkagesfromacompetitiveness,innovationandinvestmentperspective,wouldbea logicalnextstep.The latterwill requireamore in-depthanalysisof theprojectsandprogrammesthatarebeingsupportedbyEUinstruments(e.g.Horizon2020,EuropeanInvestmentBankInnovfinandEuropeanFundforStrategicInvestments(EFSI))andwhatstageoftheinnovationcycleistargetedmoreortoalesserdegree.Thiswillinformamoredetailedgap-analysis of EU industrial policy and allow the formulation of specific policy recommendationstowardstherealisationofwhatcouldintheendbecalledan‘EntrepreneurialUnion’.Finally,a comprehensiveassessmentof industrialpolicy in theEUdoesalso requiremappingofnational(andregional)activitiesinthisarea,asitisasharedcompetencebetweentheEUanditsMember States. Such comprehensive mapping will be necessary to identify gaps and possibleenhancedlinkagesbetweennationalandEUinitiatives,bothinplanningasinexecutivephasesofindustrialpolicy.

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2.MappingEUindustrialpolicyrelatedinitiatives

2 . 1 . S T R A T EG I C I N I T I A T I V E S 2.1.1.EUIndustrialpolicyinthe21stcentury Beforeintroducingthemappingofstrategicinitiatives,itisrelevanttointroduceEUindustrialpolicybrieflytofacilitatethediscussioninthefollowingsection.Inparticular,itisimportanttounderstandthatEUcompetencesonindustrialpolicyarelimited,butkeepinginmindthatcertainEUinitiativesarecriticalforindustrialcompetitivenessandgrowth.Industrialpolicy,accordingtotheTreatyoftheFunctioningoftheEU(TFEU),isasharedcompetencebetweentheEUanditsMemberStates.MemberStatesarefree,withinthelimitsofinternalmarketandcompetitionpolicies,tochooseanddeveloptheirownindustrialsectorsandpoliciesandtheconditions to enhance the competitiveness of these sectors. Notwithstanding the above,consultationand(wherepossible)coordinationofthesepoliciesbetweenMemberStatesandEUisdeemedanecessityaccordingtotheTreaty.TheEU’srolemostlyconsistsinsupportingMemberStatestoensurethattheconditionsnecessaryforthecompetitivenessoftheUnion'sindustryexistbyenhancingthecoordinationandcooperationbetweenMemberStates.Theseconditionsrelateto1:

• speedinguptheadjustmentofindustrytostructuralchanges• encouraging an environment favourable to initiative and to the development of

undertakingsthroughouttheUnion,particularlysmallandmedium-sizedundertakings,• encouraginganenvironmentfavourabletocooperationbetweenundertakingsand• fosteringbetterexploitationof the industrialpotentialofpoliciesof innovation, research

andtechnologicaldevelopment.Socalled‘hard’or‘old’industrialpolicies,suchasproductionlimitsor(direct)productionsubsidiesarenormally-speakingnotpartoftheEU’sornationalindustrialpolicyportfolio.TheEUinternalmarketforgoodsandservicescanbeseenastheinstrumentthathashadthebiggestimpacton industrialperformance intheEUoverthepastdecades. Itcreatedoneoftheworld’sbiggest consumer markets and enhanced the development of intra-EU value chains. Commonstandards and internal EU competition law enhanced the economic efficiency of industrialproduction. The formation of an internal market both necessitated (a level playing field) andfacilitated the introduction of EU legislation and initiatives related to better environmentalprotectionandsustainable,secureandaffordableenergy.

1Art.173oftheTreatyoftheFunctioningoftheEUhttp://eur-lex.europa.eu/legal-content/EN/TXT/PDF/?uri=CELEX:12012E/TXT&from=EN

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Inthebeginningofthe21stcenturytheEU’sindustrialpolicyprimedhorizontalactions,asopposedtosectoral initiatives2.The2004EuropeanCommission’scommunicationon industrialpolicy isagoodexampleofthis.Itintroduced,inparticular,abifurcatedhorizontalapproachconsistingof3:

• Better EU law-making: e.g. one-stop-shop regulations, regulatory impact assessments,(cumulative)impactofEUregulationoncompetitiveness

• Integrated multi-policy approach on competitiveness: including research and innovationpolicies that are business driven and linked to innovation diffusion and systems, humancapitalandskills,deepeningandwideningoftheinternalmarket,cohesionandindustrialclusters,cleantechandaccess-to-marketsoutsidetheEU.

Thisstrategyhasproventobeconsistentsince2004.Itwashoweverinfluencedandrefinedthroughcriticalprocesses takingplaceduring the lastdecade, suchasacceleratingglobalisationand thepower of emerging economies and the recent economic crisis that significantly affected EUindustrial sectors. Therewere fourmajor communications on industrial strategy over the pastdecade.The2010theEuropeanCommissioncommunication‘AnIntegratedIndustrialPolicyfortheGlobalisationEra’4prioritisedcompetitivenessandsustainability.Ithadtheambitiontosetupanintegratedindustrialpolicystrategyencompassingcompetition,trade,innovationandenergy.The2012communication‘AStrongerEuropeanIndustryforGrowthandEconomicrecovery’5introducedfourindustrialpolicypillars:investmentsininnovation,bettermarketconditions,accesstofinanceandcapital,humancapitalandskills.TheEuropeanCommissionalsoexpressedthevoluntaristicgoal of having the EUmanufacturing sector contribute 20% to the EU GDP by 2020. The 2014communication‘ForaEuropeanIndustrialRenaissance’builtfurtheruponthevisionpresentedin2012, but fine-tuned some of the previously identified priorities: Mainstreaming industrialcompetitiveness in other policy areas, maximising potential of internal market, instruments ofregional development supporting innovation, skills and entrepreneurship, promoting access tocritical inputs to encourage investments and facilitating integration of EU firms in global valuechains.Finally,themostrecentcommunication‘Investinginasmart,innovativeandsustainableIndustry:ArenewedEUIndustrialPolicyStrategy’6(September2017)canbe(mostly)seenasastock-takingexercise by mainly reflecting on the current state of EU activities in the area of what can beconsideredindustrialpolicy.Inparticular,theCommissionsoughttore-organisetheseasaholisticpackage with the goal of achieving a stronger andmore competitive EU industry. This holistic

2JacquesPelkmans,2006,EuropeanIndustrialPolicy,BEEPbriefingn15.3EuropeanCommissionCommunication,20April2004,‘Fosteringstructuralchange:anindustrialpolicyforanenlargedEurope’http://ec.europa.eu/social/BlobServlet?docId=9484&langId=en4EuropeanCommissionCommunication,28November2010,‘Anintegratedindustrialpolicyfortheglobalisationera’http://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=LEGISSUM:et0005&from=EN5EuropeanCommissionCommunication,10October2012,‘AStrongerEuropeanIndustryforGrowthandEconomicrecovery’http://ec.europa.eu/transparency/regdoc/rep/1/2012/EN/1-2012-582-EN-F1-1.Pdf6EuropeanCommissionCommunication,13September2017,‘Investinginasmart,innovativeandsustainableindustry:ArenewedEUindustrialpolicy’http://eur-lex.europa.eu/resource.html?uri=cellar:c8b9aac5-9861-11e7-b92d-01aa75ed71a1.0001.02/DOC_1&format=PDF

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approach features fiveelements: investments (e.g. theEuropeanFund forStrategic Investments(EFSI)), innovation (e.g. Key enabling Technologies (KETs) and Horizon 2020), circular and low-carboneconomy,completionofthesinglemarket(capitalanddigitalmarkets)andskills,digitisationandtheinternational(trade)dimension.Alloftheseelementsareintheirturnlinkedtonationalandregionalpoliciessuchassmartspecialisationandcooperationandindustrialtransformationandmodernisation.Mostoftheactivitiesandpoliciesmentionedinthecommunicationare‘horizontal’,i.e. theycovermultiple industrial sectorsandwider sectors in theeconomy.Sectoralpoliciesorinitiativesarecurrently limited to theEUdefence industry, space industry,automotiveand toalesser extent the steel sector.New initiativesmentioned in the communicationmostly buildonexistingandpreviousactions(e.g.circulareconomy,betterregulation(includingRegulatoryFitnessTests (REFIT)), continuation of EFSI, projects of common interests, digital singlemarket, capitalmarketsunion,energyunionand(new)CO2standardsforcarsandvans).2.1.2.Mappingofstrategicinitiatives Beyondtheindustrialstrategyrelatedcommunicationsmentionedabove,itisinterestingtozoomintosomeofthecomprehensiveinitiativesmentionedorinitiatedunderthesestrategiesoverthepast10years.Forthepurposeofthisworkingpaperwelookatfourcategoriestoclassifytheseinitiatives:

• Horizontalinitiativesthatcovermultipleindustrialsectorsorhaveaneconomywidescope• Innovationpromotinginitiativeswithlinktoindustry• Sectoralinitiatives• Otheractionsimpactingindustrialactivities

HorizontalinitiativesThe EU has engaged in powerful horizontal activities related to industry since 2008. The NewLegislativeFramework(adoptedin2008)inparticular,strengthenedtheconditionsforawiderangeof (industrial) products in the internal market. This includes better rules for accreditation ofconformity bodies, conformity assessments of products,market surveillance and common legalframeworkforindustrialproducts.ThecompletionofthesinglemarkethasbecomethenextprimestrategywithfocusonareaswheretheEUinternalmarketislaggingbehind;energy(viatheEnergyUnion),digitaleconomyandthecapitalmarkets.OtherimportanthorizontalinitiativesweretheEurope2020strategy,regulatoryfitness,andbetterregulationinitiatives.TheEurope2020strategywasclearlymission-orientedwithspecificgoalssetin areas of employment, education, poverty reduction, energy, climate and R&D. The betterregulationandregulatoryfitnessinitiativeshavetheambitiontoimprovetheregulatoryandhencetheinvestmentclimateforindustryintheEU.

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TheInvestmentPlanforEuropeandtheresultingEuropeanFundforStrategicInvestments(EFSI),ademand driven industrial initiative, formed an innovative response to a protracted economicslowdownintheEUresultingfromlow(domestic)demand.PartoftheEUbudgetandresourcesprovided by the EIBwere used to stimulate investments in the EU, including in projectswith acommoninterestfortheEU.InnovationorientedinitiativesAs announced in the EC’s industrial policy strategy communications (since 2004), from 2007onwardsinnovationbecameanimportantpillartotheEU’sindustrialdevelopmentatscale.The7thEUframeworkprogrammeonR&I(FP7)wassucceededbyaframeworkprogramme(FP8/Horizon2020) that includes solid societal challenges and advancedmanufacturingpillars at a significanthigherbudgetcomparedtotheFP7funds.OtherindustrialinnovationinitiativesweretheStrategicEnergyTechnology(SET)planandthelaunchoftheInnovationUnion.Section2.3ofthispapergoesintoabitmoredetailinanalysingtheseinstruments.SectoralinitiativesAsexpected following theCommission’senduring strategy to favourhorizontal activities, sectorspecific initiativesareratherscarcesince2008.TherewasaspecificactionplanfortheEUSteelIndustryandaforestbasedindustriesstrategy(2013),likelytriggeredbythecontinuingeconomicrecession.Othersectorspecificactionplanswereannouncedin2014,however,theseactionplansmainly refer to other existing horizontal initiatives and policies (e.g. regulatory fitness, tradedefence)anddidnotleadtosignificantsectorspecificsupport.Otherrelevantinitiatives/strategiesNext to the strategic, sectoral, horizontal and innovation oriented plans, a list of other actionsrelevanttoindustrywereinitiatedoverthepastdecade.ThisincludesimportantEUprogrammeson climate action and energy transformation. Growing attention has been directed to resourceefficiencyandtheshapingofacirculareconomy.Theseareasdemonstrategrowingawarenessthatenvironmental challenges have a major economic component and can bring economicopportunities.ThisisalsovisibleintheEU’sinnovationactionswheretheyaretakenupassocietalchallengeswithpotentialforindustrialinnovation.More attention has also been given to smart and regional specialisation in the EU and thedevelopmentofskillsforarapidlydigitisingeconomy.Arelativenewthemethatisbeingexploredisusingdemandsidepoliciesforinnovationandindustrialdevelopment.Thisincludes,asmentionedbefore, the EFSI but also initiatives to use public procurement for innovation and newmarketcreationintheEU.

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Figure1:MappingofEUindustrialstrategyrelatedinitiativessince2007-20082.1.3.Insights Over the past decade there has been a relative high level of consistency in the EU’s industrialstrategyandimplementationthereofthroughsustainedfocusonbetter law-makingandamulti-policy(horizontal)approachtocompetitiveness.TheEU’sR&Iinitiativeshavemovedmoreinthe

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directionofindustryandsocietalchallenges.CompletionoftheinternalmarketremainsoneoftheprioritiesofanindustrialstrategywithfocusonareaswheretheEUislaggingbehind(i.e.digital,energy and capital markets). External factors, most importantly the long economic crisis, alsoshapedEUinitiativesimportantforindustryoverthepast10years,leadingtotheintroductionofdemandsidepoliciessuchastheEFSI.WhilegrandchallengessuchasreducinggreenhousegasemissionsandresourceefficiencyfeatureintheindustrialstrategiesoftheEU,theyareoften(butnotalways)referredtoaselementswhereregulationmustbedesignedinawaytonotnegativelyimpactindustryandnotascoreingredientsormissionswhosetransformativepowercanrevitaliseEurope’sindustrialbase.

2 . 2 . MAP P I NG O F GOV E RNANC E I N S T RUMENT S ThemappingofgovernanceinstrumentsshowstheapplicationoftwomaintypesoftoolsintheEU.Firstofall,thereisanextensiveuseofmonitoringandreportingtools;secondly,theEUdeployedanumberof (soft)governancebodies toassistwithor implementEU industrialand/or innovationactivities.Theactionsare(wherepossible)classifiedintothreeareas;competitiveness,innovationandinvestments.2.2.1.Monitoringandreporting(Table1) Inrelationtocompetitiveness,theEUcurrentlyhas10monitoringand/orreportinginstruments.Most of these fall under the responsibility of DG GROW. It is worth investigating whetherstreamliningorrationalisingthese instruments ispossible.ThegoalthereoftobringaboutmoreeffectiveandtransparentinsightsontheEU’s,industrialandnationalcompetitiveness.ThisincludesenhancedlinkagewiththeEUsemesteranditscountryspecificrecommendations,asthisisoneofthefewgovernancetoolsthatcanfacilitateenhancedcompetitivenessatnationallevels.Thereisextensivemonitoringoninnovation(regional,national,industrial,digital,…).AgainmostoftheseinstrumentsaremanagedbyDGGROW.Again,itwouldbevaluabletoanalyseifthiscanbestreamlined(e.g.inrelationtoEUsemester),butmoreimportantlyiflinkstomonitoringindustrialcompetitivenessarecurrentlyunder-explored.Thefactthatbothareas(i.e.competitivenessandinnovation) aremostlymonitoredby the sameDG (GROW), opens short-termopportunities forstreamliningandstrengtheningtheEU’smonitoringcapacity(seefigure2,left).

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MonitoringinstrumentsInstrumentsonCompetitiveness Responsibleentity

EuropeanSemester(CSRs)*7 ECSecGenQuarterlyReportsDGECFINdataonpriceandcostcompetitiveness8 DGECFINAnnualEuropeanCompetitivenessReport9 DGGROWReportonSingleMarketIntegrationandCompetitivenessintheEUanditsMemberStates10

DGGROW

MemberStates'CompetitivenessReport11 DGGROWEUIndustrialStructureReport12 DGGROWShort-termIndustrialOutlook13 DGGROW

GoodPracticeReports14 DGGROWPublicAdministrationScoreboard15 DGGROWEuropeanClusterObservatory16 DGGROWRegulatoryScrutinyBoard17 Other:IndependentbodyoftheEC

InstrumentsonInnovation EuropeanPublicSectorInnovationScoreboard(EPSIS)18 DGGROWDigitalTransformationMonitor19 DGGROWDigitalTransformationScoreboard20 DGGROWKeyEnablingTechnologies(KETs)-KETTechnologycentresandKET'sobservatory21 DGGROW

RegionalInnovationMonitorPlus(RIMPlus)22 DGGROWEuropeanInnovationScoreboard23 DGGROWRegionalInnovationScoreboard24 DGGROWInnobarometer25 DGGROWBusinessInnovationObservatory26 DGGROW

TheEUIndustrialR&DInvestmentScoreboard27 JRC

ResearchandInnovationObservatory(RIO)28 JRC *The European Semester (CSR)extendsbeyondinnovation,andcouldalsobeclassifiedasaninstrumentoncompetitiveness.

Table1:EUmonitoringinstrumentsoncompetitivenessandinnovation

7EuropeanSemster(CSR),https://ec.europa.eu/info/strategy/european-semester/european-semester-timeline/eu-country-specific-recommendations_en8QuarterlyReportsDGECFINdataonpriceandcostcompetitiveness,https://ec.europa.eu/info/business-economy-euro/indicators-statistics/economic-databases/price-and-cost-competitiveness_en9AnnualEuropeanCompetitivenessReport,http://ec.europa.eu/growth/industry/competitiveness/reports/eu-competitiveness-report_en10ReportonSingleMarketIntegrationandCompetitivenessintheEUanditsMemberStates,https://ec.europa.eu/growth/industry/competitiveness/reports/single-market-integration-competitiveness_en11MemberStates'CompetitivenessReport,http://ec.europa.eu/growth/industry/competitiveness/reports/ms-competitiveness-report_en12EUIndustrialStructureReport,https://ec.europa.eu/growth/industry/competitiveness/reports/eu-industrial-structure-report_en13Short-termIndustrialOutlook,https://ec.europa.eu/growth/industry/competitiveness/reports/short-term-industrial-outlook_en14GoodPracticeReports,http://ec.europa.eu/growth/tools-databases/newsroom/cf/itemdetail.cfm?item_id=913715PublicAdministrationScoreboard,http://webcache.googleusercontent.com/search?q=cache:wQFz7RT_hh8J:ec.europa.eu/DocsRoom/documents/7162/attachments/1/translations/en/renditions/native+&cd=2&hl=en&ct=clnk&gl=be16EuropeanClusterObservatory,https://ec.europa.eu/growth/smes/cluster/observatory_en17RegulatoryScrutinyBoard,https://ec.europa.eu/info/law/law-making-process/regulatory-scrutiny-board_en18EuropeanPublicSectorInnovationScoreboard(EPSIS),http://ec.europa.eu/growth/industry/innovation/policy/public-sector_en19DigitalTransformationMonitor,https://ec.europa.eu/growth/tools-databases/dem/monitor20DigitalTransformationScoreboard,http://ec.europa.eu/growth/tools-databases/newsroom/cf/itemdetail.cfm?item_id=907621KeyEnablingTechnologies(KETs),https://ec.europa.eu/programmes/horizon2020/en/area/key-enabling-technologies22RegionalInnovationMonitorPlus(RIMPlus),https://ec.europa.eu/growth/tools-databases/regional-innovation-monitor/23EuropeanInnovationScoreboard,http://ec.europa.eu/growth/industry/innovation/facts-figures/scoreboards_de24RegionalInnovationScoreboard,https://ec.europa.eu/growth/industry/innovation/facts-figures/regional_en25Innobarometer,http://ec.europa.eu/growth/industry/innovation/facts-figures/innobarometer_de26BusinessInnovationObservatory,http://ec.europa.eu/growth/industry/innovation/business-innovation-observatory_en27TheEUIndustrialR&DInvestmentScoreboard,http://iri.jrc.ec.europa.eu/scoreboard.html28ResearchandInnovationObservatory(RIO),https://rio.jrc.ec.europa.eu/

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2.2.2.Othergovernanceinstruments(Table2)Intheareaofcompetitiveness,othergovernanceinstrumentstaketheformof(sectoral)highlevelgroups,sometimesofatemporarynature.ThecompetitivenesscouncilandtheREFITplatformaremorestructuralinstruments.Theothergovernanceinstrumentsintheareaofinnovationtendtoplayan(important)roleintheimplementation of EU R&I and technology deployment activities. For instance, the roles of theEuropean Innovation Partnerships (EIPs), Knowledge and Innovation Communities (KICs) andEuropeanTechnologyPlatforms(ETPs) inthe implementationofe.g.Horizon2020,theStrategicEnergy Technology (SET) plan and activities in the area of resource efficiency. With regard toinvestment related governance, the focus is on facilitation through the use of business andinvestmentportals,hubs,networkorplatforms.AgainasignificantproportionoftheseinstrumentsismanagedbyDGGROW,butwithmuchhigherlevel of involvement of other DG’s and other actors from the broader industrial, innovation orinvestmentcommunity(seefigure2,right).

OthergovernanceinstrumentsInstrumentsonCompetitiveness Responsibleentity

EuropeanResourceEfficiencyPlatform29 DGENV

Competitivenessproofing(guidance)30 DGGROWHighLevelGroupontheCompetitivenessoftheEUChemicalsIndustry31 DGGROWListofCriticalRawMaterialsintheEU32 DGGROWHighLevelexpertGrouponenergy-intensiveindustries(E03326)33 DGGROWHighLevelExpertGrouponSteel(E02972)34 DGGROWExpertGrouponForest-basedIndustriesandSector-relatedIssues35 DGGROWRawMaterialsSupplyGroup(X01353)36 DGGROWHighlevelgrouponBusinessServices37 DGGROWCompetitivenessCouncil(COMPET)38 ECSecGenREFITPlatform-BetterRegulation39 ECSecGen

InstrumentsonInnovation

29EuropeanResourceEfficiencyPlatformhttp://ec.europa.eu/environment/resource_efficiency/re_platform/index_en.htm30Competitivenessproofing(guidance)http://ec.europa.eu/growth/about-us/competitiveness-proofing_en31HighLevelGroupontheCompetitivenessoftheEUChemicalsIndustryhttp://webcache.googleusercontent.com/search?q=cache:cUWiY4emtscJ:ec.europa.eu/DocsRoom/documents/12203/attachments/1/translations/en/renditions/native+&cd=1&hl=en&ct=clnk&gl=be32ListofCriticalRawMaterialsintheEUhttp://webcache.googleusercontent.com/search?q=cache:cUWiY4emtscJ:ec.europa.eu/DocsRoom/documents/12203/attachments/1/translations/en/renditions/native+&cd=1&hl=en&ct=clnk&gl=be33HighLevelexpertGrouponenergy-intensiveindustries(E03326)http://ec.europa.eu/transparency/regexpert/index.cfm?do=groupDetail.groupDetail&groupID=332634HighLevelExpertGrouponSteel(E02972)http://ec.europa.eu/transparency/regexpert/index.cfm?do=groupDetail.groupDetail&groupID=297235ExpertGrouponForest-basedIndustriesandSector-relatedIssueshttp://ec.europa.eu/DocsRoom/documents/1728536RawMaterialsSupplyGroup(X01353),https://ec.europa.eu/growth/sectors/raw-materials/policy-strategy_en37HighlevelgrouponBusinessServiceshttps://ec.europa.eu/growth/single-market/services/business-services_en38CompetitivenessCouncil(COMPET)http://www.consilium.europa.eu/en/council-eu/configurations/compet/39REFITPlatform-BetterRegulation,https://ec.europa.eu/info/law/law-making-process/overview-law-making-process/evaluating-and-improving-existing-laws/reducing-burdens-and-simplifying-law/refit-platform_en

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Industrialtaskforcestoimplement'actionlines'40 DGGROWGuidebook:PublicProcurementasaDriverofInnovationinSMEsandPublicServices41

DGGROW

EuropeanInnovationPartnerships(EIPs)42 DGRTDEuropeanTechnologyPlatforms(ETPs)43 DGRTDJointTechnologyInitiatives(JTIs)44 DGRTDCompetenceCentreonCompositeIndicatorsandScoreboards**45 JRCSmartSpecialisationPlatform(S3P)46 JRCProcurementofInnovationPlatform47 Other:ICLEI,fundedbyDGGROWProcurementforum48 Other:ICLEI,fundedbyDGGROWInnovationandNetworksExecutiveAgency(INEA)49 Other:IndependentbodyoftheEC(DG

ENERGY,DGMOVE,DGRTD,DGCONNECT)

EuropeanInstituteofInnovationandSociety(EIT)KnowledgeandInnovationCommunities(KICs)50

Other:IndependentbodyoftheEU

InstrumentsonInvestment EuropeanInvestmentProjectPortal(EIPP)51 DGDIGITIPRSMEhelpdesks52 DGEASMEYourEuropeBusinessPortal53 DGEASMEEuropeanClusterCollaborationPlatform(ECCP)54 DGEASMEEuropeanInvestmentAdvisoryHub(EIAH)55 Other:ECandEIBEnterpriseEuropeNetwork(EEN)56 Other:EUinitiativebythecommissioner

ofDGGROW,partiallyfundedbyDGGROW(underCOSME)

**CompetenceCentreonCompositeIndicatorsandScoreboardsextendsbeyondinnovation,andcouldalsobeclassifiedasaninstrumentoncompetitiveness.

Table2:EUgovernancetoolsrelatedtocompetitiveness,innovationandinvestments

2.2.3.Insights Most of the instruments at the disposal of the EU when it comes to governance of industrialinnovation,competitivenessandinvestmentscanbeseenassoftorfacilitativeinstruments.ThisisaresultofthesharedcompetencebetweentheEUanditsMemberStatesintheseareas.However,theactionstheEUundertakes(inparticularinmonitoring),arefairlyextensiveandcomprehensive.

40Industrialtaskforcestoimplement'actionlines'https://ec.europa.eu/growth/industry/policy/task-forces_en41Guidebook:PublicProcurementasaDriverofInnovationinSMEsandPublicServiceshttp://ec.europa.eu/DocsRoom/documents/15522/attachments/1/translations/en/renditions/pdf42EuropeanInnovationPartnerships(EIPs)http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=eip43EuropeanTechnologyPlatforms(ETPs)http://ec.europa.eu/research/innovation-union/index_en.cfm?pg=etp44JointTechnologyInitiatives(JTIs)http://ec.europa.eu/research/jti/index_en.cfm45CompetenceCentreonCompositeIndicatorsandScoreboards,https://composite-indicators.jrc.ec.europa.eu/46SmartSpecialisationPlatform(S3P)http://ec.europa.eu/inea/47ProcurementofInnovationPlatformhttps://www.innovation-procurement.org/48Procurementforumhttps://procurement-forum.eu/about49InnovationandNetworksExecutiveAgency(INEA)http://ec.europa.eu/inea/50EuropeanInstituteofInnovationandSociety(EIT)KnowledgeandInnovationCommunities(KICs)https://eit.europa.eu/activities/innovation-communities51EuropeanInvestmentProjectPortal(EIPP)https://ec.europa.eu/eipp/desktop/en/index.html52IPRSMEhelpdeskshttps://ec.europa.eu/growth/industry/intellectual-property/smes_en53YourEuropeBusinessPortalhttp://europa.eu/youreurope/business/index_en.htm54EuropeanClusterCollaborationPlatform(ECCP)https://www.clustercollaboration.eu/55EuropeanInvestmentAdvisoryHub(EIAH)http://www.eib.org/eiah/http://invega.lt/en/european-investment-advisory-hub/56EnterpriseEuropeNetwork(EEN)http://een.ec.europa.eu

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Itisthereforerecommendedtoinvestigatewhetherstreamliningthecompetitivenessmonitoringinstruments and the innovation instruments is warranted, with the objective to enhance theeffectiveness, linkagesandtransparencyof thesetools.Theongoingefforts todevelopeffectivegovernance instruments under the Energy Union can be seen as an interesting and relevantprecedenthere.

Figure2:numberofmonitoringinitiativesoninnovationandcompetitivenessbyEUentity(left),

numberofothergovernanceinstrumentsbyEUentity(right)

2 . 3 . MAP P I NG O F E NAB L I NG I N S T RUMENT S 2.3.1Analysisoftheinitiatives The mapping of enabling (i.e. funds, finance and finance facilitating) instruments uses fourcategories;investmentoriented,innovationoriented,mixed(investment&innovation),socialandsupportinginstruments(seetable3andfigure3below).Theareasofinnovationandinvestmentdidseeaproliferationofmanyinitiativesaimedatindustry(includingSMEs)overthepastdecade,butalsoanongoingstreamliningandintroductionofnewfinancingmechanisms.Thereisalsoagrowingconnectionbetweensupportforindustrialinnovationandsocietalchallenges(e.g.climatechange,resourceefficiency).AdhocinitiativessuchasSPIRE(Sustainable Process Industry through Resource and Energy Efficiency) and SILC (SustainableIndustryLowCarbon)havebeenamplifiedandstreamlinedintoHorizon2020(andEFSItoalesserextent).While it is tooearly tospeakofamission-orientedapproach,a trendcanbespotted inparticular under Horizon 2020 (see figure 5) with the introduction of societal challenges andindustrialleadershippillarsundertheframeworkprogramme.Someinitiativesandprojectsdoseemto go in the direction of more holistic innovation challenges (across the value chain). This is

DGGROW(17)

ECSec-Gen(1)

DGECFIN(1)

JRC(2)

Other(1)

DGGROW(10)

DGRTD(3)

DGEASME3

ECSec-Gen2

DGDIGIT1

DGENV1

JRC2

Other(6)

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especiallythecasewithinnovationsupportrelatedtothecirculareconomy.

57ResearchFundforCoalandSteel(RFCS),http://ec.europa.eu/research/industrial_technologies/rfcs_about.html58EUETSNewEntrantsReserve(NER)300,https://ec.europa.eu/clima/policies/lowcarbon/ner300_en59EUETSInnovationfund,https://ec.europa.eu/clima/events/articles/0115_en60EUETSModernisationFund,https://ec.europa.eu/clima/policies/ets/revision_en61Horizon2020,https://ec.europa.eu/programmes/horizon2020/h2020-sections62SustainableIndustryLowCarbon(SILC),https://ec.europa.eu/growth/industry/sustainability/low-carbon-economy/silc-programmes_en63SustainableProcessIndustriesthroughResourceandEnergyEfficiency(SPIRE)http://ec.europa.eu/research/industrial_technologies/sustainable-process-industry_en.html64CohesionFund,http://ec.europa.eu/regional_policy/en/funding/cohesion-fund/65ERDF,http://ec.europa.eu/regional_policy/en/funding/erdf/66EuropeanFundforStrategicInvestments,http://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2015.169.01.0001.01.ENG67ConnectingEuropeFacility,https://ec.europa.eu/inea/en/connecting-europe-facility68EuropeanEnergyProgrammeforRecovery(EEPR),http://ec.europa.eu/energy/eepr/projects/69EuropeanEnergyEfficiencyFund(EEE-F),http://www.eeef.lu/organizational-setup.html70InnovFin,http://europa.eu/rapid/press-release_IP-14-670_en.htm71LIFE,http://ec.europa.eu/environment/life/about/index.htm72ESF,http://ec.europa.eu/esf/main.jsp?catId=35&langId=en73EuropeanGlobalisationAdjustmentFund(EGF),http://ec.europa.eu/social/main.jsp?catId=326

EUFUNDSandFINANCE Totalinvestment Responsibleentity

InnovationorientedResearchFundforCoalandSteel(RFCS)*57 55.000.000 DGRTD

EUETSNewEntrantsReserve(NER)30058 2.100.000.000 DGCLIMAandEIB

EUETSInnovationFund59 Post2020 DGCLIMAandEIB

EUETSModernisationFund60 Post2020 DGCLIMA

Horizon202061 74.000.000.000 DGRTD

SustainableIndustryLowCarbon(SILC)62 IncludedinHorizon2020 DGGROW

SustainableProcessIndustriesthroughResourceandEnergyEfficiency(SPIRE)63

IncludedinHorizon2020 DGRTDandDGGROW

Investmentoriented

CohesionFund(CF)64 63.400.000.000 DGREGIO

EuropeanRegionalDevelopmentFund(ERDF)65 256.000.000.000 DGREGIO

EuropeanFundforStrategicInvestments(EFSI)66 33.500.000.000 EIBandEC

ConnectingEuropeFacility(CEF)67 30.400.000.000 DGENER,DGMOVE,INEA(implementingagent)

Mixed(e.g.innovationandinvestment)EuropeanEnergyProgrammeforRecovery(EEPR)68

3.980.000.000 DGENER

EuropeanEnergyEfficiencyFund(EEE-F)69 IncludedinEEPR DGENER(managedbyitsshareholderse.g.EC,EIB,DeutscheBank,…)

EIB-Innovfin70 24.000.000.000 EIB

LIFE71 3.400.000.000 DGENV

SocialdimensionEuropeanSocialFund(ESF)**72 IncludedinERDF DGEMPL

EuropeanGlobalisationAdjustmentFund(EGF)73 150.000.000 DGEMPL

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Table3:EUfundsandfinancinginstrumentsrelatedtoindustrialactivities

Overthepastdecade,theroleoftheEuropeanInvestmentBank(EIBbutalsoEIF)inEUinnovationandindustrialpolicieshasincreased.TheEFSIbutalsotheInnovfinmakeuseoftheEIB’sstrength(e.g.AAArating)tofinanceandde-risklargeinvestments.Thisislinkedwiththeincreaseduseofinnovativefinancinginstruments(atEUlevel)suchasguaranteesandinvestmentplatforms.SizableandfocussedPublicPrivatePartnershipsforindustrialinnovation(e.g.SPIRE,bio-basedPPP),seemto bring together innovation, societal challenges (e.g. GHGmitigation, resource efficiency) andenhanced industrial competitiveness especially at the latter stages of the innovation cycle(demonstrationphase).

Figure3:Fundsorderedbysizeand(main)purpose

74JASPERS,http://ec.europa.eu/regional_policy/en/funding/special-support-instruments/jaspers/75JESSICA,http://ec.europa.eu/regional_policy/en/funding/special-support-instruments/jessica/#276ELENA,http://www.bei.org/products/advising/elena/index.htm77COSME,https://ec.europa.eu/growth/smes/cosme_en

Supportinginstruments(incl.oncompetitiveness/entrepreneurship)JASPERS74 n.a. DGREGIO

JESSICA75 n.a. DGREGIO

ELENA76 n.a. DGENERandEIB

CompetitivenessofEnterprisesandSMEs(COSME)77

2.300.000.000 DGGROW

*RFCShasabudgetof€55Mnannually.**ESFcovers€84BnoverMFF2014-2020.

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ItislessclearhowsomeofthelargerinvestmentfundsoftheEU(e.g.CohesionFund,EuropeanRegional Development Fund) link to innovation initiatives (e.g. Horizon 2020). This is relevantbecauseR&Isupportisontheonehandanimportantenablingconditionforregionaldevelopmentandcohesion;andontheotherhand,thelargebudgetsavailableforinvestmentscouldacceleratethemarketizationofR&IandassistinfillingthegaptomarketR&IinEurope.Furthermore,abriefanalysisoffundinginitiatives,showthattheycoverinnovationsupportacrosstechnologyreadinesslevel(e.g.lowerTRL’scoveredbyHorizon2020andhigerTRLdevelopmentbyinitiativessuchasEEPRandEIB Innovfin).However,anover-archingupfrontstrategyorarchitecturetoensurefullsupportcoverageoftheinnovationcycleincludingbringingR&Itothemarket,ismissingintheEU.

Figure4:MainpillarsunderHorizon2020

2.3.2.Recommendations Horizon2020, following its sizeanddesign, seems tobecomeanessential catalyst forwhatcanbecomemission-orientedindustrialinnovation.ThisisrelevantforthedesignoftheforthcomingEUinnovationprogrammeunderthenextMulti-annualFinancialFramework(MFF).Itisthereforerecommended,ingeneralterms,thatthenextEUR&Iframeworkprogrammehasasimilarapproachandatleastequal(financial)size.ThemainchallengewillbetoembedtheEUR&Ifundingintoabroaderinvestmentframeworkto

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ensureeconomicandindustrialmaximisationofEUR&IinputandhencereducethegapbetweenR&Dandcommercialisation.ThisrequiresthatthenextEUMFFcontainsanoverarchingvisioninitsdesign and architecture through establishing enhanced links between other EU (investment,cohesion,development)funds.ThiswouldofcoursealsoenhancetheimpactofsocietalchallengesandindustrialleadershipR&I.BetterandstreamlinedgovernanceofEUcompetitiveness,investmentandinnovationinstruments,as earlier mentioned, can also have a positive impact, as it will allow the design of future EUinnovation and investment funds to be better aligned with national and regional needs thatemergedfromcompetitivenessandinnovationmonitoringinstrumentsatEUlevel.Otherwisesaid,itshouldimprovecoordinationbetweennationalandEUactivities.

2 . 4 . R E GU LA TOR Y I N S T RUMENT S The regulatory environment for industrial sectors is densely populated across different areas(environment, energy, competition, trade, standards/internal market, …). Therefore, acomprehensivemappingofallEUregulatoryinstrumentsrelevanttoindustryisbeyondthescopeof thismapping exercise at themoment.However, somegeneral observations canbemadebysamplingsomelargerandimportantregulatoryinitiatives.EUregulationsseemde-coupledfrominnovationdynamicsSomeEUregulations(especiallyintheareaofclimateandenvironment)lookasiftheyaredesignedto automatically trigger the necessary industrial innovation to meet targets and maintaincompetitivenessatthesametime.TheEUETSissucharegulation.SofarthesystemhasnotinducedtheradicalinnovationsthatarerequiredtodecarboniseEUindustrialandenergysectorswithinthenext 30 years. At the same time, no sustainable solution has been presented to tacklecompetitiveness issues followingthe introductionofacarbonprice.Thisperceptionseemsvalidgiventherecentchangestothesysteme.g.introductionoffirsttheNER300andlatertheinnovationand modernisation funds. EU regulations also seems to prevent (radical) innovation itself byembracing technological neutrality too extensively. The latter can unduly favour incumbentindustries and technologies and damage the EU’s innovative capacity. The design andimplementation of EU CO2 cars regulation is a clear example of this problem. It was designed(intentionallyornot)toimplicitlypromoteefficientdieselenginesandhenceslowedinnovationinbatterybasedelectricvehicles.Therecentdisruptiveinnovationinelectricvehiclesinotherpartsoftheworld,incombinationwithfraudulentbehaviourbyEUcarmanufacturers(likelyenabledbythedesign of EU regulations), is now having a negative impact on the future (innovative)competitivenessofmostEUcarmanufacturers.Apossiblesolutionwouldbetointroduce(asananaloguetoregulatoryfitnesschecks)innovationfitnesschecks(IFIT)inthedevelopmentofnewEUregulations.Thisincludescheckingtheinnovative

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potentialofnewproducts,processes,servicesandbusinessmodelsfollowingtheintroductionofnewEU regulationbut also the impacton value added to theEUGDPandpotential of (global)disruptivemarket leadership of EU companies. For the European Commission this would implyreviewing,adjustingorevenreplacingthecurrentmacro-economicmodelsandapproachesusedtomeasuretheimpactofEUrules.In this context enhanced streamlining or integration of EU R&I, investment and regulatoryinitiatives,wouldalsoberecommended.InpracticethiscouldimplythatindustrialR&Isupportislinkedtothemediumandlongtermchallengesorconstraintsputforwardinregulatoryinitiatives.The use of a societal challenges pillar under Horizon 2020 is in this context a step in the rightdirection.FutureEUR&I(andinvestment)programmescouldbemadeevenmoremission-oriented,inparticularinrelationtoregulatorytargetsandchallenges.Demandsidepoliciesseemunder-exploredAnotherobservationlinkedtothestreamliningofR&I,investmentandregulatoryinitiatives,isthatdemandsidepoliciesandtheirpotentialformarketformation,seemunder-used.Inparticular,thepromotion of use of public procurement to stimulate innovation (especially in the context ofsustainability) is limited.TheEChas initiatives inthisareaandsomeMemberStatesarealreadyengaging firmly, but the EU’s own resources and funds could be used better as leverage forinnovativepublicprocurement,bothatMemberStatelevelandonEUlevel.Forexample,anEUbody for facilitation of public-private partnerships and enhanced public procurement practices,could support the interaction between industrial actors and public bodies (e.g. facilitation ofplatformsforbestpracticesharing,trainingetc).ButalsotheEU’sowninvestmentorientedfundscouldbeusedbetterasleverageforinnovativepublicprocurement(atMemberStatelevel),butincludingspecificcriteriathatenhancemarketformationforinnovativeandsustainableproductsandservicesintheEU.

3.Conclusionsandrecommendations

WhilethisworkingpapercannotbringanindepthanalysisofallindustrialpolicyrelatedinitiativesintroducedbytheEUoverthepastdecade,itdoesofferaninterestingbird’seyeperspectiveontheflurryof(changing)activitiesinthisarea.Ingeneraloverthepastdecade,therewasarelativehighlevelofconsistencyintheEU’sindustrialstrategyandimplementationthereofwithsustainedfocusonbetter lawmakingandamulti-policy(horizontal)approachoncompetitiveness.TheEU’sR&Iinitiatives havemoved in the direction of industry and societal challenges. Completion of theinternalmarketremainsoneoftheprioritiesofanindustrialstrategyfocusingonareaswheretheEUislaggingbehind(i.e.digital,energyandcapitalmarkets).Externalfactors,mostimportantlythelongeconomiccrisis,alsoshapedEUinitiatives importantfor industrysince2008, leadingtotheintroductionofdemandsidepoliciessuchastheEFSI.

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Intheareaofgovernance,mostoftheinstrumentsatthedisposaloftheEUonindustrialinnovation,competitivenessandinvestments,canbeseenassoftorfacilitativeinstruments.ThisisaresultofthesharedcompetencesbetweentheEUanditsMemberStatesinthesepolicyareas.However,theactionstheEUundertakes(inparticularinmonitoring)arefairlyextensiveandcomprehensive.Itisrecommended to investigatewhether streamlining the competitivenessmonitoring instrumentsand the innovation governance instruments is warranted, with the goal to enhance theeffectiveness, linkagesandtransparencyof thesetools.Theongoingefforts todevelopeffectivegovernance instruments under the Energy Union can be seen as an interesting and relevantprecedenthere.Horizon2020andthegrowingengagementoftheEIBseemtobecomeanessentialcatalystforwhatcan become mission-oriented industrial innovation. This is relevant for the design of theforthcomingEUinnovationprogrammeunderthenextMulti-annualFinancialFramework(MFF).Itis thereforerecommended, ingeneralterms,thatthenextEUR&Iframeworkprogrammehasasimilarapproachandatleastequal(financial)size.ThemainchallengewillbetoembedtheEUR&IfundingintoabroaderinvestmentframeworktoensureeconomicandindustrialmaximisationofEUR&IinputandhencereducethegapbetweenR&Dandcommersialisation.Thisrequiresthatthenext EUMFF contains an overarching vision in its design and architecture through establishingenhancedlinksbetweenotherEU(investment,cohesion,development)funds.Thiswouldofcoursealso enhance the (economic) impact of EU funded R&I on societal challenges and industrialleadership.BetterandstreamlinedgovernanceofEUcompetitiveness,investmentandinnovationinstruments,canalsohaveapositiveimpactasitwillallowthedesignoffutureEUinnovationandinvestmentfundstobebetteralignedwithnationalandregionalneeds.Saidotherwise,itshouldimprovecoordinationbetweennationalandEUactivities.EUregulationshouldbebetterlinkedwithinnovationandinnovativecapacitiesofindustriesandbestreamlined with other innovation supporting initiatives. This is to avoid regulatory inducedtechnological lock-ins and competitivedisadvantages. The introductionof an innovation fitness-checkfornewEUregulations,similartotheexistingREFIT,wouldassistinbringingsuchasynergyabout.Finally, the use of demand side instruments to enhance market creation for innovative andsustainableproductsintheEU,shouldbeexploredfurther.Thisincludesrefining(EU)procurementrulesandtargeteduseofEUinvestmentfunds.TheseinitiativescanreducetheR&Itomarketgapbutalsocreate(global)marketsfornewproductsandservicesdevelopedbyEUcompanies.

Documents

A MAPPING OF EU INDUSTRIAL AND INNOVATION POLICY · TOMAS WYNS RESEARCHER, VRIJE UNIVERSITEIT BRUSSEL OCTOBER 2017 23 Rue de la Science – 1040 Brussels – Belgium +32 2 89 49 308