159th CoR Plenary Session (31 January - 1 February 2024)

In June 2023, the EC tabled a proposal for a regulation establishing a new strategic technologies for Europe platform (STEP). STEP would rely on the reprogramming of funds under existing EU instruments. It would also come with an additional budget of €10 billion. Overall, the platform could leverage up to €160 billion in investment, of which €110 billion would be triggered by the top-up. STEP would direct funding to strategic projects supporting the development and manufacturing of deep and digital technologies, clean technologies and biotechnologies, and the strengthening of their value chains, to meet the challenges of the green and digital transitions.

This report offers guidance on how to manage industrial transition and is directed towards all policymakers seeking to improve the “what” and “how” of policies that promote industrial change. It identifies how regions in industrial transition can become more competitive and more resilient in the context of major shifts brought about by globalisation, decarbonisation and ongoing technological change. It takes stock of discussions emanating from a series of peer-learning workshops jointly organised in 2018 by the European Commission and the OECD.

Horizon Europe, the ninth EU framework programme for research and innovation (2021-2027), established five 'missions' to be achieved by 2030. These are the EU's long-term, cross-cutting research priorities and they focus on climate change, cancer, oceans and waters, climate-neutral and smart cities, and soil health. On 29 September 2021, the European Commission presented a communication in which it set out the goals the missions should aim to achieve by 2030. Research and innovation actors across Europe have welcomed the missions as an important enabler of the twin digital and ecological transition.

With the adoption of a communication on a new European innovation agenda on 5 July 2022, the European Commission aims to encourage innovators to make better use of EU single market finance opportunities, as well as to attract new private and public investors to reinforce EU financial and capital markets. The communication presents a set of legislative and non-legislative initiatives based on five flagships areas – access to finance; framework conditions for deep tech innovation; tackling the innovation divide; deep tech talents; and improving innovation policies – which cut across the von der Leyen Commission's political priorities.

The Smart Specialisation Strategy (S3) concept was introduced by Foray et al. (2009), as part of the Knowledge for Growth Expert Group composed of growth and innovation economists, appointed in 2005 by Janez Potocnik, former European Commissioner for Science and Research. It also builds on the initiative of DG Regio that started in 1995 on developing Regional Technology Plans and later on Regional Innovation Strategies. The aim was to lend greater impetus to the Lisbon Strategy (2000). The approach emphasises the need for decision and policymakers to recognise innovation fostering technologies and sectors at the local level, focusing on areas of comparative strength while avoiding duplication and fragmentation of efforts.

The European Commission is trying to reconcile these environmental and economic objectives by advocating a green and digital transition, which should lead to green growth, decoupling growth and pollution. The 2023 strategic foresight report 'Sustainability and people's wellbeing at the heart of Europe's open strategic autonomy' illustrates this effort. However, greening the economy and making the EU more autonomous do not always overlap. Whereas the Commission emphasises synergy between these objectives, that is just one possible scenario for the EU's future. Focusing on greening or autonomy only are equally viable scenarios, as is the possibility of achieving none of these objectives. Recently, tensions between the objectives of greening and becoming more autonomous have surfaced in political debates.

The European Investment Bank's Innovation, Digital & Human Capital (IDHC) lending programme has been in place for over two decades. This orientation takes stock of recent lending in this area and sets the direction for the 2021-2027 period. While experience has confirmed the relevance and soundness of this lending programme, the green and digital transitions are game changers . The European Investment Bank aims to fully embrace the opportunities that these create, while providing targeted and effective support for their accelerated deployment, in line with its commitments under the Climate Bank Roadmap. This includes the financing of R&D, demonstration and first commercial deployment of innovative technologies, infrastructures and innovative business models that will propel the decarbonisation of the economy.

The report highlights the historical opportunity for the EU, with a policy agenda placing sustainability in the front seat. The authors take inspiration from two experimental innovation policies in the EU: the smart specialisation policy, implemented through the European Regional Development Funds, and the mission-oriented policy, implemented through the upcoming Horizon Europe programme for research and innovation . A place-based innovation policy for sustainability will require a solid multi-level governance and a policy flexibility to address possible trade-offs early on. Smart specialisation strategies have built the foundations but would now need to marry bottom-up leadership with the new directionality of sustainability and inclusiveness. The authors formulate this as the move from S3 to S4+.