This memo sets out progress achieved on some key areas of EU action on research and innovation, a vital component of Europe's future competitiveness and growth.

Where are we on Innovation Union?

The Innovation Union is one of the seven flagship initiatives of the Europe 2020 strategy for a smart, sustainable and inclusive economy. Launched by the European Commission in October 2010, it aims to improve conditions and access to finance for research and innovation in Europe, to ensure that innovative ideas can be turned into products and services that create growth and jobs.

Good progress has been made in launching and implementing 30 out of the 34 Innovation Union commitments. Notably, by the end of 2011, based on wide stakeholder consultations, the Commission has put forward all six legislative proposals announced in the Innovation Union (Horizon 2020, new Cohesion policy, reform of public procurement legislation, a new regime for venture capital, standardisation package and legislative proposals for unitary patent protection). These proposals will bring a step change in framework conditions for innovation in Europe.

For more on Innovation Union see:

http://ec.europa.eu/research/innovation-union/index_en.cfm

Horizon 2020 - more and better funding for research and innovation

The Commission has proposed to increase investment in research, innovation and education in support of the EU's pro-growth agenda. Horizon 2020, the proposed €80 billion investment programme for research and innovation for 2014-2020. It brings together all existing EU research and innovation funding and provides support in a seamless way from idea to market, through streamlined funding, simpler programme architecture and rules for participation.

Horizon 2020 embodies many of the specific Innovation Union commitments. It focuses on societal challenges like climate change or health. It devotes significant funding to SMEs, financial instruments, supporting public procurement of innovation, facilitating collaboration, and supporting research on public sector and social innovation. The Commission will also seek to close the innovation divide in Europe by developing the synergies between Cohesion policy funding and Horizon 2020.

The Commission is already supporting top research and innovation across Europe. The current EU Seventh Framework Programme for Research (FP7) is worth €55 billion from 2007-2013. The last call for proposals under FP7, in July of this year, will be the biggest ever under an EU research programme, providing close to €10 billion to researchers and innovative companies.

Delivering the European Research Area

The European Council conclusions today stressed the effort needed on the European Research Area (ERA), following the commitment made in February 2011 to complete ERA by 2014.

ERA will provide a genuine single market for knowledge, research and innovation. This will enable researchers, research institutions and businesses to better move, compete and co-operate across borders. Currently, there is too much fragmentation across Europe, too much duplicated work, and too many barriers preventing knowledge circulation and researcher mobility. This wastes scarce resources – resources that could be more effectively used to stimulate innovation and create growth and jobs.

The Commission is due to propose a framework for achieving the ERA later this year, following a wide-ranging public consultation that too place during autumn 2011. The framework will focus on a number of ‘big ticket’ items which are crucial for achieving ERA and will make the biggest impact on the economy. One of the initiatives to help achieve ERA will be that major research stakeholders – both those who fund and those who do the research – will be invited to sign up to a formal joint commitment with the Commission to deliver on the main priority measures in the ERA Framework. These "ERA-Pacts" will contain a clear roadmap, based on common objectives, with precise, realistic deliverables for research actors and for the Commission, and clear deadlines for achieving them.

Developing a single innovation indicator

The European Council conclusions called for the rapid development of the single innovation indicator that had been identified in the Innovation Union flagship. The indicator is to measure the share of fast-growing, innovative companies in the economy. The indicator will cover both technological and non-technological innovation. The Commission is working closely with Member States on data collection in order to present reliable, consistent and comparable results by the end of 2012.

The European Commission continues to monitor innovation performance in Europe through a wider series of indicators. The Innovation Union Scoreboard (IP/12/102) provides a comparative assessment of the research and innovation performance of the EU27 Member States and the relative strengths and weaknesses of their research and innovation systems, based on 24 indicators. The EU Industrial R&D Investment Scoreboard analyses European and international companies in terms of their R&D investment (IP/11/1205).

IPR valorisation

In line with the European Council request to explore options for setting up an intellectual property rights (IPR) valorisation instrument, the Commission has carried out a study and convened an expert group. The results of both are now publicly available. Building on this work, the Commission is analysing the case for action in this field and will report to the Council.

IPR valorisation means exploitation of intellectual property rights through selling, licensing and other methods, and its transformation into goods and services. This should help accelerate the commercialisation of research results and help unlock the innovation potential from unused patents.

For more information see:

http://ec.europa.eu/enterprise/policies/innovation/policy/intellectual-property/index_en.htm

Helping business innovate: simplification and SME-friendly measures

Major efforts have already been made over the past year to simplify participation in the current Framework Programme for Research (FP7). The Commission Decision of January 2011 (C(2011)174) adopted three measures concerning the use of average personnel costs, a simpler cost reimbursement for owner-managers of SMEs without a salary, and the establishment of a clearing committee for ensuring the consistent application of the FP7 rules across all Commission services. These measures have been highly appreciated by the research community, especially by innovative SMEs.

Latest figures show that the European Commission is keeping its promises on research funding for Small- and Medium Enterprises (SMEs). SMEs are set to receive 15.3% (€2.4 billion) of the €16.3 billion committed so far under the Cooperation part of the Seventh Framework Programme (FP7). This surpasses the goal of 15% set by the European Parliament and European Council. SME funding under the Cooperation Programme is expected to remain above 15% for the rest of FP7, meaning SMEs will receive at least €4.8 billion of the €32 billion available under the Cooperation programme. Overall, around €7 billion of the FP7 budget of €55 billion is expected to go to around 17,000 SMEs.

Access to finance for innovation – RSFF and Horizon 2020

Financial markets and institutions are often reluctant to back research- or innovation- intensive companies or projects due to the relatively high level of uncertainty inherent in their activities. As a direct answer to this challenge, in 2007 the European Investment Bank and the European Commission jointly created a new lending instrument called the Risk-Sharing Finance Facility (RSFF).

The RSFF improves access to debt financing for promoters of research and innovation investments by sharing the underlying risks between the European Union and the European Investment Bank. Together they are providing up to €2 billion for the period 2007-2013. That has so far helped 75 companies benefit from over €7 billion in EIB loans to projects enhancing European growth and competitiveness

Horizon 2020 will maximise the growth potential of companies by providing them with adequate finance when they need it. The Commission has proposed some € 3.5 billion for financial instruments that will leverage many times this amount in private finance for loans and equity investments in innovative projects and companies. Under Horizon 2020, a debt financing instrument will provide loans and guarantees on a market-driven, first-come first served basis for investment in research and innovation. An equity instrument will provide venture capital to individual start-ups and growing enterprises.

For more on the RSFF see:

http://www.eib.org/products/loans/special/rsff/index.htm

For more on Horizon 2020 see:

http://ec.europa.eu/research/horizon2020/index_en.cfm?pg=home

Source: Reference:  MEMO/12/153    Date:  02/03/2012