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Document 52018SC0307

COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposals for a REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing Horizon Europe – the Framework Programme for Research and Innovation, laying down its rules for participation and dissemination DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on establishing the specific programme implementing Horizon Europe – the Framework Programme for Research and Innovation COUNCIL REGULATION establishing the Research and Training Programme of the European Atomic Energy Community for the period 2021-2025 complementing Horizon Europe – the Framework Programme for Research and Innovation

SWD/2018/307 final

Brussels,7.6.2018

SWD(2018) 307 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposals for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing Horizon Europe – the Framework Programme for Research and Innovation, laying down its rules for participation and dissemination

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on establishing the specific programme implementing Horizon Europe – the Framework Programme for Research and Innovation

COUNCIL REGULATION establishing the Research and Training Programme of the European Atomic Energy Community for the period 2021-2025 complementing Horizon Europe – the Framework Programme for Research and Innovation

{COM(2018) 435 final}

{COM(2018) 436 final}
{COM(2018) 437 final}
{SEC(2018) 291 final}

{SWD(2018) 308 final}

{SWD(2018) 309 final}


Table of contents

Executive Summary

1Introduction: Political and legal context

1.1Scope

1.1.1    Political context    

1.1.2    Legal context    

1.2Lessons learnt from previous programmes

2Challenges and Objectives

2.1Key features of Horizon 2020 and expected impacts of its continuation

2.2Main R&I challenges and problems to be addressed

2.3Objectives of the future Programme

3Programme structure and priorities

3.1Scope and structure of the new Framework Programme

3.2Improvements and their expected implications

3.2.1    The European Innovation Council (EIC)    

3.2.2    Research and Innovation Missions    

3.2.3    International cooperation    

3.2.4    Open Science policy    

3.2.5    European Partnerships    

3.3Overall impact on the new Framework Programme

3.4Critical mass

4Delivery for Impact

4.1The strategic planning process

4.2The single set of rules

4.3The funding model

4.4Forms of funding, including simplified cost options

4.5Grants, financial instruments and blended finance

4.6Proposal evaluation and selection

4.7Ex-ante and ex-post audits

4.8Policy and rules regarding Dissemination and Exploitation

4.9Delegation to Executive Agencies

4.10Overall impact on the objectives of the MFF

5How will performance be monitored and evaluated?

Glossary

Term or acronym

Meaning or definition

COSME

EU programme for the Competitiveness of Enterprises and Small and Medium-sized Enterprises

EIC

European Innovation Council

EIT

European Institute for Innovation and Technology

ERAC

European Research Area and Innovation Committee

ERC

European Research Council

ERCEA

European Research Council Executive Agency

ERDF

European Regional Development Fund

EU

European Union

FET

Future and Emerging Technologies

FP7

Seventh Framework Programme for Research and Technological Development

GDP

Gross Domestic Product

JRC

Joint Research Centre

KICs

Knowledge and Innovation Communities

MFF

Multiannual Financial Framework

MSCA

Marie Skłodowska-Curie Actions

R&I

Research and Innovation

REA

Research Executive Agency

SMEs

Small and Medium Enterprises

TFEU

Treaty on the Functioning of the European Union



Executive Summary

This impact assessment accompanies the Commission proposal for Horizon Europe, the 2021-2027 Framework Programme for EU Research and Innovation, which will succeed the current Programme, Horizon 2020 (active between 2014-2020), and the proposal for the 2021-2025 Research and Training Programme of the European Atomic Energy Community (Euratom Programme).

Research and innovation help Europe deliver on citizens' priorities, as embodied in the Sustainable Development Goals and in the Paris Agreement on fighting climate change, to bring about sustainable growth and high-quality jobs, and to solve present and unforeseen global challenges. However, Europe overall currently underinvests in research and innovation compared to its main trading partners, and so risks being irreversibly outpaced.

EU-level investment, through successive Framework Programmes, has supported the provision of public goods with a high European added value. This added value comes from the Programmes’ focus on excellence through EU-wide competition and cooperation. Framework Programmes support training and mobility for scientists, create transnational, cross-sectoral and multidisciplinary collaborations, leverage additional public and private investment, build the scientific evidence necessary for EU policies, and have structuring effects on national research and innovation systems. The significant and long-lasting impact of the Framework Programmes, in particular the current Programme, is acknowledged by the EU institutions, Member States and stakeholders alike.

Horizon Europe is built on the evidence and lessons learnt from the Horizon 2020 interim evaluation, and the recommendations of the independent High-Level Group on maximising the impact of EU research and innovation. The new Programme will be an evolution, not a revolution, focusing on a few design improvements to further increase openness and impact.

Horizon Europe’s general objectives stem from the Treaty on the Functioning of the European Union. These will be: to strengthen the scientific and technological bases of the Union and foster its competitiveness, including for its industry; to deliver on the EU's strategic policy priorities and contribute to tackling global challenges, including the Sustainable Development Goals. To address particular research and innovation challenges faced by the EU, Horizon Europe also has specific objectives. All objectives apply across the Programme, and all individual Programme parts will contribute to their achievement.

The evolution from Horizon 2020 is reflected in the revamped structure. The three-pillar structure will be continued, but redesigned for more coherence, both between and within pillars, in support of the Programme objectives.

Pillar 1 - Open Science will continue to focus on excellent science and high-quality knowledge to strengthen EU’s science base through the European Research Council, Marie-Skłodowska Curie Actions and Research Infrastructures. As a "bottom-up", investigator-driven pillar, it will continue to give the scientific community a strong role.

Pillar 2 - Global Challenges and Industrial Competitiveness will better address EU policy priorities and support industrial competitiveness by integrating the Horizon 2020 Societal Challenges and Leadership in Enabling Industrial Technologies into five clusters (i.e. Health; Resilience and Security; Digital and Industry; Climate, Energy and Mobility; and Food and natural resources). The clusters will better support the full spectrum of the Sustainable Development Goals, and increase collaborative research and innovation across sectors, disciplines and policy fields – boosting flexibility, focus, and impact. Due to its policy focus, the pillar will be implemented "top-down", through a strategic planning process ensuring the involvement of stakeholders and society, and alignment with Member States' activities. The pillar will give appropriate visibility to industry’s essential role in achieving all the Programme’s objectives, not least in tackling global challenges, including by developing key enabling technologies for the future.

Pillar 3 – Open Innovation will offer a one-stop shop for high-potential innovators with the European Innovation Council and increase cooperation with innovation ecosystems and actors. This pillar will integrate and reorganise Horizon 2020 activities, such as Innovation in SMEs (notably the SME instrument), Fast-track to Innovation, as well as Future and Emerging Technologies. Innovation will continue to be supported throughout the whole Programme, not just in this innovation-focussed pillar.

Horizon Europe will reinforce the European Research Area through: Sharing excellence (extending the Horizon 2020 actions that help tackle low research and innovation performance i.e. Teaming, Twinning, ERA chairs, and COST); research and innovation reforms and policy, covering the Policy Support Facility; foresight activities; and Framework Programme monitoring, evaluation, dissemination and exploitation of results

The new Programme will also have some new features and enhancements of existing elements. With Horizon 2020 well on track to deliver excellence, impact and openness, these changes will make the successor Programme achieve even more impact (through the European Innovation Council and mission-orientation) and more openness (through strengthened international cooperation, a reinforced Open Science policy, and a new policy approach to European Partnerships).

The European Innovation Council will help place the EU in the lead for breakthrough market-creating innovation. It will support high-risk, market-creating innovation projects that do not (yet) generate revenues, to bridge the “valley of death” between research and commercialisation and help companies scale up. The tailor-made support to innovators will be channelled through two main funding instruments. The Pathfinder for Advanced Research will provide grants from the early technology stage (proof of concept, technology validation) to the early commercial stage (early demonstration, development of business case and development of strategy). The Accelerator will support the further development and market deployment of breakthrough and market-creating innovations, to a stage where they can be financed on usual commercial terms by investors (from demonstration, user testing, pre-commercial production and beyond, including scale-up). It will place a particular emphasis on innovation generated within the Pathfinder, although it will also fund projects from other parts of the Programme, such as the European Research Council or the Knowledge and Innovation Communities. The expected implications of the role played by the European Innovation Council include more innovation that creates the new markets of the future, more companies that scale up in Europe, higher growth among SMEs, and more entrepreneurship and risk-taking.

Horizon Europe will see the introduction of a limited set of highly visible research and innovation ‘missions’ under Pillar 2 (but potentially also providing direction to the other pillars). Missions will prioritise investment and set directions to achieve objectives with societal relevance, thereby creating more impact and outreach, encouraging a systemic approach (moving from a view of narrow sectors to entire systems), and aligning instruments and agendas for research and innovation across Europe. Missions will either accelerate progress towards a set scientific, technical or societal solution, by focusing large investment on a specific target; or transform an entire social or industrial system within an established timeframe. They will be selected after the Programme launch, according to strict selection criteria, and co-designed with Member States, stakeholders and citizens. The expected implications of this new mission approach include more cross-sectoral and cross-disciplinary cooperation, higher impact on global challenges and EU priorities, and a reduced gap between science and innovation, and society.

Strengthened international cooperation is vital for ensuring access to talent, knowledge, facilities and markets worldwide, for effectively tackling global challenges and for implementing global commitments. The Framework Programme will intensify cooperation and extend openness for association to all countries with proven science, technology and innovation capacities, to make cooperation and funding of joint projects as smooth as possible. The programme will continue to fund entities from low/middle income countries. Entities from industrialised and emerging economies will be funded only if they possess essential competences or facilities. The expected implications include higher excellence in the Programme, more influence for the EU in shaping global research and innovation systems, and higher impact.

Open Science will become the modus operandi of the new Programme, going beyond Horizon 2020’s open access policy to require immediate open access for publications and data (with opt-out possibilities for the latter), and research data management plans. The Programme will encourage the proliferation of FAIR data (findable, accessible, interoperable, and re-usable) and support a sustainable and innovative scholarly communications ecosystem. It will foster activities to improve researcher skills in Open Science and the reward systems that promote this. Research integrity and citizen science will play a central role, as will the development of a new generation of research assessment indicators.

The new approach to European Partnerships will be more impact-focussed. The need to establish future European Partnerships or renew existing ones will be identified as part of the strategic programming process for the Framework Programme. European Partnerships will be open to all types of stakeholders (e.g. industry, Member States and philanthropic foundations) and will be limited in time, with clear conditions for the phasing out of the Framework Programme funding. They will be based on the principles of Union added value, transparency, openness, impact, leverage effect, long-term financial commitment from all parties, flexibility, coherence and complementarity with Union, local, regional national and international initiatives. The future partnership landscape will ensure optimal coherence between Framework Programme activities and partnerships. There will be only three types: i) co-programmed European Partnerships, based on memoranda of understanding or contractual arrangements; ii) co-funded European Partnerships, based on a single, flexible co-fund action; iii) institutionalised European Partnerships (based on Article 185 or 187 of the Treaty on the Functioning of the European Union). Following a life-cycle approach, the Framework Programme will set out the criteria for selecting, implementing, monitoring, evaluation and phasing out all European Partnerships.

The changes to the Programme's structure and the improvements to it will facilitate the achievement of the Programme's objectives, making it more effective and helping it generate even more economic benefits and value for money. These effects will be amplified by strengthened synergies and complementarities with other EU programmes, for example through the Seal of Excellence.

Efficient delivery is essential for meeting all the objectives. It is also key to achieving higher impact and further simplification. Building on the achievements of Horizon 2020, simplification remains a continuing endeavour also in the new Programme. Several improvements have been made to streamline delivery for impact. The Programme will aim at further simplification within the present real cost reimbursement system with its simplified funding model. Increased use will be made of project funding against fulfilment of activities (i.e. lump sum) and other simplified forms of funding allowed by the new Financial Regulation. Cross-reliance on audits across EU programmes and acceptance of usual cost accounting practices will be developed. To increase flexibility, the Programme will support the intersection of disciplines and sectors and allow allocation of funds between and within pillars to react swiftly to emerging issues or challenges. Further improvements to the proposal submission and evaluation process will be envisaged by continuously trying to reduce the 'time to grant' and by improving feedback to applicants. The evaluation criteria, process and involvement of independent experts will underscore the Programme's excellence and impact. Innovation support schemes will be streamlined under the European Innovation Council, while the complementarity between grants and financial instruments could be reinforced through blended finance.

Impact depends ultimately on the dissemination and exploitation of research and innovation data and results, and it needs to be effectively captured and communicated. An ambitious and comprehensive strategy will increase the availability of such data and results and accelerate their uptake to boost the overall impact of the Programme. Portfolios of mature results will be exploited in synergy with other EU programmes to ensure their uptake at national and regional level, maximising European innovation potential. This will be complemented by effective communication and outreach campaigns that build trust and engage citizens.

Progress towards the Programme’s objectives will be tracked along 'impact pathways' (on scientific, societal, and economic impact). The impact pathways will be time-sensitive, distinguishing between the short, medium and long term. The impact pathway indicators will contain both qualitative and quantitative information, the availability of which will depend on the Programme's stage of implementation. Individual programme parts will contribute to these indicators to varying degrees and through various mechanisms. The data behind the key impact pathway indicators will be collected in a centrally managed and harmonised way that imposes minimum reporting burden on beneficiaries, including using unique identifiers for applicants and sourcing data automatically from existing external public and private databases. Baselines, targets and benchmarks will be established before the Programme’s launch. Management and implementation data from the Programme will continue to be collected in near real-time. An analysis of progress on key dimensions of management and implementation will be carried out every year. Interim and ex-post evaluations will ensure that methodologies are consistent and coverage is comprehensive.



1Introduction: Political and legal context

1.1Scope

This impact assessment accompanies the Commission proposals for Horizon Europe, the 2021-2027 Framework Programme for EU Research and Innovation (R&I), which will succeed Horizon 2020 (2014-2020): proposals for the Framework Programme and Rules for Participation 1 , the Specific Programme 2 , as well as the 2021-2025 Research and Training Programme of the European Atomic Energy Community (Euratom Programme) 3 . An impact assessment for the defence research has been carried out separately and is accompanying the proposal for the European Defence Fund Regulation.

R&I are crucial for providing solutions to the challenges of our time. They deliver on citizens' priorities, as embodied in the Sustainable Development Goals and in the Paris Agreement on fighting climate change 4 , on growth and jobs, and to solve the global challenges we face today and will face tomorrow 5 . In areas like health, digital technologies, industrial transformation, resilient societies, natural resources, energy, mobility, environment, food, low-carbon economy and security, R&I are critical to the success of EU priorities, in particular jobs and growth, Digital Single Market, Energy Union and climate action. R&I are at the core of the productivity and competitiveness of our economy. About two-thirds of Europe's economic growth over the last decades has been driven by R&I. R&I support the creation of new and better jobs and the development of knowledge-intensive activities, which account for more than 33% of total employment in Europe. Moreover, to ensure sustainable growth and the capacity to address the societal challenges ahead, Europe must reinforce and maintain its technology and industrial capacities in the key areas that underpin the transformation of our economy and society. 

"Fostering R&I across the EU" is the most important policy challenge for 97% of respondents to the cluster-based public consultation on EU funds in the area of investment, research & innovation, SMEs and single market 6 .

R&I determine the productivity and competitiveness of our economy: about two-thirds of Europe's economic growth over the last decades was driven by innovation. They support the creation of new and better jobs, and the development of knowledge-intensive activities, which account for more than 33% of total employment in Europe 7 . Europe must maintain and even reinforce its technological, industrial and innovation capacities in a sustainable way, in the strategic areas that underpin our society, economy and international commitments.

Currently, Europe underinvests in R&I compared to its main trading partners. If this continues, Europe risks being outpaced irreversibly. The EU's overall R&I intensity is just above 2% of GDP (failing to meet the 3% target 8 ). In particular, private investment in research and development in the EU has remained low in comparison to other advanced economies, and the gap has grown again since 2013. This poor EU performance signals a weak capacity to translate knowledge into market-creating innovations 9 . Europe has to anticipate and ride the new global wave of breakthrough innovation that is coming up, one that will be more “deep-tech” 10 and will affect sectors such as manufacturing, financial services, transport or energy.

EU-level R&I investments support public goods 11 with a high European added value 12 : through EU-wide competition for excellence, EU investments support the training and mobility of scientists, create transnational and multidisciplinary collaboration, leverage additional investment from the public and private sectors, build the scientific evidence necessary for effective EU policies, and structure national R&I systems 13 .

To stimulate innovation in Europe, more is needed. EU investments in R&I must be enhanced and re-designed to better serve strategic areas for Europe and cover the full value chain development from early and advanced research to innovation and market deployment. They must be matched by national investments in R&I, and the market and regulatory framework must create the right conditions for innovation to flourish 14 . However, these issues are outside the scope of this impact assessment.

1.1.1Political context

The common view of the EU Institutions is that the Framework Programmes for R&I have a high EU added value and that the implementation of the current Programme is largely a success. In addition to the Communication on the Interim Evaluation of Horizon 2020 15 , the Commission’s reflection paper on the future of EU finances highlights R&I as a key European priority 16 , citing it as an example of a public good with clear EU added value. Opinions and reports from the European Parliament 17 , the European Economic and Social Committee 18 , the Committee of Regions 19 , the European Research Area and Innovation Committee (ERAC, where Member States' public administrations are represented) 20 , and more recently, the Competitiveness Council (through Council Conclusions 21 ) support the findings of the Interim Evaluation, in particular stressing that EU added value must be the major driver for the design and implementation of the next Framework Programme.

Box 1 Overall budget envelope

On 2 May 2018, the European Commission adopted its proposals for a new Multiannual Financial Framework (MFF) for 2021-2027 22 . Under these proposals, the Horizon Europe and the Euratom programmes will have a combined budget of EUR 100 billion over this period. This impact assessment report reflects the decisions of the MFF proposals and focuses on the changes and policy choices which are specific to these instruments. 

In response to the Horizon 2020 interim evaluation, the European Parliament, supported by the Committee of Regions, similarly calls, among others, on the EU to avoid budget cuts to Horizon 2020 and to endow the successor programme with at least EUR 120 billion 23 . The ERAC calls for proportionality between budget and ambitions. Similarly, Council Conclusions emphasise the need to prioritise R&I across all relevant EU policies, and provide significant funds for the future programme.

1.1.2Legal context

The Framework Programme for R&I is based on Articles 173, 182, 183 and 188 of the Treaty on the Functioning of the European Union 24 . This initiative is in an area of (shared) parallel competence and the subsidiarity and proportionality principles apply. This impact assessment satisfies the requirements of the Financial Regulation in respect of preparing an ex-ante evaluation.

The EU Framework Programme for R&I respects the subsidiarity and proportionality principles. Action at EU level is necessary: the underlying findings of a recent external study are that more than four out of five Horizon 2020 projects would not have gone ahead without Horizon 2020 funding 25 . They produce undeniable added value in terms of scale, speed and scope compared to national and regional-level support to R&I (without replacing it 26 ) by boosting excellence through transnational competition, strengthening impact via collaborative R&I, and providing critical mass to tackle global challenges (see Annex 4). Moreover, it is proportionate, not going beyond what is required for Union objectives.

1.2Lessons learnt from previous programmes

EU Framework Programmes have generated significant and long-lasting impacts 27 , as shown by successive evaluations since the EU started investing in R&I in 1984. More details on the lessons learnt from evaluations of previous Programmes are in Annex 3.

Box 2: Recommendations from the ex-post evaluation of the Seventh Framework Programme

The Ex Post Evaluation of the Seventh Framework Programme (FP7) made the following recommendations 28 , which are also relevant for this impact assessment:

a.Ensure focus on critical challenges and opportunities in the global context.

b.Align research and innovation instruments and agendas in Europe.

c.Integrate the key components of the Framework Programmes more effectively.

d.Bring science closer to the citizens.

e.Establish strategic programme monitoring and evaluation.

The Communication on the interim evaluation of Horizon 2020 29 identified several areas for improvement. In addition to in-depth analysis, this was based on extensive stakeholder feedback 30 and the strategic recommendations of the independent High Level Group on maximising the impact of EU R&I Programmes (Lamy High Level Group):

·Continue simplification. Horizon 2020 has made great progress in terms of simplification compared to FP7, but simplification is an ever continuing undertaking, requiring constant improvements. Further simplification should be pursued to support faster innovation cycles and lower administrative burden.

·Support breakthrough innovation. While some potential for supporting breakthrough, market-creating innovation was identified in Horizon 2020, such support should be considerably strengthened in order to identify, develop and deploy breakthrough and market-creating innovations and support the scale-up of young and quickly growing innovative companies to international and European levels.

·Create more impact through mission-orientation and citizen involvement. The Framework Programme needs greater impact and more outreach to citizens. A mission-oriented approach would increase the focus on impact, while involving citizens, customers and end-users in agenda-setting (co-design) and implementation (co-creation) leads to more innovation by stimulating user-driven innovation and the demand for innovative solutions.

·Increase synergies with other EU funding programmes and EU Policies. While synergies already exist between Horizon 2020 and other EU programmes, they should be further strengthened. In particular, building on synergies with the European Structural and Investment Funds (ESIF) and smart specialisation strategies, R&I capacities built over the past decade in lower performing regions could be better used for Framework Programme-supported projects.

·Strengthen international cooperation. While Horizon 2020 has a broad international outreach and openness to the world, third-country participations declined when compared to FP7 31 . International cooperation in R&I is vital for ensuring access to talent, knowledge, know-how, facilities and markets worldwide, for effectively tackling global challenges, and for implementing global commitments. It needs to be further intensified in order to strengthen Europe's R&I excellence and competitiveness.

·Reinforce openness. There is a need to build on the great progress made in terms of making the scientific publications and data generated by Horizon 2020 openly accessible to the wider scientific community and public. The next Framework Programme should fully embrace Open Science policy as a way of strengthening scientific excellence, benefiting from citizen participation, achieving better reproducibility of results, and increasing the re-use of research data.

·Rationalise the funding landscape. A key area for improvement is the rationalisation of the funding landscape, in particular with respect to partnership instruments and initiatives. Reforming the current policy approach to European Partnerships should make it possible to use the full potential of the new or renewed European Partnerships in achieving ambitious policy objectives that cannot be achieved by the Union or national action alone.

Following the Interim Evaluation of Horizon 2020, the Lamy High Level Group report (presented at the conference "Research & innovation – shaping our future" on 3 July 2017) 32 and the open public stakeholder consultations for the preparation of the sectorial legislation accompanying the proposal for the post-2020 MFF, more than 300 position papers were received. Fostering R&I across the EU resulted as the most important policy challenge according to the respondents to the public stakeholder consultation. Key messages and a detailed analysis of this stakeholder input can be found in an Annex 2.

2Challenges and Objectives

2.1Key features of Horizon 2020 and expected impacts of its continuation

Having excellence as the core underlying principle, Horizon 2020 attracts participants from the best institutions and companies in and outside Europe, covering a wide range of disciplines. Stakeholders express strong satisfaction with the programme, as shown by the sustained interest in its highly competitive calls and high oversubscription rates (which is commonly quoted by stakeholders as being the biggest problem). The programme offers unique collaboration and networking opportunities. Scientific publications of Horizon 2020 are cited already at twice the world average rate. Patents produced through the programme are of higher quality and likely commercial value than similar patents produced elsewhere. Horizon 2020 has shown flexibility in responding to evolving political priorities, such as migration, and emergencies such as the Ebola and Zika outbreaks. Horizon 2020 is on track to contribute significantly to the creation of jobs and growth. Moreover, it supports EU policy objectives through its focus on excellent science, industrial leadership and societal challenges

Key features of Horizon 2020:

·significant budget (close to EUR 77 billion) for 7 years (2014-2020), with a target of 35% related to climate action and 60% related to Sustainable Development;

·seamless integration of R&I into a single framework, from ‘blue-sky’, frontier research to close-to-market innovation activities;

·direct R&I investments through an EU-wide competition based on excellence as guiding principle (and main evaluation and selection criterion);

·central management by the European Commission, its executive agencies or other implementing bodies;

·a three-pillar structure focusing on excellent science, industrial leadership and societal challenges.

·major simplification measures implemented through the Common Support Centre, such as a single set of rules, an easy to use cost reimbursement model, a single point of access for participants, fewer audits.

The continuation of the ongoing Programme is expected to generate even more:

·new knowledge and technologies, promoting scientific excellence and significant scientific impact. The Programme will continue to facilitate cross-border collaboration between top scientists and innovators, allowing for trans-national and cross-sector coordination between public and private R&I investment. Horizon 2020 has already attracted the world’s best research institutions and researchers, supported ~340,000 researchers, and developed Europe’s human capital. The first scientific publications from Horizon 2020 are world-class (cited more than twice the world average) and contributed to major discoveries like exoplanets, the Higgs boson, and gravitational waves. 33 .

·positive effects on growth, trade and investment flows 34 , quality jobs and international mobility for researchers in the European Research Area. The continuation scenario is expected to bring an estimated average GDP increase of 0.08% to 0.19% over 25 years, which means that each euro invested can potentially generate a return up to 11 euros of GDP gains over the same period 35 36 (see Annex 5). EU investments in R&I are expected to directly generate an estimated gain 37 of up to 100,000 jobs in R&I activities in the “Investment phase” (2021-2027) and to foster an indirect gain of up to 200,000 jobs over 2027-2036, of which 40% are high-skilled jobs, through the economic activity generated by the Programme.

·significant social and environmental impact. This will happen directly through the dissemination, exploitation and uptake of scientific results translated into new products, services and processes, which in turn contribute indirectly to the successful delivery on political priorities.

These impacts mean that the potential cost of discontinuing the EU R&I Programme (i.e. cost of non-Europe) is substantial. Discontinuation would result in a decline of competitiveness and growth (up to EUR 720 billion of GDP loss over 25 years 38 ), sharp reductions in the private and national investments that are currently leveraged by EU-level co-investments, creating significant losses of social, environmental and economic impacts.

Box 3: Three phases of the economic impact of the Framework Programme

The expected economic impact of continuation is decomposed in three phases in the NEMESIS model 39 :

·The investment phase. From the beginning to the end of the Programme (2021-2027). Assuming a “maturation” lag of innovation between 3 and 5 years, economic impact is driven by the spending, with comparatively moderate impact from the production of innovations at this stage.

·The innovation phase. During and after the investment phase, R&I investments produce economic effects through the creation of new process and product innovations. Process innovation increases efficiency, which leads to lower cost. Product innovation increases the quality of, and raises the demand for, products. The lower cost and enhanced quality increase competitiveness.

·The obsolescence phase. After the innovation phase, knowledge depreciation decreases gains.

Figure 1: GDP gains from the continuation of Horizon 2020 (percentage change compared to a situation without Framework Programme)

*Note: Figures calculated for EU-27; different sets of results from QUEST are presented in Annex 5 based on different funding assumptions. This graph presents the scenario with higher benefits.

2.2Main R&I challenges and problems to be addressed

Based on the key findings and lessons learnt from the Horizon 2020 Interim Evaluation (see section 1.2 above), the following key challenges in the area of R&I to be addressed by the future Programme have been identified:

1) The creation and diffusion of high-quality new knowledge and innovation in Europe should be improved. Europe is overall a global scientific powerhouse, but it is essentially a "mass producer [of knowledge] with, relative to its size, comparatively few centres of excellence that standout at the world level and with large differences between European countries" 40 . Moreover, the gap between high productivity firms and the rest has grown, illustrating a serious issue in the circulation of knowledge and technologies. This corresponds to the following findings of the Horizon 2020 Interim Evaluation:

·Sub-optimal creation 41 of high-quality knowledge and lack of diffusion 42 of knowledge across borders, sectors, disciplines 43 and along the value chain;

·Insufficient open science 44 ;

·Scattered pockets of scientific excellence and R&I infrastructures 45 ;

·Rapid increase of global competition for talent 46 ;

·Hampered global R&I cooperation 47 .

2) There is a need to reinforce the impact of R&I in policy-making. R&I have to take a more prominent place in shaping EU policy priorities and for delivering on policy commitments and priorities of the Union. R&I are expected to make a crucial contribution to achieving EU policy priorities, including the Sustainable Development Goals. The impact is stronger when investments are prioritised in areas where the EU added value is greatest 48 and aligned with policy needs; when support provides incentives in a highly performing and dynamic system with supportive framework conditions; and where R&I results have a strong potential to feedback into the policy-making cycle. Investments in R&I have to better fit into the full innovation cycle, from societal needs to market deployment, supporting the implementation of EU, national and regional strategic policy priorities. Uptake of innovative solutions has been low so far, and more needs to be done to increase end-user involvement, for demonstrating and scaling up promising solutions and create favourable market and framework conditions for innovation, including social innovation, while ensuring that competition in the internal market which drives the innovative efforts of companies and unlocks their innovative potential is not distorted. This corresponds to the following findings of the Horizon 2020 Interim Evaluation:

·Variable focus on EU strategic challenges 49 ;

·Sub-optimal link between R&I and EU policy-making 50 ;

·Low awareness of innovative solutions and insufficient end-user/citizen involvement in the R&I process 51 .

3) EU is lacking rapid uptake of innovative solutions. Around two thirds of EU manufacturing companies have not recently used any advanced technologies 52 , and competition from the USA and Asia has intensified. The EU's substantial knowledge assets, notably in the field of key enabling technologies, need to be more effectively and quickly turned into innovations, particularly as innovative solutions for global challenges are increasingly research-intensive. Apart from aiming at high industrial participation in the programme, a stronger focus is needed on innovators working on breakthrough market-creating innovations - these are rare in Europe (fast-growing start-ups, so-called unicorns, are five times fewer than in the USA 53 ). This corresponds to the following findings of the Horizon 2020 Interim Evaluation:

·Slow industrial transformation 54 ;

·Limited scale-up of innovative SMEs at EU level and lack of venture capital 55 ;

·Lack of entrepreneurial skills to translate ideas into innovations 56 .

4) There is a need to strengthen the European Research Area (ERA). While strong progress was made over the last years 57 , knowledge flows, good working conditions, effective career development of researchers and other ERA priorities, need to be more widely spread. Within the EU, scientific excellence is rather concentrated, and EU funding from Horizon 2020 to low performing R&I countries remains low 58 . The delivery of the Programme can only be optimised by unlocking the potential of all partners - this means there is a need for strengthening the EU scientific and technological base and spreading the benefits of excellence 59 .

2.3Objectives of the future Programme 

The Framework Programme’s general objective is based on Article 179.1 TFEU:

to strengthen the scientific and technological bases of the Union and foster its competitiveness, including for its industry, deliver on the EU's strategic policy priorities and contribute to tackling global challenges, including the Sustainable Development Goals.

As a lesson learnt from the Interim Evaluation of Horizon 2020 supported by strong stakeholder feedback, specific objectives are identified for the Programme as a whole (i.e. not per part or instrument) to improve coherence and linkages among Programme parts. Based on the challenges identified in section 2.1, the specific objectives are:

1)to support the creation and diffusion of high-quality new knowledge, skills, technologies and solutions to global challenges;

2)to strengthen the impact of research and innovation in developing, supporting and implementing Union policies, and support the uptake of innovative solutions in industry and society to address global challenges;

3)to foster all forms of innovation, including breakthrough innovation, and strengthen market deployment of innovative solutions;

4)to optimise the Programme's delivery for increased impact within a strengthened European Research Area.

General and specific objectives will be pursued through an improved Programme structure (Section 3). The implementation of the Programme will be optimised in terms of delivery (Section 4) in line with the cross-cutting objectives of the MFF, notably simplification, flexibility, coherence, synergies and focus on performance. The specific objectives are operationalised in the Specific Programme implementing the Framework Programme. All objectives articulate with each other coherently, so that all actions in each pillar can deliver on the objectives without risking any inconsistencies or exclusions.

Figure 2: Link between the Framework Programme’s challenges and objectives.

3Programme structure and priorities

3.1Scope and structure of the new Framework Programme

“An evolution, not a revolution” 60 - building on the positive findings of the Horizon 2020 Interim Evaluation, stakeholder feedback 61 and the Lamy High Level Group report, only a further refinement of the current Programme is necessary 62 . Therefore, the vast majority of the parts and features of Horizon 2020 will be continued, albeit with several optimisations and minor redesigns. As all components of the Framework Programme are necessary to achieve its objectives, a different level of ambition (including budgetary) would result in an adjusted level of support across all areas. Moreover, compared to Horizon 2020, Horizon Europe will invest less in sector-specific projects and partnerships, and focus instead on systemic transformations.

The Programme’s scope will continue to cover research 63 and innovation 64 in an integrated manner. Scientific knowledge, societal challenges and industrial technologies should complement each other and be mutually reinforcing, bringing industry, academia, public stakeholders, and citizens closer together, and thereby aligning the processes and the outcomes of R&I with societal needs, expectations and values, including gender balance. In close synergies with other EU Programmes, the Framework Programme will continue to support the whole innovation ecosystem with seamless support from the lab to the market uptake for high-risk activities that would not be performed without public support.

Error! No sequence specified.Box 4: The three-pillar structure of Horizon 2020

Pillar 1 - Excellent Science aims to raise the level of excellence in Europe's science base and ensure a steady stream of world-class research to secure Europe's long-term competitiveness. Pillar 2 - Industrial Leadership aims to speed up the development of the technologies and innovations that will underpin tomorrow's business and help innovative European SMEs to grow into world-leading companies. Pillar 3 - Societal Challenges responds directly to the policy priorities of the Europe 2020 strategy and aims to and addresses major concerns shared by citizens in Europe and elsewhere.

In addition to the three pillars, Horizon 2020 has two specific objectives: (i) "Spreading Excellence and Widening Participation" and (ii) "Science With and for Society". It also includes support for the European Institute of Innovation and Technology (EIT) – with the objective of promoting the knowledge triangle – and for the Joint Research Centre (JRC) – with the objective of providing robust evidence for EU policy making. Furthermore, a number of cross-cutting issues are promoted, e.g. the realisation of the European Research Area (ERA), Responsible Research and Innovation, SMEs and private sector participation, Social Sciences and Humanities, gender, international cooperation, sustainable development and climate-related expenditure.

Figure 3: The three-pillar structure of Horizon 2020

The three-pillar structure will be continued and optimised. It will be redesigned to better address the challenges described in Section 2.2. With clearly defined and complementary rationales for intervention, each part will contribute to all the specific objectives. The design of the three pillars will ensure interconnections leading to mutual reinforcement of activities, helping meet the Programme's objectives and ultimately boosting the overall impact (see Figure 4 ). Support to basic research will remain a cornerstone of the Programme, pursued primarily under the first pillar (but also in the other two pillars); applied research and incremental innovation will be the centre of gravity in the second pillar, addressing both industrial and societal needs (Global Challenges and Industrial Competitiveness); innovation is the focus of the third pillar (Open Innovation). The largest share of resources is needed for Global Challenges and Industrial Competitiveness pillar, followed by Open Science and Open Innovation, whereas Strengthening the European Research Area entails only limited budget.

The majority of stakeholders commenting on the pillar structure are satisfied with the current three-pillar structure of Horizon 2020 and wish to see either a complete replication or some modifications to the exsisting architecture. The main suggestions for improvements over the Horizon 2020 structure relate to increasing the links between pillars to improve the coverage of the entire knowledge and innovation chain. Several position papers outline the increasing importance of the ‘Societal Challenges’ and call for a more prominent pillar that takes into account the current socio-economic issues 65 .

The revised pillar structure reflects the nature of the R&I challenges, which has evolved compared to Horizon 2020. As highlighted in previous sections, the Programme needs to be equipped with an innovation-focussed pillar to support breakthrough market-creating innovations that bring transformational changes. In addition, given the crucial role of Key Enabling Technologies in the economy and society 66 , the R&I agenda-setting has to integrate industry’s contribution to societal needs with efforts to tackle global challenges and other EU political priorities in order to improve the coherence and impact of the Programme.

The overarching mission-orientated approach will provide a sense of direction to all activities supported by the Programme. For instance, future missions under pillar 2 (see section 3.2.2) will be planned in the context of ongoing frontier research under the ERC. While fully respecting the bottom-up nature of those programme parts, relevant ERC and MSCA projects might be linked to ongoing missions. The scale and scope of missions can also inspire new research and innovation proposals elsewhere in the Programme. Promising projects from either of the first two pillars might produce spin-offs and be scaled-up with support under the EIC Accelerator under pillar 3 (see section 3.2.1). Similarly, activities supported through the EIT KICs may be picked up under the EIC Accelerator, or feed into ongoing missions (see Annex 8).

Figure 4 Main structure of the Framework Programme: "evolution, not revolution"

·Pillar 1 - Open Science: Building on its current successes, the first pillar will continue to focus on excellent science and high-quality knowledge to strengthen EU’s science base through the European Research Council (ERC), Marie-Skłodowska Curie Actions (MSCA) and Research Infrastructures. A greater emphasis will be placed on Open Science policy (open access to publications, accessibility and reuse of scientific data), including in the Research Infrastructures part in support for the European Open Science Cloud. In view of the largely "bottom-up", investigator-driven nature of this pillar, the European scientific community will continue to play a strong role. The Future and Emerging Technologies (FET) part (Pro-active, Open and Flagships) has, and continues to have, a relevant impact on knowledge production, the economy and society 67 . The lessons learnt 68 from these essential instruments will be taken forward and streamlined with other instruments in the Framework Programme (see section 3.2.1). However, the “FET” label will be discontinued for increased coherence and user-friendliness, in the interest of rationalising the support landscape.

·Pillar 2 - Global Challenges and Industrial Competitiveness: The second pillar will integrate the Horizon 2020 parts Societal Challenges and Leadership in Enabling Industrial Technologies to better address EU policy priorities and support industrial competitiveness. Due to its policy focus, the pillar will be implemented "top-down" through a strategic planning process ensuring societal and stakeholder involvement, and alignment with Member States' R&I activities. The pillar will provide robust, evidence-based support to Union policies, in particular through the Joint Research Centre (JRC). While maintaining a strong degree of continuity with Horizon 2020, the main changes will be:

-Societal Challenges and Leadership in Enabling Industrial Technologies of Horizon 2020 integrated in five clusters to enable more flexibility and interdisciplinarity, with a specific digital and industry cluster (see Box 5 );

-reinforced mission-orientation, with a limited set of highly visible R&I missions that engage citizens and civil society organisations to help reach ambitious goals 69 (see Annex 8 on missions);

-higher visibility for industry’s role in solving global challenges (see Box 6 ), including through Key Enabling Technologies.

-simplified forms of partnership initiatives that are open to all (e.g. private sector, Member States, philanthropic foundations; see Annex 8).

Error! No sequence specified.Box 5: Clusters in the Global Challenges and Industrial Competitiveness pillar

The Global Challenges and Industrial Competitiveness pillar has five clusters that cover the activities of the LEIT part of pillar 2 and the seven societal challenges of pillar 3 of Horizon 2020. The clusters are Health; Inclusive and Secure Society; Digital and Industry; Climate, Energy and Mobility; and Food and Natural resources. The clusters are derived from specifically commissioned foresight input, including from stakeholders, and have the Sustainable Development Goals as main reference point. The clusters and their intervention areas are expected to have more impact since they cut across classical boundaries between disciplines and address different types of challenge. The integrated clusters of activities will form the basis for support to collaborative research and innovation projects under the Global Challenges and Industrial Competitiveness pillar in the implementation of the Framework Programme.

Table 1: Clusters and intervention areas

·Pillar 3 – Open Innovation: Whilst innovation will be supported throughout the whole Programme, an innovation-focussed pillar will offer a one-stop shop for high potential innovators with the European Innovation Council (EIC). The EIC will offer a coherent, streamlined and simple set of support actions dedicated to the emergence of breakthrough ideas, the development and deployment of market-creating innovations and scaling-up of innovative enterprises. These activities will be largely defined "bottom-up", being open to innovations from all fields of science, technology and applications in any sector, while also enabling focused approaches on emerging breakthrough or disruptive technologies of potential strategic significance. Additional measures under this Pillar will boost support to the European innovation ecosystem, notably through co-funding various joint national initiatives that boost innovation (e.g. joint programme between agencies implementing national/local innovation policies, joint public procurement actions). In addition to the EIC, financial instruments implemented under the InvestEU programme will help bridge the “valley of death” between research and commercialisation, and will support the scaling-up of companies. The European Institute for Innovation and Technology (EIT) and its Knowledge and Innovation Communities (KICs) will have an important role in the Open Innovation pillar, supporting the development of the European innovation ecosystem through the integration of education, research and entrepreneurship. Through their focus on key strategic priorities in line with the strategic programming of the Framework Programme (see section 4.1), KICs will also contribute to the wider programme objectives, including to deliver on global challenges and missions.

In addition to the three main pillars, the Horizon Europe will strengthen the European Research Area through successful elements of Horizon 2020 that will be integrated: (i) Sharing excellence (extending the Horizon 2020 Spreading Excellence and Widening Participation actions Teaming, Twinning, ERA chairs, and COST) to continue supporting low performing R&I Member States to increase their excellence; (ii) Reforming and enhancing the European Research Area, covering the Policy Support Facility; foresight activities; Framework Programme’s monitoring, evaluation, dissemination and exploitation of results; the modernisation of European universities; and Science, society and citizens (building on the Horizon 2020 Science with and for Society).

The redesigned pillar structure will improve internal coherence, in particular through:

-the integration of industrial technologies in Pillar 2, enhancing the contribution of industry to tackling global challenges, and matching supply with demand for new solutions 70 ;

-the rationalisation of the current Societal Challenges into five cross-theme clusters that will cover the whole innovation chain and that will encourage transdisciplinary activities, including social sciences and humanities (SSH);

-the streamlining of different innovation support instruments through the EIC;

-the link of the EIC to the other activities of Horizon Europe, in particular ERC, MSCA and the EIT-KICs, to help researchers and innovators to deploy their innovation to the market and scale up.

-emphasis on a strong horizontal role of education and training.

Box 6Error! No sequence specified.: The reinforced role of industry in Horizon Europe – Industrial Competitiveness

Strengthening the Union's scientific and technological bases and encouraging it to become more competitive, including in its industry, is an objective enshrined in Article 179 of the Treaty on the Functioning of the European Union. The Union and its Member States support industrial competitiveness by speeding up the adjustment of industry to structural changes, encouraging a favourable regulatory environment, encouraging an environment favourable to cooperation and fostering better exploitation of the industrial potential of policies of research and innovation (Article 173 of the Treaty on the Functioning of the European Union).

Horizon 2020 supports industrial competitiveness, as highlighted by the following facts:

·A 20% target exists for the total combined budget to be awarded to SMEs under the "Leadership in Enabling and Industrial Technologies" and "Societal Challenges" parts of Horizon 2020. By the end of 2017, this has been exceeded with almost 25% of the EU contribution awarded to SMEs 71 .

·Private for-profit companies have been awarded 27% of the overall Horizon 2020 budget, amounting to EUR 6.7 billion.

Building on the strong support to stimulating industrial leadership and competitiveness currently provided, which will continue (e.g. the single funding rate for industry participants, partnerships with industry), the following changes in the new Framework Programme will reinforce it:

·The whole Programme will contribute to industrial competitiveness. This reflects the overriding aims of the Programme, in which industrial technologies reinforce scientific knowledge and tackle global challenges; in which industry, academia, public stakeholders, citizens and their associations (CSOs) are brought closer together; and which seamlessly supports the whole innovation ecosystem from research to innovation and market deployment.

·Industry is a core enabler to solve Global Challenges. Integration of the Leadership in Enabling Industrial Technologies programme parts, previously under the second pillar in Horizon 2020 ('Industrial Leadership'), within the Global Challenges and Industrial Competitiveness pillar would provide a higher visibility to the role of industry in solving Europe's major societal challenges, for instance through Key Enabling Technologies.

·The "Digital and industry" cluster will be dedicated to support innovative, sustainable and digital industries, including through Key Enabling Technologies for the future. This cluster is expected to address directly the issue of slow industrial transformation and promote adjustment of industry to structural changes.Partnerships with industry will continue. EU policy-driven R&I partnerships with industry are important for pooling resources in order to tackle big policy and societal challenges, to support competitiveness and jobs and to encourage greater private investment in research and innovation, amongst other things. Public-private collaboration with industry will continue as part of a simplified and more impact-focussed approach to European Partnerships (see section 3.2.5 below).

As a result, the expected implications for industry are:

·Europe’s global leadership in various industries, especially in high value added and technology-intensive products and services, will hinge on its capacity to master the Key Enabling Technologies, in which the Framework Programme will continue to invest.

·Investing in new technologies through the Programme will enhance EU's industrial competitiveness in the global transition to circular and low-carbon economy, create new business opportunities including in export markets, and protect businesses against scarcity of resources or volatile prices.

·A broader perspective involving users and society at large (and more generally the demand side) in the design and development of innovative solutions to address global challenges will ensure ownership and commitment from industry and other stakeholders, as well as the buy-in from civil society.

·Bringing together activities on digital, key enabling, clean and space technologies, the Programme will allow for a more systemic approach, and a faster and more profound digital and industrial transformation.

In terms of design structure, some stakeholders 72 have identified the risk that merging the stand-alone “industrial leadership” pillar would discourage industry participation. On the other hand, a higher participation of industry in the Global Challenges and Industrial Competitiveness pillar could be seen as giving the private sector a disproportionate role in setting the R&I agenda at the expense of other stakeholder groups. As a mitigation measure, the strategic planning process (see section 4.1), building on the lessons learnt from the inclusive programming process of Horizon 2020, will ensure a balanced approach by involving all stakeholders, including citizens, customers and end-users in agenda-setting. The Programme will also gain flexibility by a less prescriptive approach to defining R&I activities. This brings about a higher capacity to adapt to evolving political priorities and to respond to emerging, unforeseen challenges.

Box 7: Climate mainstreaming

Horizon 2020 legal basis provides a target of investing at least 35% of its budget for climate-related activities. The EP has asked for a thorough climate mainstreaming and underlined that the EU should not finance projects and investments that are contrary to the achievement of EU climate goals 73 . The European Court of Auditors recommends aligning EU spending and investment more closely with the Union's strategic priorities 74 . 14 Member States have signed a joint letter to the Commission on 5 March 2018 asking for a climate-friendly EU-budget. 75

Horizon 2020 is a major contributor to the EU’s target to mainstream climate action and sustainable development. While the expenditure target for climate action has not been met, the overall success of the mainstreaming approach has been confirmed by the Commission in the MFF Mid-Term Review 76 , in the European Court of Auditors Special report 31/2016 77 , in the related council conclusions 78 , and by a targeted external report 79 .

The EU has signed up to the Paris Agreement on fighting climate change, and has already set itself a target to reduce greenhouse gas emissions by at least 40% by 2030. It also made wider energy transition commitments as captured in the Energy Union and its implementation packages, such as the the European Strategy for Low-Emission Mobility 80 and the Clean Energy For All Europeans package 81 .

In continuation with the provision set out in Horizon 2020 and line with the EU’s international commitments, an ambitious goal for climate mainstreaming across all EU programmes has been set, with a target of 25% of EU expenditure contributing to climate objectives. To ensure its essential contribution to these objectives, Horizon Europe will continue contributing to climate action, including to clean energy transition in the EU. The programme is expected to contribute with 35% of its budget spent to climate objectives.

3.2Improvements and their expected implications

In addition to the structure optimisations described in section 3.1, the key areas for improvement identified by the Horizon 2020 Interim Evaluation (see section 1.2) have been translated into novel features and enhancements of existing features. These improvements build on the foundations of the interim evaluations 82 , findings of High Level Groups 83 and the work of scientific experts 84 . They were developed on the basis of analysis detailed in the Annex 8, from among identified alternative ways to address the key challenges identified in section 2.2.

The significant improvements linked to the design of the programme (see Figure 5 ) will be covered in this section, along with their expected implications. While Horizon 2020 is already excellent, impactful and open, these changes will make the Framework Programme achieve even more impact (EIC and missions) and more openness (through strengthened international cooperation, reinforced Open Science policy, and a new policy approach to European Partnerships). Neither of these changes goes beyond what is necessary at EU level (proportionality test), and each one aims to increase the overall effectiveness, efficiency and coherence of the Programme (see Section 3.3 for an overview of how this is achieved). More details can be found in Annex 8, which also covers more gradual changes, e.g. linked to Sharing excellence.

Moreover, the lessons learnt linked to simplification have been taken up in the section on delivery for impact (Section 4 and Annex 9), while those related to synergies with other EU programmes were included in the upstream design of those programmes (see Annex 7).

Figure 5: Design improvements and novelties in the new Framework Programme

3.2.1The European Innovation Council (EIC) 

Why do we need it? There is a growing lack of equity funding for risky companies dealing especially with deep-tech products, in particular young, innovative firms and scale-ups in Europe. According to a recent study 85 , the total equity funding gap in Europe is estimated at EUR 70 billion, of which 85% is represented by the so-called “first valley of death” 86 . The European Investment Bank estimates 87 that it would require around EUR 35 billion a year in additional venture capital for financing start-ups and growth-stage firms in the EU to match comparable US levels. Private investors are deterred by the lack of certainty, no cash flow generation, and unproven ability to scale-up rapidly. Such ventures need a sophisticated support ancillary to a grant, such as equity, guarantee, or other type of financing (tailor made blended finance, see section 4.5) to better de-risk them and bring them to a stage where they can be financed on usual commercial terms by investors.

What do we have now? Horizon 2020 provides some measures of targeted support to disruptive technologies and to innovative companies for bringing discoveries close to the market, with a quarter of Innovation Actions having breakthrough potential 88 . On the one hand, the FET instrument supports high-risk cutting-edge research projects aiming to bring about transformational change by opposition to incremental innovation. However it lacks an instrument to bring these disruptive innovations to the market. On the other hand, the SME Instrument focusses especially on product, performance, business model innovations and market uptake, but much less on service, network, and customer engagement innovations and does not provide for market deployment and scale-up. In Horizon 2020, the SME Instrument has provided EUR 1,332 million in grants to 3,239 SMEs supporting the technical and commercial feasibility of a business idea and the development of innovation with demonstration and scale-up purposes. Majority of the projects emerging from receiving SME Instrument grants are however still exposed to the "first valley of death" for their subsequent development, which is not covered by the SME Instrument. These projects still have investment requirements to fully develop and commercialise their products 89 . Overall, Horizon 2020 does not provide enough support to innovators, and in particular SMEs, to develop breakthrough technologies cutting across sectors to access market and scale up rapidly at EU level.

What did the other EU institutions say? The European Parliament stresses the importance of innovation support in general, and of disruptive innovation and scaling up in particular. Council Conclusions emphasise the importance of supporting the whole innovation value chain, including high-risk disruptive technologies, while the possible future EIC should support breakthrough innovations and the scaling up of innovative companies 90 .

The majority of stakeholders commenting on the EIC are supportive and provide suggestions on its possible role, objectives and implementation. In general stakeholders expect the EIC to simplify the current support to innovation and act as an European accelerator. They note that the support to innovative SMEs and start-ups is essential to maximise Europe’s potential for growth and socioeconomic transformation 91 .

What changes? The Framework Programme will introduce the EIC under the Open Innovation Pillar to place the EU in the lead for breakthrough market-creating innovation 92 . The EIC will support innovators with breakthrough ideas and market creating innovations that currently face high risks due to the fragmentation of the innovation eco-system, lack of risk finance and risk aversion 93 . The EIC will integrate, reorganise and expand activities previously carried out in Horizon 2020, such as in Access to Risk Finance (in synergy with the InvestEU programme), Innovation in SMEs (notably the SME instrument), Fast-track to Innovation as well as Future and Emerging Technologies (FET-Open).

The EIC will mainly implement two complementary instruments, offering a seamless support from research and innovation activities to market deployment and scaling-up of innovative companies. The Pathfinder for advanced research will be a grant-based instrument for early stage research on technological ideas that can bring about transformational change, to nurture spin-offs and potential market creating innovations. The Accelerator will be a financial instrument operating through tailor made blended finance (advances, reimbursable or not, equity, guarantees; see also section 4.5) in support of the development and the deployment of market-creating innovation and the scale-up of innovative companies, until they can obtain support from the InvestEU programme or be financed on usual commercial terms by private/commercial investors. The Accelerator will place a particular emphasis on innovations / spin-offs / start-ups generated within the Pathfinder, as well as from any other parts of the Programme such as the ERC, the EIT KICs and R&I missions. In de-risking the operations it supports, the Accelerator will also stimulate private investments in R&I while preserving competition in the internal market.

EIC business advisory services will complement these instruments in order to connect innovators with industrial partners and investors and provide them with other support services. A High-Level Advisory Board composed of entrepreneurs, corporate leaders, investors and researchers, will assist the Commission in the governance and have an outreach function with an ambassadorial role. For its launch, the EIC could be implemented with the support of an executive agency for some tasks. Subsequent development may however lead to establishment of a fully externalised solution, as one of the possible implementation scenarios (see Annex 8).

What is the EU added value? As for the Horizon 2020 Future Emerging Technologies and the SME Instrument, the continent-wide competition for ideas will ensure excellence and EU-gains. Moreover, only EU-level action has the capacity to tackle the persistent lack of large-scale venture capital. EU support will be more effective and more comprehensive (e.g. common regulation, fostering synergies with other EU programmes) compared to national or regional support. The EIC will focus on breakthrough innovations at European level, pooling resources and unleashing the potential of European and global markets for EU innovators 94 . The EIC will not replace national and private initiatives fostering breakthrough innovation, but instead it will increase the coherence of the overall innovation ecosystem by establishing a one-stop shop for high potential innovators and partnerships with national, regional and local innovation actors.

Figure 6 EU support to innovation (bottom-up and top-down)

Table 2 Comparing the EIC with the ERC, EIT, and InvestEU

European Innovation Council (EIC)

European Research Council (ERC)

European Institute for Innovation and Technology (EIT)

InvestEU

Key principles

Focus on excellence (attract best innovators) based largely on bottom-up approach, but also high-risk, breakthrough R&I activities that create markets and provide solutions to global challenges.

Focus on excellence (attract best researchers), based on bottom-up approach

Focus on knowledge triangle integration (education, research and innovation) that empowers innovators and entrepreneurs to solve global challenges through KICs

Focus on bankable projects, and expected return on investment. Implemented, through financial intermediaries (Banks, Venture Capital Funds, and other private investors)

Target group

Focus on the individual (the innovator), with high-growth potential (researchers, entrepreneurs, start-ups, SMEs and mid-caps), from single beneficiaries to multi-disciplinary consortia, but promote their incorporation and growth under late stage activities

Focus on the individual (the researcher)

Focus both on individual entities and on cooperation of businesses, education institutions & research organisations within KICs

Focus on entities that can borrow money or can sell shares.

Rationale

Remove constraints (field of innovation) for growth and scale-up

Remove constraints (field of science, collaboration partners)

Reinforce  R&I ecosystems in specific areas (knowledge exchange and networks, entrepreneurship, skills); support innovators to start and accelerate new businesses; provide talent through entrepreneurial education

Leveraging private sources of finance.

Address market gaps and sub-optimal investment situations.

Evaluation and Selection

Selection by peers (scientists and innovators) and investors based on excellence, the impact (marketability), and the level of risk

Selection by scientific peer review

Selection of KICs by EIT Governing Board; KICs business plans (i.e., innovation and education activities, projects) assessed by panel of experts appointed by EIT

Selection by financial intermediaries through due-diligence process.

Types of Action

Grants (Pathfinder) and combination of grant-type advances and equity or financial guarantees (Accelerator).

Projects may be amended or terminated if milestones are not met, seeking alignment with private investors

Long-term grants with guaranteed funding

Grants to KICs partnerships + complementary activities (incl. education & entrepreneurial  programmes)

Equity finance, mainly focusing on risk-capital funds and debt finance in the form of loans and guarantees.

What are the risks? Firstly, in giving priority to potential impact rather than return on investment, the EIC will promote long-term operations too risky to attract private investors. In recent years, these risks have increased due to the more multi-disciplinary nature of R&I and the intrinsic complexity and systems nature of many emerging technologies. If the risk of failure of projects under the EIC is more pronounced, even higher is the potential benefit of generating new markets that are essential for the future of the Union and its citizens, e.g. deep-tech based areas of future growth and jobs such as clean and efficient new energy sources, block-chain, artificial intelligence, genomics and robotics. Secondly, there is a potential risk of conflict of interest linked to the involvement of experts, which will also be innovators and/or investors themselves. Safeguards will be put in place, for example by preventing them to invest into EIC supported companies, or similar provisions.

Box 8: EU Added Value of mono-beneficiary instruments

The Horizon 2020 interim evaluation showed that the quality of R&I improves through EU-wide competition. This is an important element of EU added value, notably in areas where mono-beneficiaries are the norm, like the SME Instrument and the ERC. The EU added value of the ERC from its exclusive focus on excellence through competition helped it become a global beacon of excellence. Similarly, an in-depth evaluation study of the SME Instrument 95 positively assessed its EU Added Value: it is unique compared to similar support schemes at national/regional level (which are only focusing on certain priority domains; do not have rolling submissions; have significantly smaller project volumes; require project collaboration with other SMEs or universities).

What are the expected implications?

·More innovations that create the new markets of the future. Giving more prominence and visibility to breakthrough innovation, the EIC will attract the Europe’s best innovators. The selection process by peer-scientists and innovators and investors will enable risk-taking, hence providing support to radically new initiatives in uncharted territories. The EU could become the home of up to a third of leading innovators in major areas for breakthrough deep tech innovation 96 such as Artificial Intelligence, biotech, and augmented/virtual reality and to leading innovators addressing global challenges.

·Scaled up companies and higher SME growth. The EIC will support late stage innovation activities and market deployment for the most promising ideas, resulting in an increase in the number of growing EU start-ups and SMEs. The EIC will also target innovative companies with a great potential for scaling up, offering them co-investment to become larger and increase their markets. The support to innovative companies and in particular SMEs will increase their market valuation, employment, and turnover.

 

·Increased complementarities between grant-type funding, financial instruments, and leverage from private investment. Under the Accelerator, blended finance will allow the Union to bear the initial risk of deploying market breakthrough innovations, with the aim of de-risking these operations as they unfold, down to a stage where they can be financed through private capital, hence incentivize private investors. Combined with activities undertaken by the (InvestEU Programme) this alignment of interests with private investors will provide improved access to venture capital and risk finance, hence leveraging the overall volume of finance available for innovation..

 

·More entrepreneurship and risk-taking. The EIC will provide business acceleration services to innovators and will award EIC Fellowships to the outstanding ones. The EIC will highlight innovators who can inspire others to set up and grow their own enterprises.

·More accessible and user friendly support to innovation. The EIC support and services will be provided through a one-stop shop enabling easy and quick access for innovators to EU support.

3.2.2Research and Innovation Missions

Why do we need it? As underlined by the Interim Evaluation of Horizon 2020 97 , the current EU research and innovation programme does not fully prioritise investments with the highest overall impact and added value for Europe, as expected impact is defined only at the level of individual call topics. This leads to fragmentation and a dilution of impact. The consequent lack of focus on societal impact also results in a low level of public awareness and engagement in EU-funded R&I. This implies that current EU investments in R&I are not sufficiently responsive to, or connected with, the needs of citizens.

What do we have now? Horizon 2020 featured over 20 Focus Areas in key domains, where priorities cut across different parts of the programme (e.g. blue growth, circular economy, digital security), to concentrate resources and efforts. While focus areas reinforced the programme's coherence and its capacity to provide interdisciplinary solutions to multiple societal challenges, their multiplication also resulted in some confusion. Moreover, citizens were not involved in the process, and limited coordination of the focus areas undermined their impact. Nor did they set achievable and time-bound goals.

What did the other EU institutions say? All EU Institutions stress the importance of involving citizens more profoundly in the co-design and co-creation of R&I contents to maximise the impact generated by the Framework Programme 98 . The European Parliament recognises the importance of society playing a more active part in defining and addressing the problems, and in jointly putting forward the solutions. The Committee of the Regions is calling for the adoption of a new, complementary approach based on missions and for greater importance of science-society actions. The European Economic and Social Committee calls for increased involvement of Civil Society Organisations in the Framework Programme. The Council Conclusions and the European Research Area and Innovation Committee (ERAC) point to the need to deliver better and continued outreach to society, and call for exploring a mission-oriented approach 99 .

Almost all stakeholders referencing R&I missions clearly supported mission-orientation of Horizon Europe or acknolwedged it as a possible future scenario. In general, stakeholders consider that tangible missions that underpin the overall political objectives could enhance visibility and create a more engaging narrative of the Framework Programme. There is also a widespread acknowledgement on the need to engage wider society in identifying the most relevant missions within broader societal challenges. 100

What changes? Horizon Europe will introduce a limited number of highly visible R&I missions. Missions will replace and build on the Horizon 2020 Focus Areas. They will be well-defined 101 and self-standing programme parts, as opposed to the Focus Areas. This will more clearly and directly incentivise cross-sectoral and cross-disciplinary cooperation. Clear objectives and rationale will be established at the mission's inception (addressing a specific weakness identified in the focus areas approach) in order to define targets, clear time-bound goals and expected impact. Finally, missions will be more closely co-designed with end-users and citizens, thus prioritising public engagement and involvement and "building upon existing work and prior commitments to bring societal actors together to prioritise R&I activity" 102 .

Different types of missions can be envisaged, for example missions to accelerate progress towards a set technical or societal solution, focusing large investments on a specific target (e.g. accelerate market uptake of post Li-ion energy storage solutions) or missions for transforming an entire social or industrial system within an established timeframe (e.g. transformation of the entire energy system or mobility system in cities). Evidence indicates that a combination of approaches would be most suited to the scale of EU-level missions and the complex challenges which they will address 103 .

Missions will be selected (after the launch of Horizon Europe) according to the following selection criteria 104 :

·Bold, inspirational, with wide societal relevance;

·A clear direction: targeted, measurable and time-bound;

·Ambitious but realistic research and innovation actions;

·Cross-disciplinary, cross-sectoral, and cross-actor innovation;

·Multiple bottom-up solutions;

·Strong EU added value.

At the implementation stage, Mission Boards for each mission will ensure proper involvement of stakeholders and end-users. Mission Boards will be involved in co-designing the missions involving stakeholders and the wider public, providing input to the content of the call for proposals and the evaluation of project proposals and in monitoring missions. A mission manager will be appointed for each mission with the task of ensuring that the mission objectives are reached through a portfolio approach. By involving citizens and stakeholders in the definition, selection and monitoring of missions, a sense of urgency and collective commitment will be created 105 while also ensuring societal ownership of the missions 106 .

What is the EU added value? Setting R&I missions at EU level gives them the critical mass necessary to address global challenges. They will help the EU to better deliver on Sustainable Development Goals and its strategic policy priorities. Setting R&I missions at EU level would also facilitate ensuring that the EU regulatory framework fully supports the achievement of such an EU mission, for instance through applying the innovation principle, setting standards at EU level, or through joint public procurement at EU level. Missions can involve end-users and citizens much more closely in EU R&I activities.

What are the risks? The success of missions hinges on the timely and due dialogue with stakeholders, to avoid disengagement or weak interest. Moreover, in the implementation phase, the evaluation and monitoring mechanisms will need to be sophisticated enough to capture the long-term impacts of missions. Finally, the ultimate uptake and roll-out of innovative solutions arising from missions will depend on wider framework conditions – this kind of wider support to uptake can be supported through policy actions in the spirit of the Inovation Principle, or through Innovation Deals 107 .

What are the expected implications?

·Improved cross-sectoral and cross-disciplinary cooperation. Missions will require expertise from different sectors and disciplines to come together. For example, climate action requires meaningful collaboration across sectors such as urban planning, construction, energy efficiency in buildings, mobility, behavioural aspects, food, environmental capacity, and in many other areas. The mission-oriented approach will work across clusters to promote system-wide transformation.

·Increased impact on global challenges and EU policy priorities. Missions will increase effectiveness in delivering societal impact for end-users and citizens, by prioritising investments and set directions to achieve objectives with societal relevance. Missions will set the direction for the EU regulatory framework, and leverage further public and private sector R&I investments in Europe.

·Reduced gap between science/innovation and society. R&I missions will be easy to communicate, in order to mobilise citizens and end-users in their co-design and co-creation (e.g. through citizen science and user-led innovation). In turn, this increases the relevance of science and innovation for the society and it would stimulate the societal uptake of innovative solutions and leverage business investment.

3.2.3International cooperation

Why do we need it? International cooperation in R&I is vital for ensuring access to talent, knowledge, know-how, facilities and markets worldwide, for effectively tackling global challenges and for implementing global commitments 108 .

What do we have now? Association to the programme is limited to countries geographically close to Europe. Organisations from non-associated third countries can participate in projects in all parts of the programme, except for mono-beneficiary grants, specific close-to-market innovation activities and actions for access to risk finance. Except for a few cases, only participants from low- and middle-income countries are automatically eligible to receive EU funding. EU funding can be exceptionally granted to third-country entities whose participation is deemed essential for carrying out an action. 

What did the other EU institutions say? The Council and the European Parliament have called for strengthening international R&I cooperation in the Framework Programme, including with associated countriesand emerging countries, as soon as possible through concrete actions. The Parliament, in addition, has highlighted the value of science diplomacy. Council Conclusions have also reaffirmed the importance of reciprocity.

A predominant view among stakeholders is that cooperation should be strengthened to counter the drop in internationalisation activities and participation rates from third countries that was experienced in Horizon 2020.

Some stakeholders also advocate science as a platform for international diplomacy. A few stakeholders noted that EU could adopt legislation to encourage exploitation of research and innovation results in Europe first 109 .

Figure 7: Approach to international cooperation in Horizon 2020 vs the new Framework Programme

What changes? The Framework Programme will intensify cooperation in line with the strategy for EU international R&I cooperation and the "Open to the World" R&I priority 110 . The programme will extend openness for association, beyond EU enlargement, EEA countries and ENP countries, to include all countries with proven science, technology and innovation capacities to make cooperation and funding of joint projects as smooth as possible. The programme should increasingly invite partners from the rest of the world to join EU efforts as an integral part of initiatives in support of EU actions for sustainable development; it should provide more support for activities that facilitate the collaboration of European researchers with their counterparts worldwide, enable international mobility of researchers and ensure access to research infrastructures globally; and it should extend support to joint and coordinated funding of global industrial research and innovation cooperation. The programme should continue to fund entities from low-mid income countries, and to fund entities from industrialised and emerging economies only if they possess essential competences or facilities. The programme will intensify support to international flagships, partnerships, bilateral and multilateral initiatives and joint programmes and calls, to increase access to researchers, knowledge and resources worldwide and optimise benefits from cooperation.

Box 9: Third Countries associated to the Framework Programme

·The Framework Programme will define which countries will be able to apply for association, what criteria should be used to assess their applications, and what principles should apply for the terms and conditions regarding their participation.

·Each Association Agreement to the Framework Programme should define the scope, specific terms and conditions of participation, as well as the rules governing the financial contribution of the associated country. These rules should ensure a close approximation between payments and returns.

What is the EU added value? Openness of the Framework Programme to third countries enhances the EU added value of the Programme itself, allowing EU participants to collaborate with the best minds in the world. The EU can more effectively shape policy agendas when represented as a single voice in multilateral fora and international organisations. The EU has a comparative advantage as compared to single Member States when negotiating bilateral agreements with third countries regarding framework conditions such as mutual openness of funding programmes or issues related to Intellectual Property Rights (IPR) protection. Thanks to the Framework Programme, Member States are enabled to cooperate with several third countries, including countries with which they do not have bilateral agreements. Increasing international cooperation does not go beyond what is necessary to achieve the objectives of the programme.

What are the risks? The main risk is that the proposed specific objective, priorities for actions and instruments to be used will not be sufficient for strengthening international cooperation in the Programme compared to the current situation. Regarding the process, there is also the risk that European objectives both in terms of global challenges and competitiveness take less of a driving role in priority-setting when more international partners are involved. International S&T cooperation policy dialogues and broad consultations should ensure that international joint actions are strategically designed in line with EU interests and agreed with international partners based on mutual interest and common benefit.

What are the expected implications?

·Improved excellence of the Programme. Attracting and collaborating with the world's top researchers, innovators and knowledge-intensive companies reinforces the EU’s science and technology base. Evidence shows that international collaboration increases the impact of scientific publications 111 .

·Higher influence of the EU in shaping global R&I systems. This approach will enhance the EU leading role in setting the policy agenda, in particular for addressing common challenges and for achieving the Sustainable Development Goals. The mutual benefits of international cooperation strengthen EU leadership in the knowledge-intensive economy. The Programme will be an effective instrument in Europe's efforts to harness globalisation by removing barriers to innovation and by establishing fairer framework conditions with international partners.

·More impact from the Programme. Increased international cooperation will reinforce EU R&I excellence and the creation and diffusion of high-quality knowledge in the EU. Cooperating internationally is indispensable as the scope and interconnectivity of global societal challenges increase and require more international joint action and coordination of agendas International openness of the innovation eco-systems will strengthen EU competitiveness by promoting a level playing field and enhancing supply and demand of innovative solutions. The association agreements with countries having proven R&I capacities will facilitate mutual access to European and third-country know-how and markets, as cooperation with top third country innovators facilitates access to expertise that is increasingly developed outside the EU.

3.2.4Open Science policy

Why do we need it? The next Framework Programme should fully embrace Open Science as a way of strengthening scientific excellence, benefiting from citizen participation, achieving better reproducibility of results and increasing knowledge circulation and the re-use of research data 112 , hence accelerating the take-up of R&I knowledge and solutions and increasing the EU policy and societal impact of the Framework Programme.

What do we have now? There is a shift towards a more open, collaborative, data-intensive and networked way of doing research and sharing research results, enabled by developments in ICT and related infrastructures and the increasing proliferation of data. Open access to publications is mandatory, while open access publishing is encouraged, and relevant costs eligible. Beneficiaries are encouraged by guidelines to keep enough (copy)right to self-archive, but are not legally empowered to do so. Participation in the Open Research Data Pilot is the default for Horizon 2020 projects, and it requires a Data Management Plan and open access to research data, but there are solid conditions to opt-out from the Pilot at any stage.

What did the other EU institutions say? The European Parliament opinion is in favour of the general principle of Open Access, while the European Research Area and Innovation Committee (ERAC) regards the 100% Open Access policy of Horizon 2020 as a clear measure in favour of knowledge circulation. Importantly, the Council Conclusions on the transition towards an Open Science System give valuable guidance for the future, while the Council Conclusions on the Interim Evaluation of Horizon 2020 highlight the role of Open Science in boosting impact and transparency 113 .

The majority of stakeholders who referred to Open Science note that data and knowledge produced from EU funded projects should be shared openly. However, some business representatives underlined the need for the opt-out option to be maintained to secure confidentiality of market-oriented innovation outputs. Stakeholders also highlight that open science, open data and open access calls for new principles in citation and academic reward system and requires attention to the development of skills in research data management

114 .

What changes? The Framework Programme will fully embrace and support Open Science policy as the new research modus operandi through various requirements in the Work Programmes. It will go beyond the open access policy of Horizon 2020, requiring immediate open access for publications and data (with robust opt-outs for the latter), and research data management plans to support sound data management; it will foster the proliferation of FAIR data (findable, accessible, interoperable and re-usable). It will support activities that promote a sustainable and innovative scholarly communications ecosystem; it will foster activities for the enhancement of researcher skills in open science and support reward systems that promote open science; it will integrate research integrity in the open science activities and support citizen science. Lastly, it will also support the introduction of next generation indicators for the assessment of research.

What is the EU added value? Even while Member States are developing their own policies for Open Science, the positive effect of EU action is substantial 115 . Horizon Europe will contribute towards policy alignment across the Member States and thus towards the development of a better and more unified environment for research collaboration in ERA and beyond it. Requirements of the Programme have structuring effects that accelerate the propagation of Open Science policy via collaborative projects in the research community. Horizon Europe will accelerate the transition towards Open Science by building a European Open Science Cloud supported by world-class infrastructure that will gradually also benefit industry and the public sector.

What are the risks? The main concern on Open Science in Horizon Europe relates primarily to the requirement for open access to data from research projects. Without clearly explained safeguards, this policy could be perceived as deterrent for industry and businesses to participate. This is why, while open access to research data will be the standard, Horizon Europe will be fortified with robust exceptions to this rule, where access to data needs to be protected and Intellectual Property Rights protected. The principle that research data has to be 'as open as possible, as closed as necessary' will be emphasised every time it is necessary. A concern shared also at the time of Horizon 2020 is that the development of open access in Europe may offer content paid by European taxpayers for exploitation to the entire world, and therefore advantages other countries for more severe competition in research and innovation. The Commission is not the only funder with such open access and open science policy requirements. Funders across the globe are aligned in mandating open access to publications and data and relevant open science policies. It is not expected that Europe will set itself into a comparative disadvantage in this way, vis-à-vis other countries across the world.

What are the expected implications?

·Increased availability of scientific output in open access. A higher percentage of projects will make their outputs (publications, data, algorithms etc.) available in open access because of the simplification of provisions, the stricter formulation of exceptions, and financial support provided through the Programme.

·Higher levels of excellent research and innovation. Placing high quality content in the open, and stimulating knowledge circulation and the reuse of results, improves science communication and enables interdisciplinary research.

·Increased accessibility to high quality digital content. Data are increasingly becoming the starting point for innovation, with high returns 116 . With digitisation, it can be expected that SMEs and other companies will base new business models on digital content, hence will reap the benefits of a strengthened Open data environment in Europe and maximise the exploitation of digital resources through reusability.

·Higher societal and policy impact. Open science policy allows citizens to be part of the research process (for example through citizen science), helping lifelong learning and developing an informed society for the 21st century challenges. Accessible R&I data and results can be used for evidence-based policy-making, therefore they contribute to strengthening the policy role of R&I.

3.2.5European Partnerships

Why do we need it? The European R&I partnership landscape grew significantly in size and complexity over the last decade with an increasing risk of overlap and non-coherence with the EU framework programme and between the partnerships themselves. In particular, there is a large number of Public-Public Partnership initiatives (currently close to 100). Still, Partnerships are key to achieving policy objectives that the Framework Programme alone cannot achieve. Reforming the current partnership landscape and improving the design and implementation of future European Partnerships, renewed or newly set-up, should make it possible to use their full potential in achieving ambitious policy objectives. 117

What do we have now? Horizon 2020 supports two broad categories of partnerships: those mainly involving industry, i.e. Article 187 initiatives or Public-Private-Partnerships (PPPs) and contractual PPPs (cPPPs); and those involving mainly Member States, i.e. Article 185 initiatives or Public-Public-Partnerships (P2Ps), ERA-NET Cofund, European Joint Programming-Cofund and Joint Programming Initiatives. Moreover, there are other types of mixed partnerships such as the Knowledge and Innovation Communities (KICs) of the European Institute of Innovation and Technology (EIT) (integrating the knowledge triangle) and the Future and Emerging Technologies Flagships.

What did the other EU institutions say? The Competitiveness Council Conclusions stressed that the current R&I ecosystem has become too complex, and that all partnership initiatives should have an exit strategy from EU funding. The European Research Area and Innovation Committee (ERAC) considers it particularly urgent to rationalise the funding schemes, while considering public-to-public partnerships essential for more coordinated implementation of national and EU R&I. The European Parliament advocates ‘decomplexifying’ the EU funding landscape 118 .

A large share of stakeholders submiting position papers is concerned by the complexity of the EU R&I funding landscape. A dozen stakeholders explicitly emphasise the fact that exsisting support schemes should be carefully evaluated, and the discontinuation of funding should be an option (i.e. sunset clauses). 119

What changes? An overall European Partnerships strategy based on an objective- and impact-driven intervention logic will be developed and implemented in order to ensure that partnerships are established or renewed 120 only in cases where impacts need to be created that cannot be achieved by other Framework Programme’s actions or national action alone. All future European Partnerships will be designed based on the principles of Union added value, transparency, openness, impact, leverage effect, long-term financial commitment of all the involved parties, flexibility, coherence and complementarity with Union, local, regional national and international initiatives.

The strategic planning process of the Framework Programme (see section 4.1) will frame the establishment of European Partnerships. This will ensure that the next generation of partnerships will support agreed EU priorities and will lead to a rationalised R&I landscape, with fewer, but more targeted initiatives receiving co-funding/investment from the Framework Programme.

The design and implementation of future European Partnerships will include an improved coherence between Framework Programme’s actions and R&I partnerships, as well as among initiatives. In addition, communication and outreach will be strengthened by a clear, easy-to-communicate architecture under the umbrella term “European Partnerships”. This encompasses all Partnerships with Member States, Associated or Third Countries and/or other stakeholders such as civil society/foundations and/or with industry (including small and medium sized enterprises), with greater openness to international cooperation. European Partnerships will only be developed on agreed EU policy priorities in the context of the Framework Programme, and subject to the criteria set out in the Framework Programme. They will be limited in time with clear conditions for phasing out from the Framework Programme funding. There will be only three types of intervention modes (i.e. several Horizon 2020 labels like P2P, PPP, ERA-NET, FET Flagship and cPPP will be discontinued): i) co-programmed European Partnerships between the EU, Member States, and/or other stakeholders, based on Memoranda of Understanding or contractual arrangements with partners; ii) co-funded European Partnerships, based on a single, flexible programme co-fund action for R&I activities; iii) institutionalised European Partnerships (based on Art. 185 or 187 TFEU, and EIT regulation for KICs). Following a life-cycle approach 121 the legal act will set out the criteria for the selection, implementation, monitoring, evaluation and phasing out of all European Partnerships.

What is the EU added value? The main added value derives from the additional private and public R&I investments on EU priorities (additionality and leverage), the alignment of these investments towards common objectives (directionality) and the achievement of impacts that cannot be created by other Framework Programme actions or national action alone. In addition, the revised policy approach will substantially improve the coherence between European Partnerships and the Framework Programme in general, based on clear criteria identified together with Member States and other stakeholders. EU investments in R&I will be simpler to communicate and understand for stakeholders. The approach will build on, and bring together, all the on-going and future partnerships.

What are the risks? The major risk for the new policy approach is considered to be the expectations from the current partnerships to continue on a business as usual approach and expect more or less automatic renewal without being in line with the criteria set. It is crucial to ensure early involvement of Member States and stakeholders, including currently active initiatives, in the strategic programming process to build trust and ownership on the agreed future priorities.

What are the expected implications?

·Improved coherence and simplification. The clear rationale for the use of R&I partnerships, the elaboration of distinct and clear intervention logics based on policy objectives and the application of an impact-based criteria framework along the life cycle of R&I partnerships, including their phasing-out will guide the establishment of the next generation of partnerships. This will lead to a smaller number of more coherent partnerships and improve the overall coherence of the European R&I ecosystem.

·More openness and flexibility. Partnerships will be open to all types of stakeholders (Member States, civil society/foundations, industry, including small and medium sized enterprises) with no entrance barriers for newcomers and smaller R&I players. Flexibility will be encouraged with a simplified toolbox, and a lifecycle-based planning and implementation approach.

·Enhanced impact of EU R&I funding. The new approach to partnerships will ensure that partnerships will only be established in cases where desired impacts cannot be created by other Framework Programme’s actions. As EU co-funding will be limited to agreed EU strategic priorities, including EU R&I missions, the overall impact of EU R&I funding will be increased by leveraging additional investments on EU policy priorities, by providing 'directionality' to these investments, and by reaching out to a broader set of stakeholders.

3.3Overall impact on the new Framework Programme

Impact is expected to be even higher than for the current Programme, because of improved programme-design novelties, increased internal coherence between Programme pillars, with more focus on cross-disciplinary, cross-sectoral and cross-policy activities, increased synergies with the MFF programmes, rationalisation, more user-friendly modalities, increased openness to all stakeholders, more flexibility and efficient delivery mechanisms, including a more effective dissemination and exploitation of R&I results.

The EIC which aims to capitalize on EU science strengths and improve transition from science to breakthrough innovation, (i.e. innovation with highest impact) is expected to be particularly effective in assisting companies along their innovation journey by offering innovators seamless support (from grants to blended finance, from early stage research to market uptake). Missions which aim to set ambitious goals and channel EU R&I investment to areas with highest added value (i.e. highest impact) would allow the Programme to deliver better on EU strategic challenges; support the implementation of EU policy priorities; improve the contribution to EU policy-making; increase cross-sector and cross-disciplinary cooperation; and improve the societal uptake of innovative solutions based on better communication with, and involvement of, citizens. Strengthening international cooperation would foster R&I by attracting even more of the world's top innovators, knowledge-intensive companies, scientific organisations and researchers. Strengthening open science policy should create and diffuse better high-quality knowledge, while better involving and informing citizens. The integrated approach for partnerships would improve leverage of, and alignment to, Member State and private investments.

Table 3: Effectiveness of the changes to the Programme

Changes

Objectives of the Framework Programme

MFF cross-cutting objectives

Support the creation and diffusion of high-quality knowledge

Strengthen the impact of R&I in developing, supporting and implementation EU policies 

Foster innovation

Optimise the Programme's delivery for impact within a strengthened ERA

Simplification

Flexibility

Coherence

Synergies

Focus on performance

Structure

0

0

0

+

+

+

+

0

0

EIC

+

+

+++

++

+

++

+

+

++

Missions

+

+++

+

++

+/-

+

++

++

++

International cooperation

++

+

+

+

0

0

0

0

+

Open Science policy

++

+

+

+

0

0

+

0

0

Partnerships

+

++

+

++

++

+

+

+

+

Note: +, ++, +++ correspond respectively to slight, moderate and significant improvement compared to a no-policy change scenario. +/- correspond to a coexistence of positive and negative impacts. 0 means no significant change.

Horizon Europe is expected to generate more substantial economic benefits. Compared to the baseline (Section 2.1), the improvements will increase the overall impact, with different possible scenarios depending on how R&I leverage, diffusion and economic performance will react to these changes. Illustrative results from the NEMESIS model 122 (see Annex 5) show that the estimated GDP gains for the EU compared to the baseline can range from +0.04% in a low scenario to +0.1% in a more optimistic scenario (direct and indirect effect). The total impact of the Programme on EU GDP could range from EUR 30 billion to EUR 40 billion per year over 25 years (EUR 800 billion to EUR 975 billion in total) 123 .

Figure 8: Impact of the changes compared to the baseline (GDP gain, compared to a situation without Framework Programme)

Source: Seureco, Support for assessment of socio-economic and environmental impacts (SEEI) of European R&I programme.

Horizon Europe will deliver more value for money.  Figure 8 shows that the future Programme is expected to generate even more economic benefits due to the improvements in the programme structure and design, which together with more delivery for impact (see section 4) will ensure that the Programme will be cost-effective.

Table 4 Economic costs and benefits of Horizon Europe

Economic Benefits 124

Costs 125

Leverage of R&I investment

EUR 6-7 billion over 2021-2027

Submitting proposals

Cost for beneficiaries: About EUR 650 million per year 126

GDP gain

720 to 975 billion over 25 years

Administrative burden (reporting obligations)

Cost for beneficiaries: EUR 0.9-2.3 million per year 127

Employment

Direct benefit: Over 100 thousand jobs in R&I activities around 2027

Indirect benefit: Over 200 thousand jobs around 2035

Management of projects and proposal evaluation

Cost for administrations:

EUR 500-600 million per year 128

Lastly, these effects will be amplified by strengthened synergies and complementarities with other EU Programmes (see Annex 7). This will entail for example stronger alignment of priorities; clearer complementarities; more flexible co-funding schemes to pool resources at EU level; common strategic planning processes to allocate funding; greater alignment between applicable rules; and eligibility of R&I high-quality proposals for funding by other EU programmes (e.g. Seal of Excellence, co-funded European Partnerships), stronger involvement of existing networks at EU level (e.g., the Enterprise Europe Network). Portfolios of R&I results will be made available for EU regions for potential uptake based on their specific needs, thus maximising the benefits coming from synergies with EU initiatives, for increasing regional competitiveness and innovation. This will maximise the impact of investments, speed up market uptake and the development of a comprehensive R&I ecosystem. Moreover, the Framework Programme will deepen links with EU policy priorities by bringing R&I results into policy-making, with full involvement of sectoral policy-makers.

Error! No sequence specified.Box 10: Market uptake

Improving market uptake of innovative solutions is a broad concept encompassing various activities, which help R&I-driven innovation to succeed on the market and create new value for market players and consumers/citizens alike. However, market uptake goes beyond R&I. Therefore, activities under the Framework Programme alone cannot suffice to incentivise broad market uptake and dissemination of innovative solutions. Other EU programmes need to also play a key role (see Annex 7 on Synergies).

What does Horizon 2020 currently do for market uptake?

·Supports the development of innovative solutions until demonstrators and pilots (introduction of a first-of-its-kind innovation in the EU).

·Speeds up the introduction of innovations on the market and supports coaching and mentoring of companies.

·Provides support to closer-to-market activities, including the launch and scale-up of innovative companies, without distorting competition within the EU.

·Supports public demand for innovative solutions, through Public Procurement for Innovation and Pre-Commercial Procurement. This support is limited to the coordination costs between procurers.

·Develop standards for innovative products and services, but with limited progress so far.

What can the Framework Programme do more for market uptake?

·Ensure market uptake is considered at the phase of proposal development, fostering applicants to co-create/experiment their research and solutions with users from the outset, to ensure improved fit to the final needs, including within the KICs co-location centres;

·Support innovation actions and the demonstration of technological and non-technological innovative solutions of a first-of-a-kind nature in Europe with potential for replication;

·Establish pipelines of innovative solutions (originated from R&I projects) targeted to public and private investors, including the EIC’s Accelerator and other EU programmes;

·Support to roll out and replication of innovative solutions with cross-border and transnational dimension;

·Support to pre-commercial procurement and public procurement of innovation is maintained;

·Support with the EIC the deployment of market-creating innovations and the scale-up of start-ups, innovative SMEs and mid-capital firms with breakthrough potential to create new markets by blended finance of grants and financial instruments under the EIC;

·Improved monitoring and dissemination of R&I results including through initiatives such as the Dissemination and Exploitation Boosters and the Innovation Radar – also directed to other EU programmes for further implementation

·Support non-technological innovations (social innovation, business model innovation, public sector innovation etc.) including innovative delivery mechanisms.

·Put in place a comprehensive go-to-market package to incentivise the exploitation of Framework Programme’s results by helping beneficiaries to find the most appropriate instruments and channels for the market uptake of their innovations.

·Provide holistic support throughout the dissemination and exploitation lifecycle to ensure a constant stream of innovations stemming from the Framework Programme.

·Put in place an ambitious and comprehensive dissemination and exploitation strategy for increasing the availability of R&I results and accelerating their uptake to boost the overall impact of the Framework Programme and the European innovation potential.

3.4Critical mass

Achieving critical mass is key for the efficiency and effectiveness of the Programme 129 . Horizon Europe cannot work effectively if it is not able to fund a sufficiently broad portfolio of relevant technologies and a sufficiently large range of complementary R&I projects that can build on each other and contribute to the objectives of the Programme. Reaching critical mass means that the Programme should be able to fund projects large enough to bring together across countries, sectors and disciplines, all partners and resources required to achieve the targeted objectives. Critical mass is also needed to support large-scale initiatives, preparing full market deployment of solutions in areas like batteries, infectious diseases, smart and clean buildings and vehicles, low-emission technologies, circular economy, solutions for plastic waste, and connected/automated cars. Ambitions will have to be scaled back equally across the Programme if critical mass would not be available.

Over the first three years of Horizon 2020, only 11.6% of the proposals could be funded. This low success rate can be explained by the high attractiveness of the Programme, which has led to a sharp increase in the number of eligible proposals compared to FP7 130 . Moreover, in the first years of Horizon, only 1 in 4 high quality proposals could be funded - an additional EUR 62 billion would have been needed to fund all proposals independently evaluated above the stringent quality threshold. 131 . This underfunding represents an opportunity cost for Europe's promising R&I potential, since it undermines the critical mass needed to tackle global challenge; constitutes a waste of resources for the applicants (who spent an estimated EUR 636 million a year preparing proposals 132 ), deters excellent R&I players from applying, and deprives the EU of the full potential of the Programme. Based on the steady trend observed over the last decade, the number of proposals should be larger than in Horizon 2020. If the resources allocated to the Programme would remain similar to those of Horizon 2020 (in constant prices), the success rate would likely decline, or at best be maintained at ~12%, with only 20% -25% of high-quality proposals funded. This success rate is too low for the Programme to be efficient - a success rate of 15-20% (comparable to FP7), and funding for at least 30% of high quality proposals would be ideal 133 .

Alternative measures to increase the success rate are not expected to be fully effective. Using financial instruments through the InvestEU programme and enhancing complementarities with other MFF programmes, including the European Regional Development Fund, would allow funding more R&I projects. More use of two-stage calls would filter proposals at an early stage 134 . However, financial instruments are not appropriate for all projects 135 , and two-stage calls will not solve the problem for unfunded high quality proposals. Likewise, decreasing the size of projects would imply abandoning larger scale projects, mainly affecting collaborative projects, which are an intrinsic part of the EU added value of the Programme. More strict eligibility criteria can improve overall success rate 136 , however will not address the issue of low success rate for high-quality proposals. Lastly, decreasing the funding rate would lower effectiveness because applicants, including those with high-quality proposals, would need to find complementary funding, and could be discouraged from applying or taking risks.

Figure 9 EC contribution requested in proposals (EUR billion)

Source: DG Research and Innovation. NB: the "increase" scenario assumes an increase in proposals' requested contribution from Horizon 2020 to the new Framework Programme that is similar to the increase experienced from FP7 to Horizon 2020.

4Delivery for Impact

Efficient delivery is essential for reaching all the Programme’s objectives. This section will describe the improvements made in order to better reach the cross-cutting objectives of the MFF: simplification, flexibility, coherence, synergies and focus on performance. These improvements are based on recommendations for optimising delivery from the Horizon 2020 Interim Evaluation 137 and the Lamy High Level Group report 138 . The changes are presented in a structured way along the typical lifecycle of EU R&I support. When changes represent a significant departure from Horizon 2020 (see Table 6 for lessons learnt from Horizon 2020), they will be assessed qualitatively and, where possible, quantitatively. More details can be found in the Annex 9 on the Rules for Participation.



Table 5: Mapping of continued, discontinued and new features in Horizon Europe

Continued without changes

Continued with changes

Discontinued

New

Design – Priorities

·Excellent Science: becomes Open Science pillar and does not include the FET specific objective

·Societal Challenges: becomes Global Challenges and Industrial Competitiveness pillar and covers the LEITs specific objective of the Industrial Leadership pillar and the EIT, which was a separate specific objective

Industrial Leadership as a separate pillar

·Open Innovation pillar

·Strengthening the European Research Area : covers Science With and for Society, and Spreading Excellence and Widening Participation, which are Horizon 2020 specific objectives

Design - Specific objectives

·European Research Council

·Marie Skłodowska Curie Actions

·Research Infrastructures

·Direct Actions (Joint Research Centre)

·Support to the European Institute of Innovation and Technology

·Leadership in enabling and industrial technologies (becomes cross-cluster, though in particular in Digital and Industry cluster)

·Innovation in SMEs, (included in European Innovation Council)

·Societal Challenges 1-7 (becomes Clusters in the Global Challenges pillar)

·Science with and for Society (becomes intervention areas within ERA foundation

·Spreading Excellence and Widening Participation (becomes Sharing Excellence, within ERA foundation)

·Future and Emerging Technologies as separate label, but activities included in other parts

·Fast Track to Innovation

·Access to Risk Finance (covered under InvestEU programme)

European Innovation Council (building on EIC pilot)

Implementation - instruments

·Research and Innovation Actions

·Innovation Actions

·ERC frontier research

·Training and mobility actions

·Programme co-fund actions

·coordination and support actions

·inducement prizes

·recognition prizes

·public procurements

·ERA Chairs

·Twinning

·Teaming

·Policy Support Facility

·Pre-commercial procurements (PCP) and Public procurement of innovative solutions (PPI) (becomes Coordinated innovation procurement)

·SME Instrument (integrated into EIC Accelerator and transition activities)

·Future and Emerging Technologies (FET)Open (becomes EIC Pathfinder)

·Future and Emerging Technologies (FET)Flagships (incorporated within mission concept)

·Support to Joint Programming Initiative, ERA-NET, Contractual Public Private Partnerships, Institutionalised public-private partnerships (Art. 187) and Institutionalised public-public partnerships (Art. 185): incorporated within European Partnerships, with strong criteria

·Missions

·EIC pathfinder

·EIC accelerator

Implementation – concepts

·Key Enabling Technologies

·Gender Equality

·Ethics standards

·International cooperation (new criteria)

·Strategic planning – widened to include R&I activities from other funding programmes

·Governance

Optimising delivery is also key to achieve higher impact and further simplification 139 . When properly designed, the Rules for Participation ensure legal certainty for participants and contribute to overall coherence in terms of implementation. Simplification remains a continuing endeavour in Horizon Europe, building on the achievements of Horizon 2020, which reduced the administrative burden and costs for applicants, and made it more attractive for newcomers and SMEs through new elements like its funding model (single reimbursement rate and a flat rate for indirect costs), the Participant Portal, and e-signatures. Beneficiaries and stakeholders have reacted very positively 140 . 

Impact depends ultimately on the dissemination and exploitation of R&I data and results, and it needs to be effectively captured and communicated 141 . An ambitious and comprehensive dissemination and exploitation strategy will increase the availability of R&I data and results and accelerate their uptake to boost the overall impact of the Programme. The strategy will move from a focus on individual projects to analyses of portfolio of R&I results in key policy areas and will further endorse Open Access policy to incentivise the exploitation of R&I results. In particular, clusters of mature R&I results will be exploited in synergy with other EU programmes to foster their uptake at national and regional level, maximising the European innovation potential. This will be complemented by effective R&I communication and outreach campaigns that build trust and engage citizens.

Table 6 Lessons learnt from the Interim Evaluation of Horizon 2020 and from the Stakeholder Consultation

What do we have now?

What did we learn?

Strategic planning

The priority-setting process is defined in multiannual Work Programmes 142 (WP). The WPs identify the priorities in calls for proposals. They allow some flexibility to respond to new developments 143 . The strategic planning process builds on: Scoping Papers developed by the Commission; foresight; targeted consultations of industry, academia and civil society; and input from experts (Advisory Groups). The WPs are adopted by Commission Decision, in consultation with Member State representatives in the 14 configurations of the Programme Committee.

The strategic planning process improved the intelligence base underpinning priority-setting, and made the focus of the programme more in line with stakeholders needs. Nonetheless, the translation of high-level challenges and objectives into specific calls and topics is not always clear, while the transparency in the WP formulation process and the participation of stakeholders/and citizens/CSOs in agenda-setting were identified as areas for improvement.

The single set of rules

The single set of rules (i.e. the Rules for Participation and dissemination of results) implies that the same rules are applied in all parts of the programme, regardless of the implementing body (Commission, Executive Agencies, Joint Undertakings). Only a very limited number of derogations from the Rules for Participation exist, when duly justified, e.g. for specific operating needs of public-to-public partnerships (Art. 185 TFEU) and public-private partnerships (Art. 187 TFEU) 144 . The Common Support Centre (CSC) harmonises implementation of the rules across all implementing actors.

The single set of rules and its harmonised implementation via the CSC are widely seen by beneficiaries as advantageous, contributing to increased legal certainty, coherence and simplification of the rules, though some partners perceived it as a loss of flexibility compared to FP7 145 . Moreover, Member States have repeatedly expressed their wish to include Art. 185 TFEU initiatives under the the Participant Guarantee Fund 146 , which does not currently cover them.

The funding model

The rules concerning the contribution of the EU to eligible costs do not differentiate between organisation categories or types of activities (in contrast to the FP7 funding model, which used a complex matrix of organisation categories and activity types). Its main features are a single reimbursement rate for direct costs (up to 100% of eligible costs for Research and Innovation Actions, and up to 70% for Innovation Actions 147 ) and a single flat rate for indirect costs (25% is applied to the direct eligible costs 148 ).

The funding model has not led to a significant change in funding intensity 149 . The funding model is a simplification measure that allows for flexibility and that has mobilised and largely satisfied stakeholders 150 . The overall funding rate is on average 70% of total project eligible costs (both direct and indirect). In a simplification survey 151 , 78% of respondents appreciated the single reimbursement rate.

Simplified forms of grants

Horizon 2020 features a simplified cost reimbursement system with enhanced use of unit costs 152 , flat-rates and lump sums, while actual cost reimbursement (i.e. costs actually incurred by beneficiaries) is used still for the majority of the budget. Unit costs are used for specific types of personnel costs (i.e. for average personnel costs and SME owners without a salary) and other direct costs (i.e. internal invoices), while indirect costs are covered by a single flat-rate. Lump sums, at the start of Horizon 2020, were used for small-sized projects (e.g. Phase 1 of the SME Instrument). In the 2018-20 Work Programme, pilot actions were launched for testing lump sum project funding for "mainstream" collaborative R&I projects.

While beneficiaries express preference for actually incurred costs, a number of financial complexities are inherent to this model (e.g. calculation of the monthly hourly rate, additional remuneration). Moreover, reimbursement of actual costs focuses attention on justification of costs, and not on the expected impact as in the case of lump-sum funding. Further simplification of the actual cost reimbursement system is necessary, in particular for personnel costs. The European Court of Auditors 153 also proposed that the post 2020 Framework Programme assesses the need for further use of simplified cost options such as lump sum project funding and prizes.

Grants and financial instruments

More than 90% of the Horizon 2020 support is grant based, while the rest is provided with financial instruments (i.e. debt or equity) through the European Investment Bank (InnovFin) 154 . Pre-commercial public procurement (PCP), public procurement for innovation (PPI) and inducement prizes represent only a limited share of the Horizon 2020 budget.

Only a small number of firms receiving Horizon 2020 grants benefitted from Horizon 2020 financial instruments. Extremely few companies taking part in Horizon 2020 obtained investments for scaling up from InnovFin. This points to a potential lack of integration between the grant and non-grant based instruments at different stages of the innovation cycle but also to limitations of intermediated risk-sharing mechanism where the initial risk is to be fully borne by the Union due to market risk-aversion 155 .

Proposal evaluation and selection

Major investment decisions are taken at the stage of evaluation and selection of proposals. The system, based on independent expert judgement ensures that the selected projects are the best. The approach ensures maximum coherence across the different implementing bodies, based on three award criteria against which proposals are evaluated: Excellence; Impact; and Quality and efficiency of the implementation 156 .

The Horizon 2020 proposal evaluation and selection process is generally highly regarded. Still, some stakeholders asked for more transparency, found the quality of evaluation feedback received uneven, and considered that the evaluation experts sometimes appeared to lack the appropriate expertise 157 . To increase efficiency in relation to over-subscription, two-stage calls for proposals were identified as good practice.

Ex-ante and ex-post audits

The general rules related to the management and implementation of projects are detailed in the Model Grant Agreement. Beneficiaries are bound by the grant agreement they sign with the Commission. The audit and control system seeks an appropriate balance between trust and control, taking into account administrative burden for participants. The Horizon 2020 audit strategy is based on the financial audit of a representative sample of expenditure, and is complemented by a selection based on risk assessment

The Common Support Centre strengthened the corporate approach in implementing the programme and in auditing projects. However, some Joint Undertakings expressed the need of additional direct audit coverage and considered the common representative sample as not sufficient enough for their needs, leading to a potential increase of audit burden towards the Horizon 2020 beneficiaries.

Dissemination and exploitation

Throughout Horizon 2020, specific calls for proposals, coordination and support actions and public procurement provide targeted assistance to projects in order to optimise the dissemination and exploitation of their research results. To further assist project consortia, the Commission provides tailor-made support services, e.g. the Common Exploitation Booster, the Common Dissemination Booster and the Innovation Radar.

Beneficiaries develop activities for better dissemination and exploitation but results are still not fully accessible to all relevant stakeholders and this represents a barrier to knowledge circulation and to innovation uptake. The uneven exploitation capacity among beneficiaries hinders market uptake. Moreover, feedback from R&I projects into policy-making must be strengthened 158 .

Delegation

To ensure a more modern, effective and dynamic implementation, while reducing staffing by 5% over 5 years 159 , 75% of Horizon 2020 budget is delegated to other EU bodies: Executive Agencies (55%), Public Private Partnerships (Art. 187 TFEU initiatives, 10%), the European Investment Bank (4%), the European Institute of Technology (EIT, 4%) and Public-Public Partnerships (Art. 185 TFEU initiatives, 2%). The remaining 25% is managed "in house" by the Commission.

The delegation to implementing bodies allows Commission services to focus on policy-making and strategic planning, while maximizing the effective and efficient use of EU funding. Executive Agency evaluations confirmed their effectiveness and high value for money, with administrative costs well below 5% 160 .

4.1The strategic planning process

Towards a strategic, impact-oriented and collegial planning process. The strategic planning process will provide multi-annual strategic orientations for the Framework Programme. It will be co-created in synergy with other EU programmes and policies, with the intention of giving coherence to the entire portfolio of actions supported by the EU under the MFF. The process will be streamlined into a single Commission document 161 , applying to all Programme components 162 , including missions 163 , European Partnerships, and the EIT Strategic Innovation Agenda 164 . This draft Strategic R&I Plan will be open for public consultation, providing more involvement of EU Institutions and citizens than previously. The Work Programmes will then be developed on the basis of the finalised Strategic Plan.

In addition, a simpler governance structure with ad-hoc and flexible advisory mechanisms and Programme Committee configurations will improve the rationalisation and simplification of the planning process, hence delivering results more efficiently and transparently.

What are the expected implications?

·Increased co-creation with other EU Institutions and citizens. While in Horizon 2020 the priority setting was defined mostly with targeted consultations, the new Strategic R&I Plan will be more open for general public consultation, involving citizens, customers and end-users in agenda-setting (co-design) for the Programme. In particular, the public will have a say in the definition of R&I missions.

·Higher coherence within the Programme and enhanced synergies with other EU Programmes. By bringing together all Commission services and implementing bodies, the Strategic R&I Plan will ensure a stronger and more inclusive agenda-setting process, whereby the linkages between EU Programmes would be strengthened, promoting faster dissemination and uptake of R&I results.

·Better alignment of national and EU policies. Involvement of Member States at early stage in the discussion on the strategic planning and in consequences in the work programme preparation will help to build better alignment between national and EU R&I activities.

4.2The single set of rules

The principle of a single set of rules will continue with further improvements. In line with the corporate approach towards a single-rule book and the preparation of the MFF, the new EU Financial Regulation 165 will be used as a common reference under which the rules applicable to all EU funding programmes will be aligned. Derogations to the Financial Regulation are kept to the minimum, but maintained in order to strike the right balance between full harmonisation and specific needs of individual initiatives. The new Rules for Participation allow other funding bodies, in particular bodies implementing Article 185 or 187 TFEU initiatives, to establish limited derogations in their basic acts in cases duly justified by their specific needs. Furthermore, the Participant Guarantee Fund (renamed Mutual Insurance Mechanism) will be extended to article 185 TFEU institutionalised European Partnerships.

What alternatives were considered? Keeping Horizon 2020 status quo was considered for predictability, but this would have been a missed opportunity to streamline the approach taken on derogations (e.g. by maintaining the scope of the derogations for Art. 187 TFEU initiatives separate from other institutionalised European Partnership Initiatives) and for further simplification. Returning to FP7 Rules would provide more flexibility (e.g. by allowing different funding bodies to adopt rules as they see fit), but this would result in diverging rules, undermining simplification, legal certainty and hampering participation.

What are the expected implications?

·More simplification and reduced costs. The single set of rules contributes to the rationalisation of the new Framework Programme. It further harmonises and streamlines implementation methods, hence simplifying the burden e.g. for preparing and submitting proposals. It increases the accessibility and attractiveness of the programme, in particular for applicants with limited resources, such as SMEs.

·Improved synergies with other EU programmes. As the number of derogations to the Financial Regulation is reduced, EU programmes are more likely to share common rules. This increases the possibility for more targeted multi-faceted EU support, for instance through missions.

·Increased flexibility while maintaining legal certainty. The Framework Programme will further improve the balance between flexibility and legal certainty e.g. by allowing funding bodies to establish rules that depart from those laid down in the Financial Regulation or in the Rules for Participation, in order to accommodate their specific operating needs of individual initiatives in duly justified cases.

4.3The funding model

Rules on funding rates will be maintained. Given the largely positive assessment of the Horizon 2020 funding model, Horizon Europe will maintain the single reimbursement rate for direct costs (up to 100% of the total eligible costs for Research and Innovation Actions and up to 70% for Innovation Actions) and the single flat rate for indirect costs (25% is applied to the total direct eligible costs) 166 . Similarly, the funding rate will be a maximum - this ceiling can be reduced for implementing specific actions, where duly justified (e.g. for Euratom, or specific close-to-market calls).

What alternatives were considered? Alternatives to the continuation were considered, mainly to reduce oversubscription 167 , but maintaining attractiveness (i.e. broad involvement from all sectors and disciplines) is more important. A lower funding rate for all projects (e.g. 75%) would allow a larger number of beneficiaries to benefit from EU support. However, such an approach would decrease the overall attractiveness of the programme, especially for non-profit entities and SMEs, hence affecting the principle of excellence. Different levels of funding for industry compared to other types of beneficiaries were also considered, but this approach would have a negative impact on industry participation, on simplification and on time-to-grant. Alternative ways to address oversubscription are also identified in section 3.4 on critical mass.

What are the expected implications?

·Maintained programme attractiveness. Continuity in the funding model enhances predictability, legal certainty, attractiveness and ease of access to the Programme. Administrative burden would not increase. On the contrary, a significant departure from the Horizon 2020 model would force beneficiaries to adapt once again to a new system.

·Further simplification and more flexibility. The benefits of the current funding model have already largely materialised 168 : simple financial management of projects; reduced complexity of the financial rules; reduced financial error rate; acceleration of the granting processes.

·Reduced oversubscription. Extending the use of flexibility to establish lower funding rates in the Work Programme can contribute to reducing oversubscription for targeted calls or topics. The level of co-investment will increase or at least remain the same as in Horizon 2020.

4.4Forms of funding, including simplified cost options

The cost reimbursement scheme will be further simplified. The two current unit costs (average personnel costs and internally invoiced goods and services) calculated in accordance with the beneficiary's practices 169 will be maintained. In addition, in view of simplification, the unit cost for internally invoiced goods and services will allow for a higher acceptance of the usual cost accounting practices. Beneficiaries will be able, under certain conditions 170 , to calculate such unit cost based on ‘actual direct and indirect costs', provided those costs are recorded in their accounts. The need to further align programme provisions with beneficiaries’ accounting practices was also a recommendation from the European Court of Auditors 171 . In order to lower administrative burden, an increased use will be made of lump-sum project funding against fulfilment of activities – building on the experience from the lump-sum pilot in Horizon 2020 – as well as other simplified forms of funding provided by the new Financial Regulation, including other incentives based on contributions not linked to costs, where appropriate.

As regards actual costs, the calculation of personnel costs will be further simplified and aligned to the Financial Regulation. The distinction between basic and additional remuneration will be removed and the Horizon 2020 capping on the additional remuneration abolished. For beneficiaries with project-based remuneration 172 , costs of personnel will be eligible up to the remuneration that the person would be paid for the time worked in projects funded by national schemes.

The system of in-kind contributions provided by third parties to beneficiaries will be further aligned to the Financial Regulation: in-kind contributions against payment will be treated and reimbursed under other budget categories according to the eligibility criteria for actual costs. In addition, the calculation of in-kind contribution free-of-charge will be further simplified: no distinction will be made if these resources are used on the premises of beneficiaries or third parties and beneficiaries will no longer need to declare them, under specific conditions, as receipts.

What alternatives were considered? Alternative simplified costs options were assessed regarding rules for personnel costs, such as optional unit cost (hourly rate) or contributions not linked to costs but were not found feasible. Fully relying on the Financial Regulation was also considered, but such an approach would imply a significant departure from current practices (lack of continuity) and would be negatively perceived by beneficiaries.

What are the expected implications?

·Lower administrative burden. The broader acceptance of beneficiaries’ usual cost accounting practices, the abolition of the additional remuneration scheme, and the extended use of lump sum and output-based funding significantly contributes to simplification, as they improve and simplify reimbursement of actual costs, while providing flexibility. In particular, the use of lump sums reduces substantially the reporting requirements from beneficiaries during the lifetime of the project, shifting the focus of project monitoring from financial checks to performance and content. 

·Lower error rate. The further acceptance of the beneficiaries’ usual cost accounting practices will reduce the error rate on issues that have generated recurrent and repetitive errors under FP7 and Horizon 2020. For example, the abolition of the additional remuneration scheme will allow the beneficiaries to report their personnel cost with respect to their usual accounting practices, whilst the current experience on auditing lump sums has confirmed the low error rate on such transactions.

·More coherence with the Financial Regulation. An alignment of the rules with other EU funding programmes will also allow the beneficiaries to apply even more widely their usual accounting practices, as this reduces the need to amend reporting models to the various (and sometimes diverging) needs of each EU programme. This harmonisation and further acceptance of the beneficiaries’ usual accounting practices will reduce the administrative burden of the beneficiaries.

4.5Grants, financial instruments and blended finance

Blended finance will help companies to scale up. The supply of flexible and agile funding schemes is essential for innovators. Grants will continue for projects that are far from the market, for example for basic research 173 . Yet, projects that are closer to market may still present a too high-risk profile, preventing them access to risk finance. Through the European Innovation Council (EIC), the new Framework Programme will offer large-scale blended funding (grants or reimbursable advance with equity or guarantees) to companies undertaking such projects, for late stage innovation activities, but also for market deployment activities such as pilot manufacturing, large trials or ensuring regulatory compliance 174 , tailored to their risk level and technological maturity. The overall purpose of blended finance shall be to support high-risk innovations beyond the usual limits of grant-based research, where the risks – whether technological, market or regulatory – cannot be borne by the market alone. By combining grant-type funding with equity or guarantees under the EIC, the Programme will hence bridge the financing gap between late stages of R&I and market uptake and deployment, and will encourage investors and lenders to support innovative high-risk projects, with a greater propensity to co-invest or to offer lower interest-rates and less onerous requirements for collateral.

What alternatives were considered? While innovation at large will be reinforced by the InvestEU single fund - providing indirect financial instruments carried out through the European Investment Bank Group or other implementing partners, with a dedicated window for R&I investments and specific products for innovative companies - financial intermediaries (banks and investors) may remain averse to the residual risk they bear when investing in high-risk innovative projects. To date, available private and corporate financing remains small 175 for late stage of innovation activities and market take-up for high-risk breakthrough innovations, as financial institutions must limit their risks to maintain their market rating. There is hence a necessity for direct Union intervention. Providing only for grant allows to start de-risk operations and attract private or corporate finance, but partially, as some activities too close to market, including deployment and scale-up, may not be covered by grants. Furthermore, the classical alternative of awarding blended finance to a project by allocating grant-type funding (through the Framework Programme) and financial instruments (through InvestEU) might not be fully adapted to the needs of risky breakthrough innovators, who need to proceed to the market quickly.

Box Error! No sequence specified.: Examples of blended finance

National innovation agencies such as Vinnova, BPI France, Innovate UK and CDTI operate blended finance in the form of grants in combination with soft loans and venture investments:

·A loan combined with a grant: the proportion of grant to loan depends on an assessment of the riskiness of the innovation whose development the funding will support: the higher the risk, the greater the grant component. This approach can be combined with the whole or partial write-off of the loan if the development of the innovation fails for technical or commercial reasons; or the reimbursement of part of the grant if the innovation succeeds.

·A conditional grant combined with a loan or equity: the payment of all or part of the grant is conditional on the grantee obtaining at least a matching amount as a loan or an equity investment (such as venture capital) from a lender or investor.

What are the expected implications?

·Raise availability of large-scale risk finance in Europe by providing large tailor-made investments that combine EU support through grants and blended finance, in addition to investment through support to equity or guarantees.

·Increase leverage through active measures put in place for EU R&I funding to stimulate private finance. For instance, proposals may also be submitted by investors including public innovation agencies looking for co-investment. A set of actions to improve ‘investment-readiness’ and ‘bankability’ will continue from the Horizon 2020 EIC Pilot in term of coaching (InvestHorizon), and the EIC events aimed at matching investor/investee and awareness raising.

·Increase risk taking for breakthrough innovation by de-risking technical or financial failure.

4.6Proposal evaluation and selection

The key elements of the proposal evaluation and selection system will be maintained, including the use of independent experts, and the use of three award criteria (based on excellence, impact and quality and efficiency of the implementation) across the board, with differentiation for the proposals for ERC frontier research actions, which will continue to apply only the excellence criterion and for the EIC’s Accelerator whose evaluation will include valuation of risk. Small improvements in order to address lessons learnt from the Horizon 2020 Interim Evaluation (e.g. to improve quality of feedback to applicants, differentiated expert panels, and multi-stage and multi-step procedures, gender balance in evaluation panels and the integration of the gender dimension in R&I content) can be ensured throughout the implementation of the Work Programmes. To increase the societal relevance and applicability of proposals, greater use of civil society expertise should be encouraged in appropriate evaluation panels 176 . In particular for missions and the EIC, the Commission may select proposals based not only on the merit of individual proposals, but also in relation to the overall coherence of the portfolio of projects and other Union policy objectives. While the main principles would be spelled out in advance in the Rules, the Work Programmes will provide further details on the application of the award criteria depending on the objectives of the calls and instruments (e.g. the aspects to be taken into account under the evaluation procedures).

Box 11 Access conditions to the Framework Programme

For collaborative projects, the consortium must include at least three independent legal entities established in a different Member State or associated country, and with at least one of them established in a Member State, unless otherwise provided for in the work programme. For other specific activities (i.e. EIC, ERC, co-fund, or MSCA training and mobility actions), different minimum conditions apply. Additional eligibility criteria may be laid down in the work programme. In case of actions carried out outside the Union using and/or generating classified information, a security agreement have to be concluded between the Union and the third country in which the activity is conducted.

What alternatives were considered? A possible alternative was the exclusion from the Rules for Participation of these provisions, relying instead on the full flexibility offered by the Financial Regulation (leaving the criteria and other provisions for the Work Programmes). Although this would maximise flexibility, it risks a divergence of rules in practice, jeopardise smooth business processes, and lead to unpredictability for applicants. Specifying in full detail the criteria for evaluation and selection of proposals in the Rules would ensure a high degree of coherence across the programme and a measure of stability for applicants but would represent a significant loss of flexibility.

What are the expected implications?

·Achieve a balance between flexibility and coherence. The current system has been shown to work well, and there is no evidence for the need for a fundamental change. However, missions and the EIC require a proactive portfolio management to reach their objectives, calling for flexibility to ensure overall consistence. Providing the main ground rules in the legislation, while permitting adaptability via the Work Programme, has proven in the current and previous programmes to ensure coherence across the board, predictability for applicants, and smooth business processes, while maintaining a strong degree of flexibility and the possibility for experimentation.

·Maintain a strong focus on excellence and performance. Streamlined but adaptable rules will help applicants design well-focussed proposals, and will lead to processes in which the best proposals are identified and selected as quickly as possible.

4.7Ex-ante and ex-post audits

A wider cross-reliance on audits and assessments – including with other EU programmes – is envisaged. The increased alignment to the Financial Regulation provide an opportunity for audit synergies via Systems and Processes Audit. Indeed Systems and Processes Audit avoid duplication of audits, since there will be a common audit approach on common financial rules and hence a more harmonised and simple audit approach. By cross relying on audits of beneficiaries among the various EU programmes, the need for additional auditing will gradually be reduced. In addition, cross-reliance has been explicitly considered in other elements of assurance (e.g. Systems and Processes audits and audit on transactions) resulting into a reduced need for financial audits on beneficiaries with positive results in their Systems audits. Moreover, cross-reliance could be part of the conditions under which the obligation for the beneficiary to submit a certificate on the financial statement can be waived.

Further efforts in the area of ex-ante controls through implementing additional automated checks and tools for simpler entry of the data, will have a positive impact where beneficiaries need to submit information to Commission. Integration of ex-post audit support into the Participant Portal will enable better view on the progress of the audits to the beneficiaries, allow completely electronic exchange of documents and notifications, all that can anticipate additional reduction of burden and costs to beneficiaries.

What alternatives were considered? The concept of cross-reliance on other audits or assessments with other EU programmes was considered, however its effectiveness depend on the homogeneity of the rules between programmes. Identifying possible common benchmarks / principles or best practises for a broader acceptance of usual cost accounting practices of beneficiaries from different sectors and different countries can be further explored as a second alternative in view of moving a step forward from a ‘rule-based’ approach towards a ‘principle-based’ one. However, it should be noted that such a challenging alternative would be possible only once having taken into account the eligibility criteria of the different programmes, in the particular context of the absence of any international standard in that matter.

What are the expected implications?

·Reduce administrative burden. Compared to Horizon 2020, the Systems and Processes Audit (SPA) will lead to a reduction of the audit burden of the beneficiary that has been positively assessed. A beneficiary which is positively assessed via a Systems and Processes Audit, receives a long term assurance that their usual accounting practices are compatible with the Horizon Europe’s eligibility requirements, whilst the need for further auditing ceases to exist. The introduction of Systems and Processes Audit is a holistic audit approach, resulting into an overall assurance which when achieved, results into a significant reduction of the audit burden.

·Increase simplification for beneficiaries of EU funds. The Systems and Processes Audit (SPA) allows for more synergies with the Audits carried out under the shared management mode (e.g. especially those performed under the European Regional Development Fund). With this cross-reliance between audits, the Commission increases efficiency and effectiveness, avoids duplication of audit efforts and initiates a process where auditors within the Commission can exchange data and reviews.

4.8Policy and rules regarding Dissemination and Exploitation

Horizon Europe will provide dedicated support to dissemination (including through open access to scientific publications), exploitation and knowledge diffusion actions. Strong emphasis will be placed on portfolios of research results for targeted diffusion to end-users, citizens, public administrations, academia, civil society organisations, industry and policy-makers, including through the use of data intelligence tools for harvesting knowledge and providing innovative data uses and visualisation.

More emphasis is put on to promoting the exploitation of R&I results, in particular in the EU. Horizon 2020 provides for a "best effort" to exploit results and, if indicated in the Work Programme, for additional exploitation obligations. In Horizon Europe, the "best effort" approach to exploit must have a particular focus on the EU. As in Horizon 2020, the Work Programme can specify additional obligations if justified. The beneficiaries must include in their proposals a dissemination and exploitation plan that must be updated during and after the end of the project, to ensure a continued focus on the exploitation of results.

What alternatives were considered? Alternatives for better exploitation of R&I results that were considered range from not having specific rules at all, to having more stringent rules across the board. Having a more stringent general rule was considered unjustified, as there may be valid reasons why exploitation occurs elsewhere (the EU often still benefits from such exploitation). Moreover, such a broad approach would deter industrial and international participants. Having no rules at all, and leaving the full choice of exploitation location to market forces was considered insufficent to safeguard the appropriate exploitation of results for the benefit of the Union.

What are the expected implications?

·More economic and societal impact. By fostering better exploitation of R&I results, a more EU-focussed exploitation increases the accessibility of high quality content, while ensuring that the benefits serve the EU. They aim at better ensuring the right balance between the pursuit of EU strategic interests in terms of competitiveness and job creation on one hand, and attractiveness for industry and openness to international participation on the other. This will assist market uptake, boost impact, and increase the innovation potential of results supported by EU funding.

·Some additional reporting requirements. The possibility of additional reporting specifically on exploitation or impact demonstration and related administrative burden will be weighed against the need to have accurate information regarding the exploitation of results beyond the lifetime of the projects.

·Higher market uptake, impact and innovation potential. Union support will ensure a constant stream of knowledge and innovations towards the scientific community, industry, policy-makers, and the public. Dedicated support services developed by the Commission, combined with the strengthened exploitation plans of the beneficiaries, will satisfy both the legitimate interest of beneficiaries and the interest of the public.

4.9Delegation to Executive Agencies

The Commission will increase the share of the budget delegated to Executive Agencies, subject to positive outcome of the mandatory Cost Benefit Analysis. Given the new elements in the scope of the new Framework Programme (e.g. missions and the EIC) and the increased budget to be delegated, the reshaping of the portfolios of the existing Executive Agencies will be needed along with exploring the possibility of establishing additional ones. Activities with substantial policy content will be excluded from delegation to Executive Agencies while, in parallel, the effective feedback of R&I data and results from Executive Agencies to the Commission will be reinforced, in line with the dissemination and exploitation strategy, to strengthen the inputs for policy-making.

What alternatives were considered? For the implementation of the new Framework Programme, the following alternative options were considered: an 'in-house' scenario (reintegration of part of the programme management in the Commission); maintaining the current status as in Horizon 2020; and full delegation of all programme's activities. The in-house scenario would imply returning to previous management modes that entailed comparably higher administrative costs 177 . Specific scenarios for the implementation of the EIC activities through a dedicated Executive Agency are described in the Annex 8 on the EIC.

What are the expected implications?

·Reduce administrative costs. Independent evaluations 178 show that delegation to Executive Agencies brings substantial savings in administrative expenditure. The administrative costs of the programme implementation by Executive Agencies in Horizon 2020 are around 2-3% of the operational budget, which is well below the target of 5%.

·Improve synergies with other programmes. Executive agencies manage parts of different programmes that complement each other 179 : rationalising their portfolio can help aligning and integrating objectives of different programmes, for instance better linking R&I results to market deployment.

·Enhance focus on performance. Executive Agencies have reached and maintained very high levels of satisfaction among their beneficiaries 180 , while at the same time successfully managing a larger number of projects than in FP7. This consistent high performance allows the Commission to focus on strategic priorities.

4.10Overall impact on the objectives of the MFF

The delivery tools of the Framework Programme will contribute to the cross-cutting objectives of the Multiannual Financial Framework (MFF), notably simplification, flexibility, coherence, synergies and focus on performance. Overall, the Framework Programme is expected to deliver large benefits that outweigh costs, in particular for the Programme's focus on performance, its flexibility, as well as its internal coherence and its synergy with other programmes (see Ta ble 8 ).

Other MFF Programmes are closely linked to the new EU R&I Programme: synergies and complementarities between them should be enhanced (see Table 7 and Annex 7). Current Horizon 2020 beneficiaries also benefited from other EU programmes, e.g. the European Structural and Investment funds, EU Health Programme, and COSME 181 .

Table 7 Synergies and complementarities with other MFF proposals

MFF Programmes

Links to new Framework Programme

Common Agricultural Policy (CAP)

A key priority for the ‘second pillar’ of the post-2020 CAP 182 is an increased focus on fostering innovation, in particular through wider diffusion of innovation, better access to new technologies and investment support. This will involve strengthening the links between agricultural and rural development policies and R&I in support to the development of knowledge and innovation systems. The development of an ambitious, integrated Strategic Research and Innovation Plan will define priorities of the Framework Programme in the area of food, nutrition security and sustainable management of natural resources with a view to develop synergies between the Framework Programme and the CAP. The latter will promote the use, implementation and deployment of innovative solutions, including those stemming from R&I projects funded by Horizon Europe.

European Maritime and Fisheries Fund

The post-2020 European Maritime and Fisheries Fund will provide important support to the implementation of the Common Fisheries Policy and the Maritime Policy. This programme will focus on creating the conditions for boosting competitiveness in the blue economy, especially through close-to-market innovation, access to marine knowledge and by ensuring a safe and secure maritime space. Strong and sustainable blue growth requires enhanced synergies with wider EU intervention. The Framework Programme is of particular relevance in this respect as it strengthens the knowledge base from which new, innovative products, processes and services can emerge in the maritime economy. The EMFF will support the rolling out of novel technologies and innovative products, processes and services, in particular those resulting from Horizon Europe in the fields of marine and maritime policy.

Connecting Europe Facility (CEF)

The post-2020 CEF will prioritise the large-scale roll-out and deployment of innovative new technologies and solutions which result from projects in transport, energy and telecommunications funded by the Framework Programmes. Horizon Europe will support all stages in the R&I chain, including non-technological and social innovation, and closer-to-market activities with innovative financial instruments. Through the Strategic Research and Innovation Plan, Horizon Europe will support R&I on transport, energy and mobility, in particular through the Climate, Energy and Mobility cluster, as well as digital technologies. The exchange of information and data between Horizon Europe and CEF projects will be facilitated, for example by highlighting technologies from the Framework Programme with a high market readiness that could be further deployed through CEF.

Digital Europe Programme (DEP)

DEP focuses on large-scale digital capacity and infrastructure building in High Performance Computing, Artificial Intelligence, Cybersecurity and advanced digital skills aiming at wide uptake and deployment across Europe of critical existing or tested innovative digital solutions. While several thematic areas addressed by both programmes converge, DEP will mainly focus on roll-out and deployment activities outside research and innovation, whereas the Framework Programme will focus on investing in the entire spectrum from research to market. R&I needs related to digital aspects are identified and established in Horizon Europe strategic R&I plan, while DEP capacities and infrastructures are made available to the research and innovation community, including for activities supported through Horizon Europe such as testing, experimentation and demonstration across all sectors and disciplines.

Erasmus

The post-2020 Erasmus will continue to support mobility, cooperation and policy initiatives in the field of higher education. This includes support for integration of education, research and innovation, development of competences and inter-disciplinary, transferable, digital and entrepreneurial skills in forward-looking fields or disciplines and support to higher education institutions, research centres, businesses and civil society to contribute to innovation. The Framework Programme will continue to invest in the people behind research and innovation, strengthening their skills, training and career development and fostering the transfer of knowledge and cooperation between research-performing organisations and providing incentives for universities embracing open science policy. Horizon Europe will complement the Erasmus programme's support for the European Universities initiative, in particular its research dimension, as part of developing new, joint and integrated long-term and sustainable strategies on education, research and innovation based on trans-disciplinary and cross-sectoral approaches to make the knowledge triangle a reality.

European Defence Fund

Complementarity and synergies with the European Defence Fund will be ensured, so that results under civil R&I also benefit defence R&I and vice-versa.

European Regional Development Fund (ERDF)

The post-2020 European Regional Development Fund (ERDF) will provide an important part of EU funds for R&I. The post-2020 ERDF may feature increased funds dedicated to the take-up of results and the rolling out of novel technologies and innovative solutions from past Framework Programme and Horizon Europe. It will continue to invest in actions that build R&I capacities of actors aimed at participating in the Framework Programme or other internationally competitive R&I programmes. Holders of Seal of Excellence 183 labels from the Framework Programme may be funded by Member States and regions, where relevant to the local context and smart specialisation strategies, including with resources from any Union shared-management programme. The same applies for national funding of joint programmes co-funded under the Framework Programme. In addition, budget from share management could be voluntary transferred for implementation to central managed programmes. Part of the Framework Programme will continue to support low-performing countries in R&I, in the context of strengthening the European Research Area. Smart specialisation strategies will continue to promote innovation based on the strengths of each region and be a basis for ESI Funds investments in R&I and the innovation eco-systems.

European Social Fund+ (ESF)

The post-2020 European Social Fund will continue to invest in human capital and skills development, as well as in social innovation. The ESF+ can mainstream and scale up new and innovative curricula for education and training programmes developed in R&I projects under the Framework Programme. Holders of the Seal of Excellence may be funded by the ESF+ to support activities promoting human capital development in research and innovation with the aim of strengthening the European Research Area. The Health strand of the ESF+ will mainstream innovative technologies and new business models and solutions, in particular those resulting from the Framework Programmes.

Neighbourhood, Development and International Cooperation Instrument

The future Neighbourhood, Development and International Cooperation Instrument will merge several EU external instruments existing in the 2014-2020 period 184 . The broad instrument will include a prominent neighbourhood window, strong focus on migration including a 20% unallocated envelope and provisioning for Macro-Financial Assistance.

There are inherent complementarities between Horizon Europe and the future Instrument, for example in so far as they both contribute towards the EU's international commitments such as the 2030 Agenda for Sustainable Development 185 , the Paris Agreement on Climate Change, or the renewed EU-Africa Partnership among others. The Neighbourhood, Development and International Cooperation Instrument will continue to complement the Framework Programme by building research and innovation capacity (at individual, organisational or institutional levels) including through research infrastructures in third countries and regions. It will support the diffusion and uptake of innovations, the development of human capital and market access for technological solutions developed through collaborative research and innovation.

Innovation Fund under the EU Emissions Trading System

The Innovation Fund under the EU ETS will support low-carbon technology demonstration projects in the EU. It has been established by the revised EU ETS Directive and it will use the proceeds from the auctioning of at least 450 million allowances under the EU ETS, as well as leftovers from the current NER 300 programme. It will specifically target innovative low-carbon technology demonstration projects in industry, renewable energy, energy storage, carbon capture and storage (CCS) or industrial carbon capture and use (CCU) to be developed via the R&I window of the (InvestEU Programme) in addition to resources deployed therein. Horizon Europe will fund the development and demonstration of technologies that can deliver on the EU decarbonisation, energy and industrial transformation objectives.

Internal Security Fund and
Integrated Border Management Fund

The future Security and Border programmes will contribute to ensuring a high level of security in the Union, inter alia by tackling terrorism and radicalisation, organised crime and cybercrime, and by supporting the effective implementation of the European Integrated Border Management system. The programmes will support Member States’ efforts in these areas, including by incentivising Member States to take up and apply R&I results from the Framework Programme. The Framework Programme will support R&I in the area of security, including border management, in particular though the cluster on Resilience and Security. Potential complementary actions can also be considered under Horizon Europe regarding research and innovation for customs control equipment in view of the Union instrument for financial support for customs control equipment (CCE).

InvestEU Fund

The InvestEU Fund will include financial instruments in four separate policy windows. An R&I thematic window will bundle financing activities that are closely linked to the objectives of the R&I Framework Programme, and dedicated products for innovative SMEs and mid-caps will be deployed through SME window. Blended finance in the Framework Programme will be provided by the EIC to high-risk market-creating innovations. Appropriate synergies with the new InvestEU programme shall be established, in particular regarding budgetary guarantees and leveraging Venture Capital funds supported by InvestEU.

Programme for Environment and Climate Action (LIFE)

The post-2020 LIFE programme will continue to act as a catalyst for implementing EU environment and climate policy and legislation, including by taking up and applying R&I results from the Framework Programmes and help deploying them at national and (inter-) regional scale. LIFE will continue to incentivise synergies with Horizon Europe through the award of a bonus point during evaluation for proposals which feature the uptake of Framework Programmes’ results. Horizon Europe will contribute to tackling environmental challenges in particular through the clusters on Health, Climate, Energy and Mobility and Food and Natural Resources by defining relevant R&I activities in the Strategic Research and Innovation Plan.

Single Market Programme, including the Competitiveness of Enterprises and SMEs Programme (COSME)

The post-2020 COSME will address market failures that affect all SMEs and will promote entrepreneurship and the creation of growth of companies. Under the Framework Programme, the European Innovation Council (EIC) will directly support the activities and scale-up of high-risk profile innovative start-ups, SMEs and mid-cap firms, while the InvestEU programme will more broadly focus on R&I-driven innovative companies. The Enterprise Europe Network as a corporate tool with its Key Account Managers will continue to play a role in Business accelerator services of the EIC aiming at providing beneficiaries with access to partners, investors, and assistance (coaching, training, technical support).



Continued simplification will enhance user-friendliness. User-friendliness will mainly be enhanced by maintaining the single set of rules, continuity of funding rates and new simplifications such as the new simplified cost options, and the increased cross-reliance on certified accounting systems. Moreover, the European Innovation Council will also act as a one-stop-shop for innovators looking for funding, while also rationalising existing funding schemes for innovation, and will be clearly and visibly branded as such. European Partnerships will be opened up for all interested stakeholders. The Research Participant Portal is already highly appreciated by stakeholders (as well as other Commission services,) and we will further improve its design for the new Programme. Finally, a "toolbox" will be created to provide a comprehensive overview of all available funding tools in the legal proposal.

Synergies will be enhanced through the revamped strategic planning process, which will allow for identifying common objectives and common areas for activities (such a partnership areas or mission areas) across different Multi-Annual Financial Framework programmes. It will be open for public consultation, involving EU Institutions and citizens and end-users in agenda-setting (co-design) for the Work Programme.

Internal coherence will be strengthened through a redesigned pillar structure. The Framework Programme will not set objectives per pillar but at Programme-level. Each pillar and programme part is expected to contribute to those objectives albeit to different degrees. This will in turn ensure that each euro invested in one area will generate multiple impacts.

The Programme has the flexibility to easily adapt to emergencies or new priorities. The strategic flexibility in the programming process will allow the Commission to react to urgent needs and new priorities well beyond its start date in 2021. The Programme will be able to shift budget allocations within and between pillars. Similarly, the strong cross-disciplinary, cross-sector and cross-border nature of the Programme allow it to produce R&I results relevant to changing circumstances.

Table 8 Contribution of Horizon Europe to the MFF cross-cutting objectives (compared to Horizon 2020)

Delivery for impact

MFF cross-cutting objectives

Simplification

Flexibility

Coherence

Synergies

Focus on performance

Strategic planning

0

0

++

+

+

Single set of rules

0

+

+

+

0

Funding model

0

0

0

0

0

Forms of funding

++

+

0

0

0

Blended finance

-

++

0

+

+

Proposal evaluation

-

+

+

0

+

Ex-ante and ex-post audits

+

0

+

+

0

Dissemination & exploitation

-

0

0

+

++

Delegation

0

0

0

+

+

Note: +, ++, +++ correspond respectively to slight, moderate and significant improvement compared to a no-policy change scenario. +/- correspond to a coexistence of positive and negative impacts. – indicates a slight negative impact. 0 means no significant change.


5How will performance be monitored and evaluated?

The monitoring and evaluation framework of the new Framework Programme 186 will have three main building blocks:

·Annual monitoring of the programme performance: tracking of performance indicators in the short, medium and longer-term according to key impact pathways towards Programme objectives, based on baselines and targets where possible;

·Continuous collection of programme management and implementation data;

·Two fully-fledged (meta)-evaluations of the programme at mid-term and ex-post (upon completion).

Figure 10 Tracking performance of the programme along key impact pathways towards impact categories translating the Programme's general objectives

Impact pathways, and related key impact pathway indicators, will structure the annual monitoring of the programme performance (see Annex 6) towards its objectives. The objectives translate into three complementary impact categories (each being tracked along several pathways), which reflect the non-linear nature of R&I investments:

1.Scientific impact: related to supporting the creation and diffusion of high-quality new knowledge, skills, technologies and solutions to global challenges;

2.Societal impact: related to strengthening the impact of research and innovation in developing, supporting and implementing EU policies, and support the uptake of innovative solutions in industry and society to address global challenges;

3.Economic impact: related to fostering all forms of innovation, including breakthrough innovation, and strengthening market deployment of innovative solutions

The impact pathways will be time-sensitive: they will distinguish between the short (typically as of one year, when the first projects are completed), medium (typically as of three years, and for the interim evaluation) and long term (typically as of five years, and for the ex-post evaluation). The impact pathway indicators will contain both qualitative and quantitative information, the availability of which will depend on the state of implementation of the Programme. These indicators serve as proxies to report on the progress made towards each type of impact at Programme level. Individual programme parts will contribute to these indicators to a different degree and through different mechanisms. Additional indicators might be used to monitor individual programme parts when relevant and commensurate. These indicators proposed (see Annex 6) reflect the lessons learnt from the interim evaluation of Horizon 2020: all Horizon 2020 indicators related to outputs, results and impacts are maintained but streamlined and further specified to cover the whole programme. The management and implementation data is still collected but is separated from the key performance indicators, as illustrated in Table 9 .

Table 9 Monitoring and Evaluation Frameworks

Horizon 2020

The new Framework Programme

3 headline indicators not directly attributable to the programme 187

55 Horizon 2020 Key performance and Cross-Cutting issues indicators:

§27 are related to management and implementation data (e.g. funding, participation)

§28 are related to outputs, results or impacts, out of which:

onone is related to the programme as a whole (covering only programme parts)

o9 relate to publications

o7 relate to intellectual property rights and innovations

o4 relate to leveraged funding

o4 relate to researchers’ mobility and access to infrastructures

ØAll Horizon 2020 indicators related to outputs, results and impacts are maintained but streamlined and further specified to cover the whole Programme

ØManagement and implementation data are still collected and made available in close-to-real time through Dashboard but are not part of “performance indicators”

ØKey indicators are set at Programme level according to the Programme objectives and are attributable to the Programme

ØKey indicators are classified according to 9 key impact pathways, for tracking impact through short, medium and long term indicators – for more accurate reporting over time

ØHigher reliance on external data sources, qualitative data and automated data tracking to minimise burden on beneficiaries

ØPossibility for programme part or action specific indicators (but not in the legal base)

The micro-data behind the key impact pathway indicators will be collected in a centrally managed and harmonised way, with minimal reporting burden. This will be achieved, for example, by collecting at proposal stage the unique identifiers of applicants, by sourcing data automatically from existing external public and private databases also after project’s end (e.g. data on publications, patents, employment and turnover), by adopting new ICT tools (e.g. text mining) and by using alternative primary data sources (e.g. expert reviews). Longer-term impact indicators may be estimated based on dedicated studies. The data collected will allow tracking disaggregated indicators and be analysed per type of action, type of organisation, type of collaboration, sectors, disciplines, calls, countries (including associated and third countries).

Baselines, targets, and benchmarks will be established prior to the Programme’s launch. External experts will help establish accurate and timely baselines, and propose targets with appropriate benchmarks, where relevant. To the extent possible data will also be collected for control groups to allow counterfactual evaluation designs:

·Propensity score matching- based on pairing with similar researchers/companies and the development of panel data;

·Regression discontinuity design based on the comparison of the performance between successful and unsuccessful applicants (pending their approval on data use);

·Difference-in difference based on the comparison of the performance of beneficiaries before/after the Programme.

Management and implementation data for all parts of the Programme and all delivery mechanisms 188 will continue to be collected in close to real-time. This data will be collected in a centrally managed and harmonised way through the Common Support Centre. It will also continue to be publicly available on a dedicated on-line portal in close to real-time allowing extraction per programme parts, types of actions and types of organisations (including specific data for SMEs). This will include inter alia proposals, applications, participations and projects (number, quality, EU contribution etc.); success rates; profiles of evaluators, applicants and participants (partly based on unique identifiers, and including country, gender, turnover, role in project etc.); implementation (including time-to-grant, error rate, satisfaction rate and the rate of risk taking etc.); and financial contribution to EU climate and environmental objectives and other mainstreaming targets. A yearly analysis of progress on key dimensions of the Framework Programme’s management and implementation will be carried out.

The evaluations of the new Framework Programme will ensure coherence of methodologies and comprehensiveness of coverage (i.e covering all programme parts and all delivery mechanisms). Evaluation of individual programme parts can continue to make use of specific indicators that complement relevant the Programme-level indicators. The evaluation of the Framework Programme will build on the coordinated evaluations of each programme part, type of actions and delivery mechanism according to common evaluation criteria and standard methodologies (incl. counterfactual analysis and qualitative approaches such as case studies). The comprehensive interim evaluation of the entire Framework Programme is foreseen by 2024, to draw the first lessons from the changes introduced in the new Framework Programme. A full-scale ex-post evaluation is planned by 2030 to provide a full assessment of the new Programme and report on the longer-term impacts of previous ones.

Lastly, evaluations will better account for the coordinated impact of R&I support at EU, national and regional level, building on existing work to better track the impact of EU R&I Programmes at national level 189 . The European RTD Evaluation Network 190 will provide the basis for a substantially increased cooperation with Member States and Associated States.



Figure 11 Intervention logic of Horizon Europe

 

Source: European Commission, DG Research and Innovation

(1) The Treaty requires that rules for participation and dissemination are adopted by the European Parliament and the Council in accordance with the ordinary legislative procedure.
(2) The Treaty on the Functioning of the European Union (TFEU) requires that a multiannual Framework Programme is adopted by the European Parliament and Council in accordance with the ordinary legislative procedure, and implemented through Specific Programmes adopted in accordance with the special legislative procedure.
(3) The Euratom Treaty provides the legal basis for promoting and facilitating nuclear research.
(4) European Commission (2017), 2017 Special Eurobarometer on Climate change. According to the 2017 Special Eurobarometer on Climate change, 92% of EU citizens see climate change as a serious problem, and 79 % of Europeans believe fighting climate change can boost the economy and create jobs.
(5) This initiative contributes in particular to the following Commission priorities: Jobs, Growth and Investment; Digital Single Market; Energy Union; Deeper and Fairer Internal Market; An Area of Justice and Fundamental Rights; Towards a New Policy on Migration; EU as Stronger Global Actor; and EU of Democratic Change. It contributes as well to the implementation of the 2030 Agenda on sustainable development, the EU Global Strategy, and new EU priorities, notably security, defence and migration, in line with the Rome declaration.
(6) See Annex 2 on Stakeholder consultation.
(7) European Commission (2017), The economic rationale for public R&I funding and its impact, Policy Brief Series, p. 23.
(8) In contrast, China's intensity is now higher, and South Korea's is more than double. The EU will need to train and employ at least one million new researchers, but the share of R&I personnel in the labour force increased marginally 2002-2015.
(9) LAB-FAB-APP, Investing in the European future we want, Lamy High Level Group Report (2017), p. 11
(10) “Deep tech” refers to companies founded around scientific discoveries or meaningful engineering innovations.
(11) European Commission (2017), Reflection paper on the future of EU finances.
(12) More evidence can be found in the Annex 4 on the EU added value of R&I.
(13)  The EU has been investing in R&I since 1984. Over time, the share of the EU budget dedicated to R&I has increased.
(14)  LAB-FAB-APP, Investing in the European future we want, Lamy High Level Group Report (2017), p. 11.
(15)  European Commission (2018), Communication on the Horizon 2020 Interim Evaluation, COM(2018)2 final.
(16) European Commission (2017), Reflection paper on the future of EU finances.
(17) European Parliament (2017), REPORT on the assessment of Horizon 2020 implementation in view of its interim evaluation and the Framework Programme 9 proposal, EP T8-0253/2017.
(18) European Economic and Social Committee (2016), EESC information report INT/807, Horizon 2020 (evaluation).
(19) Committee of the Regions (2017), CoR Opinion SEDEC-VI/026, Local and Regional Dimension of the Horizon 2020 Programme and the New Framework Programme for Research and Innovation.
(20) European Research Area and Innovation Committee (2017), ERAC Opinion on the Interim Evaluation of Horizon 2020 and preparations for the next Framework Programme, ERAC 1207/17.
(21) Council of the European Union (2017), From the Interim Evaluation of Horizon 2020 towards the ninth Framework Programme - Council conclusions.
(22) European Commission (2018), A Modern Budget for a Union that Protects, Empowers and Defends, The Multiannual Financial Framework for 2021-2027, COM(2018) 321 final.
(23) European Parliament (2017), REPORT on the assessment of Horizon 2020 implementation in view of its interim evaluation and the Framework Programme 9 proposal, EP T8-0253/2017.
(24) The Euratom proposal is based on Article 7 of the Treaty establishing the European Atomic and Energy Community.
(25)  PPMI (2017), Assessment of the Union Added Value and the Economic Impact of the EU Framework Programmes (FP7, Horizon 2020).
(26)  Lab – Fab – App, Investing in the European future we want, Lamy High Level Group report, Annex 5, p. 32. Indeed, the Lamy High Level Group report identified no direct evidence of overall crowding-out effect of national funding. While some countries present simultaneously a decrease in national budget for R&D and an increase in EU contribution from the Framework Programme, this result is not systematic for all countries.
(27) European Commission (2018), A new, modern Multiannual Financial Framework for a European Union that delivers efficiently on its priorities post-2020, COM(2018)98 final.
(28)  European Commission (2016) Response to the Report of the High Level Expert Group on the Ex Post Evaluation of the Seventh Framework Programme, COM(2016) 5 final.
(29) European Commission (2018), Horizon 2020 interim evaluation: maximising the impact of EU research and innovation, COM(2018)2.
(30) The open public stakeholder consultation on the Interim Evaluation received 3500 replies and 300 position papers.
(31) The discontinuation in Horizon 2020 of the automatic funding to organisations from Brazil, Russia, India, China and Mexico caused an important decrease of their participation.
(32) Conference proceedings available at https://publications.europa.eu/s/fC5N
(33) European Commission (2017), Key findings of the Interim Evaluation.
(34) The economic impact of the Programme comes from the transformation of scientific excellence into innovations that generate economic outcomes: employment, exports, competitiveness, value-added and higher GDP.
(35) This multiplier is based on simulations done using the NEMESIS model and is consistent with figures provided in the Interim evaluation of Horizon 2020 (calculated over a period of 17 years) and in the ex-post evaluation of the 7th Framework Programme.
(36) The average GDP gain in RHOMOLO is 0.08%, the average gain in QUEST is up to 0.14% and the average gain in NEMESIS is 0.19%. NEMESIS results are based on Seureco (forthcoming), Support for assessment of socio-economic and environmental impacts (SEEI) of European R&I programme. QUEST and RHOMOLO results were produced, respectively, by DG ECFIN and DG JRC.
(37) ibid.
(38) This figure is calculated for the EU-27 only and it is based on the NEMESIS model.
(39) Seureco (forthcoming), Support for assessment of socio-economic and environmental impacts (SEEI) of European R&I programmes.
(40) European Commission (2017), Interim Evaluation of Horizon 2020, SWD(2017) 220, book, p. 46.
(41) More than 14% of publications from the United States are in the top 10% most cited publications compared to 11% for EU publications (see Research and Innovation O bservatory) . When looking at the top 1% mos t cited publications, the difference is even larger (50% more in the US than in the EU) (see S. Thomson, V. Kanesarajah (2017), The European Research Council – The first 10 years, Clarivate Analytics).
(42) Knowledge diffusion between business and academia remains lower in the EU than in the US (public-private co-publications per million-population stand at 50, over 35 points lower than in the US (see European Commission (2016), Science, Research and Innovation Performance of the EU).
(43) J. Allmendinger (2015), Quests for interdisciplinarity: a challenge for the ERA and Horizon 2020, RISE policy brief.
(44) RISE Group (2017), Europe's future: Open innovation, open science, open to the world; reflections of the Research, Innovation and Science Policy Experts (RISE) High Level Group, p. 65.
(45) Scientific quality is concentrated in a group of leading countries, predominantly in North-West Europe, but there are a number of small universities with a small number of excellent fields in less developed regions (source: Interim Evaluation of Horizon 2020).
(46) Increasingly, expertise and resources are abroad: 75% of knowledge (see European Commission (2016), Science, Research and Innovation performance of the EU) and 90% of market growth (see European Commission (2015), Trade for all, Towards a more responsible trade and investment policy) will be outside the EU over the next decade (see also European Commission (2017), Strengthening European Identity through Education and Culture, The European Commission's contribution to the Leaders' meeting in Gothenburg, p.4).
(47) European Commission (2017), Interim Evaluation of Horizon 2020, SWD(2017) 220, book, p.100.
(48)  Lab – Fab – App, Investing in the European future we want, Lamy High Level Group report, p.8.
(49) European Commission (2017), Interim Evaluation of Horizon 2020, SWD(2017) 220, book, p. 59.
(50) Ibid.
(51)  Social awareness is a constraining factor for the full-scale deployment of R&I-driven solutions required for societal transformation, but new and rapidly evolving technologies like robots and artificial intelligence raise concerns amongst citizens. In Europe, absence or uncertainty of demand for innovative goods and services are among the most cited obstacles to innovation, see also JRC Science for Policy Report (2016), Modes of Innovation.
(52) Flash Eurobarometer 433, Innobarometer 2016 – EU business innovation trends. This figure has increased by 14 percentage points between the last two releases of the Innobarometer (i.e. 2015 and 2016).
(53) Lab – Fab – App, Investing in the European future we want, Lamy High Level Group report, p.7.
(54) High-Level Strategy Group on Industrial Technologies (2018), Conference Document.
(55) Very few European start-ups survive beyond the critical phase of 2-3 years, and even fewer grow into larger mermaids. Less than 5% of European SMEs grow internationally. Venture capital in the EU is one-fifth the level of the USA.
(56) Less than half Europeans believe they have the skills to pursue entrepreneurial opportunities World Economic Forum, Enhancing Europe’s Competitiveness Fostering Innovation-driven Entrepreneurship in Europe, p16.
(57) European Commission (2017), ERA Progress Report 2016, Report from the Commission to the Council and the European Parliament, COM(2017) 35.
(58) European Commission (2017), Interim Evaluation of Horizon 2020, SWD(2017) 220, book, p. 119.
(59) Ibidem, p. 46.
(60) LAB-FAB-APP, Investing in the European future we want, Lamy High Level Group Report (2017), p.14.
(61) 80-90% of stakeholders' position papers echo the Lamy High Level Group, recognise that Horizon 2020 is a success and do not call for changes to the basic structure of the programme.
(62) European Commission (2018), Communication on the Horizon 2020 Interim Evaluation, COM(2018)2 final, p.11.
(63) Research and experimental development (R&D) comprise creative and systematic work undertaken in order to increase the stock of knowledge – including knowledge of humankind, culture and society – and to devise new applications of available knowledge. The activity must be: novel, creative, uncertain, systematic, transferable and/or reproducible. (Frascati Manual, http://www.oecd.org/innovation/inno/frascati-manual.htm)
(64) Innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisational method in business practices, workplace organisation or external relations. Innovation activities are all scientific, technological, organisational, financial and commercial steps which actually, or are intended to, lead to the implementation of innovations. Innovation activities also include R&D that is not directly related to the development of a specific innovation. (Oslo manual, http://www.oecd.org/science/inno/2367580.pdf)
(65) Griniece, E. (forthcoming) Synthesis of stakeholder input for Horizon Europe and European Commission analysis
(66) Rüttgers J., and al. (2018), Re-defining industry, Defining innovation, Report of the independent High Level Group on industrial technologies. On industry’s contribution and value to society, see also https://industry-changemakers.ert.eu/    
(67) Beckert B., et al. (2018), Visionary and Collaborative Research in Europe, Pathways to impact of use-inspired basic research, Fraunhofer Institute for Systems and Innovation Research, Austrian Institute of Technology.
(68) European Commission (2017), Annex 2 of the Interim Evaluation of Horizon 2020, SWD(2017) 221 final.
(69) Three examples of missions for pedagogical use are described in Mazzucato M. (2018), Mission-OrientedResearch & Innovation in the European Union.
(70) Key Enabling Technologies and digital technologies are instrumental in modernising Europe’s industrial base, to ensure that industry reduces its carbon footprint and embrace a circular economy approach. Moreover, industry could mobilise important industrial players and ensure participation of SMEs on social and political priorities.
(71) European Commission (2018), Annual Report on Research and Technological Development Activities of the European Union and Monitoring of Horizon 2020 in 2017.
(72) See Annex 2 on the Stakeholder Consultation.
(73) European Parliament (2017), Resolution of 14 March 2018 on the next MFF: Preparing the Parliament’s position on the MFF post-2020, ref. 2017/2052(INI).
(74) European Court of Auditors (2018), Future of EU finances: reforming how the EU budget operates, Briefing Paper.
(75)   http://www.bmub.bund.de/en/service/details-europe-and-environment/artikel/statement-of-green-growth-group-2/
(76)   http://ec.europa.eu/budget/mff/lib/COM-2016-603/SWD-2016-299_en.pdf  
(77)   https://www.eca.europa.eu/en/Pages/DocItem.aspx?did=39853
(78) Council conclusions 7495/17, adopted by ECOFIN on 21 March 2017, http://data.consilium.europa.eu/doc/document/ST-7495-2017-INIT/en/pdf    
(79)   https://publications.europa.eu/en/publication-detail/-/publication/1df19257-aef9-11e7-837e-01aa75ed71a1  
(80) European Commission (2016), A European strategy for low-emission mobility, COM(2016)0501 final.
(81) European Commission (2016), Clean Energy for all Europeans, COM(2016)0860 final.
(82) Among others, the Interim Evaluation of the Joint Undertakings,Interim evaluation of the European Institute of Innovation and Technology, FET Flagships – Interim evaluation.
(83) In particular, the High Level Group on maximising the impact of EU R&I programmes and the Research, Innovation and Science Policy Experts (RISE) group.
(84) For the evidence used in this impact assessment, please refer also to Annex 1.
(85) Deloitte (2016) Equity funding in the EU.
(86) The “Valley of Death” is commonly known as a market failure. “First valley of death” is associated to pre-commercial development of a product, with still high technical risks and unproven ability to generate revenue. Companies facing the “second valley of death” are in a more advanced stage of their lifecycle, and they are mainly looking for growth finance. However, private investors are deterred by unproven ability to scale-up rapidly and generate cash flow. In both cases technologies are seen too risky by private investors, and are, therefore, often not funded.
(87) European Investment Bank (2016) Restoring EU competitiveness p.36.
(88)  European Commission (2017). Interim Evaluation of Horizon 2020, SWD(2017) 220, p.34.
(89) European Investment Bank (2018) Improving Access to Finance for Beneficiaries of the SME Instrument,.
(90) Ibid.
(91) Griniece, E. (forthcoming) Synthesis of stakeholder input for Horizon Europe and European Commission analysis .
(92) Breakthrough market-creating innovations are defined in Horizon 2020 as radically new, breakthrough products, services, processes or business models that open up new markets with the potential for rapid growth at European (and global) levels, in contrast to incremental innovation (improvements to existing products for existing markets).
(93) Additional evidence provided in Annex 8 on the European Innovation Council.
(94) To this end, a level playing field among competitors is key to unleashing the innovative potential of companies (especially SMEs) for breakthrough or disruptive innovation to happen.
(95) Technopolis (2017), Evaluation of the SME instrument and the activities under Horizon 2020 Work Programme "Innovation in SMEs".
(96)  Ibid.
(97) European Commission (2018), Communication on the Horizon 2020 Interim Evaluation, COM(2018)2 final, p. 7. See also the specific recommendation in the Lamy High Level Group report on "adopting an impact-focused, mission-oriented approach" in future EU research and innovation programmes (LAB-FAB-APP, Investing in the European future we want, Lamy High Level Group Report (2017), p. 15-16.
(98) Democratic Society (2018), "Citizen Participation in FP9: A model for mission and work programme engagement". See p.18-19 for a more detailed overview.
(99) Ibid.
(100) Griniece, E. (2018), Synthesis of stakeholder input for Horizon Europe and European Commission analysis.
(101) Over 20 Focus Areas were introduced in Horizon 2020, and the interim evaluation found that "their multiplication resulted in some confusion" (p.149, In-Depth Staff Working Document on Horizon 2020 Interim Evaluation, SWD(2017) 220 final).
(102) Democratic Society (2018), p.18.
(103) "There is much evidence that EU scale R&I missions would be best serves in a hybrid model (including or combining accelerator and transformer elements), that is flexible in addressing different types of challenges and different levels of complexity, while at the same coordinating and concentrating the effort and resources towards the commonly agreed objectives". Joint Institute for Innovation Policy (2018), Mission-Oriented Research and Innovation: assessing the impact of a mission-oriented research and innovation approach.
(104) Mazzucato M. (2018), Mission-Oriented Research and Innovation in the European Union: A problem-solving approach to fuel innovation-led growth.
(105) This is identified as a key characteristic of the most successful mission-like initiatives across the world. See: Joint Institute for Innovation Policy study.
(106) "Missions require to set up specific governance structures with full-time professionals and to keep close contacts with all stakeholders. A balanced system of separation of powers between steering, strategic and financial decision-making and the day-to-day management is a must to establish from the outset". Joint Institute for Innovation Policy study.
(107) https://ec.europa.eu/research/innovation-deals/index.cfm
(108) European Commission (2018), Communication on the Horizon 2020 Interim Evaluation, COM(2018)2 final, p. 8.
(109) Griniece, E. (forthcoming) Synthesis of stakeholder input for Horizon Europe and European Commission analysis .
(110) See Annex 10 on the Implementation of the strategy for international cooperation in R&I.
(111) Within the Programme, peer-reviewed publications with at least one associated or third country have a higher impact than other ones: European Commission (2017), Interim Evaluation of Horizon 2020, SWD(2017) 220, book, p. 115.
(112) European Commission (2018), Communication on the Horizon 2020 Interim Evaluation, COM(2018)2 final, p.9.
(113) Ibid.
(114) Griniece, E. (forthcoming) Synthesis of stakeholder input for Horizon Europe and European Commission analysis .
(115)

The effect of emulating or aligning Member States funding policies to match these of Horizon 2020 with respect to open access is clearly reported by Member States in the National Point of Reference (NPR) report of 2015) and can be seen in many instances, for example in aligning embargo periods (p. 16). Similar trends can be observed in the 2017 NPR report, where 2/3 of Member States report that the 2012 Recommendation for Open Access to and Preservation of Scientific Information has had significant impact on national policies.

(116)   https://ufm.dk/en/publications/2018/preliminary-analysis-introduction-of-fair-data-in-denmark  
(117) European Commission (2018), Communication on the Horizon 2020 Interim Evaluation, COM(2018)2 final, p. 9.
(118) Ibid.
(119) Griniece, E. (forthcoming) Synthesis of stakeholder input for Horizon Europe and European Commission analysis .
(120) Specific partnerships, whether new or renewed, are not included in the legal proposal of the Framework Programme.
(121) As proposed by the ERAC ad-hoc working group on partnerships (2018)
(122) The impacts of the changes were quantified based on the NEMESIS model only. As shown in Annex, 5, the QUEST and RHOMOLO models provide lower results in terms of GDP gain for the baseline scenario.
(123) Seureco (forthcoming) Support for assessment of socio-economic and environmental impacts (SEEI) of European R&I programme,.
(124) These benefits are estimated after 2021 based on the NEMESIS model. Source: Seureco (forthcoming) Support for assessment of socio-economic and environmental impacts (SEEI) of European R&I programme,.
(125) Costs are based on Horizon 2020 figures.
(126) The Interim Evaluation of Horizon 2020 shows that the estimated cost for applicants to write proposals is EUR 1908.9 million or EUR 636 million annually. Of these costs, it is estimated that EUR 1.7 billion would be spent on writing proposals that do not get funded, including EUR 643.0 million for non-funded high quality proposals alone.
(127) The administrative burden of reporting obligations were estimated based on the standard cost model. The total burden is obtained by multiplying: (1) Average personnel cost per hour: based on data from the R&D surveys (Eurostat), the average cost of R&D personnel per FTE R&D staff is EUR 4927 per month in the EU. Based on this, a gross salary range of EUR 4000-6000 per month is assumed for the calculations (20% around the EU average). This corresponds to an hourly wage of EUR 25 to 37.5 per hour. In line with the better regulation guidelines, the hourly pay to be used in the standard cost model corresponds to this gross salary plus overhead costs (25%). This gives a range of EUR 31.25 to 46.88 per hour. (2) Time required per reporting obligation: the duration of the tasks required to fulfil a reporting obligation is estimated to range between 4 and 8 hours. (3) Number of projects: about 11,100 projects were launched during the first three years of Horizon 2020. This corresponds to 25,900 over 7 years. (4) Number of reporting obligations: based on data from Horizon 2020 projects, an average of two reporting obligations per project is assumed.
(128) The administrative expenditure related to the evaluation of proposals and the management of projects is below 5% of the budget. More extensive use of executive agencies since 2014 (REA, ERCEA, INEA and EASME) promoted economies of scale and increased synergies. As a result, administrative expenditure was drastically reduced (compared to 6% in FP7). At the same time, the level of client satisfaction is very high. Therefore, a rate of 5% is a reasonable assumption for the next Framework Programme. This corresponds to an estimated cost of EUR 500 to 600 million per year.
(129) European Commission (2017), The Grand Challenge. The design and societal impact of Horizon 2020.
(130) The success rate in Horizon 2020 is 11.6%, compared to 18.5% under the previous framework programme (FP7).
(131) Proposals that passed all thresholds in the independent evaluation process (from Horizon 2020 Interim Evaluation).
(132) European Commission (2017), Interim Evaluation of Horizon 2020, SWD(2017) 220, book, p. 83.
(133)  LAB-FAB-APP, Investing in the European future we want, Lamy High Level Group Report (2017), p.10.
(134)  European Commission (2017), Interim Evaluation of Horizon 2020, SWD(2017) 220, book, p. 87-88.
(135) European Commission (2017), Reflection paper on the future of finance, p. 26.
(136) In calls under the Horizon 2020 Societal Challenge 7 "Secure Societies", the success rate reached 20% by imposing strict eligibility criteria.
(137) European Commission (2018), Communication on the Horizon 2020 Interim Evaluation, COM(2018)2 final, p.5.
(138) LAB-FAB-APP, Investing in the European future we want, Lamy High Level Group Report (2017), p.18.
(139) See also Annex 11 on the simplification checklist.
(140) European Commission (2016), Report on the Horizon 2020 Simplification Survey.
(141) LAB-FAB-APP, Investing in the European future we want, Lamy High Level Group Report (2017), p.22.
(142) This is complemented by separate Work Programmes for the European Research Council, the Euratom, the Joint Research Centre, and the Strategic Innovation Agenda for the European Institute of Innovation and Technology (EIT).
(143) For instance, an emergency procedure to swiftly allocate funds to a particular purpose can be activated through WP updates, as happened in Horizon 2020 to tackle the outbreaks of Ebola and Zika.
(144) At the request of the European Parliament during inter-institutional negotiations, the scope of derogations were set out in the RfP for Art. 187 TFEU initiatives while for Art. 185 TFEU initiatives, these are laid down in the respective basic acts.
(145) Interim Evaluation of the SESAR Joint Undertaking (2014-2016) operating under Horizon 2020, p. 53.
(146) Since 2007, two Participant Guarantee Funds were created (EU and Euratom) to protect from non-recovery of sums due to the Union and to allow ongoing projects to continue in case of default of one of the beneficiaries.
(147)  Non-profit organisations are reimbursed 100% also in Innovation Actions.
(148) Except subcontracting financial support to third parties, and in-kind contributions not used on the beneficiary's premises.
(149) The following types of actual costs can be declared as eligible: personnel costs, sub-contracting, purchase of goods, services or works (incl. travel costs), financial support to third parties and costs incurred by third parties.
(150) European Commission (2017), Interim Evaluation of Horizon 2020, SWD(2017)
(151) European Commission (2016), Report on Horizon 2020 simplification survey.
(152) The Marie Skłodowska Curie Actions are fully funded by a set of unit costs.
(153) The European Court of Auditors (2018) “ A contribution to simplification of EU research programme beyond Horizon 2020
(154)  European Commission (2017), Interim Evaluation of Horizon 2020, SWD(2017) 220, book, p. 140.
(155)  Ibid. p. 84.
(156) For the ERC, only the Excellence criterion applies. Under Innovation Actions in Horizon 2020, Impact has a higher weight.
(157) European Commission (2017), Interim Evaluation of Horizon 2020, SWD(2017) 220, book, p. 236.
(158) Ibid., p.200
(159) Commission’s proposals for the 2014-2020 Multiannual Financial Framework (MFF).
(160) PPMI (2016), Evaluation of the operation of ERCEA (2012-2015), final report; and PPMI (2016), Evaluation of the operation of REA (2012-2015), final report.
(161) This could also become a formal Commission document such as a Communication or Staff Working Document.
(162) While the focus would be on the programmable Global Challenges and Industrial Competitiveness pillar, the relationship between this and the bottom-up parts such as the EIC, including the results from these, would feed into the planning process.
(163) This will reflect the expected impact of missions of up to 15 years, as appropriate.
(164) In the case of the ERC, the Scientific Council will continue to establish the overall strategy, the Work Programme and the proposal evaluation and selection. The JRC will also continue to establish its own Work Programme and strategy and receive opinions from Member States through its Board of Governors. The EIC will also develop its own Work Programme. As regards the EIT, the specific priority fields, financial needs, time schedule, selection process and implementation of KICs will be defined in the EIT Strategic Innovation Agenda (SIA) as a separate legal base arising from the EIT founding regulation. Proposals for future EIT KICs indicated in the EIT Strategic Innovation Agenda (SIA) should take into account the outcomes of the strategic planning process.
(165) European Commission (2017), Financial Regulation applicable to the general budget of the Union and its rules of application, available at: http://ec.europa.eu/budget/library/biblio/documents/regulations/financial_regulation_2017_en.pdf
(166) Except for subcontracting, financial support to third parties and unit costs for internally invoiced goods and service are calculated in accordance with the usual cost accounting practices of the beneficiaries. Such unit costs shall be determined on the basis of actual eligible direct and indirect costs.
(167) As shown in the Interim Evaluation of Horizon 2020, too much oversubscription could cause disillusionment and dissatisfaction, leaving good proposals unfunded and to be resubmitted.
(168) European Commission (2017), Interim Evaluation of Horizon 2020, SWD(2017) 220, book, p. 79.
(169) The acceptance of other cost items will be further defined in the model grant agreement, as in the current system.
(170) These conditions (e.g. beneficiaries must be able to identify their actual eligible indirect costs) will be further developed in the model grant agreement.
(171) The European Court of Auditors (2018) “A contribution to simplification of EU research programme beyond Horizon 2020”
(172) Project-based remuneration means remuneration that is linked to the participation of a person in projects, is part of the beneficiary’s usual remuneration practices and is paid in a consistent manner.
(173) European Commission (2017), Reflection paper on the future of EU finances, p.26.
(174) High-Level Group of Innovators (2018), Europe is back: accelerating breakthrough innovation.
(175) Europe's innovators struggle to access risk finance above the €10 million range. PwC/CB Insights, Money Tree Report Q4 2017, p. 93. Funding rounds of companies above $100 million are five times higher in the US and Asia than Europe (p. 92).
(176) Martinuzzi, A. et al. (2016), Network Analysis of Civil Society Organisations’ participation in the EU Framework Programmes, Vienna and Leicester.
(177) The administrative expenditure in FP7 represented 5.16% of the total budget of the programme (indirect actions). The Interim Evaluation of Horizon 2020 shows that, over the first three years, its administrative expenditure is below the 5% target and is particularly low for the executive agencies.
(178) PPMI (2016), Evaluation of the operation of ERCEA (2012-2015), final report; and PPMI (2016), Evaluation of the operation of REA (2012-2015), final report.
(179) For example, INEA implements the Connecting Europe Facility Programme (large energy, transport, digital infrastructures projects) as well as Horizon 2020 Societal Challenges.
(180) Up to 82% for REA and up to 93% for ERCEA of the beneficiaries are satisfied with the performance of the agencies. See PPMI (2016), Evaluation of the operation of ERCEA (2012-2015), final report; and PPMI (2016), Evaluation of the operation of REA (2012-2015), final report.
(181) A total of 86% respondents to the cluster-based public consultation on EU funds in the area of investment, research & innovation, SMEs and single market reported having experience with the Horizon 2020 program. From this sample, the respondents reported having experience also with European Structural and Investment funds (22%), EU Health Programme (9%), COSME (8.%).
(182)  The ‘second pillar’ of the CAP focuses on rural development and complements the system of direct payments to farmers and measures to manage agricultural markets (the so-called ‘first pillar’)
(183) The Seal of Excellence scheme, launched in 2015, is a quality label recognising proposals submitted to Horizon 2020 calls which were evaluated as high-quality but were not funded due to lack of available budget. The holder of a Seal of Excellence can approach other sources of funding (regional, national, private, public) with this quality label.
(184) The future External Instrument will merge the following instruments: European Development Fund, Development Cooperation Instrument; European Neighbourhood Instrument; Partnership Instrument for Cooperation with Third Countries; European Instrument for Democracy and Human Rights; Instrument contributing to Stability and Peace; Instrument for Nuclear Safety Cooperation, and the Common Implementing Rules post-2020.
(185)  See https://sustainabledevelopment.un.org/post2015/transformingourworld
(186) Including Missions and European Partnership Initiatives
(187) Share of GDP invested in research and development; evolution of the Innovation Output Indicator, share of researchers as part of the active population.
(188) Including European Partnerships.
(189) European Research Area and Innovation Committee (2017), Final Report of the ERAC Ad-hoc Working Group on Measuring the Impact of EU Framework Programmes for Research and Innovation at National Level. Available at: http://data.consilium.europa.eu/doc/document/ST-1206-2017-INIT/en/pdf .
(190) More information available at: https://ec.europa.eu/research/evaluations/index.cfm?pg=network .  
Top

Brussels,7.6.2018

SWD(2018) 307 final

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposals for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL establishing Horizon Europe – the Framework Programme for Research and Innovation, laying down its rules for participation and dissemination

DECISION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL on establishing the specific programme implementing Horizon Europe – the Framework Programme for Research and Innovation

COUNCIL REGULATION establishing the Research and Training Programme of the European Atomic Energy Community for the period 2021-2025 complementing Horizon Europe – the Framework Programme for Research and Innovation

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{COM(2018) 436 final}
{COM(2018) 437 final}
{SEC(2018) 291 final}

{SWD(2018) 308 final}

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Annexes

Annex 1: Procedural information    

1    Lead DG(s), Decide Planning, CWP Reference    

2    Organisation and timing    

3    Consultation of the Regulatory Scrutiny Board    

4    Evidence, sources and quality    

Annex 2: Stakeholder consultation    

1    Objectives    

2    Target groups    

3    Consultation methods and tools    

4    Methodology and tools used to process the data    

5    Results of the stakeholder consultation    

6    Inclusion of the stakeholder consultation results in the legal proposal    

Annex 3: Evaluation results    

1    Lessons from the evaluations of previous Framework Programmes    

2    Lessons learnt from the Interim Evaluation of Horizon 2020    

Annex 4: Added Value of EU-funded R&I    

Annex 5: Macroeconomic modelling    

1    NEMESIS    

2    QUEST    

3    RHOMOLO    

4    Comparison of results    

Annex 6: Indicators    

1    Key Impact Pathways Indicators    

2    Key Management and Implementation Data    

Annex 7: Synergies with other proposals under the future Multiannual Financial Framework    

1    Why do we need synergies between EU programmes?    

2    The role of the Framework Programme in the EU R&I support system    

3    Synergies with the European Regional Development Fund (ERDF)    

4    Synergies with the European Social Fund (ESF+)    

5    Synergies with the EU programmes for agricultural and maritime policy    

6    Synergies with the Single Market Programme    

7    Synergies with the InvestEU Fund    

8    Synergies with the Connecting Europe Facility    

9    Synergies with the Digital Europe Programme    

10    Synergies with the Programme for Environment & Climate Action (LIFE)    

11    Synergies with Erasmus    

12    Synergies with the Neighbourhood, Development and International Cooperation Instrument    

13    Synergies with the European Space Programme    

14    Synergies with the Innovation Fund under the EU Emissions Trading System    

15    Relevant studies    

Annex 8 Detailed information on key improvements in the design of Horizon Europe    

1    European Innovation Council (EIC)    

2    Research and Innovation Missions    

3    International R&I cooperation    

4    Open Science    

5    European Partnerships    

6    Strengthening the European Research Area - Sharing excellence    

7    Support to policy-making: activities of the Joint Research Centre in Horizon Europe    

8    European Institute of Innovation and Technology (EIT)    

9    Support to education in Horizon Europe    

Annex 9 - Rules for Participation    

1    Single set of rules    

2    Funding model and types of action    

3    Forms of grants    

4    Further simplification/flexibility    

5    Use of grants, financial instruments and budgetary guarantees    

6    Proposal selection and evaluation, including experts    

7    Audits and controls    

8    Intellectual Property Rights, including “Exploit in the EU”    

9    Dissemination and exploitation of results    

Annex 10: Implementation of the Strategy for international cooperation in R&I    

1    Reinforcing the international dimension of the EU R&I Framework Programme    

2    Improving the framework conditions for engaging in international cooperation    

3    Leading multilateral initiatives - working with international organisations on global challenges    

4    Reinforcing the partnership with Member States    

5    Intensifying the synergies with the EU's external policies    

6    Refining the communication strategy    

7    Conclusions    

Annex 11: Simplification checklist    

 

Annex 1: Procedural information

1Lead DG(s), Decide Planning, CWP Reference

The Impact Assessment of the future Framework Programme for Research and Innovation is the result of a collective work carried out under the leadership of DG RTD with the R&I-family DGs, including AGRI, CNECT, EAC, ENER, GROW, HOME, JRC, MOVE.

CWP Reference: COM(2017) 650 final

2Organisation and timing

This Impact Assessment has benefited from co-creation with the following working groups: the internal RTD IA Penholder Group, the RTD Indicator task team, the informal R&I IA working group. The work was steered at senior management level through discussions at the R&I-family DG meetings, as well as at the Inter-Service Steering Group on Horizon Europe (including the R&I-family and BUDG, CLIMA, COMP, DIGIT, ECFIN, ENV, EMPL, MARE, REGIO, SJ, SANTE, SG, TRADE). In addition, workshops open to all services were held on indicators with external experts and on synergies between the Framework Programme and other EU programmes.

The following milestones constitute the bulk of the general chronology of the Impact Assessment:

Date

Activity

10 January 2018

Launch of Cluster Stakeholder Consultation (8 weeks)

17 January 2018

Upstream meeting with RSB

19 January 2018

1st Informal R&I-family meeting

2 February 2018

2nd Informal R&I-family meeting

16 February 2018

3rd Informal R&I-family meeting

21 February 2018

Workshop with experts on indicators

27 February 2018

First formal ISSG meeting chaired by SG

2 March 2018

4th Informal R&I-family meeting

6 March 2018

R&I DG meeting

9 March 2018

End of cluster consultation

19 March 2018

Second formal ISSG meeting chaired by SG

21 March 2018

Submission to the RSB

11 April 2018

RSB meeting

26 April 2018

Third ISSG meeting on the legal proposal

4 May 2018

Launch of ISC (duration: until 16 May 2018)

8 May 2018

Fourth ISSG meeting

7 June 2018

Adoption



3Consultation of the Regulatory Scrutiny Board

The Regulatory Scrutiny Board (RSB) gave a positive opinion (with reservations) to a draft version of this impact assessment. The main text and annexes were adjusted following the recommendations of the RSB. In particular, significant work was conducted to ensure consistency between challenges, objectives, structure and impacts. All revisions were done to ensure that the assessment relies on a solid methodology that meets the RSB standards. The Board's recommendations covered the following key aspects.

(1) The report does not sufficiently describe the balance between the new three pillars of the programme. It does not spell out the rationale, risks, and implications of the proposed structure and priorities. This applies in particular to the Global Challenges pillar (pillar 2).

1 Pillar structure and objectives

The report should better explain and justify its proposed three pillars' structure.

Text revised in section 3.1.

It should clearly explain how FP9 objectives will differ from Horizon 2020.

Text revised in section 2.3 to address this point.

It should better derive the proposed changes to the current structure of Horizon 2020 from lessons learned and stakeholders’ input. This is particularly relevant for the second pillar on Global Challenges where the exact scope and implications of the proposed structure should be substantiated.

New text added in 3.1.

Boxes with stakeholders’ inputs added throughout the text, in particular for each design novelty. Sections in annex on stakeholder consultation revised.

The report should also confirm that the strengthened emphasis on innovation and support to close-to-market initiatives will not happen at the expense of basic research.

In this respect, the report should clarify how the concerns expressed by stakeholders on the need for a balanced integration of social sciences and humanities is taken on board.

New text added in 3.1.

In that respect, an indication of the expected breakdown of resources across the different pillars and within each pillar would provide useful information on the “centre(s) of gravity” of the future programme.

New text added in 3.1.

(2) The report does not show the rationale and value added of the additional structures and initiatives for the next framework programme, such as the European Innovation Council or the “R&I missions”.

2 Proposed novelties

The report should better demonstrate that the proposed novelties build on sound foundations and will effectively address key challenges identified for the next framework programme. It should transparently present possible risks and trade-offs associated with the introduction of these new instruments.

Text revised in the introduction of 3.2. References added overall and for the different novelties. All sections on novelties reinforced in order to strengthen their rationale and added value. New sections “what are the risks?” added for each design novelty.

In the case of the European Innovation Council, the report should better analyse its structure, governance, beneficiaries, optimal scale and functioning. It should better demonstrate that the EIC addresses a legitimate unmet demand from innovators that cannot be met more efficiently and competently through other means or existing structures such as the EU Institute for Innovation and Technology (EIT) or the Joint Research Centre.

It should describe how it builds on the experience of providing support to innovative SMEs.

It should explain its complementarity with the EIT and other instruments in existing programmes supporting various stages and forms of innovation.

Main text and annex revised for EIC. Section on blended financed updated. Structure of EIC clarified. Governance, beneficiaries and functioning detailed in the annex. Optimal scale covered by providing figures on the equity funding gap.

The report should also better position the concept of “R&I missions” in the overall proposed structure of the programme and explain whether they will replace the current “focus areas”, how “R&I missions” differ from and/or intend to build on them. The report should more convincingly explain how the overall governance and practical organisation of the “R&I missions” will deliver on the expected societal engagement and ownership, while ensuring timely progress and tangible impacts. The report should clarify the expected interaction between “R&I missions” and the EU regulatory framework.

Text added on overarching approach of missions in section 3.1. Missions section & annex revised accordingly.

The report should also provide safeguards and mitigation measures protecting against potential risks associated with its proposed bottom up approach to supporting innovation, in particular in terms of respect of EU values, ethical approach and conflicts of interest.

It should strengthen the case for publicly supporting close-to-market initiatives with high long-term profit potential by explaining how citizens and public authorities will reap the benefits of such high-risk public investments.

Sections on risks added for each design novelty, including EIC. Section and + annex on EIC revised accordingly

(3) The report does not convincingly demonstrate that the new programme will effectively streamline its delivery mechanisms, including the partnerships landscape.

3 Simplification, notably rationalisation of partnerships

The delivery mechanisms should more clearly emphasise the simplification proposed in the various instruments that will serve to implement the next framework programme.

This concerns notably the rationalisation of the partnerships landscape for which the programme should more clearly state its ambitions. Currently the report does not demonstrate, in many instances, that FP9 will be less burdensome and less costly for the beneficiaries.

A mapping of instruments used in the current and proposed in the new programme could usefully illustrate such simplification efforts

Simplification aspect reinforced throughout the text. Section and annex on partnerships revised. Revisions in section 4 in several places. Table with continued and discontinued instruments added in section 4.

4 Latest MFF developments, notably synergies

The report should reflect the latest developments, as they become known, concerning the overall Multiannual Financial Framework. Notably in the area of synergies across programmes, it should provide more tangible elements on concrete measures to ensure that they are fully exploited. This concerns for instance the interfacing with the Digital Europe Programme, InvestEU, and the European University Networks in Erasmus+.

Section and annex on synergies revised.

Other

The Board notes that this impact assessment will eventually be complemented with specific budgetary arrangements and may be substantially amended in line with the final policy choices of the Commission’s MFF proposal.

Box in 1.1.1 added. The impact assessment does not make any budget assumption (except for the baseline scenario in the economic models), therefore no drastic change was required after the MFF proposal related to the amount itself. Sections on synergies revised.



4Evidence, sources and quality

Figure 1 Evidence used for the impact assessment

Findings from previous evaluations are used throughout the document. The impact assessment is strongly guided by the results from the interim evaluation of Horizon 2020 and related evaluations, which include:

·European Commission (2017), Interim evaluation of Horizon 2020, Staff Working Document (SWD). The interim evaluation of Horizon 2020 (major reference used throughout the impact assessment)

·European Commission (2017), Interim Evaluation of the Joint Undertakings (JUs) operating under Horizon 2020, Staff Working Document (SWD).

·European Commission (2017), Interim evaluation of the European Institute of Innovation and Technology (EIT), Staff Working Document (SWD).

·European Commission (2017), FET Flagships – Interim evaluation.

·Joint Research Centre Implementation Review 2017: In the context of the Interim Evaluation of Horizon 2020. DG JRC, July 2017.

For this impact assessment, several references are made in particular to the recommendations and findings of the High Level Group chaired by Pascal Lamy. The mandate of this High Level Group was to provide advice on how to maximise the impact of the EU's investment in research and innovation. Reports from high level groups used for this impact assessment include:

·LAB – FAB – APP: Investing in the European future we want, Report of the independent High Level Group on maximising the impact of EU Research & Innovation Programmes, July 2017.

·Funding - Awareness - Scale - Talent (FAST): Europe is back: Accelerating Breakthrough Innovation, Full set of recommendations from the Independent High-Level Group of Innovators on establishing a European Innovation Council, 2018.

·Mission-Oriented Research and Innovation in the European Union: A problem-solving approach to fuel innovation-led growth, by Mariana Mazzucato. February 2018.

·Mission-Oriented Research and Innovation: Assessing the impact of a mission-oriented research and innovation approach. Study coordinated by the Joint Institute for Innovation Policy, February 2018.

·Mission-Oriented Research and Innovation Policy: A RISE Perspective, February 2018.

·Open Innovation, Open Science, Open to the World, Reflections of the Research, Innovation and Science Policy Experts (RISE), March 2017.

·High Level Group; Towards a Mission-Oriented Research and Innovation Policy in the European Union: An ESIR Memorandum, December 2017.

Several documents produced by the Commission and other institutions were used, including:

·Committee of the Regions (2017), CoR Opinion SEDEC-VI/026, Local and Regional Dimension of the Horizon 2020 Programme and the New Framework Programme for Research and Innovation.

·Council of the European Union (2017), From the Interim Evaluation of Horizon 2020 towards the ninth Framework Programme - Council conclusions.

·European Commission (2017), Reflection paper on the future of EU finances.

·European Commission (2017), The economic rationale for public R&I funding and its impact, Policy Brief Series.

·European Commission (2018), Communication on the Horizon 2020 Interim Evaluation, COM(2018)2 final.

·European Parliament (2017), REPORT on the assessment of Horizon 2020 implementation in view of its interim evaluation and the Framework Programme 9 proposal, EP T8-0253/2017.

·European Economic and Social Committee (2016), EESC information report INT/807, Horizon 2020 (evaluation).

·European Research Area and Innovation Committee (2017), ERAC Opinion on the Interim Evaluation of Horizon 2020 and preparations for the next Framework Programme, ERAC 1207/17.

In addition to the existing literature of studies and reports related to research and innovation, external studies were launched in the context of this impact assessment on specific issues:

·On economic modelling: Seureco (2018), Support for assessment of socio-economic and environmental impacts (SEEI) of European R&I programme.

·On the impact of missions: Mission-Oriented Research and Innovation: assessing the impact of a mission-oriented research and innovation approach. The Joint Institute for Innovation Policy, Joanneum Research, Tecnalia, TNO, VTT, the Danish Technological Institute, and Valdani Vicari & Associati (2018).

·On Future and Emerging Technologies: Beckert B., et al. (2018), Visionary and Collaborative Research in Europe, Pathways to impact of use-inspired basic research, Fraunhofer Institute for Systems and Innovation Research, Austrian Institute of Technology.

·On foresight: Ricci, A. et al. (2017), Beyond the Horizon: Foresight in Support of the Preparation of the European Union’s Future Policies in Research and Innovation.

·On EU added value: PPMI (2017), Assessment of the Union Added Value and the Economic Impact of the EU Framework Programmes (FP7, Horizon 2020).

Various consultation methods and tools were used (see Annex 2), including events, conferences, workshops.

The quantification of the overall expected impact of the Programme relies on economic modelling (see Annex 5). Internal and external expertise was mobilised:

·Results from the NEMESIS model were produced by an external contractor (Seureco). DG JRC and DG ECFIN were part of the committee steering the related study to ensure the quality of the results.

·Results from the QUEST model were produced by DG ECFIN.

·Results from the RHOMOLO model were produced by DG JRC.

Internal expertise was used to ensure the overall quality of the impact assessment by triangulating these different sources of information, organising several meetings and participatory workshops with experts from the Commission on dedicated topics and ensuring continuous exchanges between Commission services. The approach and results have been discussed and validated during senior management and inter-service meetings.

Annex 2: Stakeholder consultation

1Objectives

The aim of stakeholder consultations was to seek the views of EU Research and Innovation (R&I) stakeholders on the key elements of the design of the post 2020 EU programme for R&I. The results of the stakeholder consultation feed into the Impact Assessment for the programme and help to shape the drafting of the legal text.

Previous stakeholder consultations used for this impact assessment include the following:

·the Horizon 2020 Stakeholder Consultation completed in January 2017 organised in the context of the Interim evaluation of Horizon 2020 (3,500 responses and 300 position papers) 1 ;

·the European Innovation Council Call for ideas completed in April 2016 (1,000 respondents and 100 position papers) 2 .

2Target groups

In preparation to the stakeholder consultation activities a mapping of the key stakeholders was carried out. They mainly include the EU and global umbrella organisations and institutions relevant to the EU R&I policy field and the decision-making process. The consultations were, however, also meant to reach citizens in general and involve them in the discussion on the future of R&I in Europe.

3Consultation methods and tools

A mix of consultation activities came in different moments of the Impact Assessment work to ensure stakeholder views are systematically accounted for in the design of Horizon Europe.

To tailor for different information needs, consultation activities ranged from stakeholder conferences and events, to expert groups, an on-line consultation, workshops, meetings and seminars and analysis of the position papers.

Table 1 Consultation process

I. Preparatory phase

II. Assessment and design phase

III. Validation phase

Q1-2017

Q2-2017

Q3-2017

Q4-2017

Q1-2018

Q2-2018

3.1 Conferences and events

 

 

 

 

 

 

§Research & Innovation – Shaping our Future

 

 

 

 

 

 

§European Research Excellence: Impact and value for society

 

3.2 Expert groups

§HLG on maximising the impact of European research and innovation programmes

 

 

§EIC HLG of Innovators

 

 

 

 

 

 

§Report on mission-oriented approach

3.3 On-line consultation

 

 

 

 

 

 

§Cluster-based public stakeholder consultation

 

 

§Call for feedback on missions

3.4. Workshops, meetings and seminars

 

 

 

 

 

 

§Simplification workshop

3.1Conferences and events

The aim of conferences and events was to gather input from a larger number of stakeholders through direct interaction.

A conference "Research & Innovation – Shaping our Future" 3 organised on 3 July 2017 brought together policymakers from EU institutions, stakeholders and interested actors to discuss the role of research and innovation for Europe's future. Pascal Lamy, the chair of the High Level Group on maximising the impact of European research and innovation programmes, presented the Group's vision and recommendations for the future, based on the results of the interim evaluation of Horizon 2020. Other visionary speakers included captains of industry, researchers and innovators at the frontier of progress, politicians and movers and shakers in society but also young people. More than 600 stakeholders from 40 different countries and almost 5000 online viewers from 49 countries actively engaged in the discussion on the future of EU R&I programme by asking 229 questions and submitting 7,788 votes to polls through special IT tool Sli.do. The Commission also followed the discussions at various events organised by different entities.

A conference "European Research Excellence: Impact and value for society" 4 organised by Estonian Presidency aimed to influence the debate on European research policy in the lead-up to the next Framework Programme. The outcome of the EU Presidency Conference was presented in a final declaration, the Tallinn Call for Action. The Conference brought together internationally-outstanding scientists and policymakers from many EU countries, as well as a range of stakeholders from academia, business, and civil society.

3.2Expert groups

In September 2016 the European Commission mandated the High Level Group on maximising the impact of European research and innovation programmes to provide advice on how to maximise the impact of the EU's investment in research and innovation based on the results of the interim evaluation of Horizon 2020. The High Level Group concluded with 11 recommendations for the future EU R&I programme presented in the report " LAB – FAB – APP: Investing in the European future we want " 5 in July 2017.

European Innovation Council High Level Group of Innovators was set up in January 2017 and mandated to support the European Commission in developing the European Innovation Council (EIC). The report "Europe is back: Accelerating breakthrough innovation " 6 with 14 recommendations was adopted in January 2018.

Following the recommendations of the Lamy report on missions, an external expert was appointed to advise the Commission on the mission-oriented approach. In February 2018, Prof Mariana Mazzucato presented a report " Mission-Oriented Research & Innovation in the European Union - A problem-solving approach to fuel innovation-led growth " 7 in which she recommends five key criteria for the selection of missions at EU level.  

3.3On-line consultations

The aim of web-based consultations was to gather inputs from a broad range of stakeholders. It included on one hand consultation with unlimited access to everybody who wished to contribute – cluster-based public consultation and on the other hand targeted consultation – call for feedback on missions.

ØCluster-based public consultation

Target group:    citizens and stakeholders

Timing: January - March (8 weeks) 2018

The public consultation – launched through the Commission’s central public consultation website 8 - on EU funds in the area of investment, research & innovation, SMEs and single market was launched as a mandatory element of the stakeholder consultation. It included both closed and open questions and queried on the policy challenges, subsidiarity and added value, objectives of the programmes and obstacles to reach them, scope for simplification and synergy between the programmes. Stakeholder had also a chance to submit their position papers on the design of the post 2020 EU programmes. The consultation period was shortened to 8 weeks, as compared to the standard 12 weeks, given the tight timing of the new programmes preparations.

ØCall for feedback on missions

Target group:    citizens and stakeholders

Timing:    February – April 2018

In the report prepared by Prof Mazzucato on mission-oriented R&I 9 , five criteria for setting up the missions were suggested. A call for feedback on these recommended criteria was launched 10 . Besides stakeholders' views on the criteria for mission, as a new feature of the Framework Programme, the respondents were also asked for suggestions of concrete missions. However, information on the topics for concrete missions will be used in the future, not for the purpose of this consultation.



3.4Workshops, meetings and seminars

Stakeholder workshop on ideas for further simplification of the implementation of the R&I Framework Programmes was organised by the Commission on 20 October 2017 11 . The main objective of the workshop was to have a discussion with practitioners at working level on the technical details of the processes, documentation and guidance for R&I grant implementation. Representatives of the main European research stakeholder umbrella organisations were invited to participate on site and the meeting was also web-streamed to allow for broader remote contribution. The programme of the workshop was built upon the conclusions of the Conference on Performance and Further Simplification hosted by Commissioner Moedas in February 2017, and the recommendations of the Lamy Report.

3.5Position papers

Various stakeholders expressed their views on the post 2020 EU programme for R&I by submitting their position papers. More than 300 position papers have been submitted, either ad-hoc or as a response to the cluster-based public stakeholder consultation.

The EU institutions also expressed their views on the post 2020 EU programme for R&I adopting the reports based on the results of the interim evaluation of Horizon 2020:

·Competitiveness Council Conclusions From the Interim Evaluation of Horizon 2020 towards the ninth Framework Programme adopted on 1 December 2017 12 ;

·ERAC Opinion 13  of 7 July 2017 on the Interim Evaluation of Horizon 2020 and preparations for the next Framework Programme (FP);

·European Parliament (EP) resolution of 13 June 2017 on the assessment of Horizon 2020 implementation in view of its interim evaluation and the Framework Programme 9 proposal 14 ;

·Opinion of the European Economic and Social Committee of 20 October 2016 on the mid-term evaluation of Horizon 2020 15 and an information report of 16  January 2017 on Horizon 2020 (evaluation) 16 ;

·Opinion of the Committee of Regions on local and regional dimension of the Horizon 2020 Programme and the new Framework Programme for Research and Innovation of 12 July 2017 17 .

4Methodology and tools used to process the data

Information collected during the consultation was analysed depending on the consultation method. Reports from the conferences, workshops and expert groups were prepared and published. All relevant stakeholder input, including the results of the on-line consultations as well as the position papers, were carefully analysed against the key issues identified in the process of the impact assessment preparations.  

5Results of the stakeholder consultation 

5.1Conferences and events

The conference "Research & Innovation – Shaping our Future" (3 July 2017) opened the discussion with stakeholders on the future of R&I. At this early stage in the process, stakeholders expressed first views regarding the missions underlying that transparency in setting up the missions is of utmost importance and highlighting the role of society and citizens.

Stakeholders were also asked to summarise their vision for the future R&I programme and the responses focused on such key concepts like jobs, SMEs and impact.

At the conference organised by the Estonian Presidency on 12 October 2017, "European Research Excellence: Impact and value for society", the key message on the importance of R&I for the future was translated into three priorities: 1) Ensure investment in research and innovation; 2) Increase the impact of R&I investments; 3) Build trust between research and society, and within the R&I system. It was followed by a number of more concrete actions addressed to different groups from policymakers to researchers to increase public and political support for R&I.

5.2Expert groups

In the preparation of the next Programme, the Commission sought information and assistance from different expert groups. The High Level Group on maximising the impact of European research and innovation programmes prepared 11 recommendations which triggered the discussion on the R&I future. Stakeholders reflected upon many of them in their position papers:

·Prioritise research and innovation in EU and national budgets

·Build a true EU innovation policy that creates future markets

·Educate for the future and invest in people who will make the change

·Design the EU R&I programme for greater impact

·Adopt a mission-oriented, impact-focused approach to address global challenges

·Rationalise the EU funding landscape and achieve synergy with structural funds

·Simplify further

·Mobilise and involve citizens

·Better align EU and national R&I investment

·Make international R&I cooperation a trademark of EU research and innovation

·Capture and better communicate impact

In order to collect information on a way forward regarding the breakthrough innovation the European Innovation Council High Level Group of Innovators was set up and developed 14 recommendations to support single innovators turning disruptive/breakthrough science and technology into market-creating innovations grouped into four factors that hold back breakthrough and deep tech innovation in Europe:

-Funding: empower the innovator, simplify, incentivise private investment,

-Awareness: champion innovators, communicate success,

-Scale: build the camp, leverage European ecosystems,

-Talent: connect people, create prestige for innovators.

A new concept of missions suggested in the Lamy report was further elaborated in the report " Mission-Oriented Research & Innovation in the European Union - A problem-solving approach to fuel innovation-led growth " prepared by an expert in the area, prof. Mariana Mazzucato. Five criteria for the selection of the missions were identified:

·EU R&I missions should be bold, inspirational with wide societal relevance;

·EU R&I missions should have a clear direction: should be targeted, measureable and time-bound;

·EU R&I missions should have ambitious but realistic research & innovation actions

·EU R&I missions should be cross-disciplinary, cross-sectoral and cross-actor

·EU R&I missions should foster multiple, bottom-up solutions

The stakeholders were asked to rate the importance of these criteria in a special Call for feedback open until 3 April in which 1200 responses submitted. The overall picture is that respondents agreed to the criteria and measures for implementing mission proposed by Prof Mazzucato, and agreed to consult citizens on the choice of missions.

5.3Workshops, meetings and seminars

Key messages from dialogue with stakeholders on simplification coming from the workshop on that issue of key importance for participants, especially new ones, were as follows:

·Support to the existing funding model, with a single funding rate per project and a flat rate for the indirect costs;

·Cautious regarding a broad extension of the simplified cost options, such as the Lump Sum pilot in Horizon 2020, or the use of unit costs for personnel costs; clear preference for continuation of cost reimbursement;

·Request for broader acceptance of usual cost-accounting practices and for the introduction of the single audit principle/cross-reliance on audits;

·Further shortening of the Time to Grant, simplified project reporting and improvements to the submission and evaluation processes;

·Improve projects reporting in order to increase the quality of dissemination and exploitation.

5.4Online consultation, including the public consultation on EU funds in the area of investment, research & innovation, SMEs and single market

More than 4000 responses were submitted to the cluster-based public consultation on EU funds in the area of investment, research & innovation, SMEs and single market. 94% of respondents referred to the EU support for R&I. These respondents are subject of the further analysis below.

Almost half of respondents (46%) replied to the consultation in individual capacity followed by business and industry representatives (17%) and universities (14%). 93% of respondents were from EU Member States, 5% from associated countries and 1% from third countries. Respondents came from 70 different countries.

Figure 2 Respondents to cluster-based public consultation

Some 90% (3,414) of cluster survey respondents reported having experience with the Horizon 2020 program. Those respondents who reported having experience with Horizon 2020 also reported having experience with European Structural and Investment funds (22%), EU Health Programme (9%) and COSME (8.%).

The Commission has preliminarily identified a number of policy challenges that the programmes/funds in the area of investment, research & innovation, SMEs and single market could address. The three most important policy challenges in view of respondents are:

·“Fostering R&I across the EU”: 97% of respondents consider this very or rather important policy challenge. The absolute majority of those who submitted position papers also implicitly acknowledge R&I as an important policy priority for Europe. Stakeholders consider that R&I play a fundamental role in forming European identity.

·“Supporting education, skills and training”: 93% of respondents consider this very or rather important policy challenge.

·“Ensuring a clean and healthy environment and the protection of natural resources”: 90% of respondents consider this a very or rather important policy challenge.

Some 61% of respondents believe that “fostering R&I across the EU” has so far been fully or fairly well addressed policy challenge while 35% consider it has been addressed to some extent only. Among other challenges, stakeholders consider that provision of smooth circulation of goods and support to capital flows and investments are well addressed. However, stakeholder responses suggest that more can be done to address unemployment and social disparities: only 14% of respondents consider that this challenge is fairly well addressed, while 40% are of the opinion that it has been addressed to some extent only and 21% believe that it has not been addressed at all.

According to vast majority of stakeholders, "too complex procedures leading to high administrative burden and delays" is the main obstacle preventing the current programme from achieving its objectives. Regional public authorities in particular agree with this statement. The other obstacles noted were: "lack of flexibility to react to unforeseen circumstances", "insufficient synergies between the EU programmes/funds" and "difficulty of combining EU action with other public interventions and private finance".

Generally, stakeholders agree that fewer, clearer, shorter rules, alignment of rules between EU funds and better feedback to applicants are the most important simplification factors.

The majority of respondents (88%) believe that the current programme adds value, to a large or fairly good extent, compared to what Member States could achieve at national, regional and/or local level. Public regional authorities, universities and civil society organisations appear to be slightly more positive in this regard.

Collaboration and cooperation is the most often given example of the EU added value of EU programmes and funds over efforts of Member States. Research organisations, national public authorities and individuals more frequently referenced collaboration and cooperation compared to other stakeholders. Business and industry, other stakeholders and individuals on the other hand more frequently discussed maximising competition. Meanwhile, international organisations, universities and regional public authorities more frequently than other stakeholders noted that increased mobility is an added value of EU programmes and funds. Stakeholders consider also new markets, various networks and partnerships, pooling of resources and increased visibility as factors that provide considerable added value to EU programmes and funds.

5.5Position papers 18

Stakeholders expressed their views also in more than 300 position papers submitted either ad-hoc or to the cluster-based public consultation. All the EU institutions reflected upon the next Framework Programme as well, often in the context of the interim evaluation of Horizon 2020. Most common views from stakeholders are as follows:

§Three-pillar structure should be kept, though better links between pillars are needed

The vast majority of stakeholders are satisfied with the current three-pillar structure of the Framework Programme and wish to see either a complete replication or small modifications to the existing architecture. The main criticisms relate to the lack of coherence and links between the pillars that hamper coverage of the whole knowledge chain. Some say that the societal challenges pillar should become more prominent and more relevant, taking into account the current pressing socio-economic issues. The suggestion was also made to rename the "Industrial Leadership" pillar to "Innovation Leadership", giving it a more cross-cutting outlook.

§Successful individual researchers' schemes (ERC, MSCA) need increased budget

The European Research Council (ERC) and Marie Skłodowska-Curie Actions (MSCA) are widely appreciated and many voices stress that these two schemes should be strengthened with a budget increase.

§The Future and Emerging Technology (FET) actions should be strengthened

The majority of stakeholders praise the FET schemes as an important set of instruments that should be strengthened in the future. The bottom-up principle of FET is recognised as a strong point. Suggestions are made to ensure better links with other R&I instruments such as the EIC and EIT. The main concerns are related to the serious oversubscription, particularly to FET Open scheme, hence a more strategic approach is needed when defining the FET priority areas and budgetary allocation for individual calls.

§Key Enabling Technologies (KETs)

Those stakeholders commenting noted that KETs play a vital role in Europe’s industrial competitiveness and ability to tackle societal challenges and should hence continue to play a central role in the forthcoming Horizon Europe. Some stakeholders and Member States call for a separate programme part oriented on KETs.

§Grants to remain the main funding model, complemented by dedicated financial instruments

An overwhelming majority of stakeholders stress that grants should remain the main funding mode under the next Framework Programme, as the only acceptable funding instrument for public and non-profit entities as well as certain economically non-viable R&D areas (in the short-term) despite the huge socioeconomic impact they may have (in the long term). It is also widely shared that any loan-based funding should not be introduced to the detriment of grant-based funding. At the same time, some stakeholders say that financial instruments could be introduced as a very useful complementary funding. This is especially the case for close-to-market activities in areas where the possible scalability of innovations does not correlate to the very high expectations of the venture capital funding or where periods between research and market success are very long.

Industry representatives, though, caution that proposals to give more flexibility to applicants to choose from a portfolio of instruments provided and to have innovative blending of grant, loan and equity- based forms of investment require careful consideration. For close-to-market activities (above TRL8), blended instruments with additional loan funding can be useful, but attention should be paid to maintaining clear and simple processes as well as avoiding higher bureaucracy both for public and private sectors.

§Stronger emphasis for curiosity-driven research is needed

A significant share of stakeholders call for a stronger focus on bottom-up curiosity-driven calls to adapt better to the emerging societal needs. The need for more bottom-up approach was particularly referred in relation to the EIC and mission-orientation. One third of respondents flag the need to ensure an adequate balance between top-down themes for societal challenges and a bottom-up supply of ideas to address them.



§Use synergies with the Structural Funds to incentivise the widening of FP participation

Almost half of stakeholders, mainly Member States, universities and research organisations, commented on the “Spreading excellence and widening participation” part of Horizon 2020. Many Member States, from different parts of the European Union and with different experience and performance in the Framework Programme, call for increased support to and/or dedicated instruments to address the “spreading excellence” objective (Croatia, Czech Republic, Cyprus, Estonia, France, Germany, Hungary, Italy, Lithuania, Poland, Portugal, Slovakia, Slovenia and Sweden). ‘Widening participation’ objective as an important aspect for the design of Horizon Europe is highlighted also by Belgium, Ireland and Spain, yet they place more noticeable emphasis on the need to incentivise Member States' own investments and efforts in capacity building or national/regional research and innovation ecosystems. At the same time two Member States express strong support to excellence as priority over any geographical considerations (Denmark and Finland).

The most debated aspect is the proposition to introduce geographical quotas for participation in Horizon Europe. A dominating view is though that this would not bring the required effects, but only distort the excellence-based principle of the Framework Programme. Among the most frequently cited means to spread excellence are synergies with the ESI funds through a ring-fenced budget dedicated to the “widening” objective, continued support to existing mechanisms (Teaming, Twinning, ERA-Chairs, COST, NCP networks), a return phase for intra-European MSCA fellowships, EIT KIC Regional Innovation scheme and targeted measures to promote pockets of excellence in low R&I performing countries. At the same time there are also voices on the need to incentivise Member States' investments and efforts in capacity building of national/regional research and innovation ecosystems. The Commission’s initiative to launch Policy Support Facility (PSF) has been commended as a good step in this direction.

§Smaller scale collaborative projects are important for widening, originality and creativity

An overwhelming majority of stakeholders commenting on the size of projects support a justified balance between big and small-scale projects. The budget threshold stakeholders consider as an indicator for a small collaborative project ranges from less than EUR 3 million to less than EUR 8 million. It was reasoned that small and medium-sized collaborative projects offer good prospects for the participation of junior researchers and newcomers (such as start-ups and young companies) particularly from Member States which have, up to now, been involved to a lesser extent. Smaller projects may also be much better starting point for exploring promising lines of enquiry, engaging in riskier research and thus incentivising originality and creativity.

§Define R&I missions as ambitious but feasible high-impact objectives

Around half of the submitted position papers included references to mission-orientation of Horizon Europe. Almost all stakeholders either clearly support mission-orientation or indirectly acknowledge this as a possible future scenario. Only a few concerns were noted mainly that the focus on the selected missions might be done at the expense of curiosity-driven fundamental research.

In general, stakeholders consider that tangible missions that underpin the overall political objectives could enhance visibility and create a more strongly engaging narrative of the Framework Programme. One proposition is to define missions “as ambitious but feasible, high-impact objectives, embedded within a challenge-based approach”. Missions should be limited in number, easy to communicate and have a concrete budget and timeline. They should have a breakthrough or transformative potential and a clear EU added value. Cross-sectoral and cross-disciplinary collaboration should be at the core of mission approach.

In terms of programming and implementation modalities, stakeholders consider that R&I missions should be formulated in an open manner and underpinned by non-prescriptive calls. There is widespread acknowledgement on the need to engage wider society in identifying the most relevant missions within broader societal challenges. Coordination mechanisms should be put in place to support any synergies between the projects contributing to the same mission.

All EU Institutions stress the importance of getting citizens more involved and maximising impact from the Framework Programme. The Committee of the Regions is very explicit in encouraging the adoption of a new, complementary approach based on missions. ERAC and the Council point to the need to deliver better and continued outreach to society, and call for exploring a mission-oriented approach.

§Citizens should be better involved through tailored co-design and co-creation mechanisms

More than a third of stakeholders touch upon the idea of opening up the agenda-setting, design and evaluation of European research and innovation to society and citizens. Stakeholders are supportive of the idea that the Framework Programme should address citizens' concerns better and involve them in a more substantial role with sufficient attention paid to "Societal Readiness Levels" (SRLs) aimed at increasing societal impact. In several cases, stakeholders highlighted also crowdfunding as a possible additional part in the COFUND scheme.

Stakeholders underline also the need to enhance science communication, as well as promote R&I projects to develop more ambitious communication strategies, including all types of media. They place particular attention on making sure that the impacts of designated R&I missions are clearly communicated and disseminated to society at large.

§Reinforce Social Sciences and Humanities (SSH) to make mission-orientation a success 

Many stakeholders reflected upon SSH underlining its value in particularly with relation to societal challenges and the suggested mission-orientated approach. Generally, stakeholders call for more adequately reflecting the SSH dimension in the design of call and consortium requirements, proposal evaluations and impact measurement.

§EIC should simplify the current support to innovation and act as an European Accelerator

Around 80% of stakeholders who reflected upon the future European Innovation Council (EIC) favour the overall idea and provide detailed suggestions on the possible role, objectives and arrangements for its operation. A recurring view is that the EIC should not add an extra layer of governance, but rather seek to identify gaps, coordinate and simplify the existing support instruments serving as an umbrella initiative with a concretely defined value added. The idea of bringing together existing instruments (SME instrument, Fast Track to Innovation, FET Open and inducement prizes) for a comprehensive support to all forms of innovation and technologies, including market-creating innovation is well echoed across the stakeholder input.

Stakeholders consider that support to innovative SMEs and start-ups is essential to maximise Europe’s potential for growth and socioeconomic transformation. Thus the role of EIC in support to SMEs is frequently emphasised. Some stakeholders and Member States are of the opinion that the introduction of the EIC should make the support landscape for SMEs much clearer and easier to navigate.

There is a split opinion from stakeholders on the success of the current SME Instrument scheme. While some consider the programme a great achievement of Horizon 2020, others are much more critical pointing out the high rates of oversubscription and casting doubt on the EU added value of funding single companies.

The main concerns expressed in relation to the EIC idea are that support to incremental innovation should not diminish due to an increased emphasis on breakthrough innovation that the EIC will aim to promote. There are also voices against the creation of a separate organisation suggesting evaluating more carefully the possible merging of the EIC mandate with the EIT, FET or ERC to capture the whole research-innovation spectrum.

The European Parliament stresses the importance of innovation support in general, and of disruptive innovation and scaling up in particular. The Council emphasises the importance of supporting the whole innovation value chain, including high-risk disruptive technologies, while the possible future EIC should support breakthrough innovations and the scaling up of innovative companies.

§Boost international cooperation to tackle global challenges

Many stakeholders reflected on the international cooperation including around 70% of all Member States who submitted position papers. A predominant view among stakeholders is that cooperation with third countries should be strengthened to counter the drop in internationalisation activities and participation rates from third countries that was experienced moving from FP7 to Horizon 2020. Some stakeholders advocate that science is a strong force in international diplomacy; hence, the EU should seek to strengthen collaboration in science and technology further beyond Europe. Several contributions also highlighted that the Commission should consider making it easier for participants from third countries to join ongoing projects on an ad-hoc basis, especially if they do not qualify to receive EU funding. One suggestion is to allow secondary recipients of funds, who are not part of the EU, to negotiate the terms of their cooperation directly with their European partners in order to establish a mutually beneficial arrangement. As a principle, reciprocity between third country programmes should be sought, where relevant.

A few stakeholders touched upon the issue of exploitation of research and innovation results in Europe first. There were suggestions that the EU could adopt legislation to encourage stakeholders conducting research mainly financed by European public funds, to exploit the results of this research primarily on European soil.

The European Parliament calls for strengthening international R&I cooperation, including with associate partners and emerging countries, as soon as possible through concrete actions. The Parliament, in addition, highlights the value of science diplomacy. The Council reaffirms the importance of reciprocity.

§Open science entails a complex cultural change that should be supported

Among stakeholders who reflected on these issues, Member States, universities and research organisations appear to be more vocal. It is widely acknowledged that data and knowledge produced from EU funded projects should be openly shared. Stakeholders frequently cite the need to adhere to FAIR data principles. Business representatives underline more that the opt-out option for Open Data Pilot should be maintained to secure some confidentiality of market-oriented innovation outputs. Stakeholder contributions highlight that open science, open data and open access paradigm calls for establishing new principles in citation and academic reward system, as well as require more attention to development of skills in research data management. Some stakeholders also mention European Open Science Cloud (EOSC) agenda, in most cases expressing support to this EU level initiative. Incentives for Open Science were also mentioned.

The European Parliament opinion is in favour of the general principle of Open Access, while ERAC regards the 100% Open Access policy of Horizon 2020 as a clear measure in favour of knowledge circulation. Importantly, the Council Conclusions on the transition towards an Open Science System give valuable guidance for the future, while the Council Conclusions on the Interim Evaluation of Horizon 2020 highlight the role of Open Science in boosting impact and transparency.

§Make the R&I support landscape simpler

Concerns that the EU R&I funding instrument landscape is too complex are widely echoed in the majority of position papers across all stakeholder groups. Stakeholders advocate for aligning intervention logics of the proposed instruments with already well-embedded schemes to detect gaps, overlaps and work towards better synergies. Some stakeholders explicitly emphasise that existing support schemes should be carefully evaluated and discontinuation of funding should be an option for measures that do not hold self-sustainability test (sunset clause).

The EIT receives positive remarks as an attempt to integrate all sides of the knowledge triangle and create cross-border innovation networks as ‘true pan-European actors’. Yet stakeholders recognise that EIT KICs are part of the proliferation of R&I instruments and call for formulating their clear added value and complementarity with other instruments. A frequent plea for better synergies and coordination between EIT and EIC is expressed. There is also a call for improving the EIT and the KICs' openness to the inclusion of new relevant actors. Stakeholders also note the unnecessary detailed rules and control requirements applied by the EIT for existing KICs, and call for better adapting them to the nature of Horizon Europe.

ERAC considers it particularly urgent to rationalise the funding schemes, while considering public-to-public partnerships essential for more coordinated implementation of national and EU R&I. The Council similarly stresses that the current R&I ecosystem has become too complex and that all partnership initiatives should have an exit strategy from EU funding. The European Parliament advocates ‘decomplexifying’ the EU funding landscape.

§Synergies with other EU programmes are difficult to achieve, but are essential

An overwhelming majority of stakeholders specifically mention synergies with the ESI funds as an area deserving most of attention. Also, cluster survey responses confirm synergies with the ESI funds as the most frequently-discussed area for future complementarities. There is widespread recognition, however, that achieving real complementarities between the Framework Programme and the ESI funds is difficult in practice due to different nature and implementation modalities of both funding instruments. In the views of some stakeholders, the Seal of Excellence has not lived up to expectations as an attempt to bridge both programmes. Several stakeholders draw attention to the need for ensuring that research infrastructures are able to effectively utilise the ESI funds to support their construction and operation. Alignment and modifications in State Aid rules to ensure more innovation-friendly regulatory environment is an equally prevailing concern of stakeholders.

The need to strengthen synergies and links with other EU programmes and instruments is much less pronounced, though universities as well as some Member States refer specifically to synergies with higher education area. Stakeholders acknowledge the necessity to strengthen the connections of all three sides of the knowledge triangle and design complementarities between programme intervention logics. Research organisations and industry stakeholders also recognise the untapped potential of closer knowledge triangle integration. An idea of creation excellence-based university network is proposed Critique of the idea of ‘European Universities’ label is expressed by both university and industry networks.

§Enhance the strategic programming process

Many stakeholders, and the majority of Member States, reflected on the strategic programming process. Several stakeholders flag that the transparency in the process of formulating work programmes and traceability of stakeholder inputs should be improved and the comitology process enhanced. Programme Committees should be fully involved in strategic discussions before orientation papers are presented by the Commission. There should be enough time for negotiations before decisions are taken. The process for drafting work programmes must be predictable, uniform and transparent, allowing time for development of views and the identification of synergies between the Programme Committees. An overall need to better align the interfaces between the EU, Member States and societal stakeholders (joint standing committees) is flagged by another range of contributors. The introduction of more flexible biennial work programmes is explicitly welcomed by some respondents. There is also a more radical call to implement open calls with several cut-off dates per year instead of having calls for proposals with deadlines.

Some stakeholders were also in favour of enhancing the management capacity of Commission Directorates-General. Here, the need for better coordination among it was suggested to better coordinate the work of the various Commission Directorates-General and the executive agencies to ensure more strategic management approach and streamlined interpretation of rules. Other stakeholders underline the need to resource and enhance the management capacities of the Commission, in alignment with the level of ambition for the future programme.

§Continue the drive for simplification

Simplification efforts already implemented by the Commission have been well recognised. The large share of stakeholders, however, call for further simplification actions. This was also a main finding of the simplification workshop organised with European stakeholder umbrella organisations.

The two-stage submission procedure is regarded as beneficial. It is a widely-held view that a more selective first stage evaluating excellence and impact must be completed first, while the implementation and consortium competence can be judged at the second stage. Some stakeholders suggest also concrete targets for this procedure such as reaching a 1 in 3 success rate at the second stage. At the same time, stakeholders consider that a more detailed feedback to all the unsuccessful applicants also should be ensured. There is also a call for further optimisation of the Participant Portal.

It is generally acknowledged that the current cost reimbursement formula (100% for direct costs + 25% for indirect costs) works well and has helped to simplify the current programme, even though it is suggested to consider an increase of indirect costs in case of non-profit organisations.

Views on the introduction of lump sum-based funding are split. Around one third of stakeholders that reflected on this topic welcome this initiative, stating that it has considerable simplification potential, especially for SMEs and small projects with small-size participants. More than a half of stakeholders, however, are more cautious and call for a careful assessment of the lump-sum pilots beforehand. Stakeholders call for a thorough attention to the lump-sum calculation methodology to ensure that it does not shift workload from administration and financial support teams to researchers and does not create a competition on pricing and distort the ‘level playing field’.

Another area of concern relates to the need for a better model for reporting personnel costs, as expressed by some Member States and organisations highlighting the need for an appropriate system of personnel remuneration so that the rules are not disadvantageous for participants coming from some countries. Other topics cited included the introduction of the Single Rulebook, simplification of the Annotated Model Grant Agreement and further improvements to the Participant Portal.

Generally, there is a consensus that the evaluation system of the Framework Programme should be robust, fair, clear, transparent, and as fast as possible. Among the key improvements of the evaluation process, stakeholders mention the need to increase the quality of the feedback information provided to the applicants; the composition of and complementarities between skills, experiences and perspectives (e.g. sector, including industry; discipline, especially SSH; gender; nationality; end-users in case of close to market calls, etc.) of evaluation panel members; and re-introduction of consensus meetings.

§Adapt the definition of innovation and improve evaluation to capture impacts of FP funding

A large majority of stakeholders highlighted aspects related to the need for better defining and measuring impact, especially with regards to the mission-oriented approach. The significance of tracing impact is widely recognised, especially by Member States and universities. Stakeholders acknowledge the need to adopt a broader view on impact covering not only economic, but also social, scientific and cultural impacts. The impact definition should describe the desired outcomes of research and innovation while TRLs stipulate the route to get there. It is also underlined that impact should be viewed in a much longer term than the current impact assessment practices generally capture. This implies that Framework Programme project coordinators should be obliged to provide interviews also long after the project has ended. A call to develop better methodological frameworks to allow for tracking economic and social impact has been raised. But some stakeholders, especially business and industry, warn that impact measurement should not become too complex and overly bureaucratic.

Some stakeholders commented on the reporting and monitoring obligations, stating that imposed reporting obligations should be feasible for beneficiaries and relevant to measure the progress of projects towards the defined overarching goals. They flag the need to establish comprehensive monitoring systems to measure the extent to which supported actions contribute to societal challenges and other programme objectives. Other stakeholders emphasise that monitoring is essential to ensure reflection, improve learning curves and revisit the structure of Horizon Europe instruments to adapt to emerging trends.

6Inclusion of the stakeholder consultation results in the legal proposal 

Stakeholder views have been analysed and taken into account, to the extent possible, regarding the structure and key principles, implementation and governance of Horizon Europe.

Following the overall endorsement by stakeholders, the three-pillar structure is maintained and refined to enhance linkages between pillars for a greater impact. Key Enabling Technologies, due to their effectiveness in tackling societal challenges, will continue under Global Challenges pillar. The design of all new elements, but in particular missions and the European Innovation Council, fully reflect stakeholder views. Citizens will be involved in selecting the most relevant missions, while the EIC aims at simplifying existing support instruments. Although the EIC will focus on breakthrough innovation, Horizon Europe will continue to support incremental innovation through the Global Challenges and the EIT.

Synergies between different funding programmes will be facilitated by, for example, making the Seal of Excellence more operational and addressing issues of State Aid. The complexity of the research and innovation system is fully addressed by the new approach to Partnerships, which will lead to a smaller number of more coherent initiatives having higher impact and leverage. Moreover, the current Horizon 2020 support to lower-performing EU countries will be continued and strengthen.

As regards implementation issues, the current funding rates will be maintained and lump sums will be scaled up, though taking into account lessons learnt from the ongoing pilot phase. Provisions on association to the Horizon Europe, and eligibility criteria for funding are both designed to increase international cooperation. Finally, the strategic programming for calls will become more transparent and open, to ensure a more active involvement of EU institutions, citizens and end-users.

Annex 3: Evaluation results

1Lessons from the evaluations of previous Framework Programmes

While European research and innovation programmes have been successful, there are important lessons to be learned from the past, from stakeholder feedback, and from analytical studies. Research, innovation and education should be addressed in a more coordinated manner and coherent with other policies and research results better disseminated and valorised into new products, processes and services. The intervention logic of EU support programmes should be developed in a more focused, concrete, detailed, inclusive and transparent manner. Programme access should be improved and start-up, SME, industrial, EU13 and extra-EU participation increased. Monitoring and evaluation need to be strengthened.

1.1Improved horizontal and vertical policy coordination

A number of ex-post evaluations of the Framework Programme have noted that the coordination between, on the one hand, the Framework Programme and other EU policies, and on the other hand, the Framework Programme and Member State research activities could be improved. With regard to horizontal policy coordination in the narrow sense, the FP7 interim evaluation 19 noted that a strategic shift is needed to establish stronger and better connections between research, innovation and education (the so-called 'knowledge triangle'). As for broader horizontal policy coordination, the FP6 ex-post evaluation 20 called for a clearer division of labour between the FP and the cohesion policy funds. It also stated that other EU policies such as transportation and energy would benefit from a more coordinated interface between research activities under the Framework Programme and regulatory and demand-side policies.

The need for horizontal policy coordination is confirmed by the conclusions of the OECD's work on the most appropriate system of innovation governance. OECD 21 , for instance, mentions the need to develop "a strategic, horizontal approach", which "should include and develop the innovation policy potential in other ministerial domains and ensure a co-ordinated division of labour between them". And OECD 22 concludes that "given the increasingly central role of innovation in delivering a wide range of economic and social objectives, a whole-of-government approach to policies for innovation is needed". With regard to vertical policy coordination, the FP6 ex-post evaluation noted that, given its small size compared to Member State expenditure, the Framework Programme should not try to substitute for Member State R&D policies but should use its added value in a more strategic way and set an attractive and accepted European agenda. In the same vein, an evaluation 23 concluded that the division of labour between the EU and national levels should be further refined, in particular in view of the introduction of the likes of the European Research Council and the Joint Technology Initiatives. The need for vertical policy coordination is confirmed by the results of OECD work on the optimal system of innovation governance. OECD 24 , for instance, calls for "coherence and complementarities between the local, regional, national and international levels".

1.2Focus and a more robust intervention logic

A number of ex-post evaluations 25 of the Framework Programme have noted that the programme's design could be improved. Some pointed that the Framework Programme lacks a clear and robust intervention logic: the programme has too many objectives, and higher-level objectives are insufficiently translated into lower-level objectives.

With regard to the Framework Programme's objectives, the FP6 ex-post evaluation 26 as well as expert evidence 27 noted that there were too many – addressing almost all S&T and socioeconomic challenges - and that they were too abstract and vague and therefore untestable, complicating ex-post evaluation. A European Parliament ITRE Committee report 28 noted in the same vein that "an ever-growing number of objectives and themes covered and diversification of instruments has widened the scope of FP7 and reduced its capacity to serve a specific European objective". In addition, no explicit links are made between higher-level objectives and lower-level concrete technical goals 29 . Meanwhile, instruments are not designed explicitly to achieve particular objectives: challenges are defined so as to match existing instruments, not the other way around 30 . The result is 'catch all' instruments trying to tackle all problems and to satisfy all types of stakeholders. That is why the European Court of Auditors has called for addressing a single objective through each instrument 31 .

The importance of focus and a proper hierarchy of objectives (combined with appropriate monitoring) are confirmed by OECD work. OECD 32 for instance, argues in favour of "a more strategic focus on the role of policies for innovation in delivering stronger, cleaner and fairer growth". The OECD 33  notes that "third-generation innovation policy cannot be properly implemented without precise targets and intelligent follow-up. Governments should increase their capacity to develop actions plans based on horizontal, strategic approaches and translate these into concrete measures to be taken by each ministry or agency.

1.3Lower barriers to participation and increase dissemination and valorisation of outputs

All ex-post evaluations of the Framework Programme - see, for instance, the chapters on participation in the FP6 ex-post 34 and FP7 interim evaluations 35 - are unanimous in their view that application, contract negotiation and project management procedures are too complex and burdensome and that this results in high barriers to application and participation to the Framework Programme, in general but in particular for first time, start-up, SMEs and applicants from new Member States.

Participants' main reasons for getting involved in the Framework Programme relate to networking and the creation of new knowledge 36 . Research under the Framework Programme is also more of a long-term, exploratory, technologically complex nature 37 . The Framework Programme should therefore not be expected to produce new, immediately marketable products and processes.

Nevertheless, Framework Programme’s evaluations conclude that more attention should be paid to the production of project outputs and to their dissemination and economic valorisation, in particular since the Framework Programme is supposed to support Europe's competitiveness. What is highlighted is the absence in the Framework Programme of valorisation channels that enable the exploitation of research results and the linkage of knowledge created through the Framework Programme with socially beneficial uses 38 . In the same vein, the FP7 interim evaluation observes a lack of clarity on how the Framework Programme incorporates innovation (as opposed to 'pure' research).

In this respect, OECD 39 argues that "the creation, diffusion and application of knowledge are essential to the ability of firms and countries to innovate and thrive in an increasingly competitive global economy".

1.4Strengthen monitoring and evaluation

The main problem affecting the monitoring and evaluation system of the Framework Programme relates to the aforementioned lack of focused objectives and a robust intervention logic. The evaluation process aims to link evidence emerging from project implementation with the strategic and specific objectives set for the programme. As the European Court of Auditors 40 observed, if this connection is difficult to make, an assessment exercise becomes extremely complicated. The evaluation and monitoring system suffers from other problems as well, however.

The importance of a proper monitoring and evaluation system is emphasized by the OECD 41 , for instance, recommends "improving evaluation and learning": "In general, governments should create a solid basis for evaluation and learning and make them part of the policy-making process. This includes evaluation of broader reforms, as knowledge about their impact on innovation is useful for feedback and policy formulation. A more holistic approach to evaluation and learning can enhance feedback in the governance system and lead to more effective policy". The OECD 42 also argues that "evaluation is essential to enhance the effectiveness and efficiency of policies to foster innovation and deliver social welfare. Improved means of evaluation are needed to capture the broadening of innovation, along with better feedback of evaluation into the policy-making process. This also calls for improved measurement of innovation, including its outcomes and impacts".

2Lessons learnt from the Interim Evaluation of Horizon 2020

The Horizon 2020 Interim Evaluation Staff Working Document identified the following strengths and challenges that need to be addressed in the last three years of Horizon 2020, as well as in the next Framework Programme:

2.1Strengths

1.The evidence presented in the Horizon 2020 interim evaluation has demonstrated that, overall, Horizon 2020 is an attractive and well performing programme. It has so far attracted more than 100,000 applications, representing a huge increase in the annual number of applications compared to FP7. It involves top level participants from the higher education, research and private sectors; from a wide range of disciplines and thematic fields; and from over 130 countries. 52% of participants are newcomers. Industrial participation has increased compared to FP7. 23.9% of the budget for industrial and enabling technologies and societal challenges goes to SMEs, far exceeding the target. Stakeholders are generally very satisfied with the programme.

2.Horizon 2020's objectives and rationale for intervention remain highly relevant and have been validated by, and are fully consistent with, recent EU and global priorities, such as the Sustainable Development Goals. The programme has also proven that it is flexible and can respond to emergencies (e.g. Ebola, Zika) and emerging needs.

3.Horizon 2020 is on track to be cost-efficient, achieving a very low administrative overhead, thanks to the extensive externalisation of programme implementation, the creation of a Common Support Centre, and the large-scale simplification of the rules for participation, in particular the funding model, which has reduced time to grant and lowered costs for participants, to the satisfaction of stakeholders and without reducing the level of co-funding by beneficiaries.

4.In terms of effectiveness, through its focus on scientific, economic and societal impacts, Horizon 2020 is on track to contribute to the creation of jobs and growth and the achievement of the priorities of the Juncker Commission. It strengthens the science base by involving the EU's and world's best research institutions and researchers; by training large numbers of EU-based researchers; by producing large numbers of world class open access scientific publications and data; by producing scientific breakthroughs; and by building cross-sectoral, inter-disciplinary, intra- and extra-European research and innovation networks.

5.It fosters industrial leadership by successfully involving the private sector and SMEs; by creating networks between the business sector, universities and research institutions; by providing businesses and SMEs with risk finance to carry out their research and innovation projects; by investing in demand-driven innovation; by producing high quality, commercially valuable patents and other intellectual property rights; by generating proofs of concept and demonstrators and supporting the deployment of innovation solutions; by producing new knowledge, strengthening capabilities, and generating a wide range of innovation outputs including new technologies, products and services; and by increasing the competitiveness of beneficiaries. It addresses major societal challenges by producing publications, patents, prototypes, products, process and methods. It is successful in spreading excellence and widening participation through dedicated instruments and as a cross-cutting issue throughout the programme. It achieves encouraging results in terms of gender equality and the integration of the social sciences and humanities.

6.Compared to FP7, Horizon 2020 is an internally more coherent programme. Synergies with other programmes and instruments are being strengthened.

7.Horizon 2020 has clear European added value in terms of speed, scale and scope and a strong additionality: 83% of funded projects would not have gone ahead without EU funding.

2.2Challenges

1.Horizon 2020 suffers from underfunding, resulting in large-scale oversubscription, much larger than in FP7, which constitutes an enormous waste of resources for applicants and of good proposals for Europe.

2.While Horizon 2020 demonstrates potential in terms of supporting breakthrough, market-creating innovation, such support needs to be strengthened substantially.

3.There is a need for greater outreach to civil society to better explain results and impacts and the contribution that research and innovation can make to tackling societal challenges, and to involve them better in the programme co-design (agenda-setting) and its implementation (co-creation).

4.While great efforts have already been made to increase the synergies between Horizon 2020 and other EU programmes (notably European Structural and Investment Funds), these can be strengthened further, particularly in view of R&I capacity building for lower performing regions.

5.While Horizon 2020 has achieved a broad international outreach, international cooperation needs to be intensified and more efforts are needed to ensure that the programme fully delivers on its target for sustainable development.

6.While compared to FP7, great progress has been made in terms of simplification, simplification is a continuing endeavour, which requires constantly identifying new candidate areas for improvements; at the same time, there is scope for rationalising the Horizon 2020 funding landscape.

7.While Horizon 2020 has made great progress in terms of making openly accessible to the wider scientific community and public the scientific publications and data it generates, more can be done in this respect.



Annex 4: Added Value of EU-funded R&I

Without replacing national Research and Innovation (R&I) activities, EU funded R&I activities through the Framework Programmes produce demonstrable benefits compared to national and regional-level support to research and innovation in terms of scale, speed and scope. The added value comes through – inter alia –strengthening the EU’s scientific excellence through competitive funding; the creation of cross-border, multidisciplinary networks; the pooling of resources to achieve critical mass for tackling global challenges, and developing the evidence-base to underpin policymaking. Overall, this increases EU's global attractiveness as a place to carry out research and innovation, strengthens the EU’s competitiveness, contributes to growth and jobs 43 and makes the EU a world leader in tackling global challenges. Therefore, EU research and innovation should be “one of the essential policy priorities in the future”. 44  

Added value:

·Strengthening the EU’s scientific excellence through competitive funding – Excellence-based EU-wide competition increases the quality and visibility of the research and innovation output beyond what is possible with national or regional level competition. This is shown by the fact that EU-funded peer-reviewed research publications are cited more than twice the world average. Publications from EU funded R&I activities are almost four times more represented in the world’s top 1% of cited research compared with the overall publication output of the 28 EU Member States. 45 Compared to 1.7% of national publications, 7% of ERC publications (973, since its creation in 2007) are among the top 1% highly cited in the world by field, year of publication and type of publication. 46

·Creating critical mass to address global challenges- Collaborative projects funded at EU level will help to achieve the “critical mass” required for breakthroughs when research activities are of such a scale and complexity that no single Member State can provide the necessary financial or personnel resources”. This occurs where a large research capacity is needed and resources must be pooled to be effective, or where there is a strong requirement for complementary knowledge and skills (e.g. in highly inter-disciplinary fields). Investing in research and innovation at EU level will address global challenges (eg migration, security, climate change, health) which facilitates finding solutions much faster and efficient compared to what can be done at national level.

·Reinforcing the EU’s human capital – EU funded R&I activities support human capital reinforcement through mobility and training which provide access to complementary knowledge. 47   300,000-340,000 researchers in the EU Framework Programmes teams are fully or at least partly involved in EU-funded research activities 48 . In the case of MSCA, evidence shows that the research impact of internationally mobile researchers is up to 20% higher than the impact of those who opt to stay in their home country 49 .

·Building multidisciplinary transnational networks for more impact – EU R&I activities build cross-sectoral, inter-disciplinary, intra- and extra-European research and innovation networks which is key for bringing knowledge quickly to market and gaining industrial leadership. Based on a counterfactual analysis, EU funded R&I teams had, on average, 13.3 collaborations versus six collaborations in the control group. The beneficiary teams also built almost two times more collaborations with partners from outside the EU (on average, 3.6 partners from third countries versus 2.1 partners in the control group). 50 This leads to more impact: for example, Horizon 2020 publications including authors from associated and third countries score up to more than three times as much as the world average. 51  

·Increasing the EU’s competitive advantage – EU R&I activities increase the competitive advantage of participants, for example through international multi-disciplinary networks, the sharing of knowledge and technology transfer and access to new markets. According to a counterfactual analysis, EU funded R&I teams grow faster (11.8% more) 52 . EU-funded R&I teams are around 40% more likely to be granted patents or produce patent applications compared with non-funded teams. 53 Furthermore, patents produced in the context of EU Framework Programmes are of higher quality and likely commercial value than similar patents produced elsewhere.

·Creating new market opportunities through collaborative multi-disciplinary teams and dissemination of results - Compare to the national level, EU R&I activities involve key industrial players, SMEs and end-users, which reduces commercial risks, for example through the development of common standards and interoperable solutions and by defragmenting existing markets. EU funded collaborative R&I activities with open access policies enable a more rapid and wide dissemination of results to users, industries, firms (SMEs in particular), citizens, etc. – leading to a better exploitation and larger impact than would be possible only at Member State level.

·Strengthening the evidence-base for policy-making – EU funded R&I activities have an important role of supporting policy-making, which is for example illustrated by the results of EU funded projects related to antimicrobial resistance 54 and EU funded projects in the field of climate change which played a key role in developing and aggregation climate change models, with a strong impact at the International Panel on Climate Change (IPCC).

·Leveraging private investment: EU funded R&I activities induce the private sector to invest more of their own funds than they would under national funding schemes. A counterfactual analysis shows a 24.6% difference in the budget leverage. 55 Involving key EU industry players helps ensure that research results and solutions are applicable across Europe and beyond, enables the development of EU- and world-wide standards and interoperable solutions, and offers the potential for exploitation in a market of 450 million people: based on preliminary data, public-private partnerships (PPPs) are expected to attract between EUR 0.90 and 2.17 from private actors per each EUR of EU funding invested. 56 Existing public-private partnerships in advanced manufacturing and processing (Factories of the Future, SPIRE and Energy-efficient Buildings) can already show private investments between 1.5 and 5.4 times the public funding, taking current investments into account and discounting intentions regarding future investments. 57 Thanks to its leverage effect, it is estimated through macro-econometric modelling that each EUR of EU investment in R&I would bring a GDP increase of between EUR 6 and 8.5 during 2014-2030.

·High additionality – The EU invests in distinctive research and innovation projects, which are unlike those funded at national or regional level: the programme's additionality (i.e. not displacing or replacing national funding, see Figure 3 ) is very strong with, on average, 83% of projects that would not have gone ahead without Horizon 2020 funding. 58

Figure 3 Change in Government budget allocations for R&D and change in EU contribution between FP7 and Horizon 2020 (size of circles: number of applications in Horizon 2020)

Source: LAB-FAB-APP, Investing in the European future we want, Lamy High Level Group Report (2017)



What stakeholders say about the EU Added Value of EU programmes and funds

In their open responses to cluster based public consultation 2,541 stakeholders elaborated on the EU added value of EU programmes and funds. Four types of EU added value were most frequently mentioned:

 Collaboration: 36% of respondents referenced collaboration and cooperation as an added value of the EU programmes and funds. Respondents noted the EU programmes and funds allow addressing macro-level challenges with a cross-border character (e.g. environmental sustainability, energy, health). The programmes also helps to access external expertise, competencies, resources and innovations that may not be available in one country, while allowing to scale-up and enhance innovative projects beyond national contexts. Multi-annual strategic plans and long-term strategies are also more helpful in aligning priorities between international partners than national programmes. Business and industry stakeholders frequently noted that the EU programmes and funds by default promote access to the EU single market that boosts their global competitiveness and help achieve greater long-term impacts. Here the creation of new cross-border value chains, standards and interdisciplinary partnerships between diverse stakeholders and markets that were not connected before is particularly pertinent. Civil society organisations note that improved collaboration contributes to the harmonisation of the EU market and policies, improves social cohesion among Member States and advances European integration. This allows achieving strategic development objectives, particularly in cases where critical mass and pooling of resources is present. In addition research organisations view international cooperation beyond the European Union as a considerable added value of the programmes, as it contributes to greater impact of research projects, expands possible partnership options and introduces a European dimension beyond the EU. A positive externality of this cooperation, according to research organisations, is the breakdown of research silos and the minimisation of research effort duplications.

 Maximising competition: 22% of stakeholders underlined that the EU programmes and funds provide considerable improvements in competitiveness of participants by incentivising cross-border and cross-sectoral partnerships and thus contributing to pooling of resources, knowledge transfer along with other positive spill-over effects. Stakeholders also note that the EU programmes and funds improve the overall competitive edge of Europe by sustained investments in innovation that address pan-European and global societal challenges; and in the maintenance of effective innovation ecosystems throughout Europe. National public authorities note that while oversubscription is one of the main obstacles that prevent the programmes from achieving its objectives, high competition for funds also strengthens the European knowledge base and boosts the competitiveness of successful applicants. This is particularly pertinent, in-part due to increased visibility and exposure. Furthermore, performance benchmarking of participants by all applicants improves the overall performance, leading to more ambitious and higher quality projects, breakthroughs and increased impact. Regional public authorities note that EU R&I investments also strengthen the integration of SMEs into European value chains that improves efficiency.

 Mobility: 10% of stakeholders noted that since quality research is not localised to a specific country, one of the most pronounced added value of EU programmes and funds is the support for the mobility of researchers, particularly through mechanisms such as Marie Skłodowska-Curie Actions (MSCA) and Erasmus. These are considered as vital in flagship programs that support scientific exchange, foster methodological innovation, multi-centred research collaborations, and a culture of joint research. Universities further note that support for mobility has several amplifying effects on the added value of EU programmes and funds, particularly in the form of skills and career development, as well as improvements in social cohesion and cooperation between European researchers, thus increasing the productivity of this community. Furthermore, it also provides greater freedom in choosing research topics and scope, partners, and impact areas than national efforts of EU Member states. International organisations meanwhile note that mobility contributes to successful cross-border collaboration, while also providing hardly measurable benefits to research and commercial activities.

 Access to new markets: 9% of stakeholders noted that the programme, along with other EU funds and programmes stimulates access to the EU single market and new markets that may not exist or are too small on a national level. The support for the entire innovation chain (TRL 1 to 8) from the idea, to research and go-to market actions and partnerships, stemming from longer-term funding modalities helps achieving these objectives. Furthermore, the programmes are considered somewhat more successful in accelerating time-to-market of innovative solutions. Business and industry stakeholders further note that EU funds help reducing risks associated with R&D investments that on national and local levels are frequently funded through loans, allowing to divert additional resources to new market entry. Explicit incentives for research-industry cooperation also allow developing innovative products, thereby generating new markets and unlocking private sector investment in innovation provided ex-post market uptake.

Annex 5: Macroeconomic modelling

Macroeconomic modelling is used to quantify the economic impact of the future EU R&I Programme in terms of GDP gain and job creation in the EU. While there is a general consensus 59 that R&I are decisive in fostering productivity growth, quantifying the impact of R&I policies at a macroeconomic level requires modelling tools that appropriately capture how R&I translate into economic gains.

There are several models available for assessing the impact of R&I, with each model presenting specific features. This impact assessment uses results produced by three macroeconomic models: NEMESIS, QUEST and RHOMOLO. NEMESIS results were produced by a team of external experts 60 , while RHOMOLO and QUEST results were produced by the European Commission services (DG JRC for RHOMOLO and DG ECFIN for QUEST).

The strengths of these models rely on their specificities. Di Comite and Kancs (2015) 61 consider that NEMESIS is the richest model in terms of innovation types and policy elasticities when compared to other standard macroeconomic models for R&D and innovation policies (QUEST, RHOMOLO, GEM-E3). The forward-looking dynamic approach of QUEST makes the model the most appropriate for assessing the impact of R&I innovation policies over time. By modelling regional economies and their spatial interactions, RHOMOLO is the most suitable model to address questions related to geographic concentration of innovative activities and spatial knowledge spillovers.

The three models are used to assess the impact of the baseline scenario in order to triangulate the signs, patterns and sizes of the impact of continuing the current Framework Programme. The specificities of the models are then used to produce additional sets of results: the rich set of elasticities and innovation channels in NEMESIS is used to assess the impact of modifying precise R&I parameters of the model that capture the changes foreseen in the future Programme, while the spatial dimension of RHOMOLO is used to assess regional impacts.

1NEMESIS

Presentation of the model

The NEMESIS model was developed by a European consortium 62 in 2000 in order to analyse the macro-sectoral impacts of European structural policies. Its endogenous growth mechanisms were first based on R&D investments and the related knowledge spillovers. The model became a reference tool for the assessment of European or national research and innovation policies. Since 2004, the model has been used by the European Commission for several analyses, including the assessment of the 3% R&D effort in the Lisbon Strategy 63 , the assessment of the RTD National Action Plan related to the Barcelona Objective 64 and the assessment of the impact of European research and innovation Programmes (ex-ante assessment of the 7th Framework Programme 65 and of Horizon 2020 66 ). In 2017, NEMESIS has been used for the ex-post assessment of the 7th Framework Programme and the interim evaluation of Horizon 2020 67 .

Structure

NEMESIS is a macroeconometric model composed of a system of sectoral detailed models for every EU countries. The endogeneisation of technical progress in NEMESIS is derived from the new growth theories where innovations result from the investment in R&D by private firms and from the R&D achieved by the public sector. In the new version of NEMESIS used for this impact assessment, innovations still arise from firms’ and public investments in R&D, but also from investments in two other complementary innovation inputs: ICT and Other Intangibles (including training and software). These improvements have allowed enhanced accuracy in assessing research and innovation policies by considering the most up-to-date theoretical as well as empirical findings of the economic literature (Le Mouël, et al., 2016).

How NEMESIS models R&I

1 Firms determine their investments in the three innovative assets (private R&D, ICT and OI).

2 The investment effort feeds their own knowledge (stock variable) as well as the knowledge in others sectors and countries through knowledge matrices (knowledge transfers). For each innovative asset, these knowledge stocks are modelled as a weighted sum of the stock of assets, R&D, ICT or OI, belonging to all sectors and countries. The spread parameters used to build these stocks are calibrated using matrices based on patent citations between sectors and countries. These matrices combine the citations between patents allocated by technology classes and country with the OECD concordance table, in order to allocate these citations between sectors (Johnson, 2002).

3 The growth of the knowledge stock of each innovation asset coupling with the knowledge absorption capacity (measured with the investment intensity in each innovative asset) generates innovations.

4 These innovations take two forms: product and process. Product innovation increases the intrinsic quality of the product sold by the firms whereas process innovation improves the production process without changing the quality of the product sold (pure TFP effect). This distinction between process and product innovations is crucial as econometric studies show that process innovations alone have a negative, or only a slight positive impact on employment, whereas the impact of product innovations is always positive (Hall, 2011).

5 New product innovations raise internal as well as external demands for the enhanced product. New process innovation reduce the production cost of the sector that, in a context of competitive market, will reduce the end-user prices of the product and then increase its demand on the internal and external markets. 

6 All these dynamics at sectoral level are brought together by the input-output tables of the model. Then, the combination of these sectoral interdependencies (“bottom-up”) with the “top-down” macro-economic forces impulses the medium and long term dynamics of the model. These macroeconomic forces depend mainly on the labour market and the wage setting that are the drivers for the final consumption of vaughan, and also for the domestic production prices and so of the competitiveness of the economy

The macroeconomic dynamic in NEMESIS can be summarised in three main phases:

1. An investment phase that is a “demand phase” in which all the dynamics are induced by the change in the R&D expenditures without or with moderated impacts of the innovation (as the innovations take time to appear). This phase can be viewed as a Keynesian multiplier.

2. The innovation phase: the arrival of innovation (process and product) reduces the production cost of the new products or raises their quality that induces an increase of external and internal demands.

3. The obsolescence phase: progressively the new achieved knowledge declines because of the knowledge obsolescence 68 and in the long-term, the macro-economic track goes back to the reference scenario.

Key assumptions for the impact assessment

Key assumptions in NEMESIS for assessing the impact of the Framework Programme are related to budget size, budget allocation and the value of key parameters such as leverage 69 and performance.

Key assumptions (continuation of Horizon 2020)

Budget size

Continuation of Horizon 2020 budget in constant prices – 15%

Budget allocation across years, countries and sectors

Horizon 2020 allocation

Knowledge spillovers

Inter-sectoral and international spillovers modelled using patent citation techniques with no additional specificity for the Framework Programme.

Direct leverage effect

Direct leverage:

- Basic research: 0

- National funding of applied R&I: 0.1

- EU funding of applied R&I: 0.15

Indirect leverage: firms keep their investment effort constant in the long term.

Economic performance

Higher performance of EU funding (+15%) compared to national funding

Financing

Reduction in public investment

Budget size and allocation are assumed to be the same as in Horizon 2020 in constant prices, minus the contribution from the UK (assumed to be 15% of the budget). The Programme is assumed to be financed by lowering national public investment. Regarding the direct leverage effect, the assumptions used are supported by a survey 70 on research units involved in the 7th Framework Programme and by the empirical literature 71 . A sensitivity analysis 72 shows that this parameter does not significantly drive the results produced for this impact assessment. Economic performance in NEMESIS is calibrated by country and sector on the basis of the available empirical literature. A higher leverage and performance parameter for EU funding compared to national funding reflects the benefits related to the EU added value of the Programme, with values that are supported by existing quantified evidence on publications, patents and revenues from innovations 73 .

In order to assess the impact of the various changes regarding the structure and priorities of Horizon Europe, each of the changes for more impact and more openness (section 3) was translated into variations of the parameters in NEMESIS. While the sign of these variations is straightforward, their size is uncertain. Therefore, different scenarios were considered, from low to high, by using ranges in the variation of the parameters. These ranges rely on plausible values found in the literature 74 , with extreme values showing how impactful Horizon Europe can be in the most ambitious and optimistic conditions.

Table 2 Assumptions in NEMESIS

Changes for more impact

This assumes …

Range

Higher economic performance

Focus on R&I with higher economic impacts and on breakthrough innovations.

Higher performance of EU funding compared to national funding: +0 (baseline) to +5 percentage points.

Lower knowledge obsolescence

More focus on breakthrough knowledge.

14% to 13% obsolescence rate compared to 15% in the baseline.

Stronger complementarities with other innovative assets

More cross-technological and cross-sectoral R&I.

5% to 10% stronger than in the baseline.

Higher direct leverage of private R&D

Better access to finance of innovative firms, especially for SMEs.

0.1 (baseline) to 0.15.

Changes for more openness

This assumes …

Range

Higher complementarities with national support to R&D

Increased complementarities through partnerships.

Increased leverage for basic research: 0.05 to 0.1 compared to 0 in the baseline.

Stronger knowledge diffusion

Facilitated knowledge diffusion nationally, between the different categories of research organisations and/or internationally.

5% to 10% stronger than in the baseline.

Results

Results from the NEMESIS model indicate that the Framework Programme is expected to generate large GDP gains. The continuation of the Framework Programme is expected to produce 0.08% of additional GDP on average over 25 years, which means that each euro invested can potentially generate a return ranging from 10 to 11 euros of GDP gains over the same period 75 . The highest gains (+0.31% of GDP) are expected to occur around 2034.

Figure 4 GDP impact of the continuation of Horizon 2020 (NEMESIS, deviation in % from a situation without Framework Programme) 

Source: Seureco (2018), Support for assessment of socio-economic and environmental impacts (SEEI) of European R&I programme.

The impact on jobs is also substantial. Over the period of the Programme, up to 100 thousand jobs are expected to be directly created in R&I activities. During this period, while the Programme has a positive effect on jobs in R&I, the decrease in national public investment that is assumed by the model is mechanically accompanied by a comparable decrease in non R&I-related jobs. The net indirect impact of the Programme on jobs materialises as from 2030, with the creation of more than 200 thousand jobs after 2035, including more than 80 thousand high-skilled jobs.

Figure 5 Employment impact of the continuation of Horizon 2020 (NEMESIS, deviation in thousand jobs from a situation without Framework Programme)

Source: Seureco (2018), Support for assessment of socio-economic and environmental impacts (SEEI) of European R&I programme

Compared to the continuation of Horizon 2020, the changes in the design of the Programme can potentially generate an additional GDP gain up to 0.04% in a low scenario, and up to 0.1% in a high scenario. The impact of the changes is expected to be the most significant after 2030. The total impact of the Programme on EU GDP would be between EUR 800 billion and EUR 975 billion over 25 years.

Figure 6 Decomposition of GDP impact of changes for more impact and more openness (deviation in % from the continuation of Horizon 2020, scenarios based on highest values of the ranges)

Changes for more impact

Changes for more openness

Source: Seureco (2018), Support for assessment of socio-economic and environmental impacts (SEEI) of European R&I programme

Figure 7 GDP impact of changes for more impact and more openness (deviation in % from a situation without Framework Programme)

Source: Seureco (2018), Support for assessment of socio-economic and environmental impacts (SEEI) of European R&I programme

Limitations of the model

While NEMESIS’ strengths justify its relevance for measuring the impact of R&I policies, the model’s specificities and approach also imply a number of limitations to be taken into account when interpreting the results. First, it relies on the empirical observation of relationships and allows for flexibility in behavioural functions, which may generate inconsistencies among the most recent developments in macroeconomic theory. Furthermore, it does not use forward-looking expectations but adaptive ones. Regarding the use of human capital in the model, NEMESIS does not link that with investments in the educational system.

2QUEST

Presentation of the model

The QUEST model is a global dynamic general equilibrium model developed by the Directorate General for Economic and Financial Affairs of the European Commission 76 . The different model variants have been extensively used for macroeconomic policy analysis and research, e.g. analysing the impact of fiscal and structural reforms and assessing the impact of Cohesion Policy 77 . QUEST is a fully dynamic structural macro-model with rigorous microeconomic foundations derived from intertemporal utility and profit optimisation. The model also accounts for frictions in goods, labour and financial markets.

Structure of the model

QUEST belongs to the class of micro-founded dynamic general equilibrium (DGE) models that are now widely used in economic policy institutions as the latest step in the development of macroeconomic modelling. The focus in these models is on the economy as a whole, as an integrated system of economic agents that base their economic decisions over a range of variables by continuously re-optimising, subject to budgetary, technological and institutional constraints. These models are forward-looking and intertemporal, i.e. current decisions account for expectations about the future.

This impact assessment uses the semi-endogenous growth version of the European Commission’s QUEST model with an R&D production sector (QUEST3RD). The model economy is populated by households, final and intermediate goods producing firms, a research industry, a monetary and a fiscal authority. In the final goods sector, firms produce differentiated goods which are imperfect substitutes for goods produced abroad. Final good producers use a composite of intermediate goods and three types of labour: low-, medium-, and high-skilled. The model has two types of households, liquidity and non-liquidity constrained, a feature which has become standard in dynamic stochastic general equilibrium modelling. Liquidity constrained households have no access to financial markets. They simply consume their current income at each period. Non-liquidity constrained households buy the patents of designs produced by the R&D sector and license them to the intermediate goods producing firms. The intermediate sector is composed of monopolistically competitive firms, which produce intermediate products from rented capital input using the designs licensed from the household and by making an initial payment to overcome administrative entry barriers. The production of new designs takes place in research labs, employing high skilled labour and making use of the commonly available domestic and foreign stock of knowledge. Importantly, the model is a global multi-country model of the EU Member States and the rest of the world in which individual country blocks are interlinked with international trade and knowledge spillovers.

Assumptions used for the impact assessment

Key assumptions (continuation of Horizon 2020)

Budget size

Continuation of Horizon 2020 budget in constant prices – 15%

Budget allocation across years, regions and sectors

Horizon 2020 allocation

Spillovers

International trade and knowledge spillovers, based on trade statistics and elasticities in the relevant literature.

Direct leverage effect

Identical leverage of EU funding and national funding

Economic performance

Identical performance of EU funding and national funding

For this impact assessment, results were produced based on two scenarios regarding the financing of the Framework Programme. In a first scenario, financing relies on raising additional VAT revenues in the Member States. The second scenario assumes that future Programme is financed at the expense of lowering national public investment.

Results

The results highlight the importance of the underlying financing assumptions. As value added taxes are some of the least distortive taxes, financing productivity-enhancing R&D investments from these resources is unambiguously beneficial at the EU level in the medium and long run (see left side graph in

Figure 8 a).

By changing from VAT financing to public investment cuts (e.g. roads, buildings), Members States loose the potential productivity effects of these public investments and the GDP results are lower both in the short- and long-run (second panel in

Figure 8 b).


Figure 8 GDP impact of the continuation of Horizon 2020 (QUEST, deviation in % from a situation without Framework Programme)

a. VAT financed                        b. Financed through public investment cuts

Source: European Commission, DG ECFIN

There is a small short-run output loss due to crowding out effects in the beginning of the intervention period. This is because R&D subsidies stimulate innovation by helping R&D intensive companies to attract more high-skilled labour from traditional production into research with higher wages. In the second scenario, the expected GDP effects are less beneficial at the EU level. Similar to R&D investments, public investment is also productivity-enhancing, therefore, this type of financing is more costly for the Member States. It also takes longer to compensate the short-run output loss.

In both scenarios, the GDP gains peak around the 2030-2032 period, up to 0.14%, and gradually decrease after the Programming period due to the depreciation of tangible and intangible capital. The average impact over 25 years can reach up to 0.14% over 25 years. Note, that in the QUEST simulations EU and nationally funded R&I have the same leverage and performance effects.

Limitations of the model

Although the model is well-suited to simulate the effect of public financed subsidies to private R&D, it does not distinguish between research undertaken in private or public R&I entities. All R&D activities are carried out by a (virtual) R&D sector. Being an aggregate macroeconomic model, QUEST also misses the extensive regional details present in RHOMOLO.

3RHOMOLO

Presentation of the model

RHOMOLO is the spatial computable general equilibrium model of the European Commission focusing on EU regions. It has been developed and maintained by the regional economic modelling team at the Directorate-General Joint Research Centre (DG JRC) in cooperation with Directorate-General for Regional and Urban Policy (DG REGIO). It is used for policy impact assessment and provides sector-, region- and time-specific simulations to support to EU policy making on investments and reforms covering a wide array of policies. RHOMOLO is built following a micro-founded general equilibrium approach 78 and is used to provide a breakdown of results by region and sector.



Structure of the model

RHOMOLO is a spatial dynamic general equilibrium model that covers 267 regions at the NUTS2 level. Each region contains 10 economic sectors. A subset of these operates under monopolistic competition. The rest of the sectors operate under perfect competition. Regional goods are produced by combining labour and capital with domestic and imported intermediates, creating vertical linkages between firms.

Final goods are consumed by households, government and investors. Each region is inhabited by a representative household which supply labour of three skills type, consume and save. The government levy taxes, purchases public consumption goods, conduct public investments and allocate transfers to the various agents in the economy. Goods and services can be sold in the domestic economy or exported to other regions. Trade between regions is associated with a set of bilateral regional transportations costs. The RHOMOLO model incorporates imperfect competition in the labour market. The model allows one to switch from a wage curve to a Phillips curve. RHOMOLO contains two types of capital, sector specific private capital and public capital available to firms in all sectors within the region.

How RHOMOLO models R&I

 R&D expenditure is modelled as private investments. Hence, R&D spending generates demand for capital goods. In addition, R&D spending leads to the accumulation of an intangible knowledge capital stock which in turn spills into an increase in total factor productivity (TFP).

 Expenditure for R&D support is introduced into the model as a reduction in user cost of capital which in turn generates an increase in R&D investments.

 The impact of R&D expenditure on total factor productivity through the accumulated knowledge capital stock is captured by a set of regional spillover elasticities which are conditional on R&D intensity within the region. Higher regional R&D intensity is associated with higher spillover from knowledge capital to TFP. The R&D spillover elasticities are based on estimates by Kancs and Siliverstovs (2016) 79 .

Assumptions used for the impact assessment 80

Key assumptions (continuation of Horizon 2020)

Budget size

Continuation of Horizon 2020 budget in constant prices – 15%

Budget allocation across years, regions and sectors

Horizon 2020 allocation

Regional spillovers

Regional spillovers are conditional on R&D intensity within the regions.

Direct leverage effect

Direct leverage: Calculated as a weighted average from NEMESIS

Indirect leverage: Determined endogenously by the models investment demand specification

Economic performance

Identical performance of EU funding and national funding

Financing

Reduction in public investment

The regionalisation of funding is based on the regional distribution of existing Programme spending. Hence, it is assumed that future R&I support would follow the same regional distribution as previous spending programmes. Figure 9 shows the assumed regional accumulated spending for R&D support for the period 2021-2027 in percent of GDP. Large regional variations in spending can be observed.

Figure 9 Accumulated regional spending in support of R&D in the reference scenario (percent of GDP)

Source: European Commission, DG JRC

The impact of the Spreading Excellence and Widening Participation (SEWP) programme is also measured using RHOMOLO by using the regional allocation of funds for the years 2014-2015 under SEWP. The largest receivers of funding were regions in Cyprus, Hungary, Slovenia, Portugal and Estonia. The funding is mainly concentrated in regions in the widening countries. However, some regions in other member states also receive funding through participation in project with counterparts in the widening countries.

Results

Results from RHOMOLO show significant benefits of continuing the EU R&I Programme compared to a situation in which funding is reallocated to national public investments. The Programme is expected to generate up to 0.17% (in 2020) of additional GDP compared to a situation without Framework Programme, with an average impact of 0.08% of GDP over 25 years.



Figure 10 GDP impact of the continuation of Horizon 2020 (RHOMOLO, deviation in % from a situation without Framework Programme)

Source: European Commission, DG JRC

Key regional results from the model are the following:

·Regions from all Member States are directly or indirectly impacted by SEWP measures, not targeted countries only.

·Regional impact of the SEWP can reach up to 0.18% of regional value added in some regions.

·Each Euro invested in the SEWP part of the Framework Programme is expected to bring similar return in terms of GDP gain compared to the rest of the Programme.

Limitations of the model

While the spatial dimension of RHOMOLO is clearly a key strength of the model, the extensive regional disaggregation of the model requires that the dynamics are kept relatively simple 81 , implying that the optimisation problems in RHOMOLO are inherently static and do not acknowledge the inter-temporal consequences of innovation decisions that can change not only the level but also the rate of growth of regional economies. The model is solved by recursive dynamics. Furthermore, RHOMOLO does not explicitly distinguish between private and public R&D investments or between types of endogenous innovation.

4Comparison of results

RHOMOLO, QUEST and NEMESIS are three different models corresponding to different approaches and with very different specifications and settings of parameter values. One should therefore not expect the three models to produce identical estimates of the economic impact of a given policy change. However, comparing the findings from the three models for the baseline scenario (i.e. the continuation of Horizon 2020) allows assessing the consistency of the impacts identified in each model and contributes to address to some extent the issue of model uncertainty.



Figure 11 GDP impact of Horizon 2020 continuation (deviation in % from a situation without Horizon 2020)

 

 

Source: European Commission, DG Research and Innovation. Note: EU+ indicates that Nemesis uses higher performance and leverage for EU funding compared to national funding as a reflection of the EU added value of the Programme. QUEST *1 assumes that financing of the Programme relies on VAT increase. QUEST *2 assumes that financing relies on lowering public investment.

Overall, NEMESIS, QUEST and RHOMOLO present consistent results in terms of sign and temporal pattern of the GDP gain from the Framework Programme (compared to the discontinuation of the Programme) over 2021-2050. The three models show a strong increase in the GDP impact during or after the period covered by the Programme, with highest impacts expected between 2029 and 2034. The size of the GDP gain is the highest based on the NEMESIS results. This can be explained by the fact that the three models use different sets of innovation channels and elasticities. Furthermore, the parameters and mechanisms in QUEST and RHOMOLO do not directly take into account the higher leverage and performance expected from EU funding of R&I compared to national funding, which are acknowledged in NEMESIS as an illustration of the EU added value of the Framework Programme.



Annex 6: Indicators

1Key Impact Pathways Indicators

1.1Scientific impact pathway indicators

The Programme is expected to have scientific impact by delivering creating high-quality new knowledge, strengthening human capital in R&I, and fostering the diffusion of knowledge and Open Science. Progress towards this impact will be monitored through the proxy indicators in Figure 12 , set along three key impact pathways.

Figure 12 Key scientific impact pathways indicators

Short-term

Medium-term

Longer-term

Scientific impact

1 Message: Horizon Europe generates world-class science, as shown by the high-quality publications that become influential in their field and worldwide 82 .

Publications -

Number of FP peer reviewed scientific publications 83

Citations -

Field-Weighted Citation Index of FP peer reviewed publications

World-class science -

Number and share of peer reviewed publications from FP projects that are core contribution to scientific fields

Creating of high-quality new knowledge

Data needs: identification of publications co-funded by the FP through the insertion of a specific DOI for the FP (funding source code) when publishing, allowing follow-up tracking of the perceived quality and influence through publication databases and topic mapping.

2 Message: Horizon Europe strengthens human capital, as shown by the improvement in skills, reputation and working conditions of participants 84 .

Skills -

Number of researchers having benefitted from upskilling activities in FP projects (through training, mobility and access to infrastructures) 85

Careers -

Number and share of upskilled FP researchers with more influence in their R&I field

Working conditions -

Number and share of upskilled FP researchers with improved working conditions

Strengthening human capital in R&I

Data needs: collection of unique identifiers of individual applicants to the FP at proposal stage, allowing follow-up tracking of their influence in their field through publication and patent databases, awards and prizes, as well as evolution of working conditions through salary levels and benefits.

3 Message: Horizon Europe opens up science, as shown by research outputs shared openly, re-used and at the origin of new transdisciplinary/trans-sectoral collaborations 86 .

Shared knowledge -

Share of FP research outputs (open data/ publication/ software etc.) shared through open knowledge infrastructures

Knowledge diffusion -

Share of open access FP research outputs actively used/cited after FP

New collaborations -

Share of FP beneficiaries having developed new transdisciplinary/ trans-sectoral collaborations with users of their open FP R&I outputs

Fostering diffusion of knowledge and Open Science

Data needs: Identification of research outputs (in particular publications and research data) co-funded by the FP through the insertion of a specific DOI for the FP when publishing or sharing openly (e.g. OA journals/platforms (publications) and open FAIR repositories (data)), allowing follow-up tracking of open access performance in terms of active use/citations and collaborations. 

1.2Societal impact pathway indicators

The Programme is expected to have societal impact by addressing EU policy priorities through R&I, delivering benefits and impact through R&I missions, and strengthening the uptake of research and innovation in society. Progress towards this impact will be monitored through the proxy indicators in Figure 13 , set along three key impact pathways.

Figure 13 Key societal impact pathways & progress indicators

Short-term

Medium-term

Longer-term

Societal impact

4 Message: Horizon Europe helps addressing EU policy priorities (including meeting the SDGs) through research and innovation, as shown by the portfolios of projects generating outputs contributing to tackling global challenges.

Outputs -

Number and share of outputs aimed at addressing specific EU policy priorities (including meeting the Sustainable Development Goals (SDGs))

Solutions -

Number and share of innovations and scientific results addressing specific EU policy priorities (including meeting the SDGs)

Benefits -

Aggregated estimated effects from use of FP-funded results, on tackling specific EU policy priorities, including contribution to the policy and law-making cycle

Addressing EU policy priorities through R&I

Data needs: Projects classified according to the specific EU policy priorities (including the SDGs) pursued and follow-up tracking of their outputs, results and impacts. Portfolio analysis on effects from scientific results & innovations in specific EU policy priority/SDGs areas, text mining.

5 Message: Horizon Europe produces knowledge and innovation that contribute to achieving missions of EU interest  87 .

R&I mission outputs -

Outputs in specific R&I missions

R&I mission results -

Results in specific R&I missions

R&I mission targets met -

Targets achieved in specific R&I missions

Delivering benefits and impact through R&I missions

Data needs: Projects classified according to the missions pursued and follow-up tracking of their outputs, results and impacts according to the target set. Portfolio analysis on effects from scientific results & innovations in mission areas.

6 Message: Horizon Europe creates value for European citizen, as shown by the engagement of citizen in the projects and beyond the projects by improved uptake of scientific results and innovative solutions 88 .

Co-creation -

Number and share of FP projects where EU citizens and end-users contribute to the co-creation of R&I content

Engagement -

Number and share of FP beneficiary entities with citizen and end-users engagement mechanisms after FP project

Societal R&I uptake -

Uptake and outreach of FP co-created scientific results and innovative solutions

Strengthening the uptake of innovation in society

Data needs: Collection of data at proposal stage on the roles of partners (incl. citizen) in the projects, structured survey of beneficiary entities and tracking of uptake and outreach through patents and trademarks and media analysis.

1.3Economic impact pathway indicators

The Programme is expected to have an economic/innovation 89 impact by influencing the creation and growth of companies, creating direct and indirect jobs, and by leveraging investments for research and innovation. Progress towards this impact will be monitored through the proxy indicators in Figure 14 , set along three key impact pathways.

Figure 14 Key economic impact pathways indicators

Short-term

Medium-term

Longer-term

Economic impact

7 Message: Horizon Europe is a source of economic growth, as shown by the patents and innovations that are launched on the market and generate added value for businesses 90 .

Innovative outputs -

Number of innovative products, processes or methods from FP (by type of innovation 91 ) & Intellectual Property Rights (IPR) applications 92

Innovations -

Number of innovations from FP projects (by type of innovation) including from awarded IPRs

Economic growth -

Creation, growth & market shares of companies having developed FP innovations

Innovation-based growth

Data needs: Reporting of beneficiaries on innovative products, processes or methods from FP and their practical use, and insertion of a specific DOI for the FP (funding source code) when filling IPR applications, allowing follow-up tracking of the patents through patent databases and trademarks (“follow the investor approach”).

8 Message: Horizon Europe generates more and better jobs, initially in the projects, and then through the exploitation of the results and their diffusion in the economy 93 .

Supported employment -

Number of FTE jobs created, and jobs maintained in beneficiary entities for the FP project (by type of job 94 )

Sustained employment -

Increase of FTE jobs in beneficiary entities following FP project (by type of job)

Total employment -

Number of direct & indirect 95 jobs created or maintained due to diffusion of FP results (by type of job)

Creating more and better jobs

Data needs: Collection of information on individuals involved in FP projects at proposal stage, including their workload (Full Time Equivalent) and job profile allowing follow-up tracking of employment in beneficiary organisations. Longer-term indicator will be an estimate based on a dedicated study.

9 Message: Horizon Europe is leveraging investments for research and innovation in Europe, initially in the projects, and then to exploit or scale-up their results 96 .

Amount of public & private investment 97 mobilised with the initial FP investment

Amount of public & private investment mobilised to exploit or scale-up FP results

EU progress towards 3% GDP target due to FP

Leveraging investment

Data needs: Data on co-funding in FP projects by source of funds including other EU funds (e.g. ESIF), collection of unique identifiers of applicants to the FP at proposal stage (e.g. VAT), allowing follow-up tracking of their capital. Longer-term indicator will be an estimate based on a dedicated study.



2Key Management and Implementation Data

This section specifies a number of key management data for assessing the state of implementation of the Programme. The data covers the inputs and activities of the Programme, including the European Partnerships.

·Number of proposals and applications submitted, EC contribution requested and total costs of submitted proposals (by source of funds)

·Number of proposals reaching the quality threshold (funded/not funded)

·Number of retained proposals

·Success rates of proposals

·EC contribution and total costs of retained proposals (by source of funds)

·Number of participations and single participants

This information shall be collected according to:

·Types of action

·Types of organisations, including Civil Society Organisations (with specific data for SMEs)

·Countries and regions of applicants and participants (including from associated and third countries)

·Sectors

·Disciplines

Data shall also be monitored on the profiles of beneficiaries and evaluators:

·Gender balance (in projects, in EC advisory groups and evaluators)

·Role(s) in project 98  

·Share of newcomers to the Programme

Data shall also be monitored on the implementation processes:

·Time-to-grant

·Time-to-pay

·Error rate

·Satisfaction rate

·Rate of risk taking

Data shall also be monitored on:

·The financial contribution that is climate-related

Data shall also be collected on:

·Communication of R&I results

·Dissemination of R&I results

·Exploitation and deployment of R&I results, including through monitoring the funding allocated for uptake of research and innovation results through the instruments listed in Annex 7 on synergies with other EU programmes.



Annex 7: Synergies with other proposals under the future Multiannual Financial Framework

1Why do we need synergies between EU programmes?

The set of EU funding programmes under the next multiannual budget must be closely linked to each other, and they must work in synergy. This can be described as:

ØCompatibility: harmonisation of funding rules for projects; making co-funding schemes more flexible; pooling resources at EU level;

ØComplementarity between EU programmes: no overlap in funding;

ØCoherence: alignment of strategic priorities in support of a common vision.

An important lesson learned from the Horizon 2020 interim evaluation is that, in cases where those programmes were not designed with a clear strategic overview on their complementarities from their inception, it proved difficult to ensure full complementarity and coherence at the implementation stage.

More effective synergies between EU programmes under the next EU Multinational Financial Framework (MFF) will make the EU's overall investments more effective, readable and able to provide better value for citizens. It will amplify the impact of EU-level investments in R&I for creating jobs, growth and competitiveness on the ground by bringing European, national and regional R&I funding schemes better into play. Ultimately, they should contribute in a complementary way to a common vision and shared objectives on tackling the major challenges facing Europe and ultimately make the EU as a whole better equipped to face ever-increasing competitive pressure from global markets.

What have we learned from the Horizon 2020 Interim Evaluation?

 

"It is difficult to assess to what extent the political willingness to increase Horizon 2020's external coherence has translated into practical implementation. Given different rules and implementation structures, and varying scale and scope of programmes, promoting synergies at project level (in terms of combining different financing sources for the same project) still appears difficult" 99 .

Differences in applicable rules lead to legal uncertainty for potential applicants; while communication, coordination and support for synergies between all institutional actors involved is not optimal.

"Despite initiatives being taken to reinforce synergies with other EU funds, notably the ESIF, further coherence is hampered by the different intervention logics and complexity of the different funding and other rules " 100 .

"The main areas to be addressed to improve the generation of synergies and to boost their impacts on regional development, on growth, job creation and tackling societal challenges are: strategic framework and programming; generation of concrete guidance and implementation of best practice; monitoring. These issues should support a more specific, widespread, efficient and effective implementation of synergies between Horizon 2020 and ESIF" 101 .

Exploring synergies between the Framework Programme and other MFF proposals related to the support of the research and innovation systems at the programme design stage aims to:

(I)ensure complementarity in designs and objectives of the different Programmes to ensure the most efficient use of limited public resources and enhanced readability for beneficiaries;

(II)capture the scope of the activities supported through the different Programmes to ensure full synergies and coherent approaches on the ground for instance through aligned strategic programming processes (e.g. on priority areas, partnerships), and common missions to guide funding priorities of different Programmes;

(III)ensure the development of complementary and combined funding across programmes and facilitate the implementation of the Seal of Excellence

What do stakeholders say?

The large majority of stakeholders state the broad view that increased synergies, coordination and strategic alignment with other EU programmes would help to maximise the impact of the future EU R&I programme.

In general, this is a consistently high priority for other EU institutions:

·[The European Parliament]"Notes that synergies between funds are crucial to make investments more effective….regrets the presence of substantial barriers to making synergies fully operational and seek, therefore, an alignment of rules and procedures for R&D&I projects under ESIF and FP…..encourages the Commission to enhance synergies between the Framework Programme and other dedicated European funds for research and innovation, and to establish harmonised instruments and aligned rules for those funds" 102 .

·[The Council] "Highlights the importance of improved synergies and complementarities between the FP and other EU funding instruments. Considers therefore that regulations for the next FP and the European Structural and Investment Funds, as well as state aid rules and any other relevant EU programmes must be designed from the very beginning with synergies, coherence, compatibility and complementarity in mind in order to provide a level playing field for similar projects under different management modes and to consider harmonization of funding rules for R&I towards those of the FP" 103 .

Specific suggestions from stakeholder organisations include:

·To include education activities in relevant parts of the EU R&I programme and secure synergies with the next EU framework programme for education.

·To increase the impact of national and regional funding coming from ESIF allocated to R&I activities, to allocate a minimum specific percentage of the budget devoted to synergies with the R&I programme for each Member State.

·To step up efforts for the ‘Seals of Excellence’ enabling excellent-but-unfunded projects submitted to the R&I programme to be funded under other schemes (including private, national, other EU funds).

·To co-construct the future R&I and ESIF programmes by ensuring efficient support from the ESIF funds to excellent R&I projects in capacity-building (upstream) and uptake of results (downstream).

·Request for broader acceptance of usual cost-accounting practices and for the introduction of the single audit principle/cross-reliance on audits.

2The role of the Framework Programme in the EU R&I support system

The Framework Programme remains the sole EU programme supporting mainly trans-national research and innovation activities and networks, including through partnerships with Member States, businesses and foundations, based on the key criteria of excellence. This includes the trans-national access to and integration of national research infrastructures across Europe and the development of ESFRI 104 pan-European research infrastructures.

The Framework Programme will cover activities that support the development, demonstration and market uptake of innovative solutions (through co-creation, EIC’s Accelerator, public procurement) that usually have a trans-national dimension or require more support than may be provided for at national/regional level, and are first-of-a-kind innovative solutions for Europe. Across its activities the programme will support the development of the skills of researchers and innovators involved. While the Framework Programme is open to participation from all Member-States and beyond, it will continue to support the building of capacity in low-performing countries in R&I through dedicated collaboration-based schemes - including for policy reforms, in the context of strengthening the European Research Area, including outermost regions.

Other programmes under the next MFF will provide support for research and innovation activities, including demonstration of solutions tailored to specific national/regional contexts/needs, as well as bilateral and interregional initiatives. In particular, the European Regional Development Funds support the building of research and innovation eco-systems in the Member States in terms of infrastructures, human resources, modernisation of the public and private sectors, and (inter)regional cooperation networks, such as clusters structures. MFF programmes such as the Connecting Europe Facility (CEF), the Digital Europe Programme (DEP), the European Social Fund (ESF) or LIFE make notably use of public procurement as one instrument to deploy physical infrastructures and innovative technologies and solutions in specific areas - that can originate from the Framework Programme activities, but not only.

The Framework Programme will also provide support for R&I activities underpinned by these infrastructures and facilities, including testing, experimentation and demonstration across all sectors and disciplines. Actions implemented through other MFF programmes will provide the backbone for system transitions (e.g. infrastructures for energy transition) and ensure supportive framework conditions such as interoperability, standards, innovation-friendly regulations, but also enhanced skills and awareness of the wider population, the spreading of best practice in research and innovation policy implementation, but also for the wider diffusion and uptake of (European) innovations in the international arena, e.g. through external action.

Overall the wider dissemination of R&I results attained through the Framework Programmes towards a broader audience within the European institutions but also Member States and other stakeholders will be encouraged. Through the Seal of Excellence, high-quality but unfunded proposals under the Framework Programme will continue to be promoted for support through alternative funding sources, including ERDF or ESF where relevant.

Moreover, the development of the corporate eGrants/eProcurement suite of business processes and IT tools for all centrally managed programmes will provide for harmonised implementation and improved possibilities for exploiting synergies at project level. Cross-reliance on audits of other EU programmes could also be considered, although its effectiveness will depend on the homogeneity of the rules between programmes.

Table 3 Support to R&I projects/activities, incl. closer-to-market activities, replication & diffusion of technologies & innovative solutions – Complementarities Framework Programme/ Other EU programmes

Horizon Europe

What will the other EU programmes typically cover?

R&I activities/projects:

-Programme focussed on excellent R&I from TRL 1-9 with continued strong focus on collaborative R&I

-Support to individual entities and transnational collaborations (top down and bottom-up)

-Mainly grants for TRL 1-8; repayable or convertible advances, equity and/or guarantee for loans (no grants) for TRL 5/6-9

-Support technological & non-technological innovations ((citizen science, user-led innovation, social innovation, business model innovation, public sector innovation etc.), including innovative delivery mechanisms

-Continuation of Coordination and Support Actions

-Incentives for institutional changes towards Responsible Research and Innovation (RRI) and gender equality. 

-Continued streamlined support to European Partnerships: co-programming, co-funding (incl. through procurement), institutional funding open to all types of public, private stakeholders (incl. foundations)

Market uptake:

-Market uptake considered as of FP projects’ proposal development, fostering applicants to co-create/ experiment their research and solutions with users from the outset, including within the KICs co-location centres.

-Supporting innovation actions and the demonstration of solutions of a first-of-a-kind nature in Europe with potential for replication

-Establishing pipelines of innovative solutions from R&I projects (incl. from ERC Proof of concept) targeted to public and private investors, including EIC’s Accelerator and other EU programmes

-Support to roll out and replication of innovative solutions with cross-border & transnational dimension 

-Support to pre-commercial procurement and public procurement of innovation as a stand-alone tool maintained

-Support to scale-up of companies with breakthrough potential to create new markets with financial instruments under the EIC, in particular where the market does not provide viable financing

-Improved monitoring and dissemination of R&I results including through initiatives such as the dissemination and exploitation Boosters and the Innovation Radar - also directed to other DGs and programmes for further implementation.

R&I activities/projects

-Continue support R&I activities tailored to specific national/regional contexts/needs, as well as bilateral and interregional initiatives (e.g. ERDF, LIFE)

-Build R&I capacity in countries and regions (including regional and national research infrastructures): ERDF, InvestEU (infrastructure, human capital and SME windows), External Instrument, Erasmus-supported European Universities initiative, Strategic Partnerships, Knowledge Alliances and Mobility

-High-quality but unfunded proposals under the Framework Programme (SME and MSCA Seals of Excellence) should be supported through alternative funding sources, including ERDF or ESF where relevant. In the case of the SME SoE, they should benefit from similar funding conditions elsewhere, including under national/regional funding schemes.

-Pool resources for coordinated parallel actions that complement with the Framework Programme (including ERDF or ESF for the support of European Partnerships) and for R&I in specific areas (i.e. with ETS Innovation Fund)

-Align funding provisions/financial regulations between programmes.

-Provide advice on finding alternative funding sources through COSME+.

Market uptake:

-Support user-driven activities tailored to specific national/regional contexts (e.g. living labs, testbeds under the ESI funds, DEP)

-Support demonstration and innovation activities tailored to specific national/regional contexts including trans-regional activities (incl. LIFE, ESI funds)

-Take up FP results and support further development, dissemination and deployment for the benefit of economy and society (project pipelines) (all EU programmes when relevant)

-Replicate and deploy tested technologies and innovative solutions to improve the environment, energy consumption or the health of citizen or in digital technologies at local and regional level incl. trans-regional through CAP, LIFE, ERDF or ESF (e.g. for acquiring technologies, skills development) while preserving competition within the internal market

-Support the take-up of innovative solutions by individuals and final users, industry and public administration (e.g. for energy consumption, health, environment) through ESIF, LIFE, CAP, etc.

-Build enabling framework conditions for the transition processes (e.g. energy transition) such as interoperability, standards, innovation-friendly regulations, but also enhanced skills and awareness of the wider population, the spreading of best practice in research and innovation policy implementation, but also for the wider diffusion and uptake

-Support wider diffusion and uptake of (European) innovations (including through External Instrument)

-Deploy physical infrastructures allowing technological system transitions (e.g. for a transition to clean energy under CEF; financial instruments under Invest EU, ERDF)

-Reinforce cooperation between DGs for developing further the public procurement for innovative solutions in key areas of European interest, in particular for energy, transport, environment, health & ICT

Table 4 Support to entrepreneurship, start-ups, SME growth/scale up, clusters & innovation hubs

Horizon Europe

What will the other EU programmes typically cover?

Support to entrepreneurship & SME growth:

-Support the launch and scale-up of start-ups, innovative SMEs and mid-capital firms with breakthrough potential to create new markets with financial instruments through the European Innovation Council (pathfinder, accelerator), preserving competition within the internal market and not crowding out private investments

-Dedicated R&I thematic window and SME Window (i.e. including innovative SMEs) under InvestEU that are closely linked to the objectives of the Framework Programme

-Blended finance for innovators that is distinct from indirect financial instruments under InvestEU, but in synergy with funds and intermediaries supported by InvestEU

-Support to companies (incl. mentoring and coaching) provided within the EIT KICs, , including investments via EIC’s Accelerator 

Support to clusters, hubs and broader innovation ecosystem:

-Joint programmes and other actions son to enhance innovation ecosystems

-Reinforcement of EIT KICs co-location centres (innovation hubs) for experimentation and testing with end-users

-Support to development of standards for innovative products/services in FP projects

Support to entrepreneurship & SME growth:

-Ensure full complementarity with financial instruments implemented through InvestEU windows to support scale-up of companies

-Support the growth and internationalisation of mainstream individual companies (e.g. through COSME; ERDF and External Instrument) in a competitive environment

-Support to business skills development (ESF)

Support to clusters, hubs and broader innovation ecosystem:

-Support the construction and equipment of structures for SME support (clusters, incubators, etc., notably under ERDF)

-Support to regional/national innovation ecosystem development incl. provision of advice and support services to companies (incl. through COSME+ and the Enterprise Europe Network and through the ESI funds).

-Shape R&I supportive standards in the international standardisation arena (incl through COSME)

Table 5 Support to research infrastructures, human capital development, networking & policy-making

Horizon Europe

What will the other EU programmes typically cover?

Research infrastructure:

-Consolidate the landscape of European research infrastructures e.g. ESFRI: support early-phase development of pan European research infrastructures, the European Open Science Cloud and European Data Infrastructures and enable delivery of High Performance Computing/data services

-Open, integrate and interconnect national research infrastructures

-Support partnerships with industry for the supply of high-tech components while ensuring a level playing field between competitors.

-Reinforce European research infrastructure policy and international cooperation

Human capital development:

-Supporting individual researchers (incl. ERC, MSCA) and R&I networks for the exchange of knowledge, incl. mobility & career development

-Continue supporting mobility & career development of researchers in ERA (e.g. Human Resources Strategy for researchers, EURAXESS, RESAVER Pension Fund, etc.)

-Continue supporting access to research infrastructures for researchers, innovators & SMEs on a transparent and non-discriminatory basis

-Continue supporting responsible research and innovation and gender equality & gender dimension in research and innovation

-Continue supporting the development of entrepreneurial skills in universities (EIT-KICs) and reinforce the role of the EIT KICs for future skills identification in areas related to global challenges

-Increase FP role in modernisation of universities in ERA, i.e. through embedding Open Science practices as well as entrepreneurship focus (e.g. skills, recognition and rewarding mechanisms, etc.)

-Continue mentoring & coaching companies to enhance innovation & entrepreneurial skills (EIC, EIT/KICs)

-Launch new Recognition prizes (Women Innovators, Capital of Innovation, EIT awards) and EIC Prizes

-Continue reinforcing human capacity in low R&I performing countries (ERA Chairs)

Networking and policy-making :

-Continuation of coordination and support actions incl. Sharing Excellence actions (Teaming, Twinning, ERA-Chairs), Policy Support Facility to help EU Member States reform their research and innovation policies and Innovation Deals to identify barriers to innovation at sectoral level

-Rationalised support to European Partnerships: co-programming, co-funding, institutional funding open to all types of stakeholders

-Improved monitoring and dissemination of R&I results towards policy

-EIC Forum of national agencies implementing national innovation policies

Research infrastructure:

-Support the national/regional contributions to the construction of pan European research infrastructures i.e. with ERDF and InvestEU Fund

-Exploit the potential of the CEF and Digital Europe Programme instruments for the large-scale coordinated procurement/ deployment of digital infrastructures and infrastructures for digital technologies

-Use External instruments for developing capacity in third countries to participate in global research infrastructures of EU interest

-Provide appropriate and continued financial support for long-lasting initiatives beyond FP funding life-time

Human capital development:

-Support to skills development (technical, digital and transversal) to support the use of innovative solutions, while increasing employability and career prospects, but also entrepreneurial skills through the future COSME (Erasmus for Young Entrepreneurs) and ESF

-Build/reinforce human R&I capacity in countries & regions (including through regional & national research infrastructures & fellowships): European Social Fund (incl. basic digital skills), InvestEU (research infrastructure, human capital & SME windows); Erasmus (targeting particular sectors to provide a pipeline of talented pre-graduates that can embark on a research career, European Universities initiative, Strategic Partnerships individual mobility for studies and for traineeships); External Instrument

-Develop skills and capacities towards gender equality and Responsible Research and Innovation

-Foster links and synergies between relevant policy actions linking education/research/innovation

Networking and policy-making :

-Ensure strong coordination between programmes, especially in the area of research infrastructures, innovation hubs, large demonstrators etc.

-Continue support R&I networking activities tailored to specific national/regional contexts and inter-regional cooperation

-Build R&I policy capacity in countries and regions e.g. by developing networks across the quadruple helix to input policy evidence

-Support through CAP and ERDF to upgrade national and regional ecosystems and make them more innovation-conducive (incl. through Smart Specialisation Strategies)

-External Instrument actions to help improve framework conditions for innovation and for cooperation in R&I

3Synergies with the European Regional Development Fund (ERDF) 

Table 6 European Regional Development Fund- Research and innovation related support

Sectors/Domains:

-Under development

Target beneficiaries:

-All of the Framework Programme's beneficiaries may also get ERDF support either for different types of projects or within a common project

Geographical coverage:

Member States and regions 

R&I activities/projects

-Supports R&I projects of individual enterprises, and public institutions, cooperation university-business and university researchers

Market uptake:

-Focusses funding for R&I on the take-up of technology and knowledge

-Social innovation and co-creation, use of design-thinking and other newer forms of innovation

-Supports all types of market take-up, prototyping, IPR management advice, etc. (within State-Aid limits!)

-Funds replication and diffusion of innovative solutions and technology deployment, including the actual public and private procurement of innovative solutions

-Open to PCP and PPI funding (both preparation of Terms of Reference and actual procurement), offers technical assistance and training for national and regional authorities; networking among different countries

-Supports interregional partnerships along value chains for joint investment pipelines, with the aim for industrial transition 

Support to entrepreneurship & SME growth:

-Financial instruments under ERDF

-Funds the provision of advice and support services

Support to clusters, hubs and broader innovation ecosystem:

-Funds the construction and equipment of infrastructures for SME support (clusters, incubators, etc.)

-Funds the innovation ecosystem development

R&I Infrastructure:

If in line with the relevant smart specialisation strategy, ERDF may pay for:

-The construction and upgrade of research infrastructures (this may include some training “on the job” to correctly use new infrastructures and equipment)

-The construction and upgrade of innovation infrastructures (pilot lines, living labs, demonstrators, tech transfer offices)

Human capital development:

-Funds the purchase of equipment and infrastructures needed for human capital development, if relevant for the implementation of the smart specialisation priorities.

Networking and policy-making:

-Supports the development and improvement of national & regional innovation eco-systems including business-industry-citizens-public support bodies’ cooperation, innovation governance, capacity-building and the cooperation with other regions & Member-States for mutual learning & joint investment pipelines

-Invests in networking with other countries & regions bringing together the policy-makers & funding agencies/authorities/stakeholders on the ground

-Invests in better innovation policy-making for industrial modernization (Smart Specialisation)

-Invests in better innovation governance (entrepreneurial discovery process)

The Regional Development Funds aim at strengthening the EU's economic, social and territorial cohesion. They have a prominent role in developing, improving and connecting national and regional innovation ecosystems, and are expected to continue to dedicate important amounts in the post-2020 period to research and innovation ecosystem investments, i.e. in research or innovation infrastructures, SME innovation capacities, networking, innovation support services and human capital. Support to innovation is provided through smart specialisation strategies which prioritise public research and innovation investments through a bottom-up approach for the economic transformation of regions, developing innovation ecosystems, building on regional competitive advantages and facilitating market opportunities in new inter-regional and European value chains. Smart specialisation provides a strategic framework to support 'upstream actions' to prepare stakeholders to participate in the Framework Programme, and 'downstream actions' to exploit and diffuse research and innovation results, developed under the Framework Programme.

Horizon Europe will continue to support and build capacity of low-performing countries in research and innovation, in the context of strengthening the European Research Area and reforms to the research and innovation systems. The complementarity between the Framework Programme's support and ERDF support to the national and regional innovation systems will be ensured. For instance, the Teaming mechanism will still require compliance with the relevant Smart Specialisation strategy.

The scaling-up and transferability of projects and the communication and sharing of practices constitute two key areas of improvement for the future. Establishing a more structured cooperation across the Commission would pool efforts and streamline various initiatives. In this regard, transnational cooperation activities and innovative national actions will be further supported with a view to promote social innovation in the implementation of the European Pillar of Social Rights.

Arrangements for synergies between Horizon Europe and ERDF or ESF or national contributions for similar type of projects will be further enhanced benefiting from more conductive rules. Legal provisions allowing cumulative funding of grants from the Framework Programme and ERDF/ESF for the same action (provided that there is no double funding) will be kept allowing a pro rata basis approach. Programme co-fund actions will be designed to facilitate such funding synergies and simplified rules. Similarly, funding of Seal of Excellence awards from national ERDF or ESF allocations will be simplified and facilitated. Moreover, the take-up in Horizon Europe of simplified cost options for reimbursing expenditure (lump sums, flat rates, unit costs) will further facilitate the combination of funds. To accomplish the enhanced synergies and simplification mentioned above, all relevant rules and regulations will be revised accordingly in time for Horizon Europe, provided certain conditions are fulfilled.

High-quality-but-unfunded proposals under the Framework Programme (Seals of Excellence awarded under SME actions or the Marie Skłodowska-Curie Actions, MSCA) will be able to benefit from the same co-funding rates elsewhere, including under regional funding schemes. For example, this means that ERDF or ESF allocations can be used to support Seal of Excellence projects, where relevant to the local context and smart specialisation strategy.

Portfolios of R&I results and innovations attained by projects funded under the Framework Programme that correspond to existing national or regional needs will be made available to national or regional ERDF and ESF managing authorities in a consistent and organised manner. The role of advisory services and their access to available innovations, knowledge and results stemming from the Framework Programme will be given particular attention. More specifically, the ERDF may feature increased funds dedicated to the take-up of results and the rolling out of novel technologies and innovative solutions from past Framework Programmes and Horizon Europe.

Box 1 Concrete examples of how synergies with ERDF and ESF could look like in practice

·Horizon Europe projects can be implemented using the equipment and research infrastructures previously funded from the ERDF.

·SME who have received a Seal of Excellence (SoE) can apply for alternative funding under conditions to be further defined under relevant rules and regulations, including GBER with regard to State-aid compatibility. That allows for reducing administrative burden and costs on the SME and funding body side.

·Researchers who received the MSCA SoE under the Framework Programme can be supported through alternative sources of funding at regional or national level, including through use of ESF. This allows countries/institutions to identify and employ excellent researchers, while removing/reducing the need to carry out a new evaluation of the proposals.

4Synergies with the European Social Fund (ESF+)

Table 6 European Social Fund + - Research and innovation related support

Sectors/Domains:

-Not sector-specific

Target beneficiaries:

-No groups are excluded

Geographic coverage:

-EU

R&I activities/projects

-Future ESF to continue promoting social innovation (i.e. policy testing and experimentation in the social & employment policy fields)

Support to entrepreneurship & SME growth:

-ESF programme:

-access to finance (microcredit and microloans)for vulnerable groups and micro-enterprises; continued support for youth, social entrepreneurship

R&I Infrastructure:

-Complements other EU instruments for investments in R&I infrastructure

Human capital development:

-Aims to improve the quality, efficiency and openness of (tertiary) education e.g. developing new teaching methods, delivering high quality educational content, which is relevant to labour market needs

-Stimulates partnerships between higher education, business and research organisations

-Aims to strengthen human capital in R&I, e.g. through training and capacity building for researchers (e.g. complementarities and synergies with MSCA Seal of Excellence and MSCA co-funded doctoral and postdoctoral research training programmes) and for teachers; opening tertiary education access to disadvantaged groups

-Can mainstream curricula oriented towards equipping students with the skills needed in the future labour market developed under the Framework Programme.

Networking and policy making:

-ESF support for reforms of education systems, curricula

The European Social Fund (ESF) is instrumental in supporting continuous investments in skills which are key for harnessing technological development. Skills are a crucial element for developing environments conducive to innovation, including in the European Research Area. The ESF+ will mainstream and scale up Framework Programme-funded innovative curricula that will equip people with the skills and competencies needed for the jobs of the future (based on forecasting of future professions).

Across the EU funds, the ESF represents the major bulk of funding for social transformation mainstreaming social innovation in the economy and reinforcing human capital, including for research and innovation.

The deployment and support of ESF to Framework Programme-funded skills and competencies curricula can take several approaches (i.e. integration of Framework Programme-funded curricula in national or regional programmes; transnational cooperation networks on skills). This will translate for example through synergies and complementarities between ESF and the Framework Programme-MSCA co-funded doctoral and postdoctoral research training programmes. MSCA proposals with the Seal of Excellence may be funded by the ESF+ to support activities promoting human capital development in research and innovation and to attract talents, in aiming to strengthen the European Research Area.

Box 2 Concrete examples of how synergies with ESF could look like in practice

·Framework Programme-MSCA researchers can use previously ERDF funded equipment and infrastructures for the trainings and ESF can financially support innovative training activities as well as other capacity-building measures (e.g. networking activities, mobility allowance).

5Synergies with the EU programmes for agricultural and maritime policy

Table 7Error! No sequence specified. European Agricultural Guarantee Fund; European Agricultural Fund for Rural Development; European Maritime & Fisheries Fund - Research and innovation related support

Sectors/Domains:

-Agriculture

Target beneficiaries:

-Farmers

-Policy makers

-Bio-industries

-SMEs

Geographical coverage:

-EU

R&I activities/projects:

-Support to R&I in Member States’ CAP Strategic Plans

-Knowledge exchange and innovation actrivities within Agricultural Knowledge and Innovation System (AKIS)

-Innovation projects (operational groups) with EIP-AGRI (European Innovation Partnership)

-Bottom-up innovation projects (operational groups)

Market uptake:

-Investments projects

-EIP-AGRI

Human capital development:

-AKIS (European Agricultural Knowledge and Information Systems) /EIP-AGRI

-Conditionality in coming CAP plans

Networking and policy making:

-CAP network

-European Innovation Partnership network

Research and innovation are set to play a stronger role in the future agricultural and maritime policy as part of a key priority to foster innovation, in particular through the wider diffusion of innovation and better access to new technologies and investment support.

Through the Framework Programme's strategic planning processes, coherent approaches with these policies will be ensured. In particular they will work in tandem to promote Food and Nutrition Security and the Sustainable Management of Natural Resources as a strong component under the Framework Programme and the modernised CAP. This commitment is reflected in developing an ambitious, integrated Strategic Research and Innovation Agenda (building on the Strategic Approach to EU Agricultural R&I, Food 2030, and the Bioeconomy Strategy) as an important input into the shaping of Horizon Europe and for serving the evolving innovation needs of the CAP.

The development of the Strategic Research and Innovation Agenda Plan will inform priorities of the Framework Programme in the area of food and natural resources whereas the uptake of research and innovation results into a modernised CAP will be promoted. This will build on the work undertaken to date through the European Innovation Partnership on Agricultural Productivity and Sustainability (EIP-AGRI) 105 in mobilising the agricultural sector for innovation, funding multi-actor pilot projects and making new knowledge available. The ambition is to bring about systemic knowledge generation and CAP support that is generated upstream, thus leading to the downstream uptake and deployment of innovations by end users within projects. This will enable the CAP to make best use of research and innovation results and to promote the use, implementation and deployment of innovative solutions, including those stemming from projects funded by the Framework Programmes and from the European Innovation Partnership.

Box 3 Concrete example of how synergies could look like in practice

The implementation phase will ensure greater uptake of Framework Programme results in CAP programmes, e.g. by:

·Reinforcing the role of Agricultural Knowledge and Innovation systems (AKIS) in Member States and improve the connections between national AKIS at various levels (regional, national, EU levels). The role of advisory services and their access to research outcomes will be given particular attention.

·Increasing the impact of CAP instruments to foster demonstration, investments or new business models in farming and rural areas. Examples provided under CAP instruments could address innovations in digitisation, precision farming and the bioeconomy.

6Synergies with the Single Market Programme

Table 7 Single Market Programme - Research and innovation related support

Sectors/Domains:

-SMEs across sectors

-Focus on SME in strategic value chains

Target beneficiaries:

-SME intermediaries

-Cluster organisations

-Technology clusters

-Specialised SME support actors

Geographical coverage:

-EU

Market uptake:

-Support SME’s uptake of innovation through Joint Cluster Initiatives & Scaling-up Instrument

-Facilitates SME’s access to markets, including through public procurement

Support to entrepreneurship & SME growth:

-Upgraded Enterprise Europe Network: specialised business advisory services, e.g. scale-up advice for entrepreneurs with a proven business model

-Erasmus for Young Entrepreneurs: mentoring; initial business matchmaking

-New Scaling-up Instrument: For SMEs & strategic value chains channelled by Joint Cluster Initiatives; supports SME scale-up across regional, sectoral & technological boundaries to access global industrial value chains

-Delimitation New Scaling-up Instrument/ EIC accelerator: focus on growth drivers beyond innovation (e.g. internationalisation, skills); specialised mainstream SMEs (#only breakthrough innovators in EIC)

Support to clusters, hubs and broader innovation ecosystem:

-Joint Cluster Initiatives: foster strategic interregional collaboration among specialised clusters and eco-systems to strengthen EU value chains (10-20 major EU value chains)

Human capital development:

-Integrated business support, incl. skills development and mentoring in “Erasmus for young entrepreneurs”

Networking and policy-making:

-Strategic Cluster Initiatives: strategically connect ecosystems and clusters

-Enterprise Europe Network (innovation ecosystem integrator & corporate tool)

-SME Panels and SME Feedback tools for policy making through the EEN

The Single Market Programme - which integrates the COSME programme - addresses the market failures, which affect mainstream SMEs, and will promote entrepreneurship and the creation and growth of companies. Thus it will focus on generating growth opportunities for mainstream enterprises. Under Horizon Europe, the European Innovation Council will support, in a complementary way, the scale-up of innovative start-ups, SMEs and mid-cap firms with market-creating innovation potential; in particular where the market does not provide viable financing.

Horizon Europe will remain the one-stop-shop for EU innovation policy support, as well as measures stimulating innovation uptake that are already embedded in dissemination and exploitation strategies of actions supported under Horizon 2020. Full complementarity will be ensured between the COSME scaling-up instrument for mainstream companies deployed through InvestEU and the actions of the future European Innovation Council for innovative companies, as well as in the area of support services for SMEs, in particular where the market does not provide viable financing.

For the dissemination of both future programmes (Horizon Europe and the Single Market Programme) the Enterprise Europe Network (EEN) may play, as other existing SME support structures, a complementary role to dedicated support structures put in place for the Horizon Europe, such as National Contact Points (NCPs). The future mandate of Enterprise Europe Network and the Horizon Europe support structures (e.g. NCPs, Innovation Agencies) will be defined to avoid duplication, with the aim of maximising benefits to SMEs.

The skills and knowledge available in existing networks including EEN may be used for enhanced existing services, like for example coaching activities under the EIC beneficiaries. These include investment readiness development, linking with private investors, business partners and customers through brokerage activities and events including trade fairs. The networks may also be used for the testing of new initiatives with regards to support delivery to SMEs via specific actions.

7Synergies with the InvestEU Fund

Table 8 InvestEU Fund - Research and innovation related support

The InvestEU Fund will integrate current EU-level financial instruments and budgetary guarantees under a single mechanism and in particular deploy indirect financial instruments provided for under Horizon Europe and other EU programmes.

Sectors/Domains:

-R&I Window

-SME Window including innovative companies

-Sustainable infrastructure window

-Social, skills and human capital window

Target beneficiaries:

-Financially viable projects or commercial entities facing market gaps or sub-optimal investment situations

Geographical coverage:

-EU

R&I activities/projects

-The R&I window and products for innovative companies developed under the SME Window, will provide a range of debt and equity financing products in line with the variety of potential final beneficiaries at different development stages and in different EU policy areas.

Market uptake:

-The R&I window will support high-risk investments in R&I and new technologies, including in large-scale first-of-a-kind demonstrations for which market investor interest may be low.

-The R&I window will de-risk investments in innovative technologies and, together with the SME window, transfer established solutions to new markets.

-Products for innovative companies developed under the SME Window will boost SME investment capacity.

Support to entrepreneurship & SME growth:

-The SME window will improve access to finance by supporting SME financing, including and in particular for innovative companies. It will further support start-ups and companies commercialising R&I results.

-The R&I window and SME Window will provide a range of financing products to support growth of companies, including and in particular innovative ones.

-The Social, skills and human capital window will promote inclusive entrepreneurship, improve access to employment (including self-employment), job creation, labour market integration, social inclusion by increasing the availability of and access to micro-finance 106 , and access to finance for social enterprises.

R&I Infrastructure:

-The R&I Window will facilitate access to finance through debt and equity instruments to research infrastructures. It would support in particular those that are financially viable and investment ready.

Human capital development:

-Social and human capital window: support to investment in all levels of education and (necessary for building a knowledge-based society), support to increase vocational training and lifelong learning, including non-formal learning investment in human capital.

Networking and policy making:

-The InvestEU Fund will provide project development assistance to support the development of a robust pipeline of investment projects. It could also be used to facilitate blending opportunities with grants schemes.

Financial instruments for research and innovation and innovative companies, including SMEs, supported under Horizon Europe or other EU programmes will be deployed through InvestEU. InvestEU will feature a dedicated R&I window as well as a dedicated SME window that will also target innovative companies, possibly through a sub-window. Investment efforts under InvestEU will complement investment and support efforts under Horizon Europe (including by supporting high-risk investments in research and innovation and new technologies) in a manner that does not crowd out private investments.

Additionally, Horizon Europe will provide blended finance for innovators in a way that is distinct from indirect financial instruments under InvestEU, in case of a very high level of risk where no intervention from InvestEU would be possible (yet). Blended finance shall be implemented in tandem with financial intermediaries supported by InvestEU, in order to ensure investment continuity where appropriate and necessary.

Box 4 Concrete example of how synergies could look like in practice

A radically innovative SME with scale-up potential that is supported under the Accelerator scheme of Horizon Europe's European Innovation Council and hence is benefiting from a mix of finance and other types of support in order to deliver on a particular innovation – which implies that the latter becomes fully market-mature and investment-ready – can be introduced to the different schemes under the SME window of InvestEU, in order to allow it to find additional finance – where appropriate and necessary – in view of supporting further company development and scale-up. The idea is that the Accelerator will de-risk the innovation project driven by the SME to a point that it becomes an attractive investment target for financial intermediaries implementing SME products under InvestEU.

8Synergies with the Connecting Europe Facility

Table 9 Connecting Europe Facility – Research and innovation related support

Sectors/Domains:

-Energy

-Transport

-Digital

Target beneficiaries:

-Public authorities

-Industry: infrastructure building/ manufacturing, Infrastructure managers, transport operators

-Consultants for studies

Geographical coverage:

CEF-transport divided into 2 ‘envelopes’:

-General envelope: for all Member States

-Cohesion Fund envelope: for Cohesion Member States

R&I related activities/projects:

-Transport, energy, telecom: Support to deployment of new technologies & innovation, as per TEN-T guidelines Art.33

-Real-life pilots (studies/works)

-Deployment of existing innovations

Market uptake:

-CEF supports pilots, prototypes for certain technologies developed under the Framework Programme or relevant for transport infrastructure

-CEF funds transnational infrastructures to strengthen Energy Union and accelerate energy transition: research and innovation state-of-the-art should be considered in CEF (particularly regarding digital applications, electric charging and alternative fuels).

-CEF transport supports the development of the SESAR Joint Undertaking solutions through the SESAR deployment managers: technology deployment;

Support to entrepreneurship & SME growth:

-Grants and public procurement

R&I Infrastructure:

-Not R&I infrastructures but efficient and interconnected networks + main infrastructure components

-Smart infrastructure for sustainable mobility (digital, alternative fuels, multimodality, innovation)

-Safer, secure, resilient and accessible infrastructure (i.e. climate resilience)

Networking and policy making:

-Support to policy making: alternative fuels, ITS, Urban, etc. policies

The future CEF will prioritise the large-scale roll-out and deployment of existing and proven/demonstrated innovative new technologies and solutions which result from Framework Programmes in transport, energy and mobility, in particular through the Climate, Energy and Mobility cluster as well as digital technologies. Research and innovation needs in the areas of transport, energy and the digital sector within the EU will be identified and established during the Horizon Europe strategic planning process.

Strategic synergies will be pursued through making the two programmes’ contributions to EU policy more explicit and clearer, while deployment of state-of-the-art technology will be pushed within targeted areas – for example electro-mobility 107 . The exchange of information and data between the Framework Programme and CEF projects will be facilitated in particular by highlighting technologies arising from Framework Programme projects with a high market readiness that could be deployed through CEF.

The blending of funds and instruments for common objectives, for example public procurement, will be explored. In view of the investment challenges in the three CEF focus areas, and the transformational character of most of the CEF projects, public procurement for innovation could be used to facilitate and de-risk the take-up of such technologies in the networks sector. This could also enable system operators to invest substantially higher volumes than they (both through their balance sheets and their regulated asset bases) are used to.

Box 5 Concrete example of how synergies could look like in practice

Research and development on low-emission vehicles will be supported by the Framework Programme, while re-charging infrastructure / alternative re-fuelling stations will be deployed under CEF.

9Synergies with the Digital Europe Programme

Table 10 Digital Europe Programme - Research and innovation related support

Sectors/Domains:

Digital technologies for :

-High Performance Computing (HPC)

-Cybersecurity

-Artificial Intelligence

-Advanced digital skills

-Areas of public interest and industry

Target beneficiaries:

-Public authorities and administrations

-Industry including SMEs

Geographical coverage:

-EU wide

Market uptake:

-Support to transformation of areas of public interest and industry

-Wide deployment of digital technologies

-Large-scale deployment projects making best use of digital capacities and latest technologies such as High Performance Computing and Artificial Intelligence in areas of public interest

Support to entrepreneurship & SME growth:

-Through Digital innovation hubs and networking of competence centres

Support to clusters, hubs and broader innovation ecosystem:

-Support to Digital Innovation Hubs and networking of digital facilities

R&I Infrastructure:

-Co-investment in digital capacities (through joint procurement)

-Promotion of interoperability and standardisation

Human capital development:

-Support to advanced digital skills in HPC and Big Data, Cybersecurity and Artificial Intelligence

The Digital Europe initiative is a new initiative dedicated to enlarging and maximising the benefits of digital transformation to all European citizens and businesses. Both Horizon Europe and the Digital Europe Programme (DEP) will provide public support in the field of digital technologies. Under Horizon Europe, a dedicated budget will be allocated to a cluster "Digital and industry". In addition, digital technologies will, because of their cross-cutting nature, also be developed in a wide range of other (thematic) parts of the programme.

While several thematic areas addressed by Horizon Europe and Digital Europe coincide (e.g. both will cover High Performance Computing, Artificial Intelligence, Cybersecurity), the type of actions to be supported, their expected outputs and their intervention logic are different and complementary. Digital Europe will focus on large-scale digital capacity and infrastructure building. These capacities and infrastructures will support the wide uptake and deployment across Europe of critical existing or tested innovative digital solutions. This will mainly be implemented through coordinated and strategic investments with Member States, notably through joint public procurement, in digital capacities to be shared across Europe and in EU-wide actions that support interoperability and standardisation as part of developing a Digital Single Market.

Research and innovation needs related to digital aspects will be identified and established as part of the strategic planning process of Horizon Europe; this includes research and innovation for High Performance Computing, Artificial Intelligence, Cybersecurity, combining digital with other enabling technologies and non-technological innovations; support for the scale-up of companies introducing breakthrough innovations, including based on digital technologies; the integration of digital across all the Global Challenges pillar; and the support to e-Infrastructures.

Digital Europe capacities and infrastructures will be made available to the research and innovation community, including for activities supported through Horizon Europe including testing, experimentation and demonstration across all sectors and disciplines. As the development of novel digital technologies matures through Horizon Europe, these will progressively be taken up and deployed by Digital Europe. Horizon Europe initiatives for the development of skills and competencies curricula, including those delivered at the co-location centres of the European Institute of Innovation and Technology's Digital KIC (EIT Digital), are complemented by Digital Europe-supported capacity-building in advanced digital skills.

To ensure strong coordination mechanisms for programming and implementation the strategic programming and operating procedures for both programmes are aligned, inter alia using the services provided by the Horizon Europe Common Support Centre. Their governance structures involve the respective Commission services as well as others concerned by the different parts of the respective programmes.

Figure 15 Complementarities between Horizon Europe and Digital Europe at the strategic level

Horizon Europe

Digital Europe

Development of technological and non-technological solutions, including digital content

Large scale deployment of digital capacity and existing digital technologies in areas of public interest or market failure

Research, technological development, demonstration, piloting, proof-of-concept, testing and innovation including precommercial deployment

Capacity and infrastructure building on HPC, AI, Cybersecurity and advanced digital skills

Research and innovation on digital technologies

Making the best use of digital capacities in areas such as health, public administration, justice and education

Selection through EU level competition and support for cross-border collaboration

Large-scale deployment of digital capacities, infrastructures and solutions within Member States as part of an overall EU strategy or policy

EU-level calls for proposals: grants, public procurement, financial instruments and budgetary guarantees (*).

An important part will be strategic co-investment with Member States through public procurement. Funding also to be provided through procurement grants, financial instruments and budgetary guarantees(*).

Networking at EU level of research & innovation actors

Promotion of interoperability of digitised public services

Support to cross-border access to and integration of research infrastructures

Construction, maintenance, upgrade and use of digital capacities and infrastructures in computing, AI and cybersecurity.

Development of skills and competencies curricula

Support for capacity building on advanced digital skills

Supporting EU-wide research databases

Building of shared digital capacities including "common data spaces" of public sector data and other publicly available data

(*) To be implemented under the InvestEU Fund.

Complementarities in specific thematic priorities Digital Europe / Horizon Europe

High Performance Computing (HPC)

=> Digital Europe will focus on co-investment (through joint procurement with Member States) in the latest supercomputers, the networking of supercomputing facilities and the use of these in areas of public interest, e.g. health, public administration, climate, etc. Supercomputing capacity will be also available to the scientific community and industry, notably SMEs. The budget will be used: (i) to procure together with Member States two top-range exascale super computers by 2022-23; (ii) to provide an EU coordinated framework for MS wishing to upgrade and share their mid-range supercomputing facilities across Europe; (iii) to facilitate the networking and use of the supercomputing facilities.

=> Horizon Europe will support research and innovation underpinned by HPC infrastructures and facilities, including testing, experimentation and demonstration across all sectors and disciplines. On HPC specifically, Horizon Europe funding will cover research and innovation for next generation computing paradigms, architectures and programming environments, like cognitive computing, neuromorphic systems, multi-purpose quantum computing and codes for post-exascale performance. It will explore features like extreme low-power and large-scale distributed data processing.

Cybersecurity

=> The DEP will focus on:

·Investments in advanced cybersecurity equipment and infrastructures that are essential to protect critical infrastructures and the DSM at large. This could include investments in quantum facilities for cybersecurity (e.g. Quantum key distribution and facilities for post quantum cryptography) and other tools to be made available to public and private sector across Europe.

·Scaling up existing technological capacities in the Competence Centres in Member States and ensuring wide deployment of the latest cybersecurity solutions across the economy;  

·Networking of Cybersecurity Competence Centres in the Member States with leading technology capacity able to support the digital economy. This should also include aligning and enhancing  cybersecurity skills;

=> Horizon Europe will provide support for research and innovation underpinned by cybersecurity infrastructures and facilities, including testing, experimentation and demonstration across all sectors and disciplines impacted by cybersecurity. In addition Horizon Europe will support research and innovation on cyber-secure components and software relevant for areas such as protection of infrastructure or privacy and data protection. These novel approaches include, e.g. new paradigms for safety- and security-by-design, for cryptography, for self-healing systems and for cyberattack monitoring and rebuttal.

Artificial Intelligence (AI)

=> Digital Europe will focus on common capacity building to ensure the wide deployment of AI in Europe including, e.g. (i) the provision of an "AI on demand" based on open source software, algorithms, tools and equipment, and on a "common data space" containing public sector data and other publicly available data. The platform will be made available widely across Europe (notably through the Digital Innovation Hubs, see below) to actors in all sectors; (ii) the set up and reinforcement of the network of Digital Innovation Hubs to cover all regions in Europe with AI expertise and facilities. Support will go both, to the reinforcement of existing competence centres (at the core of the Digital Innovation Hubs) and to building up of new ones where needed.

=> Horizon Europe will support for research and innovation underpinned by AI infrastructures and facilities, including testing, experimentation and demonstration across all sectors and disciplines that are influenced by Artificial Intelligence. Horizon Europe will also support research and innovation in advanced AI technologies including explainable AI, unsupervised machine learning and data efficiency. Horizon Europe will support the networking and EU-wide access to specialised innovation hubs and innovation infrastructures for research and innovation performing activities.

Digitisation of areas of public interest and of industry

=> Digital Europe will support the Europe-wide transformation of areas of public interest and of industry. This will be done through co-investment with Member States and, where relevant, the private sector in leadership deployment projects making the best use of digital capacities and latest digital technologies in areas of public interest or market failure. The added value of Digital Europe will be in ensuring interoperability of solutions, suitable regulatory frameworks and standards across the EU, as well as higher impact through EU-wide actions avoiding digital divide and fragmentation, and with significant economies of scale. An important component of Digital Europe will be the access to and availability of advanced digital skills. This action will complement the training activities performed in the KIC-Digital of the EIT under Horizon Europe.

=> Under Horizon Europe a dedicated budget will be allocated to support research and innovation dedicated to “digital and industry” and digital aspects will be behind almost every research, including health, transport, environment, energy, etc.

10Synergies with the Programme for Environment & Climate Action (LIFE) 

Table 11 LIFE - Research and innovation related support

Sectors/Domains:

-Better integration of environmental legislation: Natura 2000 areas

-Waste, water, air pollution plans

-Projects with direct environmental impact

-Climate mitigation measures

-Climate adaptation measures

Target beneficiaries:

-Cities, NGO, administrations, entreprises

Geographical coverage:

-EU

Market uptake:

-”Standard action projects” best-practice or demonstration projects (public, private, university) for new measures or approaches at Member State/regional level with significant environmental or climate impact

-“Strategic integrated projects’ mobilising and ensuring the effective contribution of other EU, national/regional/private funds to the implementation of key measures as per the environmental and climate plans (e.g. river basin management plans, clean air plans, adaptation strategies or climate and energy plans)

-Not directly supporting PCP/PPI but regions could use the Strategic Integrated projects to that end

-Capacity building, policy implementation and support for large-scale deployment of innovative solutions for clean energy transition (energy efficiency, renewable energy)

Support to entrepreneurship & SME growth:

-Financial instruments as part of Invest EU

Networking and policy making:

-Not addressing R&I actors but enterprises, cities, NGO, administrations

The future LIFE programme will continue to act as a catalyst for implementing EU environment, climate and energy policy and legislation, including by taking up and applying research and innovation results from the Framework Programme. The future LIFE programme will, firstly, strengthen its role as a catalyst for the implementation of EU legislation and policies, for instance through strategic integrated projects. Secondly, its complementarity with other EU programmes will be reinforced where the market does not provide viable financing.

LIFE synergies with Horizon Europe will ensure that research and innovation needs to tackle environmental, climate and energy challenges within the EU are identified and established during Horizon Europe's strategic research and innovation planning process. LIFE will continue to act as a catalyst for implementing EU environment, climate and energy policy and legislation, including by taking up and applying research and innovation results from Horizon Europe and help deploying them at national and (inter-)regional scale where it can help address environmental, climate or clean energy transition issues. They can subsequently be deployed at large scale, funded by other sources, including Horizon Europe. In particular LIFE will continue to incentivise synergies with Horizon Europe through the award of a bonus during the evaluation for proposals which feature the uptake of results from Horizon Europe. Horizon Europe's European Innovation Council can provide support to scale up and commercialise new breakthrough ideas that may result from the implementation of LIFE projects.

Through strategic programming there is also potential for LIFE to highlight the areas where it sees a research and innovation need. LIFE will continue to incentivise synergies with the Framework Programme through the award of a bonus during the evaluation for proposals that feature the uptake of Framework Programme results.

The integration of Clean Energy Transition sub-programme in LIFE will continue the actions funded under Intelligent Energy Europe III/Horizon 2020-Societal Challenge III. It will focus on capacity building and policy support activities, while the Framework Programme will continue focusing on technology and non-technology related research and innovation for clean energy transition.

LIFE projects will also find further ways to gain support in helping them scale up and commercialise their ideas. This will occur via channelling relevant successful LIFE projects into the European Innovation Council mechanism. This would be relevant for those innovators having benefitted from the LIFE programme for their projects having demonstrated direct environmental impact at the regional or national scale, which also have a high growth potential and ambition to accelerate the transition to a low-carbon, energy efficient and circular economy through sustainable innovation.

11Synergies with Erasmus

Table 12 Erasmus - Research and innovation related support

Sectors/Domains:

-Education, Training, Youth /Higher Education, Vocational Education and Training, Adult Learning

Target beneficiaries:

-Students (researchers and young entrepreneurs)

-Teachers, Researchers and other Higher Education Staff

-Higher Education Institutions

-Policy Makers & Higher Education stakeholders

Geographical coverage:

EU and international

R&I activities/projects

-European Universities initiative:

osupport the development of new, joint and integrated, long term and sustainable strategies on education, research and innovation based on trans-disciplinary and cross-sectoral approaches to make the knowledge triangle a reality, providing impetus to economic growth;

ofoster the emergence of multidisciplinary and multilingual environments where students, lecturers, researchers and other public and private actors co-create and co-share knowledge and innovation, working together to address global societal challenges (for example: they could focus on SDGs or priorities of the Framework Programme).

-Further roll out of Higher Education for Smart Specialisation to advice public authorities to involve higher education institutions and to align their educational offer to the needs identified in smart specialisation strategies

Market uptake:

-Strategic Partnerships and Knowledge Alliances for the small-scale testing of research outcomes

Support to entrepreneurship & SME growth:

- Support for Innovation Partnerships through Knowledge Alliances

- Expanded use of HEInnnovate tool in making innovation and entrepreneurship a core part of overall institutional strategy

- Step-up support for University-Business Cooperation and Establishment of regional and national University-Business fora

R&I Infrastructure:

-Create a Europe-wide platform for digital higher education

Human capital development:

-European Universities initiative – educating students and researchers to be critical and reflective thinkers with solution-oriented analytical skills and ethical and intercultural awareness

-Erasmus research internships and Strategic Partnerships will encourage undergraduates and Masters students to be involved in research projects and develop their research and critical thinking skills 

Networking and policy making:

-Ensure dissemination of results from Policy Experimentation projects to common stakeholders and explore synergies between Erasmus-supported Peer Learning and Peer Counselling on funding of higher education and Research and Innovation supported Peer Review

Europe's high-level skills needs are addressed by both Horizon Europe and Erasmus through investments in the development of competences, inter-disciplinary, transferable and entrepreneurial skills in forward-looking fields or disciplines that are strategic for smart economic and social development (such as science, technology, engineering and mathematics, climate change, clean energy, artificial intelligence, robotics, data analysis, design, etc.). More specifically, Erasmus will continue to support mobility, cooperation and policy initiatives in the field of higher education, whereas Horizon Europe continues supporting the improvement of skills within funded projects and provides incentives for universities embracing open science.

Both programmes foster the integration of education and research through facilitating higher education institutions to formulate and set up common education, research and innovation strategies, to inform teaching with the latest findings and practices of research to offer active research experience to all students and higher education staff and in particular researchers, and to support other activities that integrate higher education, research and innovation.

Horizon Europe will complement the Erasmus programme's support for the European Universities initiative, in particular its research dimension, as part of developing new, joint and integrated long-term and sustainable strategies on education, research and innovation based on trans-disciplinary and cross-sectoral approaches to make the knowledge triangle a reality. This will provide impetus to economic growth.

At the level of postgraduate training, the Marie Skłodowska-Curie Actions (MSCA) under Horizon Europe will further strengthen the provision of transferable skills for researchers, including by transferring research results into teaching. The participation to MSCA projects' activities, in particular network-wide training, where relevant, of Erasmus students or staff and vice versa, will concretise synergies between research and education programmes.

Erasmus European Universities, Strategic Partnerships, Knowledge Alliances or Erasmus Mundus Joint Masters Degrees will support forward-looking skills and new curricula aligned with the objectives of the future EIT KICs and Horizon Europe’ Missions to create specific synergies. Encouraging undergraduates and Masters students to be involved in research and innovation projects and develop their research and critical thinking skills will continue to be a higher education priority supported through research internships and Strategic Partnerships under the future Erasmus programme.

The European Universities initiative will be a catalyst for human capital development, education, research and innovation activities and projects. The alliances will seek to address the big societal challenges and skills shortages that Europe faces, underpinned by higher education institutions which can seamlessly cooperate across borders. This will progressively increase the international competitiveness of European higher education institutions by:

·fostering development of new, joint and integrated, long term and sustainable strategies on education, research and innovation based on trans-disciplinary and cross-sectoral approaches to make the knowledge triangle a reality;

·driving educational and research innovation by making use of the most innovative teaching methods and digital technologies;

·creating new joint curricula based on forward looking skills and multidisciplinary approaches;

·attracting the best students, teachers and researchers across the world and acting as role models and mentors for other higher education institutions throughout Europe;

·fostering opportunities for students, teachers, researchers and other public and private actors to co-create knowledge and innovation together (e.g. working together to address global societal challenges, Sustainable Development Goals or priorities identified by the Framework Programme).

Box 6 Concrete example of how synergies could look like in practice

The Erasmus students could take part in the EIT/KICs courses and vice versa where the Erasmus activities will be easier to access for the beneficiaries of the Framework Programme.

12Synergies with the Neighbourhood, Development and International Cooperation Instrument

Table 13 EU Neighbourhood, Development and International Cooperation Instrument - Research and innovation related support

Sectors/Domains:

-Cross-cutting sectorial role covering all pillars of the Framework Programme (sustainable agriculture, food & nutrition security, natural resources & environment, migration, socio-economic development)

-2030 Agenda – Sustainable Development Goals

-Commitments under the Paris Agreement (2015)

Target beneficiaries:

-Public authorities

-Civil society

-Beneficiaries in procurement contracts

Geographic coverage:

-Geographic pillar of the External Instrument covering the Neighbourhood, Sub-Saharan Africa, Americas, Asia and Pacific and European non-EU member states, corresponds to global reach of the Framework Programme

Market uptake:

-Infrastructure projects

-Investment projects

Support to clusters, hubs and broader innovation ecosystem:

-Socio-economic development programmes including access to finance, capacity building and entrepreneurship programmes.

-Support to clusters, hubs and broader innovation ecosystem: Development of technology roadmaps

R&I Infrastructure:

-Laboratory and research facility benchmarking and development

Human capital development:

-Capacity building for researchers as well as

-Education

-Researcher/expert mobility

Networking and policy making:

-EU representation in international for a and organisations including at regtional level (e.g. the Union for the Mediterranean)

The Neighbourhood, Development and International Cooperation Instrument groups together several existing external instruments 108 under the current MFF in addition to the European Development Fund, which is brought under the EU budget. This new design will address at least in part some of the present fragmentation in external instruments and favour complementarities and synergies, particularly at implementation stage, between detailed external programmes and the Horizon Europe. Synergies will ensure that Horizon Europe activities with the participation of Third Countries and targeted international cooperation actions seek alignment and coherence with parallel market uptake and capacity-building actions under the Instrument.

There are inherent complementarities between Horizon Europe and the Neighbourhood, Development and International Cooperation Instrument, for example in so far as they both contribute towards the EU's international commitments such as the 2030 Agenda for Sustainable Development 109 , the Paris Agreement on Climate Change 110 , or the renewed EU-Africa Partnership 111 among others.

The overall objectives of the Neighbourhood, Development and International Cooperation Instrument will focus on supporting sustainable economic, social and environmental development, reducing global poverty, maintaining a special relationship with neighbourhood countries and addressing global challenges.

Targeted international cooperation actions will be mainly implemented through the Framework Programme's call topics dedicated to international cooperation. This will pursue the trend of the final years in Horizon 2020 flagship initiatives as a means to lever international cooperation. In addition European Partnerships are also expected to play an important role in structuring cooperation with Third Countries. These comprise both co-programming and co-funding activities. Where relevant, the Framework Programme's partnerships with the participation of Third Countries should seek alignment and coherence with parallel capacity building strands within the Instrument, based on common defined priorities. 

Box 7 Concrete example of how synergies could look like in practice

·The Neighbourhood, Development and International Cooperation Instrument develops research capability and supports the role of academia and evidence-based policy making in third countries. Capacity building takes place at individual level, for example through brain circulation and training; at organisational level (laboratories, building research departments) and institutional (by developing good governance, regulatory environments and incentive schemes).

·The EU-African Union partnership will develop a joint research and innovation programme on renewable energy to adapt renewable energy technologies to the African environment, social and economic conditions through joint research efforts. Subsequently market take-up and scaling of technologies and solutions developed could be undertaken by the External Instrument in African markets.

·As part of the external dimension of internal EU policies, opening trade and cooperation in other policy areas including migration and visas are also key contributors for establishing framework conditions for innovation and the penetration of technologies developed in the EU in world markets.

13Synergies with the European Space Programme

Space technologies, data and services can support numerous EU policies and key political priorities, including the competitiveness of our economy, migration, climate change, the Digital Single Market and sustainable management of natural resources. Space is also of strategic importance for Europe. It reinforces Europe’s role as a stronger global player and is an asset for its security and defence. Space policy can help boost jobs, growth and investments in Europe. Investing in space pushes the boundaries of science and research. Europe has a world-class space sector, with a strong satellite manufacturing industry, which captures around 33 % of the open world markets, and a dynamic downstream services sector with a large number of SMEs. The European space economy, including manufacturing and services, employs over 230 000 professionals and its value was estimated at EUR 46-54 billion in 2014, representing around 21% of the value of the global space sector .

The Union has made a strong political commitment with the Space Strategy for Europe, supplemented by an ambitious space agenda welcomed by the Council and European Parliament which provided further political orientations. The Space Strategy focuses on four strategic objectives: (1) Maximising the benefits of space for Europe’ society and economy; (2) Fostering a globally competitive and innovative European space sector; (3) Reinforcing Europe’s autonomy in accessing and using space in a secure and safe environment; (4) Strengthening Europe’s role as a global actor and promoting international cooperation.

Europe needs to maintain and further strengthen its world-class capacity to conceive, develop, launch, operate and exploit space systems. To ensure this, there is need to support the competitiveness of the whole supply chain and actors from industry to research organisations. There is also need to foster the emergence of an entrepreneurial ecosystem, opening up new sources of financing, creating new business opportunities, and making sure this will benefit businesses in all Member States.

Coherence and synergies between the space programme and Horizon Europe will be instrumental for the delivery of solutions to the aforementioned challenges. Space research shall be an integral part of the Global Challenges pillar of Horizon Europe, with research and innovation needs of space sector identified and established as part of the programme's strategic planning process. Space data and services made available by the Union space programmes will be used to develop breakthrough solutions. Horizon Europe will also be instrumental to foster the space entrepreneurial innovation ecosystem through the Open Innovation pillar and to push the frontiers of space science through the Open Science pillar. Space data and services made available through the European Space Programme can be used to develop breakthrough solutions through research and innovation, including in Horizon Europe, while Copernicus Data and Information Access services will contribute to the European Open Science Cloud and thus facilitate access to this data.

Box 8 Concrete example of how synergies could look like in practice

·Space data and services made available as a public good by the Union Space Programme will be used to develop breakthrough solutions through research and innovation, in particular for sustainable food and natural resources, climate monitoring, smart cities, automated vehicles or disaster management.

·The Copernicus Data and Information Access Services contribute to the European Open Science Cloud and thus facilitate access to Copernicus data for researchers and scientists.

·Horizon Europe will underpin the evolution of the Union Space Programme systems and services as well as the competitiveness of the space sector, notably with regard to sustainability of supply chains, non-dependence and access to space.

·Technology transfer from the space ecosystem can enable multidisciplinary innovation and entrepreneurship.

·The space innovation ecosystem will be fostered by the open innovation pillar of Horizon Europe through a mechanism for pipelines of projects emerging from the implementation of the Space Programme.

·Research infrastructures, in particular in situ observing networks constitute essential elements of the in situ observation infrastructure enabling the Copernicus services. In turn, they benefit from information produced by Copernicus services. 

14Synergies with the Innovation Fund under the EU Emissions Trading System

Table 14 Innovation Fund under the EU Emission Trading System - Research and innovation related support

Sectors/Domains:

-Innovative low-carbon technologies in energy intensive industries in Annex I of the ETS Directive, energy storage, CCS and innovative renewable energy technologies

Target beneficiaries:

-Enterprises and their grouping

Geographical coverage:

-EU

R&I activities/projects:

-Can support projects as of TRL 6-9

Market uptake:

-Demonstrations & first-of-a-kind commercial scale projects

The Innovation Fund is established by the revised EU Emissions Trading System (ETS) Directive and will support innovation in low-carbon technologies and processes, including environmentally safe carbon capture and utilisation (CCU) that contributes substantially to mitigate climate change, as well as products substituting carbon intensive ones, and to help stimulate the construction and operation of projects that aim at the environmentally safe capture and geological storage of CO2 (CCS) as well as innovative renewable energy and energy storage technologies.

The EU ETS Directive already sets the frame of the support. For example, projects shall have the potential for widespread application or for significantly lowering the costs of transitioning towards a low-carbon economy for the sectors concerned; technologies receiving support shall not yet be commercially available, but shall represent breakthrough solutions or be sufficiently mature to be ready for demonstration at pre-commercial scale; projects shall be selected in geographically balanced locations within the territory of the Union, etc.

Horizon Europe (and the R&I window of InvestEU Fund) will support research and technology development and innovation in the EU decarbonisation, energy and industrial transformation, especially under pillar 2. However, the need for public financing to overcome the “valley of death” of low-carbon technologies at high TRLs is significant. The Innovation Fund may, subject to fulfilment of its selection and award criteria, support the demonstration phase of eligible projects that may have received the support from the Horizon Europe or its predecessor programmes. Synergies will be sought in governance cooperation and alignment of funding conditions where possible.



Box 9 Concrete example of how synergies could look like in practice

·Potential Innovation Fund’s support provided via financial instruments could be channelled via the EU Invest R&I window, if possible and relevant, subject to meeting the provisions of the ETS Directive.

·Further synergies will be sought in governance cooperation, aiming at coordinated approach vis-à-vis final beneficiaries.

15Relevant studies

·From Rivalry to Synergy: R&I Policy and Cohesion Policy. European Commission, DG Regional and Urban Policy, February 2018.

·In-Depth Staff Working Document for Horizon 2020 Interim Evaluation, SWD(2017) 221 final, May 2017. See in particular section 9.2: "To what extent is Horizon 2020 coherent with other EU initiatives?"

·Issue Papers for the High Level Group on maximising the impact of EU research and innovation programmes. European Commission, DG Research and Innovation, February 2017 112 .

·Synergies between Framework Programmes for Research and Innovation and European Structural and Investment Funds – Contributing to the Interim Evaluation of Horizon 2020 Final Report.

·DG Research and Innovation and Joint Institute for Innovation Policy, 2017.

·EU Funds Working Together for Jobs and Growth: Synergies between the R&I Framework Programmes and the European Structural and Investment Funds. European Commission, DG Research and Innovation, 2016.

·Enabling Synergies between European Structural and Investment Funds, Horizon 2020 and other research, innovation and competitiveness-related Union programmes – Guidance for policymakers and implementing bodies. European Commission, DG Regional and Urban Policy, 2014.

·Maximisation of Synergies between European Structural and Investment Funds and Other EU Instruments to Attain Europe 2020 Goals. European Parliament, REGI Committee, 2016.

·European Parliament Resolution of 6 July 2016 "Synergies for innovation: the European Structural and Investment Funds, Horizon 2020 and other European innovation funds and EU programmes"

·Synergies between EU R&I Funding Programmes: Policy Suggestions from the Launching of the Stairway to Excellence. Joint Research Centre Technical Report, 2014.



Annex 8 Detailed information on key improvements in the design of Horizon Europe

1European Innovation Council (EIC)

1.1Why do we need an EIC and why should this be done at EU level?

The EU innovation ecosystem generates as many start-ups as the US in number but only a few of them grow-up rapidly 113 . This is even truer for start-ups carrying out breakthrough innovation 114 and for the science-based 115 ones (“deep tech”) 116 . The fact that the next wave of breakthrough innovation will be science-based calls for immediate action.

Breakthrough innovation that creates new markets and, therefore, growth and jobs, is too rare in Europe. This is due to a range of factors, including lack of venture capital (VC), deep-rooted aversion to risk that builds also on fragmentation of the internal market and regulatory barriers and lack of transfer of new technologies from the research base to the market. The EIB estimates that the total equity funding gap in Europe is EUR 70 billion, of which 85% is represented by the first valley of death 117 .

There is market-based evidence emerging from InnovFin Advisory studies 118 that there is a particularly acute funding gap and need for “patient capital” for so called “deep tech” companies (such as Key Enabling Technologies, Life Science and semiconductor and photonics). These companies are characterised by high capital intensity, high technology risk, and long development periods. The combination of these factors make the investment proposition of “deep tech” companies less appealing from a risk/return prospective than companies such as ICT/digital (which mainly assume product and execution risk).



Figure 16 Equity funding in the EU: gap of EUR 70 billion in the SMEs and mid-caps space (up to 3,000 FTEs)

Source: Deloitte, July 2016

High-growth potential firms, which receive public funding in the form of equity, contribute to job creation and growth. The employment growth rate varies from 50% to 145% and turnover from 125 and 800% 119 . Evidence shows that innovative firms not only grow twice as much as their non-innovative counterparts in terms of employment but also "faster growing firms continue to innovate providing impulses to rejuvenate the economy" 120 . This may be due to their absorptive/learning capacity and intensive R&I activities 121 .EU support to breakthrough innovators needs to evolve towards an agile, seamless and tailor-made approach. Current EU support to breakthrough innovators remains fragmented, complex and does not attract the most innovative companies. It is often described as complex to navigate, too prescriptive, uncoordinated, involving many rules, inflexible projects, forms of funding and management designed for classical R&D projects, not fitting with innovators needs (“one size fits all approach”), etc. Moreover, current EU programmes do not address in a seamless way the required tailor-made support to science/technology leading to breakthrough innovation and scaling up.

Challenges

Europe lacks venture capital for companies to scale-up fast.

The ample supply of venture investment helps US companies to turn market-creating innovations into world-leading companies, while Europe's innovators struggle to access risk finance above the €10 million range. 122 The supply of flexible, agile funding, such as via blended finance (combining grants with loans or equity), or through crowdfunding, is insufficient. This hampers young innovative companies (‘yollies’) to scale up to ‘Unicorns’ 123 . 'Unicorns’ are young companies reaching a market valuation of $ 1 billion. Europe has 26, China has 59, and the US has 109. Per capita, Europe has 7 times fewer unicorns than the US.

Lack of financial resources is the main challenge that EU companies face when commercialising their innovative goods and services 124 . Two-thirds of VC investments in Europe are in the home country of the investor only 125 . Consequently many European start-ups move to the US: US companies enjoy 14 times more later-stage capital than their European counterparts do 126 . The European stock markets provide insufficient help. In 2012-2016, the average European venture capital exit via Initial Public Offering was nearly $70 million versus $220 million for the US 127 .

Access to finance for young high growth innovative enterprises needs to be improved

The data on new lending to SMEs shows that of the 25 countries that provided data for 2016, growth in new SME loans was negative in 15 of them, sometimes substantially. In the Czech Republic and Denmark, SME loan growth turned negative in 2016 following positive growth in the previous year. Austria, Luxembourg, Portugal and Slovenia witnessed a bigger decline in 2016 than in 2015. In only a minority of instances, growth rates turned positive or strengthened 128 .

In fact, most SMEs, including new, innovative and fast-growing firms, remain heavily reliant on internal resources and traditional bank debt. The lack of appropriate forms of finance, especially of the equity-type, stands in contrast with large businesses, and is limiting entry, long-term investment, expansion and innovation 129 .

According to an EIB study, a significant proportion of KETs companies, including innovation leaders with a documented solid growth, find it hard to raise the capital needed to expand. Thus, while there is evidence that high-growth innovative firms can be catalysts for aggregate economic growth, their capacity to grow is highly dependent on the access to financial resources 130 . Almost 30 per cent of the KETs companies fail to obtain adequate debt financing. KETs companies (about 50 per cent) find themselves severely struggling to obtain the finance needed to generate further growth and innovation 131 .

Europe has a shortage of risk capital for small, early-stage growing businesses. This is holding back the development of high-growth sectors such as technology, which are essential for economic competitiveness. While sources of capital such as crowdfunding and business angels are becoming more accessible, the EU is still at a significant disadvantage to the US 132 .

Europe needs high growth companies to create new jobs

Among the 23 million European SMEs, only a fraction are high growth companies quick to grow, invest, create jobs and become leaders in their respective markets. "With more equity investment, more businesses could survive and potentially create new jobs. But start-ups, scale-ups and high growth companies respectively need seed, early-stage and expansion capital to reach their objectives" 133 .

Europe is associated with a deep-rooted aversion to risk

Europe is associated with 'a deep-rooted aversion to risk' and a low entrepreneurial spirit compared to the US, China and Korea 134 . In Europe—like most of the world—failure in business can be a stigma, inhibiting an entrepreneur’s ability to secure new investors. Relatively few European start-ups (compared to Silicon Valley) set aggressive goals or start with the idea of changing an industry or the world, instead targeting niche growth in their home markets'.

European financial intermediaries (e.g. banks) are also risk averse when confronted to high risk projects. Banks appear to have become more risk averse compared to the pre-crisis period, to the detriment of innovative companies, young firms and start-ups 135 . For instance, under the InnovFin actions in Horizon 2020, the European Commission had to provide 100% guarantee for products such as Energy Demo Projects (EDP) and Infectious Diseases Finance Facility (IDFF) to get the intermediaries on-board to provide loans.

Europe lacks transfer of new technologies from the research base to the market

According to the 2016 Eurobarometer 136 , around two thirds of European manufacturing companies have not recently used any advanced technologies and this proportion has increased considerably since the 2015 survey. At the same time, significant resources have been devoted over recent years by the US and Asian economies toward the development and deployment of key enabling technologies such as ICT, nanotech and biotech in such companies. The results can be seen in the ICT industry world-wide. Most of the biggest R&D intensive ICT companies are in US or Asia and many of them are young. 137  

European innovators cannot exploit the scale of the Union and face regulatory complexity

In Europe, innovators and companies with international growth potential have to cope with 28 national markets with their diverse currencies, languages and business cultures. 138 Such fragmentation also applies to the innovation ecosystem. While Europe is home to a growing number of hotspots (London, Berlin, Paris, Stockholm and Amsterdam now figure in the top-20 world-wide start-up ecosystems 139 ), these are not well connected 140 . Also, regulations can hinder company growth 141 , especially the 'maze of regulatory regimes' in Europe. 142 Consequently, European start-ups tend to move to the more homogeneous US market. 143

Current EU support is not optimal for breakthrough innovation

Horizon 2020 is the first European programme to support innovation next to research, but few of the young and quickly growing innovative companies take part. The current support is seen as too complex and the multitude of acronyms discourages them to apply. EU support has tended to focus on incremental innovation and prescribed thematic topics that often do not correspond to modern innovation taking place at the intersection between different sectors and dsiciplines.

Tackling these challenges at the EU level allows:

§To pool resources and unleash the potential of European and global markets for EU innovators. Scaling up to exploit the European market is the first step towards international growth. Only the EU as a whole has the capacity to tackle persistent lack of large-scale high-risk venture capital. EU support can be bigger in size and more comprehensive (e.g. common regulation) compared to national or regional support.

§To encourage risk taking and increase the quality of innovations through EU-wide competition between the best. This will provide Europe’s best innovators with resources they need to allow them to scale up and compete better at global level. Operating across Europe on a competitive basis will allow to draw on a wider pool of talents and ideas than would be possible through national schemes. Only the most risky and most breakthrough ideas will compete against each other.

§To create synergies across Europe (and beyond) by stimulating cross-border cooperation mainly through networks 144 . European support for innovation creates synergies with related regional and national programmes, agencies and financial intermediaries. For instance, tackling the problem of slow industrial transformation at the EU level provides the critical mass and the networks needed to develop and take up key enabling technologies by manufacturing companies and their supply chains 145 .

What do we have now in Horizon 2020?

 SME Instrument provides EUR 500 million per year in grants to SMEs for investigation of technical and commercial feasibility of a business idea and development of innovation with demonstration and scale-up purposes (TRL 6).

 Fast Track to Innovation provides EUR 100 million in grants to consortia of partners from different countries with innovation projects addressing any technology or societal challenge field. It aims to reduce time from idea to market and to stimulate the participation of first-time applications to EU research and innovation funding.

 Future and Enabling Technologies (FET) provides EUR 200 million per year in grants to collaborative research. It aims to stimulate bottom-up small scale explorations (FET-Open), build up a critical mass around promising directions (FET-Proactive) and fund large scale interventions that require a common European effort over a longer period to pursue grand challenges in science and technology (FET Flagships, such as Graphene and the Human Brain Project).

 InnovFin actions provide EUR 400 million per year in loans to single beneficiaries for investment in research and innovation, guarantees to financial intermediaries making loans to beneficiaries and combinations of loans and guarantees, guarantees or counter- guarantees for national, regional and local debt-financing schemes, venture and/or mezzanine capital to individual enterprises in the early stage (start-up window).

EU awards challenge prizes to innovators who develop a new solution for a highly demanding challenge, such as the battery of the future with advanced specifications. These prizes are open to any bids and can attract both incumbents and newcomers. They are top-down in defining the challenge, but encourage bottom-up new approaches.

Public procurement of innovative solutions (PPI) are grants for establishment of networks of public procurers to prepare for launching PPI as well as direct financing of consortia of public procurers to undertake PPI procurement.

Pre-commercial procurement (PCP) are grants to consortia of public procurers to buy R&D from several competing suppliers in parallel to compare alternative solution approaches and identify the best value for money solutions that the market can deliver to address their needs.

What have we learned from Horizon 2020 Interim Evaluation?

Horizon 2020's Interim Evaluation identified that the Framework programme has a potential for supporting breakthrough, market-creating innovation, but noted that such support must be considerably strengthened in the future.

In particular, Horizon 2020 Interim Evaluation assessed the programme lacks connection between grant and loan based financing for companies. Horizon 2020 invests EUR 400 million per year in risk financing through European Investment Bank (InnovFin) but only a small number of firms receiving Horizon 2020 grants benefit from such financial instruments.

 Similarly, Horizon 2020 invests EUR 500 million per year in the SME Instrument. The Interim Evaluation assessed that the scheme is on track to deliver innovations to the market by providing grant based funding and business acceleration services to SMEs. However, there is also scope for improvement such as the need to scale up companies and the need for more interaction with business angels and Venture Capitalists.

The Communication on the Interim Evaluation notes that the future Framework Programme should provide support faster and more flexibly and build on the current achievements in innovation support through the SME Instrument, collaborative projects and public-private partnerships.

Horizon 2020 supports scientific excellence in Europe and has contributed to high-profile scientific breakthroughs. But there is a need to raise the breakthrough market-creating innovations, which is vital for future growth and jobs. This is not about switching budget from fundamental research to innovation, but about generating more impact from innovation funding. The increasing impact could build on key ingredients in the success of the European Research Council, for example building a prestigious brand focused around excellence, with a strong bottom-up emphasis.

What do stakeholders say?

·The Lamy High Level Group 146 called for a 'true EU innovation policy that creates future markets' and proposes that the impact of the EU programme is maximised by fostering ecosystems for research, innovators, industries and governments, and by investing in innovative ideas with rapid scale-up potential. The group notes that an ambitious European Innovation Council should be a central pillar in the next EU research and innovation programme. It also recommends (#4 Design the EU R&I programme for greater impact) that the EIC design new proposal evaluation and selection processes to better capture high-risk, high-return projects, introduces greater flexibility in grant management (stop-go decisions) and tolerates failure.

·The High Level Group of Innovators, advising the Commission on innovation , developed a set of recommendations to support single innovators turning disruptive/breakthrough science and technology into market-creating innovations 147 :

­Funding: empower the innovator, simplify, incentivise private investment,

­Awareness: champion innovators, communicate success,

­Scale: build the camp, leverage European ecosystems,

­Talent: connect people, create prestige for innovators.

·The Commission engaged in a dialogue with a variety of other stakeholders to gain more insight on options for EIC. A consultation process was organised with national innovation agencies 148  as well as the wider innovation community through a 'Call for ideas' 149 and cluster consultation. In their feedback through the position papers, stakeholders called for:

­European Innovation Council that increases synergies and acts as Europ