Executive Summary Sheet

Impact assessment of a potential institutionalised European partnership on key digital technologies

A. Need for action

What is the problem and why is it a problem at EU level?

‘Key digital technologies’ (KDTs) are electronic components and systems that underpin all digital products and services. They are viewed as key because they are the basic building blocks of digital systems.

If the EU does not maintain its leadership in electronic components and systems, it risks losing its strong market position in sectors such as automotive, healthcare, industrial manufacturing, aerospace and security.

It also risks being a follower in emerging paradigms and technologies, such as artificial intelligence (AI) and edge computing, and associated markets which are creating demand for electronic components and systems that will need to exhibit levels of performance that differ from those available today.

A major problem the EU would face is security of supply of trusted, safe and secure component technologies for critical infrastructures and industrial sectors that are vital for the economy.

The non‑alignment of these KDTs with the EU’s political priorities would deprive it of a major instrument for leveraging the digital transformation in addressing its societal and environmental goals.

What should be achieved?

An R&I effort of sufficient scale and with a sufficient degree of coordination to assemble a critical mass of resources, organise multiple competences and interests, and direct them towards a common agenda with the following goals to be achieved by 2030:

1.Reinforce the EU’s technology sovereignty in electronic components and systems to support future needs of ‘vertical’ industries and the economy at large

Ensure that the EU stays at the forefront of technology in advanced electronic components and systems contributing to resilient strategic value chains. This will be increasingly critical as digital transformation unfolds and digital technologies become more pervasive across sectors.

Greater sovereignty should translate into a doubling in the value of the design and production of electronic components and systems in the EU by 2030, in line with its weight in products and services in general.

2.Establish EU scientific excellence and innovation leadership in emerging components and systems technologies

Further miniaturisation towards physical limits, the rapid penetration of AI, and the emergence of edge computing and alternative computing paradigms open new opportunities for electronics components and systems and their applications. A solid scientific base in emerging areas can enable the EU to seize such opportunities. SMEs and start-ups active in emerging technologies can benefit from and help shape new ecosystems.

SMEs should account for least a third of the total number of participants in a KDT initiative and receive at least 20% of public funding.

3.Ensure that components and systems technologies address the EU’s societal and environmental challenges

EU and national public authorities would play an essential role in a coordinated initiative ensuring its alignment with political priorities. Electronic components and systems technologies should provide the right levels of trust and privacy, and contribute to EU environmental objectives.

The initiative would target a reduction in energy consumption of 32.5% by 2030 1 .

What is the value added of action at the EU level (subsidiarity)? 

Electronic components and systems underpin industrial value chains that have significant social and economic impact across Europe.

The fast pace of technological progress in the industry, coupled with the fact that the United States and Asian countries are investing massively in order to be at the cutting edge and to minimise their dependencies on other regions, demands a coordinated response at EU level.

No single country or organisation would be able to deliver on the above objectives. Only mobilisation at EU level, involving Member States and industry, will ensure the necessary strategic approach and critical mass of resources, competences and interests.

B. Solutions

What are the various options to achieve the objectives? Is there a preferred option or not? If not, why?

The following options were considered as means to support R&I:

·traditional calls under the framework programme (baseline option);

·a co-programmed European partnership (option 1); and

·an institutionalised European partnership under Article 187 TFEU (option 3).

An institutionalised European partnership is the preferred option, as it would ensure that the wider electronic components and systems industry takes an active role in setting the R&I agenda, together with public authorities (at EU and national levels), to meet the above-mentioned goals. It would enable sustainable commitment from the partnership members over an agreed 7-year programme and provide a stable structure for efficient implementation and for coordination with related initiatives. Interaction would be sought in particular with digital-centric partnerships (e.g. photonics, EuroHPC, SNS, AI, data and robotics) and application areas (health, automotive, manufacturing, space).

The assessment found that this option provides the most ‘directionality’ (ensuring alignment with an R&I agenda) and ‘additionality’ (securing leveraging effects).

What are different stakeholders’ views? Who supports which option?

When Member States were consulted on Horizon Europe partnerships, 96% considered a partnership on KDT relevant for their national policies and priorities, and for their industry, research organisation and universities.

In the open public consultation, 82% of respondents indicated that a KDT initiative would be relevant or very relevant for securing access to trusted components and systems. In particular, this view was supported by industry associations, universities, RTOs, Member States and large companies.

Many respondents (over 40%) found the institutionalised partnership the most suitable option. This represents a balanced cross‑section of industry (large firms and SMEs), research organisations and Member States. Stakeholders interviewed for the study supporting the impact assessment also strongly backed this option.

Minority views (e.g. from research organisations) indicated that this option carried a risk of greater complexity. However, the harmonisation and simplification of procedures and practices are addressed in the proposed initiative.

C. Impacts of the preferred option

What are the benefits of the preferred option (if any, otherwise of main ones)? 

A partnership based on Article 187 TFEU could:

·support an EU strategic R&I agenda (SRIA) on electronic components and systems technologies, aligning EU, participating states’ and industry priorities to achieve a critical mass;

·count on upfront contribution commitments from public (EU and national) and private members in the partnership;

·provide a centrally managed structure that supports the long-term engagement of private members for the implementation of an ambitious programme; and

·deliver a high leverage of 1:3 combining EU financing with contributions from Member States and industry (€1 from the EU, €1 from participating states, €2 from private members), for the mobilisation of a critical mass of R&I resources.

What are the costs of the preferred option (if any, otherwise of main ones)? 

As a future KDT initiative would adopt the current ECSEL structure, the cost of implementing the preferred option is the running cost of a joint undertaking office for the period of the initiative. This cost is largely offset by the benefits mentioned above, in particular the leverage effects of co-financing to reach the scale of resources necessary to address the ambitious goals. The ECSEL joint undertaking would be adapted to the KDT partnership and overall implementation costs would remain the same.

What are the impacts on SMEs and competitiveness?

One recommendation from the interim assessment of ECSEL is to stimulate more active involvement by SMEs. The focus on emerging technologies and the objective of building design capacity (areas in which SMEs are particularly active) is likely to attract a higher number of small companies to the initiative in more relevant roles. Specific activities are envisaged (e.g. technology access and experimentation) to involve small suppliers and users in the ecosystem.

Will there be significant impacts on national budgets and administrations? 

The KDT partnership is based on a tri-partite model (Commission, Member States and industry) with financial contributions and administrative involvement from participating states (Member States and associated countries). This model is currently used successfully in the ECSEL joint undertaking.

Will there be other significant impacts? 

In the development and adoption of electronics components and systems technologies, fundamental rights will be taken into account, in particular citizens’ safety, security and privacy.

Proportionality? 

The preferred option provides all the elements to achieve the objectives and does not go beyond what is necessary.

D. Follow‑up

When will the policy be reviewed?

The partnership will be reviewed regularly at project, technology/sector and programme levels. A mid‑term evaluation by an independent panel of experts is planned after 3 years of operation. Regular evaluations will assess progress with respect to the initiative’s objectives, expected impacts and contribution to EU policy priorities.

Executive Summary Sheet (Max 2 pages)

Impact assessment on a potential institutionalised European partnership on smart networks and services 1

A. Need for action

What is the problem and why is it a problem at EU level?

The European networks and services industry is facing industrial competitiveness and technology sovereignty challenges with regard to the deployment of 5G infrastructures as a basis for digital lead markets, and research and innovation on 6G systems. Problems include:

·Europe’s inability to exploit the full potential of the digitalisation of the economy;

·limited technological sovereignty as regards critical technologies of smart network and service value chains, in particular due to ever‑increasing global competition for European suppliers;

·slow deployment of infrastructure platforms for digital lead markets; and

·limited interest in addressing societal issues such as climate change through digital solutions.

The main problem drivers are:

û5G’s insufficient capabilities to respond to advanced communication and computing requirements;

ûthe insufficient presence of EU actors in global digital value chains;

ûthe lack of integration of EU value chains;

ûthe slow development of 5G;

ûthe need for cybersecurity, ethics and privacy; and

ûthe lack of energy efficiency.

The above issues are expected to lead to limited technological sovereignty as regards critical technologies of smart networks and services value chains, a lack of infrastructure platforms for innovation and a risk of lagging behind in research on 6G-based networks and services.

What should be achieved?

The goal is to ensure technological sovereignty as regards smart networks and services value chains. In this context, the aim is to enable European players to develop the R&I capacities for 6G technologies as a basis for future digital services in the period to 2030. The initiative also aims to foster the development of lead markets for 5G infrastructure and services in Europe. Both set of activities (for 5G infrastructure deployment and 6G R&I) will foster the alignment of future smart networks and services with EU policy and societal needs, including energy efficiency, privacy, ethics and cybersecurity.

What is the value added of action at the EU level (subsidiarity)? 

This partnership will address cross-border/transnational challenges, the pooling of resources, strategic roadmaps, the need for critical mass to meet policy objectives and the need to coordinate different actors across different sectors of the digital economy, which cannot be tackled as effectively by Member States acting alone, in particular as regards R&I on 6G systems.

B. Solutions

What are the various options to achieve the objectives? Is there a preferred option or not? If not, why?

The options are as follows:

·baseline option — traditional calls under the framework programme;

·option 1 — co-programmed European partnership;

·option 2 — institutionalised European partnership.

The preferred option is option 2, which is likely to have the biggest scientific, economic and societal impact and greater coherence, although it is the most costly and complex.

What are different stakeholders’ views? Who supports which option?

Stakeholders have recognised the importance of a partnership approach for Europe’s future networks and services ecosystem across digital value chains. The consultation indicated a preference for a co‑programmed or an institutionalised partnership, but many respondents, including the key players, also stressed that they are open to both models, depending on a number of administrative and legal factors.

C. Impacts of the preferred option

What are the benefits of the preferred option (if any, otherwise of main ones)?

The benefits are clearly maximised under the institutionalised partnership option (option 2) which would:

1.    be more effective, especially in terms of economic, technological and societal impacts, by securing stronger stakeholder commitment and contributing to regulation and standardisation activities, and to public policies including technological sovereignty and ‘green deal’ objectives;

2.    improve external coherence by effective outreach to other initiatives and a clear mandate to establish synergies with EU, national and regional programmes, in particular for deployment; and

3.    offer very good overall efficiency, despite additional costs.

What are the costs of the preferred option (if any, otherwise of main ones)?

The costs relate to the establishment of a joint undertaking and its operation.

What are the impacts on SMEs and competitiveness?

EU companies in the field of networking, cloud computing and the ‘internet of things’ will benefit most, as will companies in ‘vertical’ industries. The initiative should also help them to maximise the effectiveness of R&D investments and speed up the development process, which would improve their competitiveness. EU SMEs and micro-enterprises in the field will experience direct and indirect economic benefits. The partnership will not impose regulatory obligations on them; rather, it will open up opportunities in terms of cost reduction for the design of new products and help them gain easier access to investment to deploy marketable solutions at EU scale.

Will there be significant impacts on national budgets and administrations? 

The impact on national budgets and administration will be limited to governance participation.

Will there be other significant impacts? 

There will be positive impacts on competitiveness, global standardisation and related trade and investment.

Proportionality? 

The preferred option does not exceed what is necessary to solve the original problem.

D. Follow up

When will the policy be reviewed?

The partnership will be reviewed in line with the standard Horizon Europe policy on reviewing partnerships, probably involving annual key performance indicator (KPI) reviews and in‑depth review at mid-term and towards the end of Horizon Europe.

Executive Summary Sheet (Max 2 pages)

Impact assessment on a European partnership for transforming Europe’s rail system

A. Need for action

What is the problem and why is it a problem at EU level?

The problem to be addressed is the failure of the rail industry to develop a common vision for change by allowing for the rapid utilisation of modern technologies (especially digitalisation and automation) to deliver a fully interoperable flexible and cost-efficient rail system.

The drivers are:

·fragmentation of the industry – the effective use of most innovations in a very complex system requires coordination between Member States, between infrastructure and rolling stock, and between developers of different subsystems;

·a need for coherence between R&I and standardisation/regulation;

·limited and uncoordinated participation in R&I;

·high R&I costs, risks and lead-time; and

·insufficient alignment.

The consequences, which affect all stakeholders along the value chain, are that the rail sector:

ûmakes a limited contribution to a more sustainable transport system;

ûis dependent on bespoke products, which are expensive and inflexible in operation; and

ûis less competitive vis-à-vis other modes of transport.

What should be achieved?

The main objectives are: 

Øto modernise rail in Europe so that it can increase its market share;

Øto support rail freight in order to reduce greenhouse gas emissions from transport; and

Øto advance the completion of a single European railway area by delivering on an integrated and sustainable rail system taking full advantage of digitalisation and automation.

In turn, this would enhance the rail industry’s contribution to societal development in the EU, increasing the capability and capacity of rail freight, and ensure that rail-related R&I is based on a user-centric approach better attuned to market needs.

What is the value added of action at the EU level (subsidiarity)? 

A common European strategy for rail-related R&I would help ensure a more coordinated, market-focused approach capable of bringing stakeholders together to deliver on a common overall vision. This would enable the rail industry to meet European transport and broader policy objectives, increasing the attractiveness of rail transport in comparison to other modes.

B. Solutions

What are the various options to achieve the objectives? Is there a preferred option or not? If not, why?

The options are to support rail R&I through:

·traditional Horizon Europe calls;

·a co-programmed partnership; or

·an institutionalised partnership under Article 187 TFEU.

The institutionalised partnership is the preferred option, since it is the only one that provides a platform for the common development of R&I serving a coherent overall vision. It is also best at providing a long-term strategy and commitment from industry and the EU. It has proved its value in the current S2R joint undertaking. The stability of this option and the legally binding commitments from the EU and industry partners would be key to involving stakeholders in the aftermath of the Covid-19 outbreak and its expected economic impacts, which could include cuts in the sector R&I investment.

What are different stakeholders’ views? Who supports which option?

Over 65% of respondents indicated that institutionalised partnerships were the most appropriate way of addressing rail challenges and transforming the European rail system. In particular, they cited the entire product development cycle, long‑term commitment and market uptake.

C. Impacts of the preferred option

What are the benefits of the preferred option (if any, otherwise of main ones)?

An institutionalised partnership is the best way of ensuring that the private and public sectors remain fully engaged in the development and implementation of a long-term strategy for rail R&I, while encouraging broad participation from key stakeholders. This option ensures substantial scientific, economic, technological and societal impacts, e.g. market uptake of innovative solutions and emissions reductions. Also, it will leverage industrial financial and in-kind resources to maximise the impact of Commission funding.

What are the costs of the preferred option (if any, otherwise of main ones)?

The S2R joint undertaking costs €3.5 million (€1.6 million administrative + €1.9 million staff costs) per year of operation. Its total running costs cannot exceed €27 million (50% from the EU; 50% from other members). These baseline costs should be adapted on the basis of the ambition, programme and budget of the Transforming Europe’s Rail System candidate partnership.

What are the impacts on SMEs and competitiveness?

Wide stakeholder participation and the creation of networks linking universities and research-based organisations under the coordination of the future partnership would foster greater involvement by SMEs, who have the flexibility to develop innovations and bring them to market relatively rapidly.

An institutionalised partnership would have a significant impact on the competitiveness of both the rail transport industry and the rail supply industry. It would ensure that a high proportion of R&I outputs would be taken up by the market.

Will there be significant impacts on national budgets and administrations? 

An institutionalised partnership would be able to simplify the administration relating to the members’ participation in the R&I activities. It could ensure alignment between developing national rail R&I programmes and thus better overall use of public resources.

Will there be other significant impacts? 

The initiative would:

üstrengthen significantly the rights of EU citizens through a greater emphasis on the integration of national, regional and local rail systems with other modes; and

üenable effective dialogue between those engaged in R&I activity and those responsible for rail policy and regulation at international and national level (including international standards bodies).

Proportionality? 

An institutionalised partnership would ensure that the private and public sectors remain fully engaged in the development and implementation of a long-term strategy for rail R&I, and leverage industrial financial and in-kind resources to maximise the impact of Commission funding and deliver on the ‘green deal’ priorities. Therefore, the preferred option does not exceed what is necessary to solve the original problem and meet the objectives of the initiative.

D. Follow up

When will the policy be reviewed?

An interim evaluation of the proposed institutionalised partnership would be carried out after it has been in operation for 3 years.