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EC details €80BN innovation proposal

01 Dec 2011

The European Commission lays out its 'Horizon 2020' budget, emphasizing cuts to red tape and a boost for industrial innovation.

The European Commission (EC) has spelled out its proposals for an €80 billion investment in research and innovation for the next European Union budget running from 2014 to 2020, highlighting a greater emphasis on applied research to compete in the global economy, and moves to ease bureaucracy for project participants.

If the budget can emerge from negotiations with the European Parliament and Council relatively unscathed – something that would appear challenging, given the current debt crisis – the plan would become operational in January 2014 and provide a major increase in overall funding compared with the EC’s existing research program.

Research and innovation commissioner Máire Geoghegan-Quinn, EC vice president Antonio Tajani and commissioner Androulla Vassiliou officially announced details of the plan in Brussels on November 30, with Geoghegan-Quinn describing the budget as ambitious but realistic, and “very necessary” as the eurozone looks to innovate its way out of the crisis.

Vassiliou echoed that sentiment, saying that the proposal for such a large increase on the current €56 billion Framework Programme 7 (FP7) demonstrated a commitment to innovate as part of Europe’s “exit strategy” from the sovereign debt crisis.

Funding pillars
The Horizon 2020 plan combines the previous FP7 efforts with the Competitiveness and Innovation Framework Programme (CIP) and European Institute of Innovation and Technology (EIT), and is based on a “three-pillar” approach that aims to meet grand challenges like an ageing population, energy security and food security through investment in research and innovation.

Funding is arranged around those three pillars, which the EC has identified as “excellent science; industrial leadership; and societal challenges”. In the proposed budget, the science base receives €24.6 billion; industrial leadership receives €17.9 billion; and societal challenges receives €31.7 billion (figures are quoted in constant 2011 prices, and do not account for inflation).

Under the science pillar, the European Research Council (ERC) is set to receive €13.2 billion, equivalent to a huge 77% boost compared with its present funding level in recognition of its “spectacular” success, the commissioners said.

That proposed increase is likely to be broadly welcomed by the research community, with the League of European Research Universities (LERU) saying it was pleased to see that the ERC funding model will now be used in almost all Horizon 2020 research projects.

“In general, LERU is very pleased with the focus on excellence in the Horizon 2020 proposals, without any geographical or other preconditions,” said the organization in a statement, adding that it also welcomed a less prescriptive approach to topic descriptions in the calls for proposals for the six broad-themed societal challenges.

Key enablers
Funding of closer-to-market projects will be made under the industrial leadership pillar, and this will include much of the photonics innovation activity, with photonics previously identified by the EC as one of a handful of key enabling technologies (KETs).

Total Horizon 2020 funding for the industrial pillar will amount to €17.9 billion, but Geoghegan-Quinn and Tajani expect to leverage much more than that in private funding, and the KET effort is designed to attract active participation from Europe’s largest private enterprises and SMEs alike.

“KETs are fundamental to our future,” said Geoghegan-Quinn. “These technologies will help us to renew our economies.” In the Horizon 2020 documentation, photonics is grouped together with micro- and nano-electronics, but optics.org understands that photonics will retain its status as a standalone KET, and that the two topics are grouped together purely because of the EC’s internal reporting process.

The Photonics21 industry group told optics.org that it welcomed the EC’s moves to strengthen ties between the public and private sector, noting that the installation of more public-private partnerships (PPPs) are considered in Horizon 2020, with photonics and robotics specifically mentioned as potential new PPP candidates. In September, Photonics21 had outlined its proposal for a €7 billion photonics PPP, which calls for €1.4 billion in public funding.

Financial instruments and SMEs
Separate to the total KET allocation of just under €6 billion, the breakdown of the Horizon 2020 budget proposal for industrial leadership also indicates that €7.9 billion would be allocated to the information and communication technologies (ICT) segment, of which €1.59 billion is set to be aimed at photonics, microelectronics and nanoelectronics development.

One important change in the approach to funding innovation will be the use of financial instruments, in the form of debt and equity finance. This is also budgeted under the “industrial leadership” pillar, with €3.5 billion earmarked for risk finance. And while the EC says that approximately €1 billion of that will go towards implementing Strategic Energy Technology Plan projects, around one-third of the funding is expected to go to SMEs, in the form of loans and venture capital.

Other measures will include the introduction of a new dedicated SME-funding instrument based on the small business innovation research (SBIR) model already used in the US, and widely viewed as an effective approach to funding innovation.

“With simple rules and procedures, the new instrument will encourage SMEs to put forward their most innovative ideas with an EU dimension,” said the EC. “Only SMEs will be able to apply for funding, [and] even single company support will be possible to ensure market relevance and to increase commercialization of project results.”

Overall, SMEs are set to be allocated around 15% of the combined “societal challenges” and “industrial leadership” pillar funding, equivalent to some €6.8 billion over the course of the Horizon 2020 program.

“Slashing” red tape
One of the major changes that ought to benefit all participants in EC projects will be another attempt to cut bureaucracy, and Geoghegan-Quinn detailed some simplified rules and regulations that have been proposed in response to feedback from FP7 researchers. “We are slashing red tape so that researchers can spend more time in the laboratory or workshop than they spend filling in forms,” she said.

Examples include implementing just two rates to calculate project costs – one for pure research and another for close-to-market activities. Researchers will also be allowed to use their own accounting methods, while those working on an EC-funded project full time will no longer be required to fill in time-sheets. A more streamlined project approval mechanism is also targeted to cut the typical time between grant application and receipt of funding from 350 days to 250 days.

While much remains to be agreed – starting with the European Competiveness Council as soon as next week, and with the European Council, Member States and Parliament over the next two years – at this early stage the proposals certainly look to be positive for technology innovation in a broad sense, and the specific impact on photonics should become clearer as those negotiations progress.

With apparently widespread agreement that Europe must innovate its way out of its economic malaise, the most obvious question is this: how, in the midst of its deepest crisis since the Second World War, can the continent afford such a plan? Perhaps the answer is equally obvious: Europe can’t afford not to.

For full details of the European Commission’s proposed program for research and innovation 2014-2020, visit the EC’s new Horizon 2020 web site.

About the Author

Mike Hatcher is the Editor in Chief of optics.org

Photon Lines LtdABTechIridian Spectral TechnologiesHÜBNER PhotonicsHyperion OpticsSPECTROGON ABBerkeley Nucleonics Corporation
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