Strengthening the competitiveness of the European economy through the green and digital transformations has been the EU’s strategic goal over the last years. Despite its inbuilt resilience, EU industry is being challenged by high inflation, labour shortages, supply chain disruptions, rising interest rates, and spikes in energy costs and input prices. This is paired with strong, and not always fair competition on the fragmented global market. The EU has already put forward several initiatives to support its industry. The EU now needs a more structural answer to the investment needs of its industries. This will support the uptake and scaling up of development and manufacturing of strategic technologies in the EU, in the fields of digital and deep tech, clean tech and biotech. It will help companies seize the opportunities, build resilience and meet the objectives of the green and digital transitions, thereby strengthening European sovereignty.
Today, the Commission proposes the Strategic Technologies for Europe Platform (‘STEP’). The STEP will reinforce and leverage existing EU instruments to quickly deploy financial support to the benefit of business investments. The STEP will also allow directing existing funding towards technology fields that are crucial for Europe’s leadership, thus contributing to a level playing field for investments throughout the Single Market.
Commission President Ursula von der Leyen said: “The future of the strategic industries should be made in Europe. Today, with STEP, we set the stage to mobilise the necessary funding available across various EU programmes to stimulate investments in critical technologies and make sure companies grow and flourish in the EU. With the existing funding, and an extra €10 billion that we intend to inject, we aim to reach up to €160 billion in investments in the coming years. This will be the precursor to a fully fledged Sovereignty Fund that would be created in the future”.
The STEP will build on existing programmes such as InvestEU, Innovation Fund, Horizon Europe, EU4Health, Digital Europe Programme, European Defence Fund, Recovery and Resilience Facility, and cohesion policy funds.
To boost the investment capacity dedicated specifically to promoting STEP objectives, the Commission further proposes to allocate additional €10 billion to targeted programmes:
- €3 billion for InvestEU, resulting in €75 billion of investments given the 40% provisioning rate and an average multiplier of 10;
- €0.5 billion to Horizon Europe, complemented with €2.13 billion of redeployment and use of decommitted amounts, resulting in €13 billion of investments with an average multiplier of 5;
- €5 billion to the Innovation Fund, resulting in €20 billion of investments given the experience to date under the Innovation Fund;
- €1.5 billion to the European Defence Fund, which could result in up to €2 billion of investments.
Taken together, the reinforcements of the foregoing four programmes and instruments (InvestEU, European Innovation Council, Innovation Fund, European Defence Fund) can be expected to lead to additional investments in the critical technologies covered by STEP of around EUR 110 billion.
By providing financial incentives in cohesion policy funds in the form of higher pre-financing and co-financing, Member States are encouraged to reprioritise their programmes. Every 5% of reprogramming towards STEP priorities leads to €18.9 billion of resources made available, in addition to €6 billion to be paid out from the Just Transition Fund. The increase of the ceiling under the RRF to use resources for InvestEU products via its national compartments represents an additional flexibility for Member States of €30 billion potentially available for such sovereignty investments.
Altogether, the total estimated amount of new investments through STEP could reach up to €160 billion.
Under the STEP, a Sovereignty Seal and a Sovereignty portal will be created to promote synergies among the existing programmes. The Sovereignty Seal will be awarded to projects contributing to the STEP objectives, provided that the project has been assessed and complies with the minimum quality requirements of a call for proposals under Horizon Europe, the Digital Europe programme, the European Defence Fund, the EU4Health programme, or the Innovation Fund. In addition, a Sovereignty portal will serve as a one-stop-shop to help project promoters and companies seeking funds to find the relevant information about funding opportunities under EU budget programmes for STEP investments.
INTERVENTION FIELDS
STEP will support the development or manufacturing in the Union of critical technologies in the following fields:
- deep and digital technologies, such as microelectronics, high-performance computing, quantum computing, cloud computing, edge computing, artificial intelligence, cybersecurity, robotics, 5G and advanced connectivity, and virtual realities, including actions related to deep and digital technologies for the development of defence and aerospace applications;
- clean technologies, such as renewable energy; electricity and heat storage; heat pumps; electricity grid; renewable fuels of non-biological origin; sustainable alternative fuels; electrolysers and fuel cells; carbon capture, utilisation and storage; energy efficiency; hydrogen; smart energy solutions; technologies vital to sustainability such as water purification and desalination; advanced materials such as nanomaterials, composites and future clean construction materials; and technologies for the sustainable extraction and processing of critical raw materials;
- biotechnologies, such as biomolecules and its applications, pharmaceuticals, medical technologies and crop biotechnology, and biomanufacturing.
The STEP will also help safeguarding and strengthening the respective value chains, steer investments in related critical raw materials, and address shortages of labour and skills in those sectors.
NEXT STEPS
Once the STEP is formally adopted by the European Parliament and the Council, it will be possible to proceed with a swift implementation. Different timelines may apply, depending on the programmes of the EU budget and their specific characteristics.
While the STEP relies on the reprogramming and reinforcement of existing programmes for supporting strategic investments, it is also an important testing ground for further steps towards a European Sovereignty Fund.
Background
The EU has already put forward several initiatives to support its industry. The Green Deal Industrial Plan is the EU’s roadmap to secure the long-term competitiveness of Europe’s industry and support the fast transition to climate neutrality. The Net-Zero Industry Act represents its regulatory arm. The act seeks to ensure a simpler and fast-track permitting, promoting European strategic projects, and developing standards to support the scale-up of technologies across the Single Market. It is complemented by the Critical Raw Materials Act, to ensure sufficient access to those materials, like rare earths, which are vital for manufacturing technologies that are key for the twin transition. Another key instrument to support the competitiveness of the European industry is the European Chips Act, which seeks to bolster Europe’s resilience in semiconductor technologies and applications, and boost the EU’s share of the global microchips market.
Moreover, the Commission has adopted a new Temporary Crisis and Transition Framework for State aid, which gives Member States more flexibility to design and implement support measures in sectors that are key for the transition to climate neutrality. Member States are also currently amending their national recovery and resilience plans to include REPowerEU Chapters, which is a crucial opportunity to provide immediate support to companies and boost their competitiveness, without creating unnecessary strategic dependencies.
The EU also provides support to research and innovatoin, notably through Horizon Europe. And with the European Innovation Agenda, the EU has sought to position Europe at the forefront of the new wave of deep tech innovation and start-ups.
Source: Europa
