How to Strengthen the Demand for Innovation in Europe?

Warsaw, 2 December 2010

Dr. Henriette van Eijl

DG Enterprise, Policy Development for Industrial InnovationEmail: ENTR-LMI@ec.europa.eu

Overview:

1. Demand-side policies are (nearly) everywhere

2. Lead Market Initiative: lessons learnt in doing demand-side policies across EU

3. Demand-side 2.0: future actions

3

Smart GrowthSmart Growthdeveloping an economy based on knowledge and innovation

Sustainable Sustainable GrowthGrowth

more efficient, greener and more competitive economy

Inclusive Inclusive GrowthGrowth

Innovation« Innovation Union »

Climate, energy and mobility

« Resource efficient Europe »

Employment and skills

« An agenda for new skills and jobs »

Education« Youth on the move »

Competitiveness« An industrial policy for the globalisation 

era »

Fighting poverty« European platform against poverty »

Digital society« A digital agenda for 

Europe »

Demand – side policies feature in many ‘Flagships’ of EU2020

Innobarometer 2009 study

What policies have had a positive effect on innovation in your company?

New environmental regulations or standards

New requirements from other regulations or industry/

technical standards

Services provided by intermediaries (tech transfer)

Changes in public financial support (grants etc)

Changes in taxation (R&D or innovation tax credits)

“Demand-side”

Debate is beginning to consider the need for demand side innovation policies: Estonia, Greece, Hungary, Italy, Slovakia, Slovenia, Bulgaria, Czech Republic, Latvia, Lithuania, Malta, Poland, Cyprus, Portugal

Debate has focused on related demand-side aspects: Austria, Denmark, Spain

Strong and ongoing debate on linking demand side policies to innovation policy: Belgium, Finland, Germany, the Netherlands, Sweden, UK, Ireland, France

2009 Trendchart survey:

See http://www.proinno-europe.eu/

1. Sectoral focus: environmental technologies, ICT, health, transport and construction

2. Public procurement is increasingly used

3. Most demand-side measures are implemented by innovation-related organisations

Main trends in demand-side policies in Member States:

Overview:

1. Demand-side policies are (nearly) everywhere

2. Lead Market Initiative: lessons learnt in doing demand-side policies across EU

3. Demand-side 2.0: future actions

Supply-side measures

Demand-side measures

- regulation- procurement

- R&D fu

nding

- Equity

support

- Fis

cal m

easu

res

for R

&D

…

- standardisation

- Fiscal measures for buyers- Clusters

Package = LMI

The Lead Market Initiative (LMI) is complementing supply-side innovation policy

StandardisationLabelling

CertificationLegislation

Public Procurement

Complementary Actions

e-Health

Sustainable constructio

n

Protective textiles

Bio-based products

Recycling

Renewable energies

Lead

Mark

et

Are

as

eHealth action plan Sust. Construction action

plan Protective Text. action plan

Bio-based products action plan

Recycling action plan Renewable Energies action

plan

LMI in 6 sectors

New networks

1/ “ENPROTEX”: Firebuy (UK) (lead) • A web-portal for public procurers and SMEs• Innovation mapping in textile research on protective clothing • Providing industry with forward procurement needs

2/ “SCI-NETWORK”: ICLEI (lead - local governments)• 90 organisations in the pilot phase • topics: sustainable renovation, whole-life costing, environmental standards• website engages market to identify the best solutions: eulab.viadesk.com

3/ “LCB-HEALTHCARE”: Dep. Business Innovation and Skills BIS (UK) • Develop a sustainable, self-funding, trans-national network of public sector and related organisations • Survey of barriers to investment in low carbon solutions in hospitals

New tools: first results of 3 networks of public procurers

Lead Market in Bio-Based Products: Lead Market in Bio-Based Products: mapping mapping – some– some - policy targets: - policy targets:

RRMs RRMs including cropsincluding cropswaste, straw, waste, straw, wood, etc. wood, etc. ++Biofuels =Biofuels =bioethanol, bioethanol, -diesel, -gas-diesel, -gas

Oils, starch,Oils, starch, cellulose, cellulose, other sugars,other sugars, etc. etc. + syngas + syngas + bio-based + bio-based intermediates intermediates

Integrated Biorefinery ProcessIntegrated Biorefinery Process

via phys-, chem-, bio-approaches via phys-, chem-, bio-approaches & applying a process/by-product& applying a process/by-product /energy/heat-Cycle /energy/heat-Cycle

C3-, C4-, C5-type C3-, C4-, C5-type substances (substances (e.g. e.g. lactic acid, fumaric acid,lactic acid, fumaric acid,

sorbitolsorbitol) + Hydrogen,) + Hydrogen, Alcohols, FischerAlcohols, Fischer -Tropsch Liquids -Tropsch Liquids + Aromatics & + Aromatics & Polymers Polymers

Bio-based Bio-based Products: Products: Polymers, Polymers, lubricants,lubricants, surfactants, surfactants, fine chemicalsfine chemicals

CAP Aid Schemes,CAP Aid Schemes,Aid for Non-Food Crops,Aid for Non-Food Crops,

Aid for Energy Crops,Aid for Energy Crops,EU-Strategy-BiofuelsEU-Strategy-Biofuels

(COM(2006)34 & 2003/30/EC)(COM(2006)34 & 2003/30/EC)

Packaging & packagingPackaging & packaging waste waste (2005/20/EC-91/692/EEC),(2005/20/EC-91/692/EEC),

Landfill (99/31/EC),Landfill (99/31/EC),Integrated Pollution & PreventionIntegrated Pollution & Prevention

Control Directive (96/61/EC) Control Directive (96/61/EC)

Energy Package –Energy Package –Renewables,Renewables,Near-Zero-Near-Zero-

Emissions, Energy Emissions, Energy Technol.PlanTechnol.Plan

National ActionNational ActionPlan on GPPPlan on GPP,,““Handbook”,Handbook”,ECO-Label,ECO-Label,

Market based &Market based &Voluntary Voluntary

approachesapproaches

Horizontal policies: SCP-SIP, industry, standards, research-innovation

4 key lessons learnt in the Lead Market Initiative:

1) Building bridges takes time

2) In practice, few tools for demand-side policy exist

3) Greatest impact may be medium-long term

4) Obtaining good visibility is essential for success

Overview:

1. Demand-side policies are (nearly) everywhere

2. Lead Market Initiative: lessons learnt in doing demand-side policies across EU

3. Demand 2.0: future actions

Innovation Union demand-side policies:

15. Screen regulatory frameworks linked to Innovation Partnerships

16. Reform EU standard setting & link to R&D projects

17. Member States to set aside procurement budgets for innovation, with EC technical/ financial support

Innovation Partnerships: demand+supply-side

Policy learning: Member State Enterprise Policy Group

Developing metrics and policy evaluation tools

IU committment 17: Procurement budgets for innovation

EU actions so far:

• Studies• Guidance (good practice, pre-commercial procurement,

green public procurement)• Networks (Lead market initiative, pre-commercial

procurement, environment…)

Member State actions so far:

• Launch of schemes on pre-commercial procurement/ “SBIR” with promising results

• Some attempts at joint procurements• But only in some countries, limited scale, and primarily

national/regional based, weak link with R&D funding actions

Member States and regions:

Could set aside budgets for pre-commercial procurements and public procurements of innovations

EC helps:

provide guidance, such as on implementing joint procurements between contracting entities

set up a (financial) support mechanism for buyers groups: to pool demand, to draw up common specifications, and to promote SME access.

IU commitment 17: Procurement budgets for innovation

How a support mechanism might work

Commission call

Public procurer

Public procurer

Public procurer

Suppliers

Suppliers

Suppliers

Grant agreement

Procurements

Innovative solutions

Benefits to other procurers + single market

+ better public services

Benefits: Innovations + reference clients +

markets

Pilot actions in 2011

• Calls under Competitiveness and Innovation 2011 work programme (innovative procurement + eco-innovation)

• Call under FP7 ICT 2011 work programme (pre-commercial procurement)

Which areas for innovative procurement pilot call?

• European Innovation Partnerships: Bringing together supply and demand side policies to

address societal challenges Themes: active, healthy ageing, raw materials,

transport, water, smart cities, sustainable agriculture …)

• Other areas to be considered: lead markets other public sector priorities: transport, health, etc

Overview:

1. Demand-side policies are (nearly) everywhere

2. Lead Market Initiative: lessons learnt in doing demand-side policies across EU

3. Demand-side 2.0: future actions

The bottom line:

"Well-designed demand-side policies are less expensive than direct support measures"

OECD Innovation Strategy 2010

References:

Thank you for your attention!

Homepage Lead Market Initiative & procurement:

http://ec.europa.eu/enterprise/policies/innovation/policy/lead-market-initiative/public-proc_en.htm

“Innovation unlimited” blog: http://blogs.ec.europa.eu/innovationunlimited

Innovation Union:• http://ec.europa.eu/innovation-union/

ENTR-LMI@ec.europa.eu