The European Commission has unveiled an ambitious plan to boost Europe's innovative potential with the aim of turning ideas into jobs and green growth. The strategic approach streamlines efforts on key challenges, such as climate change, energy and food security, health and an ageing population. In addition, it seeks to improve co-operation between the public and private sectors, while removing bottlenecks which prevent ideas from getting to market.
The economic crisis has led, after years of sustained job creation and employment growth, to a situation where nearly 10% of the EU's labour force is out of work. Although The EU's response to the downturn has been swift and decisive, the crisis has exposed some weaknesses of our economy and many challenges remain.
So, what can be done to stimulate sustained and sustainable growth that leads not only to greater prosperity but also to more and better jobs? As the EU has underlined for some time, one crucial ingredient in any recipe for success is innovation, i.e. the turning of good ideas into great products and services. "There is no growth without industry. And there is no industry without innovation," said European Commission Vice-President Antonio Tajani, who is also in charge of industry and entrepreneurship.
The Union possesses three key funding instruments to support research and innovation, with a total budget of around €140 billion for the period 2007-2013: Cohesion policy which is funded through the Structural Funds and Cohesion Fund; the Seventh Framework Programme for Research (FP7) and the Competitiveness and Innovation Framework Programme (CIP). Projects which have been co-funded in this way by the EU have often translated into concrete success stories as several examples show (see boxes).
However, in spite of steady progress in the innovation stakes, the EU still lags behind the United States and Japan in innovation performance, and China is catching up fast, followed quite a bit behind by India and Brazil. Although having no shortage of ideas, Europe sometimes experiences difficulties in turning those into products and services because of various bottlenecks. The mp3 sound format, for instance, was invented in Europe - in fact, in a cross-border collaboration involving German, Dutch and French partners - but it was brought to market outside the continent.
In recognition of the importance of maximising Europe's innovative potential, the 'Europe 2020' strategy stresses the need to further strengthen efforts in the research and innovation domain by improving both framework conditions and access to finance for these activities.
In October, the European Commission unveiled the Innovation Union (IU) plan, one of Europe 2020's flagship initiatives. The ambitious proposal aims to re-focus research and innovation policies on the key challenges facing our society, such as climate change, energy efficiency and demographic evolution.
"Innovation is the key to building sustainable growth and fairer and greener societies. A sea change in Europe's innovation performance is the only way to create lasting and well-paid jobs that withstand the pressures of globalisation", said Vice-President Tajani and Research, Science and Innovation Commissioner Máire Geoghegan-Quinn in a joint statement .
The Innovation Union is composed of 10 key elements. As the IU is all about co-operation and collaboration between different stakeholders - such as government, academia and business - one important element is European Innovation Partnerships. These will bring together public and private stakeholders to boost innovation in areas of societal importance which have strong economic potential. These partnerships aim to reduce the time between the blue-sky research needed to develop solutions and their integration in people's daily lives, by streamlining existing instruments and new actions in a coherent framework. A pilot partnership on active and healthy ageing should begin in 2011 and will pave the way to the selection of other major themes for future partnerships.
In addition, the IU plans to eliminate obstacles hampering European enterprises in their innovation endeavours. Access to finance remains a major challenge, particularly for innovative SMEs and start-ups. In order to address this, the IU will seek to establish a cross-border venture capital regime, work with the European Investment Bank to scale up relevant EU schemes and appoint a leading figure to strengthen cross-border matching of innovative firms with investors.
The protection of intellectual property is another key factor. At present in Europe, markets have become borderless but patents are still largely organised along national lines. In fact, obtaining patent protection for all 27 EU Member States is currently at least 15 times more expensive than in the United States, largely due to translation and legal fees. This is effectively a tax on innovation. This is not only costly but also time-consuming and can raise complex legal challenges. For that reason, Member States have been considering introducing an EU patent in recent years which, the Commission estimates, can save European businesses €250 million a year. The IU urges EU leaders to finalise a deal on this soon so that the first EU patent can be delivered in 2014.
In addition to agreements on a venture capital regimen, the IU proposes several measures that can significantly contribute to the creation of a European single market for innovation in fields such as standardisation, smart regulation and public procurement.
One side of the innovation equation is supply. The flipside of the coin is demand. Although Europeans are keen consumers of innovative products and services, sometimes innovations need a helpful prod in their early lives, as occurs in the United States where public authorities spend some USD50 billion on pre-commercial procurement. Public procurement - estimated to be worth a sixth of the EU's collective GDP - can provide just such a stimulus. As part of the IU, the European Commission proposes that EU governments set aside dedicated budgets for public procurement of innovative products and services which should create a European procurement market worth at least €10 billion a year and provide innovations that improve public services.
Of course, Europe needs to continue to generate knowledge and good ideas - the cornerstones upon which innovation is built - and so the Innovation Union foresees more and more effective investment in research. In addition to Europe 2020's target of raising European R&D investment to 3% of gross domestic product, the Innovation Union will seek to consolidate and complete the European Research Area which works to enable researchers, research institutions and businesses to increasingly circulate, compete and co-operate across borders. Efforts will also be stepped up to promote greater coherence between European and national research policies, cut red tape and remove obstacles to researcher mobility.
Not only will innovation-friendly proposals be drawn up for the successor to the Seventh Framework Programme (FP7) after 2013, the European Commission will assist Member States to make better use of the €86 billion of Structural Funds programmed for research and innovation up to 2013.
The successful implementation of the Innovation Union will transform the EU into an increasingly knowledge-based economy which will have major socio-economic repercussions. On the plus side, it has the potential to create millions of new jobs. However, many of these jobs will be highly skilled or will require new and rapidly evolving skill sets. This emphasises the importance of education, training and retraining, as well as a culture of lifelong learning.
In terms of education, the IU will endeavour to modernise Europe's education systems, with excellence as the main guiding principle, in order to raise the knowledge and skill levels of Europeans and to attract more world-class talent.
But the Innovation Union is not just about enterprise and markets - it contains a new focus on public-sector and social innovation. 'Social innovation' is an emerging concept which is based on the creativity of charities, associations and social entrepreneurs in finding new ways of meeting social needs which are not adequately addressed by the market or the public sector. In 2011, the European Commission will launch a major research programme focusing on these avenues.
This ambitious and comprehensive proposal is due to be discussed by the European Council in December. In order for it to be successfully implemented, co-operation will be key, as the plan requires commitment and action both at the EU and Member State level. Progress will be monitored as part of the governance of the Europe 2020 Strategy. An annual Innovation Convention will discuss the state of the Innovation Union.
One sign that a new software or technology has made the big time is when its name starts to be used as a verb. Most examples of this on the internet, such as 'to google', carry a clear 'Made in the USA' label. However, there is one prominent example from Europe, though most Europeans are unaware of this, 'to skype' which means to use the Skype software to make voice, video or text calls over the internet.
In fact, Skype, which is currently the largest international voice carrier, was developed and brought to market in Europe and is a clear demonstration of the innovative potential of European collaboration.
The software was created by three Estonian programmers with the backing of Swedish and Danish entrepreneurs. In addition, the company benefited from funding from an EU start-up facility .
Although based on existing technology known as Voice over IP, Skype's main innovative feature is to make use of background processing on computers running the through peer-to-peer exchange, thereby eliminating the need for expensive central infrastructure.
Dutch physicist Andre Geim and his British partner Konstantin Novoselov won this year's Nobel Prize in Physics for their work on graphene, a new form of carbon material just one-atom thick which is not only the thinnest ever but also the strongest. Thanks to the remarkable world of quantum physics, graphene has some exceptional properties: it is almost completely transparent, yet so dense that not even helium, the smallest gas atom, can pass through it.
This frontier research has numerous potential applications, such as super-fast, super-light graphene transistors, not to mention transparent touch screens, solar cells and light panels.
The two scientists' groundbreaking work was partly funded by the EU's Competitiveness and Innovation Programme (CIP). "The EU is delighted to support such innovative researchers and to help them create economic value from the practical application of outstanding science," said Commissioner Tajani.
With more than 6 million Alzheimer sufferers in Europe - a figure which is predicted to double over the next decade - helping patients lead normal lives is a top priority. Utilising the latest in European satellite technology, the EU-funded IEGLO project has devised a way to enable people with Alzheimer's to continue living at home safely. With partners in five European countries, the project created MODIS, a pocket-sized device which tracks the wearer's movements both indoors and outdoors. The device's early detection system monitors signs of any unusual movements that may be signs of distress and alerts family or nursing staff via a central service centre when the wearer is doing something dangerous or has fallen or collapsed. MODIS can also be used by elderly people with limited mobility.
Heliopolis (or Sun City) was once the capital of ancient Egypt. Another Sun City, in the Netherlands, is the world's first carbon-neutral town, with 1 700 homes, and could provide a model for sustainable urban planning. Located in Heerhugowaard, the EU-backed Sun City was built on land once covered with peat fen powered by three windmills of 6.6 to 6.9 MW each, as well as a plethora of solar panels generating 3.0MW. Moreover, the water is purified with natural reeds and a nearby forest absorbs C02 from the atmosphere.
'Policy Development for Industrial Innovation' Unit,
Directorate-General for Enterprise and Industry