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Eco-innovation driving the future of the EU



Eco-innovation should be viewed as a driving force, shaping how the EU views future markets and presenting a golden opportunity, concludes the Europe Innova Sectoral Innovation Watch on eco-innovation.  

The fifth and final meeting of Europe Innova's Sectoral Innovation Watch in Brussels in April 2008 formulated the conclusions of the group's work over the previous two and a half years. Chaired by Sebastian Gallehr, the conference was an opportunity to present, and then discuss the group’s findings and policy recommendations. The Sectoral Innovation Watch provides policy-makers and stakeholders with a better understanding of sectoral drivers, barriers and challenges for innovation across the EU.

Core conclusions centred on the belief that eco-innovation should not be considered merely a sector, and applied in reference to eco-technology. Rather the concept should be viewed as 'an over arching theme' or 'driving force' for the future, one which will shape how the EU will view future markets. The panel emphasised how this in itself represents a golden opportunity for the EU.

Taking the limited nature of non-renewable sources as a given, it is important to highlight the need to introduce dematerialisation measures – measures that change the economic system with less use of non-renewable resources. Eco-efficiency or the ‘green market’ is a global trend, suggesting that competitive companies are moving in the right direction.

In order to reach what is perceived as eco-innovation, there is a need for a clear message to policy-makers, because fundamentally political decisions would be the determining factor.

In terms of policy recommendations, public policies should support eco-innovation taking into account its integrated cost, while recognising that it can become more profitable if the external costs – institutional and transaction costs – are internalised. It also called for regulations to set more ambitious technology enforcing standards. Above all, the group emphasised the important role public procurement would play in the process, while also highlighting the role of small and medium-sized enterprises (SMEs) as sources for eco-innovation solutions.

Role for sectoral policies

Boosting innovation is at the core of the Lisbon strategy to make the EU the most competitive global economy since it is a key determinant of the ability of an enterprise, sector, region, or country to remain competitive.

However, bold quantitative targets such as the EU Barcelona objective – the commitment to increase research investment to 3% by 2010 – are of limited value in understanding the more complex dynamics of modern innovation systems and providing policy guidance. This is because: countries differ in their state of economic development, industrial specialisation patterns and need for innovation; and industries differ in their innovation behaviour, technological and market opportunities and sensitivity to variations in the general business environment.

While the Sectoral Innovation Watch identified clear sectoral innovation modes that justify sector-specific policies, the interaction between national innovation policies and sectoral innovation performance indicate that it is the Member States that should be active.

The policies survey carried out within the Sectoral Innovation Watch suggests that there are many innovation policy measures that target the relevant sectors, however by and large they are rather unfocused. This suggests resources to support innovation at the sectoral level are rather dispersed and more coordination between Member States and between Member States and the European Commission could lead to a pooling of these scarce innovation resources.

Sector-specific policy measures should also be screened as to what extent they take into account the complementarities and trade-offs between different challenges. “Our analyses indicate that the development of sectoral policies should be a high priority for ICT,” saidAndreas Reinstaller of the Austrian Institute for Economic Research. “Whilemany policy measures target ICT, they are not specifically designed for the ICT industry.” Moreover, this sector has been loosing momentum vis-à-vis the USA and Japan.

“Many policy measures target biotech, eco-innovation and gazelles (high growth SMEs) but these sectors remain rather unfocused,” he added. “Food and aerospace industries face many challenges. However, targeted policy measures are already in place across Member States supporting these industries. Therefore need for policy intervention is limited.”

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Promoting understanding of sectoral innovation performance

Sectoral Innovation Watch set out to provide policy-makers and stakeholders with a comprehensive understanding of sectoral innovation performance, including barriers, drivers and challenges across the EU in support of the relaunch of the Community Lisbon Programme. A series of panels complemented analytical findings with sector-specific priorities for action, and formulated questions and issues to be tackled by Europe INNOVA – a networking initiative involving 300 partners from 23 countries in the EU Sixth Framework Programme (FP6) identifying and analysing leverages and barriers to innovation within specific sectors. Eight panels were organised, covering: space downstream applications, automotive, biotechnology, information and communications technology (ICT), textiles, energy, eco-innovation and gazelles or high growth SMEs.

The future priorities forSectoral Innovation Watch were outlined during the final session, with the Commission highlighting: service sectors and service aspects in manufacturing; policy-relevant research, based on logic of intervention; continuous dissemination of interim results; and feedback cycles, including various Commission departments and broader range of external stakeholders.

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Sectoral Innovation Watch: