How to Strengthen the Demand for Innovation in Europe? Warsaw, 2 December 2010

1. 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

2. Overview: • Demand-side policies are (nearly) everywhere • Lead Market Initiative: lessons learnt in doing demand-side policies across EU • Demand-side 2.0: future actions

3. Demand – side policies feature in many ‘Flagships’ of EU2020 3

4. What policies have had a positive effect on innovation in your company? “Demand-side” 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) Innobarometer 2009 study

5. 2009 Trendchart survey: 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 See http://www.proinno-europe.eu/

6. Main trends in demand-side policies in Member States: 1. Sectoral focus: environmental technologies, ICT, health, transport and construction2. Public procurement is increasingly used 3. Most demand-side measures are implemented by innovation-related organisations

7. Overview: • Demand-side policies are (nearly) everywhere • Lead Market Initiative: lessons learnt in doing demand-side policies across EU • Demand-side 2.0: future actions

8. The Lead Market Initiative (LMI) is complementing supply-side innovation policy Demand-side measures - regulation Package = LMI - procurement • standardisation- Fiscal measures for buyers- Clusters - Fiscal measures for R&D - Equity support - R&D funding … Supply-side measures

9. LMI in 6 sectors Standardisation Labelling Certification Legislation Public Procurement Complementary Actions eHealth action plan e-Health Sust. Construction action plan Sustainable construction Lead Market Areas Protective Text. action plan Protective textiles Bio-based products action plan Bio-based products Recycling Recycling action plan Renewable Energies action plan Renewable energies New networks

10. 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

11. Lead Market in Bio-Based Products: mapping – some - policy targets: Horizontal policies: SCP-SIP, industry, standards, research-innovation Integrated Biorefinery Process Oils, starch, cellulose, other sugars, etc. + syngas + bio-based intermediates RRMs including crops waste, straw, wood, etc. + Biofuels = bioethanol, -diesel, -gas C3-, C4-, C5-type substances (e.g. lactic acid, fumaric acid, sorbitol) + Hydrogen, Alcohols, Fischer -Tropsch Liquids + Aromatics & Polymers Bio-based Products: Polymers, lubricants, surfactants, fine chemicals via phys-, chem-, bio-approaches & applying a process/by-product /energy/heat-Cycle National Action Plan on GPP, “Handbook”, ECO-Label, Market based & Voluntary approaches CAP Aid Schemes, Aid for Non-Food Crops, Aid for Energy Crops, EU-Strategy-Biofuels (COM(2006)34 & 2003/30/EC) Energy Package – Renewables, Near-Zero- Emissions, Energy Technol.Plan Packaging & packagingwaste (2005/20/EC-91/692/EEC), Landfill (99/31/EC), Integrated Pollution & Prevention Control Directive (96/61/EC)

12. 4 key lessons learnt in the Lead Market Initiative: • Building bridges takes time • In practice, few tools for demand-side policy exist • Greatest impact may be medium-long term • Obtaining good visibility is essential for success

13. Overview: • Demand-side policies are (nearly) everywhere • Lead Market Initiative: lessons learnt in doing demand-side policies across EU • Demand 2.0: future actions

14. 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

15. EU actions so far: IU committment 17: Procurement budgets for innovation • 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

16. IU commitment 17: Procurement budgets for innovation 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 mechanismfor buyers groups: to pool demand, to draw up common specifications, and to promote SME access.

17. How a support mechanism might work Commission call Grant agreement Procurements Public procurer Suppliers Public procurer Suppliers Public procurer Suppliers Innovative solutions Benefits to other procurers + single market + better public services Benefits: Innovations + reference clients + markets

18. 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)

19. 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

20. Overview: • Demand-side policies are (nearly) everywhere • Lead Market Initiative: lessons learnt in doing demand-side policies across EU • Demand-side 2.0: future actions

21. The bottom line:"Well-designed demand-side policies are less expensive than direct support measures" OECD Innovation Strategy 2010

22. References: 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 Thank you for your attention!