Innovation investment in the post-Covid recovery

We have the financial means to succeed, with €1,750bn in the EU financial settlement for the next 7 years

Photo: EU Mariya Gabriel.

The global response to Covid-19 has been defined by scientific research and innovation.  After the early work on understanding the virus and tracking the pandemic, new treatments and diagnostics, the universal acclaim for the discovery of effective vaccines in record time is fully justified. 

And it is not just medical science - artificial intelligence helped to recreate the virus’ genome sequence and 3D printing provided swift solutions for personal protection and extra ventilators in our hospitals.  Leading scientists have become media personalities, sharing the stage with politicians and supporting society through the unprecedented challenges of recent months. 

Never before have we been more aware of the vital contribution of science, research and innovation preserving and promoting human existence.  

So what lessons should we draw for the green and digital post-Covid recovery?  How can we harness the transforming power of research and innovation to accelerate the transitions our planet and societies desperately need – a sustainable new economy for health, wellbeing and equality in its broadest sense?  Are we seizing the once-in-a-generation opportunity of massive public spending to build back better and boost economic resilience by investing in research and innovation? The honest answer is a mixed.  There is no shortage of political determination: Europe is united behind an ambitious green growth agenda to deliver full decarbonisation by 2050 and an industrial strategy with digital opportunities at its core. 

And we have the financial means to succeed, with €1,750bn in the EU financial settlement for the next 7 years including almost €100bn for the largest ever research and innovation framework programme Horizon Europe. 

Yet according to recent figures from the European Investment Bank – the EU’s future green bank - the pandemic has led to alarming reductions in private R&I investments and risks similar cuts in public R&I spending as governments and companies struggle with short-term liquidity challenges potentially harming the future achievement of our European efforts towards climate neutrality.

Public authorities can and should lead the way in reversing this trend, consistent with our R&I investment target of 3% of GDP in the EU.  The European Commission has just concluded a €1bn call for research and innovation proposals directly linked to delivering the European Green Deal. 

With more than 1500 responses, the call was twenty-times oversubscribed and we have similarly encouraging results for the new Innovation Fund focused on climate action and greenhouse gas reductions. 

The European Innovation Council will create new opportunities under Horizon Europe to support innovative start-up and scale-up companies and promote Europe’s venture capital market.  Pilot actions in this area show public funding creating multiplier effect of three times in terms of private investment.

The recently-agreed Recovery and Resilience Facility (RFF) will provide early support to EU countries’ post-Covid investment and reform strategies.  With nearly €675bn to support Member States’ national recovery and resilience plans, the RFF will create synergies with other EU financial programmes like the structural funds in support of the green and digital transition. 

We are working with Member States on national Recovery and Resilience Plans to maximise the impact of these investments and their support for reform plans.  EU Research Ministers are calling for RRPs to include significant R&I investments and reforms to address persistent challenges and to bridge the innovation divide between EU Member States.

And there are some encouraging results.  For example, the Czech Republic plans to invest around €72m over three years in seed capital to support early stage projects and technology start-up companies with as well as support for university spin-offs in a modernised new university concept. Croatia is looking for a Regional Technology Transfer Fund to improve the work of the existing Technology Transfer Offices and pave the way for the creation of new ones.

With an initial budget of €10m, it will foster links between science and businesses and help to exploit research outputs.  Slovakia will mobilise increased funding to support stronger linkages between science and businesses, including start-ups, by financing collaborative projects in this area.

These are encouraging examples, but there is scope to do much more to embed R&I in national recovery strategies.  And the moment to act is now as we work with Member States to finalise their Recovery and Resilience plans in the coming months.  Fully compatible with the European Green Deal, the RRF gives directionality in expenditure consistent with the ‘Do-no-significant-harm’ principle and Europe’s sustainability pledges. 

Investors are crowding into environmental, social and good governance projects, reinforcing the need for the emerging EU taxonomy for sustainable finance and our forthcoming framework proposals for green bond standards. Investments in research and innovation are fully compatible with this new architecture.

Europe’s world-leading scientists, researchers and innovators have every reason to be proud of their leading role during the pandemic.  Research and innovation is equally vital in supporting our economies, our societies and our way of life coming out of the crisis. 

The pace and scale of the global challenges of climate change and the digital revolution require us to listen to them in framing our post-Covid responses to ensure a sustainable, healthy, resilient and fair inheritance for future generations.  Including a strong dimension of research and innovation in our post-Covid recovery strategies is an opportunity we should seize.

Mariya Gabriel is the current EU Commissioner for Innovation, Research, Culture, Education and Youth.

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