kom (2019) 0330 (forslag) - COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on the European Institute of Innovation and Technology (recast) and Proposal for a Decision of the European Parliament and of the Council on the Strategic Innovation Agenda of the European Institute of Innovation and Technology (EIT) 2021-2027: Boosting the Innovation Talent and Capacity of Europe

Europaudvalget 2019
KOM (2019) 0330
Offentligt

EUROPEAN

COMMISSION

Brussels, 1.8.2019

SWD(2019) 330 final/2

CORRIGENDUM

This document corrects SWD(2019) 330 final of 11.7.2019.

This version corrects the omission of the annexes to the Impact Assessment.

The text shall read as follows:

COMMISSION STAFF WORKING DOCUMENT

IMPACT ASSESSMENT

Accompanying the document

Proposal for a Regulation of the European Parliament and of the Council

on the European Institute of Innovation and Technology (recast)

and

Proposal for a Decision of the European Parliament and of the Council

on the Strategic Innovation Agenda of the European Institute of Innovation and

Technology (EIT) 2021-2027: Boosting the Innovation Talent and Capacity of Europe

{COM(2019) 330 final} - {COM(2019) 331 final} - {SEC(2019) 275 final} -

{SWD(2019) 331 final}

kom (2019) 0330 (forslag) - COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT Accompanying the document Proposal for a Regulation of the European Parliament and of the Council on the European Institute of Innovation and Technology (recast) and Proposal for a Decision of the European Parliament and of the Council on the Strategic Innovation Agenda of the European Institute of Innovation and Technology (EIT) 2021-2027: Boosting the Innovation Talent and Capacity of Europe

ABLE OF CONTENTS

NTRODUCTION

POLICY AND LEGAL CONTEXT

................................................ 5

1.1. Scope of the impact assessment

......................................................................... 5

1.2. Legal and operational context of the EIT and the KICs

.................................. 5

1.3. The EIT as part of the Horizon Europe Programme

....................................... 8

1.4. What decisions on the future of the EIT have already been taken in the

Horizon Europe proposal and what are their implications?............................

1.5. The need to act

................................................................................................. 10

1.5.1. The need to amend the EIT Regulation

...................................................... 10

1.5.2. The need for a new Strategic Innovation Agenda of the EIT

.................... 10

1.5.3. Lessons learned

........................................................................................... 11

PROBLEM DEFINITION

...................................................................................... 13

2.1.

2.2.

2.3.

2.4.

2.5.

3.1.

3.2.

Suboptimal funding model

.............................................................................. 13

Limited impact of EIT’s education activities

.................................................. 15

Limited impact of EIT’s regional outreach

.................................................... 17

Technical issues

............................................................................................... 18

Summary of problems and technical issues to be addressed:

........................ 21

WHY SHOULD THE EU ACT

? .............................................................................. 22

Legal basis

........................................................................................................ 22

Subsidiarity and proportionality: need for, and added value of EU action

.. 22

OBJECTIVES

WHAT IS TO BE ACHIEVED

? ........................................................ 23

OW OPTIONS ADDRESS PROBLEMS AND TECHNICAL ISSUES

......................... 24

5.1. Discussion of technical issues

......................................................................... 24

5.2. Discussion of priority fields

............................................................................. 26

5.3. Discussion of funding model

........................................................................... 28

5.3.1. Continuation of current funding model (discarded)

.................................. 29

5.3.2. Introduction of a 50/50 co-funding rate (discarded)

.................................. 29

5.3.3. Introduction of a gradually decreasing EIT co-funding rate (retained)

... 30

5.4. Description of policy options

........................................................................... 34

5.4.1. Option 1: Baseline

....................................................................................... 34

5.4.2. Option 2

........................................................................................................ 35

5.4.3. Option 3

........................................................................................................ 38

5.4.4. Inputs of options

.......................................................................................... 40

5.4.5. Key features of options

................................................................................ 40

6.1.

6.2.

6.3.

6.4.

MPACT OF POLICY OPTIONS

............................................................................ 41

Option 1: Baseline

........................................................................................... 41

Option 2

............................................................................................................ 43

Option 3

............................................................................................................ 46

Outputs of options

............................................................................................ 50

OW DO THE OPTIONS COMPARE

? .................................................................. 51

Risks associated with policy options

............................................................... 53

REFERRED OPTION

......................................................................................... 55

Implications of the preferred Option for the EIT Regulation and the SIA

... 56

OW WILL IMPACT BE MONITORED AND EVALUATED

? .................................. 57

7.1.

8.1.

10.

NNEXES

.......................................................................................................... 61

10.1. Annex 1: Procedural information

................................................................... 61

10.2.

10.3.

10.4.

10.5.

10.6.

10.7.

10.8.

10.9.

10.10.

10.11.

10.12.

10.13.

Annex 2a: Stakeholder consultation activities

............................................... 67

Annex 2b: Public consultation - Synopsis Report

.......................................... 72

Annex 3: Who is affected and how?

............................................................... 99

Annex 4A: Key achievements of the EIT

...................................................... 102

Annex 4B: key achievements and challenges as outlined in the EIT interim

evaluation:

..................................................................................................... 103

Annex 5: Discarded policy options regarding the EIT under Horizon Europe

........................................................................................................................ 107

Annex 6: Selection criteria for establishing KICs

........................................ 108

Annex 7: Social network

analysis of KICs’ partnerships

............................ 111

Annex 8: Impact Indicator Framework

....................................................... 118

Annex 9: Analysis of possible themes for future KICs

................................ 132

Annex 10: Model-based Analysis on co-funding model for KICs

............... 159

Annex 11: Overview of KIC co-funding rates in 2014-2017

....................... 185

Glossary

Term or acronym

CLC

Meaning or definition

Co-Location Centre, a geographical hub for the

practical integration of the knowledge triangle

Directorate-General Education, Youth, Sport and

Culture, a Directorate General of the European

Commission

Directorate-General Internal

Entrepreneurship and SMEs

Market,

Industry,

DG EAC

DG GROW

DG RTD

ECA

EFSI

EIC

RIS

EIT

ERASMUS+

Directorate-General Research and Innovation

European Court of Auditors

European Fund for Strategic Investments

European Innovation Council

EIT Regional Innovation Scheme

European Institute of Innovation and Technology

The EU programme supporting education, training,

youth and sport in Europe during the 2014-2020

period

European Regional Development Fund

European Structural and Investment Fund

European Union

Executive Committee of the EIT Governing Board

Governing Board of the EIT

Horizon 2020

– the EU’s framework programme for

research and innovation 2014-2020

Higher Education Institution

ERDF

ESIF

ExCo

Horizon 2020

HEI

HEInnovate

Joint initiative of the European Commission and the

OECD supporting HEIs wishing to increase their

innovative and entrepreneurial potential

High Level Group

Joint Research Centre, a Directorate General of the

European Commission

KIC Added Value Activities

KIC Complementary Activities

Knowledge and Innovation Community

Key Performance Indicator

Knowledge Triangle Integration - close, effective

links between education, research, and innovation

Multiannual Financial Framework

Organisation for

Development

Economic

Co-operation

and

HLG

JRC

KAVA

KCA

KIC

KPI

KTI

MFF

OECD

OPC

R&I

R&D

SIA

SME

SPD

SWD

TFEU

TRL

Open Public Consultation

Research and Innovation

Research and Development

Strategic Innovation Agenda

Small and Medium-sized Enterprise

Single Programming Document

Staff Working Document

Treaty on the Functioning of the European Union

Technology Readiness Level - a method of estimating

the maturity of technology

1. I

NTRODUCTION

POLICY AND LEGAL CONTEXT

1.1. Scope of the impact assessment

This impact assessment accompanies the Commission proposals for an amendment of the

European Institute of Innovation and Technology (EIT) Regulation

through a recast

and

for a new Strategic Innovation Agenda (SIA) for the EIT for the period 2021-2027. These

initiatives aim to align the EIT legislative framework with the Commission proposal

establishing the Horizon Europe Programme

, the next Union framework programme

supporting research and innovation, to define the new priority fields of the EIT as well

as its financial needs, and to improve the functioning of the EIT taking into account the

lessons learned from the past years.

The Impact Assessment accompanying the proposal for Horizon Europe

provided a

clear, evidence-based blueprint for how the programme will help to consolidate European

leadership in research and innovation to deliver scientific, economic and societal impact.

It described the key objectives and rationale of the programme including a stronger focus

on the added value of its parts.

The Horizon Europe proposal confirmed the importance and contribution of the EIT and

its Knowledge and Innovation Communities (KICs) in delivering the EU's strategic

priorities in the area of innovation. It proposes the EIT budget for 2021-2027, its scope,

added-value and main areas of activity, while pointing to a revised role of the EIT in

order to reinforce its contribution to Horizon Europe’s objectives.

However, the Horizon

Europe proposal itself does not provide the legal basis for continuing EIT operations

beyond 2020, which would continue to be laid down in the EIT Regulation.

This impact assessment does not cover the decisions already taken concerning the EIT in

the Horizon Europe proposal (see section 1.3 and 1.4), since these were assessed as part

of the Horizon Europe impact assessment. Instead, this impact assessment focusses on

key problems and issues that have been identified as hampering the effectiveness of the

EIT based on lessons learned from the EIT interim evaluation and other key sources of

evidence.

1.2. Legal and operational context of the EIT and the KICs

The European Institute of Innovation and Technology

The EIT’s overall mission is to boost sustainable European economic growth and

competitiveness by reinforcing the innovation capacity of the Member States and the

Union. Set up in 2008, and part of Horizon 2020 since 2014, the EIT seeks to integrate

the knowledge triangle of higher education, research and innovation, reinforce the

Union's innovation capacity, and address societal challenges. The EIT achieves these

goals primarily through its Knowledge and Innovation Communities (KICs): large-scale

European partnerships (with ~50-400 partners) focussing on global societal challenges.

1 Regulation (EC) No 294/2008 of the European Parliament and of the Council of 11 March 2008 establishing the European Institute

of Innovation and Technology (OJ L 97, 9.4.2008, p. 1). Amended by Regulation (EU) No 1292/2013 of the European Parliament and

of the Council of 11 December 2013 (OJ L 347, 11.12.2013, p. 174).

2 Interinstitutional Agreement of 28 November 2001 on a more structured use of the recasting technique for legal acts. OJ C 77,

28.3.2002, p. 1.

3 Proposal for a Regulation of the European Parliament and of the Council establishing Horizon Europe

–

the Framework Programme

for Research and Innovation, laying down its rules for participation and dissemination. COM(2018) 435 final.

4 SWD(2018) 307 final.

The EIT provides grants to the KICs, monitors their activities, supports cross-KIC

collaboration and disseminates results and good practice. The EIT's Governing Board is

responsible for the strategic orientation of the EIT and of the KICs and takes the

decisions on the designation of the KICs and their funding.

The Horizon Europe Impact Assessment highlighted the role of the EIT in addressing

specific structural weaknesses in the EU’s innovation capacity which are common to EU

Member States. They include: the under-utilisation of existing research strengths to

create economic or social value; the lack of research results brought to the market; low

levels of entrepreneurial activity and mind-set; low leverage of private investment in

research and development; and an excessive number of barriers to collaboration within

the knowledge triangle of higher education, research, business and entrepreneurship on a

European level. The EIT addresses these challenges through the KICs.

The EIT's objectives, rationale, EU added value, budget, broad lines of activity and

performance indicators are currently defined in the Horizon 2020 Regulation

. The EIT

Regulation sets out, in parallel, the mission and tasks for the EIT along with the

framework for its functioning. The strategic, long-term priority fields and financial needs

of the EIT for each seven-year period are laid down in the Strategic Innovation Agenda

(SIA) of the EIT

. The SIA includes the detailed operating modalities of the EIT such as

the selection and designation of the KICs and their performance monitoring, based on the

framework set out in the EIT Regulation. The graph below illustrates the key aspects of

the current regulatory environment.

•General

and specific objectives of the EIT

•Broad

lines of activity

•Budget

Horizon 2020

•Performance

indicators

EIT

Regulation

•Mission

and tasks of the EIT

•Framework

for its functioning

SIA

•Strategic

direction

•Activities

and implementing provisions

•Priority

fields of the EIT

•Financial

needs

Figure 1: Current regulatory context of EIT, own illustration

5 Regulation (EU) No 1291/2013 of the European Parliament and of the Council of 11 December 2013 establishing Horizon 2020 -

the Framework Programme for Research and Innovation (2014-2020). OJ L 347, 20.12.2013, p. 104.

6 Decision No 1312/2013/EU of the European Parliament and of the Council of 11 December 2013 on the Strategic Innovation

Agenda of the European Institute of Innovation and Technology (EIT): the contribution of the EIT to a more innovative Europe. OJ L

347, 20.12.2013, p. 892.

Knowledge and Innovation Communities

The KICs are autonomous partnerships of businesses, research institutes and higher

education institutions (HEIs). The KICs are set up as legal entities under respective

Member States’ laws, appoint a Chief Executive Officer

to run their operations and have

their own governance systems. The relations between the EIT and KICs are laid down in

contractual agreements, which set out their respective rights and obligations, ensure an

adequate level of coordination and outline the mechanism for monitoring and evaluating

KIC activities and outcomes. The KICs report on their activities on a yearly basis to the

EIT. Specifically, the KICs submit their annual Business Plans to the EIT as the basis for

the award of the EIT grant.

Since 2010, eight KICs have been set up or designated to address specific societal

challenges. According to the EIT Regulation (Article 7b) and the financial sustainability

principles adopted by the EIT Governing Board

, the duration of EIT grant for each KIC

is expected to last a maximum of 15 years after which the KIC should be able to pursue

its activities without EIT funding. The areas of intervention of the current KICs are

indicated below, together with their missions.

Figure 2: Overview of current KICs, their missions and number of partners; own illustration

7https://eit.europa.eu/sites/default/files/EIT%20GB%20Decision%20on%20principles%20on%20KIC%20Financial%20Substainabili

ty.pdf

Each KIC aims at reinforcing innovation capacities by running a balanced portfolio of

activities in three areas:

Innovation support projects:

aimed at supporting and developing new

innovative products, services and solutions that address societal challenges in the

KICs areas of activity. They may include the support to demonstrators, pilots or

proofs of concept.

Education:

these include innovative educational and training programmes

offered by each KIC in the form of post-graduate (MSc/PhD) programmes,

executive/ professional development courses, lifelong learning modules, summer

schools, etc. The EIT Label ensures quality of the KIC education programmes

and recognition within and beyond the EIT Community.

Business creation and support activities:

these include start-up and accelerator

schemes to help entrepreneurs and potential entrepreneurs translate their ideas

into successful business. The focus is primarily on access to market, access to

finance, and access to networks, mentoring & coaching.

KICs also engage in a range of outreach, communication, dissemination and horizontal

cross-sectoral activities. Since 2014, the EIT has developed the EIT Regional Innovation

Scheme (RIS) as part of its outreach strategy in regions in Europe that are modest or

moderate innovators according to the European Innovation Scoreboard

1.3. The EIT as part of the Horizon Europe Programme

The Horizon Europe impact assessment emphasises that the EIT should be more strongly

integrated within Horizon Europe than is currently the case in Horizon 2020 and greater

synergies with other components of the programme should be created. Within the

Commission’s proposal for

Horizon Europe the EIT activities thus become part of the

Pillar III “Open Innovation”, which focuses primarily on supporting breakthrough and

market-creating innovation. The EIT and the KICs are also expected to play a key role in

addressing global challenges and European industrial competitiveness - and achieving the

objectives of future R&I missions -

(Pillar II “Global Challenges and Industrial

Competitiveness”) while also contributing to excellent science (Pillar I).

A novelty of the Horizon Europe proposal is the introduction of multiannual Strategic

Planning

for ensuring the implementation of the programme-level objectives in an

integrated manner based on wide consultations about priorities and the suitable types of

action and forms of implementation, in particular European research and innovation

partnerships. These European Partnerships are initiatives where the Union, together with

private and/or public partners (such as industry, public bodies or foundations) commit to

support jointly the development and implementation of a programme of research and

innovation activities. Horizon Europe promotes a more strategic, ambitious and impact-

oriented approach to these partnerships, ensuring that they can effectively contribute to

the Union’s policies

and priorities

8 http://ec.europa.eu/growth/industry/innovation/facts-figures/scoreboards_en

9 e.g. it is expected that the EIT will contribute to the climate-related expenditure target which should exceed 35 % of the overall

Horizon 2020 budget

10 Annex I, COM(2018) 436 final, pp. 1-2.

11 European Partnerships will be designed on the basis of key principles of Union added value, transparency, openness, impact,

leverage effect, long-term commitment of involved parties, flexibility, coherence and complementarity with Union, national and

international initiatives. The criteria for the selection, implementation, monitoring, evaluation and phasing out of Union funding for

European partnerships are set out in Annex III of the proposed Regulation for Horizon Europe.

Under the Horizon Europe proposal, the EIT KICs are considered as institutionalised

European Partnerships. The alignment with the Horizon Europe framework will be

supported through the multiannual Strategic Planning, which will in particular

incorporate inter-disciplinary and cross-sectoral perspectives and ensure that all activities

under Horizon Europe are coordinated in an effective manner. In particular, the Horizon

Europe proposal emphasises that “proposals for future EIT KICs in

compliance with the

EIT Regulation will be indicated in the EIT Strategic Innovation Agenda (SIA) and will

take into account the outcome of the Strategic Planning process and the priorities of the

Global Challenges and Industrial Competitiveness pillar”

To deliver on Horizon Europe objectives close cooperation with, in particular the

European Innovation Council (EIC), will also be important to ensure synergies and

impact. The EIT and the EIC are complementary. The EIC will identify, develop and

deploy breakthrough innovations, and support the rapid scale-up of innovative firms

carrying out market-creating innovations at the European and international levels. On the

other hand, the EIT will develop innovation capacity through knowledge triangle

integration and support to innovation ecosystems. It will contribute to Horizon Europe

with its distinctive focus on human capital, entrepreneurial education and support to

business creation and development in specific thematic areas.

1.4. What decisions on the future of the EIT have already been taken in the

Horizon Europe proposal and what are their implications?

A number of policy choices relating to the future of the EIT have already been made by

the Commission through the adoption of the Horizon Europe proposal. Specifically, the

Horizon Europe proposal sets out the budget for the EIT (EUR 3 billion for the period

2021-202713),

its rationale, the areas of intervention which are the basis of EIT’s general

objectives, and its broad lines of activity14. In particular, the general objectives of the

EIT are reflected in its areas of intervention defined by the Horizon Europe proposal:

(1) Strengthening sustainable innovation ecosystems across Europe;

(2) Fostering the development of entrepreneurial and innovation skills in a lifelong

learning perspective and support the entrepreneurial transformation of EU

universities;

(3) Bring new solutions to global societal challenges to the market;

The Horizon Europe proposal also defines the criteria for selection, implementation,

monitoring, evaluation and phasing-out of European Partnerships (including EIT KICs).

It sets out the programme’s rules for participation and dissemination, as well as

monitoring and evaluation requirements, which will apply to the EIT, in addition to

relevant provisions of the EIT Regulation

The Horizon Europe programme, however, does not specify the concrete actions nor the

means and instruments to achieve the EIT’s objectives. In addition, it does

not specify

the expected results and resources that are needed to implement the EIT key actions to

12 Explanatory memorandum, COM(2018) 435 final, p. 15.

13 Article 9, COM(2018) 435 final, p. 32.

14 Annex I, COM(2018) 435 final, p. 3 and Annex I, COM(2018)436 final, pp. 70-72.

15 In particular, with regard to entities eligible for participation, entities eligible for funding, award criteria, funding rates, indirect

costs, eligible costs.

deliver on Horizon Europe objectives and expected scientific, economic and societal

impacts.

Indeed, the Horizon Europe proposal and its impact assessment recognise the role of the

EIT Regulation in setting out the scope of the EIT’s functioning and in governing the

selection and priority-setting process of the KICs taking into account the outcome of the

Strategic Planning process and Horizon Europe criteria for partnerships. They also

recognise the role of the Strategic Innovation Agenda in setting the priority fields of the

EIT and KICs for the 7-year programming period.

1.5. The need to act

1.5.1. The need to amend the EIT Regulation

The EIT Regulation, adopted in 2008, establishes the EIT. It sets out the mission and

tasks of the EIT and the framework for its functioning. The Regulation was amended in

2013 in order,

inter alia,

to align it with Horizon 2020.

The EIT Regulation is not in principle time bound, contrary to the SIA. However, given

that a number of provisions in the EIT Regulation make a direct reference to the current

Horizon 2020 programme established for the period 2014-2020, these provisions need to

be amended, to make them compatible with the next Union framework programmes

supporting research and innovation.

1.5.2. The need for a new Strategic Innovation Agenda of the EIT

In line with Article 17 of the EIT Regulation a new

Strategic Innovation Agenda

(SIA)

is to be adopted for each 7-year programming period (MFF).

The SIA lays down the strategic, long-term priority fields and financial needs for the EIT

for the period covered by the MFF. It also includes an overview of the planned higher

education, research and innovation activities and the respective budget breakdown. The

current SIA is limited in time and covers only the period 2014-2020.

The new SIA will put forward the strategic orientations, financial needs and sources of

funding of the EIT for the next MFF. Furthermore, the SIA will define the priority fields

and time schedule for the selection and designation of KICs for the next programming

period. It will include an overview of the planned higher education, research and

innovation activities and the budget breakdown over the period. The SIA is also a

legislative tool to align the priority setting of the EIT with the Horizon Europe strategic

programming.

16 Regulation (EC) No 294/2008 of the European Parliament and of the Council of 11 March 2008 establishing the European Institute

of Innovation and Technology (OJ L 97, 9.4.2008, p. 1). Amended by Regulation (EU) No 1292/2013 of the European Parliament and

of the Council of 11 December 2013 (OJ L 347, 11.12.2013, p. 174).

Timing and coherence of the Strategic Innovation Agenda and Strategic Planning

Process

The new Strategic Innovation Agenda of the EIT for the period 2021-2027 needs to be in

place before 1 January 2021

. The SIA will be adopted by the European Parliament and

the Council, in accordance with the ordinary legislative procedure.

While the scope of the Strategic Planning process under Horizon Europe, its legal form

and overall timing are to be decided by the co-legislators, the preparatory process

supporting the strategic planning has already started. The Commission is discussing

currently possible partnerships in order to ensure the highest coherence and

complementarity at service, cabinet and political level in the form of the Project Team

Meeting on Competitiveness and Innovation. In this context, it clearly emerged that the

best option would be to include initially one priority area/KIC theme in the new SIA

proposal for the programming period 2021-2027. Other priority areas/theme(s) for future

KIC(s) within the said period would be proposed subsequently by the Commission taking

into account the outcome of the multiannual Strategic Planning process, new emerging

priorities, and any other relevant developments. The SIA will outline the selection of the

KICs taking into account the Strategic Planning process and the criteria for partnerships

in line with Horizon Europe. The total number of future KICs for the programming

period will depend on the adopted EIT budget.

This approach would be in line with the EIT Regulation and would avoid any delay in the

preparation and launching the call of the first new KIC in 2021. This would enable the

EIT to continue developing innovative solutions addressing societal challenges through

new KICs and contributing to the attainment of the objectives of Horizon Europe through

a new KIC starting from 2021.

The proposed approach for the adoption of the SIA would therefore ensure (i) the

continued functioning of the EIT as from 1

January 2021, (ii) avoidance of unnecessary

delay of the launch of any new KIC and (iii) addressing the need for the planning of new

KICs to take account of the strategic planning process under Horizon Europe.

1.5.3. Lessons learned

Given that the EIT Regulation needs to be revised to align it with the applicable Union

framework programme supporting research and innovation and that a new SIA needs to

be proposed, it is appropriate to consider what other changes would be needed in order to

improve the functioning of the EIT and enable it to fulfil its mission and objectives.

These considerations should take account of a number of evaluations, audits reviews and

reports on the EIT that have been carried out over the past few years.

The following sections describe the key issues and technical problems that have been

identified in these reports and assess the options for addressing these issues through the

amendment of the EIT Regulation and the proposal for a new SIA.

17 According to Art. 1 of the current SIA, it will expire at the end of 2020.

18 Based on Art. 17(4) of the EIT Regulation, which provides that acting on a proposal from the Commission, the European

Parliament and the Council shall adopt the SIA in accordance with Art. 173(3) of the TFEU.

The table below indicates the most important sources of evidence for this impact

assessment.

Lessons learned

The

Court of Auditors report of 2016

acknowledged the raison-d'être of the EIT

but recommended a number of changes to the implementation model such as a revision

of its funding model and changes to the EIT staff provisions in order to increase the

overall effectiveness and achieve the expected impact of the EIT.

The

EIT interim evaluation of 2017

and the related Commission Staff Working

Document

concluded that the EIT model remains valid. They highlighted the need for

the EIT to improve in a number of operational areas and develop further synergies with

other EU initiatives.

The

High Level Group on the EIT of 2017

identified a clear need to strengthen

the role of the EIT as a provider of shared services and expertise to the KICs. It

recognised the distinctive role education plays in knowledge triangle integration and

called for the EIT to strengthen it.

Table 1: Key sources of evidence on EIT; own illustration

19 European Court of Auditors (2016), Special Report on performance of the EIT (subsequently mentioned as ECA (2016), Special

Report)

20 C. Wilkinson and al./ICF (2017), Evaluation of the European Institute of Innovation and Technology (EIT) (subsequently

mentioned as ICF (2017), Evaluation), and European Commission, Staff Working Document on the Interim Evaluation of the EIT,

SWD (2017) 351 final (subsequently mentioned as SWD (2017) 351 final).

The High Level Group was established by Commissioner Tibor Navracsics in 2016 to review the EIT’s workings and make

recommendations that can help guide the European Commission and the EIT Governing Board. High Level Group on the EIT (2016),

The Future of the European Institute of Innovation and Technology (EIT). Strategic Issues and Perspectives (subsequently mentioned

as High Level Group (2016), Future of the EIT).

PROBLEM DEFINITION

This chapter presents the main problems and further technical issues driving EIT

intervention within the Horizon Europe framework. It presents only those problems and

technical issues that need to be addressed in the next programming period (2021-2027)

through

legislative changes and decisions. These adjustments will increase the EIT’s

efficiency, effectiveness and overall internal and external coherence, in combination with

operational and managerial measures. The problems and issues identified below stem

primarily from the EIT evaluation, the Court of Auditors report, and the High-Level

Group report, and include references to the findings of those documents.

2.1. Suboptimal funding model

The EIT provides annual grants to KICs for a maximum of 15 years. The KICs

implement their knowledge triangle integration activities based on annual Business Plans

which are implemented by the KIC partners. The KIC activities are divided into two

categories:

a) activities funded up to 100 % by the EIT; and

b) complementary activities which are not funded by the EIT.

The distinction between these two types of activities determines the ceiling of the EIT’s

contribution. According to the EIT Regulation, EIT funding may only cover a maximum

of 25 % of a KIC’s overall costs (i.e.

the sum of the costs of EIT-funded activities and

non-EIT-funded activities - this complex model is set out in the Figure 3 below).

Figure 3: EIT funding model, European Court of Auditors illustration

According to the Court of Auditors 2016 report,

the inclusion of “complementary

activities” in the funding model is suboptimal given that both their definition and their

interpretation are rather general and vague.

This creates problems in applying the

eligibility rules among partners and KICs. The criteria for the designation of

complementary activities, i.e. their links to key activities and their proportionality, are

unclear, and thus, of little added value.

As the Court of Auditors observed, “the measuring and reporting of KIC complementary

activities

are not essential to the achievements of the EIT’s objectives” as many

complementary activities are not additional in practical terms,

i.e. they are not directly

triggered by the EIT intervention, already exist or will happen anyway. Therefore, the

intended EIT financial leverage effect, i.e. ensuring that a substantial part of the overall

KIC budget comes from non-EIT funding (such as membership fees, national or regional

funding), is not applied in practice.

In addition, the current funding modalities create a

disproportionate administrative burden in terms of financial reporting for the KICs. The

Court of Auditors implied in its report clearly the need to focus on EIT-funded activities

and concluded that the EIT funding model was not effective and requested its change in

order to improve it.

An additional important aspect of the EIT funding model is the financial sustainability

objective: KICs should gradually reduce their dependency from EIT funding for their

further consolidation and further expansion. In accordance with the EIT Regulation the

EIT grants provided to KICs should normally cease after a maximum of 15 years. In

order to support this objective, the EIT has adopted principles

obliging each KIC to

develop and implement a financial sustainability strategy and submit an annual progress

report. However, the current funding model does not provide any specific incentives to

KICs to gradually increase their levels of private funding. As a result, progress towards

financial sustainability remains uneven amongst KICs (see Figure 4).

22 ECA (2016), Special Report, pp. 15-20.

23 An example used also by the European Court of Auditors is that KIC partners have reported as a KIC complementary activity the

cost of non-EIT students attending courses in which EIT students also participate. However, these costs are not additional as the

courses were part of the standard educational programme of the university.

24 Ibid., p. 24

25 The overall level of co-funding of KAVA activities by KICs was 23% in 2016 and 20% in 2017.

26 Ibid., pp. 15-20.

27 Decision 4/2015 of the Governing Board on Principles of KICs financial sustainability.

Development of co-funding rate

(% of KICs contribution)

40,0

35,0

30,0

25,0

20,0

15,0

10,0

5,0

0,0

2014

Climate KIC

Raw Materials

2015

Innoenergy

Food

Digital

AVERAGE

2016

Health

2017

Figure 4: Co-funding attracted by KICs, 2017; own chart based on EIT data

An additional challenge of the current funding model is the annual nature of the planning

and preparation cycle of the KIC Business Plans.

As the Court of Auditors observed,

the current annual grant process is at odds with the need to reflect the longer-term

perspective of innovation activities.

The annual grant process is also a major obstacle to

planning and coordinating multiannual innovation projects. This limits the potential of

the KICs and leads to a suboptimal selection of innovation activities, low engagement of

some KIC partners and limited networking and interaction.

Questions related to the EIT funding were also part of an Open Public Consultation

(OPC) which was launched in the context of the impact assessment. The majority of

respondents

supported the notion that KICs need a robust financial sustainability

strategy from the outset (64% of respondents) and that securing other public funding for

the operations of KICs is necessary (60% of respondents). Furthermore, securing funding

from other sources, including those from private actors was the most popular solution

cited by respondents in an open-ended question regarding financial sustainability.

2.2.

Limited impact of EIT’s education activities

Since its set-up, the EIT has supported innovative education and training programmes by

linking education, research and business; learning-by-doing curricula; entrepreneurship

education; and international and cross-sectorial mobility. EIT students have strong

entrepreneurial competences and high employability rates, suggesting that their skills and

education are both recognised and useful.

In the last four years, 43 ventures and persons

The KICs’ Business Plan contains the detailed description of the activities that the KIC and its partners will run in the course

of the

year and forms the basis on which the grant allocations are decided by the EIT Governing Board; (see details in Annex 5).

29 ECA (2016), Special Report, pp. 26-30.

30 Based on the network analysis of partnering within KICs in the Study to support the Impact Assessment (SQW, November 2018),

Annex 7.

31 See Annex 2B

32 There were close to entrepreneurial 1200 EIT Label graduates as of 2017, in addition to EIT students engaged in other

programmes. See EIT (2017), Our Impact, from 2010 to 2016, pp. 33-34 (eit.europa.eu/interact/bookshelf/eit-our-impact-2010-2016),

and SWD (2017) 351 final, p.28.

from the EIT Community have been featured in Forbes Europe 30 under 30 lists.

highlighted by the EIT evaluation

, there are benefits to EIT-supported education

activities resulting from: knowledge triangle integration and the integration of research

results and innovative practices into the education offer; involvement of industry in the

design and delivery of the programmes; and access to accelerator programmes.

However, the EIT evaluation and the High Level Group report to the Commissioner also

highlighted that the impact of the education activities of the EIT remains limited. The

evaluation referred to the low awareness of the EIT education brand

. The EIT labelled

programmes do not appear to have sufficient traction to create market demand.

Moreover, the evaluation found that links “between education and innovation-support

activities [are underexploited], and will require further efforts in the coming future.”

More generally, in terms of overall impact, the Commission concluded in its Staff

Working Document on the EIT evaluation that “stronger impact is expected from [EIT]

education activities”.

A recent report

of the Joint Research Centre argues that "together with research centres,

HEIs are co-innovators of 70% of the innovations derived from H2020 projects.

However, further changes in strategic orientation and university governance are required

for universities to realise their potential contribution as enablers of innovation.

Excellence in research, high-quality education, entrepreneurship and contributions to

innovation all need to be strengthened, while at the same time ensuring synergies

between them.”

The Horizon Europe proposal has outlined a stronger role for the EIT in education. This

relates to the need for stronger entrepreneurial and innovation capabilities and skills in

HEIs.

Against this backdrop, the Horizon Europe impact assessment called for “an

enhanced role for the EIT in embedding innovation and entrepreneurial capabilities,

prospective skills identification and

talent development in HEIs”.

The challenge to increase the innovation capacity of HEIs is set to grow as they become

more integrated in local, national and global innovation chains.

In this context, the

proposal for the Specific Programme under Horizon

Europe identifies “entrepreneurial

and innovation skills in a lifelong learning perspective and the entrepreneurial

transformation of EU universities”

as one of the intervention areas for the EIT.

The stakeholders responding to the Open Public Consultation called for a stronger role of

the EIT in education. A total of 65% of all OPC respondents

agree or strongly agree

that training opportunities to become more entrepreneurial and innovation minded are

insufficient in Europe. The most popular suggestions from the respondents for achieving

33 See EIT (2017), Our Impact, p. 37 and EIT Press release: EIT entrepreneurs in the spotlight in Forbes 30 under 30

(eit.europa.eu/newsroom/eit-community-entrepreneurs-spotlight-forbes-30-under-30).

34 SWD (2017) 351 final, , pp. 40-44.

35 SWD (2017) 351 final, p.31.

36 Ibid., p.28.

37 Ibid., p.44.

38 C. Benedetti Fasil et al. (2017), Current challenges in fostering the European innovation ecosystem, EUR 28796 EN, Publications

Office of the European Union, Luxembourg, 2017, ISBN 978-92-79-73862-3, doi:10.2760/768124, JRC108368.

39 Ibid., p. 10.

40 See OECD (2009), Universities, innovation and entrepreneurship: criteria and examples of good practices.

(http://www.oecd.org/cfe/leed/43201452.pdf) as well as OECD country reviews on

https://heinnovate.eu

41 SWD (2018) 307 final, p. 256

42 See Renewed EU Agenda for Higher Education (COM(2017) 247) and the ones set in the Renewed EU Agenda for Research and

Innovation (COM(2018) 306) as well as High Level Group on maximizing the impact of EU Research & Innovation Programmes

(2017) LAB

–

FAB

–

APP. Investing the European future we want, p.13.

43 COM(2018) 436 final, p. 71

44 Cf. Annex 2B

the educational policy objective are for the EIT to provide funding for innovation

capacity development and rewarding/recognising HEIs to become more innovative and

entrepreneurial (71% of respondents) and to launch new actions supporting education and

human capital development through the identification of future skills needs (69% of

respondents). In the same consultation however, only 23% of respondents support the

strengthening of the EIT label. Furthermore, the representatives of business and regional

associations interviewed by the Commission

expressed the view that HEIs should play

a key role for a more entrepreneurial environment in Europe.

2.3.

Limited impact of EIT’s regional outreach

The KICs consist of geographical hubs or co-location centres (CLCs) that bring together,

at a local or regional level, education, research and industry partners of the KIC. As the

EIT evaluation confirmed, CLCs broaden the EIT innovation support to some of EU's

moderate innovation performers; nevertheless, the CLCs' support to the group of

“moderate and modest innovator” countries

remains limited to a small number of

Member States (Portugal, Poland, Estonia, Greece, Slovenia)

Both the evaluation of the EIT and the High-Level Group report highlighted that efforts

are still needed for the KICs to be fully integrated into the local innovation ecosystems.

60% of respondents to the consultation on the mid-term evaluation of the EIT reported

that “the KIC had had little or no systemic impact on local, regional or national

innovation ecosystems”.

The majority (77%) of all respondents to the OPC agree or strongly agree that the joint

activities between HEIs, businesses and research organisations are not sufficiently

integrated within their regional and local ecosystems. This perception is even stronger

(89% of respondents) in

“moderate and modest innovators” countries. Similarly, the main

issue raised by the representatives of the business and regional associations during the

consultation organised by the Commission in November 2018 related to the necessity of

linking the EIT and KIC activities to the regional and local Smart Specialisation

Strategies.

The problems of insufficient engagement of KICs in developing strong local innovation

communities are further amplified by the fact that 73% of the EIT financial contribution

is concentrated in five countries.

This results in a lack of integration and promotion of

KIC activities within the regions and local innovation ecosystems across Europe and

limits their overall impact on regional innovation ecosystems.

Through its Regional Innovation Scheme (EIT RIS) which was launched in 2014, the

EIT developed an outreach strategy, which is carried out through the activities of the

KICs. Its main objective is to support countries and regions that lag behind in innovation

45 Views expressed in the stakeholder workshops organised by the Commission in November and December 2018.

46 This report adopts the categorisation of the European Innovation Scoreboard. The Scoreboard identifies countries as: Innovation

Leaders; Strong Innovators; Moderate Innovators; and Modest Innovators. ec.europa.eu/growth/industry/innovation/facts-

figures/scoreboards_en

47 ICF (2017), Evaluation, p. 36, i.e. Portugal, Poland, Estonia, Greece, Slovenia

48 Ibid., p. 84. and High Level Group (2016), Future of the EIT, p. 13.

49 ECA (2016), Special Report, pp. 42-43. Funds are concentrated in partners from: Netherlands (24%), Germany (15%), France

(13%), Sweden (12%) and United Kingdom (9%)

performance

by strengthening their capacity for innovation and by bringing the EIT

model to these regions. EIT RIS is a voluntary scheme and KIC do not have an

obligation to implement it unless they decide to include it their Business Plans.

Incentives for KICs to operate in EIT RIS territories are still limited, in comparison to the

total budget available. The EIT RIS guidelines foresee that each KIC can apply for EUR

1.5 to EUR 4 million annually. This is between 1.7% to 5% of the total annual grant for a

first generation KIC in 2018. Such incentives appear insufficient to fully exploit the

potential of the regional outreach of the KICs activities and do not adequately mitigate

existing regional disparities.

Given the novelty of the RIS any conclusions regarding its impact would be premature at

this stage. However, there are indications that its effect is likely to be limited, partly due

to low budgets as well as differing strategies between the horizontal EIT RIS strategy

and the individual strategies of the KICs that ultimately implement it on a voluntary

basis.

2.4. Technical issues

In addition to the three key problem areas described above, the interim evaluation, the

Court of Auditors Report, the High-Level

Group Report, the Commission’s observations

on the EIT functioning also point to a number of technical issues that the EIT needs to

address in order to increase the effectiveness, efficiency and coherence of its operations,

in line with its objectives and mission.

KICs: openness, transparency and collaboration

Limited transparency and openness of the KICs affect their partners and stakeholders. As

the Court of Auditors observed in relation to KIC internal processes, the major

challenges relate to the limited number of partners involved in the strategic and

operational decision-making of the KIC

; the selection of activities financed by the

EIT

; and the lack of transparency and communication

, hindering wide participation,

roll-out and replication.

The high concentration of EIT financial support in a small

number of partners negatively impacts the attractiveness of the KICs for potential new

partners.

The High-Level Group report found that the limited openness of KICs, and their

innovation ecosystems as a whole, to new partners, as well as the lack of clear guidelines

associated with becoming a partner can reduce the effectiveness of the EIT model. The

Group report referred to the perception of the KIC as “closed clubs” and called for

principles that can better engage external partners including SMEs.

A similar view was

50 Modest and moderate innovators in 2018, based on the European Innovation Scoreboard: Bulgaria, Croatia, Cyprus, Czech

Republic, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, (South) Italy, Slovakia, Slovenia, Serbia

and Turkey.

51 ECA (2016), Special Report, p. 42.

52 Ibid. p. 44; 50% of the respondents to the survey do not believe that the selection of the activities within the KIC is fair and

transparent.

53 Ibid. p. 44; some KIC partners have expressed their concerns by stating

that “there are a

couple of influential partners and they

distribute the funds among themselves”.

54 E.g. the websites of some KICs still lack basic information on the supported projects such as contact details of project

coordinators, project duration, amount of EU-funding, and key deliverables. The EU as funding source is not properly indicated

throughout the co-funded projects.

55 High Level Group (2016), Future of the EIT, pp. 17-18.

reiterated by some participants in the consultations on Horizon Europe.

Some

stakeholders highlighted that “it is essential that the EIT and the KICs improve their

openness and responsiveness to include new relevant actors and keeping a continuous

outreach effort to renew and reinforce the member base”.

Stakeholders also highlighted

the potential synergies from more active collaboration between and across the KICs.

More than 50% of OPC respondents indicated that the EIT brand is not well

recognised.

The current EIT mechanisms to ensure systematic and wide dissemination

of results to better inform European, national and regional policy makers of the

achievements of KICs/EIT are not effective.

The integration of the activities of HEIs, research organisations, and businesses is a

cornerstone of the EIT innovation model and requires efficient collaboration among these

actors. As confirmed by participants in the consultation activities run by the Commission,

the level of cooperation between education and training institutions and businesses is

insufficient. Business actors were not always willing to partner with academia thus

confirming a broader problem in university-business collaboration.

Furthermore, the social network analysis in Annex 7 suggests that in selected KICs up to

83% of KIC beneficiaries participated in only one or two projects meaning that some

organisations have weak ties with the system and that activities are concentrated around a

small number of organisations.

EIT Governance

Good governance of the EIT is essential for achieving its objectives and ensuring long-

term success. Structures, processes, roles and responsibilities as established in the EIT

Regulation are interrelated. Several bodies play an important role and these are (1) a

Governing Board

(high-level members experienced in higher education, research,

innovation and business) assisted by an

Executive Committee,

(2) a

Director,

appointed

by the

Governing Board

and (3) an

Internal Auditing Function

advising the

Governing

Board

and the

Director.

The Commission has an observer role in the

Governing Board.

also appoints the members of the

Board

but the latter is not obliged to report to the

Commission.

Therefore, the Commission’s contribution to the effective and efficient

functioning of the EIT and KICs is limited.

56 E. Griniece and M. Muizarajs (2018), Synthesis of stakeholders input for Horizon Europe, p. 64.

57 Ibid.

58 See Annex 2A

59 ICF (2017), Evaluation, pp. 51-52

60 Ibid.

61 European Commission (2018), The state of university-business cooperation in Europe. Publication available

at.europa.eu/en/publication-detail/-/publication/1b03ee59-67a4-11e8-ab9c-01aa75ed71a1/language-en

It adopts, for example, the draft EIT’s SIA, the SPD, the EIT’s budget, appropriate measures if the evaluation of a KIC shows

inadequate results, appoints and dismisses the

Director

and exercises disciplinary authority over him/her, promotes the EIT globally,

etc.

The external evidence on governance is not as extensive as in other areas; however, in

the Commission’s experience it is clear

that the current form of governance has an

impact on the efficiency of the EIT’s functioning. As an example, the current EIT

Regulation does not rigorously distinguish between the supervisory powers of the

Governing Board and the executive powers of the Director, e.g. with regard to the

continued monitoring and evaluation of the activities of the KICs. The governance

structures should also better ensure that KICs operate in synergy with each other and

with relevant EU policy objectives

According to the EIT Regulation, the

Stakeholder Forum

is intended to be a platform

open to national, regional and local authorities, organised interests and individual entities

from business, higher education, research, associations, civil society and cluster

organisations, as well as other interested parties from across the knowledge triangle.

However, its implementation is through one annual event

, which suggests that it is not

effectively fulfilling its function due to its limited scope.

The governance of the EIT has also been the subject of recommendations from the High

Level Group on the EIT (HLG)

. Consequently, there is a need to clarify and adjust

roles, responsibilities and the division of tasks between the

Governing Board,

the

Executive Committee

and the

Director

with a view to increase clarity, avoid duplication

and the need to simplify the EIT’s decision-making

process

. In addition, a clarification

of the role of the Stakeholder Forum is necessary in order to maximise its impact.

Other issues

As highlighted by the Court of Auditors’ 2016 report, there is a high staff turnover at the

EIT linked to the fact that EIT staff contracts have limited duration compared to other

similar EU bodies. This is an issue that needs to be addressed as it has impact on the

continuity of EIT's operations and its functioning.

63 The EIT is organising every year an event gathering EIT stakeholders. See for more information https://eit.europa.eu/innoveit

64 High Level Group (2016), Future of the EIT, pp. 22-24.

65 Supported by evidence from decentralised EU agencies concluding that a clear separation of roles and functions between the

Management Board

and the

Director,

as foreseen in the founding regulations, is meant to avoid overlap between the two, and allow

the

Management Board

to focus on strategic priorities and key management decisions.

2.5. Summary of problems and technical issues to be addressed:

The following problem tree exemplifies the drivers of the problems and technical issues:

Drivers

Low awareness of the EIT education

Complicated concept of KAVA vs. KCA activities, the concept of

entrepreneurship education and linking

activities and related unclarity on

the education, research and business

eligibility among KIC partners

Non coherence between KIC

strategies/ business plans and EIT

activities (RIS scheme) vis-à-vis

regions

Limited openness and

transparency of KICs

EIT Governance

–

responsibilities and tasks

Problems

Suboptimal KIC funding model

Limited impact of EIT education

activities

Limited impact of EIT s regional

outreach

Technical issues

Low integration and promotion of

KIC activities within local

environments

Limited entrepreneurial competences

Limited inclusion of education in

innovation ecosystems

Lack of specific skills in key fields

(individual level)

Lack of entrepreneurial capabilities of

HEIs

(institutional level)

Low integration and promotion of KIC

activities within local environments

Untapped potential to better link

innovation players across Europe

Concentration of EIT

funding in few countries

Collaboration and

unexploited linkages

between KTI activities

Effects

Consequences

Low co-funding attracted and limited

progress in achieving financial

sustainability

Low effectiveness of annual activity

planning and budgeting

Disproportionate admin burden on

financial reporting

Figure 5: Problem tree; own illustration

The following table shows the sources of problems and technical issues:

Problem/technical

issue

Suboptimal funding

model

EIT governance

Future themes for

new KICs

Limited impact of

education activities

Limited impact of

regional outreach

Openness, transparency

and collaboration of

KICs

Horizontal: ensuring

alignment within

Horizon Europe and

synergies

Operational/managerial

measures

Regulation

SIA

Table 2: Sources of problems and technical issues; own illustration

WHY SHOULD THE EU ACT

3.1. Legal basis

The EU has a shared competence in industry policy based on Article 173 TFEU (Title

XVII). According to Article 173(1), the Union and the Member States shall ensure that

conditions necessary for the competitiveness of the Union's industry exist. For that

purpose, in accordance with a system of open and competitive markets, their action shall

be aimed also at fostering better exploitation of the industrial potential of policies of

innovation, research and technological development. Article 173(3) foresees that the

European Parliament and the Council, acting in accordance with the ordinary legislative

procedure referred to in Article 294, may decide on specific measures in support of

action taken in the Member States to achieve the mentioned objective, excluding any

harmonisation of the laws and regulations of the Member States. This provision is the

legal basis of the EIT Regulation and of the EIT’s Strategic Innovation Agenda 2014-

2020.

The proposed reinforcement of the activities of the EIT, including in the area of

education and the regional dimension, are innovation-driven and aim at the fulfilment of

the objective set out in Article 173 TFEU. Therefore, the industry legal base provided in

Article 173 TFEU constitutes the legal base of both proposals assessed in this impact

assessment.

3.2. Subsidiarity and proportionality: need for, and added value of EU action

The Commission proposals for amending the EIT Regulation through a recast and for a

new SIA respect the principles

of subsidiarity

and

proportionality.

They do not go

beyond what is required for achieving the Union's objectives and provide a clear EU

added-value in terms of economies of scale, scope and speed of investments in research

and innovation areas, compared to national and regional initiatives and solutions.

Moreover, EU action would not interfere with purely domestic scenarios or require

harmonisation of the laws and regulations of the Member States.

The EIT has a unique way of building EU-wide innovation ecosystems of education,

research, business and other stakeholders.

Its activities have a cumulative effect, which

support and stimulate Europe's expertise, notably, in key strategic fields. This strengthens

the Union's competitiveness and innovation capacity for the benefits of society as a

whole. Furthermore, cooperation activities supported by the EIT lead to an increased

quality of action, innovation and internationalisation of KIC partners and organisations,

the creation of cross-border, multidisciplinary networks, more cross-sectoral cooperation

and geographical outreach.

The EIT is also the sole instrument within Horizon 2020 and the future Horizon Europe

with a distinct focus on education as a key driver of innovation, growth and

competitiveness. The EIT and the KICs develop innovative education and training

programmes by linking education, research and business; learning-by-doing curricula and

robust entrepreneurship education. The EIT contributes to increasing the number of

entrepreneurs and skilled professionals thus contributing to the overall development of

human capital in Europe.

66 ICF (2017), Evaluation, p. 36.

OBJECTIVES

WHAT IS TO BE ACHIEVED

The general objectives are reflected in the Horizon Europe programme proposal and

presented below, along with the specific objectives that address the problems and

technical issues facing the EIT.

PROBLEMS

OBJECTIVES

Horizon Europe

I. Barriers to collaboration between higher

education, research and business

General

I. Strengthen sustainable innovation ecosystems

across Europe

II. Foster innovation and entrepreneurship

through better education

III. Bring new solutions to global challenges to

market

II. Low levels of entrepreneurial activity and lack of

entrepreneurial mindset

III. Underutilisation of existing research strengths

to create economic or social value

EIT Regulation, SIA

Suboptimal KIC funding model

Limited impact of EIT education activities

Limited impact of EITs regional outreach

Increase the impact of KICs and knowledge triangle

integration

Specific

Increase innovation capacity of higher education by

promoting entrepreneurial transformation of HEIs

Increase regional outreach of EIT by addressing regional

disparities in innovation capacity across the EU

Technical issues

Individual operational objectives

Figure 6: General and specific problems and objectives of the EIT; own illustration

In line with the identified problems, the specific objectives, to be defined in the SIA are:

a. To increase the impact of KICs and knowledge triangle integration through an

effective and efficient EIT funding model;

b. To increase the innovation and entrepreneurial capacity of the higher education

sector by promoting institutional change in HEIs in Europe;

To increase the regional outreach of the EIT in order to address regional

disparities in innovation capacity across the EU;

5. H

OW OPTIONS ADDRESS PROBLEMS AND TECHNICAL ISSUES

A number of options regarding the EIT’s future direction were considered and

discarded

in the Horizon Europe impact assessment

: namely, the Reduction/Discontinuation of

EIT KICs interventions; the Continuation of the approach to EIT/KICs as implemented

under Horizon 2020

; the Direct integration of KICs into the Framework Programme

(without the EIT). Annex 5 provides details on policy options which were not considered

viable and the reasons for this.

Before proceeding to the discussion of the three policy options, sections 5.1.-5.3. discuss

measures to be taken in response to problems and technical issues described in section 2

for which only one alternative is viable. The policy options are presented in the backdrop

of a targeted EU level intervention on the basis of the Horizon Europe proposal for an

EIT budget of EUR 3 billion (allowing the launch of one or two new KICs during 2021-

2027 according to the option chosen). The options offer different strategic choices and

are not cumulative even though a wide range of similarities exists across all of them.

5.1. Discussion of technical issues

Openness, transparency and collaboration

Limited transparency and openness affect negatively the collaboration of EIT

stakeholders. Technical amendments in the EIT Regulation would be necessary to

reinforce the principles of openness and transparency, particularly: the provision on

transparency of both the EIT and KIC and access to documents and extending the

selection criteria for KICs to incentivise the addition of new members and including

references to Horizon Europe principles of transparency and openness for European

Partnerships.

A number of technical measures can be introduced by the EIT which do not require

additional amendments to the EIT Regulation. Such measures include the creation of

guidelines by the EIT to be followed by KICs as regards transparency and openness

aspects, in particular the selection of new partners, the preparation of the Business Plan

and the openness of activities to third parties. The Governing Board (GB) would monitor

how KICs apply the guidelines and take them into account in the assessment of KICs’

performance for the funding allocation. This includes the possibility to explore how

strategic priorities that are not foreseen to be addressed by new KICs can eventually be

efficiently supported through collaborative action among several KICs (cross-KIC

actions). This applies even more so if more than one KIC already foresee activities

common for a policy objective.

In addition, the

KICs’ multi-annual

strategies need to describe how the KICs will ensure

openness to relevant partners and stakeholders and how it intends to reach new potential

partners across Europe. Other measures include ensuring that KICs transparently share

the conditions and the criteria to become partners as well as improving the procedure for

the preparation of a KIC multi-annual strategy and Business Plan (including the

identification of priorities, synergies with other KICs and other EU-activities, the

selection of activities and the allocation of funds). Finally, the Governing Board could

67 SWD(2018) 307 final, p. 129

68 This approach was discarded due to its perceived lack of integration of EIT in the overall R&I framework

69 Including guidance on streamlining the policy goals/targets and its monitoring.

incentivise KICs that demonstrably increase the share of calls, in particular for

innovation projects that are open to third parties.

In its monitoring, the EIT should signal over-concentration of EIT financial support to

the Governing Board which should be able to request operational measures from the KIC

that mitigate such over-concentration. More generally, transparency guidelines should

ensure that KIC Business Plans contain the information on the level and intensity of

cooperation between KIC partners (i.e. overview/ratio of KIC partners/beneficiaries

within individual KIC activities, innovation projects or education programmes; and

breakdown of funding distribution among individual partners). Such measures should be

monitored by the EIT via relevant indicators and trigger action at the level of the

Governing Board if related objectives are not met.

Governance

There is a need for clarification of the roles for the EIT Governing Board, Executive

Committee and Director. The Governing Board needs to strike the right balance between

strategic leadership of the EIT and KICs and responsibility for operational aspects of the

EIT and KICs.

In addition, the Governing Board has to give overall guidance to the EIT

while respecting the autonomy of the KICs.

While the EIT Regulation qualifies all

decisions of the Governing Board as ‘strategic’, it is clear that some decisions are

operational in nature such as the establishment of advisory groups or the implementation

arrangements for the operation of an Internal Auditing Function.

The EIT would benefit from a more guidance from the Governing Board on key strategic

issues. The Governing Board currently does not play a sufficiently strong role in the

monitoring, supervision and steering of KICs, which could be strengthened by

supervising more closely the ongoing evaluation and monitoring of KICs. A clearer

division of tasks could help the Governing Board to achieve balance between strategic

leadership and operational aspects.

The assistance by the Executive Committee to the Governing Board should be clarified in

order to provide more effective support (eg. preparation by Executive Committee of the

meeting of the Governing Board in cooperation with the Director; consultation of the

Exectutive Committee by the Director on key documents such as the draft Single

Programming Document and draft consolidated annual activity report). The

Commission’s role should also be clarified to reflect its legal obligations in terms of

monitoring and sound financial management. A requirement for agreement by the

Commission on a limited number of strategic issues (e.g. monitoring and financial

allocation principles) should be introduced.

The EIT Stakeholder Forum should take into consideration the activities of the Forum of

Member

States and Associated Countries’ public authorities and bodies to be established

under the Horizon Europe programme. This forum will promote coordination and

dialogue on the development of the EU’s innovation ecosystems and between EU and

national innovation policies and programmes.

70 Under the current EIT Regulation, the GB has to i) take the necessary strategic decisions on the EIT and KICs by, for example,

adopting the Strategic Programming Document (SPD) and EIT’s budget, the draft SIA, selecting a partnership as a KIC; ii) exercise

responsibility for operational aspects of the EIT and KICs, e.g. by adopting procedures for financing, monitoring and evaluating the

activities of the KICs; and iii) respect the substantial autonomy of the KICs by not influencing their internal organisation and

composition , precise agenda or working methods.

71 As a result of the broad scope of the KICs autonomy in the EIT Regulation, the KICs have tended to grow large, strong and

independent, while the GB has built up the corresponding capacity to successfully oversee their strategic development and

performance. The result is a lack of operational transparency of the KICs, a problem identified in ECA (2016), Special Report, and

High Level Group (2016), Future of the EIT.

Moreover, several amendments to the EIT Statutes annexed to the EIT Regulation would

be necessary to reinforce the EIT governance provisions. In particular, this would include

changes to clarify the role of the Governing Board, the Executive Committee, the

Director and the Commission in the governance of the EIT with a view to increase its

effectiveness; and to clarify the role of the Stakeholder Forum. In addition, provisions as

regards staff contracts should be amended to allow for contracts of an indefinite duration

in line with other comparable bodies, in order to ensure the continuity of EIT operations.

5.2. Discussion of priority fields

According to the EIT Regulation, the SIA should define the priority fields for the future

KICs. The Governing Board of the EIT proposed four possible priority themes for future

KICs in its Strategic Outline on the Future of the EIT

and the draft Strategic

Innovation Agenda of the EIT that was submitted to the European Commission in

accordance with the EIT Regulation. The priority fields proposed by the Governing

Board have been subject to a further thorough assessment by the Commission (see Annex

9 for more details). It should be noted that this assessment did not include a detailed

specific assessment of the potential economic, social and environmental impacts of

possible KICs launched under each of the proposed priority fields since this is not

explicitly required by the EIT Regulation.

The final Commission assessment, summarised in the table below, 1) builds on several

reports and assessments conducted by the EIT and the Commission against various sets

of criteria and 2) is based on the evaluation of 9 key aspects that condition the selection

of the priority fields. Annex 9 summarizes the assessment process and its different steps

and outcomes. Annex 6 outlines the European partnerships criteria that will be reflected

in the call for selection of future KICs and in their multiannual strategies.

See

for

details

the

strategic

outline

published

the

EIT

GB:

https://eit.europa.eu/sites/default/files/eit_strategic_outline_0.pdf

73 The same approach was followed by the Commission and co-legislators for the preparation and adoption of the current Strategic

Innovation Agenda 2014-2020.

Key aspects

Coherence and synergies with

EU R&I and Education

landscape

Not covered by planned similar

EU initiatives (i.e. partnerships)

Cultural and

Creative

Industries

Security and

Resilience

Water, Marine

and Maritime

Inclusion,

Integration

and Migration

Fragmentation of the innovation

value-chain

Suitability of the EIT model to

address innovation bottlenecks

Ability to mobilize investment

and sufficient market for

innovation

Modernisation/transformation

potential of the Education

system and skills gap

Regional dimension

Citizen-focus approach

Synergies with and

complementarity to existing

KICs

TOTAL

Table 3: Selection of future priority fields, Commission assessment

As a result of this assessment process, the field of Cultural and Creative Industries (CCI)

has been identified as the most adequate thematic priority for the first KIC to be launched

under Horizon Europe as it obtained the best results in the overall assessment against the

proposed criteria. CCI are a sector with a high growth potential, many grass-roots

initiatives and strong citizen appeal. They are strongly embedded in their local and

regional ecosystems. However, the innovators and business creators in this sector lack

the needed entrepreneurial and innovation skills. For these reasons, the KIC model seems

particularly well adapted.

Cultural and Creative Industries also complement very well the themes of the 8 already

existing KICs in the EIT portfolio. Last but not least, they cover an area for which no

other potential partnership is foreseen and where there is a strong political support from

the European Parliament and from Member States. Therefore, this theme has proven to

be the most suitable to the KIC model and complements well the activities of the existing

ones. These conclusions would be reflected in the SIA, along with an indication for the

launch of such a KIC. A call would be launched in 2021 that would lead to the

designation of a KIC in the year after, i.e. 2022.

5.3. Discussion of funding model

In line with the EIT Regulation provision that requires funding for KICs to cease

normally after a maximum of 15 years, the EIT Governing Board adopted principles for

the financial sustainability of the KICs in 2015, based on its initial experience with the

first generation KICs launched in 2010. In the principles, the Board outlined that that the

maximum EIT contribution to a KIC for eligible costs should start to decrease from

100% to 80% in year 11 of the EIT grant agreement with the KIC

, implying there is no

co-funding obligation for the KIC in the years one to ten. While this decision was the

first to explicitly introduce co-funding from the KIC partners, given that no KIC has

entered its eleventh year by 2019, its effectiveness cannot currently be assessed.

KIC partners already attract co-funding, albeit to a very different extent. The figure

below provides an overview of the co-funding attracted by KICs so far

–

ranging from

9.7% in EIT InnoEnergy (launched in 2009) to 27% in EIT Health (launched in 2014).

The figure shows the average co-funding increasing from 9% to 19% between 2014 and

2017 (see Annex 11 for more details). However, as shown in the Figure 7, it is evident

there are significant performance differences between the KICs. In particular, two out of

three first generation KICs have significant difficulties in attracting co-funding.

Co-funding rate, 2017

(% of KICs contribution)

30,0

25,0

20,0

15,0

10,0

5,0

0,0

Climate KIC

Innoenergy

Digital

Health

Raw

Materials

Food

AVERAGE

Figure 7: Co-funding rate (% of KICs contribution) in different KICs in 2017; EIT data

74 The decision applies to the so-called KAVA activities (KIC-value added activities), ie. the activities that can be funded with up to

100% (see chapter 2.1. for an explanation). The Governing Board decided in 2015 that the maximum EIT contribution to a KIC will

be reduced from up to 100%

funding to KAVA after 10 years of a KIC’s designation to 80%, on average, in year 11 and thereafter

progressive annual reductions: 60% in year 12, 40% in year 13, 20% in year 14 and 10% in year 15. This decision has not been

revoked since then as it is expected that the Commission will revise the funding model, in accordance with the Court of Auditors

recommendation.

In this context and in view of the recommendation of the Court of Auditors, different

solutions have been analysed in order to address the suboptimal funding model of the

EIT: a continuation of the current practice; an introduction of a co-funding rate in line

with the Horizon Europe provisions for partnerships; and a decreasing EIT co-funding

rate. Annex 10 provides a financial modelling analysis of the implications of co-funding.

5.3.1. Continuation of current funding model (discarded)

Not changing the current funding model would mean that there would continue to be a

funding model that does not distinguish clearly between the EIT grant and real external

investment. The KIC activities not funded by the EIT would continue to be included in

the calculation basis when determining the EIT’S financial contribution to the KIC. The

yearly reporting of the KIC complementary activities, both in the Business Plans and in

the financial reports submitted by the KICs, would continue to add considerable burden

with limited added value.

As a result, the funding allocation would continue to be ineffective and disincentivise

KICs from implementing sound financial sustainability strategies. The expected leverage

effect will continue to be undemonstrated. Finally, not responding to the recommendation

of the Court of Auditors

is not a justified option, so this solution is discarded.

5.3.2. Introduction of a 50/50 co-funding rate (discarded)

In light of the 2015 decision of the Board, the subsequent recommendations of the High

Level Group and the Court of Auditors, the data available, and the need to strengthen

KIC partners contributions or other revenue sources, an alternative to the continuation of

the current model is to consider the introduction of an explicit co-funding model to

replace current practice.

One possibility would be to adopt the guidance provided for institutionalised European

Partnerships based on Articles 185 and 187 of the TFEU. The provisions in Annex III on

Partnerships of the Horizon Europe

proposal stipulate, “the financial and/or in-kind,

contributions from partners other than the Union, will at least be equal to 50%”.

The

shift to such a funding model would however raise a number of serious concerns in terms

of feasibility and the overall impact on the KIC.

While it can be assumed that co-funding of KICs would gradually increase, it seems

implausible that KICs would be able to adapt to a co-funding rate of 50% in the transition

to the Horizon Europe framework as of 2021 onwards. Such a change in the funding

model of all existing KICs would imply a far-reaching revision of all existing financial

management and planning practices. Such an abrupt change would need to be agreed by

all KIC partners putting the KIC partnership at risk. It is not excluded that it can

seriously destabilise the current structure which is based on existing guidance.

In addition, the application of a harmonised co-funding rate of 50% across all eight KICs

- that are in very different stages of development - would disrupt all KICs and the entire

75 ECA (2016), Performance report, p. 51

76 See COM(2018) 435 final, Annex III, p.7.

77 It is expected that the final HE Regulation will require the limit of 50% of EU financial contribution will apply only to

institutionalised partnerships under Article 185 and 187 of the TFEU.

KIC operation model. It would be contradictory to the guidance provided by the EIT GB

which aimed to allow for some flexibility in preparing KICs better for financially

sustainability with a decreasing rate of co-funding by the EIT.

Moreover, such a rate would not provide sufficient incentives to any new KICs to apply

to upcoming calls or to the achievement of the financial sustainability goals by the

current ones. In the case of new KICs, the obligation to co-fund 50% of the budget from

the very beginning entails a clear risk of non-implementation, as partners would be more

reluctant to engage in long-term partnerships that requires them to commit significant

resources over up to 15 years. It is very likely that calls for proposals for future KICs

would not attract interest under this co-funding rate.

Apart from the significant operational implications of a shift to a 50% co-funding model,

the financial modelling in Annex 10 shows that even though attractive in theory in the

short term, a co-funding rate of 50% would be a suboptimal solution in the long-term.

Moreover, there are significant enforcement issues with such a rate that may prevent

partners from participating in the activities, both for existing and new KICs.

In addition, a co-funding of 50% appears more suitable for research-industry partnerships

where industrial partners have a core interest in shaping and controlling the research and

development agenda. It seems however less suitable for a KIC that includes at its core

also education and entrepreneurship activities that aim at developing skills and a more

entrepreneurial culture. Such activities are traditionally addressed by and in close

collaboration with the education sector and are more difficult to fund from private

sources.

In conclusion, there is a considerable risk that a co-funding rate of 50% applied across all

KICs may lead to premature termination of the activities of at least some KICs, while

causing severe disruption in all of them and preventing new ones from starting. For this

reason this option is discarded as well.

5.3.3. Introduction of a gradually decreasing EIT co-funding rate (retained)

A number of reasons suggest a gradually decreasing EIT co-funding rate would be an

appropriate solution to the problem at hand.

First, the establishment of EIT co-funding rates that would reflect the decision adopted

by the Governing Board in 2015 and the needs of KICs across their different phases

(start-up phase, ramp-up phase, maturity phase, exit from the EIT grant). It would

support them more effectively towards achieving financial sustainability and result in

additional economic benefits due to the significant investment made already.

It would

provide clarity on specific co-funding conditions for the different phases. This would

result in higher planning security and private investment in KIC-supported

projects/sectors, enabling KICs to gradually focus more on higher added-value activities

and services they provide.

Secondly, the introduction of a gradually decreasing rate of EIT co-funding would

stimulate and reward performance and best practice. While most of the KICs already

have adequate non-EIT co-funding rates, some of them do not. This is the case of two out

78 See Annex 10 for details

of the three first generation KICs (EIT InnoEnergy at 9.7% and EIT Climate-KIC at

12.6% in 2017) despite them being fully mature and receiving a grant of around EUR 85

million and EUR 80 million, respectively for 2017. However, given the clear guidance of

the Governing Board from 2015 it is expected that their performance will improve

between 2018 and 2020 (latest data available is 2017) as the EIT Governing Board has

raised this issue with the KICs in its monitoring and supervision.

A co-funding rate applicable to the KICs should reflect best performance and aim to

increase the performance of KICs that under-perform. Based on the KIC development

model, a decreasing funding rate would involve four phases. A start-up phase (years one

to four) will involve the set-up of the organisational structure of the KIC, establishing its

management and operational structures and defining the short-term business strategy.

This phase will be supported with up to 100% of the eligible cost within the available

grant. This is necessary as the KICs build up their operations in the first years and the

absolute size of the grant is growing only over time (for example, EIT Health, launched

in 2014, received the followings amounts: EUR 3.2 million (2015); EUR 20.7 million

(2016), EUR 34.2 million (2017) and EUR 57.7 million (2018)).

In the ramp-up phase (years five to seven) the KIC will consolidate its partnership

structure and deliver on its mid-term business strategy. The EIT will support the KIC

with up to 80% of the eligible costs, requiring the KIC to match at least 20% of the cost.

In the maturity phase (years eight to eleven), the KIC will grow, expand and the EIT will

support it with up to 70% of the budget. Finally, in line with the Governing Board

principles for financial sustainability, during the exit phase (years twelve to fifteen), the

EIT will request the KIC to gradually increase its co-funding rate on an annual basis. The

“exit from EIT grant” phase is in line with the guidance of the Governing

Board that

stipulated a decrease starting with 80% in year 11 and thereafter progressive annual

reductions: 60% in year 12, 40% in year 13, 20% in year 14 and 10% in year 15”.

The

EIT will discontinue its annual grant to the KIC after year fifteen.

The table below provides an overview of the proposed decreasing co-funding rate that

adapts and formalizes the decision taken by the Governing Board.

Start-up

Years

EIT

Co-

funding rate

–

Up to

100%

Ramp-up

–

Maturity

–

Exit from EIT grant

–

50% at year 12,

decreasing by 10% per

annum

Up to 80%

Up to 70%

Table 4: Overview of the proposed decreasing co-funding rate for the EIT grant; own illustration

79 Internal data and reporting provided by the EIT to the European Commission.

The same document stipulates “in year 11 and thereafter progressive annual reductions: 60% in year 12, 40% in year 13, 20% in

year 14 and 10% in year 15”.

Unlike the Governing Board proposal of 2015, the proposed decreasing co-funding rate

would ensure that co-funding is applied early on in the KIC operations (starting at year 5

instead of 11), thereby significantly increasing the commitment of the partners and their

long-term planning security. The proposed EIT co-funding rate would gradually decrease

over the years 5 to 15 and facilitate the KICs transition to financial sustainability, rather

than start to fall steeply after 10 years. All other things being equal, the proposed

decreasing rate would also trigger higher private investment than the current GB proposal

(see also Annex 10). Finally, such a co-funding rate reflects well the best performing

KICs today that should gradually become the benchmark.

EIT co-funding rate, EIT expected annual grant and KIC

co-funding in 15 years perspective

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

EIT co-funding rate (%)

EIT co-funding (Meuro)

KIC co-funding (Meuro)

Figure 7: EIT co-funding rate, EIT expected grant and KIC co-funding in perspective; own projection

The adaptation of the funding model would increase the non-EIT co-funding share. As a

result, higher private investments from both existing KIC beneficiaries as well as new

partners investing in KIC-supported projects would be likely in the medium to the long

term as the simulations in Annex 10 demonstrate.

Furthermore, the adaptation of the

funding model is in line with the views of the majority of stakeholders expressed in the

Open Public Consultation. Securing other public or private funding for the operation of

KICs from the outset was the most popular solution cited and supported by 64% of the

respondents.

81 The simulation results in Helsinki-Uusima and Noord-Brabant regions suggest that the accelerating of the private investment in the

medium- to long-run is the most effective when the increasing co-funding rate over time is applied (policy option 2) attracting

annually EUR 96.62 million and EUR 324 million respectively in 2035.

The implications of changes to the funding model would be different for different waves

of KICs:

First wave

(three KICs launched in 2010): somewhat affected as the funding by

the EIT will be discontinued after 2024 and Governing Board guidance from 2015 is

broadly in line with current proposal.

Second and third wave

(three KICs launched in 2014 and 2016): moderately

affected since the change in the funding model would happen in the middle of their

programming period. However, the KICs of 2014 and 2016 already now have a non-

EIT co-funding rate of between 20 to 25 % which is in full compliance with the

proposal.

Fourth wave

(two KICs launched in 2018): no significant implications as they

would start up their activities in 2019 and 2020 which would allow for smooth

integration into any new funding model.

For any

future KICs:

no particular implications as they would be launched in the

next programming period.

Table 5: Implications of new co-funding model on KICs; own analysis

The theoretical and empirical simulation analyses in Annex 10, point to the overall large

potential of the EIT investment support to leverage additional private investment into

KIC projects through gradually decreasing EIT co-funding rates. However this may also

have an effect on the number of KIC partners and the membership. Higher KIC co-

funding rates could imply fewer partners willing to participate and contribute to the

operation of the KICs. Such a scenario could however be counterbalanced with

appropriate EIT incentives that reduce the financial, technology or market uptake risks of

the potential KIC investors.

A number of additional measures aimed at improving the efficiency of the funding

allocation will support the application of the new funding model. First, a comprehensive

and in-depth review after seven years of KIC operations would be the opportunity for the

EIT Governing Board to decide if a KIC has demonstrated adequate and expected results

with the option to discontinue funding

. This review would guarantee transparency and

would be in line with the guiding principles and criteria for European Partnerships in

Horizon Europe and best practice in the EU.

A possible challenge may emerge if there is non-compliance by the KIC with the non-

EIT co-funding rule. For this there are effective mitigation measures. Firstly, a KIC must

respect the financial principle of the EIT when preparing their Business Plans (prepared

and submitted in year n-1), necessitating that the KIC will have to make the relevant

calculations before proposing its Business Plan and requesting a budget to implement it.

Secondly, should a KIC still have difficulties to match the EIT grant, then the Governing

Board could reduce the absolute EU contribution to a level that the KIC can match,

according to the rules. Such flexibility is currently possible and can be implemented

through managerial measures.

82 The possibility that the EIT Governing Board has of terminating a KIC should its results be inadequate is foreseen in the current

EIT Regulation. The new EIT Regulation should include a clear reference to the 7-year review and the possible termination or

suspension of funding.

Cf. the review process of the Exzellenzinitiative in Germany which can extend the status of an “excellent university”.

Deutsche

Forschungsgemeinschaft,

http://www.dfg.de/foerderung/programme/exzellenzinitiative/

5.4. Description of policy options

Three policy options are presented below: a baseline reflecting the continuation of

business as usual; and two different options addressing the problems and technical issues

identified in the impact assessment.

The following graph presents comprehensively the intervention logic of all the Options 1,

2 and 3. It is to be noted that the options are expected to achieve the outputs, results and

impacts to a different extent (further developed in section 6).

ISSUES

Suboptimal KIC funding model

Increase the impact of KICs and

knowledge triangle integration

Limited impact of EIT education activities

Increase innovation and entrepreneurial

capacity of higher education institutions in

Europe

Limited impact of EITs regional outreach

Increase regional outreach of EIT and

address regional disparities in innovation

capacity across the EU

Technical issues

Improve operational effectiveness

and efficiency of EIT

OBJECTIVES

INPUT

Dedicated EU financial, human and organisational resources to EIT as part of Horizon Europe; KICs as organisations performing activities and

networks of HEIs, businesses, research and civil society; EIT as organisation performing horizontal activities beyond the remit of KICs;

OPTION 1

OPTION 2

8 existing KICs

97 %

2 new KICs

85 %

KIC activities

Budget

OPTION 3

8 existing KICs

Budget

70 %

8 existing KICs

1 new KIC

Creation of EIT hubs in all MS

- Collaborative small scale projects for

knowledge triangle integration

- Brokerage between KICs and regions

- knowledge triangle integration services

(business support, education)

ACTIVITES

EIT activities

Basic coordination

- EIT RIS

- EIT Label

Direct support actions for

entrepreneurial and innovation

capacity development of Higher

Education Institutions

15 %

30 %

OUTPUTS

HEIs involved in

EIT activities

Students involved

in EIT activities

Businesses involved

in EIT activities

Start-ups

supported by EIT

New products,

services or processes

on the market

Regional actors in

Europe involved

in EIT activities

KICs co-funding

RESULTS

Reduction in skills

mismatches in key

sectors

Increased quality of

entrepreneurial higher education

Effective and efficient

new businesses

creation

Increased knowledge sharing and

networking in innovation ecosystems

involving more actors at regional level

IMPACTS

More entrepreneurial and innovative European higher education;

Improved human capital and talent for innovation

Increased innovation capacity in Europe

Figure 8: Intervention logic; own illustration

5.4.1. Option 1: Baseline

The baseline option represents the continuation of EIT’s activities as they are today with

essential adjustments necessary to align it with the proposal for Horizon Europe. The

EIT’s activities would be planned and implemented to maximise synergies and

complementarities with the actions (clusters and missions) under the

Global Challenges

and Industrial Competitiveness

Pillar. EIT would comply with implementation,

monitoring and evaluation criteria for European Partnerships.

In addition, the EIT will develop synergies with the European Innovation Council in

offering support to highly innovative ventures in both start-up and scale-up stages, in

particular through KICs. In order to ensure alignment with the overall Horizon Europe

proposal in terms of administrative rules, a simplification of rules would be pursued.

The EIT and the KICs would keep their

current model

and continue business as usual.

The EIT would continue to operate only through KICs. The role of KICs as drivers of

innovation ecosystems in specific fields and the EIT as primarily a grant management

agency would not change. The funding model of KICs would stay unchanged. Horizontal

activities, such as the EIT Label or the EIT Alumni would continue operating on their

current basis. The Regional Innovation Scheme (EIT RIS), would continue to be

performed on a voluntary basis and its activities would not be part of a KIC’ overall

strategy.

No new actions

would be launched by the EIT to further address education and regional

aspects as part of the baseline.

In line with the EIT Regulation, the first three KICs

would cease

to receive EIT

financial support after 2024. The five KICs

that started operations between 2015 and

2019 would reach maturity in the new programming period.

Within the proposed budget of EUR 3 billion and based on the current funding model,

two new KICs would be launched

within the timeframe of 2021

–

2027, the first in the

field of Culture and Creative Industries (CCI), the second on a theme to be defined taking

into account the Horizon Europe Strategic Planning exercise.

In terms of

budget,

Option 1 would represent a continuation of the current distribution of

budget between KIC activities, the EIT-driven activities and the EIT administrative

budget, i.e. 97% of the budget for the grants to KICs and the rest divided between the

EIT-driven activities and its administrative budget. No changes would be made to the

EIT staff provisions and duration of staff contracts.

2021

Admin budget

KIC-related expenditure

EIT-driven activities

Total EIT Budget

401

409

2022

388

399

2023

424

437

2024

427

441

2025

424

439

2026

435

446

2027

431

444

Total

2930

3000

Table 6: Indicative budget under option 1 (MEUR); own illustration

5.4.2. Option 2

Option 2 builds on the baseline. In addition to the essential adjustments necessary to

align with the proposal for Horizon Europe, (=baseline), it adopts a number of technical

measures to enhance the functioning of the EIT.

Synergies

with the proposal for Horizon

Europe will be similar to those under the baseline.

Option 2 introduces

a new EIT action

in order to address its specific objectives in the

fields of education and regional outreach. The main defining feature of this action would

be the direct support action for entrepreneurial and innovation capacity development of

84 EIT InnoEnergy, EIT Digital, EIT Climate-KIC

85 EIT Food, EIT Health, EIT Raw Materials, EIT Manufacturing, EIT Urban Mobility

Higher Education Institutions (HEIs). In addition, complementarities with other EU level

programmes (e.g. ERDF, Erasmus+) or national programmes and funding instruments

would increase.

The EIT would adapt its

funding model

and implement a gradually decreasing EIT co-

funding rate, as described in section 5.2. Another important aspect of this Option would

be the introduction of a long-term planning perspective of innovation activities

(multiannuality). In order to address

technical issues

hampering its functioning, the EIT

would also adapt its governance model and improve openness, transparency and

collaboration.

The

Regional Innovation Scheme

will be further strengthened by integrating it fully in

the KIC Business Plans and making it a core activity of the KIC with an increased

budget.

A substantial number of stakeholders in the Horizon Europe consultations referred to the

role of the EIT in Horizon Europe in bridging R&I instruments with support to higher

education.

The EIT will simplify the EIT labelling process, extending it to a wider

lifelong learning perspective and to external quality assurance.

In order to address its

specific objectives, the EIT would launch

a new support and coordination action

aimed at supporting the

development of entrepreneurial and innovation capacity of

HEIs.

This action will build on HEInnovate, a proven concept developed by the

Commission and OECD.

HEInnovate is a policy framework of the Commission and the OECD launched in 2013,

that offers (1) a methodology for HEIs to develop their innovation and entrepreneurial

capacities and (2) a methodology to Member States to review their higher education

systems. To date more than 1000 HEIs have used HEInnovate and a number of Member

States have hosted HEInnovate policy reviews by OECD.

This demand suggests that

there is a strong need in HEIs to develop their innovation and entrepreneurial capacity in

a structured and systematic way. However, tn the current programming period (2014-

2020) the use of HEInnovate is not linked to any funding support.

Given its experience in the knowledge triangle integration that directly supports

innovation capacity development the EIT is uniquely positioned to implement an action

aimed at supporting the development of entrepreneurial and innovation capacity of HEIs.

The action would integrate the HEInnovate methodology of the Commission and the

OECD and would fund entrepreneurial and innovation capacity development in HEIs.

The new support and coordination action would include the following elements:

86 E. Griniece and M. Muizarajs (2018), Synthesis of stakeholders input for Horizon Europe, p. 62.

Such an approach could build on e.g. the ‘European Innovation Associate’ pilot (DG GROW) –a

test to establish a SME-driven

scheme to attract foreign recent PhD graduates (or PhD graduate returnees to their countries of origin) to R&I posts in small

innovative enterprises, or the toolbox initially developed for the EC and now operated by the ‘European Innovation Management

Academy’ in Düsseldorf, Germany (www.improve-innovation.eu

)

88 Five Member States (NL, IE, HU, PL, BG) completed an OECD review and four (IT, AT, CR, RO) are currently undergoing one.

Support the entrepreneurial and innovation capacity development in HEI in the

following HEInnovate dimensions: Leadership and Governance; Digital

Transformation; Organisational Capacity; Entrepreneurial Teaching and Learning;

Preparing and Supporting Entrepreneurs; Knowledge Exchange; Internationalisation;

and Measuring Impact.

Transferring innovation and entrepreneurial know-how between HEIs, by

networking partners established in one region with HEIs established in other regions;

Bringing innovative HEIs from across the EU closer to KICs stakeholders

communities and the EIT RIS stakeholder communities and connect local HEIs to

European value chains in which KICs are involved;

Entrepreneurial and innovation capacity building services - including business

support services, entrepreneurial education;

Support synergies and alignment between different EU programmes contributing

to innovation capacity;

Table 7: Overview of new action supporting the entrepreneurial and innovation capacity of HEIs; own

illustration

The EIT would implement the aforementioned action through annual calls and a

dedicated budget. The calls would support collaborative projects comprising consortia of

a minimum of three HEIs.

The EIT would provide specific guidance, expertise and

coaching to participating HEIs and develop evidence on best practices and share it with

the wider innovation community.

Bridging

regional disparities

will be a significant part of the new action as the EIT

would particularly target HEIs from modest and moderate innovator countries to help

them strengthen the regional innovation footprint and smart specialisation strategies of

their HEIs. The EIT would allocate at least 25% of the overall budget of the action

(around EUR 420 million) to projects led by a partner from a modest or moderate

innovator country. The open nature of the calls (open to all HEIs) and the widening

dimension will reach out to as many institutions from modest and moderate innovator

countries as possible.

Within the proposed budget of Euro 3 billion and based on the introduction of a co-

funding model that aims to increase private investment from KIC, Option 2 would see

two new KICs

launched within the timeframe of 2021-2027, the first on Cultural and

Creative Industries and a second on a theme to be decided by taking into account the

future Strategic Planning Process. In line with the EIT Regulation, the first three KICs

(launched in 2010) would cease to receive EIT financial support after 2024.

89 The specific rules for setting up consortia will be in compliance with the relevant rules of Horizon Europe programme.

The more efficient funding of KIC through the decrease of EIT co-funding will result in

the EIT being able to launch EIT-driven activities within its proposed

budget.

The

distribution of budget between KIC activities, EIT-driven activities and EIT

administrative budget would be as follows: 83% of the budget for the grants to KICs and

the rest split between EIT-driven activities (15%) and administrative budget (1.8%).

2021

Admin budget

KIC-related

expenditure

EIT-driven activities

Total EIT Budget

342

371

2022

335

381

2023

367

432

2024

370

445

2025

366

454

2026

374

464

2027

360

454

Total

2513

417

3000

Table 8: Indicative budget under option 2 (MEUR); own illustration

5.4.3. Option 3

Similar to option 2, option 3 builds on the baseline, adopts essential adjustments

necessary to align with the Horizon Europe proposal and develop

synergies

with it, and

includes the same co-funding model and technical measures to enhance the functioning

of EIT as option 2.

Option 3 differs from option 2 in that it would introduce

a new activity

of setting up a

EIT Hub in each Member States in order to address the limited impact of the EIT’s

regional outreach activities, instead of the support and coordination action aimed at

supporting the development of entrepreneurial and innovation capacity of HEIs proposed

in option 2.

The EIT Hubs in the Member States would build on and gradually absorb the current

Regional Innovation Scheme

of the EIT. The EIT would directly implement the EIT

Hubs to foster knowledge triangle integration, for example, via support for collaborative

projects on a smaller scale than KICs. The projects would include partners from

higher

education,

research and business. The EIT Hubs would also serve as a broker between

the existing KICs and the needs of the local innovation community of the Member States

and regions.

The EIT Hubs would ensure pro-active engagement with beneficiaries, development of

local ecosystems as well as provision of services and small-scale grants to the

beneficiaries, based on transparent criteria. They would also facilitate the management of

knowledge triangle projects targeting regions where they operate. The EIT Hubs would

serve the following functions:

Brokerage between KIC activities and local partners and support cross-KIC

collaboration in connecting to local partners

Bringing the KICs stakeholders communities and the RIS stakeholder

communities closer together, as well as support collaboration between European

Structural and Investment Funds (ESIF) managing authorities and KICs and connect

stakeholders to European value chains in which KICs are involved

Managing annual grants in support of knowledge triangle integration for

collaborative projects, including business support services, entrepreneurial education;

Transferring expertise and know-how between KIC and regions, by networking

partners established in one region with EIT Hubs established in other Member States;

Establishing links between local actors including innovation agencies, KICs and

related R&I Initiatives, notably Strategic Value Chains, European partnerships, other

EU-funded initiatives like Digital Innovation Hubs;

Table 9: Overview of EIT Hubs activities; own illustration

The EIT would manage the Hubs in all Member States

. The Hubs would support small-

scale knowledge triangle integration projects between at least one HEI, one business and

one research organisation from at least 3 countries8989. A particular emphasis will be

put on developing effective collaboration between HEIs and businesses as this is usually

the weakest link in innovation projects. The EIT would provide specific guidance,

expertise and coaching to participating organisations and develop evidence on best

practice and share it with the wider innovation community. The EIT would allocate

around EUR 800 million of the total budget to this action.

In terms of budget implications, Option 3 would foresee 70% of the budget for the grants

to KICs and the rest would be split between EIT-driven activities (27%) and

administrative budget (3%). Only one new KIC would be launched during the next

programming period, on the theme of Cultural and Creative Industries. In line with the

EIT Regulation, the first three KICs launched in 2010 would cease to receive EIT

financial support after 2024.

2021

Admin budget

KIC-related

expenditure

EIT-driven activities

Total EIT Budget

290

334

2022

281

361

2023

307

111

426

2024

308

129

447

2025

307

139

464

2026

311

158

489

2027

298

160

477

Total

2100

810

3000

Table 10: Indicative budget under option 3 (MEUR); own illustration

90 In Hungary as the EIT wwouldassume this role through its headquarters based in Budapest

5.4.4. Inputs of options

The following table summarises the inputs to the presented options:

Option 1

(baseline)

EIT administrative budget (mio EUR)

EIT funding to KICs (mio EUR)

Maximum number of KICs active during SIA

Budget for EIT-driven activities (mio EUR)

EIT Hubs in EU Member States

Table 11: Inputs of discussed options; own illustration

2930

Option 2

2500

440

Option 3

2100

810

5.4.5. Key features of options

The following table summarises the key features of the presented options:

Issue

Number of KICs

Alignment with Horizon

Europe

Technical issues

(openness and

transparency;

governance)

Funding model

Option 1 (baseline)



8 existing KICs



2 new KICs



synergies

partnerships,

EIC



No changes

with

missions,

Option 2



8 existing KICs



2 new KICs



Same as option 1

Option 3



8 existing KICs



1 new KIC



Same as option 1



adaptation

governance



measures to

openness

transparency

increase

and



Same as option 2



No changes



New funding model

based on gradually

decreasing co-funding

rate



New action to support

actions

for

entrepreneurial

and

innovation

capacity

development of HEIs



Strengthening

Regional

Innovation

Scheme



Strengthening of EIT

Label



Same as option 2

New actions addressing

problems on limited

impact of education and

regional outreach



None



New action to create

EIT Hubs in Member

States

support

collaborative

small

scale

projects

for

knowledge

triangle

integration



Strengthening of EIT

Label

Table 12: Key features of options, own illustration

91 Hubs would operate in all Member States except Hungary and the United Kingdom following its expected withdrawal in 2019.

6. I

MPACT OF POLICY OPTIONS

The following section contains a qualitative and quantitative assessment of the main

economic, societal and innovation impacts identified in areas where the options are likely

to have effects. The projections of future performance are based on past data reported by

the EIT using existing performance indicators. The accuracy of forecasts based on

historical data is limited but considered the best method to assess the results of the KICs.

While undertaking such an assessment ex-ante, it is important to remember that the EIT

operates in the dynamic and evolving innovation landscape. The novel character of the

EIT and the knowledge triangle integration model suggest that its impacts are gradually

evolving and can only be demonstrated in the long-term.

6.1. Option 1: Baseline

The EIT

would continue to support KICs

and build innovation ecosystems across the

EU. The first three KICs, launched in 2010, will cease to receive an EIT grant after 2024

(in line with the maximum duration for support provided by the EIT to KIC) while one

new KIC would be set up in 2022 and a second in 2025.

Synergies and complementarities with other EU programmes and funding instruments

would increase due to the closer alignment with Horizon Europe, and in particular Pillars

II and III. Consequently, the overall effectiveness in spending public money on

innovation would improve although its quantification is not available. The presence of

the EIT will remain

concentrated

in a limited number of Member States (see below).

More than half of the EIT co-location centres (CLC) are placed in 6 countries, while only

six CLCs out of 51 in total are located in moderate and modest innovator countries.

EIT Co-location Centres (CLCs) of the EIT, 2018

Figure 9: Co-location centres of the EIT as of 2018; EIT data

In the absence of effective transparency, openness and collaboration measures, activities

of the EIT would remain limited to the KICs' partners. No significant diversification of

the partnership is expected in the absence of a change in the approach towards openness

and transparency.

No enhancement of SME participation is expected in this option as there would be no

particular incentives for SMEs in place.

Concentration of funds would be unlikely to change, in line with the current trends, with

around 73 % of the total budget concentrated in partners from five countries (see problem

definition, page 16).

The establishment of the EIT with the KICs and their co-location centres were directly

responsible for approximately 430 FTE direct jobs in 2016 (with a portfolio of 5 KICs,

two of which only starting) across the EU.

Based on this data, and a portfolio of 10

mostly mature KICs between 2021-2027, it is estimated that the number of equivalent

FTE in the EIT and KICs would reach 1000.

Data reported from the three first-wave KICs, suggests that they have supported start-

ups, scale-ups and business ventures that have created around 6,100 jobs

by 2016.

Building on a portfolio of up to 10 KICs between 2021 and 2027, it is assumed that the

number of indirectly created jobs will more than double, i.e. around 12,000 jobs will be

indirectly created.

The structure of the KIC with regard to the type of partners and their overall weight

would not be expected to change.

Around 300 HEIs would continue to be part of the EIT Community as KIC partners, with

some fluctuations over the years due to the cessation of the EIT grant to the first

generation of KICs after 2024 and the set-up of two new KICs during the Horizon

Europe programming period.

With additional and more mature KICs, opportunities for knowledge transfer would

increase proportionately. Based on past performance, it is estimated that between 2021-

2027 around 3500 new products, services or processes would reach the market.

It is estimated that over 2021-2027 around 10,000 students would participate in EIT

education

activities through the EIT label and adjacent activities, which would equip

them with solid entrepreneurial and innovation skills. It is likely that a part of them

would become entrepreneurs and attract economic activity to regions where they are

based, meaning agglomeration effects would continue. Currently, the ratio of student-to-

entrepreneur in the EIT is around 1.8%, meaning some 200 start-ups could be created by

students (8 start-ups created by EIT students in 2017). Together with the start-ups created

as a result of KIC innovation projects, the number of start-ups supported by the EIT

would reach almost 400.

The impacts described above would be visible across all the sectors in which KICs

operate, though to different extents: the most significant impacts would be observed in

the areas of health, raw materials, food, urban mobility, and added-value manufacturing

as the KICs addressing these priority fields would all reach maturity during 2021-2027.

The impacts of the first generation of KICs (EIT Climate-KIC, EIT InnoEnergy and EIT

Digital) would be expected to remain. The impacts of new KICs would be visible mainly

in the field of Cultural and Creative Industries

–

to be launched in 2022. The impact of

the second KIC, if launched as expected around 2025, would be marginal during the

Horizon Europe programming period.

EIT

(2017)

Our

Impact,

2017_our_impact_from_2010_to_2016.pdf

93 Ibid.

94 See output table at the end of this section

available

https://eit.europa.eu/sites/default/files/11983-eit-

Students participating in EIT education activities would continue to acquire

entrepreneurial competences, and have high employability rates

. However, the

systemic impact of EIT educational activities, i.e. beyond the direct KIC partners and

beneficiaries, would remain restricted due to the lack of external quality assurance and

limited visibility of the EIT Label.

There would be no changes in the funding model. The yearly reporting of the KIC

complementary activities, both in the Business Plans and in the financial reports

submitted by the KICs would continue to add significant administrative burden with no

added value. The absence of clear rules for external co-funding will result in missed

efficiencies and lost opportunities to establish stronger incentives for financial

sustainability.

Option 1 would mean a continuation of EIT administrative expenditure at current levels

(EUR 48 million over 7 years) in line with the overall budget increase of the EIT over the

programming period of seven years arising from staffing. Within this option, the staff

provisions of the EIT and duration of staff contracts would not be amended.

6.2. Option 2

The EIT would continue to support KICs and build innovation ecosystems across

Europe. The key results of KIC activities (EIT Label graduates; start-ups created by EIT;

new products and services on the market) would be broadly similar to the baseline given

that the number of new KICs will be the same. However, there would be a number of

efficiency gains resulting from the improvements related to the technical issues and the

introduction of a co-funding model.

Establishing clearer implementation measures and tools regarding openness, transparency

and collaboration would facilitate access to KIC and CLCs

and improve the interaction

with partners. This would be particularly the case for partners from modest and moderate

innovator countries or SMEs. This would increase the likelihood of new CLCs in modest

and moderate innovator countries for both existing and new KICs. While difficult to

estimate an absolute result, it is likely that the number of the CLC in modest and

moderate innovator countries will at least double.

The integration of the Regional Innovation Scheme in the KICs multi-annual strategies

and Business Plans

would increase the effectiveness of EIT’s regional outreach.

Assigning a higher budget to the RIS activities from the current average of 4.3% to at

least 10% will also increase their impact. Stronger impact would be expected to

materialise in those countries and regions that are moderate and modest innovators as the

number of organisations engaged with KICs would grow and their activities would

increase due to increased knowledge and technology transfers linked to a stronger EIT

regional focus.

Improving the functioning of the EIT governance would have a generally positive effect

for the function of the EIT and the KIC in terms of effectiveness and efficiency.

95 See Annex 4

96 EIT RIS innovation hubs could be seen as embryonic CLCs in RIS-eligible countries, directly sharing and disseminating KIC

knowledge and know-how to local knowledge triangle stakeholders.

Liang J. and Goetz, S. (2018), “Technology intensity and agglomeration economies”,

Research Policy

47, pp. 1990–1995; see also:

Apa, Noni, Orsi and Sedita (2018), “Knowledge space oddity: How to increase the intensity and relevance of the technological

progress of European regions”, in

Research Policy

47, pp. 1700–1712

The change in the funding model would mean annual reporting of the KIC

complementary activities would no longer be necessary, resulting in significant reduction

of administrative burden. The information obligations arising from the KIC grant

agreements (i.e. declaration of costs of associated activities) with its intention to show the

financial commitment of KIC partners and its leverage effect will become redundant with

the introduction of the new co-funding model for KICs. The alleviation of such a

requirement on the side of the EIT as well as KICs and their partners will ease their

resources for other tasks and improve the efficiency of the KICs operations.

The introduction of explicit conditions for co-funding will lead to stronger private

investment and external involvement. Specifically, between EUR 1500 and 1800 million

in co-funding is expected to be generated. This would reflect the preferences of the

majority of stakeholders in the OPC who expressed their support to co-funding.

Commitment from partners would further increase the likelihood of KICs to achieve

financial sustainability in the long-run as the number of their stakeholders will grow.

KICs are expected to adjust to the new funding model as most of them already have

significant co-funding. Greater openness and stronger performance monitoring by the

governing board would contribute to raising the overall efficiency of the KIC model. In

the case of difficulties for some KICs (for example the first generation that will stop to

receive an EIT grant after 2024), the EIT Governing Board could introduce transitory

measures.

The introduction of a long-term planning perspective of innovation activities and the

move away from the current annual granting scheme (annuality) would imply that KICs

would offer greater legal and financial security for KIC partners. It would also

consolidate the innovation activities in line with the multiannual strategies adopted by the

KIC. It would ease the administrative burden by reducing the annual reporting and would

facilitate the assessment of the KIC performance over the long term. Generally, it would

help to ensure business continuity.

The number of start-ups generated would not necessarily increase in linear terms in 2021-

2027, compared to the baseline. However, the higher private investment and external

participation would improve the general quality of new business creation. While difficult

to quantify, some efficiency gains are expected in terms of survival rates of start-ups and

higher commercialisation of ideas and technological maturity (TRL

Compliance and implementation costs arising from the adaptation of the funding model

would be expected to be higher for those KICs and their partners that would have to

adjust their established processes and operation systems, and relatively low for those that

are at the starting phase and establishing their operation modes. However, given that

most KICs already attract co-funding, the measure would likely increase on average the

performance across KICs, as those lagging behind would need to accelerate their efforts

in attracting co-funding and catch up with best practice or risk correction measures

requested by the EIT Governing Board.

The impacts described above will be visible across all the sectors that KIC operate in

with the most significant impacts in the areas of health, raw materials, food, urban

mobility, and added-value manufacturing as the KICs addressing these priority fields will

all reach maturity during 2021-2027.

98 Technology Readiness Level (TRL)

–

a method of estimating technological maturity and capability.

Impact of the new Action on supporting the entrepreneurial and innovative capacity of

HEIs

On top of the KIC results, the impact of the EIT would be distinctive as a result of the

new actions that the EIT would launch to support the innovative capacity of HEIs. The

new EIT actions would spread best practice and help create a community of

entrepreneurial HEIs across institutions, disciplines, countries and regions

. The social

impact of the entrepreneurial transformation of higher education through this measure

would be reflected by the involvement of staff, students and institutions. Providing

funding for innovation capacity development of HEIs is the most popular suggestion

among the OPC respondents in order to achieve the educational policy objective for the

EIT.

As a result of the action, around 450 HEIs and more than 20,000 students would be

expected to participate in HEInnovate-driven in capacity development actions.

Entrepreneurial and intrapreneurial

100

activities in the participating HEIs would lead to

higher levels of economic activity, particularly in modest and moderate innovator

countries, given the open nature of the annual calls and the earmarked budget (25% of

the action budget would be allocated to projects led by partners from modest and

moderate innovator countries). The illustration below provides an overview of the key

assumptions behind this actions.

Total budget of this action is around 420 Million, or 60 Million per year

Annual calls for projects including at least 3 HEIs and an average budget of max

EUR 3 million per project

Each HEI will involve at least 50 students in the capacity building action

23 projects per year leading to ~150 projects in total (2021-2027)

150 projects with at least HEIs each means 450 HEIs (involving at least 50

students each) means at least 22500 students (2021-2027)

At least 25% of projects would directly involve partners from moderate and

modest innovator countries, i.e. 25% of 450 HEIs, or ~110 HEIs

Overall participants from moderate and modest innovation countries, i.e. 200

(current RIS) and 200 (future RIS) and at least 110 (HEIs projects)

Table 13: Assumptions behind new action supporting the innovative capacity of HEI; own illustration

It is realistic to assume that at least 15% of all EU HEIs would be reached through the

HEInnovate capacity development actions (450 in total over 7 years from around 3300

HEIs in the EU) over the 7 years. The impacts would be visible in both economic and

social terms through teaching, research, and entrepreneurial activities.

101

99 E.g. HEinnovate country reviews which demonstrate the importance and the challenge for HEIs to develop their entrepreneurial

and innovation capacity. The reports show that pioneering initiatives emerge in a number of HEIs, but need to be broader, more

systematic and taken forward by HEI leaders in collaboration with key stakeholders. The reviews are available at

www.HEInnovate.eu.

100 Intrapreneurship is the act of behaving like an entrepreneur while working within a large organisation.

101 Jacob, M et al. (2003)

: “Entrepreneurial transformations in the Swedish University system: the case of

Chalmers University of

Technology”, in:

Research Policy

32, pp. 1555–1568.

Also Guerrero, M., Cunningham, J. and Urbano, D., (2015), “Economic

specifically, there is evidence that scientific productivity is positively associated with

entrepreneurial effectiveness so participating HEIs could be expected to increase their

scientific production levels.

102

Finally, raising awareness about the entrepreneurial

capacity of an HEI is crucial because perceiving an HEI as having a low or high

entrepreneurial capacity has an important effect on whether an academic engages in

entrepreneurial activities, thus influencing the overall entrepreneurial aptitude of

academics.

103

Together with the new action, the impact of the existing EIT Label, which is awarded to

the KIC education programmes, would increase via stronger quality assurance

mechanisms including external reviews. This would positively influence the recognition

of the label outside the EIT community.

Synergies and complementarities with other EU programmes and funding instruments

would increase due to closer alignment with the proposal for Horizon Europe, and in

particular Pillars II and III

104

In addition, strong cross-over synergies and

complementarities would be expected to emerge between the Horizon Europe and the

Erasmus+ programme as a result of the scaling up of the action supporting the innovation

capacity of HEIs by the EIT. In budgetary terms, Option 2 would mean a re-balancing of

the expenditure of the EIT back to around one-third of the total budget allocated to

education (currently, only 17% of the KIC-related expenditure are spent on education,

this would increase to around 31% with the proposed action under Option 2).

Compared to the baseline scenario, Option 2 would mean an increase in EIT

administrative costs (EUR 70 million compared to the EUR 48 million baseline) in line

with the overall budget increase of the EIT over the programming period of seven years

arising from staffing and setting up a stronger capacity and expertise in the EIT. This

increase appears commensurate with the overall growth of activities and responsibilities

of the EIT. Within this option, the staff provisions and duration of staff contracts of the

EIT would be aligned with those of other agencies in order to ensure the continuity of the

EIT operation.

6.3. Option 3

The EIT would continue to support KICs and build innovation ecosystems across

Europe. Within the given budget distribution of this option only one KIC could be

launched (in 2022). The key results of KIC activities (EIT Label graduates; start-ups

created by EIT; new products and services on the market) would be broadly similar to

Options 1 and 2.

Impacts resulting from the introduction of clearer rules for transparency, openness and

collaboration would be similar to those under Option 2. The effect from the adjustments

in the governance of the EIT would be similar to those under Option 2 with the exception

of introducing relevant governance provisions for the implementation of the new Action

impact of entrepreneurial universities’

activities: An exploratory study of the United Kingdom”, in

Research Policy,

Volume 44, Issue

3, April 2015, pp. 748-764

102

Van Looy, B., (2011), “Entrepreneurial effectiveness of European universities: An empirical assessment of antecedents and trade-

offs”, in

Research Policy

40, pp. 553–564.

103 Kalar, B. and Antoncic, B., (2015)

“The entrepreneurial university, academic activities and technology and knowledge transfer in

four

European countries”, in

Technovation

36-37, pp. 1–11.

104 E.g. it is expected that EIT actions will better contribute to 35% of the overall financial envelopes to climate objectives within the

Horizon Europe.

described below. Compliance and implementation costs arising from the adaptation of

the funding model would be similar to those under Option 2.

Impact of new EIT Hubs-related action

The most significant differences in terms of impact under Option 3 would be linked to

the creation of the EIT Hubs.

This option would have a high impact on the management and governing bodies of the

EIT. It would have significant implications in terms of human resources, budget and task

allocations. High administrative overhead costs for the EIT would arise from setting-up,

staffing and developing EIT Hubs, ensuring quality of services provided, allocation of

funds to these hubs as well as reporting to the EIT. The establishment of the EIT Hubs

would mean that staff would need to be appointed on a permanent basis to maintain

them. Assuming that each Hub would be staffed by a minimum of five persons (a head of

the hub; three account managers for education, innovation, and entrepreneurship; and a

communication officer), around 130 positions would have to be managed by the EIT

structure, in addition to the resources needed at the EIT itself. This means that the EIT

staff needs over the period of 2021-2027 would be expected to more than double

compared to Option 2.

Total budget of EIT Hubs action over 7 years = around 810 Mio

Set up and maintenance of 26 EIT Hubs with average administrative cost of

EUR 600 000 per year x 7 years = around EUR 110 million;

Operational

budget

over

(annual budget = EUR 100 million);

years

EUR

700

million

Each Hub to run annual projects promoting knowledge triangle activities with

at least 1 HEIs, 1 Research and Technology Organisation and 1 business and an average

volume of max EUR 3 million per project; at least 20 students to be involved per project;

Total number of projects over 7 years: ~ 230;

Total number of organisations participating in EIT Hubs activities: ~ 700

60% of results should be traced directly to moderate and modest innovator countries

700 x 60% = c. 450 institutions involved in moderate and modest innovator countries

Overall participants from moderate and modest innovation countries, i.e. 200

(current RIS) + 200 (future RIS) + 450 (HEI projects)

Table 14: Assumptions behind new action on EIT Hubs; own illustration

The implementation of the EIT Hubs would need to take place gradually and would

require strong efforts at the beginning for their establishment and continuous efforts for

their coordination The substantial time lag between putting operational structures in

place, implementing tasks in regions and seeing the overall effects would significantly

influence the perceived success of Option 3, particularly concerning the timeliness of

impact.

Knowledge triangle integration in regions would increase as a result of operations of the

EIT Hubs though the annual calls. In particular, the cooperation with education and

training in the regional innovation ecosystems would improve, reflecting the positive

operational experiences with the KICs. The EIT hubs would primarily serve as

technology transfer hubs connecting businesses and knowledge providers and ensuring

regional outreach of successful KIC activities and experiences already existing in

agglomeration economies.

A moderate reduction in the skills gaps and skills shortages would be expected in the

areas of active operation of EIT Hubs. The relative number of partners from modest and

moderate innovator countries as compared to leading innovators in the regional

ecosystem would increase. Job creation and revenue growth in local innovation

ecosystem would increase marginally as a result of the activities of the EIT Hubs.

Interaction between agglomeration economies and the proposed new EIT

Hubs

105

Agglomeration economies, in a general sense, refer to productivity improvements

accruing to the co-location of economic activity, typically within, and near cities.

Economically useful innovation is centred on corporate functions such as R&D

which are typically co-located with other high-value adding activities such as

marketing, design, or IT services. Economic analysis, most recently on global value

chains (OECD 2013; Belderbos et al., 2016), confirms that these corporate

activities thrive in cities, where they benefit from large, dynamic pools of highly

qualified professionals and a dense network of complementary services, including

public research. Such effects are clearly visible in the KICs.

However, excellent research and innovation do not take place only in cities.

Converging evidence (Varga et al., 2013; De Backer et al., 2017) suggest that the

geographical distribution of business-driven research differs considerably to that of

public research-driven science and innovation. There is evidence to suggest that

agglomeration is not particularly relevant for the creation of this latter type of

knowledge (Bonaccorsi and Daraio, 2005; Varga et al., 2013). Therefore it can be

assumed that regional outreach activities of the EIT such as those proposed by EIT

Hubs can help connect businesses and public knowledge providers irrespective of

location.

Table 15: Agglomeration economies and EIT Hubs, an overview of arguments

As in option 2, synergies and complementarities with other EU programmes and funding

instruments would increase due to closer alignment with the proposal for Horizon

105 Based on literature review of: OECD (2013), Supporting Investment in Knowledge Capital, Growth and Innovation, OECD

Publishing, Paris; De Backer, K., Destefano, T. and Moussiegt, L. (2017), “The links between Global Value Chains and Global

Innovation Networks: An Exploration”, OECD Science, Technology and Innovation Policy Papers, No. 37, April; Belderbos,

R.,

Sleuwaegen, L., Somers, D. and De Backer, K. (2016), “Where to Locate Innovative Activities in Global Value Chains: Does Co-

location Matter?”, OECD Science, Technology and Industry Policy Papers, No. 30, OECD Publishing, Paris.; Bonaccorsi, A. and

Daraio,

C. (2005), “Exploring size and agglomeration effects on public research productivity”, Scientometrics, Vol. 63, pp. 87-120;

Varga, A., Pontikakis, D. and Chorafakis, G. (2014), “Metropolitan Edison and cosmopolitan Pasteur? Agglomeration and

interregional

research network effects on European R&D productivity”, Journal of Economic Geography, Volume 14(2), pp. 229–

263.

Europe, and in particular Pillars II and III. In addition, specific synergies would be

expected to emerge with relevant regional innovation policies such as smart

specialisation strategies or the European Regional Development Fund (ERDF).

Option 3 would mean an increase in EIT administrative costs (EUR 90 million compared

to EUR 70 million in Option 2 and the baseline value of EUR 48 million), primarily in

order to manage the significant coordination and transaction costs incurred by the launch

of a new Action, the EIT Hubs. Within this option, the staff provisions and duration of

staff contracts of the EIT would be aligned with those of other agencies in order to ensure

the continuity of the EIT operation.

6.4. Outputs of options

The following tables present a summary of the outputs of the presented options:

Option 1

(baseline)

106

# of HEI involved in EIT activities

109

# of students involved in EIT activities

112

# of businesses involved in EIT activities

115

# of start-ups supported by EIT

116

# of products, services or processes on the

market

117

KIC partners’ co-funding

in EUR million

(2021-2027)

118

# of participating organisations from moderate

or modest innovator countries

119

300

10000

800

400

3500

500

200

Option 2

107

Option 3

108

750

110

30000

113

950

680

4300

1800

500

530

111

14600

114

1030

490

4100

1520

850

Table 16: Outputs of options; own projections based on past EIT performance

106 All figures in baseline refer to projections based on past performance and derive from the performance achieved by the KICs in

2013-2017.

107 See Table 12 on the new action under option 2 for detailed assumptions.

108 See Table 13 on the new action under option 3 for detailed assumptions.

109 HEIs refer to Higher Education Institutions involved the EIT educational activities. Baseline figure includes KIC partners.

110 Figure includes baseline + all HEIs to participate in the new action launched under option 2.

111 Figure includes baseline + all HEIs to participate in the new action launched under option 3.

112 Baseline includes students participating in EIT Label and related activities.

113 Figure includes students participating in the new action launched under option 2. It is assumed that 150 students are involved in

each project.

114 Figure includes students participating in the new action launched under option 3. It is assumed that 20 students are involved in

each project.

115 Baseline includes business partners in KICs. Option 2 and 3 figures include, respectively business partners in actions under

Options 2 and 3.

116 Baseline includes start-ups supported by EIT through KICs. Option 2 and 3 figures include, respectively start-ups emerging from

actions under Options 2 and 3. Under Option 2 at least 2 Start-ups are expected to emerge from each supported project, i.e. 280 start-

ups over 7 years. Under Option 3 it is assumed that 1 start-up is created per 3 projects as the focus is on knowledge triangle

integration more generally.

117 Baseline includes new products, services or processes brought to the market through KICs. Option 2 and 3 figures include,

respectively business partners in actions under Options 2 and 3. It is assumed that at least 3 new products/services/processes/ideas are

brought to the market as a result of each start-up, i.e. 840 new solutions over 7 years

118 Baseline includes co-funding attracted at a rate of 20% (slightly higher than today).

119 Baseline includes the number of EIT RIS partners. Option 2 and 3 include the expected number of additional partners

participating in the actions supported by those options.

7. H

OW DO THE OPTIONS COMPARE

The following chapter summarises the evidence and arguments outlined above and

presents the effectiveness, efficiency and coherence of the Options. It presents the risks

associated to the Options.

Option 1

Effectiveness

Objective 1:

KIC funding

No particular effect as

business as usual will

continue.

Option 2

Introduction of co-funding

rates will increase long-

term impact of investment

and support the financial

sustainability strategies.

New action supporting

HEIs will positively

impact institutions from

countries so far not

reached by the EIT.

Widening dimension of the

action will further support

regional outreach.

New EIT actions would

create a structuring effect

supporting the

transformation of the HEI.

Increased impacts through

engagement of a high

number of organisations

and students.

Significant improvements

and adjustments resulting

from adapting the technical

issues.

Option 3

Identical to Option 2

Objective 2:

Regional outreach

No particular effect as

business as usual will

continue.

Actions addressing the

regional disparities in

innovation capacity would

be implemented through

the EIT hubs. The impact

is expected to be highest in

regions from countries that

are moderate and modest

innovators.

Spill-over effects expected

from Knowledge Triangle

Integration projects

supported by the Hubs due

to the participation of at

least one HEI per project.

Objective 3: HEIs

innovation

capacity

No particular effect as

business as usual will

continue.

Objective 4: Other

technical issues

No particular effect as

business as usual will

continue.

Identical to Option 2.

Efficiency

Cost-benefit of

managing KICs

No particular effect as

business as usual will

continue.

Higher cost-effectiveness

due to the establishment of

co-funding rates, clearer

measures for openness and

collaboration.

Reduction of

administrative burden

for KICs.

Low additional

administrative costs due to

use of established shared

services (procurement,

project management, IT,

legal).

Identical to Option 2

Cost of new

actions

Not applicable

Increase in the capacities

of the EIT, its staffing

levels as well as the

overhaul of its operational

systems to manage EIT

Hubs will incur significant

costs. Administrative

burden on the EIT and its

regional operational hubs

will increase. Given the

ratio of spending moving

towards the EIT hubs

operation and their

relatively marginal role in

contributing to the

objectives, the overall

efficiency of spending will

decrease.

Identical to Option 2.

Administrative

burden

Significant as no

mitigations measures

are taken

Decrease in the

administrative burden due

to introduction of co-

funding model and clearer

measures on openness,

transparency

With regard to new action

supporting HEIs, no

significant burden as

shared services of the EIT

will be used.

With regard to EIT Hubs,

administrative burden is

likely given the need to

establish new structures.

Coherence

Horizon Europe

coherence

Alignment with European

Partnerships; EIC;

Strategic Planning Process.

Similar to baseline.

High coherence with

Horizon Europe mandate

for the EIT in terms of

education.

Similar to baseline.

Role of EIT in tackling

regional disparities.

However, possible

ambiguities between

excellence and cohesion

principles.

Strong synergies through

alignment with smart

specialisation strategies via

EIT Hubs.

Synergies with

other EU

programmes or

policies

No particular effect as

business as usual will

continue.

Strong synergies with

other Commission

initiatives (e.g.

HEInnovate, smart

specialisation strategy).

Table 17: Comparison of options. Key: The Options are rated according to their impact. Policy Option 1

(baseline scenario) is set to zero and the impacts of the rest of the policy Options on the stated/foreseen

KPIs are expressed as net changes compared to it, i.e. + positive effect, ++ significantly positive effect, -

negative effect and

–

significantly negative effect.

Source: own analysis

7.1. Risks associated with policy options

There are risks associated with all options that are set out in Table 17 below. The

analysis is conceptual and based on qualitative assessment. It covers economic, consumer

welfare, environmental quality and health risks. Due to the nature of the policy there will

not be any particular health or environmental risks. Risks to consumer welfare are also

considered to be low as it is deemed unlikely that the options will reduce the availability

of goods or services, or make those available significantly more expensive. There are

three principal economic risks:

Risk of closed ecosystems

–

i.e. the establishment of KICs as integrated legal entities

leads to collusive behaviour between partners involved in the KIC. Such risk has a low

probability with a potential moderate impact on economic welfare. A related risk is that

EU actions in this area could distort markets if EU funds simply subsidise activities

which would have occurred anyway and thus ‘crowd out’ private sector investment. This

risk is estimated as high with a moderate impact on net economic welfare. Due to these

dead-weight risks the overall risk of market distortion is moderate with a potential

moderate impact on economic welfare. The risk can be mitigated with increased

openness and transparency of KICs.

Risk of disparities in economic growth due to EU support for KICs

–

i.e. supporting the

development of a limited number of centres of excellence would enhance their

economies and create positive externalities leading to the increased growth of these

centres compared to other parts of the EU. The probability of this occurring is high whilst

the magnitude of the effect on disparities in economic growth is likely to be moderate, all

other things being equal. The establishment of integrated entities of firms and institutions

of higher education and research could also create barriers to new market entrants in

locations outside the centres of operation. This would be due to a more difficult access of

external institutions and actors to knowledge, talent and finance. The probability of this

occurring is high with effects of moderate magnitude if realised.

This risk can be mitigated through measures under Option 2 and 3 (deepening the

Regional Innovation Scheme, the set up of new actions to support the entrepreneurial

capacity of HEIs across the EU and the establishment of EIT Hubs) and boosting the

dissemination of best practices beyond the EIT and KIC Communities.

Risk of KICs not reaching financial sustainability. The probability of this occurring is

high whilst the magnitude of the economic effect on existing innovation ecosystems will

be considerable. A continued low level of private funding may provide disincentives to

KICs pursuing financial sustainability. Unclear guidance on the future relationship

between EIT and KICs that stop receiving EIT grants after 15 years may further increase

the risk. Potential future benefits and gains from long-term investments made by the KIC

over their programming period may be forfeit. The risk can be mitigated with the

introduction of specific co-funding rates that will increase private investment and with a

clearer model for the future relationship between EIT and KICs that cease to receive

funding from the EIT. Guidance from the EIT is also important - evidence suggests that

the second and third generation of KICs incorporate financial sustainability objectives

more effectively than the first generate of KICs.

Risk

Consumer welfare

Negative health impacts

Environmental degradation

Economic well-being

Collusive behaviour

Deadweight

Disparities in economic growth

Agglomeration economies

Barriers to market entry

Probability

Low

Moderate

High

Magnitude

Slight

Moderate

A potential risk is one of incomplete, or no policy implementation. It is possible that

calls for proposals for future KICs would not attract interest. However, based on current

experience this is unlikely. Currently, there seems to be sufficient demand in consortia to

apply for new KICs.

120

120 In the 2018 call for new KICs there were 6 and 4 proposals for Urban Mobility and Added-Value Manufacturing, respectively.

8. P

REFERRED OPTION

The baseline would see a business as usual with essential but limited adjustments of the

EIT into the Horizon Europe framework but without addressing the problems the EIT

faces. Options 2 and 3 would address the identified problems, respond to the Horizon

Europe ambitions in terms of education and regional outreach and include adaptations

and improvements to address the technical issues identified.

Option 2 would see a concerted action by the EIT aimed at supporting the development

of innovative capacity of HEIs that would lead to economic and social spill-overs and

higher competitiveness. This would come at a relatively low cost and by using the

existing administrative capacity of the EIT and economies of scale to a considerable

extent. Involving HEIs from across the EU through the new Action would contribute to

mitigate the unbalanced strengthening of existing centres of excellence at the expense of

regions from countries with modest or moderate innovation performance.

Stronger openness and transparency measures would help to unlock the innovative

potential in a wide range of organisations. Sharing knowledge and expertise in a targeted

way beyond KICs would further add EU value. The introduction of co-funding would

lead to greater levels of private investment in KICs and enhance the promotion of new

business development and creation. This would increase the potential of reaching the EIT

financial sustainability objectives in the medium- to long-term. There would be

improvements in the regional outreach due to the integration of RIS in the KIC strategies

and an increased RIS budget.

Option 3 in comparison would see the EIT increasing its regional outreach to local

innovation ecosystems via a distributed network of EIT Hubs that support small-scale

knowledge triangle integration projects. This would gradually lead to knowledge spill-

over effects resulting in increased innovative behaviour of participating institutions.

However, the relative cost of achieving this would be significantly higher than in Option

2. The impact of the regional outreach would be likely to occur only in the long-term due

to the time lag between set up of EIT Hubs and any activities they would support. The

financial and administrative resources required for setting up the structures to implement

Option 3 would be high. Finally, the administrative burden created from the

implementation of this Option in multiple locations and the need to coordinate at a

centralised EIT level would not be commensurate to the potential benefits within the

proposed budget.

Based on the assessment of impacts presented above, Option 2 represents the most

suitable way to implement the objectives of the initiative while offering the highest

impacts. It would allow for a targeted and proportionate action, amounting to an

incremental strengthening of the intervention alongside reinforced legal certainty. Option

2 would be a significant improvement over the baseline Option, it would reflect well the

stakeholders views and could be implemented within the suggested timeframe. Particular

attention has been paid to the contribution of each Option to the attainment of the overall

delivery of EU priorities as set in the Horizon Europe proposal and the role of the EIT in

that programme, while also comparing their effectiveness, efficiency and coherence.

8.1. Implications of the preferred Option for the EIT Regulation and the SIA

EIT Regulation

A clear objective of the amendment to the EIT Regulation through the recast legislative

technique would be to ensure greater legal certainty and stability of the Regulation in

accordance with the Commission’s better regulation and law-making

principles

121

terms of structure and legal drafting. This would enable the EIT Regulation to focus on

the main principles of the functioning of the EIT/KICs and, at the same time, facilitate

the application of its provisions.

In light of the above, the recast EIT Regulation would be time-neutral and principle-

based. This would be achieved by putting greater emphasis on the principle-based

approach in the EIT Regulation, avoiding maximum harmonization and focusing on

necessary provisions enabling the functioning of EIT and KIC, and at the same time, by

developing and detailing these principles in the proposed new SIA. In addition, the new

EIT Regulation would be time-neutral in the sense that the need for its amendments at the

end of each MFF would in principle not be necessary or only minimal. It would be for

the SIA to ensure the necessary alignments with the objectives of the European

Framework programme for research and innovation funding the EIT, with the monitoring

and obligations of that programme, and also to foster synergies with the other relevant

programmes of the respective MFF.

Moreover, the EIT Regulation would be amended in order to reinforce the role of the EIT

in developing innovation capabilities through addressing global challenges and to

strengthen the legal clarity of its provisions. Additional adjustments would be needed to

ensure compliance of the EIT Regulation with the new Commission’s Framework

Financial Regulation.

Strategic Innovation Agenda 2021-2027

The SIA will set the priorities of the EIT for 2021-2027. It will align the EIT future

development with the Horizon Europe general framework and ensure synergies and

complementarities with the latter. The SIA will include the specific objectives of the EIT.

It will propose concrete measures to enhance the transparency and openness of the KIC

model in line with Horizon Europe criteria for European partnerships and define guiding

principles for the role of KIC co-location centres. The SIA will set clear co-funding

modalities for implementation by the KICs. It will provide guidance to the KICs when

they reach the maximum 15 year limit after which the EIT grant support to the KIC will

stop. It will include the main principles of the post-15 year relationship between the EIT

and KICs.

The SIA will include clear objectives for and in particular define the new action in

support of increasing the innovation capacity of HEIs to be launched by the EIT in the

next programming period. It will strengthen the regional impact of the EIT through the

new actions and through strengthening of the RIS. The SIA will include an overview of

the financial and human resources needed for the implementation of the EIT objectives.

Clear monitoring and evaluation provisions will be defined taking into account the

Horizon Europe framework and the EIT’s specificities.

121

Commission’s Better Regulation Guidelines; SWD(2017) 350 final. Interinstitutional Agreement on Better Law-Making;

OJ L

123, 12.5.2016, p. 1. Interinstitutional Agreement on a more structured use of the recasting technique for legal acts. OJ C 77,

28.3.2002, p. 1

9. H

OW WILL IMPACT BE MONITORED AND EVALUATED

Monitoring and evaluation are fundamental tools in measuring the impact of the EIT and

will be further strengthened and continuously improved over the next programming

period. Given the nature of the knowledge triangle integration model, it will be important

to apply a monitoring framework that allows flexibility at all relevant levels (EU, EIT,

KIC) and ensures coherence with the general objectives of Horizon Europe and impacts

sought.

Monitoring

The EIT has developed metrics to measure the progress of the KICs. Several Key

Performance Indicators (KPIs) are applied to all KICs.

122

However, the KPIs could be

further fine-tuned in terms of the relevance of KICs' performance. There is a need for a

balance between a clear set of EIT key performance indicators (horizontal) to measure

the KICs overall performance on the one hand and the KICs sector specific indicators

(vertical) on the other. Moreover, the monitoring model and the KPIs of the EIT are

perceived by stakeholders as too focused on input and output (short-term measures) with

limited attention to results and impacts

123

and are not aligned with the proposed

indicators and monitoring system of the Horizon Europe Programme, including

monitoring aspects of the partnerships.

124

All inputs, outputs, results and impacts identified in this impact assessment will be

monitored through indicators. Such indicators already exist for the majority of the

examples. Whenever they do not exist, new indicators will be developed in order to

enable the EIT to monitor the achievement of its objectives. The chart below provides an

overview of how operational objectives and related indicators link to the specific

objectives and related indicators.

122 Full list of core KPIs: ec.europa.eu/research/participants/data/ref/h2020/other/guides_for_applicants/h2020-core-kpis-kic-eit-

2018_en.pdf

123 E.g. ICF (2017), Evaluation of the EIT, pp. 35-36, High Level Group on the EIT (2016), The Future of the EIT, p. 24, European

Court of Auditors (2016), Special Report on performance of the EIT, pp. 30 and 49 and SWD on the Interim evaluation of the EIT,

SWD (2017) 351 final, p. 44.

124 Cf. Horizon Europe impact assessment, SWD (2018) 307; Regulation Horizon Europe, COM(2018) 435 final. Annex III.

Monitoring Indicators

Strengthen sustainable innovation

ecosystems across Europe

General

Bring new solutions to global challenges to market

Foster innovation and entrepreneurship

through better education

No. of product innovations launched

Start-up creation and survival rate

Reduction in skills mismatches

Improve effectiveness and efficiency of

EIT funding

Specific

Increase innovation capacity of higher education by

promoting entrepreneurial transformation of HEIs

Increase regional outreach of EIT by addressing

regional disparities in innovation capacity across

the EU

Financial sustainability ratio

(total revenues / total expenditure )

Monetary value of non-EIT KIC

funding

HEIs involved in EIT and KIC

activities

No. of participants completing

eligible EIT programme

No. and % of organisations involved in EIT/KIC

activities from regions outside the KIC CLC regions

Operational

Improve operational effectiveness and

efficiency of EIT

Increase oppeness and transparency

Time to grant

No. of new KIC partners every year

No. of entities participating in

EIT/KIC activities

Figure 10: Link between operational objectives and indicators to specific objectives and indicators; own

illustration

The table below provides an overview of key indicators that will be collected.

General

objective

Strengthen

sustainable

innovation

ecosystems and

bring new

solutions on the

market

Monitoring

Indicator

No. of product

innovations

(goods or

services)

launched on the

market

Targets

125

2023

2027

1.500

4.000

Sources of data /

collection methods

Annual programme /

monitoring data

Rolling survey of

organisations in

receipt of KIC

support at set time

intervals (i.e. 1, 3,

years post support)

300

700

Annual programme /

monitoring data

Rolling survey of

start-ups created as a

result of EIT activity

Rolling survey of

organisations/employ

ers in receipt of KIC

support at set time

intervals (i.e. 1, 3 and

5 years post support)

Data

availa

bility

Yes

Respons

ible

body

EIT

Link to Horizon

Europe impact

pathway

Innovation-based

growth

Start-ups

supported and

survival rate

Yes

EIT

Innovation-based

growth

Foster innovation

and

entrepreneurship

through

education

Reduction in

skills mismatches

No. of direct and

indirect jobs

created by

organisations

benefiting from

KIC support

40% increase

100% increase

EIT,

Europea

Commiss

ion

Strengthening the

uptake of

innovation in

society

125 Baseline for comparison is 2020

Specific

objective

Monitoring

Indicator

Targets

2023

2027

700 MEUR

1500 MEUR

Sources of

data /

collection

methods

Annual

programme /

monitoring

data

Annual

programme /

monitoring

data

Data

avail

abilit

Yes

Respo

nsible

body

EIT

Link to Horizon

Europe impact pathway

Increase impact

of KIC through

more effective

EIT funding

Monetary value

of non-EIT KIC

funding

Financial

sustainability

ratio

(total revenues /

total expenditure

)

n.a.

Yes

EIT

n.a.

Increase

innovation

capacity of

higher education

HEIs involved in

EIT and KIC

activities

No. of

participants

completing

eligible EIT/KIC

education

programme

300

750

Annual

programme /

monitoring

data

Annual

programme/

monitoring

data

Yes

EIT

Strengthening human

capital in R&I

10.000

30.000

Yes

EIT

Strengthening human

capital in R&I

Increase

regional

outreach

No. of

entities/organisat

ions

participating in

EIT/KIC

activities from

regions outside

the KICs’ CLC

regions

Monitoring

Indicator

50% increase

100% increase

Annual

programme /

monitoring

data

Yes

EIT

Strengthening the uptake

of innovation in society

Operational

objectives

Sources of

data /

collection

methods

n.a.

Annual

programme /

monitoring

data

Annual

programme /

monitoring

data

Data

avail

abilit

Yes

Respo

nsible

body

EIT

Link to Horizon

Europe impact pathway

Improve

operational

effectiveness

and efficiency of

EIT

Increase

openness and

transparency

Time to grant

n.a.

No. of

entities/organisat

ions

participating in

EIT/KIC

activities

20% increase

50% increase

Yes

EIT

Innovation-based growth

Table 19: Specific and operational objectives to be monitored by indicators; own illustration

In parallel and in full compatibility with existing monitoring tools, a close alignment will

be sought between the EIT monitoring provisions and those that are put in place for

Horizon Europe. For example, the EIT will align its monitoring tools with the Impact

Pathways of Horizon Europe that seek to address the need for scientific, economic and

societal impacts indicators more comprehensively. It will be a responsibility of the EIT to

regularly monitor the operational performance of the KICs and to adapt its monitoring

and reporting systems continuously. The results of such monitoring will feed into the

business planning processes of the KICs and into the EIT decision-making on the

allocation of the budget and preparation of the framework partnership agreements with

the KICs as beneficiaries. The monitoring results should feed continuously into the

policy-making process.

Evaluation

The evaluation of the performance of the EIT will be carried out by the Commission in

line with the requirements of the EIT Regulation and will feed into the overall Horizon

Europe programme evaluation that will be carried mid-term and ex-post. This will

include an assessment of the synergies of the EIT with the other instruments of the

programme.

With regard to the KICs, a specific indicator framework will be used to assess the

performance of the KICs during the next Strategic Innovation Agenda (2021-2027). The

framework draws from current and previous indicators, fills gaps and deficiencies

identified in the existing performance measurement system and is aligned to the Horizon

Europe indicator framework. While this is still in development, some key parts are

outlined in more detail in Annex 8. Further work on evaluation will be pursued with the

JRC's Competence Centre on Microeconomic Evaluation.

10. A

NNEXES

10.1.

Annex 1:

Procedural information

Lead DG, D

cide Planning/CWP references

The work on the impact assessment was led by the Directorate-General for Education,

Youth, Sport and Culture (DG EAC) which is responsible for the coordination of the

activities related to the functioning of the EIT.

The Impact assessment supports two Decide Planning initiatives as follows:



EAC - PLAN/2017/987 - Amendment of the Regulation on the European Institute

of Innovation and Technology (EIT)

EAC - PLAN/2017/1516 - Strategic Innovation Agenda for the period 2021-2027

of the European Institute of Innovation and Technology (EIT)

Organisation and timing

The impact assessment covers all the elements needed for (1) the EIT Regulation revision

and (2) the SIA 2021-2027, i.e. the EIT vision, mission, objectives, governance and

operation model as well as funding model.

Both the revisions of the EIT Regulation and the SIA are part of the wider Horizon

Europe process and hence the timely adoption of both initiatives is of utmost importance.

The Impact assessment steering group (IASG) was established in January 2018 and held

five meetings to steer the various phases of the process including the preparation of the

Open Public Consultation (OPC).

The Commission’s adoption of the proposal for a

new Strategic Innovation Agenda (SIA)

for the EIT for the period 2021

–

2027 as well as the amendment of the Regulation on the

EIT are expected in May 2019.

Consultation of the RSB

The Impact Assessment Report was submitted to the Regulatory Scrutiny Board on xx 22

January 2019 and discussed at the meeting of the Board on 13 February 2019. The Board

issued a negative opinion on 15

February. The impact assessment report was revised

taking into account the Board’s comments and recommendations.

The following table explains how the Board's recommendations have been addressed in

the revision of the report.

Main RSB considerations

1. The report does not explain what

still needs to be decided and what

is covered under Horizon Europe.

Measures taken and the changes

introduced in the revised IA report

The report has been revised to explicitly

state what decisions on the future of the

EIT have already been made in the

Horizon Europe proposal and what issues

are left for the EIT Regulation and SIA.

The report now contains clarifications as

regards the scope of the impact

assessment, the legal and operational

context of the EIT and KICs and how the

EIT Regulation and the SIA link to the

Horizon Europe programme.

The problem definition has been

restructured and additional evidence on

problems, drivers and effects has been

added.

The core problems have been identified as

(i) suboptimal funding model

(ii)

limited impact of EIT’s

educational activities

(iii)

limited impact of EIT’s regional

outreach

To better illustrate the linkages and

relations, a problem tree (Figure 4) with

drivers and consequences has been added.

Where

Chapter 1.3. and

1.4

It is also unclear which elements

pertain to the new SIA and the

amended EIT Regulation,

respectively.

Chapter 1.4. and

1.5

2. The report does not provide

evidence that demonstrates the

need to act on alleged problems.

Chapter 2

Chapter 2.1.-2.3

Chapter 2.5.

3. It is also not clear how the options

respond comprehensively to the

reported problems.

An intervention logic (Figure 7) has been

added to explain how problems are

addressed. The three options address all

identified problems, but to a different

extent.

The chapter on impacts provides additional

argumentation on the effects of the

reallocation of funds proposed under

option 3. The same section incudes a brief

discussion on agglomeration economies in

the context of option 3.

Additional details have been added on the

functions of the EIT Hubs.

Chapter 5.4.

4. The report does not explain why

the reallocation of funds works in

opposite directions for different

options, nor does it explain what

the regional hubs achieve.

Chapter 6.3

Chapter 5.3

RSB further considerations and

adjustments required

1. The report should better explain

what the Commission needs to

decide at this stage. It should

clarify the urgency to act and

coherence with other initiatives.

The elements already covered

under the Horizon Europe proposal

should come out more clearly.

Also, the policy context should

explain the alignment with the

priorities and strategic planning of

the programme. In particular, the

report should clarify the timing and

coherence between the choice of

additional KICs in the SIA and the

ongoing strategic planning process

of Horizon Europe. It should

acknowledge any possible risks in

this respect. It should better

delineate between the content of

the SIA and the EIT Regulation.

2. The intervention logic should show

how the identified problems get in

the way of achieving the policy

objectives, and how measures

contained in the alternative options

would resolve this. The report

should better explain why the

problems require a legislative

solution. It should better use the

available evidence, e.g. the interim

evaluation and the Court of

Auditors report. The problems and

their magnitude need more in-depth

analysis, notably in the areas of

education and regional outreach.

See also point 3 above.

The report makes clear what measures are

contained within each option and

distinguishes more clearly between them

in terms of KIC activities (no. of new

KICs), EIT horizontal activities and

budget allocation for these.

Option 2 comprises the direct support

actions for entrepreneurial and innovative

capacity development of HEIs and

introduces the key assumptions and

rationale for the action.

Option 3 key feature is the creation of EIT

hubs in all MS as a main instrument to

achieve EIT operational and specific

objectives. The key assumptions and

rationale for the EIT Hubs are explained.

All options are presented with their

proposed budgets.

The report further explains how incentives

would result in private co-financing and

lists also mitigation measures.

The inputs into the individual options in

terms of budget are provided. The

differentiation for each option is made

clear as regards the administrative budget,

the budget to KICs and the budget to

horizontal EIT activities.

Intervention logic charts are added to

outline the links at different levels (i.e.

between problems, objectives and

options).

Chapter 5.3.

Chapter 5.3

Chapter 6.2.

Chapter 6.3.

Chapter 5.3

Annex 10 + Chapter

5.3.3.

Chapter 5.4.4.

Chapter 5.4

5. The report should better explain

what the probability of success

The impact chapter of the report has been

revised in order to better capture the

Chapter 6

is under each option. It should

better analyse all relevant

impacts, including regulatory

costs and benefits, social

impacts, and impacts on SMEs.

The report should clarify the

expected societal return of the

different options, including the

regional outreach. It should

examine whether regional

outreach might conflict with

agglomeration economies in

creating knowledge. How the

report arrives at the preferred

option should come out more

clearly. The report should use

clear criteria to compare across

the alternatives.

relevant impacts including the regulatory

costs and benefits, social impacts and

regional outreach and impact.

The impact analysis is based on the

projection of the key output indicators as

follows:



HEIs involved in EIT activities



Students involved in EIT

activities



Businesses involved in EIT

activities



Products, services, processes or

ideas generated



Start-ups supported



Value of KIC co-funding



No. of external participants as a

measure of regional activity

New set of criteria has been introduced to

compare the options.

(1) effectiveness in reaching the

operational objective

(2) efficiency, cost-benefit of

managing KICs and cost-benefit

of introducing new actions

(3) coherence with Horizon Europe

and synergies with other EU

programmes and policies

Simple and user friendly comparison table

have been introduced with qualitative

assessment of options per criteria and

ratings according to their impact.

Chapter 7

6. The evaluation arrangements

should define benchmarks for

what success of the initiative

would look like. In doing so, the

report should identify

operational objectives and link

them with monitoring indicators.

The evaluation and monitoring part has

been revised.

Specific and operational objectives have

been linked to the monitoring indicators

for measuring the achievements.

Sources of data collection have been

added and the processes of monitoring and

evaluation as well as responsibilities of

involved bodies were clarified.

The different issues in individual chapters

have been complemented with visual tools

(charts, graphs, tables) to allow the reader

easily capture the complex issues.

A native English speaker has proofread

the document.

The overall presentation and reading of

the report has improved in order to reflect

a common structure of the presentation.

Chapter 9

7. The presentation of the report

should be more reader friendly,

avoiding jargon and using plain

language. It should enable the

reader to understand how the

EIT works and cooperates with

KICs. The report should be self-

standing and independent from

annexes and external documents,

e.g. the evaluation. The report

could use more visual aids, e.g. a

problem tree, illustrations and

diagrams

Entire report

Evidence, sources and quality

The impact assessment is based primarily on the results of the latest evaluation, review

and analysis done by the following studies, reports and consultations that are presented

below:



Commission Staff Working Document on the Interim Evaluation of the European

Institute of Innovation and Technology (EIT), SWD (2017) 351 final;

Wilkinson, C. et al. / ICF (2017), Evaluation of the European Institute of

Innovation and Technology (EIT);

European Court of Auditors (2016), Special Report on the EIT

Report on the strategic issues, perspectives and future of the EIT of the High

Level Group set up by Commissioner Tibor Navracsics (published in 2016)

Study to support the Impact Assessment (SQW, November 2018)

Directorate-General for Research and Innovation

(2018), A new horizon for

Europe. Impact assessment of the 9th EU framework programme for research and

innovation, SWD(2018) 307.

10.2.

Annex 2a:

Stakeholder consultation activities

Annex 2A provides a brief synopsis of the outcomes of the consultation activities that

have been undertaken as part of the preparation of the impact assessment on the new

Strategic Innovation Agenda of the European Institute of Innovation and Technology

(EIT) and the revision of the EIT Regulation. Table 1 provides a short overview of the

nature, scope and timing of the consultations and the next sections present the results.

Table 1. Scope of the consultation activities

Issue

Challenges hampering innovation

in Europe

EIT objectives

Type of consultations

Open Public Consultation (OPC) with

157 responses and 14 written position

papers

OPC with 157 responses and 14 written

position papers

Interviews with representatives of DG

EAC, EIT and KICs (16 in total)*

EIT impact indicators

Online consultation with

representatives of KICs (8 responses)*

Workshop with representatives of EC,

EIT, and KICs*

OPC with 157 responses and 14 written

positions

Interviews with representatives of DG

EAC, EIT and KICs (23 in total)

Options for improvements in

operation of the EIT and the

KICs

Workshop with representatives of EC,

and EIT *

Stakeholder meeting

–

Education and

Research Organisations/ Associations

Stakeholder meeting

–

Business and

Regions Associations

Interviews with representatives of

academia, businesses and thematic

networks (25 in total)

OPC with 157 responses and 14 written

positions

Date of consultations

10 October

–

5 December 2018

10 October

–

December 2018

February

–

July 2018

April

–

May 2018

15 May 2018

10 October

–

December 2018

February

–

September

2018

15 May 2018

22 November 2018

29 November 2018

February

–

July 2018

10 October

–

December 2018

Themes for the establishment of

future KICs

* Note: Consultations have been carried out as part of the Study to support the Impact assessment on the

Strategic Innovation Agenda of the EIT.

Findings from the consultation activities

Challenges hampering innovation in Europe

The open public consultation (OPC)

126

conducted by the European Commission showed

strong agreement amongst respondents that there is scope for further reinforcing the role

of research and innovation in Europe with a view to address global challenges. The

majority of respondents also agreed with the following statements:



the European innovation ecosystem is fragmented

the transfer of ideas, technologies and talents from education and research into

start-ups and technology is not fast enough

companies with potential for international growth have to cope with the

fragmentation and diversity of national markets.

The breakdown of the results by respondents from different country groups (using

countries identified as ‘innovation leaders and strong innovators’ and countries identified

as ‘moderate and modest innovators’), showed that the results were very similar, with

both groups in agreement on many of the statements. However, respondents from

‘moderate and modest innovators’ tend to agree more that joint activities between

education and industry have not been sufficiently integrated within their regional and

local ecosystems, and there is insufficient involvement of end-users and citizens in the

co-design, experimentation and testing of innovation solutions.

A high degree of consistency was also found when the statements were broken down by

respondents distinguishing between citizens and representatives of company/business

organisations, academic/research organisations and others. When asked in an open-

response question about the factors that hinder active involvement in existing pan-

European innovation ecosystems,

the most common factors noted were ‘lack of visibility

and awareness of existing innovation ecosystems and opportunities’, ‘bureaucracy and

administrative complexity’ and ‘the barriers between nation-states’.

EIT objectives

The respondents to the OPC (157 responses and 14 written positions) provided their view

on how best to achieve the three EIT policy objectives. The main actions identified in

relation to the three EIT policy objectives were as follows:



Objective 1:

To foster, grow, strengthen and develop current or new sustainable

innovation ecosystems across Europe.

Supporting the involvement of final users in the development of

innovative solutions.

Harnessing the synergies among existing innovation activities at EU and

national levels.

Increasing the effectiveness of cooperation and coordination of existing

KICs and related activities.

126 An analysis of the results of the OPC is provided in Annex 2B.



Objective 2:

To improve the human capital base for innovation through

developing talents and enhancing skills and competences, to make

entrepreneurship and innovation culture in Europe stronger, more inclusive and

more open, and to contribute to the entrepreneurial transformation of higher

education institutions across the EU.

Providing funding for innovation capacity development and

rewarding/recognising universities for becoming more innovative and

entrepreneurial.

Launching new actions supporting education and human capital

development through the identification of future skills needs.



Objective 3:

To develop and bring new solutions to global societal challenges to

the market by integrating education, business and research, as well as other

relevant players (such as municipalities, civil society, large industry, small and

medium-sized enterprises, etc.) according to the sector.

Development of new products and services, which involve all relevant

stakeholders.

Making business support services widely available.

Increasing support for financial and capital raising services and attracting

private funding.

EIT impact indicators

The consultation activities occurred between DG EAC, the EIT and its KICs, and the

Joint Research Centre of the Commission tackled two main aspects of the development

of the impact indicator framework.

First, it helped in identifying a set of

key principles for the indicator framework

follow, namely:



To maximize the consistency and coherence of the impact indicators, including,

where possible, to introduce consistent definitions for specific indicators and a more

harmonised approach to the measurement of impact, particularly in terms of impact

indicators of the new Horizon Europe Programme.

To include a balanced coverage across the three levels of impact: 1) economic

development (e.g. jobs, economic growth), 2) innovation and education system

effects (e.g. capacities to innovation, collaborations, networks, and ecosystem effects)

and 3) societal benefits (e.g. to cover the foci of KICs, such as on climate, health,

energy etc.).

To address prevailing gaps in the existing core indicator set, in particular to address

the outcomes and the longer-term impacts, as well as the effects on different regions.



Second, a

set of aspects to be duly taken into account

to best meet the different

stakeholders’ perspectives on the impact indicators. The following

four key points were

pertinent in developing the final set of recommended indicators.



Clarifying the core purpose of the Indicator Framework

–

i.e. to provide evidence

about the long-term socio-economic impacts of the KIC model but also to

acknowledge the role of initial indicators as per the results chain (or logic chain) in

terms of how these impacts are brought about.

Acknowledging the challenges to decide on resource allocation using long-term

indicators

–

i.e. KICs contribute to long-term effects but should not be accountable

for them.

Some expected outcomes/impacts do not fit easily within the indicator framework

and would be best assessed through multiple methods of research (rather than single

indicators), and in particular through evaluative research where a degree of

judgement will be required.

Challenges to provide evidence about the causality and attribution in the indicator set,

and the importance of evaluative research for helping to test causality, or at least the

contribution of the KIC model and KIC activities to outcomes and impacts.



The subsequent workshop, survey and consultations with stakeholders on the impact

indicators were used to gather further feedback, in particular on the perceived importance

and value of different indicators, and the specific challenges and possible solutions in

defining and measuring certain indicators. The results were fed into the refinement and

finalisation of the recommended indicator set.

Options for improving the operation of the EIT and the KICs

The respondents to the OPC provided their views on the most important aspects for

ensuring the financial sustainability of KICs. According to them, a robust financial

strategy for a KIC from the outset and continuous monitoring and evaluation of its

implementation would be the best strategy.

With regard to the criteria for selecting and implementing new KICs the prevailing views

point to the societal impact of the proposed activities, including their potential to address

the Sustainable Development Goals.

The main points raised by the

representatives of the university/research associations

and organisations

highlight the negative cost-benefit ratio for a university involvement

in a KIC and the ineffectiveness of too many currently existing university labels. They

also point to 1) the need to make the conditions for university participation simpler and

more enabling, and 2) the importance of the regionalisation of universities and their link

to Smart Specialisation Strategies. In addition, academic stakeholders consider that EIT

educational activities should be complementary and build on already existing experience

of innovative universities with regard to collaborative research, problem based learning,

developing entrepreneurial courses, creation of incubators with regional authorities and

companies, etc. Many of them also stressed the limited involvement of KIC partners in

KIC educational activities and the need for more integrated system that would allow

innovative educational institutions to participate in KICs on an informal and simplified

basis.

The main issues raised by the

representatives of business and regional associations

related to the necessity of linking the EIT and KIC activities to the regional and local

Smart Specialization Strategies including the unmet potential for synergies with other

funding opportunities (ESFI, regional/local funds). Representatives of business

associations pointed out, in particular, to the need to make KICs more open and more

easily accessible by potential partners. Furthermore, involvement of all (big and small)

companies is considered important. With regard to education, the prevailing views are

that the HEIs should play a key role for a more entrepreneurial environment in Europe.

Last but not least, emphasis is put on the lack of ambition of the EIT as an institute, in

view of the need to further develop its model, to scale up the good lessons learned and to

better exploit the critical mass attained.

The interviews with representatives from the EIT, KICs, European Commission,

European Parliament and Academia, as well as the stakeholder workshop, provided input

on the challenges to the current EIT/KIC model and the options for improvement which

has been incorporated in the Impact assessment report.

Possible themes for future KICs

The interviews with representatives of academia, businesses and thematic networks

focused on the feasibility and relative merits of setting up future KICs in the following

possible areas taking also into account the proposal of the EIT Governing Board:

Security

and Resilience; Inclusion, Integration and Migration; Water, Marine, and Maritime;

Cultural and Creative Industries.

The prevailing opinion of the interviewees is that the

EU has competitive advantage and can deliver further economic growth within all these

areas due to its strong R&I base. Furthermore, the KIC model is perceived to be well

suited to addressing bottlenecks for innovation in relevant industries and thematic areas.

The respondents to the OPC also suggested other themes such as artificial intelligence;

mobility; cultural and creative sectors; sustainable development; and transport.

With regard to the criteria for new KICs the following were particularly identified:



New KICs should have the potential to enhance the wider EU economic

competitiveness without being limited to a specific economic sector (e.g.

sufficient water availability and security is required for many sectors to prosper).

KICs should also aim to contribute to the evidence-based decision making in

public and private sectors, and contribute to EU policy objectives, in particular to

sustainable development and quality of life.

The implementation of new KICs should address the geographical disparity in

economic, innovation and social terms so that the benefits of KICs activities

could be distributed equally among European regions.



10.3.

Annex 2b:

Public consultation - Synopsis Report

The Open Public Consultation (OPC) was run as a component of the European

Commission’s broad-based

Impact assessment to support its proposals for revision of the

Regulation establishing the European Institute of Innovation and Technology (EIT) (EC

No 294/2008) and adoption of a new Strategic Innovation Agenda of the EIT for 2021-

2027.

The purpose of the OPC was to gather information, opinions and views from a wide

range of stakeholders on 1) the challenges and opportunities in the European research and

innovation area, 2) the policy objectives of the EIT, and 3) the policy options to tackle

the challenges. The OPC provided an opportunity to ‘open up’ the data collection

exercise to a broad community of individuals and organisations, and give them the

opportunity to provide input to the evaluation.

The OPC was managed by DG EAC in line with the principles for consultations set out

by the Commission’s Better Regulation Guidelines –

i.e. participation, openness and

accountability, effectiveness, and coherence.

Consultation questionnaire design

The OPC consisted of a structured questionnaire designed by the Commission Services

and was accessible for completion online (via the EUSurvey platform). The majority of

the questions were closed and provided a number of opportunities for the respondents to

provide more detailed open-ended comments. To encourage a good response rate, the

length of the questionnaire was kept short, covering 20 questions in total. It consisted of

an introductory part (details on the respondents), and three thematic parts - on

challenges

and opportunities, policy objectives,

and

options.

In addition to responding to concrete

questions, the respondents had an opportunity to also submit separate written

contributions.

Sample design and questionnaire distribution

The OPC was launched on 10 October 2018 and closed on 5 December 2018. It was open

to anybody interested in sharing their opinion on the topic. The consultation was

primarily accessible via the European Commission’s dedicated public

initiatives webpage

and was promoted via the European Commission’s standard channels for running a

public consultation.

The OPC received the following responses:



157 completed questionnaires

14 written positions

127

–

two of these were specific proposals for particular

themes to focus on in the future. The remaining 12 provided further detail in line

with the points raised in the online questionnaire and/or advocated the specific

role(s) that different communities/groups/organisations could play.

127 There were 16 written documents, though two of these duplicated the online responses to the open questions.

The response rate is consistent with what would be expected for an OPC carried out as

part of an evaluation exercise.

Data analysis

Both the quantitative and qualitative data from the OPC were analysed. The analysis of

the results is based on the following considerations and analytical protocols:



The data were anonymized with only the key characteristics (e.g. organisation

type, and level of innovativeness of the country of residence of the response)

being attributed to the responses.

The relatively small sample size did not allow for a quantitative disaggregation by

country of origin of the participants.

Where relevant, quantitative data were disaggregated between: i) respondents

from leading innovators and moderate innovators; and ii) type of organisation

respondents represented. However, these disaggregated results need to be treated

with some caution as well given the small sample sizes. The following analysis

points out where substantial differences between respondents form different types

of organization appear.



Results of the OPC

Types of respondents

As Figure 1 shows, the most common types of respondent to the OPC were those

replying in their private capacity as

EU-citizens

(32% of all respondents) and those

responding as representatives of an

academic or research organisation

(32%).

Business organisations

made up 16% of respondents. The

‘other’

category includes a

mix of representatives from public authorities, non-governmental organisations,

environmental organisations and non-EU citizens. Five responses were submitted on

behalf of KIC organisations.

Figure 1. The type of the organisation that respondents represented

Q: I am giving my contribution as:

16%

32%

20%

EU citizen

Other

32%

Academic/research organisations

Company/business organisation

Base: all participants (N=157)

Source: Open Public Consultation

Size of organization or institution

Figure 2 shows the types of organisations represented in the consultation. For those

responding on behalf of organisations, more than half (56%) participated on behalf of a

large organization (i.e. 250 or more employees). The remainder were split fairly evenly

between micro, small and medium-sized entities.

Figure 2. The size of the organisation that respondents represented

Q: Organisation size

60%

50%

40%

30%

20%

10%

17%

Micro (1 to 9

employees)

Small (10 to 49

employees)

Medium (50 to 249

employees)

Large (250 or more)

15%

12%

56%

Base: all participants responding on behalf of organisations (N=101)

Source: Open Public Consultation

Country of origin of respondents

As visible from Figure 3 below, the two countries with highest number of respondents

were Belgium (15%) and Germany (12%). These were followed by France and the

Netherlands, accounting for 9% and 8% of all respondents respectively.

Figure 3. Country of origin of respondents

Country of origin

16%

12%

10%

15%

14%

12%

Base: all participants (N=157)

Note: ‘Other’ includes countries with one respondent

(Latvia, Malaysia, Austria, India, Egypt, Lithuania, China, Brazil,

and Ireland)

;

Source: Open Public Consultation

Questions on challenges and opportunities in the European innovation area

The open public consultation included questions on the challenges and opportunities in

the European innovation area. The former category included a set of statements related to

structural weaknesses that have been identified as hampering innovation in Europe.

Respondents were asked to rate these on a scale from

strongly agree

strongly disagree.

In the present section, the results are firstly presented in aggregate, before providing

analysis by country groups (‘innovation leaders and strong innovators’ and ‘moderate

and modest innovators’) and respondent type (EU citizens, a company/business

organisation, an academic/research organisation or other). After the statements, the

respondents were provided with two open-response questions to share views/feedback on

the factors that hinder active involvement of interested parties in existing pan-European

innovation ecosystems and other challenges and opportunities in the research and

innovation area that are relevant to the operations of the EIT. The analysis of these open-

response questions can be consulted at the end of this section.

Aggregate results

The results show that almost all (96%) respondents

agreed

strongly

agreed with the

statement that

“there is scope for further reinforcing the role of research

and

innovation in Europe to address global challenges”.

The majority of respondents also

agreed with statements about

the fragmentation of the European innovation ecosystem

(85%),

the slow transfer of ideas, technologies and talents from education and

research into start-ups and technology

(84%) and the issue of

companies with the

potential for international growth facing the fragmentation and diversity of national

markets

(78%).

At the other end other scale, over a third (34%)

disagreed

strongly disagreed

with the

statement that

“there are not enough measures supporting entrepreneurship in

Europe”

whilst over a quarter (26%)

disagreed

strongly disagreed

that

there are

insufficient training opportunities in Europe to become more entrepreneurial and

innovation-minded.

Nevertheless, although both statements received the greatest levels

of disagreement from respondents, the majority of the participants in the consultation still

agreed

strongly agreed

with them (50% and 65%, respectively).

Figure 4. Rating of structural weaknesses, hampering innovation in Europe

Q: A number of structural weaknesses have been identified as hampering innovation in Europe.

Based on your personal experience, how would you rate the following statements?

Base: all participants (N=157)

Source: Open Public Consultation

Results by country groups

Responses to each of the statements have also been broken down by whether respondents

are ‘innovation leaders and strong innovators’ (n=94), ‘moderate and modest innovators’

(n=54) or ‘non-EU’ (n=9). As there were only nine non-EU

respondents, the results for

this group have been excluded from our reporting (though they are shown in the charts

below for completeness).

On the whole, for a number of statements, the results are remarkably similar when

broken down by ‘innovation leaders and strong innovators’ and ‘moderate and modest

innovators’. Similar responses were given on statements about the

fragmentation of the

European innovation ecosystem,

(84% and 87% agreed or strongly agreed, respectively)

and

further reinforcing the role of research and innovation in Europe to address

global challenges

(97% and 96%, respectively).

For some statements, however, there are some notable differences in the responses from

the two

groups (see Figure 5). For example, 89% of ‘moderate and modest innovators’

agreed or strongly agreed with the statement that “the

joint activities between higher

education institutions, businesses and research organisations are not sufficiently

integrated

within their regional and local ecosystems”,

compared with 72% of

‘innovation leaders and strong innovators’. In addition, a slightly higher proportion of

‘moderate and modest innovators’ (85%) agreed or strongly agreed that,

in Europe, there

is insufficient involvement of end-users and citizens in the co-design, experimentation

and testing of innovation solutions,

compared with ‘innovation leaders and strong

innovators’ (70%).

Figure 5: Statements replies by country groups

Base: all participants; Innovation leaders and strong innovators N=94, Moderate and modest innovators N=54, Non-EU

N=9.

Source: Open Public Consultation

Results by respondent type

Responses to each of the statements have also been broken down by whether respondents

are responding in their quality of EU citizens, a company/business organisation, an

academic/research organisation or other. Any interpretation of these results should start

with an acknowledgement that these results are based on small sample sizes (EU citizens

N=51, company/business organisations N=25, academic/research organisations N=50,

other N=31).

Overall, there was a high degree of consistency between the groups. For example,

almost

all respondents across the different groups agreed or strongly agreed with the

statement that “There is scope for further reinforcing the role of research and

innovation in Europe to address global challenges”

(96% of EU citizens, 100% of

company/business organisations, 94% of academic/research organisations and 94% of

other respondents).

For some statements there were more mixed responses across respondent types. Almost

two-thirds (63%) of EU citizens and over half (52%) of company/business organisations

agreed

strongly agreed

that

there are not enough measures supporting

entrepreneurship in Europe,

but only 46% of academic/research organisations and 35%

of other respondents did so. In addition, 60% of company/business organisations and

60% of academic/research organisations, compared with 75% of EU citizens, agreed or

strongly agreed that

there are

insufficient training opportunities to become more

entrepreneurial and innovation-minded.

Figure 6: Statements replies by respondent type

Base: all participants; Academic/research organisations N=50, Company/business organisations

N=25, EU citizens N=51, Other N=31.

Source: Open Public Consultation

“Insufficient information on existing

innovation ecosystems and opportunities;

lack of knowledge on how one can

participate or get involved”

“Visibility for pan

European innovation

ecosystems needs to be

increased

”

“[Need more] awareness

of the opportunities and a

common platform to meet

and exchange ideas”

“More efforts should be directed to better reach

potential interested parties of the existing

European innovation ecosystems to increase

their possibilities of

networking”

Factors that hinder involvement in existing pan-European innovation ecosystems

The first open-ended question in this section of the survey asked the respondents to

comment on the key factors that hinder the active involvement of interested parties in

existing pan-European innovation ecosystems. 88 respondents answered this question

and raised a variety of barriers to involvement. The content within each response was

coded into one or more categories and later analysed.

From this analysis,

the three most common factors,

mentioned over 20 times in the

responses, were

‘lack of visibility and awareness of

existing innovation ecosystems

and opportunities’, ‘bureaucracy and administrative complexity’ and ‘the barriers

between nation-states’.

Other notable factors mentioned repeatedly (between 5 and 20

times) were ‘fragmentation’,

‘insufficient collaboration and networking’, ‘funding’

and ‘a lack of understanding about the needs of small and medium-sized

enterprises

(SMEs)’.

Finally, other factors raised less than five times in the responses were

‘risk

aversion’, ‘a lack of an entrepreneurial mindset’, ‘insufficient

sharing of good

practice’ and ‘issues with measurement’.

Lack of visibility and awareness

around the existing innovation ecosystems and

opportunities was among the most common factors of hindering innovation. Some of the

comments are highlighted below:

“Insufficient information on existing

innovation ecosystems and opportunities;

lack of knowledge on how one can

participate or get involved”

“Visibility for pan-

European innovation

ecosystems needs to be

increased”

Source: Open Public Consultation

“[Need more] awareness

of the opportunities and a

common platform to meet

and exchange ideas”

“More efforts should be directed to better reach

potential interested parties of the existing

European innovation ecosystems to increase

their possibilities of

networking”

One respondent offered a solution to this problem by suggesting that as information “on

competitions and grants does not reach those concerned”, a “single portal” should be

developed and used across European agency projects. This was echoed in separate

written submissions, where a recommendation to develop a simpler access to what is

available through European support was made.

Another key factor that many raised was

bureaucracy and administrative complexity.

This was often linked to the large amount of paperwork that needed to be filled out, long

lead in times for submitting projects, the scope of the work for the application, and the

complexity of reporting outputs and impact. This was a common theme in the separate

written submissions made to the OPC. These highlighted, for example, the need to:

simplify KIC tools and rules; address administrative barriers facing KICs, including

through multi-annual funding; and align financial management and reporting with

Horizon Europe.

Many respondents noted that

national differences and local context were hindering

factors.

Some of the national differences were cultural, educational or linked to language

or regulations:

“Still

the national barriers, [e.g.] understanding

of regional cultures and behaviour,

languages,…missing…a seamless

qualification and education system with

recognition at all levels”

“Different rules in different countries…different

regulations regarding personal data”

“Not

all member states are

equally represented in the

different EU structures

targeting innovation in the

EU. Measures targeting

Central and Eastern

Europe and the Balkans

should be tailor-made to

the local context.”

Source: Open Public Consultation

Linked to this, some highlighted

fragmentation

either with a lack of connection between

different initiatives or with too many unconnected networks and ecosystems without

critical mass. Instead, respondents asked for a “one-stop shop” or a few strong “places to

be”.

The issue of

collaboration and networking,

particularly across different actors, was

also highlighted along with the need to join up potential partners at the right time (see

quotes below). The additional written submissions echoed this strongly, which partly

reflected the nature of the respondents, coming from associations of particular

universities, SME communities etc.

These contributions pointed to various

recommendations, including: drawing in Research and Technology Organisations

(RTOs); recognising the role of universities that may not be part of the core stakeholder

groups of KICs, e.g. through greater outreach and information-sharing; and adopting

appropriate incentives to engage SMEs.

“Insufficient

knowledge and networking of

academic and business is also an issue”

“The

facilitators should put extra focus on

matchmaking among members within their own

ecosystem. Focus should be put on knowledge

sharing and promoting partners, there

capacities and values for others within the

ecosystem”

“Culture

of actors according to

their affiliation (basic research

organisation, RTO,

universities/teaching facilities,

enterprises). The EIT is

necessary to bring together these

actors and to “collaborate”

together (integration)”

“Need

more local / regional supports for identifying the appropriate partners

for them at different moments of their projects”

“Uneven

balance between academic expertise and business knowledge of

opportunities - academic environment seems much better suited for current setup

of innovation projects. Only those companies with sufficient size or very specific

expertise seem to be joining innovation ecosystems due to workload and

prioritization issues”

Source: Open Public Consultation

A number of issues related to

funding

were raised by respondents. Alongside the need

for funding, other issues included

complex funding rules, lack of commitment to multi-

year or long-term funding,

and

little low risk follow-up funding for completed projects.

A lack of understanding around the needs of SMEs that hinder them from getting

involved was highlighted:

“Time

investment needed, especially for

SMEs. Too low chance of success,

especially for SMEs, compared to the

administrative burden”

“Low

participation of SMEs

in innovation activities

(lack of financial resources

and skills)”.

“Too many administrative burdens for SMEs”

“Support

programs have not been designed with entrepreneurs in mind. Most

seem to be structured such that their target audience appears to be large

universities or large corporate innovation divisions. For example, when you win

a Climate-KIC grant, you must manage all cashflow for that grant for 18 months

before you receive a pay-out. For a large entity this isn't a problem, but for a

technology start-up

that cannot access debt, this is a major challenge.”

Source: Open Public Consultation

Challenges and opportunities in the research and innovation area

The second open-ended question asked respondents to comment on any other challenges

and opportunities in the research and innovation area relevant to the operations of the

EIT. One of the opportunities that came up most frequently among respondents was to

build upon and strengthen collaborations and networks

at many different levels

–

between businesses, institutions, KICs, and regional and pan-European innovation

ecosystems:

Source: Open Public Consultation

This was also a common theme in a number of written submissions. Some of the raised

points include:



The

integration across KICs

was identified as an opportunity. This included

learning exchanges between KICs, and in particular from more to less well-

developed KICs, though there was a cautionary note on the context-specificity of

certain KICs. In addition, it was noted that tools or mechanisms should be

developed to facilitate cross-KIC activity more readily when the opportunities are

identified. A broader point was made that technologies developed through KICs

are likely to be relevant across boundaries, and often companies do not even see

these artificial boundaries. Mechanisms that can facilitate knowledge sharing

would be beneficial to industry.

It was identified that

Horizon Europe

needs to provide mechanisms to facilitate

connections and links between innovation ecosystems, for example through

greater emphasis of European Innovation Ecosystems action under Pillar III.

A cautionary note was made that KICs face the risk to become

closed clubs.

They

need to have better outreach to other higher education institutions to share

lessons, and to provide information on opportunities relevant to the institutions.



Other opportunities, mentioned less frequently by respondents, related to raising

awareness and promoting the EIT

among the general public, connecting the education

system to industry

– “EIT should be a driving force to implement a more

business-

oriented approach in Universities and research centres” –

and improving the

implementation and commercialisation of innovations.

On the other hand, many mentioned

challenges related to funding and investment.

For

example, Europe

“lack[s]

a platform offering more visibility of high-potential early stage

ventures and technologies among competent

investors”; “High quality ‘frontier science’

needs to be matched equally with high quality, diverse and ‘deep’ long term funding”;

and “Short term budgets…hinder sustainability in innovation partnerships and more

long-term

strategies”.

Other challenges, mentioned less frequently by respondents, related to barriers to

participation such as bureaucracy, the

“missing alignment between regional, national

and EU research and innovation activities”

and the

difficulties entrepreneurs and

start-ups face

access funding and contribute to the EIT and the KICs as they “lack the

operational diversity and internal organizational infrastructure [that] the large companies

and the universities have in place to support the formalities of the EU and the EIT KIC”.

Separate written submissions identified potential routes to addressing these challenges,

for instance through associations representing SMEs or the intermediaries that could

provide a structured approach to doing so (e.g. the European Business and Innovation

Centre Network).

Questions on policy objectives for the EIT

The respondents to the online public consultation were asked to share their opinions with

respect to the three policy objectives set for the operation of EIT for the period 2021-

2027. In their replies, the participants could choose more than one action to achieve each

policy objective. The three most popular suggestions for activities to help pursue each

objective are described in the section below.

Policy objective 1: To foster, grow, strengthen and develop current or new

sustainable innovation ecosystems across Europe.

The most often selected action to achieve this policy objective was

supporting the

involvement of final users in the development of innovative solutions

(67%). This

approach

was most popular among respondents from ‘other’ organisations, EU citizens

and company representatives and less so among respondents from academic/research

institutions.

Another popular action for achieving the policy objective was

harnessing the synergies

among existing innovation activities at EU and national levels

(65%).

This option

was cited most often

by representatives of academic/research organisations

and it was

favoured by innovation leaders as opposed to moderate and modest innovators.

Increasing the effectiveness of cooperation and coordination of existing KICs and

related activities

was another

popular

option (61%), selected particularly by

representatives of academic/research organisations and EU-citizens.

Figure 7. The most relevant activities for the EIT to achieve the Policy Objective 1

Q: In your opinion, what are the most relevant activities for the EIT to best achieve the

following policy objectives?



Policy objective 1:

To foster, grow, strengthen and develop current or new sustainable

innovation ecosystems across Europe by connecting people, disciplines, sectors,

organisations and resources within a specific Knowledge and Innovation Community (KIC).

Setting up new KICs in a number of thematic

areas in line with European priorities and

global challenges

Accelerating support to regions towards

excellence in European countries that are

modest/moderate innovators

Harnessing synergies among existing

innovation activities at EU and national level

and thus improving the environment within

which innovation can flourish.

Supporting the involvement of final users and

citizens in the co-design, experimentation and

testing of innovative solutions

Enhancing participation of partners from

public authorities (national/regional/local) in

the KICs, including for social innovation and

public sector innovation

Increasing effectiveness of cooperation and

coordination of existing KICs and related

activities

47%

34%

65%

67%

53%

61%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Base: all participants (N=157)

Source: Open Public Consultation

Note: the figures demonstrate the distribution of answers among all respondents. As the respondents had an ability

to select several

answers up to four), the percentages do not add up to 100%

Setting up new KICs in a number of thematic

areas in line with European priorities and global

challenges

Accelerating support to regions towards

excellence in European countries that are

modest/moderate innovators

Harnessing synergies among existing

innovation activities at EU and national level

and thus improving the environment within…

Supporting the involvement of final users and

citizens in the co-design, experimentation and

testing of innovative solutions

Enhancing participation of partners from public

authorities (national/regional/local) in the KICs,

including for social innovation and public…

Increasing effectiveness of cooperation and

coordination of existing KICs and related

activities

Academic/research organisations

28%

24%

52%

44%

41%

48%

45%

35%

72%

60%

63%

61%

58%

68%

71%

74%

50%

36%

51%

74%

68%

52%

61%

55%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Company/business organisation EU citizen Other

Base: all participants; Academic/research organisations N=50, Company/business organisations N=25, EU citizens

N=51, Other N=31.

Setting up new KICs in a number of thematic

areas in line with European priorities and

global challenges

Accelerating support to regions towards

excellence in European countries that are

modest/moderate innovators

Harnessing synergies among existing

innovation activities at EU and national level

and thus improving the environment within…

Supporting the involvement of final users and

citizens in the co-design, experimentation and

testing of innovative solutions

Enhancing participation of partners from

public authorities (national/regional/local) in

the KICs, including for social innovation and…

Increasing effectiveness of cooperation and

coordination of existing KICs and related

activities

Innovation leaders and strong innovators

21%

47%

44%

57%

71%

56%

68%

67%

51%

54%

61%

10% 20% 30% 40% 50% 60% 70% 80%

Moderate and modest innovators

Base: 148 respondents: Innovation leaders and strong innovators N=94, Moderate and modest innovators N=54. Non-

EU (N=9) respondents are excluded due to the very small sample size.

Source: Open Public Consultation

The respondents were given the option to suggest any additional activities they

considered important for achieving the first policy objective.

Making KICs more

inclusive by enhancing the participation of a wider range of stakeholders,

such as

SMEs, investors, and non-EU stakeholders, was the most widely agreed upon solution

(30%), and the breadth of potential stakeholders and means of engagement is illustrated

in the quotes below. This appeared to be a particularly important issue, underscored in

some of the position papers provided by respondents, which emphasised the importance

of creating stronger ties with higher education institutions.

This activity was followed by other suggestions, such as

building a strong network

through partnerships with other initiatives

(e.g. Digital Innovation Hubs) (21%) and

removing administrative red tapes,

as the system was perceived as too slow and

complex and some requirements such as financial sustainability were put forward for

reinterpretation (10%).

Fostering complementarity and avoiding duplication with

other current and future EU initiatives,

as well as

reducing the administrative

workload of KICs,

associated with application, reporting and evaluation, were some of

the more prominently discussed issues in the position papers.

Lastly, introducing a more

bottom-up approach

by involving municipalities and

citizens and supporting cross-KIC innovation synergies and projects were recommended

by 6% of respondents each, illustrated in some of the quotes below and also was

elaborated in several position papers.

Source: Open Public Consultation

Policy objective 2: To improve the human capital base for innovation through

developing talents and enhancing skills and competence; to make entrepreneurship

and innovation culture in Europe stronger, more inclusive and more open, and to

contribute to the entrepreneurial transformation of higher education institutions

across the EU.

The most popular suggestion for achieving this policy objective was

providing funding

for innovation capacity development and rewarding/recognising universities for

becoming more innovative and entrepreneurial

(71%). It was embraced most

predominantly among academic/research organisation representatives, EU citizens and

respondents within the ‘other’ category as opposed to business representatives.

Another similarly often-selected option was

launching new actions supporting

education and human capital development through the identification of future skills

needs

(69%). There was consensus across different types of respondent for this option.

Some actions were much less popular, in particular

strengthening the EIT label

(supported by 23%). Several of the separate written submissions discussed the EIT label.

There was a sense that it was not very well-known, though it was noted by one

respondent that it potentially had some value outside of Europe. Two respondents

highlighted the need to go beyond postgraduate degrees when considering the EIT label,

or the education aspect of KIC activities more generally, as innovation needed to be part

of the “main” curriculum.

Figure 8. The most relevant activities for the EIT to achieve the Policy Objective 2

Q: In your opinion, what are the most relevant activities for the EIT to best achieve the following

policy objectives?



Policy objective 2:

To improve the human capital base for innovation through developing

talents and enhancing skills and competences; to make entrepreneurship and innovation

culture in Europe stronger, more inclusive and more open, and to contribute to the

entrepreneurial transformation of higher education institutions across the EU.

can be best achieved through

Providing funding for innovation capacity

development and rewarding/recognising

universities becoming more entrepreneurial

and innovative institutions

Exploiting synergies and coordination with

other actions and innovation activities

Providing support for mainstreaming innovative

practices into the schools or the Vocational

Education and Training (VET) sector or into

non-formal educational context

Launching new actions supporting education

and human capital development such as the

identification of future skills needs for industry

to tackle global challenges and related…

Strengthening the EIT label (certificate of

quality for programmes) by improving its

quality and having external quality assurance

and recognition

71%

41%

51%

69%

23%

10% 20% 30% 40% 50% 60% 70% 80%

Base: all participants (N=157)

Providing funding for innovation capacity

development and rewarding/recognising

universities becoming more entrepreneurial and

innovative institutions

44%

Exploiting synergies and coordination with other

actions and innovation activities

56%

31%

39%

40%

69%

48%

72%

68%

65%

74%

24%

20%

18%

32%

Academic/research organisations

10% 20% 30% 40% 50% 60% 70% 80% 90%

EU citizen

Other

70%

56%

75%

81%

Providing support for mainstreaming innovative

practices into the schools or the Vocational

Education and Training (VET) sector or into non-

formal educational context

Launching new actions supporting education and

human capital development such as the

identification of future skills needs for industry to

tackle global challenges and related training

programmes

Strengthening the EIT label (certificate of quality

for programmes) by improving its quality and

having external quality assurance and recognition

Company/business organisation

Base: all participants; Academic/research organisations N=50, Company/business organisations N=25, EU

citizens N=51, Other N=31.

Source: Open Public Consultation

Providing funding for innovation capacity

development and rewarding/recognising

universities becoming more entrepreneurial

and innovative institutions

69%

72%

Exploiting synergies and coordination with

other actions and innovation activities

47%

30%

Providing support for mainstreaming

innovative practices into the schools or the

Vocational Education and Training (VET)

sector or into non-formal educational context

Launching new actions supporting education

and human capital development such as the

identification of future skills needs for

industry to tackle global challenges and

related training programmes

Strengthening the EIT label (certificate of

quality for programmes) by improving its

quality and having external quality assurance

and recognition

17%

31%

49%

59%

67%

74%

10% 20% 30% 40% 50% 60% 70% 80%

Moderate and modest innovators

Innovation leaders and strong innovators

Base: 148 respondents: Innovation leaders and strong innovators N=94, Moderate and modest innovators N=54.

Non-EU (N=9) respondents are excluded due to the very small sample size.

Source: Open Public Consultation

The respondents were also given the option to suggest any additional activities they

considered important for achieving the second policy objective. The most often-

suggested activity was providing

affordable and easy access to training

(21%), by

creating continued education online course platform of developing short training and

empowerment programmes for entrepreneurs. This was followed propositions for

strengthening collaboration between stakeholders

(8%) by creating partnership

between industry and higher education and

aligning with other programmes

(8%), such

as Erasmus+.

Cross-disciplinary collaboration,

which allows for the exchange of

practices, and encouraging innovation at universities by incorporating entrepreneurial

courses were each supported by 6% of respondents.

In general,

creating and fostering synergies appeared

to be a prominent issue as it was

discussed at length in the position papers. For example, there were suggestions to create

specific tools that facilitate the connection between different KICs around common

topics, thus avoiding overlaps and fostering collaboration. Additionally, it was

emphasised that the focus should not only be on increasing university-business

collaborations but also on ensuring the active involvement of local and regional

stakeholders. It was suggested that this can be achieved by introducing more transparent

participation rules.

Source: Open Public Consultation

Policy objective 3: To develop and bring new solutions to global societal challenges

to the market.

When asked how the third policy objective could be best achieved, the most favoured

approach by the respondents was the

development of new products and services,

which involve all relevant stakeholders

(64%). The proportion of responses was evenly

distributed among all respondent groups.

Another similarly popular choice was

making business support services widely

available

(63%). The distribution between respondent groups was not even, as business

respondents seemed to agree with this approach to a lesser extent than the other groups.

Additionally, respondents from moderate and modest innovators were more supportive

compared to innovation leaders.

Lastly, the majority of respondents also favoured

increasing support for financial and

capital raising services and attracting private funding

(61%). This approach seemed

to be supported the most by the respondents within the ‘other’

category and EU-citizens

as opposed to academic/research organisation representatives. It also appeared to be

much less likely to be selected by innovation leaders.

Conversely,

provision of customised support for specific target groups

(36%) did not

Figure 9. The most relevant activities for the EIT to achieve the Policy Objective 3

Q: In your opinion, what are the most relevant activities for the EIT to best achieve the following policy

objectives?



Policy objective 3:

To develop and bring new solutions to global societal challenges to the

market by integrating education, business and research, as well as other relevant players (such

as municipalities, civil society, large industry, small and medium-sized enterprises, etc.)

according to the sector.

can be best achieved through:

receive a lot of support, particularly by business representatives and respondents from

innovation leaders.

Specific actions based on new business

models and digital strategies for business

Increased support for financial and capital

raising services and attracting private funding

Increased support to development of new

products and services where all relevant

players, including municipalities and civil…

Customised support for specific target groups

(young people, women, etc.)

Increased support for legal and regulatory

advice

Increased attention to mentoring, coaching,

technical assistance and other advisory

activities to make business support services…

10%

20%

30%

36%

48%

61%

64%

41%

63%

40%

50%

60%

70%

Base: all participants (N=157)

38%

Specific actions based on new business models

and digital strategies for business

76%

31%

68%

Increased support for financial and capital

raising services and attracting private funding

Increased support to development of new

products and services where all relevant

players, including municipalities and civil

society, take part

36%

Customised support for specific target groups

(young people, women, etc.)

12%

39%

48%

52%

Increased support for legal and regulatory

advice

Increased attention to mentoring, coaching,

technical assistance and other advisory

activities to make business support services

widely available and accessible, covering both…

Academic/research organisations

28%

37%

42%

62%

48%

65%

74%

10% 20% 30% 40% 50% 60% 70% 80%

EU citizen

Other

52%

60%

63%

74%

64%

60%

65%

Company/business organisation

Base: all participants; Academic/research organisations N=50, Company/business organisations N=25, EU citizens N=51,

Other N=31.

Source: Open Public Consultation

Specific actions based on new business

models and digital strategies for business

Increased support for financial and capital

raising services and attracting private funding

Increased support to development of new

products and services where all relevant

players, including municipalities and civil…

Customised support for specific target groups

(young people, women, etc.)

Increased support for legal and regulatory

advice

Increased attention to mentoring, coaching,

technical assistance and other advisory

activities to make business support services…

31%

51%

43%

52%

72%

65%

41%

43%

39%

57%

74%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Innovation leaders and strong innovators

Moderate and modest innovators

Base: 148 respondents: Innovation leaders and strong innovators N=94, Moderate and modest innovators

N=54. Non-EU (N=9) respondents are excluded due to the very small sample size.

Source: Open Public Consultation

The respondents were also given the option to put forward any additional activities they

considered important for achieving the third policy objective.

Inclusion and

collaboration with other European and national programmes

was the most-often

suggested activity (24%) by, for example, ensuring a greater eligibility for the

participation of local and regional authorities in project proposals.

Involvement of a

wider range of stakeholders,

such as regional ecosystems (15%),

collecting and

popularising best practices and successful cases

(5%),

incentivising the private

sector to take part in innovative projects

(5%) and

standardisation across

alternative and competitive technology solution providers

(5%) were some of the

more popular activities among the respondents of the survey.

The importance of regional authorities and ecosystems, as well as closer cooperation

between the nodes of the knowledge triangle are illustrated in the quotes below:

The respondents were also asked to list any other

policy objectives

they deemed

important for the future of the EIT. Overall,

nurturing the existing innovation

ecosystems was the most popular policy objective among the respondents

(30%).

They placed emphasis on the role of EIT as a connector. Similarly,

better coordination

between stakeholders, resources and initiatives

(17%)

involvement of new

stakeholders such as students

(17%), and

provision of SME-specific support

(13% )

were some of the other objectives put forward by the respondents of the survey.

Source: Open Public Consultation

Questions on options to tackle the challenges

The respondents were asked to share their opinions with respect to the options for

tackling challenges. First, they provided answers with respect to the most important

aspects for ensuring the financial sustainability of KICs.

According to them, a

robust

financial strategy from the outset of a KIC and the continuous monitoring of its

implementation and evaluation

was the best strategy (64%), an opinion particularly

prevalent among respondents

within the ‘other’ category.

Similarly,

securing other sources of public funding for the operations of KICs

was

favoured by respondents (60%) and in particular by those within the ‘other’ category and

academic/research organisations. Strategies such as

strict application of quality

management principles

(27%) and

regular membership fees

(27%) were the least

popular among the respondents.

The participants were also asked to suggest any other aspects they considered important

for achieving the financial sustainability of KICs. The most popular solution according to

them was

securing funding from other sources, through national funding,

sponsorship by private actors, and grants, among others

(36%). They also suggested

increased monitoring and regulation

(18% ),

multi-annual budget planning

(9%) and

increased entrepreneurial focus within KICs

(6%).

The requirement that

funding be awarded for one year

at a time rather than for multiple

years was presented in several position papers as impeding participation and suggestions

were made to switch to a multi-annual funding model.

Source: Open Public Consultation

The respondents were also invited to give suggestions for other suitable

thematic areas

that could be implemented through future EIT KICs to deliver on EU priorities and

challenges. The following list contains the most-often suggested themes

128



Water - suggested by 17% (23 respondents)

Marine sciences - suggested by 9% (12 respondents)

AI - suggested by 6% (8 respondents)

Mobility - suggested by 6% (8 respondents)

Cultural and creative sectors - suggested by 6% (8 respondents)

Sustainable development - suggested by 5% (7 respondents)

Transport - suggested by 5% (7 respondents)

Space and space technologies - suggested by 4% (6 respondents)

Security - suggested by 4% (6 respondents)

Circular economy - suggested by 4% (5 respondents)

Robotics - suggested by 4% (5 respondents)

Smart cities - suggested by 3% (4 respondents)

The separate position papers also included suggestions for KICs, notably on

water/marine/maritime with a vision statement offered for BlueGrowth, and with a

similar vision statement offered for nutrients sustainability (relating to agricultural

networks).

128 The themes suggested where KICs already exist have been filtered out. These are: Energy - suggested by 20% (27 respondents),

Health - suggested by 14% (19 respondents), Climate change - suggested by 13% (18 respondents), Digitalisation - suggested by 13%

(18 respondents), Food - suggested by 7% (10 respondents)

Figure 10. The most important aspects to ensure financial sustainability of KICs

Q: According to the EIT Regulation, KICs shall develop strategies for financial sustainability beyond the

funding from the European Research and Innovation Framework Programme (in a time-frame of seven to

fifteen years). In your view, which of the following aspects are the most important for ensuring financial

sustainability of KICs?

Establishment of a dedicated fund by KICs

(with KIC investments or with external

investments) to facilitate financing of the their

operations

Regular (e.g. annual, commensurate to the

level of participation, etc.) membership fees

applied for partners participating in KIC

activities

A robust financial sustainability strategy from

the outset of a KICļs operation, and the

continuous monitoring of its implementation

and periodic evaluation (e.g. regular…

Securing of direct equity investments into

businesses supported by a KIC

Securing of other sources of public funding for

the operations of KICs, beyond the funding

from the European Research and Innovation

Framework Programme

Strict application of quality management

principles in operations of the KICs

10%

27%

51%

27%

64%

46%

60%

20%

30%

40%

50%

60%

70%

Base: all participants (N=157)

Establishment of a dedicated fund by KICs

(with KIC investments or with external

investments) to facilitate financing of the their

operations

Regular (e.g. annual, commensurate to the

level of participation, etc.) membership fees

applied for partners participating in KIC

activities

A robust financial sustainability strategy from

the outset of a KICļs operation, and the

continuous monitoring of its implementation

and periodic evaluation (e.g. regular…

38%

Securing of direct equity investments into

businesses supported by a KIC

Securing of other sources of public funding for

the operations of KICs, beyond the funding

from the European Research and Innovation

Framework Programme

Strict application of quality management

principles in operations of the KICs

30%

28%

20%

35%

56%

47%

48%

62%

48%

57%

71%

20%

32%

37%

19%

58%

64%

59%

84%

56%

40%

49%

55%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Academic/research organisations

Company/business organisation

EU citizen

Other

Base: all participants; Academic/research organisations N=50, Company/business organisations N=25, EU

citizens N=51, Other N=31.

Source: Open Public Consultation

Establishment of a dedicated fund by KICs

(with KIC investments or with external

investments) to facilitate financing of the…

Regular (e.g. annual, commensurate to the

level of participation, etc.) membership fees

applied for partners participating in KIC…

A robust financial sustainability strategy from

the outset of a KICs operation, and the

continuous monitoring of its implementation…

Securing of direct equity investments into

businesses supported by a KIC

Securing of other sources of public funding for

the operations of KICs, beyond the funding

from the European Research and Innovation…

Strict application of quality management

principles in operations of the KICs

24%

28%

29%

30%

46%

57%

70%

39%

57%

62%

59%

0% 10% 20% 30% 40% 50% 60% 70% 80%

Innovation leaders and strong innovators

Moderate and modest innovators

Base:

148 respondents: Innovation leaders and strong innovators N=94, Moderate and modest innovators

N=54. Non-EU (N=9) respondents are excluded due to the very small sample size.

Source: Open Public Consultation

The respondents were also asked to indicate what the most important

criteria were for

the selection and implementation of new KICs

in pre-defined thematic areas based on

EU priorities. The most popular criterion by far was the

societal impact of the proposed

activities, including their potential to address the Sustainable Development Goals

(77%).

This option was particularly popular among the representatives of business and

academic/research organisations alike.

Two other criteria that were selected by more than half of the respondents were

expected

economic competitiveness and structure of the value-added chain and production

strategies of the proposed partnerships (57%)

and

synergies with existing Research

and Innovation Partnerships and other types of actions at European, national and

regional level (55%).

The former was significantly more popular among representatives

of the academic/research organisation than any of the other groups of respondents and

least favoured by moderate/modest innovators. In contrast, the latter criterion was most

popular among business organisation representatives.

Conversely, criteria such as

suitability of the EIT/KIC model for implementation of

the proposed activities

and

degree of higher education excellence of the proposed

partnership in this area and potential for reinforcement of relevant skills and

Figure 11. The most important criteria for the selection and implementation of new KICs

Q: In your opinion, which should be the most important criteria for the selection and implementation of

new KICs in pre-defined thematic areas based on EU priorities?

talents,

were viewed as the least important by the respondents.

Measures to ensure transparency and

openness as regards the wide involvement of…

Expected economic competitiveness and

structure of the value added chains and…

Degree of research and innovation excellence

of the proposed partnership in this area

Potential of the proposed partnership to ensure

financial sustainability; clear exit strategy…

Degree of higher education excellence of the

proposed partnership in this area and…

Synergies with existing Research and

Innovation Partnerships and other types of…

Measures to ensure transparency and

openness as regards the setting of priorities…

Suitability of the EIT/KIC model for

implementation of the proposed activities

Societal impact of proposed activities of the

partnership in this area, including potential to…

30%

34%

32%

50%

57%

46%

55%

50%

77%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Base: all participants (N=157)

Measures to ensure transparency and

openness as regards the wide involvement of

partners from different sectors including…

Expected economic competitiveness and

structure of the value added chains and

production strategies of the proposed…

Degree of research and innovation excellence

of the proposed partnership in this area

Potential of the proposed partnership to ensure

financial sustainability; clear exit strategy and

phasing-out measures

Degree of higher education excellence of the

proposed partnership in this area and potential

for reinforcement of relevant skills and talent…

Synergies with existing Research and

Innovation Partnerships and other types of

actions at European, national or regional level

Measures to ensure transparency and

openness as regards the setting of priorities

and objectives as well as dissemination,…

Suitability of the EIT/KIC model for

implementation of the proposed activities

Societal impact of proposed activities of the

partnership in this area, including potential to

address the Sustainable Development Goals…

Academic/research organisations

26%

24%

25%

36%

27%

54%

64%

57%

55%

68%

48%

36%

24%

35%

39%

36%

24%

35%

39%

44%

12%

31%

29%

52%

72%

47%

61%

54%

48%

49%

48%

84%

88%

69%

71%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

100%

Company/business organisation EU citizen Other

Base: all participants; Academic/research organisations N=50, Company/business organisations N=25, EU

citizens N=51, Other N=31.

Source: Open Public Consultation

Measures to ensure transparency and

openness as regards the wide involvement…

Expected economic competitiveness and

structure of the value added chains and…

Degree of research and innovation excellence

of the proposed partnership in this area

Potential of the proposed partnership to

ensure financial sustainability; clear exit…

Degree of higher education excellence of the

proposed partnership in this area and…

Synergies with existing Research and

Innovation Partnerships and other types of…

Measures to ensure transparency and

openness as regards the setting of priorities…

Suitability of the EIT/KIC model for

implementation of the proposed activities

Societal impact of proposed activities of the

partnership in this area, including potential…

32%

20%

45%

33%

29%

41%

29%

41%

28%

39%

55%

65%

52%

56%

57%

76%

78%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Innovation leaders and strong innovators

Moderate and modest innovators

Base: 148 respondents: Innovation leaders and strong innovators N=94, Moderate and modest innovators N=54.

Non-EU (N=9) respondents are excluded due to the very small sample size

Source: Open Public Consultation

The respondents were also given the opportunity to indicate what other criteria they

considered important for the selection and implementation of new KICs in pre-defined

thematic areas based on EU priorities. The most popular criterion among them was the

potential of the KICs to address important sustainability issues

(e.g. by using metrics

such as CO

reduction impact) (26%). Other suggestions included the potential for

closing an existing knowledge gap or meeting specific market needs

(13%),

potential

or intention for collaboration with other KICs

(13%),

potential positive impact on

quality of life

(9%) and

potential for achieving specific EU policy objectives

(9%).

The range of criteria are illustrated in the quotes below.

Source: Open Public Consultation

10.4.

Annex 3:

Who is affected and how?

Practical implications of the initiative

This annex assesses the different impacts of the identified preferred policy option

(Option 2) on the main stakeholders, as well as on the economy as a whole. The key

stakeholders that would be affected by the proposed legislation include in particular

higher education institutions, businesses and public bodies at EU level (the EIT) as well

as various regional actors. Since the proposed intervention is an enabling legislation, the

impact both in terms of potential benefits and potential costs would depend on the

magnitude of the KIC activities as autonomous organisations.

The general benefits and costs of the preferred option are summarised in Table 1 and

Table 2 below, respectively. They present the key costs and benefits which have been

identified and assessed during the Impact Assessment process.

Table 1: Overview of benefits

I. Overview of Benefits (total for all provisions)

–

Preferred Option (Option 2)

Description

Direct benefits

Number of students involved in

EIT entrepreneurial education

actions

22.500 students

The impact of the new action of the EIT on supporting

entrepreneurial and innovative capacity of HEIs will

increase through engaging more partners in the education

activities, reaching out to more students, facilitating the

transformation of good ideas in new ventures and

supporting capacity development of higher education

institutions

KICs offer technical education programmes (mainly

Masters and PhDs) with a strong focus on soft skills,

entrepreneurship and innovation management, mobility

aspects, trans-disciplinarity. The EIT Label will be

strengthened in its quality assurance mechanisms and will

be extended to lifelong learning activities.

The EIT will launch a new action by providing support to

higher education institutions to further develop their

entrepreneurial and innovation capabilities using the

HEInnovate framework to design action plans and

implement them. By linking financial support (through

specific calls for proposals addressing beneficiaries which

are not necessarily partners of a KIC) to develop

education & training programmes and support the

entrepreneurial capacities of higher education institutions

in low innovation performing regions, the EIT will

contribute to reducing the innovation divide.

The number of product innovations (goods or services)

launched on the market during and following KIC support

or the number of processes and marketing innovations or

new/significantly improved methods introduced following

KIC support. By innovations, we mean new or

significantly improved products (goods or services),

processes, ideas or marketing innovations implemented.

Innovative technological solutions can be commercialised

by new start-ups, brought to market by existing

businesses, implemented to strengthen existing

businesses, or used as a basis for further technological

development. Through the policy of supporting ‘better’

and not ‘more’ start-ups,

it is assumed that the number of

start-ups generated will not necessarily increase in 2021-

2027, but that the quality of the start-ups increases.

Overall participation in ETI and KIC activities of

organisations from moderate and modest innovation

countries will comprise the current and future RIS

participating organisations as well as organisations

participating in new action of the EIT on supporting

entrepreneurial and innovative capacity of HEIs.

Amount129

Comments

Number of graduates of EIT

labelled programmes

10.000 graduates

Number of Higher Education

Institutions (HEI) participating

in the EIT entrepreneurial

capacity actions

450 HEIs

Number of innovative products

(goods or services) launched on

the market as well as new

processes, methods, ideas or

marketing innovations

implemented

Start-ups supported

4300 products

680 start-ups

Participating organisations from

moderate or modest innovator

countries

500

Table 2: Overview of the costs

129 The numbers, where available, arise from the calculations and projections that are detailed in chapter 6 of the main report, the

impact analysis.

100

II. Overview of costs

–

Preferred option (Option 2)

Citizens/

Consumers

One-off

None

Recurrent

None

KICs (and its partners

–

businesses,

universities, RTOs)

One-off

For existing

KICs: Adapt the

monitor system

in order to

account for the

indicators’

framework.

Compliance and

implementation

costs arising

from adaptation

of the funding

model for

already existing

KICs.

Costs of

applying to

become a KIC.

Recurrent

Increased

administrative

costs due to the

need to widen the

scope of their

monitoring

activities and

report on additional

performance

indicators.

Annual

membership fees of

KIC partners -

recurrent cost

EIT Administrations

One-off

Put in place

the new

monitoring

system.

Recurrent

Admin costs for

improved

monitoring and

supervision of

KICs

Increased number

of EIT staff to

monitor KICs and

to manage the EIT

own’s activities

(i.e. support to

HEIs to develop

their

entrepreneurial and

innovation

capacity).

Overall costs of

EIT as a central

service over 7

years is EUR 70

million

None

All

considered

actions

Direct

costs

Indirect

costs

None

101

10.5.

Source: EIT data

Annex 4A:

Key achievements of the EIT

EIT InnoEnergy

EIT Core KPIs 2013-2017

- EIT labelled programme

graduates: 707

- New or improved products/

services/ processes launched: 73

EIT Digital

EIT Core KPIs 2013-2017

- EIT labelled programme

graduates: 610

- New or improved products/

services/ processes launched: 219

EIT Health

EIT Core KPIs 2013-2017

- EIT labelled programme

graduates: n/a

- New or improved products/

services/ processes launched: 22

EIT Raw Materials

EIT Core KPIs 2013-2017

- EIT-labelled programme

graduates: 0

- New or improved products/

services/ processes launched: 7

EIT Climate-KIC

EIT Core KPIs 2013-2017

- EIT labelled programme

graduates: 375

- New or improved products/

services/ processes launched: 306

EIT Core KPIs 2017

- Start-ups created by students &

graduates from EIT labelled

programmes: 2

- Start-ups created as a result of

innovation projects: 2

- Start-ups supported by KICs:

266

- Investment attracted by start-

ups supported by KICs:

187,832,231.25 EUR

- Success stories submitted and

accepted by EIT: 58

- External participants*

(individuals) in EIT RIS

programmes: 22

- External participants*

(organisations) in EIT RIS

programmes: 33

- Financial Sustainability;

revenue of KIC LE: 2,629,576.44

EUR

- Financial Sustainability; FS

coefficient: 3.72%

EIT Core KPIs 2017

- Start-ups created by students &

graduates from EIT labelled

programmes: 4

- Start-ups created as a result of

innovation projects: 0

- Start-ups supported by KICs: 80

- Investment attracted by start-ups

supported by KICs: 32,000,000.00

EUR

- Success stories submitted and

accepted by EIT: 12

- External participants*

(individuals) in EIT RIS

programmes: 17

- External participants*

(organisations) in EIT RIS

programmes: 110

- Financial Sustainability; revenue

of KIC LE: 4,932,738.41 EUR

- Financial Sustainability; FS

coefficient: 6.50%

EIT Core KPIs 2017

- Start-ups created by students &

graduates from EIT labelled

programmes: 2

- Start-ups created as a result of

innovation projects: 9

- Start-ups supported by KICs: 33

- Investment attracted by start-ups

supported by KICs: 5,850,000.00

EUR

- Success stories submitted and

accepted by EIT: 8

- External participants*

(individuals) in EIT RIS

programmes: 0

- External participants*

(organisations) in EIT RIS

programmes: 9

- Financial Sustainability; revenue

of KIC LE: 2,448,785.07 EUR

- Financial Sustainability; FS

coefficient: 3.80%

EIT Core KPIs 2017

- Start-ups created by students &

graduates from EIT-labelled

programmes: 0

- Start-ups created as a result of

innovation projects: 0

- Start-ups supported by KIC: 100

- Investment attracted by start-ups

supported by KIC: 27,900,000.00

EUR

- Success stories submitted and

accepted by EIT: 26

- External participants*

(individuals) in EIT RIS

programmes: 0

- External participants*

(organisations) in EIT RIS

programmes: 7

- Financial Sustainability; revenue

of KIC LE: 6,620,836.00 EUR

- Financial Sustainability; FS

coefficient: 19.94%

EIT Core KPIs 2017

- Start-ups created by students &

graduates from EIT-labelled

programmes: 0

- Start-ups created as a result of

innovation projects: 3

- Start-ups supported by KIC: 34

- Investment attracted by start-ups

supported by KIC: 3,601,433.00

EUR

- Success stories submitted and

accepted by EIT: 8

- External participants*

(individuals) in EIT RIS

programmes: 0

- External participants*

(organisations) in EIT RIS

programmes: 12

- Financial Sustainability; revenue

of KIC LE: 7,148,045.45 EUR

- Financial Sustainability; FS

coefficient: 21.69%

102

10.6.

Annex 4B:

key achievements and challenges as outlined in the EIT

130

interim evaluation :

Key achievements

The EIT evaluation has come to the conclusion that the rationale behind the

establishment of the EIT is still valid. The EIT/KICs model which aims at contributing to

the development of the EU and Member States innovation capacity in order to tackle

societal challenges, through the integration of the knowledge triangle

131

, is unique and

highly relevant. It targets major structural weaknesses of the innovation capacities in the

EU (in key thematic areas) such as the limited entrepreneurial culture, the low level of

cooperation between academia and industry and the insufficient development of human

potential, and aims to contribute to closing the innovation gap between the EU and its

key competitors.

The EIT and the KICs contribute to the Horizon 2020 specific objectives on "societal

challenges" and on "Leadership in enabling and industrial technologies". In particular as

a result of the strong involvement of industrial participants, KICs innovation activities

brought solutions closer to the market and paved the way for industrial and commercial

implementation in areas of societal challenges. The KICs innovation projects comprise

demonstrators, pilot plants, proofs of concept and help develop solutions in response to a

specific business opportunity.

The EIT-KICs model delivers concrete results. The first wave KICs

132

has gained

recognition for its activities in the areas of innovation, entrepreneurship and education

133

The EIT and the KICs add value beyond national initiatives, primarily by focusing on the

integration of the knowledge triangle, building new types of cooperation links and

facilitating cross-border interactions.

The co-location centres (CLCs)

134

represent a key aspect of the KICs´ business model

needed to deliver concrete results on the local level and have an impact on local

innovation ecosystems in thematic areas. They have been instrumental for widening the

KICs’ geographical scope to EU's moderate innovation performers. CLCs have

successfully built links with local governments and other institutions or organisations

where they are located. However, further efforts are needed for the KICs to become fully

integrated into the local innovation ecosystems. Furthermore, KICs' support to the

organisations from EU-13 Member States

135

, while better than the average of Horizon

2020, remains limited to a small number of these Member States.

KICs cross-border operations give KIC partners and beneficiaries access to peers,

investors and customers that they might otherwise find difficult to identify and build

links with.

The EIT educational programmes attract high calibre students. Graduates from EIT

labelled courses appreciate the multidisciplinary approach, combining technical

knowledge with entrepreneurial and innovation education, the direct access to businesses

and the international mobility. However, their integration in KICs innovation and

130 SWD (2017) 351 final

131 Knowledge triangle refers to the interaction between research, education and innovation and to an attempt to better link together

these key concepts which are key drivers of a knowledge-based society.

132 EIT Climate-KIC, EIT Digital and EIT InnoEnergy

133 EIT (2017), Our Impact from 2010 to 2016, pp. 34-39, provides examples of this recognition.

134 Co-location centre means a geographical area where the main knowledge triangle partners are based and can easily interact,

providing the focal point for the KICs’ activity in that area.

135 Bulgaria, Croatia, Cyprus, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Romania, Slovakia and Slovenia

103

entrepreneurship activities is still under-exploited and there is room for improvement.

Furthermore, KICs´ education activities did not generate so far a significant number of

student-led start-ups.

While taking into account the evidence about the concrete results achieved by the EIT in

the past years, the impacts are mainly limited to the partners (especially higher education

institutions and companies), graduates and start-ups that have directly cooperated with

the KICs. When extending the analysis to the systemic impacts of the EIT, the evidence

is less clear.

The potential of the EIT and the KICs to contribute to EU policy-making in specific

fields is apparent although this potential has not been utilized at its best. The KICs´

efforts to address national and regional administrations and authorities, in particular those

involved in designing and delivering Research and Innovation Strategies for Smart

Specialization (S3) should be improved.

The administrative expenditure of the EIT has been steadily decreasing over time and is

significantly below the 5% threshold set out for Horizon 2020. The time required for the

EIT to finalise the grant procedure has steadily decreased overtime. In 2016 the average

time to grant was five months.

The KICs´ external revenues mostly originate from membership fees but also from

sponsorships, educational services, revenue sharing agreements, equity participation,

consulting services, third party (mainly national and regional) grants. The KICs' capacity

to achieve financial sustainability is an issue and it may be challenging for KICs to

become fully self-financing after 15 years, while maintaining the full range of knowledge

triangle activities. Activities which generate less income (e.g. education ones) would be

under particular risk as well as other activities with a limited market value. This is

confirmed by the High Level Group report of 2016

136

The EIT model is unique among the EU and Member States innovation support

initiatives in tackling relevant societal challenges through strengthening cooperation

between partners in business, higher education and research

–

KTI.

137

The KICs have

been successful in involving the diversity of actors in the knowledge triangle, thus

contributing to reduce the fragmentation in their sectoral ecosystems. Better

dissemination of information about the KTI model, both within the KICs and beyond, in

order to make it better understood and foster the implementation of the model in practice,

is however needed.

KICs are perceived as communities with a fairly balanced representation of all

knowledge triangle actors. Furthermore, KICs managed to attract the most relevant

European actors in their respective fields. Most KICs have gone beyond the ‘classical’

actors of the knowledge triangle to also involve other actors such as public authorities

(e.g. EIT Climate-KIC) and civil society organisations (e.g. EIT Health) and also actively

participated in EU initiatives that promote partnerships among the EC, governments and

private actors (e.g. EIT InnoEnergy involvement in the Strategic Energy Technology

Plan's various working groups).

136 Report of the High Level Group on the EIT set up by Commissioner Tibor Navracsics, 2016, pp.8 and 9;

https://ec.europa.eu/education/sites/education/files/eit-hlg-final-report_en.pdf

137 Knowledge Triangle Integration

104

The flexibility of the EIT model is suitable and allows for testing potential new initiatives

in the area of innovation support, e.g. the EIT Regional Innovation Scheme initiative.

The cross-KICs interactions, through the active support of the EIT, have been steadily

increasing. They have resulted in mutual learning and sound evolution of KICs

governance and management model.

Key challenges

Key challenges that would need to be addressed to improve the EIT/KIC model have

been identified and are presented below:



Strengthening the EIT/KICs model as a relevant mechanism at EU level in

addressing key societal challenges and delivering on Horizon 2020 objectives, in

particular, to further improve the linkages between the knowledge triangle

activities, especially between innovation and business creation activities

Better articulating the EIT model and objectives, and further raise the awareness

of the EIT brand through strengthening the EIT/KIC communication efforts with

a focus on concrete examples, case studies, success stories, results achieved and

impact.

Encouraging cross-KIC collaboration and ever stronger participation of the

private sector, in particular SMEs, in KICs activities.

Making the selection process (through which KICs provide support to innovation

projects) more transparent and communicate the selection results to the wider

KIC community more efficiently.

Ensuring synergies and complementarities with other innovation initiatives at EU,

national and regional level at both implementation and programming level;

Increasing the dialogue and interaction with policy-makers at EU, national and

regional level with a view to better contribute to EU policy-shaping in respective

fields of action;

Improving the practical integration of KIC activities within regional and local

innovation ecosystems and enhance cooperation with regional and local

innovation actors, in particular, through better use of the co-location centres, for

inter-regional cooperation.

Increasing further the attractiveness and competitiveness of KICs' education

programmes by better monitoring the education offer, in view of improving

recruitment procedure and ensuring a high quality, with the goal of increasing

KICs´ outreach and reduce the drop-out rate at the application stage; fostering and

sharing experience across KICs; strengthening the EIT label, and systematically

monitoring the skills acquired, and the outcomes and impact of the courses;

Taking concrete actions to link KICs and public-private partnerships with similar

goals, in order to promote new and emerging curricula in a variety of industrial

sectors

105



Exploring synergies with Commission's skills development policies and further

promote the human capital, entrepreneurial and digital skills development in both

formal and informal / non-formal contexts as important elements in any

successful innovation ecosystems, in particular at the design of KICs educational

programmes.

Fostering an entrepreneurial mind-set at a broader scale by going beyond formal

education and engaging inter alia in executive education, short courses, online

learning and vocational training including professional development.

Enhancing efforts in making KICs’ management structures more efficient and

effective.

Measuring and reporting more extensively on activities and achievements related

to EU policy priorities in thematic areas; further improving and reviewing the

system for monitoring the implementation of EIT and KICs' activities towards

Horizon 2020 objectives in order to better measure and capture their direct and

indirect results and impact, and taking measures that would allow to better assess

the cost effectiveness of KICs in achieving their results.

Exploring ways to optimise the administrative procedures and reduce the burden

imposed on KICs’ operations, while making sure the data to assess the actual

performance is collected.



106

10.7.

Annex 5:

Discarded policy options regarding the EIT under

Horizon Europe

As part of the Horizon Europe Impact assessment, taking into account the stakeholder

input and suggestions on the improvement of the EU R&I partnership landscape, the

following policy alternatives regarding the EIT’s future role and operation have been

considered and discarded.

Reduction/Discontinuation of EIT KICs interventions

The EIT is highly relevant and has a clear EU added value as there is no other instrument

that builds EU-wide ecosystems of education, research, business and other stakeholders

(EIT interim evaluation). The reduction of the EIT scope of its intervention or a full or

partial phasing out of KICs from the current operating model would bear severe

implications and negative impact on the knowledge triangle integration development, the

research and innovation performance and the overall research and innovation landscape

in Europe.

Continuation of strategic approach to EIT/KICs as implemented under Horizon 2020

EIT/KICs would operate on the basis of initial objectives, scale and operating modes.

The key challenge of rationalization of the European R&I partnerships landscape in line

with the overall objectives of the future Horizon Europe Programme would not be

realised. The coherence between the EIT and other EU innovation policy initiatives and

instruments at programming as well as implementation level would not be matched. The

key difference between hereby discarded option and the baseline option analyzed in the

main body report lies in the proper alignment of the EIT operations with the requirements

of Horizon Europe programme in case of baseline option.

Direct integration of KICs into the Framework Programme (without EIT)

As confirmed by the past evaluations, the EIT model comprising the EIT and its

Knowledge Innovation Communities (KICs) is valid and working well. The EIT has

tailored its support structure to the specific needs and goals of the KICs by providing

coordination and steering (i.e. requirements for setting up KICs, performance based

funding, simplification). Through systematic focus on cross-KIC activities, sharing of

best practices and integrating lessons learnt from the past, the EIT has built up

knowledge and experience on which each KIC can draw (i.a. framework for guidance to

set up new KICs). In turn, the KICs provide the EIT with practical insights and feedback

on what works on the ground and what does not (thus increasing effectiveness and

synergies).

The EIT/KIC model is based on a long-term approach to innovation, i.e. KICs are set up

bearing in mind a long-term perspective to achieve the impact and their sustainability

beyond the direct public financial support. The EIT provides a wide range of services,

from education, training and coaching, building and maintaining networks where young

entrepreneurs and enterprises connect with future partners and investors in order to take

up the research results and bringing them to the market. This goes far beyond the

management of EU contracts and projects. The EIT has thus built up a wealth of

knowledge and experience on innovation that is unique at a European scale and

decoupling of EIT and KICs would cause the effectivity loss. The gradually built-up EIT

Community of regular exchange, mutual support and trust would disappear. Further, the

current efficiency at the EIT central management level as well as in the management of

KIC operations would be lost.

107

10.8.

Annex 6:

Selection criteria for establishing KICs

The Commission proposal for establishing the Horizon Europe programme stipulates that

European Partnerships, including KICs, should be selected, implemented, monitored,

evaluated and phased-out according to five criteria as outlined in Annex III of the

proposal

138

. In that light it is necessary to assess to what extent the new Horizon Europe

criteria framework on partnerships covers the aspects of the current KIC selection

criteria, and whether there is a need for additional selection criteria specific to KICs.

Table 1 provides a mapping of the proposed criteria for the selection of European

Partnerships and the criteria the EIT currently uses for the selection of proposals to

establish a KIC

139

. The results suggest that the new criteria cover well most of the aspects

of the current selection criteria for KICs, and only minor deviations (i.e. additional

criteria) will be needed to reflect KICs’ specificities.

Annex 9 provides analysis of possible thematic areas for future KICs taking into account

criteria for selection and implementation of European partnerships.

Table 1: Mapping of criteria for selection of KICs and the criteria for establishing

European Partnerships.

Criteria for selection of KICs

1.1. Strategic approach:

relevance, specificity and value-

added of the strategic approach and

proposed focus within the theme;

applicability of the KIC model to

tackle the societal challenge(s) of

Horizon 2020 via a

multidisciplinary approach by

integrating the Knowledge

Triangle and fostering

entrepreneurship and innovation

throughout Europe

1.2. KIC partnership innovation

potential:

Innovation potential of

the partnership to implement the

KIC’s strategy, demonstrated by

the combined strength and quality

of the partners (including SMEs),

forming a diverse, balanced,

collaborative and world-class

partnership

1.3. Synergies:

Demonstrate value

added and readiness to establish

concrete synergies and

complementarities, positioning of

the KIC vis-à-vis other relevant

public, private and third sector

initiatives at EU and other levels

2.1. Operations:

The quality of the

KIC leadership team profiles

(management and governance

Criteria for establishing

European Partnerships

Evidence that the European

Partnership is more effective in

achieving the related objectives

of the Programme, in particular

in delivering clear impacts for

the EU and its citizens, notably

in view of delivering on global

challenges and research and

innovation objectives, securing

EU competitiveness and

contributing to the strengthening

of the European Research and

Innovation Area and

international

commitments;

Assessment

Overall the criteria are well

aligned.

Assessment of the extent to

which a KIC is more effective

than other forms of partnerships

in achieving the related

Programme objectives should be

carried out as part of the EIT

SIA.

Coherence and synergies of the

European Partnership within the

EU research and innovation

landscape

The criteria are well aligned

Transparency and openness of

the European Partnership as

regards the identification of

Alignment can be achieved by

pursuing one of the two options:

Set general standards for all

138 European Commission (2018) Proposal for a Regulation of the European Parliament and of the Council establishing Horizon

Europe

–

the Framework Programme for Research and Innovation, laying down its rules for participation and dissemination,

COM(2018) 435 final. Annex III

139

EIT

(2017)

Call

for

KIC

proposals

2018

Evaluation

Criteria,

02519.EIT.2017.I.GB46.

<https://eit.europa.eu/sites/default/files/evaluation_criteria_call_for_kics_2018.pdf>

108

Criteria for selection of KICs

teams); effectiveness of the

operational structure including

selection and connectivity of

colocation centres and

demonstration how the Knowledge

Triangle Integration approach will

be implemented on the operational

level

Criteria for establishing

European Partnerships

priorities and objectives, and the

involvement of partners and

stakeholders from different

sectors, including international

ones when relevant

Assessment

KICs regarding the

requirements for selection of

specific thematic priorities

and involvement of partners

and stakeholders

Amend the selection criteria

and request all applicants to

reflect the proposed principles

for selection of priorities and

involvement of partners, and

stakeholders in the proposals

for KICs’ partnership (at the

application stage).

The criteria are well aligned

2.2. KIC business model and

financial plan:

feasibility of the

KIC’s business model and

financial plan (including EIT and

non-EIT resources) for attracting

financial resources and achieving

financial sustainability in the long

term; a plan for the management

and exploitation of intellectual

property supporting the KIC’s

business model.

3.1. Impact and KIC scoreboard:

planned pan-European impact on

the societal challenge, human

capital, job creation, economic

growth demonstrated by the

strategy; quality and relevance of

the outreach (in particular EIT

Regional Innovation Scheme);

relevance and feasibility of the

expected outcomes, outputs and

Key Performance Indicators (KPIs)

included in a KIC Scoreboard and

their contribution to the EIT

Scoreboard

Ex-ante demonstration of the

partners’ long term commitment,

including a minimum share of

public and/or private

investments

Ex-ante demonstration of

additionality and directionality

of the European Partnership,

including a common vision of

the purpose of the European

Partnership. This vision will

include in particular:

identification of measurable

expected outcomes,

deliverables and impacts

within specific timeframes,

including key economic value

for Europe;

demonstration of expected

qualitative and quantitative

leverage effects;

approaches to ensure

flexibility of implementation

and to adjust to changing

policy or market needs, or

scientific advances;

exit-strategy and phasing-out

measures

The criterion for European

Partnerships is broader and will

require some integrations to the

corresponding KICs’ selection

criteria.. However, some

elements are already covered

under other KIC selection

criteria:

KICs should demonstrate

leverage effects when

outlining their business model

and financial plan as well as

the expected synergies.

KICs should demonstrate

approaches to ensure

flexibility of implementation

under the proposed plan of

operations

Maximum duration of the

financial support is indicated

in the EIT Regulation;

KIC exit strategy (including

long-term financial

sustainability) should be

outlined in the KIC business

model and financial plan.

109

3.2 Dissemination of results and

communication:

dissemination

plans for KIC results, including

sharing good practices within,

between and beyond the KICs,

across EU Member States, regions

and institutions to ensure a

widening of the reach of the EIT

and increase of its impact; quality

and relevance of the KIC

communication strategy including

the contribution to building the

EIT brand identity

Source: IA support study of SQW

Key elements are covered by the

criteria

“Evidence

effectiveness in achieving the

objectives of the Framework

Programme” and “Openness and

transparency” where partnership

proposals have to describe

mechanisms

communication

and

dissemination of results.

The EIT criteria has a scope that

includes (and goes beyond) what

is covered by the relevant

Horizon Europe partnership

criteria.

110

10.9.

Annex 7:

Social network analysis of KICs’ partnerships

The Social network analysis

140

examines the level and intensity of cooperation between

the KICs partners and supports some of the statements in the problem definition as well

as in the impact analysis section of the main IA report, in particular those related to the

transparency, openness, effectiveness and efficiency of the activities and operations of

the KICs.

The analysis covers the first three KICs as they are most mature: EIT Digital, EIT

Climate, and EIT InnoEnergy. It is based on four main indicators:

density and

distribution of the network, distribution of KIC beneficiaries by a number of projects and

by a number of partners as well as the distribution of funding.

The data on KICs’

partners has been extracted from KICs Business Plans for 2014

–

2017

141

manually as

well as by the use of automatic text analysis and extraction algorithms.

The analysis came with three main findings:



EIT Digital and EIT Climate KIC have developed relatively dense networks of

partners, whereas the network of EIT InnoEnergy proves to be more fragmented

segregated around three clearly pronounced clusters.

All three KICs have a large share of partners (ranging between 30% in EIT

Digital and 83% in EIT InnoEnergy) that participated in less than three projects

and engaged in partnerships with a small number of organisations in the period

2014

–

2017.

The funding is highly concentrated - 5% of the organisations claimed between

31% (EIT Digital) and 64% (EIT InnoEnergy) of - the total funding for a

respective KIC in 2016 and 2017. When excluding the KIC central offices and

co-location centres, then the top 5% of the beneficiaries receive from 30% (EIT

Digital) to 43% (EIT Climate KIC) of total EIT KAVA funding.



EIT Digital

The social network analysis suggests (see figure B4-1) that the partnership structure of

EIT Digital cannot be characterised as fragmented. The figure demonstrates that there is

only one large cluster and no separate islands of organisations are visible. The results

remain valid when additional constraints are introduced to the network, such as limiting

the network to organisations that cooperate frequently (see figure B4-2) or introducing

budgetary constraints (see Notes below figures B4-1 and B4-2). The density of the social

network

142

is 0.195 (with maximum possible value of 1) further strengthening the

conclusion that all participating organisations are strongly clustered.

140 This analysis has been carried out by ICF and was part of the study to support the Impact assessment of the EIT, Annex B4, pp.

130-sq.

141 For EIT Climate it covers 2015-2017, because the received Business Plan for 2014 did not contain the relevant Annexes.

142 Density - proportion of direct ties in the network compared to the total number of possible ties.

111

Though the organisations are in a cluster, around 30% of beneficiaries of EIT Digital

participated in one or two projects and engaged with less than 11 partners (see Figure B4-

3 and B4-4). Sparse participation could indicate weak ties within the cluster or the

disparities between the small number of core and the large number of peripheral partners.

In fact, seven organisations (5% of all partners) claimed 31% of the funding in 2016-

2017. If the estimates exclude KIC central offices and co-location centres, then the top

5% (7 organisations) claimed approximately 30% of the funding.

Source: EIT data; IA support study of SQW

Figure B4-1. Social network of all organisations that Figure B4-2. Social network of organisations that had 5 or

participated in EIT Digital (2014-2017)

more cooperation’s in EIT Digital (

-2017)

Source: SQW estimates, based on EIT Digital Business Plans (2014/2015/2016/2017)

112

Notes:

Figure B4-3. Number of organisations that in 2014-2017 partnered up with a specified number of unique

partners in EIT Digital projects

No. of KIC beneficiaries

1. The number

inside

blue

circles refers to

unique

identifier of an

organization

that

participated in

EIT

Digital

2014-2017;

2. The width of

the grey line

indicates

the

number

cooperation’s

organisations

had;

51-60

61-70

71-80

81-90

91+

1-10

11-20

21-30

31-40

41-50

Number of partners

Figure B4-4. Number of organisations that in 2014-2017 participated in a specified number of EIT

Digital projects

3. The results

changes

marginally

when budgetary

constraints of

EUR 10,000 or

EUR

100,000

were

introduced in to

the

social

networks.

No of KIC beneficiaries

1-2

3-5

6-10

11-15

16-25

26-50

51-75

76-99

100+

Number of projects

Source: EIT data; IA support study of SQW

EIT Climate KIC

The social network of organisations participating in the EIT Climate KIC looks

similar to the EIT Digital one (see figures B4-5). There is one large cluster without

an indication of smaller islands of activities. The density of this network is 0.219.

This result also stands with additional constraints (see figure B4-6).

113

However, 47% of KIC beneficiaries participated in only one or two projects (see

figure B4-7). This implies that even though there is a strong singular cluster, some

organisations are weakly integrated into the system. In addition, this also indicates

that activities are strongly concentrated around several organisations. This claim is

further supported by the fact that 11 organisations (5% of all organisations that

participated in EIT Climate in 2016-2017) claimed 52% of the budget. If the

estimates exclude KIC central offices and co-location centres, then top 5% (10

beneficiaries) claimed approximately 43% of the funding. This disparity in funding

is much stronger in EIT Climate KIC in comparison to EIT Digital.

Figure B4-5. Social network of all organizations that Figure B4-6. Social network of organisations that had 5 or

more cooperation’s in EIT Climate (

-2017)*

participated in EIT Climate (2015-2017)*

Source: SQW study and estimates, based on EIT Climate KIC Business Plans (2015/2016/2017)

114

Notes:

1.The number inside blue circles refers to a unique identifier of an organization that participated in EIT Digital 2014-2017;

2.The width of the grey line indicates the number of cooperation’s organisations had;

3.The results changes marginally when budgetary constraints of EUR 10,000 or EUR 100,000 were introduced in to the social networks.

* The 2014 data was excluded from the analysis as we did not have access to the complete Business Plan for that year

Figure B4-7. Number of organisations that in 2015-2017* partnered up with a specified number of unique partners in EIT

Climate KIC projects

No. of KIC beneficiaries

1-10

11-20

21-30

31-40

41-50

51-75

76-99

100-150

151+

Number of partners

Figure B4-8. Number of organisations that in 2015-2017* participated in a specified number of EIT Climate KIC

projects

140

No. of KIC beneficiaries

120

100

126

1-2

3-5

6-10

11-15

16-25

26-50

51-75

76+

Number of projects

Source: Own estimates, based on EIT Climate KIC Business Plans (2015/2016/2017)

* The 2014 data was excluded from the analysis as we did not have access to the Business Plan from that year

115

EIT InnoEnergy

Unlike other KICs, EIT InnoEnergy is more fragmented. Figure B4-9 shows that

organisations participating in the EIT InnoEnergy are divided into three pronounced

clusters, while a large number of organisations are on the outskirts. Figure B4-10

provides additional insight by showing that after removing all organisations that

participated in EIT InnoEnergy only several times (less than 5), the network becomes

very thin. This implies that the fragmentation seen in figure B4-9 is due to some

organisations only participating in EIT InnoEnergy ones or twice, and hence not having

had the chance to work with many partners. A low Social network density of 0.116

further supports this conclusion. The network in B4-10 could be considered as the core of

EIT InnoEnergy community.

The above conclusions are further supported by Figure B4-11, which demonstrates that

around 83% of all organisations participated in only one or two EIT InnoEnergy projects.

In addition, 5% (11 organisations) in this KIC claimed around 64% of the overall funding

in 2016 and 2017. If the estimates exclude KIC central offices and co-location centres,

then top 5% (11 organisations) claimed approx. 37% of the funding.

Figure B4-9. Social network of all organizations that Figure B4-10. Social network of organisations that had 5 or

participated in EIT InnoEnergy (2014-2017)

more cooperation’s in EIT InnoEnergy (2014-2017)

Source: SQW study and estimates, based on EIT InnoEnergy Business Plans (2014/2015/2016/2017)

Notes: The number inside blue circles refers to a unique identifier of an organization that participated in EIT Digital 2014-2017;

The width of the grey line indicates the number of cooperation’s organisations had;

The results changes marginally when budgetary constraints of EUR 10,000 or EUR 100,000 were introduced in to the social networks.

116

Figure B4-11. Number of organisations that in 2014-2017 partnered up with a specified number of unique

partners in EIT InnoEnergy projects

No. of KIC KIC beneficiaries

1-10

11-20

21-30

31-40

41-50

51-60

61-70

71-80

81-90

91+

Number of partners

Figure B4-12. Number of organisations that in 2014-2017 participated in a specified number of EIT

InnoEnergy projects

100

No. of KIC beneficiaries

Number of projects

117

10.10.

Annex 8:

Impact Indicator Framework

The Annex 8 sets out the comprehensive Indicator Framework for the EIT and the KICs. The indicator framework is comprised of the system of

indicators proposed for regular monitoring and review by EIT and the KIC. The Framework also includes a sub-set of indicators recommended for less

frequent review as part of the evaluative research, which will be timed to coincide with evaluation cycles. The framework comprise the indicators directly

relevant to economic development outcomes that stem from the three nodes of the knowledge triangle, the indicators associated with cross-KTI outputs

and the development of ecosystems, and the indicators associated with the performance of KICs in operational terms. The Framework does not comprise

the societal development indicators, which will be subject to discussion and agreement between the EIT and KICs in terms of definitions, data sources,

collection frequencies, etc.

Current Core

KPI

Breakdowns

Frequency

Resource

Source

Category

Indicator

Definition

Other

Note (e.g. changes to Core KPI)

Outputs

Education

No. participants completing eligible

EIT/KIC

education

courses

programmes

Participants should have completed one of the

following:



EIT Label courses/programmes



Professional/ workforce courses lasting for

at least 5 days



Other non-degree programmes (e.g.

Summer schools of 5 days or more and

other extra-curricular courses such as

entrepreneurship training of 5 days or more)



MOOC/MOOPs of 3 modules or more.

Unit of analysis is completions, so individuals

completing more than one can be counted

twice (or more). No. days and modules

completed are provided based on testing

feedback but would be subject to agreement

between EIT/KICs.

Indicator to be expanded to

include a fuller range of courses

to reflect the broader suite of education

activities of the KICs. The breakdowns

required will ensure that time-series

comparisons can be made with data

already collected on EIT Label courses.

Breakdown by each type of

education course/ programme.

The number of days/modules represent

our recommendation to the EIT and are

based on the feedback from the testing

phase.

118

Business and

enterprise

No. businesses supported

To measure the number of business supported

by KIC activities - using current Core KPI

definition but extended to businesses of all

stages, e.g. KICs should justify that the support

provided contributes to the businesses

growth/potential growth. Examples of such

services are mentoring, consultancy (e.g.

access to finance and markets, product/service

marketing, legal advice, internationalisation,

innovation, match-making, etc). The services

should be provided for a minimum period as

set by EIT (see “Note” column).

Research and

innovation

No. of innovation projects progressing

towards commercialisation

To measure the number of innovations

resulting from innovative projects that have

progressed towards commercialisation, defined

as one or more of: progress by at least one

technology or manufacturing readiness level

(TRL/MRL); prototype/proof of concept/beta

version developed; product/service/model

piloted. The definition may be extended for

KIC-specific

measures (see “Note” column)

TRL

Core KPI broadened to include

the total number of businesses

that have received some form of

eligible support (i.e. not just start-ups).

Breakdown by: business stage

(i.e. start-ups up to two years

old, and established businesses of two

years old or more); business size

(i.e. SME and large company);

and route/type of support received by

business-supported (i.e. education

courses/programmes, start-up support,

innovation projects).

The current definition used by EIT is

based on services provided for a total

period of at least two months. We

recommend seeking to redefine the

eligibility criteria in terms of person-

days of support provided.

The indicator will be useful for

providing

intermediate

measure of the progress of innovations,

and to help in the contextualisation of

outcome indicators.

TRL

EIT to agree with KICs the

precise definition for measuring

progress towards commercialisation,

due to the use of different measures by

KICs.

Indicator to contribute to the

measurement of Horizon

Europe impact pathway No.7

–

innovation outputs.

Research and

innovation

No. of innovations produced that have

filed for some form of intellectual

property (IP) protection

To measure the number of innovations

resulting from innovative projects (i.e. filings

for some form of intellectual property

119

Research and

innovation

No. of peer

publications

reviewed

scientific

protection - patents, trademarks, registered

designs, copyrights).

No. of peer reviewed scientific publications

that have been produced as a result of KIC-

funded innovation projects.

WoS

KTI

nodes)

(2+

No. non-Education partners involved

in Education activities

To measure the number of business and other

non-Education organisations (e.g. tertiary

sector organisations) that are involved in KIC

education programmes. Involvement defined as

any form of formal engagement, from

attending an education service to involvement

in the delivery of education programmes.

Definition aligned with

Horizon Europe indicator to

measure number of peer-reviewed

scientific publications. Indicator to

contribute to the measurement of

Horizon Europe impact pathway No.1

–publications.

It is important to note that

although it is not immediately

obvious what 'good' performance

means for this indicator, it is designed

to provide contextual information when

analysed in combination related

indicators that measure the extent of

knowledge triangle integration (e.g.

Network strength analysis). It also

enables an assessment of any

particularly high or low concentrations

by location.

As above.

KTI

nodes)

(2+

No. non-business partners involved in

business start-up activities

Operational

No. of organisations 'engaged' with

the RIS (by engagement frequency)

To measure the number of education, research

and other non-business organisations (e.g.

tertiary-sector organisations) that are involved

in KIC start-up activities/programmes.

Involvement is defined as any type of formal

engagement (e.g. attending a start-up

service/activity, involvement in the delivery of

start-up activities/programmes).

To measure the number of organisations that

have engaged with each KIC who have also

engaged with the RIS

–

covering the origin of

the partner and destination of the engagement

(i.e. location and route/type of support).

Engagement should be a formal and active

participation that has involved dedicating time,

resources or funding to an activity.

Disaggregated in terms of the

type/intensity of engagement

(classified from low to high-intensity

engagement, and the frequency of

engagement).

Location to include the origin of

the partner and destination of

the engagement

–

e.g. location(s) in

120

Operational

No. and % of partners from EIT RIS

countries

As per indicator name.

which engagement occurs.

This

indicator

provides

important

contextual

information

when

analysed

combination with related outcome

indicators linked to KIC performance

in RIS countries (e.g. to inform steps

towards improving the performance of

'modest and moderate' innovators) and

provides evidence on countries with

high or low concentrations.

Core KPI expanded to all

'engaged' organisations and

whether they have engaged with RIS

countries.

Following the testing phase, we

recommend that the EIT select

one or both of the proposed “options”,

through an agreement with the KICs.

Operational

Measure of operational efficiency

(e.g. time to grant)

Operational

No. of partners making financial

contributions to the KIC

To measure operational efficiency, two

“options” are proposed, as follows:



time to grant - % of grants signed within a

pre-determined time frame (90 days)



grant utilisation rate

–

% grant utilised each

year

To measure a number of partners and donors

making cash and in-kind contributions, to be

broken down as follows:



contributions to KIC KAVA and KCA

activities



contributions to fund KIC operations (e.g.

membership fees)

Breakdown by nature of

financial

contribution

and

route/type of support received by

business receiving investment (e.g.

education courses/ programmes, start-

up support, innovation projects).

Financial contribution breakdowns

include:



contributions to KAVA and KCA

activities



contributions to KIC operations (e.g.

membership fees)

Following testing with KICs, we

propose

the

following

breakdowns by the size of the financial

121

contribution, as follows:



EUR 0 to 9,999k



EUR 10,000 to 49,999



EUR 50,000 to 99,999



EUR 100,000 to 249,999



EUR 250,000 to 499,999



EUR 500,000 to 999,999



EUR 1,000,000 plus

122

Short-term Outcomes

Economic

development

Value of private / public investment

mobilised / attracted within N years

by supported businesses

To measure the EUR value of private / public

capital attracted by businesses in receipt of

KIC support (as under output indicator above)

or receipt of innovation project funding, within

a three years post-support (e.g. last received

KIC KAVA support activity).

Core KPI expanded to the value

of investment attracted by

businesses supported across activities

(as defined in output indicator above)

and also including those in receipt of

innovation project funding.

Breakdown by route/type of

support received by business

receiving investment (e.g. education

courses/programmes, start-up support,

innovation projects)

Breakdown by route/type of

support received by each start-

up created (e.g. education courses/

programmes,

start-up

support,

innovation projects).

Data collection will draw

on a mix of research,

combining programme/monitoring data

with a rolling survey with start-ups

created as a result of KIC activities one

year after they are established, where

necessary.

There is scope to extend to 3 years

post-establishment.

Breakdown by route/type of

support

received

organisation supported (e.g. education

courses/ programmes, start-up support,

innovation projects).

Rolling survey of organisations

in receipt of KIC support at set time

intervals (i.e. 1, 3 and 5 years post

support).

Economic

development

No. start-ups created and surviving

for 12 months

To measure the number of sustainable start-ups

created as a result of KIC activities, e.g.

entrepreneurship support, innovation projects,

graduate training. Outcome eligible once a

business has started trading and been trading

for 12 months.

Economic

development

No. and % of businesses supported

that reported growth in either

employment or turnover

To measure the number and % of businesses

that report employment and/or turnover growth

that is attributable to KIC support. The

indicator will be dependent on self-reporting.

% should be based on a sample, and then no.

calculated through appropriate scaling up and

weighting to respondent profile.

123

Ecosystem

development

No. and % of participants in education

programmes that are:



in employment relevant to the KIC



in intrapreneurial roles / roles

supporting innovation in their

organisation



in managerial roles



contributing to KIC activities (e.g.

roles on EIT innovation projects)

Value of R&D investment changes by

engaged businesses

To be measured through follow-on surveys of

participants, and so dependent on self-

reporting of what participants are now doing.

This does not need to be attributed to their

participation in education programmes. %

should be based on a sample, and then no.

calculated through appropriate scaling up and

weighting to respondent profile.

Rolling survey of participants in

education courses/programmes

at set time intervals (i.e. 1, 3 and 5

years post completion).

Breakdown by each type of

education course/ programme.

Ecosystem

development

A measure of the value of R&D investment

changes attributable to KIC support based on

self-reported survey responses.

Ecosystem

development

No. products (goods or services)

launched on the market

A measure of the number of product

innovations (goods or services) launched on

the market during and following KIC support

based on self-reported survey responses. By

innovations, we mean new or significantly

improved products (goods or services) sold.

Innovations should be reported in the year

when they were introduced on the market.

Breakdown by route/type of

support received by each start-

created

(e.g.

education

courses/programmes, start-up support,

innovation projects).

Rolling survey of organisations

in receipt of KIC support at set

time intervals (i.e. 1, 3 and 5 years post

support).

Indicator to contribute to the

measurement of Horizon

Europe impact pathway No.9

–

amount

of public and private investment

mobilised.

Core KPI extended to measure

over a range of set time-

intervals (i.e. up to 5 years rather than

only 3).

Breakdown by route/type of

support received by each start-

up created (e.g. education courses/

programmes,

start-up

support,

innovation projects).

Rolling survey of organisations

in receipt of KIC support at set

time intervals (i.e. 1, 3 and 5 years post

124

support).

Indicator to contribute to

Horizon Europe

impact

pathway No.7

–

the measurement of

innovations.

Core KPI extended to measure

over a range of set time-

intervals.

Breakdown by route/type of

support received by each start-

up created (e.g. education courses/

programmes,

start-up

support,

innovation projects).

Rolling survey of organisations

in receipt of KIC support at set

time intervals (i.e. 1, 3 and 5 years post

support).

Indicator to contribute to

Horizon Europe

impact

pathway No.7

–

the measurement of

innovations.

Reporting in line with timings

of evaluative research.

Data collection will draw

on a mix of research,

combining programme/monitoring data

with

primary

research

(e.g.

surveying/consultations).

Definition

aligned

with

Horizon Europe indicator to

measure

“World-class

science”

impacts. Indicator to contribute to the

measurement of Horizon Europe

impact pathway No.1

–world-class

science.

Ecosystem

development

No. new processes, methods or

marketing innovations implemented

A measure of the number of processes and

marketing innovations or new/significantly

improved methods introduced following KIC

support over set time intervals based on self-

reported survey responses. Innovations should

be reported in the year when they were

introduced on the market.

Ecosystem

development

Network strength analysis

Ecosystem

development

No. and % high impact (“World-class

science”) scientific publications

Recommendation is to assess the number of

'nodes' and 'linkages', and their intensity,

within a defined network map for a KIC (e.g.

location-based, market- or technology-based).

This would be an evaluative assessment, which

would be reproduced to examine changes over

time.

Measured as the number and share of 'high

impact' (“World-class

science) publications.

High impact defined using SciVal’s Field-

Weighted Citation Impact (FWCI) measure.

Indicator to be aligned fully with Horizon

Europe indicator.

125

Operational

No. success stories submitted to and

accepted by EIT

To measure the number of good practices or

success stories presented by KICs to the EIT

according to a specific format and accepted by

the EIT including eligible nominees for the

EIT awards. See the “Note” column for the

links to evaluative research.

Reporting in line with timings

of evaluative research. In

addition to the numbers of cases, the

success stories provide the basis for

case study examples of the ways in

which impacts are brought about, the

scope of impacts and the potential scale

of impacts. These should be

synthesised to help provide an

evaluation

evidence

base,

and

complemented with other in-depth case

studies to understand instances where

the EIT/KIC model has proved less

successful.

126

Operational

Value of KIC funding secured from

partners and other donors

The value of cash and in-kind contributions,

to be broken down as follows:



contributions KIC KAVA and KCA

activities



contributions to fund KIC operations

(e.g. membership fees)

Breakdown by nature of

financial contribution and

route/type of support received by

business receiving investment (e.g.

education courses/ programmes,

start-up

support,

innovation

projects). Financial contribution

breakdowns include:



contributions to KAVA and KCA

activities



contributions to KIC operations

(e.g. membership fees)

Indicator to contribute to

the

measurement

Horizon Europe impact pathway

No.9

–

amount of public and private

investment mobilised.

Operational

Social

presence/audience

media/online

The sum of followers on three major social

media channels: Facebook, Twitter, and

LinkedIn.

127

Medium- to Long-term Outcomes

Economic

development

Cost savings achieved by direct

participants of KIC support (e.g. as a

result

implementing

new

innovations)

To measure the value of cost savings achieved

by direct beneficiaries of KIC support that are

identified as being due to the support provided

by the KIC. Values to be estimated in EUR

and based on self-reported assessment as part

of follow-up surveys of participants.

Rolling survey of organisations

in receipt of KIC support at set

time intervals (i.e. 1, 3 and 5 years post

support).

Indicator to contribute to the

measurement of Horizon

Europe impact pathway No.7

–

economic growth.

As above.

Indicator to contribute to the

measurement of Horizon

Europe impact pathway No.8

–

total

employment.

As above.

Indicator to contribute to the

measurement of Horizon

Europe impact pathway No.8

–

total

employment.

As above.

Indicator to contribute to the

measurement of Horizon

Europe impact pathway No.7

–

economic growth.

Economic

development

Jobs created in organisations directly

benefiting from KIC support

Economic

development

Jobs safeguarded in organisations

directly benefiting from KIC support

Economic

development

Revenue

growth

achieved

organisations directly benefiting from

KIC support

To measure the number of jobs created by

direct beneficiaries of KIC support that are

identified as being due to the support provided

by the KIC. Values to be estimated in FTE

estimates based on self-reported assessment as

part of follow-up surveys of participants.

To measure the number of jobs safeguarded

by direct beneficiaries of KIC support that are

identified as being due to the support provided

by the KIC. Values to be based on FTE

estimates based on self-reported assessment as

part of follow-up surveys of participants.

To measure the value of revenue growth

achieved by direct beneficiaries of KIC

support that are identified as being due to the

support provided by the KIC. Values to be

estimated in EUR and based on self-reported

assessment as part of follow-up surveys of

participants.

128

Ecosystem

development

% of businesses that have benefited

from KIC support that have engaged

in different forms of innovation

activities in the last 2 years (defined

using CIS activities)

Ecosystem

development

Reduction in skills mismatches (e.g. %

of engaged employers reporting skills

gaps and skills shortages)

Ecosystem

development

Policy influence following Horizon

Europe impact pathways from the

production of policy-relevant findings,

to dissemination/engagement, to a

material impact on policy (e.g. No.

policies [“approaches” or “practices”]

influenced [changed or improved])

A measure of the % of businesses that have

benefitted from KIC support that have

engaged in different forms of innovation

activities, using CIS categories (e.g. In-

house R&D; External R&D; Acquisition of

machinery,

equipment,

software

buildings;

Acquisition

existing

knowledge from other enterprises or

organisations; Training for innovative

activities;

Market

introduction

innovations; Design, Other).

For all employers that have engaged with the

relevant KIC in any way, to measure the

extent to which they experience skills

challenges. Challenges are defined as the % of

employers (responding to a survey) that have

reported: i) skills gaps (i.e. they have

employees that do not have the necessary

skills to carry out their roles); and ii) skills

shortages (i.e. they have unfilled vacancies

because applicants did not possess the

required skills).

To assess, using a case-based approach, the

nature and scope of policies (defined in terms

of “approaches” or “practices”) that have been

influenced (i.e. changed or improved) by KIC

activities.

As above.

Rolling survey of organisations/

employers in receipt of KIC

support at set time intervals (i.e. 1, 3

and 5 years post support).

Breakdown by route/type of

support that led to policy

changes or improvements (e.g.

education courses/programmes, start-up

support, innovation projects).

Ad-hoc

evaluative

research,

including

surveys, consultations with expert

stakeholders and textual analysis to

identify and verify cases of policy

influence (potentially as part of

independent evaluation work).

Operational

Measure of financial sustainability

To measure the total revenues generated by

the KIC divided by the total expenditure on

129

Operational

Net Promoter Score on

satisfaction with EIT / KICs

overall

KIC activities (i.e. KAVAs) in year N.

To measure the satisfaction of all engaged

organisations on a scale of 1-10. The Net

Promoter Score (NPS) is compiled by

dividing the total number of EIT/KIC

'promoters' (defined as those scoring their

level of satisfaction as 9 or 10) by the number

of EIT/KIC 'detractors' (defined as those

scoring their level of satisfaction as 6 or

below).

Breakdown by route/type of

support received (e.g. education

courses/programmes, start-up support,

innovation projects).

130

Symbol

Indicator is proposed to be used as part of competitive resource allocation

Description

Indicator is a prevailing core KPI (expansions/extensions to

Core KPIs, where relevant, are described in the “Note” column)

Indicator is fully aligned with the Horizon Europe Indicator Framework

Indicator is to be broken down by the route/type of support received (e.g. education courses/programmes, start-up support, innovation projects), or by some other form of

breakdown by “type” (as described in the “Note” column)

Indicator is to be broken down by location (i.e. country, and reported based on RIS and non-RIS countries)

Indicator is to be broken down by gender

Indicator is to be broken down by type of education course/ programme

TRL

Indicator is to be broken down by TRL level (or equivalent measure of progress towards commercialisation

Indicator is to be broken down into value banding (in EUR)

Data is to be collected using programme/monitoring data

Data is to be collected using a survey tool and relies on self-reporting.

The relevant survey population is described in the “Note” column

WoS

Data is to be collected from the Web of Science (WoS) databased

Data is to be collected from each KICs social media (SM) account

Data is to be collected, collated, and reported on annually

Data is proposed to be collected and analysed in line with evaluative reporting requirements

Indicator is intended as a learning indicator, or for use in contextualising a combination of indicators. More detail is provided in the

“Note” column

Indicator was included in the testing phase of work

131

10.11.

Annex 9:

Introduction

Analysis of possible themes for future KICs

The EIT Regulation

stipulates that “the SIA shall define the priority fields and the long-term

strategy for the EIT and shall include an assessment of its socioeconomic impact and its

capacity to generate the best innovation added-value”

143

. This Annex provides the outline of

the indicative priority fields for possible future KICs. The analysis is based on the themes

(=priority fields) proposed by the EIT Governing Board in its Strategic Outline on the Future

of the EIT

144

and reflected in the draft Strategic Innovation Agenda of the EIT that was

submitted to the European Commission (DG EAC) in accordance with Article 17. The

assessment of the individual priority fields is based on criteria which are in line with the

Horizon Europe Programme and takes into account the Strategic Planning Process of Horizon

Europe given the need to ensure synergies and coherence of KICs within the EU research and

innovation landscape.

The themes identified and put forward by the EIT Governing Board are:

1) Cultural and Creative Industries,

2) Security and Resilience;

3) Water, Marine, and Maritime;

4) Inclusion, Integration and Migration.

These themes were also included in the Open Public Consultation carried out in the period

October to 5

December 2018 by the European Commission (DG EAC). The main results

of this OPC show that the EU has competitive advantage and can deliver further economic

growth within these areas due to a strong R&I base.

The Commission has cross-checked the themes for future KICs proposed by the EIT by

applying the criteria listed below. They build on the criteria used by the EIT (under Horizon

2020) for the themes proposed in the draft SIA that was submitted to the European

Commission (DG EAC); are aligned with the future Horizon Europe programme; and are

complemented with the new requirements for KICs that will be introduced as part of the

revision of the EIT legal basis:

1) Alignment of the theme with the thematic clusters of the Global Challenges and

Industrial Competiveness pillar of the future Horizon Europe programme

145

2) EU economic and R&I strengths and weaknesses in the thematic area

3) Prospects for financial sustainability of a future KIC in a specific thematic area

4) Existing bottlenecks for innovation within a thematic area and extent to which the KIC

model could address them

5) Suitability and relevance of the proposed indicator framework (Annex 8) for

measuring the impacts of a future KIC within a specific thematic area

Process

143 See Article 17 of the EIT Regulation

144 See for more details the strategic outline published by the EIT GB:

https://eit.europa.eu/sites/default/files/eit_strategic_outline_0.pdf

145 The thematic clusters are the following: 1) Health, 2) Inclusive and Secure Society, 3) Digital and Industry, 4) Climate, Energy and

Mobility, 5) Food and Natural Resources.

The following table summarises the process undertaken in identification of the future priority

fields:

WHO

EIT (with the

help of external

experts and the

JRC)

WHAT

Gap analysis

based on:

Mapping

of societal challenges

already addressed by the existing

KICs

Foresight studies,

in particular

the Bohemia study, and aligned

with the

Sustainable

Development Goals (SDG)s

Analysis

of the 4 identified

thematic areas to verify their

suitability to the EIT model

intervention, and

stakeholders

consultation

(notably through

INNOVEIT 2017)

CRITERIA/OBJECTIVES

Criteria:

- Potential theme should address

major

societal challenges

with a

citizen-

centred approach, sufficiently broad

and

based on a variety of foresight

studies.

OUTCOME

4 thematic areas

have been identified:

Security and resilience

Inclusion, integration and migration

Water, marine and maritime

Cultural and creative industries

EIT (with the

help of external

experts)

Criteria:

- Fine-tuning of the scope (broad), the

(societal) challenge

and the

citizen-

centred approach.

Possibility and advantage for

Europe

(and complementary or similar

initiatives).

Added value of applying the EIT

Model

- Extend to which the area is

already

covered through activities by existing

KICs

The work of the experts has resulted in

four

reports

(outlining the challenges, the

potential impact of addressing them and the

EIT added value),

all concluding that the

identified challenges could be successfully

addressed through the establishment of a

KIC

as this would bring high added value.

The final result consists of

4 thematic

factsheets

included in the draft Strategic

Innovation Agenda 2021-2027 submitted to

the Commission in December 2017. The

EIT GB decided to keep the option of an

open call for KIC

that would be further

explored in view of responding to an

emerging challenge in the future.

The assessment resulted in

4 reports

on the

proposed priority fields.

European

Commission

(with the help of

external experts

through a

support study by

SQW)

Assessment

of the themes

proposed by the EIT

against a

set of criteria complementary

those applied by the EIT and in

line with Horizon Europe

Programme.

Criteria:

Alignment of the theme with the

thematic clusters

of Pillar II of Horizon

Europe Programme.

- EU economic and R&I

strengths and

weaknesses

in the thematic area.

- Prospects for

financial sustainability

- Existing

bottlenecks

for innovation

within a thematic area and extent to

which the KIC model could address

them.

- Suitability and relevance of the

proposed

indicator framework

for

measuring the impacts of a future KIC

within a specific thematic area.

Objectives:

- Get

stakeholders’ input

on the

thematic areas proposed by the EIT as

well as other possible ones.

European

Commission

Inclusion of the themes in the

Open Public Consultation

carried out in the period 10th

October to 5th December 2018 by

the European Commission (DG

EAC).

The main results of this OPC showed that

the

EU has competitive advantage

and can

deliver further economic growth within the 4

thematic areas proposed by the EIT due to a

strong R&I base.

Other areas emerging from the OPC were

either already addressed to a certain extend

by the existing KICs or too narrow to be

addressed under the EIT KIC model.

133

European

Commission

As part of the Impact

Assessment, analysis of the 4

proposed thematic fields

building on the previous

analytical steps.

Objectives:

- Identify the thematic areas with the

potential to be addressed by a KIC

under Horizon Europe programme.

- Propose the theme for the first KIC

to be launched in 2021.

- Propose the themes that would be

designated following theStrategic

Planning Process (2024-2027).

Criteria:

- Coherence and synergies with EU

R&I and Education landscape

- Not covered by planned similar EU

initiatives

- Fragmentation of the innovation

value-chain

- Suitability of the EIT model to

address innovation bottlenecks

- Ability to mobilize investment and

sufficient market for innovation

- Modernisation/transformation

potential of the Education system and

skills gap

- Regional dimension

- Citizen-focus approach

- Synergies with and complementarity

to existing KICs

The Impact Assessment led to the

conclusion that the 4 priority fields

Security and Resilience; Inclusion,

Integration and Migration; Water,

Marine and Maritime; and Cultural and

Creative Industries are suitable to be

addressed by a KIC under Horizon

Europe Programme.

As preparatory phase of the

SPP of Horizon Europe, check

of the coherence and

complementarity of potential

themes with potential EU

partnerships.

The analysis also led to the identification

of Cultural and Creative Industries as the

thematic priority for the first KIC to be

launched under Horizon Europe

as it

showed the highest degree of maturity of

all themes in its assessment against the

proposed criteria and demonstrated

strong potential to complement and

synergise with all existing KICs.

Furthermore, as regards the

complementarity with both the EU

Partnerships as well as the existing KICs,

the CCI theme scores higher than the

three other areas studied.

The remaining 3 thematic areas will be

further analysed and assessed during the

Strategic Planning Process (2024-2027)

Source: own analysis

Specific priority fields

Cultural and Creative Industries

146

Cultural and Creative Industries represent a horizontal solution to an array of rising

challenges, which are of a permanent nature, and can be addressed through research and

innovation activities. These challenges can be grouped into four pillars: 1) Europeans'

creativity, cultural diversity and values; 2) European identity and cohesion; 3) European

employment, economic resilience, and smart growth; and 4) Europe as a global actor.

146 Creative and Cultural sectors (CCS) means all cultural and creative sectors whose activities are based on cultural values and/or artistic

and other creative expressions, whether those activities are market-or non-market-oriented, whatever the type of structure that carries them

out, and irrespective of how that structure is financed. Those activities include the development, the creation, the production, the

dissemination and the preservation of goods and services which embody cultural, artistic or other creative expressions, as well as related

functions such as education or management. The cultural andcreative sectors include inter alia architecture, archives, libraries and museums,

artistic crafts, audio-visual (including film, television, video gamesand multimedia), tangible and intangible cultural heritage, design,

festivals, music, literature, performing arts, publishing, radio and visual arts (EIF)

134

The challenges related to the first Pillar,

Europeans’ creativity, cultural diversity, and

values,

affect citizens’ resilience, limit their flexibility, and threaten the preservation of the

quality of life.

147

The following points need to be addressed:



Shortage of cross-cutting skills that are needed for innovation and crucial in light of

labour market changes. Video and computer games, literature, publishing, performing

and visual arts can offer innovative ways of obtaining skills (e.g. digital skills via

video games and creativity in general).

Innovative practices in heritage services, museums, and libraries and film heritage

institutions are crucial to reveal the importance of different cultures and can address

the sense of loss of identity that results from globalization

148



Societal challenges related to the second Pillar,

European identity and cohesion,

can

generally be described in terms of lack of ‘bridges’ connecting different parts of the society

and include the following:



Social exclusion. CCIs favour innovative forms of community participation.

Innovations in design, architecture and the use of public spaces, as well as culture-led

social innovation, can offer effective ways to raise the quality of life of excluded

groups.

149

Development of a European identity: culture regularly tops the list of the factors that

most create a feeling of community among EU citizens.

150

Our creations reflecting our

common cultural heritage and cultural and linguistic diversity highlight the importance

of artistic and creative freedom in Europe and are at the heart of the EU project and of

the EU identity. There is now evidence that when people have wide access to culture

(physically or through digital means) and are actively engaged in cultural activities,

they are more likely to understand and adopt shared common values. The 2018

European Year of Cultural Heritage confirmed the importance that citizens attach to

their European cultural heritage, both national and non-national. Seven European

citizens in ten agree they feel pride in a historical monument or site, work of art or

tradition from a European country other than their own, and that living close to places

related to Europe's cultural heritage can give people a sense of belonging to Europe

(both 70%)

151

Discriminatory attitudes towards different cultures. European society faces challenges

regarding the inclusion of immigrants and intercultural dialogue. Literature, film, and

performing and visual arts are a way of becoming familiar with previously unknown

cultures and innovative solutions in museums and libraries (such as education

programs, targeted actions to less-represented communities) can foster interaction with

migrants and counter stereotyping.



147

Gustafsson C. and Lazzaro E. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert analysis.

Culture,

Cultural Heritage and Creative Industries.

148 OMC Report on Promoting Access to Culture via Digital Means: Policies and Strategies for Audience Development, June 2017

149 OMC Report on Participatory Governance of Cultural Heritage, April 2018

150 Standard Eurobarometer, 2017

151

https://europa.eu/cultural-heritage/toolkits/special-eurobarometer-europeans-and-cultural-heritage_en

135

Pillar three,

European employment, economic resilience, and smart growth,

addresses

economic challenges such as unemployment (especially youth unemployment) and global

competition for the brightest minds and capital. Culture-based and creativity-driven

innovations boost European competitiveness either directly by creating new enterprises and

jobs or indirectly by creating cross-sector benefits to the wider economy, improving quality of

life and increasing the attractiveness of Europe. The contribution of culture and creativity to

innovation is not limited to the direct impact of the CCIs, since innovation across-the-board is

increasingly driven by non-technological factors such as creativity, design and new

organisational processes or business models. In particular, cultural and creative industries

with distinct value chains (i.e. music, design, fashion, audio-visual, video games, architecture

…) have a strong innovation capacity in economic terms and are able to drive innovation in

other sectors of the economy.

152

CCIs are early adopters of new technologies and often play a

central role in the digital transformation and integration between the digital and physical

worlds, which is at the heart of the fourth industrial revolution. The contribution that culture

can bring to most creative processes in industry, science or services was highlighted in

various experts’ reports

153

A potential future KIC on CCIs should address cross-innovation, the process through which

creative industries share information, collaborate and work with other sectors to promote new

thinking, is key to trigger innovation in other sectors of the economy and help services and

manufacturing to become more competitive in the global market. CCIs can play a role

triggering innovation in other sectors’

value chains and in the creation of new business

models.

The fourth pillar relates to the role of

Europe as a global actor

and aims at addressing

challenges such as:



The global dynamic of power is currently shifting, yet EU countries retain significant

clout in “soft power indexes”, also because of their strong performance when it comes

to cultural assets.

154

In a world that is becoming increasingly inter-connected, IT

innovations would however be essential to enhance the dissemination of the content

created in Europe.

Sustainability and Climate change. The United Nations’ Agenda 2030 for sustainable

development defines culture as a “crucial enabler” of sustainable development. Some

CCIs (e.g. design, architecture, etc.) contribute actively to the sustainable development

and drive green innovation, while cultural content (literature, film and the arts) can

raise awareness of ecological problems and inform public opinion.



152 The content creation process lies at the heart of the CCS i.e. the artistic process.The created content provides input for both the cultural

as well as the creative sub-sectors of the CCS market. However, beyond the classical CCS sub-sectors, the artistic content created has an

impact on a wide range of industries that depend on the creative output stemming from CCS: Consumer electronics e.g. TV, Tuners, DVD;

Telecom services and hardware e.g. smartphones, computers; Industrial design; Tourism e.g. Cultural heritage, historical sites, recreation

parks; Software; Education e.g. cultural and tertiary education

153 Policy Handbook on Promotion of Creative Partnerships, an OMC report from March 2014

154

https://softpower30.com/wp-content/uploads/2018/07/The-Soft-Power-30-Report-2018.pdf,

the EU has placed seven countries among

the top ten for culture, which helps keeping five EU countries among the top ten in the global index.

136



The global digital race. New technologies (i.e. ICTs, AI, IoT, blockchain) are radically

transforming the way we live, work and communicate. Seven out of 10 largest firms in

terms of market capitalisation are digital. None are European. European CCIs are

important generators of content, products and services globally and could play a

positive role in the creation of new business models and cross-sectoral value chains.

Alignment with Horizon Europe, including with the Global Challenges and Competitiveness

pillar

The Cultural and Creative Industries theme is aligned with EU priorities. It is included as an

area of intervention

on Cultural Heritage under the cluster

Inclusive and Secure Society

of the

Global Challenges and Industrial Competitiveness Pillar of the Horizon Europe proposal. A

future KIC could provide valuable horizontal inputs across various activities to be carried out

in the

Inclusive and Secure Society

cluster and the one on Digital and Industry. Furthermore,

it could efficiently complement other parts of the Horizon Europe Programme, the

intervention of the existing EIT Digital and the actions foreseen under the new Creative

Europe Programme, as well as other EU programmes (Invest EU, cohesion funds, Single

Market Programme).

Cluster

Inclusive and

secure society

Areas of

intervention

Cultural heritage

Relevant broad lines of activities

KIC within the theme can address all lines of activity. It can

particularly foster connections between emerging creative sectors and

cultural heritage, embed cutting edge technologies including digital

ones into heritage studies and sciences, and help cultural heritage to

contribute to sustainable development.

KIC within the theme can address the line of activity related to the

role of multi-cultural citizenship and identities in relation to

democratic citizenship and political engagement.

KIC within the theme can provide horizontal inputs to most lines of

activity since creative and cultural inputs are indispensable in the

development of concepts for new products and are vital to help

generate added value.

Democracy

Digital and

Industry

Manufacturing

Technologies

Economic and research capacities of the sector

Culture and creativity are important assets for the economy. Cultural and creative industries in

Europe are at the forefront of innovation and at the origin of spill-overs to other sectors. They

provide more than 12 million full-time

jobs, which amounts to 7.5 % of the EU’s work force,

creating approximately EUR 509 billion in value added to GDP. CCIs in the EU employ 2.5

times more people than automotive manufacturers and five times more than the chemical

industry.

155

There is an EU trade surplus in cultural goods

156

amounting to EUR 8.7 billion. In addition,

42% of total economic activity in the EU (some EUR 5.7 trillion annually) is generated by IP-

155

http://www.europarl.europa.eu/sides/getDoc.do?type=TA&language=EN&reference=P8-TA-2016-0486

156 Eurostat, 2016 figures,

http://ec.europa.eu/eurostat/web/culture

137

intensive industries

–

which have a strong connection to CCIs - and approximately 38% of all

employment in the EU (82 million jobs) is in industries that have an above-average use of IP

rights.

157

Thriving areas are often places where artistic and cultural producers emerge which puts

culture high on the agenda of cities, regions and territories, as recently recognised by the

OECD.

158

As demonstrated by the EU Cultural and Creative Cities Monitor

159

, leading

cultural and creative cities are more prosperous, have more jobs, and more human capital.

Former industrial cities are therefore putting investment in culture and creativity at the centre

of their local development strategies to support policy objectives ranging from urban

regeneration and economic diversification to job creation and social innovation and cohesion.

Regional smart specialisation strategies are being implemented across the EU, and around 6%

of all 1,300 regional smart specialisation priorities refer to culture under different angles (e.g.

cultural heritage, creative industries, etc.). Culture and creativity are also critical for the

economic and social development of low-income cities and regions and can further help

address disparity issues across Europe.

Europe's cultural diversity depends on resilient and robust cultural and creative sectors.

However those sectors, notably the audiovisual or music sector, are facing a number of

challenges, as a result of the increased competition from global players and the digital shift.

Producers, distributors, broadcasters, cinema theatres and all types of cultural organizations

need to innovate in order to attract new generations of audiences

157

https://www.epo.org/about-us/annual-reports-statistics/annual-report/2016/highlights/economic-impact-of-IP.html

158

http://www.oecd.org/cfe/leed/venice-2018-conference-culture/documents/Culture-and-Local-Development-Venice.pdf

159

https://ec.europa.eu/jrc/en/publication/eur-scientific-and-technical-research-reports/cultural-and-creative-cities-monitor-2017-edition

138

Strengths

Strong and growing research base. In

2014, 18.7% of patent publications and

around 40% of trademarks registered in

Europe were related to the CCIs.

160

The

number of patents in these sectors have

been growing during the last years.

161

Weaknesses

Lack of cooperation between researchers and research and

industry.

There is a lack of coordination of R&D efforts,

sharing of methods, results, and best practices.

162

Additionally,

most of the research is produced in national languages, which

leads to repetition, as researchers are often unaware of similar

projects.

163

High market concentration.

Three European countries

–

Germany, United Kingdom, and France

–

are the absolute

leaders in CCIs compared to other European countries,

generating around 50% of turnover and added value.

166

Europe is the second CCI market in the

world (26% of estimated employment and

31% of estimated revenues).

164

4% of EU

GDP and 7.5% of EU employment are

created in CCIs.

165

EU is especially strong in the advertising

sector (50.4% of global revenues, 52.6%

of global employment). Additionally,

39.6% of the global workforce in

architecture is working in Europe.

167

EU is also strong in the sector of fashion

(EU export in fashion goods accounts for

12.3%)

168

Insufficient skills provision.

Cultural and creative studies in

European universities are mostly focused on the “creative part”

and their graduates are not always ready to enter the modern

labour market as they lack cross-sectoral (entrepreneurial,

digital, financial management) skills.

169

With regards to HE

institutions, the EU is trailing behind the USA in

Communication & Media studies (while EU universities are

performing better in more traditional disciplines such as Art &

Design or Performing arts).

170

European industries are challenged by digitization and

globalization and their powerful impact on the way artists

produce and distribute their works and relate to their audiences.

The collapse of DVD markets, new consumer expectations and

the continued power of US studios together with the rise of

global digital giants like Amazon, Itunes, Google and Netflix

have impacted the traditional value chain.

Europe's creativity is recognized

worldwide

160 Austrian Institute for SME Research and VVA Europe (2016). Boosting the competitiveness of cultural and creative industries for

growth and jobs. Final report, p. 78.

161 Ibid.

162

Gustafsson C. and Lazzaro E. (2017). Input to EIT’s Strategic Innovation Agenda.

Future EIT Thematic Areas. Expert analysis. Culture,

Cultural Heritage and Creative Industries, p.12.

163 Interviews.

164 EY (2015). Cultural times. The first global map of cultural and creative industries. Study on behalf of the International Confederation of

Societies of Authors and Composers (CISAC).

165 Austrian Institute for SME Research and VVA Europe (2016). Boosting the competitiveness of cultural and creative industries for

growth and jobs. Final report, p. 62. Gustafsson C. and Lazzaro E. (2017).

Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic

Areas. Expert analysis. Culture, Cultural Heritage and Creative Industries, p.1.

166 De Voldere, I., Durinck E., Mertens, K., Cardon, C., Maenhout, T., Warmerdam, S., Versteegh, M., Canton, E. (2013). Survey on access

to finance for cultural and creative sectors. Evaluate the financial gap of different cultural and creative sectors to support the impact

assessment of the creative Europe programme. Study prepared for the European Commission, p. 59.

167 Austrian Institute for SME Research and VVA Europe (2016). Boosting the competitiveness of cultural and creative industries for

growth and jobs. Final report, p. 43.

168 VVA Europe (2016). Boosting the competitiveness of cultural and creative industries for growth and jobs. Final report, p 67, p. 71

169 Ibid. p. 56, interviews.

170 TopUniversities 2017 ranking.

139

Financial sustainability of a KIC

The analysis suggests that the characteristics of the theme do not imply any significant risks in

terms of financial sustainability of the future KIC. In particular:



Membership fees

could generate an income stream if the KIC managed to attract larger

CCI companies with long time horizons. As pointed out by the OECD, cultural

productions occur in networks of firms where larger corporate entities coexist with

numerous small and specialised firms where the output content and design are constantly

changing. 90-95% of CCIs organisations in Europe are in fact micro-enterprises (fewer

than 10 employees) and freelancers.

171

Income from the provision of services.

This stream could be significant, if some of the

most pressing challenges are alleviated: access to finance, integration into global value

chains, etc.

Capitalisation on return on investment/equity

of incubated start-ups could be

challenging. CCIs are characterised by a large number of start-ups and continuous

renewal, but scaling up and growth of companies could be an issue. However, recent

examples of highly successful and fast growth start-ups, for example in the Virtual

Reality, animation or video gaming industry have demonstrated the dynamism of the

sector, its major potential and the possibly fast return on investment.

Income from education and training.

The interaction between STEM and art and design

is driving substantive innovation and creativity. There is therefore a need to encourage

education providers to equip students in arts and creativity, business and technology with

the knowledge and competences needed to work across cultural and creative sectors and

disciplines. This new trend could open opportunities for business model on education.



Potential to address bottlenecks for innovation

The existing KIC model is well designed to address the innovation bottlenecks faced by the

CCIs that include emerging sub-sectors as well as very mature ones that undergo a profound

digital transformation:



Lack of entrepreneurship and related skills;

Lack of platforms for scaling-up of innovations, difficult access to international value

added chains;

Insufficient integration of creative clusters and hubs;

Disconnection between education, research, and businesses;

There are two additional bottlenecks that a future KIC could successfully address:

First, a KIC in CCIs could tackle structural

obstacles related to the access of private

finance

by taking into account the positive experience of the EU Cultural and Creative

Sectors Guarantee Facility, as well as the examples of EU countries where investment in

knowledge assets is higher than in tangible ones.

172

171

Gustafsson C. and Lazzaro E. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert analysis.

Culture,

Cultural Heritage and Creative Industries, p.6.

172

https://www.nesta.org.uk/report/uk-investment-in-intangible-assets/

140

Second, a KIC in CCIs could address

growth challenges and market access

by working in a

different and innovative way, with skills development at the core and relying on a larger

geographical scale which will allow focusing on complementarities of skills and CCI products

and services.

A specific challenge posed by digitisation is the power of big platforms which facilitate

access to multiple markets, but at the same time exploit their power by keeping a significant

share of generated revenue. Attempts by alternative platforms

173

so far have not been very

successful, because of the competitive advantages of incumbents and strong network effects.

In only one area, music streaming, the leader is a European company, Spotify, which

demonstrates the capacity for European champions to take and keep leadership on global

content markets. The EU's Digital Single Market Strategy

174

is addressing some of these

challenges, in particular as concerns the so-called

“value gap”, the fair remuneration of

authors and creators, and fairness and transparency in the platforms-to-business transactions.

The market for cultural digital services is therefore in evolution, and a re-balancing of the

power relations can be expected in the near future.

Suitability of themes vis-à-vis impact indicators

Overall, the impact indicators are relevant for a future KIC in the CCI area. The financial

sustainability indicator is also very relevant given the challenges such a KIC might face. The

definition of appropriate societal impact indicators should also take into account the breadth

of challenges that the CCIs could address. The possibility of a CCI KIC to create co-location

centres across Europe would allow a better link with regional initiatives along the Research

and Innovation Strategies for Smart Specialisation (RIS3) across Europe. Overall, this theme

appears to be particularly well suited for an EIT-KIC model intervention. The degree of

maturity of this theme against all criteria envisaged suggests that a KIC on CCI could already

be launched at the very beginning of the new programme.

Security and Resilience

In recent years security threats have become more varied and more international, as well as

increasingly cross-border and cross-sectorial in nature. The EU and its Member States face

new and complex security threats which mainly originate from instability in the EU's

immediate neighbourhood

175

and also reflect the rapid technological and social and economic

developments in the world. Therefore, the freedom and security of European citizens require

anticipation, prevention, and protection from threats as well as resilience, i.e. ability to

withstand stress and rapidly recover from disruptions.

This thematic area covers the following specific issues which all require innovative solutions

to address the challenges:

176



Identification of threats to citizens, goods, and organisations.

Threats can arise from

systemic technological malfunction or targeted malicious activities (e.g. terrorist acts).

Hence, there is a need for innovation in tools and systems to monitor and identify signals

of threats from large quantities of data.

173 Consider Dailymotion, which is an alternative to YouTube developed in France.

174

https://ec.europa.eu/digital-single-market/en/policies/shaping-digital-single-market

175 Communication on the European Agenda on Security, COM (2015) 185 final

176 Jacquotte O. P., Castor M. (2017).

Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic

Areas. Expert analysis. Security

and Resilience, pp. 3-7.

141



Risk and crisis management, the resilience of systems.

Open and interconnected

technological and social systems face risks of diverse origins: environment, technology,

human, etc. Threats can easily spill over across borders and sectors and therefore have

large amplitude of impact. Innovations are needed for developing resilience-capable

systems, improving risk and crisis management.

Protection of infrastructures and soft targets.

Modern societies are heavily reliant on

infrastructures contributing and ensuring the well-being of citizens. Some of them (e.g.

water distribution and sanitation, energy creation) are vital to the very life of people and

therefore their disruption could have extreme consequences. Hence, there is a need for

innovations for protecting infrastructures, improving resilience to disruptions, and

localisation of negative impacts.

Information security.

Hacking, illegal electronic surveillance, espionage, the spread of

misinformation can undermine economic and democratic structures. To address these

challenges innovation in cyber security as well as prevention of the spread of deliberately

fake information is therefore needed.

Human understanding and control of highly automated systems / Artificial

Intelligence (AI).

Humans increasingly rely on AI to control critical societal systems,

although the algorithms of decision making are not entirely clear. Therefore, there is a

need for innovation and applications that could control and protect AI systems and robotic

solutions from ill-intentioned attacks.

The basic resilience of society.

Societies’ capabilities of managing disruptions in the

basic societal functions (e.g., water, food, and electricity) are often limited to a few days.

Furthermore, there is a need to prepare for mitigation of latent and increasing

environmental stress (e.g. water crisis in Cape Town), as well as emerging stressors (e.g.

thunderstorm asthma in Birmingham and Melbourne). Innovative solutions are required to

improve the capability to manage disruptions and increasing stress in basic societal

functions like water, food, and electricity. Furthermore, there is a need for technologies

and services making it cheaper and easier for citizens to be prepared for disruptions.

System usability.

There is a range of existing systems that could be applied to improve

the security and resilience of societies. Nevertheless, they have become overly complex to

manage and use for non-specialists. Innovations would therefore help improve user-

interfaces and bring the technologies closer to ordinary users.



Alignment with Horizon Europe, including the Global Challenges and Competitiveness pillar

The

Security and Resilience

theme corresponds to the clusters of activities of the Global

Challenges and Industrial Competitiveness Pillar as outlined in the Commission proposal for

establishing Horizon Europe programme. A KIC established within the Security and

Resilience theme could therefore contribute to four areas of intervention under the Inclusive

and Secure Society cluster: Democracy, Disaster-Resilient Societies, Protection and Security,

and Cybersecurity. Potential work of a KIC on cybersecurity, control of automated systems,

and protection of infrastructures could also contribute to the activities carried out within the

Digital and Industry cluster.

142

Cluster

Inclusive and secure

society

Areas of

intervention

Democracy

Relevant broad lines of activities

KIC within the theme can address lines of activities aiming

at addressing populism, extremism, radicalisation, terrorism

and including and engaging disaffected and marginalised

citizens, as well as enhancing the role of multi-cultural

citizenship and identities in relation to democratic

citizenship and political engagement.

KIC within the theme can address all lines of activities

KIC within the theme can address most lines of activities, in

particular, those related to systems and computing

technologies security.

KIC within the theme can provide horizontal inputs to most

lines of activity

KIC within the theme can provide horizontal inputs to most

lines of activity

KIC within the theme can provide horizontal inputs to most

lines of activity

KIC within the theme can provide horizontal inputs to the

line of activity aiming at developing secure satellite

communications for EU governmental actors.

Disaster-Resilient

Societies

Protection and

Security

Cybersecurity

Digital and

Industry

Key Digital

Technologies

Artificial

Intelligence and

Robotics

Next Generation

Internet

Advanced

Computing and

Big Data

Space

Economic and research capacities of the sector

The European research, Higher Education Institutions, and enterprises are among the major

players in the field. Nevertheless, Europe faces fierce competition in this field from the USA

and increasingly from China. Furthermore, development of innovations related to security and

resilience would require the established players to diversify from defence-related activities.

The Table below provides an overview of European strengths and weaknesses in the field of

Security and Resilience.

143

Strengths

Strong industrial, research, and HE base. The

EU security industry has approx. EUR 200 bn.

annual turnover and around 5 million

employees (including the defence sector)

177

. In

2015, the EU ranked second (behind the USA)

in the global security industry, with a global

market share of 30%

178

. The EU MSs comprise

5 out of 10 leading countries with the highest

average H-index in research fields associated

with the theme

179

Europe has a strong competitive advantage in

advanced engineering and manufacturing.

Europe has also made significant progress in

building up capacities in information security

field (security analytics, threat intelligence,

mobile and cloud security)

181

New players are emerging, e.g. Baltics (Estonia

in particular) are rapidly building up capacities

related to information security

184

Weaknesses

European industrial, research, and HE base

trailing behind that of the USA. Recently China

has also made significant progress in the field

180

European businesses and research organisations

working in the field are more

focused on defence

and aerospace

rather than on security and

resilience.

182

The USA and China are leading global efforts in

security-related AI and big data systems

183

High concentration:

most of the R&D spending,

research centres, and innovative enterprises are

concentrated in a handful of countries (the UK

185

Germany, France, Italy, Sweden, and the

Netherlands)

186

Financial sustainability of potential KIC

The economic landscape of the theme does not suggest major risks for the financial

sustainability of a future KIC. There is a significant number of large innovative enterprises

that could be interested in joining the KIC and contributing to its financial sustainability

through membership fees. The field is ripe for fast growing innovative start-ups. Hence, a

future KIC can expect income stream from return on investment/equity of incubated start-ups.

A future KIC could also expect some income from education and provision of services,

although this is likely to depend on the quality and uniqueness of the services offered.

177 European Commission (2017). Security research and innovation

–

Boosting effectiveness of the Security Union. Booklet, p. 5.

178 AmCham EU (2015). Security and Defence. Together for European Growth, p. 7. Retrieved at

http://www.amchameu.eu/sites/default/files/publications/files/security_and_defence_brochure_2016_0.pdf

179 Scimago Journal & Country Rank, 2016. The following research subarea were used to estimate the average H-index of countries in the

Security and Resilience: (i) Aerospace engineering, (ii) Communication, (iii) Computer networks and communications, (iv) Control and

systems engineering, (v) Information systems and management, (vi) Modelling and simulation, (vii) Political science and international

relations, (viii) Safety research, (ix) Safety, Risk, reliability and quality.

180 AmCham EU (2015), Scimago Journal & Country Rank, 2016 and interviews.

181 Interviews, AmCham EU (2015) and Optimity advisors (2016).

182 Interviews.

183 Interviews.

184 Interviews.

185 Brexit will further reduce European capacities in this theme.

186 Interviews and previous studies: Jacquotte O. P., Castor M. (2017). AmCham EU (2015). European Parliament (2016). The future of EU

defence research.

144

Potential to address bottlenecks for innovation

There is a large number of bottlenecks for innovation in the field that a future KIC could

potentially address. These include:



Heavy path-dependency and rigid innovation agendas.

Public funding in the

Member States (MS), as well as research and industrial base, are strongly concentrated

in traditional defence sectors. Work is typically structured around long-term R&D

programmes. As the new security challenges have emerged, attention has shifted

towards new areas of work, such as cyber-security, monitoring, and prevention of

threats (predominantly terrorism), etc. However, the interviewees suggested that the

established industrial players treat innovations for mitigating the newly emerging risks

as potential niches, rather than core future markets. Public authorities, firms, and

societies at large tend to downplay the likelihood of rare high-impact events. As a

result, the markets for non-defence security and resilience innovations are rather

shallow (unless high-impact events occur, which leads to a surge in demand).

Fragmentation of efforts.

There are strong economic arguments for closer European

cooperation. First, MS face similar challenges, but due to a low likelihood of high-

impact crises individually each country tends to underinvest in early identification,

management, and mitigation of risks. Second, the performance of innovations based

on AI and big data significantly improves with larger quantities of data, which is

difficult to obtain for low-likelihood events. Hence, the more regions and countries use

such innovations, the better they could become. However, the economic arguments are

not always compatible with the political determination of governments to develop own

systems that constitute part of national security.

Neglect of social innovations.

There is a widespread perception that technological

innovations are necessary to address challenges related to security and resilience. The

interviewed experts argued that while technology definitely has an important role to

play, a significant share of the challenges require social innovations, which have been

largely neglected to date. This also explains why the uptake of available technologies

has been rather weak. Examples of social innovations include: strengthening media

literacy to fight the spread of misinformation, prevention of radicalisation, etc.



Lack of the necessary skills.

This is particularly relevant for information security,

human understanding and control of highly automated systems and Artificial

Intelligence, and system usability sub-challenges. For example, Europe is expected to

face a shortage of 350,000 experts in cyber security by 2022.

187

The work of a future KIC could be constrained by several legal and technical obstacles.



Innovations for early identification of threats can face difficult questions regarding the

balance between security and respect for human rights. Hence, application of

innovations (e.g. face recognition) that rely on personal data can be subject to

regulatory uncertainty in Europe, while countries with looser regulatory regimes (e.g.

China) enjoy a competitive advantage in developing such technologies (sometimes at

the expense of the respect for human rights).

There is a lack of ‘soft’ infrastructure (commonly agreed terminology, frameworks),

which inhibit cross-national cooperation in developing innovations in the fields of



187 Global Information Security Workforce Study 2017.

145

security and resilience.

188

While a future KIC could contribute to the alleviation of

these bottlenecks, they span beyond the direct control of Innovation Communities.



The sectors covered by the theme are very diverse, from information and cybersecurity

to resilience of critical infrastructure. Attempts to cover most of the sectors by a future

KIC could result in spreading its resources thinly and in the need to develop a coherent

overall strategy exploiting the synergies between its members. Therefore, a refinement

or possibly a narrower scope of the theme could be considered to ensure greater

coherence of economic activities.

Suitability of themes vis-à-vis impact indicators

A future KIC in the field of

Security and Resilience

could adopt a number of strategies. On

the one hand, the KIC could aim to transform the mature industries (e.g. defence and security

industry, operators of ‘hard’ and ‘soft’ infrastructures, ICT) by attracting established players

and facilitating diversification of their activities to new areas of security and resilience. On the

other hand, the KIC could aim to develop market-creating innovations by facilitating the

emergence of new players. Either strategy (or their combination) is likely to contribute to the

attainment of the proposed economic medium/long term indicators. As with many of the

KICs, the definition of appropriate societal impact indicators will require careful

consideration. It is a particular challenge here given the intrinsic difficulties in measuring

levels of security and resilience.

Water, Marine, and Maritime

The overuse and mismanagement of natural resources in the last century has placed a great

pressure on freshwater ecosystems.

189

At the same time, new technologies and the need to

decarbonise the economy are leading to increasing use of marine resources. A major

challenge in this field is to create a sustainable, circular, and blue economy that is based on

sufficient quantities of water as well as on healthy and functioning freshwater and marine

ecosystems with a view to tackle the following points:



Water scarcity, drought, and floods.

Continued climate change and over-extraction of

fresh water are causing a rise in severity and frequency of water scarcity and droughts.

Simultaneously, increasing scale of economic activities in coastal areas, floodplains, and

deltas, and the reduction of the natural water retention contribute to the increase in the

likelihood and adverse impacts of floods. Therefore, innovative methods and technologies

are needed to gather, predict, and disseminate information about waterbodies’ safety,

potential threats, and mitigation of risks.

188 Lange D., Honfi D., Petersen L., Rod B., Pursiainen C. (2017). Application of Resilience Concepts to Critical Infrastructure in the

IMPROVER Project, in EC, Proceedings of the 1

International Workshop on Resilience, p. 39.

189

Bergkamp G. and Vassilopoulou V. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert analysis.

Water, marine and maritime, p. 2.

146



Marine and freshwater ecosystem degradation.

Waterborne pollution (especially from

agriculture) and human activities damage to coastal and marine ecosystems. Waste

reduction, improvement in water treatment and less environmentally damaging offshore

activity are needed as well as better ways of monitoring the marine environment. The

environmental status of 80% of the species and habitats assessed under the EU’s Marine

Strategy Framework Directive is ‘unknown’.

Decarbonisation.

All scenarios

presented in the Commission’s Clean Planet

Communication

190

on achieving a zero carbon economy by 2050 include an enormous

growth in offshore wind energy

–

between 10 and 50 times the present capacity.

Unprecedented expansion of other activities is also forecast. Installations for energy from

tide and waves will shift from demonstration to production. Aquaculture, particularly

shellfish and algae, for food and feed will move further offshore and expand at least

tenfold to compensate for land lost from food production for biofuels. An ecosystem of

service providers for developing, manufacturing, installing, cabling, supplying and

maintaining these facilities as well as checking their impact on ecosystems will need to be

developed.

Circular and blue economies

include two large segments:

Water management on land. A relatively small amount of wastewater is currently

reused in Europe. At the same time, other countries in the world are increasingly

facing water shortages. Therefore, there is a need for innovations to ensure

sustainability of freshwater ecosystems. The innovations could include new

technologies for water extraction, reuse, and treatment as well as social innovations

(e.g. pricing models) that could alter the behaviour of consumers.

Blue (marine) economy includes a range of traditional (e.g. shipping, tourism) and

newly emerging sectors (e.g. blue biotech). There is a need for a range of innovations

to set the traditional sectors along a sustainable growth path as well as to kick-start

economic activities of sectors that are in the early stages of development but that have

large market opportunities.



Alignment with Horizon Europe, including the Global Challenges and Competitiveness pillar

The scope of the theme corresponds well with the Food and Natural Resources cluster of the

Global Challenges and Industrial Competitiveness Pillar as outlined in the Commission

proposal for establishing Horizon Europe programme. In particular, a future KIC within this

theme could significantly contribute to the following areas of interventions: Seas and Oceans,

Circular Systems, Environmental Observation, and Biodiversity and Natural Capital. It would

also contribute to the climate, energy and mobility cluster.

190 https://ec.europa.eu/clima/policies/strategies/2050_en

147

Cluster

Climate,

energy and

mobility

Areas of

intervention

Energy systems

and grids

Clean transport

and mobility

Environmental

Observation

Biodiversity and

Natural Capital

Food systems

Relevant broad lines of activities

KIC can develop an ecosystem of service providers with special

knowledge of challenging offshore conditions that can contribute to

expansion of offshore energy that will consolidate European

leadership and will be essential for meeting carbon emission targets.

KIC within the theme can provide horizontal inputs to most lines of

activity

KIC within the theme can provide horizontal inputs to most lines of

activity

Aquaculture, both freshwater and marine, will play an increasing role

in food and feed systems as agricultural land shifts to biofuel

production.

KIC within the theme can address all lines of activities

Circular use of water resources, including reduction of water demand,

prevention of losses, water reuse, recycling and valorisation of

wastewater and governance models for smart water allocation,

addressing sources of pollution and tackling other pressures on water

resources

Food and

natural

resources

Sea and Oceans

Circular Systems

Economic and research capacities of the sector

The Water, Marine, and Maritime theme has a relatively strong knowledge base as well as

high market potential. The sectors of the highest significance in Europe are the following:



Marine supplies.

It has a production value in the EU of around EUR 52.5 bn per year.

The largest two players in this sector in the EU are Germany (EUR 12.8 bn.) and Italy

(EUR 8.7 bn).

191

Production of marine supplies includes

shipbuilding, boatbuilding,

and repair.

Shipbuilding in Europe has an annual turnover of around EUR 13 bn and

a workforce of 500 thousand.

192

Italy has the biggest boatbuilding industry in Europe

with a share of approx. 28%.

193

Coastal tourism.

Tourism alone makes up nearly 40% of the Blue Economy’s value

added and 55% of all the people employed in the European Blue Economy.

194

addition, according to the World Economic Forum Travel and Tourism

competitiveness index (2017)

195

, half of the countries in the top ten are from the

196

Maritime transport.

The share of maritime seaborne trade is estimated to account for

around 60-70% of all international trade.

197

EU maritime transport sector has an

annual turnover of around EUR 20 bn. and a workforce of 350.000

198



191 BALance (2014). Competitive position and future opportunities of the European marine supplies industry, Final Report, p. 31.

192 European Commission (2009). A sea change for ocean management. A European strategy for marine and maritime research, p. 8.

193 BALance (2014). Competitive position and future opportunities of the European marine supplies industry, Final Report, p. 33.

194 European Union (2017). Blue Economy in the EU. Retrieved from

https://publications.europa.eu/en/publication-detail/-

/publication/030d66f1-5564-11e7-a5ca-01aa75ed71a1/language-en

195 World Economic Forum (2017). The Travel & Tourisms Competitiveness Report 2017.

196 Spain, France, Germany, United Kingdom, and Italy.

197 Union for the Mediterranean (2017). Blue economy in the Mediterranean. Report, p. 39.

148



Fisheries and aquaculture.

Fisheries have an annual turnover of around EUR 20 bn

and a workforce of 500.000.

199

In 2015, it has produced around 6.4 m tons of live

weight equivalent.

200

The volume of EU aquaculture production in 2015 equated to

one-fifth of total EU fisheries production and accounted for around EUR 4.1 bn.

201

The largest EU players in the field are Spain (23.3% of all volume), the United

Kingdom (16.8%), and France (13%). Conversion of land

for biofuel to meet EU’s

decarbonisation strategy will require increasing food production offshore. Aquaculture

can produce protein for food or feed with a lower carbon footprint than terrestrial

equivalents.

Marine energy.

European companies are among the leaders in developing ocean

energy technologies. Around half of the world’s tidal energy developers and 60% of

wave energy developers are located in the EU. The highest share of tidal and wave

energy developers on the global scale are owned by the United Kingdom (19% of tidal

and 18% of wave energy developers).

202

Offshore oil and gas.

It is the biggest sector in marine energy and raw materials

industry. The size of offshore oil and gas industry in 2012 was EUR 107-133 bn, it

employed 25-50.000 people.

203

Blue biotechnology.

The sector accounts for 2-5% of the marine economy and could

have an annual turnover of between EUR 302 and EUR 754 m. The competitive

advantage of the EU lies in its R&D activities, access to marine resources, and

development of infrastructure to support these activities.

204

Water supply and wastewater treatment

sector is increasingly innovative. 2018

Global Cleantech 100 Report

205

presents the top companies in technologies, services,

and business models reducing the strains on the hydrological cycle and ensuring

reliable access to clean water. Three out of the top 5 companies are of European origin

(Organica Water in Hungary, OxyMem in Ireland, and Voltea in the Netherlands).



198 European Commission (2009). A sea change for ocean management. A European strategy for marine and maritime research, p. 8.

199 European Commission (2009). A sea change for ocean management. A European strategy for marine and maritime research, p. 8.

200

Eurostat

(2017).

Fishery

statistics.

Retrieved

from

http://ec.europa.eu/eurostat/statistics-

explained/index.php/Fishery_statistics#Total_production

201 Eurostat (2017). Aquaculture statistics. Retrieved from

http://ec.europa.eu/eurostat/statistics-explained/index.php/Aquaculture_statistics

202 Magagna D., Shortall R., Telsnig T., Uihlein A., Vasquez Hernandez C. (2017). Supply chain of renewable energy technologies in

Europe. An analysis for wind, geothermal and ocean energy. Report for Joint Research Centre.

203 Ecorys (2012). Blue Growth. Scenarios and drivers for Sustainable Growth from the Oceans, Seas and Coasts. Third interim report, p.

98.

204 Remotti L. and Damvakeraki T. (2015). Ocean Research in Horizon 2020: The Blue Growth Potential. Study for the ITRE Committee, p.

14.

205

Cleantech Group (2018). Global’18 Cleantech 100. A Barometer of the Changing Face of Global Cleantech Innovation. Report.

149

The Table below discusses other strengths and weaknesses in the thematic area in Europe.

Strengths

Strong research base. In the field of water scarcity,

droughts, and floods Europe has the second largest

number of patents (behind only

Japan).

206

Furthermore, European researchers have

produced more research papers on water science

and technology in the past fifteen years than

researchers from any other country.

207

Weaknesses

Lack of focus in Higher Education.

The academic

programmes tend to be rather broad, whereas the sub-

sectors require quite specific knowledge and skills.

Additionally, curricula in areas such as engineering,

urban design, architecture, and similar do not

sufficiently cover issues related to ecology, marine

engineering, and management of water.

208

High market potential. The EU is one of the

leaders, alongside China and USA, in marine

economy. Counting all activities that depend on the

sea, the EU blue economy employs around 5.4

million and has an annual gross value of EUR 500

bn.

209

Maritime industries in the EU represent

around 5% of EUs gross domestic product.

210

Newly emerging innovative sectors. The divides

between researchers and enterprises are less

prevalent in emerging sectors, such as

biotechnologies, aquaculture and marine energy

production.

212

The marine biotechnologies sector is

dominated by enterprises that build their business

models on innovations and are strongly rooted in

research.

213

The energy sector also develops a large

number of innovations aimed at improvements in

the efficiency of wave, tidal and wind turbines.

214

Different industries often rely on the same water

bodies.

211

This presents a challenge as there is a need

to accommodate the

conflicting needs of sectors.

For

example, the potential of harvesting marine

biotechnologies relies on the quality of water, which

may be negatively affected by shipping and industrial

aquaculture.

Lack of cooperation.

Less than 20% of R&D

organisations in water sciences have an effective

cooperation with industries or enterprises.

215

206

Bergkamp G. and Vassilopoulou V. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert

analysis.

Water, marine and maritime, p. 11.

207 Ibid.

208

Bergkamp G. and Vassilopoulou V. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert analysis.

Water, marine and maritime, p. 10.

209 European Commission (2012), Blue Growth opportunities for marine and maritime sustainable growth. COM (2012) 494 final, p. 2.

210 EC (2009). A sea change for ocean management. A European strategy for marine and maritime research, p. 8.

211 OECD (2016). The Ocean Economy in 2030, p. 20.

212 BALance (2014). Competitive position and future opportunities of the European marine supplies industry. Final report, p. 119.

213 Interviews.

214 BALance (2014). Competitive position and future opportunities of the European marine supplies industry. Final report, pp. 114-115.

215

Bergkamp G. and Vassilopoulou V. (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert analysis.

Water, marine and maritime, p. 13.

150

Financial sustainability of a KIC

The analysis suggests that the characteristics of the theme, the structure of value-added chains

and strategies of the key players do not imply any significant risks in terms of financial

sustainability of the future KIC. It will largely depend on the strategy and business plan of the

KIC.

Potential to address bottlenecks for innovation

The key bottlenecks to innovation include lack of engineering and entrepreneurship skills,

fragmentation of efforts and disconnect between education, research, and innovation

activities

216

as well as an under-developed knowledge base (e.g., up to 50% of the seafloor

does not have high-resolution topographic maps

217

). A KIC would be an appropriate

instrument in addressing these bottlenecks.

However, due to a very broad definition of the theme, a future KIC would face multiple

challenges.

1) The sectors covered by the theme are very diverse, from very mature (e.g. fisheries and

shipbuilding) to the newly emerging ones (e.g. blue biotech), and attempts to cover most of

the sectors could impede formulation of a coherent KIC strategy. However, a KIC could help

transfer lessons learned in traditional industries such as oil and gas to the emerging ones.

2) Most of the sectors rely on relatively distinct value-added chains and knowledge bases,

although there are some opportunities for synergies (e.g. shipbuilding knowledge could be

used in offshore oil and gas sector). Hence, there is a risk that a KIC will develop only loosely

connected networks.

3) Due to geographical, economic, policy, and other reasons, the scientific and economic

competence-base is very unequally distributed among the EU MS (see Table below). For

instance Mediterranean countries lag the northern countries in renewable energy because of

oceanographic conditions such as a narrow continental shelf. But innovation already in the

pipeline can overcome these challenges.

All of the above implies that:



If a future KIC aimed at covering most of the sectors, its resources would be spread

widely, but thinly, it would struggle to develop a coherent strategy and exploit the

synergies between its members.

The development of a coherent strategy and priority work fields could take a

significant amount of time and resources. The existing KICs that were set-up within

very broadly defined areas, such as EIT Climate-KIC or EIT Digital, have spent over

five years and used multiple iterations to flesh out their strategy in tackling the socio-

economic challenge at hand. Experience already gained under EU research

programmes, the integrated maritime policy and the water framework directive could

participate in shortening these timescales.

216 ECORYS (2012). Blue Growth Scenarios for Sustainable Growth from the Oceans, Seas and Coasts. Final report.

217 DG MARE (2014). Innovation in the Blue Economy: realising the potential of our seas and oceans for jobs and growth. COM(2014) 254

final/2.

151

Narrower scope of the theme would therefore facilitate management of the above risks.

Refinement of the theme could be considered in terms of ensuring greater coherence of

economic activities (e.g. blue economy). A recent study

218

suggested that the largest potential

for European R&D to deliver innovation and jobs rests in the following blue economy sectors:

aquaculture, marine tourism, coastal protection, blue biotechnology, ocean energy, and seabed

mining. However, marine aquaculture is damaged if water quality in outflow from rivers is

poor so bringing the two communities together would provide real added value. The priority

should remain at ensuring that industry has the skills, technology and entrepreneurship

necessary to exploit the potential of the sea for meeting the challenges of a low carbon

economy whilst ensuring that this expansion does not compromise the natural capital for

future generations.

Maturity of sectors covered by Water, Marine and Maritime theme

Sectors

Mature industries

Coastal tourism, passenger ferry services, cruise tourism,

yachting and similar

Inland waterway transport

Deep-sea and short-sea shipping

Shipbuilding and ship repair

Fisheries

Offshore oil and gas

Water supply, treatment and other water management on

land

Growing industries

Aquaculture

Coastal protection

Industries at pre-development stage

Blue biotech

Blue energy (incl. offshore wind and ocean renewable

energy)

Seabed mining

DE, NO, FR, UK

DK, ES, FR, IE, PT, SE, UK

DE, FR, UK

EL, ES, IT, FR, NO, UK

BE, NL

Most Member States

BE, EL, DE, DK, UK, NO, IT, FR, NL

DE, DK, IT, NL, RO

DK, ES, FR, NL, UK

DK, IT, NL, UK, NO

Most Member States

Leading European countries*

Source: compilation based on Remotti L. and Damvakeraki T. (2015). Ocean Research in Horizon 2020: The

Blue Growth Potential; ECORYS (2012) Blue Growth Scenarios for Sustainable Growth from the Oceans, Seas

and Coasts, Final report; Deloitte (2017) EU Shipping Competitiveness Study and interviews. Note: * the list is

by no means complete.

218 Remotti L. and Damvakeraki T. (2015). Ocean Research in Horizon 2020: The Blue Growth Potential. Study for the ITRE Committee.

152

Suitability of themes vis-à-vis impact indicators

Overall, the medium/long-term outcome indicators are relevant for a future KIC. However,

the targets/expected values of the indicators depend on the strategy of a future KIC (if the

scope of the theme is left unchanged). On the one hand, a KIC could focus on improving the

quality of ecosystems (e.g. Plastic-free oceans as proposed in the Mazzucato report

219

). In this

case, most of the economic impacts (job creation, revenue growth, etc.) on the blue economy

would be indirect, attained over a longer period of time, and spread along a wide range of

sectors (e.g. tourism, fisheries, blue biotech). On the other hand, a KIC could focus on the

development of the most promising fields of the blue economy. This should result in larger

short-term economic impacts. However, the two issues are linked and considering them

together would avoid unintended consequences.

Inclusion, Integration, and Migration

The European society is facing major demographic changes

–

rising life expectancy,

migration, reducing family sizes, and others. Furthermore, social and economic trends pose

challenges for social cohesion and inclusion. The two major interlinked issues within the

theme are:



Demographic change and the ageing population

has wide ranging implications for the

labour market, sustainability of social insurance systems as well as increased demand for

care, healthcare, and related services. This creates the need for technological innovations

in areas such as healthcare, home care, and housing, innovative solutions for the inclusion

of vulnerable elderly groups, and organisational changes in healthcare, education, and

social security.

Social inclusion and active citizenship as drivers for economic growth.

The share of

people at the risk of poverty or social exclusion in the EU MS ranges from 14% to 41.3%

in 2015.

220

Poverty and exclusion hinder the development of talents, reduces participation

in the labour market and civic engagement as well as undercuts one’s self-esteem

and self-

sufficiency. Two groups are particularly vulnerable in Europe:

Youth

not enrolled in education, employment or training (NEETs). Educational

chances of children still strongly depend on the socio-economic

status and parents’

linguistic background. Disadvantaged children may face lower employment and

earning potential, which not only makes them vulnerable but also limits social

cohesion and economic growth. Thus, there is a need for social innovations in

reaching out to NEETs, fostering their human capital and entrepreneurial skills.

Migrants:

immigrants, refugees, and asylum-seekers. Migrants still face challenges in

accessing employment, education, institutions, goods, and services, which limits their

participation in society. The inclusion of migrants can strengthen the innovation

potential of the EU and help address issues such as labour market shortages. For

enhanced inclusion, there is a need for the development of social innovations and

social enterprise models, innovative solutions to simplify administration and banking

processes.



219 Mazzucato M. (2018). Mission-Oriented Research & Innovation in the European Union. A problem

–

solving approach to fuel

innovation

–

led growth.

220

LaGro, Yosifova (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert Analysis. Inclusion and

integration, p. 5.

153

Alignment with Horizon Europe, including the Global Challenges and Competitiveness pillar

The scope of the theme corresponds well with the Inclusive and Secure Society cluster of the

Global Challenges and Industrial Competitiveness Pillar as outlined in the Commission

proposal for establishing Horizon Europe programme. A KIC established

within

the Inclusion,

Integration, and Migration theme could directly contribute to two areas of intervention:

Democracy

and

Social and Economic Transformations.

Cluster

Inclusive

and

Secure

Society

Areas of

intervention

Democracy

Relevant broad lines of activities

Deliberative and participatory democracy and active and inclusive

citizenship, including the digital dimension

The impact of economic and social inequalities on political

participation and democracies, demonstrating how reversing

inequalities and combatting all forms of discrimination including

gender, can sustain democracy

Social and

Economic

Transformations

Social sustainability beyond GDP only indicators especially new

economic and business models and new financial technologies

Tax and benefits systems together with social security and social

investment policies with a view to reversing inequalities and

addressing the negative impacts of technology, demographics and

diversity

Human mobility in the global and local contexts for better migration

governance, integration of migrants including refugees; respect of

international commitments and human rights; greater, improved

access to quality education, training, support services, active and

inclusive citizenship especially for the vulnerable;

Economic and research capacities of the sector

The EU has a broad but patchy research and higher education base in the areas of Inclusion,

Integration and Migration. It covers most of the issues within the theme but there is a need for

a more concerted effort in order to innovate and address challenges in the field. EU Member

States spend large shares of their GDP on social protection and health. There is also

increasing awareness of the new market opportunities and social value that can be tapped in

the area. The Table below provides an overview of the European strengths and weaknesses in

the field of Inclusion, Integration and Migration.

154

Strengths

There is significant potential in the European

social economy, which accounts for approx. 2

million enterprises (10% of all European

businesses) and employs over 11m paid

members (or 6% of the employed).

221

Weaknesses

The untapped potential of social

entrepreneurship.

Neither the European funding

system nor the legal framework is well-suited to

support social entrepreneurship.

222

Due to

complicated bureaucratic processes, social

enterprises find it difficult to access funding

schemes, to support their further development and

ultimately achieve sustainability.

223

Strong research base. The EU MSs comprise 6

out of 10 leading countries with the highest

average H-index in research fields associated

with the theme.

224

The number of European HE institutions

ranked as excellent is considerably lower

than

the rest of the world. Only three to four European

universities were in the top 20 disciplines related to

the thematic area.

225

A large share of providers of social services

relies on public funding,

which is highly volatile

in times of economic or social crises. This

undercuts the development of viable long-term

business models.

MS have allocated significant funding to

address the challenges. In 2016 the EU spent

19.1% of its GDP on social protection and

7.1% on health

226

Financial sustainability of a KIC

There are three groups of players in the thematic area: national and regional authorities, social

enterprises and NGOs, and for-profit enterprises. The first two groups are not likely to

significantly contribute to the financial sustainability of the future KIC through membership

fees or payments for services. Over the past decade, they have faced a combination of fiscal

austerity and an increased demand for services due to the migration crisis, residual effects of

the financial crisis, etc. For-profit enterprises typically provide services and products at the

higher end of the market, e.g. care and support for the disabled or elderly who can afford the

services. Hence, while some of the enterprises could contribute to the financial sustainability

of the KIC, their interests might not be well-aligned with the social mission of the KIC.

221 Grigore A. (2013). Social economy entities: a worldwide overview, Review of Applied Socio-Economic Research, 6(2).

222 BEPA (2010). Empowering people, driving change. Social Innovation in the European Union, p. 102.

223

LaGro, Yosifova (2017). Input to EIT’s Strategic Innovation Agenda. Future EIT Thematic Areas. Expert Analysis. Inclusion and

integration, p. 8.

224 Scimago Journal & Country Rank, 2016. The following research subarea were used to estimate the average H-index of countries in the

inclusion, integration, and migration thematic area: (i) Aging, (ii) Communication, (iii) Cultural studies, (iv) Demography, (v) Education,

(vi) E-learning, (vii) Geography, planning and development, (viii) Geriatrics and gerontology, (ix) Gerontology, (x) Industrial relations, (xi)

Occupational therapy, (xii) Organisational behaviour and human resource management, (xiii) Public administration, (xiv) Social psychology,

and (xv) Social work.

225 Disciplines considered: Education & Training, Social Policy & Administration, Sociology (3 EU universities in the top 20), Psychology

(4 EU universities in the top 20).

226 Eurostat (2018). Government expenditure by function for European Union (28 countries). Retrieved at

http://ec.europa.eu/eurostat/statistics-explained/index.php/Government_expenditure_by_function_–_COFOG

155

The future KIC could contribute to the creation and growth of social enterprises that are

renowned for the development of social innovations.

227

However, it is not likely that return on

investment/equity of incubated start-ups

will constitute a significant stream of KIC’s income.

First, social enterprises are focused on generating a return for society rather than return on

investment.

228

Hence, profits (if any) are usually reinvested in scaling up the services.

Second, to generate a significant return on investment, social enterprises need stable streams

of income. Most social enterprises adopt a ‘hybrid’ business model, i.e. derive their revenues

from a combination of the market (sale of goods and services) and non-market (subsidies,

grants, donations, etc.) sources. Research shows that public sector funding dominates the

revenue streams of social enterprises. For example, around 45% of social enterprises in Italy

mainly rely on public funding. In the UK, 52% of social enterprises derive some and 23%

derive all their income from the public sector.

229

Hence, financial stability, growth, and

ultimately return on investment will to a large extent depend on the level of public funding.

Careers in the field do not offer high financial rewards. This could negatively impact the

capacities and/or willingness of prospective students to pay tuition fees for EIT labelled

courses. As a result, it is not likely that the future KIC could generate significant income from

its education services.

Overall, there are significant risks that the future KIC will not generate sufficient income

through traditional sources of revenue (membership fees, the sale of services, and return on

investment and tuition fees). Unless the KIC develops alternative income streams, it is not

likely to be financially sustainable.

Potential to address bottlenecks for innovation

There is high demand for innovations in the field. However, the interviews and desk research

suggest that there are three long-standing challenges to the development and take-up of

innovations in the field.

Constraints in scaling-up of innovations.

Traditional businesses predominantly focus on

relatively standardised products and services that can be easily traded across markets. Hence,

scaling typically involves the growth of business and expansion to new markets. However, the

actors within social economy typically focus on the provision of services that are difficult to

transfer, because they are generally labour intensive, personalised and relational.

230

As a

result, social-innovations

face challenges when ‘travelling’ across social enterprises, policy

domains and regions / countries.

231

Limited access to private finance.

While traditional enterprises aim to maximise

shareholder value, the actors in the field of inclusion and integration prioritise social value or

seek to strike a balance between the two. As a result, the start-ups and scale-ups are less

attractive to the established providers of debt and equity capital. Furthermore, national

regulation can also impose additional barriers. For example, social enterprises in the Czech

Republic are prohibited from using own assets as collaterals to guarantee loans, while in

Romania bank rules place not-for-profit social enterprises among the riskiest borrowers.

232

227 DG GROWTH. Social enterprises [website]. Retrieved at: http://ec.europa.eu/growth/sectors/social-economy/enterprises_en

228 OECD/European Union (2013). Policy Brief on Social Entrepreneurship.

229 European Commission (2015). A map of social enterprises and their eco-systems in Europe. Synthesis report, pp. 36-37.

230 European Union/OECD (2016) Policy Brief on Scaling the Impact of Social Enterprises.

231 Benton, Glennie (2016). Digital Humanitarianism: How Tech Entrepreneurs Are Supporting Refugee Integration, p. 21.

232 European Commission (2015). A map of social enterprises and their eco-systems in Europe. Synthesis report.

156

Constraints in distributing profits.

Social enterprises (particularly, if they are registered

as non-profits) also face obstacles in distributing profits, which inhibits access to equity

finance

233

To alleviate the challenges, a number of alternative funding instruments have emerged (see

below), although their scale and impact remains limited.

234

Hence, national/regional

authorities and the Commission stepped-in to support the development of an ecosystem of

finance for social enterprises. The EU Programme for Employment and Social Innovation

(EaSI) provides loan guarantees for social enterprises as well as supports development of

social finance markets in Europe. Furthermore, the European Fund

for Strategic Investment’s

(EFSI) equity instrument supports social enterprises through pilot equity investments.

Alternative funding sources for social enterprises

Source

Solidarity finance

Explanation

Use of traditional financial instruments (e.g.

pension funds, savings, credit) to advance the

public good.

Application of the venture capital model into a

social investment strategy to include blended

returns (i.e. financial revenues and social

benefits).

Institutional investors such as pension or mutual

funds, insurance companies, or traditional banks

can target investments in social enterprises either

directly or through dedicated funds.

Examples

Finansol (France, 200 000

subscribers in 2005)

Venture philanthropy

(Venture Experiment Programme

by the Rockefeller Foundation

Institutional investors

Pension and insurance funds,

Donor-advised funds (DAFs):

Pioneered

by Fidelity’s Non-

profit Charitable Gift Fund

Individual investors

Highly motivated high net worth individuals or

“citizen investors” invest in social enterprises

either directly or through dedicated funds.

Angel investors, High Net Worth

Investors

Crowdfunding

Web platforms connecting entrepreneurs with

multiple “citizen investors”

Kiva; Just giving

Source: OECD/European Union (2013) Policy Brief on Social Entrepreneurship

233 Ibid.

234 Ibid.

157

The third group of bottlenecks concerns access to the market. In a number of cases, pure

markets for inclusion and integration services do not exist, because the end-users (e.g.

unemployed youth, migrants, etc.) do not have the means to pay for the services. Hence,

service providers rely on funding from charities and regional/national authorities. When

markets do exist, social enterprises typically offer products and services at higher price levels

in comparison to for-profit enterprises. The price differences arise due to the need to divest

some of the revenues for social purposes or due to the adopted production processes (e.g.

social enterprises employ lower productivity workers, such as the disabled).

235

Hence, such

enterprises strongly rely on socially active consumers and tailored public procurement rules to

compete with other providers.

Given the overwhelming constraints and challenges, there would be significant risks for a

future KIC in terms of financial sustainability and potential overlaps with other public

interventions that aim to address similar societal challenges. A range of national/regional and

EU-level instruments have already attempted to address existing challenges in the field with

some success and ensuring synergies by a future KIC would be therefore important.

Suitability of theme vis-à-vis impact indicators

Overall, most of the medium/long-term outcome indicators are relevant for a future KIC.

However, the characteristics of the theme could have implications on the definition of targets.

These are discussed in the table below.

Indicators

Jobs created / safeguarded in organisations

directly benefiting from KIC support.

Comment

The indicator is relevant, but it does not capture the

additional social value of employing disadvantaged

groups, which is a widespread practice of enterprises

working in the field. It may be worth considering

distributional weights as a means of contextualising

this indicator for this particular theme.

To an extent, this will depend on the level of public

funding to inclusion and integration and / or the

extent to which the organisations supported by a KIC

crowd-out the incumbents.

Highly relevant indicator

Revenue growth achieved in organisations

directly benefiting from KIC support

Cost savings achieved by organisations

directly benefiting from KIC support

% of business that have benefited from KIC

support and engaged in different forms of

innovation activities in the last two years

Reduction in skills mismatches

Financial sustainability coefficient

Highly relevant indicator

Highly relevant indicator, but there are significant

risks to the financial sustainability of a KIC in this

area

Highly relevant indicator

Net promoter score on overall satisfaction

with EIT / KIC

235 OECD/European Union (2013) Policy Brief on Social Entrepreneurship.

158

Contribution to alleviating societal challenge

Social impact indicators are highly relevant, but

there are significant challenges in demonstrating the

contribution of concrete initiatives or enterprises

236

10.12.

Annex 10:

Model-based Analysis on co-funding model for KICs

Model-based

analysis

the

Commission

proposal

for

the revision of the EIT Regulation carried out by the Commission's Research Joint

Centre

Non-technical summary

This Annex describes a model-based analysis assessing impacts of co-funding modalities

under the four policy scenarios considered in the EIT Impact Assessment. The analysis

consists of two parts: a theoretical model-based analysis and an empirical model-based

analysis. Both approaches provide illustrative examples of selected likely key impacts

triggered by EIT-supported investments on an additional investment leveraged by the EIT

contribution, without aiming to cover the entire spectrum of potential impacts on the EU

economy, society and environment. Two channels of the policy adjustment are considered:

the co-funding rate and the risk premium component of the cost of capital.

The results from the theoretical analysis suggest that both the co-funding rate and the risk

premium matter importantly for the EIT-support on leveraging an additional investment. The

higher is the policy ability to reduce financial, technology or market uptake risks, the larger is

the potential of the EIT investment support to leverage an additional investment in KIC-

supported projects/sectors. Results for the co-funding rate are more nuanced, as higher co-

funding rate per se implies higher investment leverage per investor but also fewer investors. A

second important result is that the two policy intervention channels

–

the co-funding rate and

the risk premium component of the cost of capital

–

interact mutually. This implies that, for

example, a decrease in the number of investors due to higher co-funding rate could be offset

by lowering the risk premium component of the cost of capital.

The results from the empirical simulation analysis confirm that those EIT policy options with

the highest capacity to reduce the risk premium component of the cost of capital and impose

the highest private investment co-funding rate are leveraging the highest amounts of an

additional investment in KIC-supported projects/sectors. Among the four analysed scenarios,

these are scenarios S2A and S2B with the highest cumulative leverage effects over the entire

2021-2035 year period. In contrast, scenario S1A performs considerably weaker in terms of

leveraging an additional (private) investment. In terms of the EIT financial sustainability,

these simulation results suggest that the EIT policy scenarios S2A and S2B are considerably

more financially sustainable than the EIT policy scenarios S1A and S1B when a time horizon

of two entire programming periods is considered.

236 OECD/European Union (2013). Policy Brief on Social Entrepreneurship.

159

1 Introduction

The European Institute of Innovation and Technology (EIT) has been set up in response to the

need to address major societal challenges by improving the innovation performance of the

EU. Among major challenges to the innovation performance is the need for an increased R&D

investment in the EU. The overall mission of the EIT is to contribute to a sustainable

economic growth and competitiveness of Europe by reinforcing the innovation capacity of the

Member States and the Union.

In order to address these challenges and achieve innovation objectives, the EIT provides an

investment support in selected policy areas with the greatest benefits for society: Climate,

Digital, Innovative Energy, Health, Raw Materials, Urban Mobility and Added Value

Manufacturing. The bottom-up approach of the EIT activities aims primarily at creating

knowledge and innovation and encouraging greater R&D investment in these policy areas.

These are essential to address the knowledge and innovation gap in Europe, thereby

supporting the Union's strategic objectives and policy priorities, including a long-term growth

and competitiveness but also wider societal impacts.

The objective of the EIT impact assessment is to provide an evidence base for two

Commission proposals: (i) the Commission proposal for an amendment of the EIT

Regulation, which is its founding legal base; and (ii) the Commission proposal for a new

Strategic Innovation Agenda (SIA) for the EIT for the period 2021

–

2027 setting out its

strategic priorities and objectives during the Horizon Europe programming period. This

Annex provides a scientific support by enlarging the evidence base of potential impacts of

alternative EIT funding scenarios.

237

To study the impact of EIT investment-support measures on private investments, we develop

a stylised investment model. Using this model, we undertake a conceptual and simulation

analysis by looking at the impact of the co-funding rate and policy-induced changes in the risk

premium component of the cost of capital. Both in the theoretical model and simulation

analysis we analyse two scenarios with two subs-scenarios: with and without the enforcement

of the private co-funding of the investment support and with and without reduction in the risk

premium component of the cost of capital. They help us to identify and understand potential

implications of alternative EIT funding scenarios.

The results from the theoretical analysis suggest that both the co-funding rate and the risk

premium component of the cost of capital matter importantly for the EIT-support on

leveraging an additional investment. The higher is the policy ability to reduce financial,

technology or market uptake risks, the larger is the potential of the EIT investment support to

leverage an additional investment in KIC-supported projects/sectors. Results for the co-

funding rate are more nuanced, as higher co-funding rate per se implies higher investment

leverage per investor but also fewer investors. A second important result is that the two policy

intervention channels

–

the co-funding rate and the risk premium component of the cost of

capital

–

interact mutually. This implies that, for example, a decrease in the number of

237 A complete description of the analysis presented in this Annex with all the assumptions and sensitivity analysis is provided in JRC

reports Kancs, D. (2019) "Economic Impacts of the European Institute of Innovation and Technology Investment Strategies: A Model-based

Assessment", JRC Working Papers JRC115573, Joint Research Centre, European Commission; Ivanova, O., Kancs D., and Thissen, M.

(2019): Regional Macroeconomic Impacts of EIT Investments in the EU, JRC Working Papers, Joint Research Centre, European

Commission.

160

investors due to higher co-funding rate could be offset by lowering the risk premium

component of the cost of capital.