EU decision makers agree on funding priorities for 2021-2027 in the area of Research & Innovation, Environment & Climate, Transport and Defence

A series of the agreements regarding some of the major financing instruments proposed by the European Commission: Horizon Europe, the Life programme, the Connecting Europe Facility and the European Defence Fund, have been successfully reached at the EU political level. A formal approval of these agreements by the European Parliament and the Council is now expected to be reached. Let’s explore what has been agreed in a bit more detail.

Horizon Europe

The Juncker Commission has once again stressed the importance of investing in research and innovation to find new solutions to maintain and improve the European way of life.  It has set a new level of ambition to deepen Europe’s innovation capability, provide lasting prosperity and preserve the EU’s global competitiveness.

Building on the success of Horizon 2020, Horizon Europe will continue to drive scientific excellence through the European Research Council (ERC) and the Marie Skłodowska-Curie fellowships and exchanges, and will benefit from the scientific advice, technical support and dedicated research of the Joint Research Centre (JRC), the Commission’s science and knowledge service.

Furthermore, it will introduce new features including the European Innovation Council (EIC). The EIC, which is already running now in a pilot phase, will be a one-stop shop to bring disruptive and breakthrough innovations from lab to market application, and help start-ups and SMEs scale up their ideas. It will provide direct support to innovators through two main funding instruments, one for early stages and the other for development and market deployment. It will complement the European Institute of Innovation and Technology (EIT).

Life programme

In order to provide a better quality of life for Europeans and invest in a more sustainable future, the Juncker Commission is making an unprecedented effort to protect the environment and climate, notably by increasing the LIFE programme funding, and integrating climate action into all major EU spending programmes.

Supporting projects that deal with priorities like the clean energy transition, it will be one of the tools enabling the EU to meet its climate goals and seek to become climate-neutral by 2050. This will in turn help Europe to deliver on its commitments under the Paris Agreement and the United Nations Sustainable Development Goals, addressing some of the most important challenges of this century.

The LIFE programme is among the EU funding programmes for which the Commission has proposed the largest proportional increase for the period 2021-2027. Raising the level of ambition for climate financing, the Commission has also proposed that at least 25% of EU expenditure across all EU programmes should contribute to climate objectives.

In addition to its own direct achievements, the LIFE programme will act as a catalyst for other funds. The main elements of the new LIFE programme (2021-2027) include:

• Continued support for the transition to a circular economy and enhanced climate change mitigation: this includes funding for delivering on milestone policy objectives in line with EU’s strategic long-term vision for a prosperous, modern, competitive and climate neutral economy by 2050.
• An increased focus on supporting the clean energy transition: a new specific sub-programme will stimulate investment and support activities focused on energy efficiency and renewable energy, especially towards sectors and European regions lagging behind in the transition towards clean energy;
• An increased focus on nature and biodiversity: a traditional strand of the LIFE programme, the new, dedicated ‘Strategic Nature Projects’ for all Member States will help mainstream nature and biodiversity policy objectives into other policies and financing programmes, such as agriculture and rural development, ensuring a more coherent approach across sectors;
• A simple and flexible approach, with focus on developing and implementing innovative ways to respond to environment and climate challenges.

Connecting Europe Facility (CEF)

Echoing the same climate-neutral ambitions, mentioned under the Life programme, the Commission proposes additional funding tools to this aim through CEF to help EU transport support the Energy Union and clean energy transition.

In addition, the digital strand of CEF will finance strategic digital connectivity infrastructure. This will include 5G corridors for connected and automated mobility, terabit backbone networks linking high performance computers and their users, and gigabit connectivity for key socio-economic drivers (such as schools, hospitals, transport hubs, major public service providers and digitally intensive enterprises) and 5G-ready communities. All this will contribute to unlocking the next generation of Digital Single Market opportunities.

European Defence Fund

In his political guidelines in June 2014, President Juncker made strengthening European citizens’ security a priority. He announced the creation of a European Defence Fund in his 2016 State of the Union address. An agreement has now been found on the following key elements:

• The Fund will provide support all along the industrial development lifecycle, from research to prototype development up to certification.
• The Fund will finance collaborative research projects mainly through grants.
• Beyond the research and design phase, where up to 100% funding is possible, the EU budget will be available to complement Member States’ investment by co-financing costs for prototype development (up to 20%) and the ensuing testing, qualification and certification actions (up to 80%).
• The Fund will provide incentives for projects with cross-border participation of the many SMEs and mid-caps in the defence supply chain by providing higher financing rates.
• Projects in the context of Permanent European Structured Cooperation (PESCO) may, if eligible, receive an additional co-financing bonus of 10%, but funding is not automatic.
• Projects will be defined in line with defence priorities agreed by Member States within the framework of the Common Foreign and Security Policy, and in particular in the context of the Capability Development Plan (CDP), but regional and international priorities, such as in the framework of NATO, can also be taken into account.
• Only collaborative projects involving at least three eligible entities from at least three Member States or associated countries are normally eligible.
• At least 4% and up to 8% of the budget will be allocated to disruptive, high-risk innovation that will boost Europe’s long-term technological leadership and defence autonomy.
• In principle only entities established in the EU or associated countries and not controlled by third countries or their legal entities are eligible for funding.

Next steps

The preliminary political agreement reached on all the funding programmes mentioned above by the European Parliament, Council and Commission in the so-called trilogue negotiations is now subject to formal approval by the European Parliament and Council. The  budgetary aspects are subject to the overall agreement on the EU’s next long-term budget, proposed by the Commission in May 2018.