Horizon Europe, a Powerful Asset in the Global Cleantech Race

Over the last decade, Horizon 2020 and Horizon Europe have contributed to positioning Europe as a powerhouse of cleantech innovation. Today, early-stage cleantech innovation is vibrant in Europe, with seed investments nearly doubling from c.€ 600 million in 2021 to 1.1 billion in 20221. As we strive to scale and industrialise these technologies, the Horizon program is well-positioned to pioneer demand programs to help this scale-up, and to fund the next generation of technologies which will get us to net-zero by 2050.

As the global cleantech race heats up, now is the time for Europe to build on its early climate leadership and use Horizon Europe to secure its net-zero future. Below, we make 4 proposals on how Horizon Europe can better support cleantech innovation in the EU, to foster European industrial leadership and ultimately support a successful EU cleantech strategy.

Proposal 1: Engage private investors in the Work Programme process

The Horizon Europe Regulation recognizes the need to fully engage “all types of industry in the Programme, from individual entrepreneurs and SMEs to large scale enterprises.” Strengthening collaboration between the research ecosystem and private investors is crucial and can bring cleantech ideas to the market faster. Currently, there does not exist a platform where private investors can help the Horizon program identify technology gaps and make sure we fund the clean technologies we need to get to net zero.

We propose to set up a regular consultation of private investors in the work program process, to point to funding gaps in critical value chains, promising technologies and missing bricks in existing EU technology. This consultation should take place as work programmes are developed and could focus on: investment priorities; missing technological bricks in Europe; improving the assistance to applicants; simplifying administrative procedures; developing synergies between EU innovation funding instruments like the EIC and the Innovation Fund.

For the 2023-2024 Horizon Europe Work Programme, Cleantech for Europe after consulting with 15 of EU’s major cleantech investors signed an open letter proposing a list2 of technologies for consideration, including long-duration energy storage which is key to support the wide deployment of renewables as envisioned by REPowerEU and software and hardware to upgrade our electricity grid.

Proposal 2: Ease the administrative burden for SMEs

The Commission has already taken steps to ease the administrative burden for applicants. However, further simplification is needed, to ensure both lower cost of applications for SMEs, and higher success rates. For Horizon 2020, the time to grant time frame of 192.5 days is not aligned with cleantech companies needs’ to drive innovation fast enough to the market. From a pan-European survey of innovative cleantech start-ups and scale-ups we ran to map their experiences with applying for EU and national funding programmes, respondents who applied for Horizon 2020 noted that the opportunity cost of applying is too high considering the low success rate of (12.6 % for Horizon 20205).

We propose setting a more ambitious time to grant of less than 50 days as well as providing more clarity around the success rate so that innovators can have a better understanding of the opportunity cost of time and resources to complete the application.

Proposal 3: Help create demand for cleantech solutions

Over the last 10 years, thanks to significant investments, Europe has become a powerhouse of cleantech innovation. But we are still struggling to scale and industrialise these technologies. This is in part due to insufficient demand signals for clean technologies. The Horizon program could have a role to play here, for instance by facilitating innovative green public procurement, or similar private initiatives, through the European Innovation Ecosystem. It has already started doing so with supporting projects such as PROCEDIN, whose goal is to accelerate innovation procurement to enable the sustainability agenda of European cities. We propose to increase the size of the funds dedicated to procurement of clean technologies to accelerate the time to market. This can have a significant demand-pull effect on the uptake of cleantech solutions in areas such as construction materials, energy efficiency, innovative renewables and electric mobility, rewarding sustainable frontrunners and creates demand that drives costs down.

Proposal 4: Increase the transparency of the 35% commitment to climate objectives

Horizon Europe is the EU’s flagship research and innovation funding programme and with its budget of €95.5 billion, it remains a critical yet scarce resource to tackle climate change, and to respond to the changing geopolitical situation. The 35 % of Horizon Europe that has been earmarked for climate objectives is more necessary than ever.

The European Court of Auditors (ECA) has cast doubt on the appropriateness of the European Commission’s methodology for accounting for climate-related spending6 Confidence must be restored: people need to know that a commitment to spend money is not just rhetoric. One of the areas of the EU budget subject to a specific climate spending target was Horizon 2020, where out of a sample of 24 projects the ECA found that “that the climate coefficients used for nine [...] were not reasonable, as they had a weaker link to climate action than claimed.” Transparency is critical to allow researchers and innovators to plan for upcoming calls and make their proposals more competitive.

We propose to add a set of indicators to the Horizon Europe Dashboard that can help assess real-time, as a time-series, how much of the budget of Horizon Europe has been committed, how much has been paid and if the commitments are targeting the climate objectives or other earmarked ambitions. Horizon Europe’s Dashboard should also report the financial envelope for the programme and the indicative distributions under the sub-headings, and track any changes to these figures.

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