Committee on Industry, Research and Energy Ordinary meeting
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ITRE European Parliament
Follow its sittingsSpeaker 2
According to recent estimations by another study, around 260 billion flow to foreign cloud and software vendors annually, and these figures are from business spending only. So this is even comparable to the EU's energy bill, which was around 360 billion in 2024. And this money then finances jobs and innovation elsewhere. And, indeed, innovation in Europe is underfinanced compared to the major other global economies. To illustrate, for example, AI accounted for 61% of global venture capital investment in 2025.
The EU managed to attract less than 6% of it compared to over 70% in the US. So unsurprisingly, in the patent area, the EU's share is also dwarfed in comparison to China or the US, as it has contributed to a mere 2.8% in recent years. So overall, European systems innovate within ecosystems defined elsewhere, ceding intellectual property and data to foreign players. And such dependencies are not only costly, but they erode the long-term economic performance of European companies and industry. And, of course, Europe has levers to correct the situation.
In the study, we outlined several areas where steps can be taken in the short term. So, procurement reform could be the first step to open and stimulate the demand for software products made in the EU, requiring open standards, interoperability, multisourcing, and meeting sovereignty criteria for cloud offerings. Such measures could boost the companies that provide just that. Open source is then also often cited as a solution to the EU's dependency problems, but for it to actually become strategic infrastructure, sustained funding, maintenance, and governance focus are essential. Furthermore, to provide alternatives to big tech for more businesses and governments, the EU-controlled digital capacity has to be scaled. That involves a wide range of areas where certain interventions could help, from establishing hybrid or federated cloud infrastructures to fixing issues related to tech R&D funding and finding the most productive ways to support European industry. So industrial alliances and PPPs might be one of the ways to do it, as emerged from the study, because they enable some of the capacities that will allow resources to compete on foundational technologies rather than just complement or niche software applications.
Overall, this broad study touched upon and tried to explain the various facets of dependencies within the EU's digital stacks and software. But this topic is so complex that this work only scratches the surface, and many elements of this phenomenon require a deeper look to find the best solution. So what is clear, however, is that there are no quick or easy fixes for this dependency situation.
Borys Budka
Thank you for these opening remarks and the presentation. And now, I give the floor to Mr. Walborn on behalf of the EPP.
Speaker 3
Thank you, Chair, and thank you to the author of this very comprehensive study. It is a very important contribution to the essential debate that we are having, namely how Europe can strengthen its technological base in a more geopolitically uncertain world. We have some similarities to when we were dealing with the Italy report on tech sovereignty. I was the EPP negotiator on that file. And I think the study here really walks us through the vulnerabilities we are now facing.
Because it is, of course, true that Europe relies on non-EU providers across the digital stack. And it is clear that we have some homework to do in relation to this. But I would urge my colleagues to have some perspective. Because, of course, overdependency is a risk in itself. However, interdependency has also been a key source of European strength and economic growth.
Europe has never built its prosperity through isolation. It was built through openness to trade and competitiveness. I want to take Sweden, which is my hopeful country, as an example. Sweden has many globally competitive companies, especially in fintech, music streaming, and AI, such as Spotify, Klarna, and Lovable. These are the champions we often talk about.
And they did not grow from massive public spending, but rather from the opposite. So, when we talk about technological sovereignty, we should be careful not to equate that to protectionism. Sovereignty should be about choice, resilience, and competitiveness. And if we want to lead in technology, and of course we do want to do that, we must focus on the fundamentals. That is deepening and completing the single market, creating a real savings and investments unit, catalyzing more private investment in R&D, heavily simplifying our regulation and drastically reducing administrative burden, and then building stronger partnerships with like-minded countries to diversify and become less dependent.
I have a few questions for the authors. I tried to rush since I saw that my time was gone. First of all, how do you distinguish between harmful dependency that we have in some cases and mutually beneficial interdependency in a global digital world? And second of all, several recommendations that you have point towards a more protectionist approach, like by Europe and localization. How do you assess the risk that these measures will increase the cost for European businesses, citizens, and authorities?
And the third and last question: the report highlights Europe's digital trade deficit. And we have, as you know, quite recently concluded digital trade agreements with Singapore and South Korea. And we have some of our free trade agreements that include digital chapters. How do you see that benefiting our competitiveness? Thank you.
Borys Budka
Thank you very much. And on behalf of S and D, Mr. Matthias Eka, the floor is yours.
Matthias Ecke
Thank you, Chair, and thank you for this excellent presentation study that helps us a lot in our discussions on how to advance sovereignty in tech, especially software. I think the study was giving some new insight, but also compiling some of the information that we already got from other sources because it is by now, I think, well known that we are very much dependent on mostly American big tech on a lot of levels of our tech stack. So, I think the debate that we have is less about isolation. I think we are really far from that. It is just about how to reduce overdependencies on critical layers.
And this is also how I understand the policy proposals in your report. I want to ask especially about the possibility of a sovereign tech fund. That was something that was mentioned in the report, and that is also something that some of our member states already have in their national buildups. And we have a sovereign tech agency in my home country, Germany, which supports software and the maintenance of software language models. And to be honest, I think that one is not extremely expensive, especially compared to all the investments that we discussed in hardware.
So, I think this is maybe an important leverage to focus on software and what is in the back end, so to say. But there are different models. And one of them is that a standalone centralized EU fund could be such a sovereign tech fund. This is discussed in the community and also among policymakers. Another option could be that we have a kind of hybrid or shared management model.
We already have existing structures, like the edicts. We now have the edict on digital commerce in Paris that was recently opened. And this idea could be to pool contributions from member states, from the industry, from structures like EDICs, and to create a sovereign tech fund or an equivalent in that respect. So, what would be your proposal on that? Thank you.
Borys Budka
Thank you very much. There is no speaker from PERFI, nor from ECR Renew. So, the next one is from Greens, Missus Marketa Gregorova. The floor is yours.
Speaker 5
Yes. Thank you very much, and thank you for the briefing, Miss Kinekite. It was very sobering. Of course, I am one of those who do know about these dependencies. Sorry.
Speaker 7
And so, I expected what you were talking about. But still, I think that it is a very important reminder to this house, especially now when we will be working on various parts of our digital infrastructure, including the cybersecurity act, that if we are attempting to secure a digital house that is dependent on, in summary, 80% of external actors and factors, then this could be considered a strategic vulnerability. And, of course, the first thing that I've always heard when talking about securing our infrastructure was the costs. So, of course, you mentioned in your presentation various means of dealing with it, but all of that is, let's say, more costly even so. So I wanted to ask you one thing, but I will come back to it: your opinion on diversification, which would potentially mean we are not doing everything ourselves, not just making Europe great again and not just Europeans taking sovereignty, but really doing what we are trying to do in the realm of fossil fuels currently.
Speaker 6
We are also not trying to relay from Russia to one other source, but to more of them. So, what do you think about that in the realm of digital dependencies? And the second point, maybe not so much a question, although I would like to hear more of your thoughts on that. Just a point also for colleagues: the open source remarks are extremely important because that's really underinvested infrastructure, but also the community future where we can heavily rely on our volunteers, which would again reduce the potential costs. We had just hosted in Brussels, you know, the FOSSDEM conference and also the Open Source Awards, and there have been so many projects.
Speaker 8
And some of you might have last month seen a lot of Lux Awards advertisements on Flow, the really cute movie with the black cat animated that was all done in Blender. Blender is completely open source, and it won an Oscar. You know? So, just so that you know, even in real life, this has a real impact.
Can use it. Thank you.
Borys Budka
Thank you very much. My speakers list is finished now, so it's time for the answers. So, I once again give the floor to our guest.
Speaker 2
Okay. Thank you so much. Very interesting questions. Perhaps the disclaimer right away is that in the study, we first of all tried to understand and map the problems, while the solutions were a secondary focus. But I will try to answer with the data that we did collect to the questions that I heard.
So whether dependencies are harmful or beneficial, we did not really make this distinction in the study because, first of all, we wanted to understand what the level of those dependencies is on software which is developed elsewhere. And I think the harm comes from overreliance, not the type of software that European companies, businesses, or users are using. And I think this relates, perhaps, to the question of diversification that was raised just recently, and whether that could be a solution instead of just shifting to a single alternative for building European. I think this is actually the main point or the proposal of those suggestions of what can be done rather than protectionism, because I think one of the points outlined in the study was that, first of all, we have to use the means that we have to make sure that the products that Europeans use are interoperable, that users can move from them to other products, and the user lock-in is reduced to the extent possible. So, this is the first step to allow more players into the markets, which are largely dominated by the incumbents.
And the localization or bio-European requirements, in our view, are not to establish any kind of protectionist line, but on the contrary, maybe to introduce more balance because we quote a study which analyzed European public procurement data. And what they found is that most of the public procurement processes in recent years, based on the TED database, that involve some procurement of some sort of IT solution, very explicitly in the technical specifications mentioned Microsoft or another US-based company as a prioritized provider of certain services. So, if this priority is given to non-European vendors, giving the same to Europeans could, I think, balance it out more rather than enforce protectionism. Trade agreements with like-minded nations. I think this was also one of the points made in the report, and it also relates to the theme of diversification, that we do not rely on just a handful of companies for the entire digital stack.
And sovereign tech fund, I think, it's quite difficult for me to speculate about the best form that it takes. The more important point here is to address the problem that open source in these discourses is often mentioned as the solution. So, to get off proprietary stacks of big tech, which are closed and difficult to audit, to something open, visible, and interoperable like open source. But this right now cannot solve all the risks or even introduce more risks because it is underfunded. Its governance structures are unclear, and it lacks maintenance.
So, the sovereign tech fund was mentioned as one of the ideas or measures to address this specific problem. And, well, yes, I think I touched upon most of the questions that I heard, but please let me know if there's anything else.
Speaker 3
Yes. If I may have a short follow-up on the open source because I think this is really important. And there might be things that I don't understand when it comes to open source. And I'm in no way against open source, but I'm not against proprietary software either. And if we are going to build a strong European base with software, I guess that also means that some companies would like to do the research, invest the money, and do it with proprietary software.
So, I think it is important that we see them as one option, and that only the open source would be the European answer, because then I think that would mean we can exclude a lot of companies that would like to invest in their IP, have their proprietary software, and that is their business model. So, as politicians, wouldn't it be better if we did not choose one or the other, but rather stayed open to both?
Yeah.
Speaker 2
That's a good question, but I think this dichotomy is not that clear-cut because the majority of any software product is based on open source fundamentals. So there is no either-or in this case, but if we are talking about finished products, for example, I don't know, office suites, whether we're getting open source or proprietary. The thing is that the proprietary ones are currently only non-EU-based offerings. And what we have in the open source space are the only alternatives. I guess this is one of the reasons why this is promoted so much.
But I don't think that in any way this report encourages moving entirely to open source. It acknowledges all the drawbacks it has at the moment. And yes, I think one of the key points is that it's important to help businesses grow and scale. And, of course, they have to; it's normal that they develop and then sell proprietary technologies to do that.
Borys Budka
Okay. Thank you. I don't see any other questions. So once again, I'd like to thank you very much for being here today with us for this lecture, let's call it, and it is very useful for our future networks in our ITRE committee. Thanks to all members who took part in the discussion for the questions.
And we finish this item 14. And within 30 minutes 30 seconds, we will start item 15, Horizon Europe. Dear colleagues, please take your seats. And we start our item 15 now: Horizon Europe 2020, H 2034, expert views and considerations. And I would like to warmly welcome our experts today: Professor Maria Leptem, President of the European Research Council; Doctor Miriam Storim, Head of Strategy and Technology Relations at Foundational Technologies Siemens; Doctor Maria Indrikova, Vice Rector for Research at Riga Technical University; and Professor Emmanuel Haytor, former Chair and Lead Author of the Commission Expert Group on the Interim Evaluation of Horizon Europe.
It's a great pleasure for us that you accepted our invitation. Thanks a lot, once again. And we have almost two hours for this hearing, which will be conducted in accordance with the speakers' list. And I invite all members who want to take the floor under "catch the eye" to put their nameplates vertically in their holders. If time permits, we will have this procedure done.
So, I will start by giving the floor to Professor Leptown for 7 minutes to make her presentation.
Speaker 9
Thank you very much. No. I don't have any slides. Thank you. I was told 8 minutes, so I'll talk fast.
Dear friends and colleagues, dear members of Parliament, thank you for the invitation. It's, of course, as always, an honor to be here. The title of my talk is: "The Commission's Proposal Represents a Minimum." As you know, the Commission's proposal for the next MFF includes a substantial increase for the Framework Programme and for the ERC. That matters.
It signals that research and innovation are being taken seriously in the competitiveness and security debate. But I need to say clearly that what is on the table should be seen as a minimum, not as a final ambition. There are a few reasons for that. First, we are already falling dangerously behind our competitors. Today, global R&D spending stands around $2,900,000,000,000.
The US invests about $800,000,000,000, China about $780,000,000,000, and the EU 27 about $500,000,000,000. So, we're already operating at a significantly smaller scale than our two main competitors. And if we look at researchers, China has roughly 3,000,000, the EU around 2,200,000, and the US around 1,600,000. So, they have fewer. But what that means is that its expenditure per researcher is higher.
In the EU, we spend roughly $229,000 per researcher. And in the US, that is half a million. And that gap translates directly into capacity, infrastructure, and long-term output. If we increase only modestly, while others continue at that scale, the gap does not close. It will widen.
And the big five US tech companies alone—Alphabet, Google, Facebook, Apple, and Microsoft—spend well over $200,000,000,000 every year, more than all EU governments combined. And I've heard, and I keep hearing, that only a couple of weeks ago, China only imitates. They have to come here to get our intellectual property and steal from us. We've got to protect ourselves. That may have been true 15 or 20 years ago, but it is not true anymore.
I know it personally from my field, but we can also look at the numbers. If we look at the Nature Index, high-quality publications in leading scientific journals, China now leads globally with nine out of the top 10 institutions being Chinese. They're not copying us. We need to copy from them if there is anything. And if we look at the technology tracker, China's global lead extends to 37 of the 44 technologies that ASPE is covering, and that includes all our pet names: defense, space, robotics, energy, environment, biotech, AI, advanced materials, and key quantum technology areas.
They lead. That shift has been extraordinarily rapid, which is why some people have not caught up with it. But this parliament cannot afford not to catch up with that, and this government here cannot either. So, it's no longer incremental. China dominates.
And we can do something about that here at home. Second, when talking about a long-term budget like the MFF, we must take inflation into account. Using the Commission's own deflator, a euro in 2034 will be around 18% less than a euro now. And keep in mind that the ERC has not adjusted its grants for inflation since it was created in 2007. That'll be 20 years next year.
So, in real terms, the purchasing power of our grants has already eroded significantly. A nominal increase that does not fully compensate for inflation is not a real increase. It's also not about awarding smaller grants to more people. It's really making significant progress. I just reminded you of the difference between us and the US in terms of funds per researcher.
And finally, we are struggling to keep up with demand. The ERC consistently receives more proposals of excellent quality than it can fund. A significant share of projects that pass our highest scientific threshold remain unfunded simply because we don't have the money. And these aren't just marginal proposals. They're internationally competitive ideas that we simply cannot afford.
So, it's not that we don't have the ideas here. We just don't fund them. And finally, there's a political reality that we all know. Historically, the commission's budget proposals are reduced during negotiations. If that happens again—no, not if.
When that happens again, the signal will be clear. Europe speaks about sovereignty and competitiveness, but it hesitates when it comes to sustained investment. So, I would plead with this committee to help avoid that outcome. I want to address another point: there is a narrative that, in a geopolitical world, we need to prioritize applied instruments and industrial policy. They are mega important, and I understand that.
We all know the pressures that Europe is under. But we should be careful not to create a false hierarchy between frontier research and innovation. I've talked about that many times here, so I'll keep it short. But I just want to remind you that the ERC is not a risky experiment. It may have been 20 years ago, but now it is one of the most evaluated and internationally benchmarked research funding instruments in the world.
We select purely on scientific excellence through global peer review, deliver Nobel Prizes, breakthrough discoveries, companies, patents, etc. So, it's not risky. You know what you're buying when you pay the ERC. You're buying the best ideas selected independently, with no political priorities. And I wanted it to be diverse also, there briefly.
If evaluation criteria are written to align with current strategic narratives, then the independence that is so important suffers. Autonomy protects unpredictability and diversity. And you know that resilience, as we know from ecology, requires diversity. That's what the ERC generates. And that's why independent research councils matter, as we see them in many other countries.
Such independent research councils create buffers between political priorities and scientific judgments. This does not mean that it removes accountability. The ERC was built on that principle, and accountability remains in place, as with all other independent research councils that we know and admire, not least in my own country, I have to say. The Germans are very good at that. So, we can't say that funding frontier research is risky.
I'm out of time. So why don't I skip the rest, including the question of fragmentation, where I want to point out that the ERC is one of the few instruments that operate at a genuine European scale. So Europe already invests less than its main competitors in absolute terms. Others spend more per researcher. Others have more research institutions at the very top.
Others are ahead in critical technologies. I'm not going to say this is a critical moment. We may have already passed that moment. So, maintaining the commission's proposal is the minimum. Strengthening it would be strategic.
We've built something with the ERC that is respected worldwide. It would be a mistake not to build further on that success. Thank you.
Borys Budka
Thank you, professor, for these remarks. And now, it's time for Missus Miriam Storim from Siemens.
Speaker 10
Yeah. Thank you, and thanks for the invitation here. It's an honor to speak to you all here. Thank you for that. So, I start with some slides on who I am because this is helpful to understand why I'm arguing like that.
You might know that Siemens is Europe's biggest engineering company. We have 380,000 employees worldwide. Our revenue sums up to nearly 80,000,000,000, and importantly, 6,600,000,000 is our R&D expenditures. We are proud of our inventions. That's it.
But we don't live, and this is not the major asset we have. We do business. How are we structured? Digital industry, smart infrastructure, and mobility are the main businesses at the moment. I'm highlighting that because sometimes people think we are making washing machines.
That's far away. Healthineers is going public now, as you might have heard. Why is this slide important here? Because Foundation Technologies, where I am part of, was invented to, let's say, give the best R&D to all those businesses. So this is a kind of research pre-development for everything that happens in the businesses, maybe something similar to Horizon Europe for all of the businesses or ECF as well for all of the businesses and member states that we have here.
It's kind of a similar structure to what we're having here. How do we link this together? This is kind of bold headlines, and I just say that because, I guess, the headline discussion is the same as what we're having here. We found 11 core company technologies, and here, in these technologies, everything is linked together: the business predevelopment as well as research and predevelopment in this foundational technology. So again, always linking this research and predevelopment to business is our main thinking and our main aim in what we're doing.
So, what are my points now? I got 5 on the table. First is, and you will not be surprised by that, targeting industrial adoption with a focus on high TRLs. It is very important because this is the proof of the pudding. Are we really inventing something, and are we putting innovation here in Europe on the table?
So we think from the customer's perspective. We think from the innovation and the market size, and this is why we always say we can afford to be proud of the application. This is okay because, with application, you will raise prosperity and growth again. Look at Asia or the US. For example, the AI action plan is a very strong statement.
We have been involved, for example, in Mission Genesis now in the US, and you might have seen that Siemens announced a 1,000,000,000 investment in AI. This is not just done in the US, but the majority of it is done in the US. And this has some reasons because we see more speed and movement, and this is something I would like to shed light on because Europe could be proud of that as well. The linkage between FP10 and ECF is a good one. So, seeing these different levels of TRLs together in one bucket, I think this is a good start and a strong statement.
So, we are in favor of that. It's all about, second, building a unified EU-wide approach. So what we say is, please try to put more X in one basket and strengthen what you have. Don't get disturbed by too many different approaches and headlines. It is important that we see a common and unified EU strength.
What we would like to see is more tripartite partnership structures because there we can see that the EU is very strong in putting all these efforts into some topics. We saw that in CHIPS joint ventures and in these joint undertakings, and this is for us a good blueprint of what we would like to see more. Investing in Mail Europe can again lead to a question of prioritization, and I think I don't have to tell you that because you're exactly struggling with this question. How can you prioritize the right topics here? From our point of view, we should limit the number of headlines.
What we see today in the yeast ECF windows is very broad. You can cover nearly everything behind that. So it's always about strategic resources or education, and the question is, what do we want to focus on? For sure, I'm here for the digital or tech industry, and I am very much in favor of strengthening all these topics around industrial AI, digital twin, and cloud edge computing. I think this is where we can lead in Europe, and we can jump in.
So, I would prioritize that much more than I can see today. Act fast and be agile; a little bit of administration in these FP10 topics is important. We understand two different points here. The first is time to grant. This is, as you said in your study a long time ago, still true.
There are too many days between the application and the grant. For our researchers and predevelopers, they are always wondering, "When do I get any answer here?" So, is there anyone out there, and can I start now? This is much too long because these innovation things are happening quite quickly. The other point is the time to change.
As far as I can see now, and this is changing again within Siemens, shifting from a little bit of hardware to a little bit more software, these innovation cycles are much shorter. And the learning, what we see, is very quick. So we test something. We prototype it. We learn.
We change. And this is how innovation is happening now. So, the time to change is now; this should be possible here. And we need flexibility here, and we probably need a longer contribution to that, not just for one year or two years, but three, four, or five years, just to be able to be flexible within the scope. The last thing is about investing in digital infrastructure.
We really welcome your efforts on the Gigafactories, for example. This is a strong statement, and I just heard Roberto Biola yesterday saying that, again, this is the biggest amount of money you've ever put into such infrastructure. I'm not calling for an Airbus for everything. I don't think that this is the right way, but I see it in digital infrastructure and computing infrastructure. So, we welcome that.
We think that FP10 and ECF combined could shed more light on this as well because many companies benefit from this installed base, and I would like to see that a little more than what we have seen before. That's it from my side. Thank you.
Borys Budka
Thank you very much. And now it's time for Riga Technical University, and I give the floor to Miss Myra Indrikova.
Speaker 11
Thank you. I didn't know that my surname was so hard to pronounce. But, yeah, honorable members of the European Parliament, ladies and gentlemen, it's my honor to be here today. Thank you for the opportunity to speak on behalf of Latvian universities. As we look ahead to the TENS framework program, we welcome the ambition and significantly increased investment proposed for Europe's next research and innovation program.
I would like to speak about the role of universities within the framework program, demonstrate the added value of the widening program, and finally conclude with some concerns. So, first of all, I would like to express my gratitude for the trust that you have shown in universities and research organizations. As you can see in the chart, in Horizon Europe, the largest share of funding is allocated precisely to research institutes and universities. I won't mention all the things that universities do; I think the most important thing is that universities push the boundaries of science. We address topics that benefit society not only in the short term, but also in the long term.
We provide cutting-edge laboratories and research infrastructure. We transfer the knowledge to industry, helping to bring our research to the market. When we think about talent, we train and educate our students. We enable research mobility across the whole of Europe, and we also want to stop the brain drain outside of Europe. We lead European university alliances, which are excellent examples of successful collaboration.
Europe will face demographic issues; therefore, it is extremely important to work together. Last but not least, large collaborative projects demonstrate how industry, small and medium-sized enterprises, universities, public, and research organizations can work together effectively. Second, I would like to focus on specific examples from Latvia, as it is the country where I come from, and I want to share some data. So, as you can see in the chart, it took time until Latvia learned how to prepare competitive international project proposals. And there is great news.
If we look at the data since 2021, Latvia has submitted 4.5 times more applications. And now, I would like to share a little more personal story. I left Latvia 15 years ago to study in Germany, and then I spent more than a decade working for one of the biggest technology companies in the south of Germany. And when I came back, it was last spring. I want to show just one picture on the right side.
It's the Baltic Biomaterial Center of Excellence, and this is the result of the teaming project. And what I observed when I walked through this institute was their state-of-the-art laboratories, international environment, and the research quality outcomes, which have tripled. So when I talked to the institute's director, he mentioned that it took 5 years to unlock the full potential. So, I believe with this example, we are on the right track, and we should strengthen the widening program. We will see a lot of success coming up in the future. Lastly, I would like to conclude my talk with several concerns.
We see a potential shift in FP10 towards high technical readiness level, industry-focused projects. Industry typically focuses on products that are developed within a five-year scope. And if you look at the geopolitical situation and speed in China, then those cycles are even reduced. When I think about the universities, they focus on long-term research. Sometimes it takes 10 to 40 years until we see our breakthrough technologies.
What kind of breakthrough technologies am I talking about? I'm talking about batteries, photovoltaics, artificial intelligence, biomedical materials, so it requires time. I highly support cooperation with industry. What I'm mentioning is that we need to balance the low TRLs with the high TRLs and find a balanced way to allocate the budget. And I would also like to talk about the evaluation process.
If I think about project proposal writing, typically, scientists slice their ideas and apply for many projects, and that's not very efficient. When we think about project writing and evaluation in the context of artificial intelligence, generative AI, then we see that the tools for evaluation need to be adapted. Another aspect, which was already mentioned before, is that there is heavy competition in a way that many projects receive a seal of excellence, but the funding is still missing. So we have great ideas, and all we need to do is just find the funding for that. And last but not least, I also want to mention simplification.
It must remain a priority. We are concerned that, together with the new European Competitiveness Fund, it's not quite clear how this instrument is going to work together with FP10. And we need to make sure that by adding a new level, a new instrument, we take care that universities with less overhead and support resources are not at a disadvantage. My message is simple. FP7 must work for all member states, protect its independence, reinforce widening, safeguard bottom-up excellence, and ensure that simplification is real and not just promised.
Thank you.
Borys Budka
Thank you, Mrs. Rector. And now, it will be time for Mr. Manuel Hayter. The floor is yours.
Speaker 12
Thank you very much, Mister President, Mister and Missus members of the European Parliament. I feel particularly honored to be on a panel with three European women discussing science and technology. So, thank you so much for making this opportunity possible. I will argue that we live in a human moment in which Europe needs creative solutions proportionate to the dangers that threaten it. And this can only be done by aligning national, regional, and European funding, acting on our institutions, and particularly accelerating research and innovation, certainly to promote European competitiveness, but also to face emerging societal challenges.
Speaker 13
The world is facing many political, economic, and demographic issues, and these challenges are accelerating very fast. But one thing we know is that research and innovation are the ways to move forward, and Europe has done it. This Parliament, the members of the European Parliament, have allowed it in previous critical times to strengthen Europe for better research and innovation. So, I will argue that we need to take care of the budget, but also of the governance, and I will argue more than ever that we need to leverage and promote the best practices of the European way to govern research. And this goes back to the so-called principle under which decisions about how to spend research funds should be made by researchers and innovators.
Speaker 12
And, again, this Parliament, members of the European Parliament have allowed it in the last 20 years, particularly through the creation of the European Research Council, for this to be made in Europe. You have been able to create the best world programs in terms of governing research because you have allowed it.
Speaker 12
Empower researchers and scientists to govern research. This needs to be leveraged, and this is the way I will argue for the European way, or the best practice, of governing research and innovation. Very briefly, let me concentrate on five main issues. But certainly, as already mentioned by Professor Maria Leptin, the proposal of the commission for FP10 is a good starting point but needs critical review. And, again, when we go back seven years ago or fourteen years ago, we know that this parliament and the members of this committee can do it and can definitely improve the current proposal in five main dimensions.
First and foremost, the budget. In our report, and in close agreement with Mario Draghi's reports, we have clearly calculated that a minimum budget of 220,000,000,000 is the minimum acceptable for high-quality proposals throughout Europe. And I will discuss this at the end because the question is: where does the money come from? And we definitely need to discuss what the taxpayer contribution should be, but also increasingly the need for new European own resources. President von der Leyen mentioned it in the last budget conference in July, and several European leaders have already strengthened that.
But definitely, to face the competition worldwide, on the other side of the Atlantic, but also in Asia, and in China in particular, we need a strong framework program with a larger budget to align with national and regional funding. My second point is about governance. And, again, the idea of a standalone program is critical, but it really needs to be a program which is governed by scientists and innovators for scientists and innovators. Any type of common rule is not acceptable because we know from practice that you, members of the European Parliament, have shown the world that we need specific governance schemes for research and innovation. And in our report to the commission, we seriously advise Europe to consider a portfolio of four different, what we call, spheres of action in terms of competitive excellence, such as now particularly through monobeneficiary grants for scientists to the European Research Council, or through innovation by the European Innovation Council, but also collaborative research to address industrial competitiveness and to face societal challenges, as well as the building up of the European research and innovation ecosystems.
This governance, and again leveraging the practice that you all have allowed us to understand, is the best European way to govern research and innovation by adopting the ERC model and leveraging it to the full program. And we need, again, to understand the good practices which ERC has shown us by empowering researchers against some of the bad practices we have seen over the last years. For example, the board of the European Missions, which works just as an advisory board with no power at all. So it is not just the idea of bringing stakeholders. It is not just the idea to bring research as innovators.
It's really important to follow what this parliament has allowed us in Europe to show to the world. It's the empowerment of researchers and scientists to govern the way funding has been allocated. And this calls us to what I will consider my third point on institutional readiness: improving autonomy and quality of governance. Again, making use of the example of the ERC by strengthening it further and guaranteeing its autonomy, guaranteeing that the president of the DRC has a full-time job, at least with mandates for four years, and running a totally independent science and technology council; strengthening the European Innovation Council and essentially multiplying it by three times, but also including an experimental unit to test new ways of assessing and funding, as clearly discussed in our report. And we strongly advise expanding and leveraging the RC model for collaborative research by creating two new councils, particularly bringing together researchers and innovators to govern the programs. But we need to address the young adults, and I will close in a minute.
And this is not just a scientific or technical issue. It is a strong political issue. We need to turn the European brain drain of the last 20 years into a European brain game. And, again, that can be done with a strong Shoes Europe program by making use of the existing co-funding mechanism at Mariskulovsky Kukuri, which should at least be multiplied by 3 times. Last but not least, we certainly need a better compromise between a strong Europe and a Europe open to the world, which today will be completely different from seven years ago.
Inside Europe, we need a strong and focused widening program. But outside Europe, our strong recommendation is that we definitely need to understand the way the once granular and revised global cooperation in science and technology can face the rise of Chinese science and certainly the emerging development of African scientists and Latin American research capacity. For instance, follow the example of the European program ARISE, the African research initiative on scientific excellence. We have seen that emerging and rising scientists from Africa have come to Europe and the United States. So we definitely need to change that process again, and this will require an adequate budget for FP10 to be a strong program and to drive alignment with national and regional strategies.
Thank you.
Borys Budka
Thank you very much. And now it's time for our reporters and shadows. We've got 10 speakers on my list. So I just remind you that everyone has two minutes for the question, and then there will be another time for our experts after this round, then other members from the list and the catch-the-eye procedure. So, I give the floor to Mr. Christian Heller.
Speaker 14
I desperately try to do that in time. First, a general question for all of you. Do you think it's a good idea, given that we want to have a link between the ECF and the second pillar, practically the €100,000,000,000 main pillar of the program, without understanding the importance of the ERC? But is it a good idea to postpone defining what is actually the second pillar to a process after the MFF and after the horizon set by governments? We don't know.
Or wouldn't it be better for industry, for research, for anyone, to define what the pillar is and then look at how to make the link between the ECF workable? General question? Second question, to Professor Lebkin, shortly. There is a discussion to broaden the instruments of the ERC to an institutional ERC. The question is simply: can we afford that?
Is that plausible, given that you had been referring to the stranger's money so far? To Doctor Storim. I mean, industry is obviously interested in a strong link between the two funds. But do you believe that it is really in the interest of the industry to pretend that there is a top-down industry policy that can formulate a €100,000,000 research program? And is that the seamless investment journey which we are constructing?
Or isn't it that industry is simple? Sometimes, we need several projects to develop technologies and not have the same actors involved. But it seems to be the norm that companies choose to become part of the consortium to implement a specific work package in which they can undertake a research activity that fits their own development process. In other words, what drives companies to join a consortium is often not the result of the overall project, but rather their specific interest in the work they can do in a work package. So, is it that you put all your eggs, so to say, in the conventional interest in that cause, or do you have a more general interest and use this construction of the seemingly investment story, with a research program to develop your business progress from more or less lower TRL to the market? To Maria, in recovery, simply put, the question and the example you had been referring to was the reflection that we had been widening, or many of the widening instruments had been used more or less to restructure the old Stalinist system of the Academy of Science. But what do we do now with this second pillar?
So, do we prioritize the ones your neighbor, Cambria, Estonia, is developing or being more successful? Or what do we do? Is it a privilege to widen opportunities for those who are not developing? Or is it a privilege for the developing country that is widening? So, what do you see as instruments?
Speaker 14
I have been referring to the agility question and the question of management. Clearly speaking, we are thinking about establishing an ARPA system to get experts from industry and science in the driver's seat to formulate a call. Is it still timely that we have a working program when, in a two-year process and dedicated formulation of calls, it takes so long for programs to react? Or wouldn't it be better to prioritize according to the priorities of the Council and the Commission, and then hand it over to a kind of governance, or not governance, but to a management which is much closer to the needs of the participants, be it from the industry or from research? Thank you very much.
Speaker 16
Thank you, Chair, and thanks to the four experts for their contributions to this, I think, very important hearing in this process. Given the time constraints, let me jump directly to the questions. My first set of questions goes to Maria Leptin, also representing the ERC here. Because, if I may be so frank, given that we are here in a political context, I find the attack that the European Commission is making on the autonomy and independence of the ERC in the specific program proposal rather flabbergasting. The first council reaction was also, in a sense, to contradict this approach.
Speaker 17
Therefore, I would be very interested in your view on this particular proposal. Don't you need more time as a president in order to actually ensure the excellence that the ERC has? Does the same not apply to the ERC Scientific Council? Don't we need to at least have a renewable term for the president and the members of the scientific council? And what kind of further elements do we need to strengthen autonomy beyond repairing what the European Commission has done?
In other words, given that we are here in a hearing, what is your wish list for us in order to improve the excellence guaranteed by the autonomy and independence of the ERC? Second point, we know that one of the biggest troubles is the time to grant. And therefore, I'm wondering to what extent it might be imaginable to create, be it a funding line or an instrument in which we already allocate a certain amount of funds to research institutions before the whole programming process starts. And by that, giving the participating institutions the autonomy to define the programming, to define the calls, and basically tailor it to their excellence, and not just conforming to what civil servants think it might be, where in two years, money is granted. Why do I say "time to grant"?
In such a situation, participating research institutions know that they will receive the money and therefore already make pre-investments in order to prepare for the money that is supposed to come. Here, only the date is a question, and not the weather. Whether that's having even more trust in the experts and the research institutions throughout the whole process. So, having them already in the programming and giving them guarantees that they will receive funding might, in a sense, allow us to bridge the time-to-grant problem without undermining the quality of the evaluation process. Third point, and here I would also be interested in European partnerships from the industry's perspective.
If you look at it abstractly, they look like something very beautiful, something that can really work. Yet, evaluation practice shows that it is not that great. We have around 50 partnerships, the added value of which is disputable. So, where do we have to change things here so that partnerships actually unfold their full potential? Last question, in particular to Mr.
Heitor. I think there's a blind spot in the specific program, which is the overall strategic priority-setting process, totally absent and much needed if we want our funds to be focused. How could we envisage a proper strategic priority-setting process that involves the experts and the sectors, in order to allow us to be more targeted and focused? Thank you.
Speaker 18
Thank you, Chair. So before going to the question today, I would like to thank the speakers and especially say how glad I am to see such a gender balance, which is not normal in this committee, despite that it should be normal if meritocracy really worked, having in mind that for decades in most European countries, there is a higher percentage of women gaining a university degree. So, I hope we will do it right in the next FP10 on improving gender balance in science. So, I will go directly to the questions. So, the first one will be a general question.
How can the NEST framework program maintain strategic flexibility? Keep in mind, I agree with you. We are at a moment, for many reasons, to respond to geopolitical shocks and technological disruptions while ensuring long-term stability, the much-needed predictability for researchers and actors, and to align with national and regional strategies to these priorities, and also, obviously, to guarantee the good monitoring and traceability of public money. The second one is on governance mechanisms. Probably, it is more directed to Manuel Eytore.
What governance mechanism would you recommend to ensure transparent and evidence-based prioritization of thematic areas, avoid political fragmentation and hidden agendas, and maintain public monitoring, as we are talking about public funding? The third one probably is more directed to Miriam Storrin because it's about how we can improve the bottom-up approach, but you were also showing something that is right: we need to invest in where Europe can lead. So how do we do all of these things together? And the next one is how we can reconcile the principle of excellence with the cohesion objectives. This is probably more directed to Mrs.
Indrikova, ensuring that excellent research can flourish across all countries and regions without creating a two-tier research ecosystem. And I also take the opportunity to ask Professor Babkin, more specifically, how excellence-driven instruments like ERC, as we know, can contribute better to geographical balance without compromising their core excellence-based model. Thank you very much.
Speaker 19
Thank you very much, and thank you all for your insights. I would immediately start with the questions and a little bit of what Nina has just said to pick up on widening. And I would address this to Professor Haytor and Professor Leptin. You said that there should be a strong focus on widening, Professor Haytor said it. And what mechanisms would you recommend, and how would you consider, for instance, and this is also to Professor Leptin, mainstreaming widening while respecting the excellence criteria within the entire framework program?
Speaker 21
So, for instance, having a kind of budgetary mechanism where excellent ranked proposals would have a certain budgetary reserve, and that could go to widening actors. And also, in the case of the ERC, how do you generally see this approach to widening? The other question would go to Doctor Storey. In the framework program, we are talking about stronger priority setting and a stronger focus. So, I was just wondering, what is your take on smaller projects and the bottom-up part? Because this is something that we are also hearing from the stakeholders: how could we combine this approach, in your view?
Speaker 19
And also, what do you think are the components of flourishing ecosystems? And what are those incentives or framework conditions that would be needed to incentivize industrial actors to work together with widening actors? And to all of you, I was originally thinking to address it to Doctor Indykova. It's because she mentioned expressive service that evaluation should be adopted. We have AI.
It is already massively used everywhere. What suggestions do you have in terms of process expertise? We heard yesterday from experts that we have to pick good companies, for instance. That would be the first and foremost important thing, for instance, in the case of the ECF. I also heard from researchers that the good, the excellent group of researchers should be focused on.
Speaker 20
So, what is your take on how we could improve the evaluation? Thank you.
Speaker 23
Yes. Thank you, and thank you to all the presenters for your insightful presentations. Well, as for the first issue, meaning the autonomy of the IRC, this should be, to my mind, an important issue in the parliament's position to keep it because this is really an important issue, and the ERC is a crown jewel of the whole framework program. It has historically been, and also must be, in the future. As for the other issues, such as the involvement of universities, for example.
Speaker 22
The involvement of universities all across Europe is, to my mind, really important because they are huge contributors. The question is, well, the European university alliances, as they already exist, although outside of the framework programs. The question is whether you see any ways to integrate them more with the framework program, especially in terms of simplification, to create some kind of interface between these two European funds, both of which are really successful. The second question is, of course, about the already mentioned widening issue. I am completely in line with the statement that this program is about excellence and not about cohesion.
But at the same time, of course, I think that everyone would benefit if European money helped to bring out the brightest minds everywhere in Europe and not produce this kind of brain drain which we are experiencing right now. This is a question for Professor Hayter because you have been working quite intensively on evaluating and reviewing the existing policies. To what extent does the current proposal really contribute to this, well, bridging of the innovation gap, which is, to my mind, a really important issue for us to take into account? And what would be your suggestions also in terms of having those conditionalities, having this current proposal, the proposed idea of having two tiers of widening countries? How do you see that, taking into account your previous work and your expertise in the field?
Thank you very much.
Borys Budka
Thank you. And the last on my list, at this point, is Mr. Nikos Papas.
Speaker 24
Thank you. I'd like to thank you for your presentation. I'd also like to share my point of view and ask a couple of questions regarding the new Horizon program: simpler, more strategic, and more in keeping with competitiveness goals. Taking this into account, the procedures and financing include 100% financing, more money per sector, and a reduction of time. Now, people are talking about simplification, but this clashes with certain political goals. The amount of money allocated in the second pillar will go to competition. And so only a small part of this will go to the social dimension of research, even if Article 5 says that humanities and social sciences have to also be incorporated, and there is not adequate financing for research into cultures and research of a more humanistic flavor.
It just exists on paper, and the proposal does expressly allow for the possibility of having support for various sectors. Different sectors like defense and research cannot just be turned into instruments of geopolitical power. We've also got to have research in the sociology and social sectors, because we've got to be careful not to lose our character. That's why I want to ask a couple of questions. As 7,600,000,000 will go to society, how can we guarantee that social and human sciences will not be reduced to playing a secondary role? And what sort of safety mechanisms are going to be put in place to ensure that dual use and other innovation sectors will not become instruments in the hands of the military?
And how can we ensure that other countries that participate in dual-use technology will not use this technology in the future against the European Union or against some of our countries? Thank you.
Speaker 14
Given the acceptance of the colleagues, my technical question would be: since we are brilliant in terms of translation, do we not get lost in translation? But usually, we get lost in the complexity and number of questions in relation to the amount of time we're granting to the in-depth expertise of those hearings and the expertise we're inviting. Would it be possible to ask colleagues, if they're willing, to formulate their questions in writing? As an addendum to the hearing, we would ask the experts and give them the opportunity to answer the question in more depth using their expertise. Because I think the challenge will be that, at least on the commission side, the commission often gets lost in the complexities of the answer and might not remember it.
And so, in a way, it would be very helpful if colleagues who want to write to formulate it in Britain would convey that via the chair to the expert, and that would give them the time to use their in-depth expertise and not be completely limited by the time and the overwhelming number of questions. Would that be possible?
Borys Budka
Yes. Very good idea. Thanks for this. So, we will do it. Thanks a lot.
And now, it's time for our experts, and it will be five minutes for each expert. So you will choose who starts, maybe the same robot. So, Professor Lattao, the floor is yours.
Speaker 9
Thank you. Obviously, the complexity of the questions means that I could easily talk for an hour. I'll actually start with the question, though this may be surprising: the last question from Mister Papas. What measures protect the social dimension and the social sciences? I'm very proud to say that the mechanisms—and I'll revert to this at other points—the mechanisms by which the ERC functions, namely bottom-up excellence only, are the best protection for all research areas.
And you should know that in the ERC, more than one third of our funding goes to the social sciences and humanities. This is where that is protected, and I couldn't agree more that this is absolutely essential. We need to understand societies. We need to understand the human mind. We need to understand migrants.
We need to understand poverty, etc. So it's the bottom-up, excellence-led research that protects that. Now, to the more political questions. We heard about the widening. We wanted your comments on ERC for institutions.
That's the term that Mario Draghi used, not institutional ERC, but ERC for institutions. And I've heard a lot about independence and autonomy. Let me begin with that. How can we strengthen autonomy? We have been calling for this because other points, like the common rule book, do not do justice to what the ERC does and how it functions.
It's how it functions that sets the ERC apart, not what science we fund. As I've said many times, applied is at least as important as fundamental. It's how we select. And I really appreciate that our commissioner Zaharieva has agreed to sit down with us, and we've begun that process to work out what can be done within the current dedicated agency structure that we have to improve functioning. We'll do that as a run-up to the next framework program.
We have also called, and in fact it's not me who has called this, it's the founding fathers and mothers who have called for this, to create the ERC along the lines of the other independent national funding bodies that I have referred to many times. So, it's not my idea. It was the founding fathers and mothers who wanted to establish the ERC as a fully independent and permanent body. We're just bringing this back up. Not because we are scared now.
We have a very supportive government now. The commissioner and the president of the commission both support this: the value of what the ERC is doing, the value of this funding. But we don't know that we won't have a hostile government in the future. So what we would like everyone in Europe—European governments, Parliament, Commission, and Council—to think about is creating a permanent body that will remain and doesn't need new legislation. Like I said, we're looking at supportive legislation now, but we can't be sure what will happen in the future.
So, protect the ERC by developing, perhaps during the period of the next framework program, Framework Program 11, the legislation to make the ERC permanent. So that's my answer to that question, and I'll be happy to elaborate on that. Institutions, ERC for institutions. Very interesting idea. This is based on many national examples.
LabX in France and the Danes have fantastic excellence clusters. Germany has its Excellence Initiative. So, the ERC Council has started to think about that. We'll put out a short paper on that in the future. There are many ways in which this could function.
The ERC, in its current form, simply does not have the capacity. We can barely function or handle our own demand, as I've said, and that demand is rising. We're enthusiastic and desperate about that because we need a larger agency. So we'll be very happy to advise you, and here is what our advice will be. And this also refers to, I think, it was Renee Rapazzi's question, maybe Christian Ella's.
Yes. Second pillar. We would be very happy to advise on how such a system should function. But I can tell you right away, it will reiterate the basic principles of the ERC. We believe that even the funding for industrial, collaborative research, for everything, and also for ERC institutions would be by scientists, for scientists, bottom-up, selected by excellence only.
This works not only for fundamental research, but also for all other areas of research. We would be very happy to advise; we'll be working on proposals for that. And we would be enthusiastic to see that implemented in Europe. So, my 5 minutes are up. I have a lot more to say, but so do my neighbors here.
So, thank you for listening.
Speaker 10
Yeah. Thank you for your questions. And I'm happy to answer that as proposed here in written form afterwards. Maybe I can shed some light on some of the questions you asked. So the first question was to define the pillar and then the governance.
So, who is in charge of doing that? Well, I'm not the best one to say here really in detail something. I just see in our company that people make a difference. And what we're doing at the moment is we hire some people from outside, and then we see how things are growing. Take, for example, our head of AI, whom we hired only a month ago.
He's based in Seattle, and you can imagine what's happening now in this box of AI products. No one has ever known before how he is formatting that, and it's quite interesting to see how people make a difference. This is what I want to say here. So it's not always possible or easy to define the pillar first, and after that, step by step, the governance people also make a difference in defining the pillars. The next question was on ECF FP 10. Who has a say?
Is it just top-down from the industry or not? Well, it is not. It should be a mix, and this is what I tried to explain, as far as I quote that from my own small company. We have a mix of financing at Siemens. So, there is a portion of money allocated specifically for research, and this is important.
And there's a portion of money which is just reserved for businesses, saying to research and development. Could you please do that? And this mix is a good idea because if you take just 100%, you will die in beauty, and there is no product on the market. If you say no, 100% by the customer, then you will not have any moonshot thing because people just do incrementally for the next year what is needed, as the targets in the businesses are as they are. So it should be a clever mix, but I want to say also from the customer side, because otherwise, you are just targeted by, I don't know. Sorry to say that, but some universities are targeted by publications, and who does that help in terms of innovation?
Sometimes, not really a lot. So, if we still have a target system that is not very strong for universities in terms of transfer, then I would say it is better to mix it up because then you have different sides here. We had a question on priority setting, which is a really big problem. Yes. I'm sure.
I gave you some thoughts on that, coming from my tech company or digital company. What is our say on smaller projects? We carefully look at that and try to decide whether we should go in with smaller projects or not. And this is because it's very dependent on the administration side. If you have a lot of administration for less money, I probably wouldn't do that because then you invest a lot of resources and nothing comes in return.
So this is at least what the university or the industry is saying about that. Another question was about ecosystems: how can we enhance them? Yes, we are working a lot with university startups, industry partners, and so on. I have to say that, with the shift from hardware to software at Siemens step by step, the common projects together with universities in terms of bilateral contracts have been decreasing over the last years. And this is maybe because of the speed in the software and because of these fast-moving targets here.
Sometimes, these partners are probably not the best ones if you are under pressure and in a hurry. So, this is maybe the reason. But, nevertheless, we push it a lot, whereas thirty years ago, only universities were in the first row. Now we're seeing a lot of startups working with us, and this is good because here we see, again, later TRRs, we see prototyping, we see some things moving, and this is what we like to have. Where can Europe lead?
I guess I already said that. We have an installed base in the industry. I'm coming from this engineering industry company, and I have to say that I'm convinced we have strong domain knowledge in different industries, and this is what Europe is good at. This is brownfield on one side, but it is a fantastic installed base of industry on the other side. And I just visited the Emirates half a year ago, where AI is very strong, especially in AI.
They all invest a lot of money in that AI thing as a state. But if you take a look at the installed base, it is not that big. It's oil in particular and some other things, but nothing else. So, if you look at the strength of Europe and the domain knowledge, this is just great and big here. And this is why I would say, take this priority on those industrial AI things.
This is probably the best choice. The last point, oh, five minutes. The last point was, and I just want to shed light on that because it seems to be the case that I'm just talking about technology here. I studied humanities and social sciences in my previous life, so to say, and I always try to link them together. I'm a big fan of giving public money to link that technology dimension with social sciences or humanities.
And I think that, for example, digital ethics or responsible AI is a big topic we should shed light on. So I see that transhumanism or just talking about technology is not enough, and there is a big role for social sciences and humanities. I would really appreciate if we see this link also in granting public funding. Thank you. Thank you.
Speaker 11
Thank you. I guess it's time for me to answer. As a colleague already mentioned, I will be happy to answer in written form later on. If I miss any question, please provide it later on. I will be glad to provide it in written form.
Regarding the first question about the European Competitiveness Fund and the second pillar to define the pillar and then the governance, in my opinion, it should be a step-by-step approach. And what's important for the user is to make it clear how it functions. And then, I guess it doesn't matter in which order. For the user, it's important to understand how they work together when combined. Regarding the other questions, I guess there were a lot of questions about the widening part, and that's actually a good question.
Shall we strengthen the strong ones, or create the united one-speed Europe? And I vote for one-speed Europe because I believe in the European Union; each country has something to offer. We have different things. If I think, for example, about Latvia and digitalization, due to the size and connection to our politicians, universities, and industry, I think I could be proud to say how much we have achieved within the framework of digitalization and AI tools usage. When I also think about quantum technologies, the border country, and the geopolitical situation, resilience and secure data transfer have also been our highest priority.
So, there is also something to offer. I will always speak nicely about my Estonian neighbors, and I'm happy about their success. And I think the answer is balance. We should strengthen both things. And as I have shown in my presentation, I think this mechanism is working.
So that's why I would suggest continuing it and not stopping it. An aspect regarding the evaluation of project proposals that I wished I had an answer to. I wished I could explain and give the answer on how to evaluate those proposals, but what I can say is that we should also think about the writing part. And in that case, for example, if we would make those proposals short, because with AI, we can generate the impact, we can generate all the things, and maybe match the consortiums, maybe match the ideas with the help of AI. Because I think, if I also think about the aspects of widening, then the question is how to join the strong consortiums.
We're more than willing to do so. Quite often, what I noticed from my previous job and experience when I was working in Germany is that usually, if the consortium works well, you go on to the next proposals with the same consortium. So you build strong alliances and continue, year by year, doing, so to say, something that works. So maybe with the help of AI and the strengths and competencies we have, we can combine them and then create new alliances and new processes to apply and later also evaluate. Then, another aspect was the social sciences and the human sciences.
I think they all are important. And, in this case, I think that in the past, we had everything together and then later separately: physics, biology, chemistry. Then, at one point, we realized that to create innovation, we need to combine chemistry, physics, and biology. So, there was a lot of interdisciplinary research. And if I think now about the social sciences and human sciences and the introduction of AI tools, where ethics becomes very important, and then to make data-based decisions, then I think we again talk about and even expand more on the interdisciplinarity of different kinds of sciences. And I'm wondering which question I forgot.
Regarding the comment on European UN alliances and whether it's a good idea to include them in the Horizon Europe framework, I think for us at universities, it's important that the systems are simple and easy to apply and understand. For small countries or universities where overhead is limited, it is crucial to create simple systems regardless of the framework, so that the processes for applications are similar. We don't have much support or overhead in smaller institutions, which might put us at a disadvantage. Thanks a lot. And if I forgot any question, please provide it in written form, and I will be glad to answer it.
Speaker 12
Thank you so much, Mr. President. Let me start with the first question from MEP Christian Heller. Do it now. I believe this parliament has shown that you can do it. And, definitely, our analysis is clear in terms of the fact that there are certainly relations between collaborative research and European competitiveness funds, but they are different.
And collaborative research needs to be strengthened and emphasized in Europe. So, do it now. But do it now in a way that has specific governance. Why is this important? What we have observed in the last decade, particularly since Horizon 2020 and now in Horizon Europe, is that with the notable exception of DRC and DIC, which represent only 22% of the full budget, the remaining 78% of the budget has been distributed through consortiums, which on average have 11 partners, where each partner receives only 127k during three years.
This is probably a good way to distribute money, but it is not the way to face scientific challenges or to do research to address industrial competitiveness or more and more emerging societal challenges. So, do the Pillar Two right now, but with the correct governance. And the only way to governance, the way we have learned in Europe, is the Aldeyan principle, again installed better than ever in the European Research Council by providing and empowering researchers and innovators to govern funding allocation. We know that the current system of distributing funding is the result of national and regional pressures on the services of decommissioning, and it is not benefiting Europe at large. But you have allowed Europe to implement good practices.
We have good practices, and we need to leverage, above all, the experience of the European Research Council and use it for collaborative research. It should be done. Some of you may remember that twenty years ago, after Commissioner Philippe Buscain launched the idea of DRC, between 2004 and 2007, many of us discussed whether it would be possible. Probably, it is not possible in Europe to give independent governance, and it was not. You have done it in Europe.
So, we have the best of the best world programs because of independent governance, and Pillar Two needs to have independent governance. Regarding the question about the ARPA system, we know the ARPA system will never work straightforwardly in Europe. It's an American invention, but there are lessons to be learned. And the lesson learned is the need for program managers. We know it relies on highly competent program managers, who are increasingly complex and costly to employ.
And, therefore, our proposal is to install right now and start with the European Innovation Council with experimental needs, particularly strengthening the program managers through the EIC. MEP René Ripassi has asked about institutional funding. Maria Leptin has already answered. I believe it's an excellent way. But don't forget, it depends on the budget.
The current ERC budget is too small, and it is an excellent program. But that is the reason why, together with Mario Draghi, in your report, we clearly advise at least doubling the ERC budget to 35,000,000,000 for the next MFF. Again, you also mentioned European partnerships, and this is a question of funding allocation. I was in the European Council 7 years ago and 14 years ago when we discussed partnerships. The idea of the partnerships, as well as the missions, was to have an allocation process different from the other collaborative research.
And, again, everything depends on funding allocation and, therefore, requires adequate governance. And this is, again, priority setting. Those who really understand priority setting are researchers and innovators from both academia and industry. They are really the most adequate people to do the necessary priority setting. Although we know for more than 40 years from the European framework program that we always need bottom-up and top-down approaches, and we need, again, to empower those who can understand the idea of privacy settings.
To answer the member of the European Parliament, Linda Galvez, governance is more critical than ever. I understand that Philippe Guillaume, Nobel laureate, was here yesterday, and we learned from him and his research work that innovation beyond capital accumulation is the main driver of economic and social development. But if we look at the Nobel laureates of 2024, they have shown us that the way funding for science and technology is allocated is critically important and depends on governance because it can either benefit only elites or affect the way workers at large and the labor force will benefit from science and technology. So, again, governance is not just a secondary issue. It's becoming a critical issue.
And today, we have the scientific evidence, particularly from the Nobel laureates of 2024, on how important it is to pay very specific attention to the way we need to implement governance to guarantee societal benefits at large. One point mentioned, and I would like to close, but to clearly have the opportunity to mention this, is about proposal preparation and simplification. We know in Europe that every seven years, when we discuss the next framework program, simplification comes to the table. We have not effectively adopted simplification because, for instance, from Horizon 2020 to Horizon Europe, the Commission adopts a limit on the number of pages. And this ended up increasing the complexity because the number of questions and the forms were greatly increased.
And, actually, what we have observed is a decrease in the fraction of the technical content of the proposals because now they include many other questions. Our calculations based on the commission data show that this has dramatically increased transaction costs because provenance usually subcontracts consultants to prepare the consortiums and the proposals. And this, again, is a bad practice which should be avoided in the future, and it can be done by essentially increasing the fraction of the proposals which are devoted to technical content, which should be at least 80% of the proposal. Very briefly, MEP Esther Lakus was very clear on the widening. Our analysis is clear.
And, again, as with many other things, widening is an extremely effective program, which is teaming. But it was expanded to many other small soup programs. So our advice is to concentrate on the best of the widening streaming. And then the remainder of the program should be articulated through cohesion funds, but we cannot ask or expect that the research and innovation funding solve all the widening programs. Most of the structural deficiencies must be addressed in coordination with the cohesion funding.
Thank you so much, and I apologize for being a bit late. Thank you.
Borys Budka
Thank you very much. And now we've got our four or five members, and then it will be time for follow-up questions. So, Yuri, Mr. Yuri Rattas.
Speaker 25
Thank you, Quest colleagues and professors. Estonia has strongly supported Horizon Europe. Our journey of moving out of the widening group and growing our research capacity shows the value of these measures. Today, however, we face new challenges. We no longer qualify for widening funding, but it is still hard to compete with the strongest countries.
Speaker 26
My proposal is simple for Estonia and the other countries that have recently moved out of the widening group. A special transition group should be graded in the next MFF. This group should continue to receive support. Progress should be encouraged. I propose four measures for transition countries.
First, support the project coordination. The second targeted top-up for leadership in research projects. The third is support for excellent but unfunded proposals and for sharing our experiences. My question to Professor Leptin is: do you consider such a proposal justified? Thank you.
Speaker 27
Yes. Thank you. Thanks to the speakers. We heard that we have a lot of talent. That's a good thing.
Speaker 28
We need more money. That's another thing. But we doubled the budget for Horizon, and it gives us a rare opportunity to close the European innovation gap, I think. But money alone is not enough. You said the governance is important.
Speaker 33
Do you have concrete suggestions about that? What do you mean by this government? And another thing that is very important, I think, is the design. The design can make a real difference. And for me, I think three elements are quite important.
Speaker 27
First, Horizon must continue to follow its proven principles. And these principles are excellence-based evaluation and a transparent, independent selection process. Second element, research and innovation must not become purely an industrial policy tool. Long-term competitiveness depends on strong fundamental research. That means safeguarding a fully independent ERC, with excellence as the sole criterion, and preserving the bottom-up nature of MSCI.
The third element, 175,000,000,000, should be seen as a minimum. But of course, we have not only the opinion money; there's also the money for research and development in the different member states. The average in Europe, in the European Union, is 2.2%. In Belgium and Germany, we have 3%, something like that. In Latvia, it's 1%.
How can we guarantee stability and predictability in this? And about that, my question is: if we agree that innovation is the foundation of European competitiveness, how can we concretely safeguard the bottom-up and excellence-based nature of programs like ERC and MSC from increasing political or industrial steering? Thank you.
Speaker 29
Thank you, Chor. Please use your headphones because I am going to speak Polish. Jean-Louis Pipes for.
Ladies and gentlemen, this debate about Horizon Europe is obviously very important in the context of the competitiveness of the whole of the EU. And we are losing out in comparison with the United States, and that has certainly been the case over the last two years in Europe. But unfortunately, I believe that this program doesn't use the potential that we have in the EU. If we look at statistics, virtually 80% of resources go to six EU countries. This means that we're losing sight of the entrepreneurs and universities all over the rest of Europe, who I'm sure have numerous innovative projects. I often hear that we can't support the weaker academic sectors, but in my opinion, they are not weak.
They are simply ignored. And we have had a huge amount of money from infrastructure funds from various sources. And the problem is the threshold to be able to get access to funds, and you've got competitions which are supposed to be organized by the European Commission and the implementing bodies. And, obviously, you've got people who are working in Siena, Salamanca, Wroclaw, or somewhere like that. What we really have got to do is to have a decentralized approach so that everyone who wants to participate will be able to get funding.
Speaker 31
Because it's only in this way that we'll be able to use the full potential of this program and increase the competition of Horizon Europe. Thank you very much.
Borys Budka
Okay. Sorry. It's absent. So, okay. So the last on the list is Mr. Berthian Riesen.
Bert-Jan Ruissen
I speak in English and Dutch. Sorry. My mother tongue. If they have ordered them.
Thank you. I represent the agricultural committee in this meeting, and I give opinions for them. And so, obviously, I'm very much involved in agriculture and food. And a very important point concerns predictability. We really have to know what to expect, and we've got to make sure that research funds are focused.
It can't be that certain priorities, like food and agriculture, are ignored and swept away by new priorities. So, how can we ensure predictability? How can we ensure that the budget for food and agriculture will be maintained adequately? And how can we ensure that research funds stay at an adequate level? Do you have any ideas about that?
And then, regarding the gaps between practice, the applicability of the results of research, and the actual research itself, I will have some questions about that. Now, what ideas do you have about that? How can we ensure that farmers or other people who benefit are involved more right from the get-go in the research cycles and research planning? How can we get them involved? Because I think it's very important when it comes to applying results in practice.
Borys Budka
Thanks a lot. And now I've got the question for every member of our committee. Do you have any additional questions? Yes. Christian?
Okay. So, the last question is from Christian, and then final remarks and answers from our guests.
Speaker 14
On the widening question, I want to be a little bit blunt, although I had the privilege to write the widening program as a non-widening country member the last time. You had been referring to that, preferably, we're not talking about one, let's say, speed Europe. But, I mean, how do we reflect that in terms of widening if, let's say, some countries spend 1% of their GDP on research and others 3.5%? And how do we prevent that widening money from having a lock-in effect because you get more money if you spend less in your national program? Or can we find a way to use widening instruments or to interlink widening between national spending and European spending?
Because 10% of the available money comes from the European program and 90% comes from member states' programs, we might not be able to solve the problem that way. So, could we find a link? And I don't say that simply to kill the baby in the cradle. It's simply a question we have to answer. And then to Doctor Storim.
I mean, if we talk about the link between, let's say, the ECF program and the framework program, even more, wouldn't there be the question of prioritization and also the question of whether you want to link the two instruments and use them in a cumulative way or have targeted strategic ambitions where you really want to squeeze the innovation process and industrial rollout, or, let's say, a sectoral preference? Wouldn't we even more need a kind of expert-driven way to do that? Because, I mean, I can't imagine that the foreseen governance process, which is more or less making sure that the member states have a say and the commission makes sure that they somehow keep it in their hands. Knowing that the process hadn't led to either agility, of course, nor statistically to very specific ones. And having in mind that this pretended prioritization by four windows in the ECF is underpinned by actually over 60 objectives and 141 instruments. So, in a way, it doesn't need prioritization and the cumulative way of funding in a modern way as it is done in companies, but as it is done, for example, in the philanthropic world by JEDI. It even more needs a more intelligent, stakeholder-driven, more agile way of doing that instead of this static working program calls, vaguely defined, with a lot of participants and less money.
I'm not advocating that we now do very small consortia, but to do very big consortia and spend not enough money on all of them might not be a way for targeted investment in certain areas where there is industry interest. So that will be my really practical question. And the other one is not malicious, but I would just like to understand how you see the widening correlation between national spending and spending on the European level.
Borys Budka
Thank you. And now, the final round. So, our experts, the floor is yours.
Speaker 9
Yes. I will focus, thank you. I will focus on widening in this response and provide everything else in writing. I think that's an excellent idea. So, for the last point, Christian Hila, it doesn't really matter how I see the correlation between participation and GDP spent on research.
Those are simply numbers and facts, and there is a very strong correlation. So, that's just a fact. What we have to decide is what to do about that and how to help. We've heard that it is people who make the difference. I think I, or one of my neighbors, said excellence comes from individuals, and they need to be helped.
And I think the best way of helping—and this is not only my view, it is shared by the entire scientific council—is to make all areas in Europe attractive for those individuals to do research in. Most expatriate scientists would love to return to their own home country to do their research there. Some European countries have managed to reattract their own talent to their countries, and that has shown effects. So, I agree that these countries are not weak. I think it was the Polish MEP who made that point.
They're not weak. They have the talent, but give that talent the opportunity in your countries to do their best work. And so the European Research Council, our council, has elaborated a green paper on widening, actually under the leadership of our Polish council member, Lesze Kasmarek. And I'll say a little about that. First of all, what do we do?
We, the ERC, have programs to help researchers in these countries: pairing programs, mentoring programs, and anyone who uses those has seen the effect of them. So, we do a lot. I'm not going to go into this. I can provide this green paper in writing with our written responses. But we also see that when countries do their part, it helps.
We see immediate success. Note that the Cohesion Fund contains 392,000,000,000, which can be used to fund the unfunded areas. Why is that not used more widely? Only Lithuania has made use of this option so far, and they have seen the effect. Their number of ERC grants has gone up.
But also, what our green paper will include is a really impressive list of best practices. So, we've mentioned Lithuania. May I mention Czechia? Czechia, in the Consolidator Grant this year and last year, came out with the top success rate, better than any of the other countries. Why?
Because they've established a mentoring, helping, and selection system—a grassroots system in the country that helps people. Hungary is just now copying that system. Slovenia funds their unfunded A's and helps them to reapply. We've seen the success of that. So there are many ways of helping.
It does not help to simply allocate funds in the absence of support for excellence on the ground. And we are the first who want to cooperate and collaborate with the countries to do that. And I'm happy to stay behind and talk to the MEPs about how we can help any individual country here. We are not doing that yet. Mister Atas, Estonia, is, of course, also one of the countries I visited this year, and I was very enthusiastic about the ERC grantees and the applicants, who are hopeful.
I was very enthusiastic about what I saw in Estonia. And I have to say, your proposals all sound eminently reasonable. Again, I'll be very happy to discuss them in detail. We heard questions about governance again, and I'll keep this brief. I want to make it clear that our independence in selecting the proposals is never questioned.
And that is highly appreciated. Nobody interferes with it. Where we are seeing a need for more autonomy is in the implementation. And the one rule book for all has been mentioned several times here. And again, you know, you don't have to rely on me, a pure scientist, or on any of my pesky academic colleagues all across Europe.
Listen to the industry. They're complaining about the one rulebook. We hear it from the European Roundtable. We hear it from health innovators, the IHI, etc. So, it's the implementation where things are going wrong.
And again, I don't want to preempt my conversations with the commissioner, her team, and RTD in trying to sort out what we can sort out now. We do need more independence and more freedom to define the best mechanisms for each program, which cannot be done, as someone said yesterday, by making it simple for the commission. No. Make it simple for each group of applicants, whether they are innovators, scale-ups, academics, or large industries. So, like I said, happy to do more in writing and happy to talk with you after the session.
Speaker 10
Okay. I tried to answer some of the buckets I heard together. One point was, and it was raised by many people here, competition with the US and how we can cope with that. Well, besides this public money, there's a lot of private money in the game in the US, and we have to take that into account as well. If you talk about that, we probably have to talk about unlocking investments of pension funds for R&I here in Europe as well.
This is probably not discussed here, but it is one of the main roadblocks we are seeing here. And this matching idea behind public and private is very good. We just saw that now with the scale-up fund, which is in development, let's say it like that. And it's very good to see an instrument like that, seeing that the commission, or we all as taxpayers, are spending, giving a little bit of risk inside those things, and private people pay the last one. So, this is a very good sign in the right direction.
Shedding light on the US as well. As far as I know, the federal spending is much higher than this distributed thing in the US, and this is maybe one of the reasons why they can afford to shed light on very big buckets. I see the special character of this European Union, and maybe this is also the reason why I like to live here and not in the US at the time, but there is a big strength in this prioritization and federal massive spending on some specific projects, and this is just something I wanted to say. On this ECF FP10 question of how we can set up a good process in governance, an expert-driven selection process was the term used here. Maybe just one anecdote here on this stage.
I was part of these ERT discussions when they kicked off the discussion about the scale-up fund. And literally, no one was interested in spending anything before someone said, "Okay." This is the person behind the fund, and this is the expert here. So, I mean, we all want to trust and want to see the people behind that. I don't invest in structures.
I mean, I invest in people, and this is why it's so important to see who is behind that. So your point is, who are the experts behind this? Shareholders, I don't know, the board? This is really crucial, and I would really take on, as you said, researchers, innovators, and people who know what I'm speaking about. Probably not me because I'm not a technician, for example. So take these people behind that who really know what they mean when they say this is industrial AI, not on the level I'm talking to you about, but deeper.
And this is needed here, and then, I guess, we can have trust in these decisions. The third point on agriculture: just one thought I had when I listened to you. I think the clue is that we have to talk about key technologies, and maybe not about sectors in the forefront. And when we talk about key technologies, we talk about AI. And when we talk about AI, we talk about vertical farming and the idea of how we can enhance and measure that.
So this is always the point I want to say: come from the key technologies now, come from them, and then you see how they integrate into these different industries. We call those verticals. Remember what we're doing at Siemens. We're having these foundational technologies, and they must be so good that they serve the data centers, agriculture, vertical farming, as well as the aerospace and defense sectors. This is the idea behind the foundational technology, at least at Siemens, and maybe it helps you with this thought too: first of all, talk about key technologies, and then talk about applications and the questions about which kind of industry we tackle with that.
Thank you.
Speaker 11
Thank you. So, I completely agree with the statement: excellence comes from individuals. And, if I think about what we can do to help with ERC programs, for Marie Sklodowska-Curie actions, then for sure, we also need help on the national level. As an example, for Marie Curie postdoctoral fellowships, I think this year it was a record number: 17,000 applications, and 1,600 were funded and selected. And, for sure, nationally, we use the funds to also refund and give opportunity.
But what we see, the excellence, seal of excellence, is absolutely massive. And I think it's also good news for us when we think about the U. S. Brain drain that comes to Europe has also raised the competition significantly. What we do internally at the university is that we have created the grant office this year.
We also exchanged with our neighbors in Estonia at Tartu University, which significantly accelerated the NRC grants in recent years. So, we learned from those who managed, and we hope we're going to provide better results in the future. I also agree with the statement that universities are not weak. We just need opportunities. And regarding the GDP, I will answer this question from a university perspective.
I can't comment on the countryside. For sure, as a vice director for research, I would be happy and more than pleased to see high numbers allocated for research. The thing is, if I check the numbers, then for Latvia, we took, at university, around EUR 11,000,000 and, in general, EUR 150,000,000 out of the EUR 1,000,000,000 program. So, I think it's not taken much. And if we find a way to balance it, I will support it.
The thing is, I want to put it on a table: universities shouldn't be disadvantaged because of some kind of political decisions, because we bring the talent, we bring the good ideas, and therefore, I hope for support. Thank you.
Speaker 12
Thank you so much. Let me start with the question of the widening debt that MEP Christian Heller, but also MEP Gatas, has asked us. My understanding is that it should be clear that we cannot ask the research funds or the research funding, either European or national, to solve all the structural problems in many European regions. And to the best of my knowledge, the widening program, which has been an excellent program, was designed and implemented to build scientific capacity in many regions with structural problems. And we have excellent examples throughout Europe, particularly in association with the teaming program.
Just let me give you an example: cancer research. We have essentially two large teams teaming programs: one between Sweden and the Karolinska Institute in Hungary, the other between Athens and Heidelberg in Germany. And because of those two teaming programs, we today have a completely different scope and scale of cancer research in areas which did not exist before. Certainly, it does not solve all the structural program problems of many European regimes, and we need to understand that, again, the framework program for research and innovation is for research and innovation, and the widening program is to tackle the question of depth in scientific capacity, either at the level of individuals or of institutions in transition regimes. But it will definitely always need to be complemented either with commission funds, particularly for infrastructures or national investments.
And that brings a more complex issue on the overall finance regimes, which determine the investment in R&D, which always depends on people and on salaries. And we have several experiences in my own country; it is a clear example of how we can go until we reach the deadline of the debt. MEP Becky asked about concrete solutions for governance. In our reports, we clearly address the need for better governance by leveraging the best of what we have done, which you, members of the European Parliament, have allowed in Europe, the so-called ERC model with independent governance. And, therefore, we clearly advise the creation of two new councils to govern collaborative research, apart from strengthening the independence of the European Invasion Council and of Mariskolovsky reactions.
About the question of Marie Skolowski, it is clear that it is becoming, and actually, the results presented earlier this week clearly show, a big problem these days due to the very limited budgets. And our recommendation is at least to increase it three times to be at least 30,000,000,000, essentially making use of a co-funding mechanism. But, again, it should be oriented towards training to reverse the current brain drain over the last 20 years and to take the current opportunity in global geopolitics to strengthen European brain gain in Europe and across European regions. The questions about agriculture are interesting. Actually, we should be proud to have in Europe such a good agricultural sector because it has a clear endogenous process of scientific and technical knowledge, namely through equipment.
Certainly, what we need to face is the current gap, and more than an innovation gap, I... Largo, an investment gap. And, therefore, we need to strengthen the capacity of Europe through more research and innovation. And certainly, like in all the other sectors of industry, the agriculture and food sectors will benefit from training people and from research. And, actually, we should be very proud of the capacity of centers for agricultural science and food science throughout Europe.
And if we look at them, the importance and the way they have benefited agriculture in their regimes is particularly interesting to understand. But to conclude, last but not least, we definitely need an adequate budget and a strong FP10 that can align national and regional investments in research and development. Thank you.
Borys Budka
Thank you very much for this very interesting discussion. Once again, thank you for being with us here, our experts, and we've got a lot of work to do with these files. So, I think that our discussion will be very useful for us in our future work in the ITRE committee. So, thank you. And within four to five minutes, we will start item 16, concrete implementation of the steel and metal section plan.
Speaker 35
So the short break. Dear colleagues, please take your seats. And now, it's time for our last debate today.
Microphone for the speaker.
Borys Budka
Okay. Let's start with our item 16. This is a topical debate. So first, I'd like to welcome our guests. Today, we've got Mr.
Jean Canton, Head of Unit for Energy Intensive Industries and Raw Materials at DigiGrow. Thank you for being with us. We've got approximately 1 hour. So, if someone would like to take the floor and catch the eye, just give me the signal. And first, I will give the floor to our colleagues as representatives of political groups.
And remember that you have two minutes for the intervention. And we will start with Miss Miroslava Nekel from EPP.
Speaker 34
Thank you. I would like to speak Polish. Chairman,
Ladies and gentlemen, colleagues, the debate on the implementation of the European steel program is not just a question of resistance. It's a question of transformation. And I think that we have to ensure that we maintain production in Europe. The situation is the following. Industry, but we've got to ensure that there is a competitive price for energy.
At the moment, these prices are the biggest barrier to the transformation of the industry because energy companies here have to pay two or three times more for energy than they do in other parts of the world. And we've got to have a maximum of 50 for each megawatt of energy. And at the same time, I think that we've got to simplify the support for energy-consuming industry and make it more flexible so that it really is an impulse for investment. And the other thing is the mechanisms which we think actually constitute barriers to investment, and we've got to take into account an interim period. And the other thing concerns the Accelerator Act and the creation of markets.
Now, we've got to ensure there is an adequate and constant supply. If this plan is going to be successful, we've got to focus on competition and investment because without this, there won't be proper incentives for investment, and Europe absolutely cannot afford to do this. Thank you very much.
Yeah. Ladies.
Speaker 38
Ladies and gentlemen, dear colleagues, I'm very glad that we're able to talk about this important plan by the Commission. At the committee level, there are three main problems protecting the metal and steel industry from overcapacity: energy prices, as we already heard, and lead markets. When it comes to overcapacity, there has been some progress. I must say, though, that the trade and defense instruments package was better than I expected, but it needs to enter into force. We're not even at try logs yet.
Speaker 37
And when it comes to energy prices, supposedly, we have recovered the level of energy prices we had before the war, but this has yet to reach the consumers. Some people are hugely benefiting from this. However, there's a risk of cannibalization between sectors, and that, I think, is a huge problem. Then, on the action plan, the Commission highlights the importance of hydrogen, especially when it comes to green hydrogen. We've got a representative of DG Grow here today, and I'm well aware that this is not necessarily your remit, but what bugs me is that we've got excellent strategies coming from the Commission.
But when it comes to the implementation at the DG level, these plans are not actually reflected. How can we deliver on the strategic importance if the DGs are trying to artificially create a scarcity of hydrogen and green hydrogen, which will mean upward pressure on prices? Hydrogen simply cannot work if you're artificially trying to keep production as low as possible in Europe for political reasons. And then, on lead markets, we saw what was leaked about the Industrial Accelerator Act. And then steel, green steel was supposed to have quotas, but not be made in Europe.
Speaker 39
So we're keeping out the overcapacities, but then we've got green steel that is being imported from outside the European Union. There's a complete lack of consistency. The plans are okay, but the implementation is very lacking.
Borys Budka
Thanks a lot. And no speaker from PFEs, so I give the floor on behalf of the ECR, Mr. Van Dijk.
Speaker 40
Thank you, Chair. Dear colleagues, it should be crystal clear by now that European steel is not just another commodity. On the contrary, it's the backbone of our sovereignty, from construction to defense. If we lose our steel, we lose control over our destiny. So, we cannot suffocate our own producers with excessive regulation that drives investment abroad, nor can we allow unfair competition from countries like China to hollow out our industry through dumping and state subsidies.
Therefore, I strongly welcome the progress made regarding the new steel trade measures. But besides the remarks of my colleagues, I want to underline the importance of safeguarding the entire steel value chain. Therefore, it is of the utmost importance that the commission systematically monitors the competitiveness and resilience of the broader steel ecosystem, including the downstream steel processing sector. We should be very vigilant that our manufacturing sector is not weakened. Hence, my strong call to the Commission to engage in an ongoing dialogue with stakeholders representing every segment of the steel value chain.
Thank you, Chair.
Speaker 43
Thank you, Chair. First of all, I think it is extremely important that we look at the entire value chain when it comes to the CBAM regulation, so that we include much more of the downstream goods that are in the steel-intensive value chains. But I'd also like to underline the importance of circularity. This is a bit unclear in this strategy. High-quality scrap will be critical for scaling up low-carbon steel production in Europe.
Speaker 42
For instance, some research indicates that the end of life of ships alone could supply up to around 20% of the EU's annual scrap steel demand, provided they are recycled under safe and circular conditions. At the same time, it seems that the commission does not intend to include circularity as part of the voluntary label for low-carbon steel in the upcoming Industrial Accelerator Act. In this context, I would like to ask the Commission to clarify if it intends to increase both the volume and, importantly, the quality of scrap available in the Union, including through improved standards for sorting and treatment in complex streams such as ship dismantling. And will the upcoming EU industrial maritime strategy, discussing the consistency between different policy areas and the implementation, explicitly address the circularity of metals to ensure this potential is effectively mobilized? And also, I think a clear EU definition and classification of decarbonized steel is needed, but also to include scrap metals, to make sure that we close the loop on steel.
Thank you.
Borys Budka
Thank you very much. And, Missus Marina Mezhore. She's not there, so this was the... ah. Okay.
Speaker 41
Marina Mezhore, I apologize. She's on her way. We'll arrive in one hour; she's just here right now.
Borys Budka
Oh, just in time. So, perfect timing. So please relax, take a seat, and the floor is yours.
Speaker 44
Thank you, Chess. Sorry for being late. I was in a previous meeting. So, we're talking about the specific implementation of the European Steel and Metals Action Plan and how we can maintain autonomy, but we've got to be aware of the realities in the field. We have a very lively debate on this in France at the moment, and we've recently heard about the announcement of electric furnaces and the decarbonization of the steel industry, but the investment, unfortunately, is arriving far too late.
Speaker 46
This strategy, the decarbonization strategy announced in 2021, should have put us in the vanguard of green steel. But with all the setbacks, people being laid off and plants being closed, some of the reasons given by ArcelorMittal were the price of steel, and that's often been raised here. And this has also been worsened and aggravated by a lack of adequate public funding. All trade unions have denounced and condemned this from various points of view. And really, that's at the heart of the issue.
Speaker 45
Obviously, we support some of the measures in this action plan. We always have. But how can we talk about planning when we depend on strategic divisions made by a private group, which is just at the behest of market cycles? And we'll look at the plant in Dunkirk. We've got a purely market-oriented strategy aimed at the long term.
Speaker 44
But what it boils down to is that we've got to put energy back into public hands. And this is not on the agenda of this Parliament so far, it seems. And so the conclusion which we control is that for a proper steel industry, which creates jobs, we've got to ensure that there is proper industrial planning. It's got to be in public hands, and we've got to guarantee our energy sector. And we've got to ensure that there is adequate funding to maintain control of this very strategic sector.
Thank you.
Borys Budka
And now, on my list, we've got 5 names. So, I give the floor to No. Four names. To Christophe Hetman.
Speaker 29
Thank you, Chair. Ladies and gentlemen, this debate about the implementation of the Steel and Metals Action Plan is really important because the situation in many countries of our Union is absolutely catastrophic, including in my country. The production of steel has fallen, and we have been flooded with imports on an unprecedented scale. And just look at, basically, 60% of Ukrainian steel production arriving in Poland, and this has had disastrous effects on our economy. The Huta in Khrozovye has had to close because of this.
That's not the only reason, and that's not the only place. I know that in Liège, Delsa has had to close as well. And we need to have a strong, robust response to this. We've got to have protective measures that must be implemented immediately, not after months of analysis. The European steel industry will absolutely not survive if energy costs are not competitive, because we pay so much more for energy in Europe than outside Europe.
There is a mechanism in the pipeline, but it's not ready yet. But SEBOM is not yet on stream. And so, we've got to have investments, and there has got to be recycling, electrification of the process, among other things. This has all got to be funded adequately. We cannot lose here.
Speaker 31
It's not just a question of securing our economy, but it is also a question of our strategic security. Thank you.
Chair Jojo Giori.
Speaker 49
You to Doctor Canton. It seems to me that the presentation of this mechanism has shown that the commission wants to act in a timely way to take into account the fact that there is overproduction coming into Europe from Asia. And I think that we've got to ensure that we act before the expiry of the current safeguard clauses in June. But let me just dwell for a moment on recycling scrap. This is crucial for decarbonization.
Speaker 50
And we know that this kind of production, which will grow considerably in Europe and elsewhere, has to come fully on stream before the end of the decarbonization cycle. And so, I think that it's really important to consider this as a critical and strategic material before it is too late. We've got to ensure that this is done, and we also have to pay heed to impact assessments, as have been done for aluminum. Now, regarding the accelerator, I'd just like to say something about the green label. Isn't it a bit of a paradox that rewards certain companies which have already managed to reduce emissions, while electrified production processes haven't been adequately rewarded?
Speaker 48
Thank you, Chair, and I'll speak in Portuguese. Without.
In the industry, we cannot ensure European autonomy. This is clear. And without taking action now, without having steel, there can be no industry in Europe. But now, we take this as our starting point. I think it's the right one.
And we looked at different measures to combat industrialization in Europe. Now, for me, the main doubt is the consistency and coherence of our policy. We want to industrialize Europe, but also have free trade agreements with our partners. So, my question for the commission is, firstly, if we have processing and production objectives for strategic materials such as aluminum, how does this work with tariffs in agreements such as the ones we have with India? Then we have the inclusion of sustainable production and measures, and whether or not these can be applied throughout the supply chain.
Then how can we tackle the export of recycled waste as well? I think we have to take all of this into account if we want to assess the way in which we reindustrialize the European continent. But we cannot forget that Europe is not a closed system. None of this can be done without consideration of how we interact with other parts of the world. And we need to diversify our markets, our integration, and our import and export markets.
We have to try to understand how the policies used within the EU to reindustrialize do not end up penalizing EU exporters. Thank you.
Speaker 52
The steel industry in Europe is extremely important. My colleagues have said it very clearly, and I agree with them. We've got to strengthen our steel industry, but the question is how: by strengthening prospects for the future and ensuring that production methods are made easier to support job creation. I think that we shouldn't keep old production methods alive artificially because they will not work in the long term. We've got to look to the future.
And I think that we should let go of past methods of production. We've got to ensure that we have a long-term view, and member states have got to invest in and build more steel plants in Europe. Now, protection methods, protection against dumping, in particular from China, really have to be put on the table. That's our job, that's our mission: to ensure that things happen as rapidly as possible. We've got to make decisions immediately before it becomes too late, before the new provisions come into force.
And the Swedish government has a very clear, focused position. We are not yet able to protect workers in the industry. We want to maintain the flow of steel from outside, and this is really shameful.
Borys Budka
Our speaker list: So now it's time for our guest to answer his questions. Any comments? So, the floor is yours.
Speaker 53
Thank you very much, Mr. Chair. Good morning, everyone, and it's a pleasure to be here. Thank you for the invitation, and thank you for the very rich debate already, as well as all the questions that you raised on the implementation of this very important action plan, the steel and metals action plan. If you don't mind, Mr. Chair, may I propose that I answer the question by looking at the five or six main pillars that we had in the steel and metals action plan, because I think it allows me to cover the different, very valid points that were raised across the debate so far.
So, if you remember the steel and metals action plan, we had identified six main pillars, six main work streams on which we wanted to work in order to deliver on the objectives that were recalled today on the importance of the steel and metal sector as basic, as one of the industrial organizations says. It's anything but basic. And it is, I think, really true. I think when we're talking about steel and metals, these are essential sectors that contribute to a wide range of industrial sectors and are essential for our green, digital, and resilience ambitions. So, it is focused on six main pillars.
The first one has to do with, and I think this was the first remark actually, access to affordable and clean energy. This is obviously fundamental for the competitiveness and the transition challenges of these sectors. On this, I was looking at wholesale prices this morning. In Europe, it is true that prices went down compared to during the crisis. They are relatively close to pre-crisis levels.
If I take gas, for instance, we're talking about $30 per megawatt-hour. At the same time, it's also true that the price for the same molecule of gas is €8 per megawatt-hour in the U. S. At the U. S.
Henry Hub Exchange. So, there is still a price difference with third countries and our main competitors, in particular. And when it comes to electricity, we still have significant variations across the single market and across the wholesale prices in Europe, which show that more and more efforts are required to deliver on the single market for energy and to make sure that all industries across the Union can benefit from the clean transition and from the decarbonization and competitiveness objectives that we have. And that's why I want to say a few words about the GRIDS package the Commission adopted in December, because I think it addresses some of these questions, in particular when it comes to ensuring that we can provide lower energy costs for electro-intensive industries such as the steel and metals sectors. This includes improved interconnectivity, the removal of bottlenecks through the Energy Highways initiative, and better use of existing infrastructure.
We know we need more infrastructure and to invest in grid infrastructure, and that's why the grid package aims to ensure that there is a match between grid capacity development and industrial electrification needs. Because, of course, if we decarbonize the steel sector by investing in electric arc furnaces, for instance, it means more electricity demand. It means the need to provide electricity where it is now consumed. I think we are working to deliver, through this proposal, faster delivery of infrastructure, meaning binding permitting timelines and digitized permit-granting procedures. So, a number of steps are being taken to ensure that these grid infrastructure developments can happen at the speed required for the electrification and decarbonization objectives of this sector.
I mean, we're not there yet. As I said, you can see it when you look at the current electricity, gas, and energy prices: more and more efforts will be needed, but this is an important contribution. One word on hydrogen, because this was mentioned. As you know, we also announced, with the Steel and the Transaction Plan, the delegated act on low-carbon hydrogen. This is something that was also proposed.
In the end, what we need is investments in this hydrogen infrastructure, in these hydrogen projects, and we need delivery. So, it's not sufficient to work only in terms of delegated acts, but we're also trying to complement this through the use of hydrogen auction mechanisms, the Hydrogen Bank auction as a service, to make sure that we deliver on the concrete industrial projects we need. The second dimension is about preventing carbon leakage. And there, I think, the proposal adopted in December on the carbon border adjustment mechanism provides stronger protection against carbon leakage. It was mentioned before. Bless you.
It was mentioned before that we had an issue with possible carbon leakage in downstream sectors. The commission has proposed expanding the coverage to 190 downstream products. We also need stronger enforcement. That is very clear, and that's why we have proposed provisions to reinforce the anti-circumvention measures. And we need to recognize, and I mean, the point was raised several times, and the answer is not only with SIBAM, but part of the answer comes with SIBAM on circularity because now we include pre-consumer steel and aluminum scrap, and that should ensure fair carbon prices, carbon pricing, sorry, and an alignment between SIBAM and the steel and metals action plan objectives.
Last but not least, we had the issue of exports. And again, the point was mentioned that we need to protect our exporters. The challenge was that the carbon leakage protection measure, when we move from free allocation to CBAM, is less effective, let's put it that way, for exporters. And that's why we proposed the competitiveness support through the temporary decarbonization fund, where we can provide support to exporters when they invest in decarbonization at the same time. It's not the only answer regarding the question of protecting EU exporters, but that's an important aspect.
The third dimension is about promoting and protecting European industrial capacity. And here, obviously, the main measure is the proposal for regulation addressing the trade-related effects of global overcapacity in steel. We very much welcome the positive feedback we received in the discussion today, but more generally from the European Parliament. We are committed to preserving the overall architectural effectiveness of the proposed instrument, but also very much committed to making sure that we can negotiate and adopt this proposal as soon as possible so that it's in place well before, or at least before, July 1, when the current safeguards come to an end. I understand the first trial will take place around mid-March.
That's right.
Speaker 53
It has already taken place, sorry. And then the next one is mid-March. So, we'll continue the discussions and play our role to facilitate the discussions between the college leaders. I must say that I would like to mention the adoption of the ferroalloy safeguard measures that were also announced in the steel and metals action plan. Basically, the Commission is trying to mobilize existing and, when necessary, new instruments in support of the protection and promotion of European industrial capacity because we fully agree with you that we need to maintain and develop European industrial capacity in those essential sectors.
The fourth element is about the circularity of metals. As I said, this is a bit covered with the C band proposal, but it goes much beyond that. And actually, very much related to what we announced as part of the resource EU action plan. So, here, we are working on targeted measures regarding the exports of aluminium scrap, and an ongoing public consultation or targeted consultation has been launched by DG Trade. And we have a commitment to come up with potential measures by the end of the second quarter of this year.
There are obviously also recycled content obligations under the End of Life Vehicles regulation, which is coming to an end. I mean, the negotiations are now finalized. And I would like to also flag the importance of the upcoming Circular Economy Act. Under the Circular Economy Act, we're putting extra attention and analysis on steel and aluminum to understand the potential to develop what was mentioned before, which is the question of quality scrap and making sure that there is a good match between what industry needs in terms of quality scrap and what recyclers and other parts of industry, by the way, can develop in this context to ensure that this good match between supply and demand can happen. And if necessary, if we need additional trade measures or any other kind of measures, we will of course consider them in this context.
This brings me to a point that was discussed before: the fact that we need to engage with all industrial stakeholders. This is true when it comes to scrap. Obviously, the producers, but also the primary producers when it comes to steel, the secondary producers, and the recyclers. And I just want to flag as well that the commission is also meeting and discussing with the steel processors. As a matter of fact, I have a meeting this afternoon exactly with this group of stakeholders to discuss the implementation of the steel and metals action plan.
The fifth dimension is an essential dimension, which is the dimension of defending quality industrial jobs. And I take your point that this is related, in a sense, to the ability of the sector to continue to invest. Because if we want to defend quality industrial jobs, and we are in close cooperation and close partnership with the social partners on these matters, we regularly discuss with employers' and employees' associations the implementation of the Steel and Metals Action Plan. But ultimately, what we need is investment—investment in decarbonized technologies. And yes, I mean, it is good news that we have this investment in Dunkirk announced, I think, last week or the week before.
Is it sufficient? No. We have a pipeline of investments that were announced, and we know that they are slowing down. And that's why we have the sixth pillar, and I'll finish on that, which is the promotion of lead markets and the de-risking of investments, so that we can accelerate final investment decisions through a range of tools. One of these is the upcoming Industrial Decarbonization Bank, on which the Commission is working to develop new elements.
The second aspect is what we can do at the research and innovation level. I just want to flag that there are good discussions happening between the different industrial sectors, steel and metals in particular. When it comes to partnerships, Horizon Europe partnerships can deliver and help in investing in innovation, research, and new processes. And the good news is that the different sectors want to work together. And this is, from the Commission's perspective, an excellent sign of the synergies and cooperation that can take place. And last but not least, when it comes to lead markets, we need to deliver with the Industrial Accelerator Act.
So, I took good note of all the comments mentioned today. You will understand that, with the act now announced and planned for adoption next week, it's difficult for me to enter into details. But of course, we are looking at the lead market provisions, and we are looking at elements that can provide sufficient incentives for investing in these sectors and for making sure that there is demand creation for the sectors and for the products that the steel and metals sectors can deliver for Europe. Thank you very much.
Borys Budka
Thank you very much. Does anyone want to ask any follow-up questions? Ah, okay.
Speaker 55
Thank you very much, Chair. A comment first, then a question for the commission, or perhaps a recommendation rather than a question. The first comment is that, once again, we're having a discussion on steel, the same as we did in November. And once again, at no point did a member of the PFE group attend the meeting. Once again, as in November, not a single member of the Patriots came to discuss the opinion or defend the agreement. It is very worrying that the second biggest group in the European Parliament, when talking about such an important sector as steel, did not have one of its 24 members speak about their suggestions even for five minutes.
Speaker 57
The commission has suggested it. My suggestion to the commission would be to take a look at what the commissioner has said. They've talked about what's at stake for steel. But in January, we talked about fertilizers as well and the C band, which has really disrupted the market. And my concern then creates great concern for investors. Now, for the time being, as far as I know, this mistake—the problem with communication—hasn't had an impact on steel investments.
Speaker 55
But I think we need to learn from what happened there, and the commission needs to be more disciplined. Another point for the commission: what is at stake here when looking at investment in steel is that we have to look at stability and fixed market prices regulated by supply and demand. Now, Friedrich Mertz and Emmanuel Macron made comments a few weeks ago that were excessively interventionist and created a great deal of uncertainty about future prices for the ETS. And here, I think we as MEPs have to be the adults in this discussion. We have to prove that we are serious about this and ensure that we implement everything that we have adopted, whether it's the trade defense mechanisms, the ETS, or the innovation fund.
Speaker 56
And we have to see how we can go further, looking at European preferences for steel as a whole and for green steel in particular, as part of the Industrial Accelerator Act. We await this with great impatience.
Speaker 59
Thank you very much. I'd like to know whether you took into account what's happening in Romania. We have the company in Gallat, Vlessedex, the largest steel factory in Europe, and it was bought by a metal steel company recently when it became Liberty Gallat. For the time being, the factory is undergoing restructuring, and we would like it to have the strategic industry label. This is the largest steel-producing plant in Romania.
Speaker 60
Did you take into account the situation of this plant? Have you met the Romanian authorities to discuss steel production in Gallat? And did you discuss the future of this plant? Could it be a strategic object, not just for Romania, but for the EU as a whole, given the current geopolitical situation? Thank you.
Speaker 53
Thank you very much for the feedback. And I mean, I will not answer on the recommendation, but I took good note of the recommendation on the way the commission as a whole communicates on the different files. I think this is well noted, as well as the need to implement what was already agreed. Absolutely noted. Maybe to answer the specific question about the situation of the plant in Romania: at least at my level, there has been no recent contact with the Romanian authorities on this matter. But I mean, I'm not the only one, obviously representing the Commission on these different topics.
So, I cannot give a fully comprehensive answer to this question. What I want to flag, and this is an important point, is the question of the strategic nature of some of these products and potentially also of some of these production sites. I didn't fully answer a previous comment that was made on the fact that steel or scrap steel could be considered a critical or strategic mineral, which is the case for aluminium, by the way, because aluminium is indeed, under the Critical Materials Act, considered a strategic raw material. And in this context, we then have production capacity objectives that push us to continue to look for industrial capacity in Europe. Pushing and promoting these industrial capacity objectives doesn't mean that we need to do everything in Europe or that we won't trade anymore.
We want to continue to trade because we'll never be self-sufficient in these aspects. Even if I take steel, for instance, our overall production capacity could cover our overall demand. There's always a need for trade when it comes to specific aspects and specific types of steel, and so on and so forth. So, trade remains important. But of course, it is important in a context where we also want to make sure that we promote and protect European industrial capacity where it makes sense. One thing that may be relevant in this context is the question of resilience and specific assets.
Today, I think at the European level, we have very limited tools to say we want to protect this or that specific asset. However, when it comes to the next multiannual financial framework and the European Competitiveness Fund, this question of resilience, and not necessarily supporting specific assets but at least putting the question of resilience of supply chains on the table in this context, is very important. And hopefully, through the negotiations of this proposal, we'll get sufficient tools to deal with specific situations in the future. I'm not claiming that I'm talking about one specific case in particular, and specifically not what was mentioned by the colleague or honorable member for Romania, but just as a general statement and general comment on the importance of strategic assets in Europe and strategic production in Europe. Thank you.
Thank you.
Speaker 40
That's less prepared than what I have heard from the colleagues, and I'm glad that we had this exchange of views. And we have all, I think, acknowledged the importance of circularity, access to green energy, and so on. But I would like to warn you against something. Now, if in Europe we continue not to talk about a united energy market and diversity in prices, which really differ very considerably from one member state to another, then I think that we are going to be endangering ourselves. There will be plants in certain countries which are much more vulnerable than plants in other countries.
And I think that we've got to look at the industry, the European industry as a whole, across all of European territory, so that we can work in a uniform way and fight competition coming from outside Europe. And that's, oh yes. And also, I wanted to express my thanks for the very deep and thoughtful answers to my questions.
Borys Budka
Remarks. So, thanks to all of you who took part in our discussion. Thanks to our guest, and I close our committee meeting.
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