TAFTIETask Force on Structural Funds
Report to the Board by the Structural Funds Task Force
27th June 2008
Preamble
In view of the above and the growing attention in Europe on the use of Structural Funds for R&D, in general, as well as to foster European-wide collaborations, in particular, the Board of TAFTIE approved the establishment of a Task Force in order to develop a common understanding and tools to use Structural Funds for R&D and Innovation cooperative activities at European level.
The Structural Funds Task Force was established with chairmanship by CDTI. Three meetings were held in July 2007 (Madrid), October 2007 and March 2008 (Brussels). Members of several TAFTIE agencies as well as DG REGIO attended and actively participated in the meetings.
An external facilitator, Mr Francisco de Arístegui from Asesoría Industrial Zabala (Pamplona, Spain), prepared the reports concerning Structural Funds managing and participated in each of the meetings. CDTI wish to acknowledge the significant contribution of Mr Arístegui and his team to this Task Force.
This report summarizes the external facilitator reports as well as TAFTIE’s participants in the Task Force contributions. All documents generated within this Task Force (reports, presentations, etc.) are available in
TAFTIE Task Force on Structural Funds
Executive Summary
Legal analysis carried out on Structural Funds and Framework Programme compatibility showed the difficulties and incompatibilities between both funding instruments. However a legal entry door would make possible to the Member States the use both instruments in international RTD activities.
So far Structural Funds have been an important financialsource for actions supportingand investments related to research and innovation. However, only a minuscule sample of projects funded by the Structural Funds wasactually related to cooperative international RTD and innovation activities.
In this context the aim of TAFTIE to set up a new funding instrument for cooperative international RTD and innovation activities, supported by operational programmes from their respective TAFTIE members countries, and based on the ‘Convergence’ and ‘Competitiveness’ objectives, is a real novelty and challenge.
Four options for using the Structural Funds for financing international technological and innovative cooperation activities has beenanalyzed; being International demonstration projects derived from the Community RTD Framework Programmes the most feasible option for Structural Funds allocation forthis kind of activities.
1. Introduction
Upon an initiative by the German Presidency of the EU, a CREST Working Group elaborated a set of strategic (but generic) guidelines including 14 recommendations on “How to achieve better coordination use of Framework Programme and Structural Funds to support R&D”. The guidelines take into account work undertaken by EURAB in parallel. A Conference attended by more than 200 participants took place on May 3rd, 2007 where the Commission announced a Communication on the said theme for July 2007.
On the said issue, very heterogeneous experience exists both within TAFTIE members and across different European regions in managing Structural Funds for R&D projects and related activities. On the other hand, although not all current TAFTIE members and countries manage such kind of funds, a TAFTIE policy would have the potential to attract further TAFTIE members from Eastern Europe. Indirectly, therefore, a pool of knowledge could help in fostering European-wide partnerships in the longer run.
In view of the above and the growing attention in Europe on the use of Structural Funds for R&D, in general, as well as to foster European-wide collaborations, in particular, it seems advisable to develop a common understanding and tools through a Task Force. In view of the complexity of the dossier, it was proposed to use an experienced consultant able to facilitate the work of the TAFTIE Task Force, both to identify good practices as well as to build-upon them in order to recommend future courses of action for TAFTIE members.
Asesoría Industrial Zabala SA from Pamplona (Spain) was selected as facilitator.
Thus the objectives of the TF and facilitator were the following:
- Clarify the legal basis regarding the EU framework of Structural Funds to be used both for R&D, in general, and complementary to FP7, in particular.
- Identify good practices of SF management within UE members.
- Define a common understanding and tools to use Structural Funds for R&D and Innovation cooperative activities at European level.
2. Legal basis regarding the EU framework of SF to be used both for R&D, in general, and complementary to FP7, in particular
A preliminary study containing a legal analysis on Structural Funds and Framework Programmecompatibility showed the difficulties and incompatibility between both funding instruments since:
“An expenditure co-financed by the Funds shall not receive assistance from another Community financial instrument” Article 54.4
However a legal entry door was suggested to use Structural Funds and Framework Programmefor international RTD projects without geographical constraints:
“At the initiative of the Member State, the Operative Programmes financed by the ERDF for the Convergence and Competitiveness and Employment objectives may also contain actions for interregional cooperation with, at least, one regional or local authority of another Member State” (article 37.6.b).
Therefore, the facilitator found crucial that each TAFTIE member assures the insertion of a specific measure in their national or multi-regional Operative Programmes financed by the ERDF–with its respective budget- for ‘financing international R&D cooperation projects managed in collaboration with other national public innovation agencies who are members of the European TAFTIE association.
According to this, a letter was sent from CDTI to CREST representatives including this recommendation.
3.Good practices identified of SF management within UE members
The most important findings on this issue were the following:
−Structural Funds represent an important sourceof finance to support actions and investments related to research and innovation (During the 2000-2006 period 10,58 B€ coming from Structural Funds were invested in these kind of activities).
−However during this period only a minuscule sample of projects funded by the SF (0.01%) wasreally related to cooperative international RTD and innovation activities which focus on industrial applications/beneficiaries or were market oriented research projects.
−The aim of TAFTIE to set up a new funding instrument for cooperative international RTD and innovation activities, supported by operational programmes from their respective TAFTIE members countries, and based on the ‘Convergence’ and ‘Competitiveness’ objectives, is a real novelty and challenge.
−The new funding instrument that TAFTIE intends to set up for financing cooperative international RTD and innovation activities through SF will, in practical terms, be a priority axis dealing with interregional cooperation activities (sharing some features with INTERREGprogrammes, but supported by Operational Programmes under the ‘Convergence’ and ‘Competitiveness’ objectives of the SF), and whose geographical scope will be given by the number of Operational Programmes across Europe that finally include this measure.
−Even though the direct participation of private companies as project partners was avoided by the managing authorities of INTERREG III programmes, there are some useful lessons which can be extracted from the management of those programmes, which could be replicated by TAFTIE members in order to ensure a proper management of cooperative international RTD and innovation projects.
−The formula of advances paid to the beneficiaries by the body granting the aid, not exceeding 35% of the total amount of the aid to be granted (which is allowed by the new SF regulation 1083/2006, article 78.2) may increase the interest/attraction for companies on the new funding instrument envisaged by TAFTIE.
As is shown in this work there are actual possibilities within EU regulations to make use of SF for this purpose.
4. Design of new instruments to use Structural Funds for R&D and Innovation cooperative activities at European level
Based on these previous analyses, this issue aims to introduce several options of using the Structural Funds for concerted financing instruments. The proposed financing options are compatible with the legal framework both for Structural Funds and State Aids, and were discussed with representatives of the Task Force.
In some case the financing option suggested will require to design a specific financing instrument to use the SF resources, in other cases the use of SF will supplement the resources of existing financing instruments.
The main options suggested for using the SF for financing international technological and innovative cooperation activities are:
4.1International demonstration projects.
These kinds of projects are derived from the Community RTD Framework Programmes, including demonstration installations needed by companies and large installations required by academic and research organisations. This financing option will require designing an ad hoc instrument: The main features of this instrument are partially based on some good practices of SF management identified in the previous programming period for supporting international innovative cooperation activities.
The strategic objective would be to enhance the technological capabilities and competitiveness of Europe’s manufacturing industry by supporting the funding of demonstration projects performed by enterprises and strategic partnerships at international level.
Funding would target technology development projects of experimental nature, aiming to develop new technologies into pilot plants, prototypes or demonstrators which will help the future economic and commercial impact of the new technology at international level, and also represent a relevant technological and industrial step forward for a sector.
It is important to remember that in principle, prototypes or pilot plants have to remain at the pre-commercial stage. The Community Framework for State Aid for R&D and Innovation allows aid for ‘experimental development’ as the closest stage to commercialisation that can be publicly subsidised. According to its section ‘2.2 definitions’, the development of commercially usable prototypes and pilot projects is also included (within the category of ‘experimental development’) where the prototype is necessarily the final commercial product and where it is too expensive to produce for it to be used only for demonstration and validation purposes. In case of a subsequent commercial use of demonstration or pilot projects, any revenue generated from such use must be deducted from the eligible costs.
For the above purposes, the project proposal should clearly show:
−Added value through transnational cooperation.
−The setting up of prototypes or pilot projects at a pre-commercial stage with a significant degree of innovation.
−Expertise of the projects partners in their respective fields of competence.
−Scale of socio-economic impact of the new technology (expected in the market and in the competitive positioning of participants).
The pre- and full proposalscould be evaluated locally (by the regional/national authorities affected) and internationally by a sort of International Coordination Committee formed by the TAFTIE members supporting this concerted instrument for transnational demonstration projects. This Committee would give advice to the project coordinators and recommend (or not) the submission of full proposals.
Given that the number of pre- and full proposals of demonstration projects derived from Community RTD project results will certainly be limited or quite small, an alternative simpler and decentralised, evaluation procedure could be envisaged without the need to create an International Coordination Committee. This could be based solely on information and assessment exchange among the TAFTIE members from the Member States of the respective proposers.
This seems to be to most interesting option.
4.2Application of SF to ‘classic’ multilateral international R&D programmes such as Eureka.
In this case, it is not necessary to propose or design an organisational and managerial structure since the financing instrument already exists and is operational. Therefore the suggestions refer to possible financing intensities and modalities.
4.3Supplementing the financing of Joint Technology Initiatives (JTIs)
Here again the organisational and managerial structure of the financing instrument is already operational in a few JTIs which have been recently set up; these financing instruments differ from one JTI to another. In this context the proposal refers to exceptional cases where SF financing could be complementary and therefore compatible with FP funds.
For example, in the JTI ‘Innovative Medicine Initiative’-IMI there are projects submitted by consortia of research centres, SMEs and large companies, where research centres and SME get funded up to 70% of their project costs through FP7 funds, while the large companies involved in the project do not benefit for any single euro from FP7 to cover their incurred personnel costs. In this case, the personnel costs incurred by large companies could be funded through SF, provided that the relevant Operational Programme envisages the support to companies participating in JTIs.
4.4Financing regional initiatives to stimulate the participation of regional innovation stakeholders in the Community RTD Framework Programme, and in other international R&D programmes.
It aims to use SF to reinforce cooperation/communication/coordination between two main groups of actors; on the one hand the respective National Contact Points of FP7 specific programmes and/or national managers of international R&D programmes; and on the other hand, regional public agents promoting, financing and stimulating R&D and Innovation, in order to optimise their efforts and increase participation of regional innovation stakeholders in FP7 and other international R&D programmes.
This measure is not affected by the Community Framework of State Aid for R&D since it targets regional public agents and is not aid for enterprises. Therefore funding ceiling are those stated in the SF general regulation.
In any case, it has to be remembered that in order to benefit from Structural Fund finances, any of the above options/measures should be reflected in the respective regional/national Operational Programmes dealing with R&D and Innovation support, in greater or lesser detail.
These measures should also reflect the possibility of being carried out in the context of international R&D and Innovation cooperation projects managed in collaboration with other regional/national authorities of other Member States.
5. Conclusions
International demonstration projects partially derived from the Community RTD Framework Programmesfunded by Structural Funds seem to be the most interesting option in terms of observing CREST Working Group recommendations on “How to achieve better coordination use of Framework Programme and Structural Funds to support R&D”.
Due to the limited number of projects, the evaluation procedure could be envisaged without the need to create an International Coordination Committee. This could be based solely on information and assessment exchange among the TAFTIE members from the Member States of the respective proposers.
In any case it has to be taken into account that all the proposed instrumentsshould be reflected in the respective regional/national Operational Programmes dealing with R&D and Innovation support.