GES: A Modern Industrial Strategy Prioritising Innovation, Ecosystems And Dialogue

The Challenge

How to design an industrial policy for Europe, which spurs innovation and enables European industries to lead in the low carbon “space race”? This is a key challenge related to two agendas on which international attention is currently focused: the COP21 of the United Nations Framework Convention on Climate Change in Paris, and Europe's recent agenda for growth, jobs, and competitiveness. Much like climate policy, the need for a new industrial policy is widely acknowledged among politicians, businesses, and the wider society. However, there is little confidence that an innovative and effective industrial policy can be designed to fit all sectors, regions, and stakeholders alike. Yet, with a low carbon market estimated at more than 4.5 trillion euros, progress in this area is vital. One promising approach is to develop a modern understanding of the role of public policy and free markets. With this in mind, the idea of "co-opetition" seeks to stimulate industrial innovation through a combination of both cooperation and competition among countries and enterprises.  

The i24c solution

Introduction

Companies are increasingly recognising that only sustainable production processes can secure profits in the long term, and that climate policies are a huge business opportunity (e.g., renewables, Electric vehicles, shared cars, circular economy). However, companies are not always provided with the right incentives (not only in the form of subsidies) or the certainty that they should go forward with developing low carbon solutions or making the needed investment. Moreover, deep industrial decarbonisation will only materialise and translate into comparative advantage if they result from coordinated actions by a multiplicity of actors within key value chains.

Removing uncertainty and stimulating co-opetition

Companies are in need of a clearly defined framework (public policy and free markets), which is supported by a more modern industrial policy that moves away from the old models of purely sectoral interventions (“picking winners”).  Such a policy should aim to reduce uncertainty and stimulate industrial innovation through a combination of both cooperation and competition - or “co-opetition".
  • Cooperative in setting not just a clear common target for decarbonisation of the economy (within the UNFCCC agenda to reach the 2-degree target) but also in some specific actions for that; international, regional or local private-private partnerships can be established with an active risk-pooling approach for breakthrough technologies; or companies can forge alliances across traditional geographic and sectoral boundaries, namely to work on R&D, circularity and lower costs.
  • Competitive in the sense that within this commonly agreed framework and clear, unavoidable decarbonisation process, countries and companies compete fairly and legitimately according to agreed rules (under WTO, for example) for advantage in a whole series of new and different global markets. This is the market driving economic activity, innovation and creativity in the low carbon “space race”.

Nurturing challenge-led innovation ecosystems

The new innovation policy should also be purposive or challenge-oriented, which emphasises the broader outcomes of innovation (e.g., solving grand challenges such as climate change), rather than just their technical focus. It should strive to enable innovation within ecosystems of industrial actors working to deliver end-use services such as mobility or energy. Policymakers should target their interventions toward these ecosystems, which are the primary locus of innovation and industrial transformation, and combine the action of businesses, institutions, technologies and societies.

Establishing a vision for European industrial transformation

Part of the solution also resides in developing a vision for European industry and support policies offering an investable policy framework, the same way that it has one for energy. We see the right movements in the Energy Union debate, where the European Commission announced it would prioritise the development of a forward-looking, energy and climate-related R&I strategy to maintain European technological leadership and expand export opportunities. However we need to extend that to industrial process and package it together in a low carbon industrial innovation package.

Defining new processes and governance for Europe’s industrial policy:

Finally, also key in overcoming the innovation hurdles is developing a process whereby trust, experimentation, and dialogue is enabled. This comes with:
  • Identifying areas in which active cooperation could be most beneficial to a transformative innovation agenda that achieves the decarbonisation goal, along the whole industrial value-chain.
  • Developing or scaling ecosystems and grass root initiatives that are held together by a “conductor”, which brings different stakeholders together (public policy-makers, industrial interests and civil society), and pilots innovation within specific ecosystems. Famous examples of such strategic conductors include ARPA-E in the United States.
  • Socializing the risk of innovation within ecosystems but also its rewards by adopting the position of a strategic investor.
  • Rethinking current governance models, with a more integrated/co-ordinated/responsive institutional architecture that brings together European union, member states, regions and cities, and acknowledges that each level of government has an important role to play in enabling the emergence of ecosystems.
  • Developing specific policies that help remove investor uncertainty and that enable / open markets for low carbon innovation / products in Europe (e.g., standards, government procurement).
This solution is likely to face significant obstacles in the form of resistance, active or passive, from incumbent firms to participating in experimentations whereas the perceived sustainability of their business models depends on protecting the status quo. As a corollary, spaces of constant dialogues and institutionalized proximity between public and private actors may lead to corporate capture and the locking out of emergent technologies and ideas.    

the latest

news

LEVERAGING THE POWER OF THE PUBLIC PURSE: USING PUBLIC PROCUREMENT OF LOW-CARBON INNOVATION FOR SUSTAINABLE INFRASTRUCTURE

December 06, 2017

In light of the European Commission launch of a guidance package for public procurers, and the conference “Joining Forces in Public Procurement to Power Investment” i24c and International Institute for Sustainable Development (IISD) publish recommendations for the European Commission and member state authorities on how to better leverage the power of the public purse to drive demand of low-carbon innovation in sustainable infrastructure.

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Bruegel and i24c launch interactive report on new growth model for Europe

September 07, 2017

Bruegel and i24c publish an interactive version of the report, “An approach to identify sources of low-carbon growth for Europe,” written by Georg Zachmann, Senior Fellow at Bruegel. It suggests that given the global decarbonisation concerns, the wide array of low-carbon technologies currently becoming available, offer a significant new growth potential for Europe.

news

i24c and BPIE publish op-ed on how innovation and industrialisation can speed up deep energy renovation

November 25, 2016

With the pending Winter Package, including an Accelerating Clean Energy Innovation strategy, the European Commission has a chance to show that the EU has reached a crossroads, write Oliver Rapf and Julia Reinaud. The Commission can now choose between continuing on the bumpy road of fragmented and shallow renovations or getting on the ‘renovation autobahn’, where rapid and deep renovation unleashes the real potential of the construction sector.

news

Deep emission reductions in the steel sector require a catalysing new industrial policy

October 06, 2016

Today the Carbon Disclosure Project (CDP) published its report “Nerves of steel” that analyses the performance of steel companies around the world in relation to this transformation and innovation challenge, highlighting company performance across a range of emissions and water-related metrics, which in aggregate could have a material impact on company performance.

news

Martin Porter moderates the European Commission’s high level stakeholder event on the Energy Union Research, Innovation and Competitiveness Strategy

October 06, 2016

The director of the i24c initiative, Martin Porter, was requested by the European Commission to moderate the high level stakeholder event on the public consultation on the Energy Union Research, Innovation and Competitiveness Strategy (EURICS) this month. The stakeholder event was convened by the Commissioner for Research, Science and Innovation, Carlos Moedas.

news

Julia Reinaud speaks at Politico event on energy innovation

June 23, 2016

Dr Julia Reinaud, Director for Research and Partnerships at i24c, took part in a panel discussion on June 20 titled “Innovation: the Way to a Low Carbon Economy?”. The event, organised by Politico.eu brought together policy-makers, energy executives and thought leaders to discuss how the EU can promote the uptake of low-carbon technologies and solutions in order to both meet its climate objectives and industrial objectives.

news

Putting innovation at the heart of the Energy Union

May 26, 2016

As the European Commission elaborates its Energy Union strategy, and as national and local governments plan their contribution to the union’s aims of energy security, decarbonisation and cost-efficiency, they need to create an environment that nurtures innovation in policy, technology and business models, write Pascal Lamy and Philip Lowe.

news

Putting innovation to work: global challenges and Industry 4.0

March 20, 2016

Martin Porter outlines how industrial innovation aimed at solving some of the world’s most pressing issues, including climate change, is already happening in Europe but needs to be scaled up and accelerated. He then presents principles for an ambitious European industrial strategy designed to support these innovations.

i24c statement on the Paris Climate Agreement

December 12, 2015

The COP21 Paris Agreement sends a clear signal that the transition to a decarbonised global economy is inevitable and now accelerating across the globe. If the EU wants to ensure it competes successfully in the new global economy, it urgently needs to comit to an ambitious European industrial innovation strategy.

publications

How can public procurement drive low-carbon innovation in infrastructure projects?

March 02, 2018

In collaboration with the International Institute for Sustainable Development (IISD), i24c launches its report titled “Low-carbon innovation for sustainable infrastructure – The role of public procurement” which looks at how to leverage the power of the public purse to maximise low-carbon innovation for sustainable infrastructure.

publications

LEVERAGING THE POWER OF THE PUBLIC PURSE: USING PUBLIC PROCUREMENT OF LOW-CARBON INNOVATION FOR SUSTAINABLE INFRASTRUCTURE

December 06, 2017

In light of the European Commission launch of a guidance package for public procurers, and the conference “Joining Forces in Public Procurement to Power Investment” i24c and International Institute for Sustainable Development (IISD) publish recommendations for the European Commission and member state authorities on how to better leverage the power of the public purse to drive demand of low-carbon innovation in sustainable infrastructure.

publications

I24c launches working paper on mapping of EU industrial policy initiatives

October 17, 2017

Since its inception, i24c has been investigating and considering what an industrial strategy for Europe would have to contain – and have been calling for the development of such a strategy. It is within this context that we publish this working paper, “A mapping of EU Industrial and Innovation policy”, assesses the developments in EU industrial and innovation policy since the beginning of the 21st century, up until today. The working paper concludes that in the last decade EU industrial policy has been relatively consistent, but that there are further options for greater ambition, and streamlining of policy initiatives and possibilities of synergies between EU and member state initiatives to fully enable the industrial transition towards a net-zero economy in 2050.

publications

DEPLOYMENT OF AN INDUSTRIAL CARBON CAPTURE AND STORAGE CLUSTER IN EUROPE: A FUNDING PATHWAY

October 05, 2017

I24c publishes in collaboration with the consultancy Element Energy a report on how to finance an industrial carbon capture and storage (ICCS) cluster through exciting EU finance mechanisms. While there are EU funds available that could support industrial CCS projects, the report concludes that in the short-term Member State support and contribution will be vital to operationalise the first industrial CCS cluster in Europe.

publications

i24c publishes memo on accelerating innovation and integration in the mobility sector

December 05, 2016

A major transition is anticipated in the transport sector over the coming decade. To that regard, i24c publishes a memo on how to won the low carbon race through accelerating innovation and integration in the mobility value chain.

publications

i24c and BPIE publish memo on boosting renovation through innovation and industry

November 25, 2016

Together with the Buildings Performance Institute Europe (BPIE), i24c publishes a memo on how to achieve healthy, comfortable and sustainable buildings for all. It emphasizes that ramping up deep energy renovation can boost the economy (competitiveness and jobs), improve living conditions (better and smarter homes) and mitigate climate change.

publications

SCALING UP DEEP ENERGY RENOVATIONS: UNLEASHING THE POTENTIAL THROUGH INNOVATION & INDUSTRIALISATION

November 14, 2016

The European construction industry is confronted by an economy that is undergoing a highly significant change. This report questions how to ensure that these changes can be treated as an opportunity for economic success and global leadership as much as an environmental challenge in the construction sector.

publications

DRIVING INNOVATION IN THE AUTOMOTIVE VALUE CHAIN

October 17, 2016

Europe’s transport industry and its related services are an essential part of Europe’s economy. Currently, the transport sector is challenged by rapidly changing framework conditions and consumer demands. Therefore, the report emphasises the necessity for European automotive companies to innovate to remain competitive and to meet increasingly stringent environmental constraints.

publications

An approach to identify sources of low-carbon growth for Europe

September 28, 2016

Given global decarbonisation concerns, the wide array of low-carbon technologies offers significant growth potential. The report assesses the potential of countries to excel in these emerging sectors and identifies whether countries are particularly specialised in innovating in specific low-carbon sectors.

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