POSITION (EU) No 8/2021 OF THE COUNCIL AT FIRST READING

with a view to the adoption of a Regulation of the European Parliament and of the Council establishing Horizon Europe – the Framework Programme for Research and Innovation, laying down its rules for participation and dissemination, and repealing Regulations (EU) No 1290/2013 and (EU) No 1291/2013

Adopted by the Council on 16 March 2021

(Text with EEA relevance)

(2021/C 146/01)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union, and in particular Article 173(3), Article 182(1), Article 183, and the second paragraph of Article 188 thereof,

Having regard to the proposal from the European Commission,

After transmission of the draft legislative act to the national parliaments,

Having regard to the opinion of the European Economic and Social Committee (1),

Having regard to the opinion of the Committee of the Regions (2),

Acting in accordance with the ordinary legislative procedure (3),

Whereas:

(1) It is an objective of the Union to strengthen its scientific and technological bases by strengthening the European research area (ERA) in which researchers, scientific knowledge and technology circulate freely and encouraging it to become more competitive, including in its industry, while promoting all research and innovation (R&I) activities to deliver on the Union’s strategic priorities and commitments, which ultimately aim to promote peace, the Union’s values and the well-being of its peoples.

(2) To deliver scientific, technological, economic, environmental and societal impact in pursuit of this general objective and to maximise the added value of the Union’s R&I investments, the Union should invest in R&I through Horizon Europe, a Framework Programme for Research and Innovation 2021-2027 (the ‘Programme’). The Programme should support the creation, better diffusion and transfer of high-quality and excellent knowledge and high-quality technologies in the Union, attract talent at all levels and contribute to full engagement of the Union’s talent pool, facilitate collaborative links and strengthen the impact of R&I in developing, supporting and implementing Union policies, support and strengthen the uptake and deployment of innovative and sustainable solutions in the Union’s economy, in particular in small and medium-sized enterprises (SMEs), and in society, address global challenges, including climate change and the United Nations Sustainable Development Goals (SDGs), create jobs, boost economic growth, promote industrial competitiveness and boost the attractiveness of the Union in the field of R&I. The Programme should foster all forms of innovation, including breakthrough innovation, foster market deployment of innovative solutions, and optimise the delivery of such investment for increased impact within a strengthened ERA.

(3) The Programme should be established for the duration of the multiannual financial framework (MFF) 2021-2027 as laid down in Council Regulation (EU, Euratom) 2020/2093 (4), without prejudice to the time limits set out in Council Regulation (EU) 2020/2094 (5).

(4) The Programme should contribute to increasing public and private investment in R&I in Member States, thereby helping to reach an overall investment target of at least 3 % of the Union’s gross domestic product (GDP) in research and development. Achieving that target would require Member States and the private sector to complement the Programme with their own reinforced investment actions in research, development and innovation.

(5) With a view to achieving the objectives of the Programme and while respecting the principle of excellence, the Programme should aim to strengthen, among other things, collaborative links in Europe thereby contributing to reducing the R&I divide.

(6) To help achieve Union policy objectives, activities supported under this Programme should, where relevant, take advantage of and inspire innovation-friendly regulation, in line with the innovation principle, to support a faster and more intensive transformation of the Union’s substantial knowledge assets into innovation.

(7) The concepts of ‘open science’, ‘open innovation’ and ‘open to the world’ should ensure excellence and the impact of the Union’s investment in R&I, while safeguarding the Union’s interests.

(8) Open science, including open access to scientific publications and research data, as well as optimal dissemination and exploitation of knowledge have the potential to increase the quality, impact and benefits of science. They also have the potential to accelerate the advancement of knowledge by making it more reliable, efficient and accurate, more easily understood by society and responsive to societal challenges. Provisions should be laid down to ensure that beneficiaries provide open access to peer-reviewed scientific publications. Likewise, it should be ensured that beneficiaries provide open access to research data following the principle ‘as open as possible, as closed as necessary’, while ensuring the possibility of exceptions taking into account the legitimate interests of the beneficiaries. More emphasis should in particular be given to the responsible management of research data, which should comply with the principles of ‘findability’, ‘accessibility’, ‘interoperability’ and ‘reusability’ (the ‘FAIR principles’), in particular through the mainstreaming of data management plans. Where appropriate, beneficiaries should make use of the possibilities offered by the European Open Science Cloud (EOSC) and the European Data Infrastructure and adhere to further open science principles and practices. Reciprocity in open science should be encouraged in all association and cooperation agreements with third countries.

(9) Beneficiaries of the Programme, especially SMEs, are to be encouraged to make use of the relevant existing Union’s instruments, such as the European IP Helpdesk that supports SMEs and other participants in the Programme in both protecting and enforcing their intellectual property (IP) rights.

(10) The conception and design of the Programme should respond to the need for establishing a critical mass of supported activities throughout the Union, encouraging excellence-based participation of all Member States, and through international cooperation, in line with the the 2030 Agenda for Sustainable Development (the ‘2030 Agenda’), the SDGs and the Paris Agreement adopted under the United Nations Framework Convention on Climate Change (6) (the ‘Paris Agreement’). Programme implementation should reinforce the pursuit of the SDGs and the commitment of the Union and its Member States to implementing the 2030 Agenda to achieving its three dimensions – economic, social and environmental – in a coherent and integrated manner.

(11) Activities supported under the Programme should contribute towards the achievement of the Union’s objectives, priorities and international commitments.

(12) The Programme should benefit from complementarity with existing relevant European R&I roadmaps and strategies, as well as with important projects of common European interest (IPCEIs), where relevant, provided that related R&I needs are identified in the Programme’s strategic planning.

(13) The Programme should ensure transparency and accountability of public funding in R&I projects, thereby preserving the public interest.

(14) The Programme should support R&I activities in the field of social sciences and humanities (SSH). This entails advancing scientific knowledge in that domain and making use of insights and progress from SSH to increase the economic and societal impact of the Programme. Under the pillar ‘Global Challenges and European Industrial Competitiveness’, SSH should be fully integrated across all clusters. Beyond the promotion of SSH in projects, the integration of SSH should also be supported through the inclusion, whenever appropriate, of independent external experts from the field of SSH in expert committees and evaluation panels, and through timely monitoring and reporting of SSH in funded research actions. In particular, the level of mainstreaming of SSH should be monitored across the Programme.

(15) The Programme should maintain a balanced approach between research on the one hand and innovation on the other, as well as between bottom-up funding (investigator or innovator driven) and top-down funding (determined by strategically defined priorities), by reference to the nature of the R&I communities that are engaged across the Union, the types and purpose of the activities carried out and the impacts that are sought. The mix of those factors should determine the choice of approach for the relevant parts of the Programme, all of which contribute to all general and specific objectives of the Programme.

(16) The overall budget for the ‘widening participation and spreading excellence’ component of the ‘Widening Participation and Strengthening the ERA’ part of the Programme should be at least 3,3 % of the overall Programme budget and should mainly benefit legal entities established in the widening countries.

(17) Excellence initiatives should aim to strengthen R&I excellence in the eligible countries, including supporting training to improve R&I managerial skills, prizes, strengthening innovation ecosystems as well as the creation of R&I networks, including on the basis of research infrastructures financed by the Union. Applicants should clearly show that projects are linked with national and/or regional R&I strategies to be eligible to apply for funding under the ‘widening participation and spreading excellence’ component of the ‘Widening Participation and Strengthening the ERA’ part of the Programme.

(18) It should be possible to apply a fast track to R&I procedure, where time-to-grant should not exceed six months, to allow for faster, bottom-up access to funds for small collaborative consortia covering actions from fundamental research to market application.

(19) The Programme should support all stages of R&I especially within collaborative projects and in missions and European Partnerships, as appropriate. Fundamental research is an essential asset of and an important condition for increasing the Union’s ability to attract the best scientists in order to become a global hub of excellence. A balance between basic and applied research should be ensured in the Programme. Coupled with innovation, that balance will support the Union’s economic competitiveness, growth and jobs.

(20) Evidence shows that embracing diversity, in all senses, is key to doing good science, as science benefits from diversity. Diversity and inclusiveness contribute to excellence in collaborative R&I: collaboration across disciplines, sectors and throughout the ERA makes for better research and higher quality project proposals, can lead to higher rates of societal take-up and can foster the benefits of innovation, thus advancing Europe.

(21) In order to maximise the impact of the Programme, particular consideration should be given to multidisciplinary, interdisciplinary and transdisciplinary approaches as key elements for major scientific progress.

(22) Research activities carried out under the pillar ‘Excellent Science’ should be determined according to the needs and opportunities of science and should promote scientific excellence. The research agenda should be set in close liaison with the scientific community and include emphasis on attracting new R&I talents, early stage researchers, while strengthening the ERA, avoiding brain drain and promoting brain circulation.

(23) The Programme should support the Union and its Member States in attracting the best talents and skills, taking into account the reality of very intense international competition.

(24) The pillar ‘Global Challenges and European Industrial Competitiveness’ should be established through clusters of R&I activities, in order to maximise integration across the respective thematic areas while securing high and sustainable levels of impact for the Union in relation to the resources that are expended. It would encourage cross-disciplinary, cross-sectoral, cross-policy and cross-border collaboration in pursuit of the SDGs by following the principles of the 2030 Agenda, the Paris Agreement and the competitiveness of the Union’s industries. The organisation of high-ambition, wide-scale initiatives in the form of R&I missions would enable the Programme to achieve a transformative and systemic impact for society in support of the SDGs, also through international cooperation and science diplomacy. The activities under that pillar should cover the full range of R&I activities to ensure that the Union remains at the cutting-edge in strategically defined priorities.

(25) The cluster ‘Culture, Creativity and Inclusive Society’ should contribute substantially to the research on cultural and creative sectors, including on the Union’s cultural heritage and in particular allowing the establishment of a European cultural heritage collaborative space.

(26) Full and timely engagement of all types of industry in the Programme, from individual entrepreneurs and SMEs to large scale enterprises, would substantially contribute to the realisation of the objectives of the Programme and specifically towards the creation of sustainable jobs and growth in the Union. Such engagement by the industry should see its participation in the actions supported at levels at least commensurate with those under the framework programme Horizon 2020 established by Regulation (EU) No 1291/2013 of the European Parliament and the Council (7) (Horizon 2020).

(27) Actions under the Programme would substantially contribute towards unlocking the potential of the Union’s strategic sectors, including key enabling technologies that reflect the Union’s industrial policy strategy objectives.

(28) Multi-stakeholder consultations, including of civil society and industry, should contribute to the perspectives and priorities established through the strategic planning. This should result in periodic strategic R&I plans adopted by means of implementing acts for preparing the content of work programmes.

(29) For a particular action to be funded, the work programme should take into account the outcome of specific previous projects as well as the state of science, technology and innovation at national, Union and international level and of the relevant policy, market and societal developments.

(30) It is important to support the Union’s industry in remaining or in becoming a world leader in innovation, digitisation and climate neutrality, in particular through investments in key enabling technologies that will underpin tomorrow’s business. The Programme’s actions should address market failures or sub-optimal investment situations, boost investments in a proportionate and transparent manner, without duplicating or crowding out private financing and have a clear European added-value and public return on investments. This will ensure consistency between the actions of the Programme and Union State aid rules, in order to incentivise innovation and avoid undue distortions of competition in the internal market.

(31) The Programme should support R&I in an integrated manner, respecting all relevant provisions in the framework of the World Trade Organization. The concept of research, including experimental development, should be used in accordance with the Frascati Manual developed by the Organisation for Economic Co-operation and Development (OECD), whereas the concept of innovation should be used in accordance with the Oslo Manual developed by the OECD and Eurostat, which follows a broad approach that covers social innovation and design. As in Horizon 2020, the OECD definitions regarding technological readiness levels (TRLs) should continue to be taken into account in the classification of technological research, product development and demonstration activities, and in the definition of types of action available in calls for proposals. Grants should not be awarded for actions where activities go above TRL 8. It should be possible for the work programme to allow grants for large-scale product validation and market replication for a given call under the pillar ‘Global Challenges and European Industrial Competitiveness’.

(32) The Programme should contribute to space objectives at a level of spending that is at least proportionally commensurate with that under Horizon 2020.

(33) The Commission communication of 11 January 2018 entitled ‘Horizon 2020 interim evaluation: maximising the impact of EU research and innovation’, the resolution of the European Parliament of 13 June 2017 on the assessment of Horizon 2020 implementation in view of its interim evaluation and the Framework Programme 9 proposal (8) and the Council Conclusions of 1 December 2017 entitled ‘From the Interim Evaluation of Horizon 2020 towards the ninth Framework Programme’ have provided a set of recommendations for the Programme, including for its rules for participation and dissemination. Those recommendations build on the lessons learnt from Horizon 2020 as well as input from Union institutions and stakeholders. Those recommendations include the proposal of measures to promote brain circulation and facilitate openness of R&I networks to invest more ambitiously in order to reach critical mass and maximise impact; to support breakthrough innovation; to prioritise Union R&I investments in areas of high added value, in particular through mission-orientation, full, well-informed and timely citizen involvement and wide communication; to rationalise the Union funding landscape in order to fully use the R&I potential, including research infrastructures across the Union, such as by streamlining the range of European Partnership initiatives and co-funding schemes; to develop more and concrete synergies between different Union funding instruments, in particular by overcoming non-complementary intervention logics and complexity of the various funding and other regulations also with the aim of helping to mobilise under-exploited R&I potential across the Union; to strengthen international cooperation and reinforce openness to third countries’ participation; and to continue simplification based on implementation experiences of Horizon 2020.

(34) Given that special attention needs to be paid to coordination and complementarity between different Union policies, the Programme should seek synergies with other Union programmes, from their design and strategic planning, to project selection, management, communication, dissemination and exploitation of results, monitoring, auditing and governance. Regarding funding for R&I activities, synergies should allow for the harmonisation of rules, including cost eligibility rules, as much as possible. With a view to avoiding duplication or overlaps, to increasing the leverage of Union funding and to decreasing the administrative burden for applicants and beneficiaries, it should be possible to promote synergies, in particular by alternative, combined, cumulative funding and transfers of resources.

(35) In accordance with Regulation (EU) 2020/2094 and within the limits of the resources allocated therein, recovery and resilience measures under the Programme should be carried out to address the unprecedented consequences of the COVID-19 crisis. Such additional resources should be used in such a way as to ensure compliance with the time limits provided for in Regulation (EU) 2020/2094. Such additional resources should be allocated exclusively to actions for R&I directed at addressing the consequences of the COVID-19 crisis and in particular its economic, social and societal consequences.

(36) In order for Union funding to have the greatest possible impact and to make the most effective contribution to the Union’s policy objectives and commitments, it should be possible for the Union to enter into European Partnerships with private and/or public sector partners. Such partners include industry, SMEs, universities, research organisations, R&I stakeholders, bodies with a public service mission at local, regional, national or international level or civil society organisations, including foundations and non-governmental organisations (NGOs) that support and/or carry out R&I, provided that the desired impacts can be achieved more effectively in partnership than by the Union alone.

(37) It should be possible, depending on the Member State’s decision, that the contributions from programmes co-financed by the European Regional Development Fund (ERDF), the European Social Fund Plus (ESF+), the European Maritime, Fisheries and Aquaculture Fund (EMFAF) and the European Agricultural Fund for Rural Development (EAFRD) be considered to be a contribution of the participating Member State to European Partnerships under the Programme. However, that possibility should be without prejudice to the need to comply with all provisions applicable to those contributions as set out in a Regulation of the European Parliament and of the Council laying down common provisions on the European Regional Development Fund, the European Social Fund Plus, the Cohesion Fund, the Just Transition Fund and the European Maritime, Fisheries and Aquaculture Fund and financial rules for those and for the Asylum, Migration and Integration Fund, the Internal Security Fund and the instrument for financial support for border management and visa for the years 2021-2027 (the ‘Common Provisions Regulation for 2021-2027’) and the fund-specific regulations.

(38) The Programme should strengthen cooperation between European Partnerships and private and/or public sector partners at international level, including by joining up R&I programmes and cross-border investment in R&I bringing mutual benefits to people and businesses while ensuring that the Union can uphold its interests in strategic areas.

(39) Future Emerging Technologies (FET) Flagships have proven to be an effective and efficient instrument, delivering benefits for society in a joint, coordinated effort by the Union and its Member States. Activities carried out within the FET Flagships on Graphene, the Human Brain Project and Quantum Technology, which are supported under Horizon 2020, will continue to be supported under the Programme through calls for proposals included in the work programme. Preparatory actions supported under the FET Flagships part of Horizon 2020 will feed the strategic planning under the Programme and inform the work on missions, co-funded and/or co-programmed European Partnerships and regular calls for proposals.

(40) The Joint Research Centre (JRC) should continue to provide independent customer-driven scientific evidence and technical support for Union policies throughout the whole policy cycle. The direct actions of the JRC should be implemented in a flexible, efficient and transparent manner, taking into account the needs of Union policies and the relevant needs of the users of the JRC and ensuring the protection of the Union’s financial interests. The JRC should continue to generate additional resources.

(41) The pillar ‘Innovative Europe’ should establish a series of measures for the provision of integrated support to respond to the needs of entrepreneurs and entrepreneurship aiming to realise and accelerate breakthrough innovation for rapid market growth as well as to promote the Union’s strategic autonomy while preserving an open economy. It should provide a ‘one-stop shop’ to attract and support all types of innovators and innovative companies, such as SMEs, including start-ups, and, in exceptional cases, small mid-caps, with potential for scaling up at Union and international level. The pillar should offer fast, flexible grants and co-investments, including with private investors. Those objectives should be pursued through the creation of a European Innovation Council (EIC). The pillar should also support the European Institute of Innovation and Technology (EIT) and European innovation ecosystems at large, in particular through European Partnerships with national and regional innovation support actors.

(42) For the purpose of this Regulation and in particular for the activities carried out under the EIC, a ‘start-up’ should be understood as an SME in the early stage of its life cycle, including those that are created as spin-offs from university research activities, which aims to find innovative solutions and scalable business models, and which is autonomous within the meaning of Article 3 of the Annex to Commission Recommendation 2003/361/EC (9); a ‘mid-cap’ should be understood as an enterprise that is not an SME and that has between 250 and 3 000 employees, where the staff headcount is calculated in accordance with Articles 3 to 6 of Title I of the Annex to that Recommendation; and a ‘small mid-cap’ should be understood as a mid-cap that has up to 499 employees.

(43) The policy objectives of the Programme are to be addressed also through financial instruments and budgetary guarantee of the InvestEU Programme, thereby promoting synergies between the two programmes.

(44) The EIC, together with other components of the Programme, should stimulate all forms of innovation, ranging from incremental to breakthrough and disruptive innovation, targeting especially market-creating innovation. Through its Pathfinder and Accelerator instruments, the EIC should aim to identify, develop and deploy high-risk innovations of all kinds, including incremental innovations, with a main focus on breakthrough, disruptive and deep-tech innovations that have the potential to become market-creating innovations. Through coherent and streamlined support, the EIC should fill the current vacuum in public support and private investment for breakthrough innovation. The instruments of the EIC require dedicated legal and management features in order to reflect its objectives, in particular market deployment action.

(45) The Accelerator is intended to bridge the ‘valley of death’ between research, pre-mass commercialisation and the scaling-up of companies. The Accelerator will provide support to high-potential operations presenting such technological, scientific, financial, management or market risks that they are not yet considered to be bankable and therefore cannot raise significant investments from the market, hence complementing the InvestEU Programme.

(46) In close synergy with the InvestEU Programme, the Accelerator, in its blended finance and equity financial support forms, should finance projects run by SMEs, including start-ups, and, in exceptional cases, small mid-caps, which are either not yet able to generate revenues, or not yet profitable, or not yet able to attract sufficient investment to implement fully their projects’ business plan. Such eligible entities would be considered to be non-bankable, while a part of their investment needs could have been or could be provided by one or several investors, such as a private or public bank, a family office, a venture capital fund or a business angel. In that way the Accelerator is intended to overcome a market failure and finance promising, but not yet bankable entities engaged in breakthrough market-creating innovation projects. Once they become bankable, those projects could be financed under the InvestEU Programme.

(47) While the Accelerator budget should be mainly distributed through blended finance, for the purpose of Article 48, its grant-only support to SMEs, including start-ups, should correspond to that under the SME instrument budget of Horizon 2020.

(48) The EIT, primarily through its Knowledge and Innovation Communities (KICs) and by expanding its Regional Innovation Scheme, should aim to strengthen innovation ecosystems that tackle global challenges. This should be achieved by fostering the integration of innovation, research, higher education and entrepreneurship. In accordance with a Regulation of the European Parliament and of the Council on the European Institute of Innovation and Technology (the ‘EIT Regulation’) and its Strategic Innovation Agenda referred to in a Decision of the European Parliament and of the Council on the Strategic Innovation Agenda of the European Institute of Innovation and Technology (EIT) 2021-2027 the EIT should foster innovation through its activities and should significantly step up its support to the integration of higher education within the innovation ecosystem, in particular by stimulating entrepreneurial education, fostering strong non-disciplinary collaboration between industry and academia, and identifying prospective skills for future innovators to address global challenges, which include advanced digital and innovation skills. Support schemes provided by the EIT should benefit EIC beneficiaries, while start-ups emerging from the EIT’s KICs should have simplified and thereby faster access to EIC actions. While the EIT’s focus on innovation ecosystems should make it naturally fit within the pillar ‘Innovative Europe’, it should also support the other pillars, as appropriate. Unnecessary duplication between KICs and other instruments in the same field, in particular other European Partnerships, should be avoided.

(49) A level playing field for competing companies in a given market should be ensured and preserved, since it is a key requirement for all types of innovation, including breakthrough, disruptive and incremental innovation, to flourish thereby enabling in particular a large number of small and medium-size innovators to build-up their R&I capacity, to reap the benefits of their investment and to capture a share of the market.

(50) The Programme should promote and integrate cooperation with third countries and international organisations and initiatives based on the Union’s interests, mutual benefits, international commitments, science diplomacy and, as far as possible, reciprocity. International cooperation should aim to strengthen the Union’s excellence in R&I, attractiveness, capacity to retain best talents and economic and industrial competitiveness, to tackle global challenges including the SDGs by following the principles of the 2030 Agenda and the Paris Agreement, and to support the Union’s external policies. An approach of general openness to international participation and targeted international cooperation actions should be followed, including through appropriate eligibility for funding of entities established in low to middle income countries. The Union should aim to conclude international cooperation agreements in the field of R&I with third countries. At the same time, association of third countries, in particular for collaborative parts to the Programme, should be promoted, in accordance with association agreements and focusing on added value for the Union. When allocating associated countries’ financial contributions to the Programme, the Commission should take into account the level of participation of legal entities of those third countries in the different parts of the Programme.

(51) With the aim of deepening the relationship between science and society and maximising the benefits of their interactions, the Programme should engage and involve all societal actors, such as citizens and civil society organisations, in co-designing and co-creating responsible research and innovation (RRI) agendas, content and throughout processes that address citizens’ and civil society’s concerns, needs and expectations, promoting science education, making scientific knowledge publicly accessible, and facilitating participation by citizens and civil society organisations in its activities. This should be done across the Programme and through dedicated activities in the part ‘Widening Participation and Strengthening the ERA’. The engagement of citizens and civil society in R&I should be coupled with public outreach activities to generate and sustain public support for the Programme. The Programme should also seek to remove barriers and boost synergies between science, technology, culture and the arts to obtain a new quality of sustainable innovation. The measures taken to improve the involvement of citizens and civil society in the supported projects should be monitored.

(52) Where appropriate, the Programme should take into account the specific characteristics of the outermost regions as identified in Article 349 of the Treaty on the Functioning of the European Union (TFEU) and in line with the Commission’s communication of 24 October 2017 entitled ‘A stronger and renewed strategic partnership with the EU’s outermost regions’, as welcomed by the Council.

(53) The activities developed under the Programme should aim to eliminate gender bias and inequalities, enhancing work-life balance and promoting equality between women and men in R&I, including the principle of equal pay without discrimination based on sex, in accordance with Articles 2 and 3 of the Treaty on European Union (TEU) and Articles 8 and 157 TFEU. The gender dimension should be integrated in R&I content and followed through at all stages of the research cycle. In addition, the activities under the Programme should aim to eliminate inequalities and promote equality and diversity in all aspects of R&I with regard to age, disability, race and ethnicity, religion or belief, and sexual orientation.

(54) In light of the specificities of the defence industry sector, the detailed provisions for Union funding to defence research projects should be fixed in Regulation (EU) .../... of the European Parliament and of the Council (10) ((+)) (the ‘European Defence Fund’) which defines the rules of participation for defence research. Activities to be carried out under the European Defence Fund should have an exclusive focus on defence research and development, while activities carried out under the specific programme established by Council Decision (EU) .../... (11) ((++)) (the ‘specific programme’) and the EIT should have an exclusive focus on civil applications. Unnecessary duplication should be avoided.

(55) This Regulation lays down a financial envelope for the entire duration of the Programme which is to constitute the prime reference amount, within the meaning of point 18 of the Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources (12), for the European Parliament and the Council during the annual budgetary procedure. That financial envelope comprises an amount of EUR 580 000 000 in current prices for the specific programme established by Decision (EU) .../... ((+)) and for the EIT, in line with the joint declaration by the European Parliament, Council and Commission of 16 December 2020 on the reinforcement of specific programmes and adaptation of basic acts (13).

(56) Regulation (EU, Euratom) 2018/1046 of the European Parliament and of the Council (14) (the ‘Financial Regulation’) applies to this Programme. The Financial Regulation lays down rules on the implementation of the Union budget, including the rules on grants, prizes, procurement, indirect management, financial instruments, budgetary guarantees, financial assistance and the reimbursement of external experts.

(57) In accordance with Article 193(2) of the Financial Regulation, a grant may be awarded for an action which has already begun, provided that the applicant can demonstrate the need for starting the action prior to signature of the grant agreement. However, the costs incurred prior to the date of submission of the grant application are not eligible, except in duly justified exceptional cases. In order to avoid any disruption in Union support which could be prejudicial to Union’s interests, it should be possible to provide in the financing decision, during a limited period of time at the beginning of the MFF 2021-2027, and only in duly justified cases, for eligibility of activities and costs from the beginning of the 2021 financial year, even if they were implemented and incurred before the grant application was submitted.

(58) Continually throughout the Programme, administrative simplification should be sought, in particular the reduction of the administrative burden for beneficiaries. The Commission should further simplify its tools and guidance in such a way that they impose a minimal burden on beneficiaries. In particular, the Commission should consider issuing an abridged version of the guidance.

(59) The completion of the Digital Single Market and the growing opportunities from the convergence of digital and physical technologies require investments to be increased. The Programme should contribute to those efforts with a substantial increase in spending on main digital R&I activities compared to Horizon 2020 (15). This should ensure that Europe remains at the forefront of global R&I in the digital field.

(60) Quantum research under the ‘Digital, Industry and Space’ cluster under Pillar II should be prioritised, given its crucial role in the digital transition, namely by expanding the European scientific leadership and excellence in quantum technologies, enabling the envisaged budget set in 2018 to be achieved.

(61) In accordance with the Financial Regulation, Regulation (EU, Euratom) No 883/2013 of the European Parliament and of the Council (16) and Council Regulations (EC, Euratom) No 2988/95 (17), (Euratom, EC) No 2185/96 (18) and (EU) 2017/1939 (19), the financial interests of the Union are to be protected by means of proportionate measures, including measures relating to the prevention, detection, correction and investigation of irregularities, including fraud, to the recovery of funds lost, wrongly paid or incorrectly used, and, where appropriate, to the imposition of administrative penalties. In particular, in accordance with Regulations (Euratom, EC) No 2185/96 and (EU, Euratom) No 883/2013, the European Anti-Fraud Office (OLAF) has the power to carry out administrative investigations, including on-the-spot checks and inspections, with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union. The European Public Prosecutor’s Office (EPPO) is empowered, in accordance with Regulation (EU) 2017/1939, to investigate and prosecute criminal offences affecting the financial interests of the Union as provided for in Directive (EU) 2017/1371 of the European Parliament and of the Council (20). In accordance with the Financial Regulation, any person or entity receiving Union funds is to fully cooperate in the protection of the financial interests of the Union, grant the necessary rights and access to the Commission, OLAF, the Court of Auditors and, in respect of those Member States participating in enhanced cooperation pursuant to Regulation (EU) 2017/1939, the EPPO, and ensure that any third parties involved in the implementation of Union funds grant equivalent rights.

(62) Third countries which are members of the European Economic Area (EEA) may participate in Union programmes in the framework of the cooperation established under the Agreement on the European Economic Area (21), which provides for the implementation of the programmes on the basis of a decision adopted under that Agreement. Third countries may also participate on the basis of other legal instruments. A specific provision should be introduced in this Regulation requiring third countries to grant the necessary rights and access required for the authorising officer responsible, OLAF and the Court of Auditors to comprehensively exercise their respective competences.

(63) Pursuant to Article 94 of Council Decision 2013/755/EU (22), persons and entities established in overseas countries or territories are eligible for funding subject to the rules and objectives of the Programme and possible arrangements applicable to the Member State to which the relevant overseas country or territory is linked.

(64) Pursuant to paragraphs 22 and 23 of the Interinstitutional Agreement of 13 April 2016 for Better Law-Making (23), this Programme should be evaluated on the basis of information collected in accordance with specific reporting and monitoring requirements, while avoiding overregulation and an administrative burden, in particular on the Member States and the beneficiaries of the Programme. Those requirements, where appropriate, should include measurable indicators as a basis for evaluating the effects of the Programme on the ground.

(65) In order to ensure the effective assessment of the Programme’s progress towards the achievement of its objectives, the power to adopt acts in accordance with Article 290 TFEU should be delegated to the Commission in respect of amending Annex V with regard to the impact pathway indicators, where considered to be necessary, and to set baselines and targets as well as to supplement this Regulation with provisions on the establishment of a monitoring and evaluation framework. It is of particular importance that the Commission carry out appropriate consultations during its preparatory work, including at expert level, and that those consultations be conducted in accordance with the principles laid down in the Interinstitutional Agreement of 13 April 2016 on Better Law-Making. In particular, to ensure equal participation in the preparation of delegated acts, the European Parliament and the Council receive all documents at the same time as Member States’ experts, and their experts systematically have access to meetings of Commission expert groups dealing with the preparation of delegated acts.

(66) Coherence and synergies between the Programme and the Union Space Programme will foster a globally competitive and innovative European space sector, reinforce Europe’s autonomy in accessing and using space in a secure and safe environment and strengthen Europe’s role as a global actor. Excellence in research, breakthrough solutions and downstream users in the Programme will be supported by data and services made available by the Union Space Programme.

(67) Coherence and synergies between the Programme and the Erasmus+ Programme will foster the uptake of research results through training activities, diffuse innovation spirit to the education system and ensure that education and training activities rely on the most updated R&I activities. In that regard, following the pilot actions launched under Erasmus+ 2014-2020 concerning European Universities, the Programme will, where appropriate, complement in a synergetic way the support provided by the Erasmus+ Programme to European Universities.

(68) In order to increase the impact of the Programme in addressing Union priorities, synergies with programmes and instruments aiming to responding to emerging Union needs should be encouraged and sought, including with the Just Transition Mechanism, the Recovery and Resilience Facility and EU4Health Programme.

(69) The rules for participation and dissemination should adequately reflect the needs of the Programme taking into account the concerns raised and the recommendations made by various stakeholders, as well as in the interim evaluation of Horizon 2020 carried out with the assistance of independent external experts.

(70) Common rules across the Programme should ensure a coherent framework which facilitates participation in programmes financially supported by the budget of the Programme, including participation in programmes managed by funding bodies such as the EIT, joint undertakings or any other structures under Article 187 TFEU, and participation in programmes undertaken by Member States under Article 185 TFEU. Adopting specific rules should be possible, but such exceptions should be limited to when strictly necessary and duly justified.

(71) Actions which fall within the scope of the Programme should respect fundamental rights and observe the principles acknowledged in particular by the Charter of Fundamental Rights of the European Union (the ‘Charter’). Such actions should be in conformity with any legal obligation including international law and with any relevant Commission decisions such as the Commission notice of 28 June 2013 (24), as well as with ethical principles, which include avoiding any breach of research integrity. The opinions of the European Group on Ethics in Science and New Technologies, the European Union Agency for Fundamental Rights and the European Data Protection Supervisor should be taken into account, where appropriate. Article 13 TFEU should also be taken into account in research activities, and the use of animals in research and testing should be reduced, with a view ultimately to replacing their use.

(72) In order to guarantee scientific excellence, and in line with Article 13 of the Charter, the Programme should promote the respect of academic freedom in all countries benefiting from its funds.

(73) In accordance with the objectives of international cooperation as set out in Articles 180 and 186 TFEU, the participation of legal entities established in third countries and of international organisations should be promoted, based on mutual benefits and the Union’s interests. The implementation of the Programme should be in conformity with the measures adopted in accordance with Articles 75 and 215 TFEU and should be in compliance with international law. For actions related to Union strategic assets, interests, autonomy or security, it should be possible for participation in specific actions of the Programme to be limited to legal entities established only in Member States or to legal entities established in specified associated or other third countries in addition to Member States. Any exclusion of legal entities established in the Union or in associated countries directly or indirectly controlled by non-associated third countries or by legal entities of non-associated third countries should take into account the risks the inclusion of such entities would represent, on the one hand, and the benefits that their participation would generate, on the other hand.

(74) The Programme acknowledges climate change as one of the biggest global and societal challenges and reflects the importance of tackling climate change in accordance with the Union’s commitment to implement the Paris Agreement and the SDGs. Accordingly, the Programme should contribute to mainstream climate actions and to the achievement of an overall target of 30 % of the Union budget expenditures supporting climate objectives. Climate mainstreaming should be adequately integrated in R&I content and applied at all stages of the research cycle.

(75) In the context of the impact pathway related to climate, the Commission should report on the results, innovations and aggregated estimated effects of projects that are climate-relevant, including by Programme part and by implementation mode. In carrying out its analysis, the Commission should take account of the long-term economic, societal and environmental costs and benefits to Union citizens of activities under the Programme, including the uptake of innovative climate mitigation and adaptation solutions, the estimated impact on jobs and company creation, economic growth and competitiveness, clean energy, health and well-being, including air, soil and water quality. The results of that impact analysis should be made public, should be assessed in the context of the Union’s climate and energy goals and should contribute to the subsequent strategic planning and future work programmes.

(76) Reflecting the importance of tackling the dramatic loss of biodiversity, R&I activities under the Programme should contribute to the preservation and restoration of biodiversity and to the achievement of the overall ambition of providing 7,5 % of annual spending under the MFF to biodiversity objectives in 2024 and 10 % of annual spending under the MFF to biodiversity objectives in 2026 and 2027, while considering the existing overlaps between climate and biodiversity goals in accordance with the Interinstitutional Agreement of 16 December 2020 between the European Parliament, the Council of the European Union and the European Commission on budgetary discipline, on cooperation in budgetary matters and on sound financial management, as well as on new own resources, including a roadmap towards the introduction of new own resources.

(77) Horizontal financial rules adopted by the European Parliament and the Council on the basis of Article 322 TFEU apply to this Regulation. Those rules are laid down in the Financial Regulation and determine in particular the procedure for establishing and implementing the budget through grants, procurement, prizes and indirect implementation, and provide for checks on the responsibility of financial actors. Rules adopted on the basis of Article 322 TFEU also include a general regime of conditionality for the protection of the Union budget.

(78) It is possible that the use of sensitive background information or access by unauthorised individuals to sensitive results have an adverse impact on the interests of the Union or of one or more of the Member States. Thus handling of confidential data and classified information should be governed by all relevant Union law, including the Institutions’ internal rules, such as Commission Decision (EU, Euratom) 2015/444 (25).

(79) It is necessary to establish the minimum conditions for participation, both as a general rule where a consortium should include at least one legal entity from a Member State, and with regard to the specificities of particular types of action under the Programme.

(80) It is necessary to establish the terms and conditions for providing Union funding to participants in actions under the Programme. Grants should be the main form of support in the Programme. They should be implemented taking into account all forms of contribution set out in the Financial Regulation, including lump sums, flat rates or unit costs, with a view to further simplification. The grant agreement should establish the rights and obligations of the beneficiaries, including the role and tasks of the coordinator where applicable. Close cooperation with Member States experts should be ensured in the drawing up of the model grant agreements and in any substantial amendment to them, in view, among other things, of further simplification for beneficiaries.

(81) The funding rates in this Regulation are referred to as maximums in order to comply with the co-financing principle.

(82) In accordance with the Financial Regulation, the Programme should provide the basis for a wider acceptance of the usual cost-accounting practices of the beneficiaries as regards personnel costs and unit costs for internally invoiced goods and services, including for large research infrastructures within the meaning of Horizon 2020. The use of unit costs for internally invoiced goods and services calculated in accordance with the usual accounting practices of the beneficiaries combining actual direct costs and indirect costs should be an option which could be chosen by all beneficiaries. In that respect, beneficiaries should be able to include actual indirect costs calculated on the basis of allocation keys in such unit costs for internally invoiced goods and services.

(83) The current system of reimbursement of actual personnel costs should be further simplified, building on the project-based remuneration approach developed under Horizon 2020, and further aligned to the Financial Regulation, with the aim of reducing the remuneration gap between Union researchers involved in the Programme.

(84) The Participant Guarantee Fund set up pursuant to Horizon 2020 and managed by the Commission has proved to be an important safeguard mechanism which mitigates the risks associated with the amounts due and not reimbursed by defaulting participants. Therefore, the Participant Guarantee Fund, renamed the Mutual insurance mechanism (the ‘Mechanism’), should be continued and enlarged to other funding bodies in particular to initiatives pursuant to Article 185 TFEU. It should be possible to extend the Mechanism to beneficiaries of any other directly managed Union programme. On the basis of close monitoring of the possible negative returns on the investments made by the Mechanism, the Commission should take appropriate mitigating measures in order to allow the Mechanism to continue its interventions for the protection of the financial interests of the Union and to return contributions to beneficiaries at the payment of the balance.

(85) Rules governing the exploitation and dissemination of results should be laid down to ensure that beneficiaries protect, exploit, disseminate and provide access to those results as appropriate. More emphasis should be placed on to exploiting those results, and the Commission should identify and help maximise opportunities for beneficiaries to exploit results, in particular in the Union. The exploitation of results should take into consideration the principles of the Programme, including promoting innovation in the Union and strengthening the ERA.

(86) The key elements of the proposal evaluation and selection system of Horizon 2020 with its particular focus on excellence and, where applicable, on ‘impact’ and ‘quality and efficiency of implementation’, should be maintained. Proposals should continue to be selected based on the evaluation made by independent external experts. The evaluation process should be designed to avoid conflicts of interest and bias. The possibility of a two-stage submission procedure should be taken into account and, where appropriate, anonymised proposals could be evaluated during the first stage of evaluation. The Commission should continue to involve independent observers in the evaluation process, where applicable. For Pathfinder activities, missions and in other duly justified cases as set out in the work programme, the necessity to ensure the overall coherence of the portfolio of projects may be taken into account, provided that the proposals have passed the applicable thresholds. The objectives and procedures for doing so should be published in advance. In accordance with Article 200(7) of the Financial Regulation, applicants should receive feedback on the evaluation of their proposal, including, in particular, where applicable, the reasons for rejection.

(87) Systematic cross-reliance on assessments and audits with other Union programmes should be implemented in accordance with Articles 126 and 127 of the Financial Regulation for all parts of the Programme, where possible, in order to reduce administrative burden for beneficiaries of Union funds. Cross-reliance should be explicitly provided for by considering also other elements of assurance such as system and process audits.

(88) Specific challenges in the areas of R&I should be addressed by prizes, including common or joint prizes where appropriate, organised by the Commission or the relevant funding body with other Union bodies, associated countries, other third countries, international organisations or non-profit legal entities. Prizes should support the achievement of the objectives of the Programme.

(89) The types of financing and the methods of implementation under this Regulation should be chosen on the basis of their ability to achieve the specific objectives of the actions and to deliver results, taking into account, in particular, the costs of controls, the administrative burden and the expected risk of non-compliance. This should include consideration of the use of lump sums, flat rates and scales of unit costs.

(90) In order to ensure continuity in providing support in the relevant policy area and to allow implementation to start from the beginning of the MFF 2021-2027, this Regulation should enter into force as a matter of urgency and should apply, with retroactive effect, from 1 January 2021.

(91) Since the objectives of this Regulation cannot be sufficiently achieved by the Member States, but can rather, by reason of avoiding duplication, reaching critical mass in key areas and maximising Union added-value, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 TEU. In accordance with the principle of proportionality as set out in that Article, this Regulation does not go beyond what is necessary in order to achieve those objectives.

(92) Regulation (EU) No 1290/2013 of the European Parliament and the Council (26) and Regulation (EU) No 1291/2013 should therefore be repealed,

HAVE ADOPTED THIS REGULATION:

TITLE I

GENERAL PROVISIONS

Article 1 Subject matter 1. This Regulation establishes Horizon Europe – the Framework Programme for Research and Innovation (the ‘Programme’) for the duration of the MFF 2021-2027, sets out the rules for participation and dissemination concerning indirect actions under the Programme and determines the framework governing Union support for R&I activities for the same duration. This Regulation lays down the objectives of the Programme, the budget for the period 2021-2027, the forms of Union funding and the rules for providing such funding. 2. The Programme shall be implemented through: (a) the specific programme established by Decision (EU) …/… ((+)); (b) a financial contribution to the European Institute of Innovation and Technology established by the EIT Regulation; (c) the specific programme on defence research established by Regulation (EU) …/… ((+)). 3. This Regulation does not apply to the specific programme on defence research referred to in point (c) of paragraph 2 of this Article, with the exception of Articles 1 and 5, Article 7(1) and Article 12(1). 4. The terms ‘Horizon Europe’, ‘the Programme’ and ‘specific programme’ used in this Regulation refer to matters relevant only to the specific programme referred to in point (a) of paragraph 2, unless otherwise specified. 5. The EIT shall implement the Programme in accordance with its strategic objectives for the period 2021-2027, as laid down in the Strategic Innovation Agenda of the EIT, taking into account the strategic planning referred to in Article 6 and in the specific programme referred to in point (a) of paragraph 2 of this Article.

Article 2 Definitions For the purposes of this Regulation, the following definitions apply: (1) ‘research infrastructures’ means facilities that provide resources and services for the research communities to conduct research and foster innovation in their fields, including the associated human resources, major equipment or sets of instruments; knowledge-related facilities such as collections, archives or scientific data infrastructures; computing systems, communication networks and any other infrastructure of a unique nature and open to external users, essential to achieve excellence in R&I; they may, where relevant, be used beyond research, for example for education or public services and they may be ‘single sited’, ‘virtual’ or ‘distributed’; (2) ‘smart specialisation strategy’ means the national or regional innovation strategies which set priorities in order to build competitive advantage by developing and matching R&I own strengths to business needs in order to address emerging opportunities and market developments in a coherent manner, while avoiding duplication and fragmentation of efforts, including those that take the form of, or are included in, a national or regional R&I strategic policy framework, and fulfilling the enabling condition set out in the relevant provisions of the Common Provisions Regulation for 2021-2027; (3) ‘European Partnership’ means an initiative, prepared with the early involvement of Member States and associated countries, where the Union together with private and/or public partners (such as industry, universities, research organisations, bodies with a public service mission at local, regional, national or international level or civil society organisations including foundations and NGOs) commit to jointly supporting the development and implementation of a programme of R&I activities, including those related to market, regulatory or policy uptake; (4) ‘open access’ means online access, provided free of charge to the end user, to research outputs resulting from actions under the Programme in accordance with Article 14 and Article 39(3); (5) ‘open science’ means an approach to the scientific process based on open cooperative work, tools and diffusing knowledge, and includes the elements listed in Article 14; (6) ‘mission’ means a portfolio of excellence-based and impact-driven R&I activities across disciplines and sectors, intended to: (i) achieve, within a set timeframe, a measurable goal that could not be achieved through individual actions; (ii) have an impact on society and policy-making through science and technology; and (iii) be relevant for a significant part of the European population and a wide range of European citizens; (7) ‘pre-commercial procurement’ means the procurement of research and development services involving risk-benefit sharing under market conditions, and competitive development in phases, where there is a clear separation of the research and development services procured from the deployment of commercial volumes of end-products; (8) ‘public procurement of innovative solutions’ means procurement where contracting authorities act as a launch customer for innovative goods or services which are not yet available on a large-scale commercial basis, and may include conformity testing; (9) ‘access rights’ means rights to use results or background under terms and conditions laid down in accordance with this Regulation; (10) ‘background’ means any data, know how or information whatever its form or nature, tangible or intangible, including any rights such as intellectual property rights, that is: (i) held by beneficiaries prior to their accession to a given action; and (ii) identified by the beneficiaries in a written agreement as needed for implementing the action or for exploiting its results; (11) ‘dissemination’ means the public disclosure of the results by appropriate means, other than resulting from protecting or exploiting the results, including by scientific publications in any medium; (12) ‘exploitation’ means the use of results in further R&I activities other than those covered by the action concerned, including among other things, commercial exploitation such as developing, creating, manufacturing and marketing a product or process, creating and providing a service, or in standardisation activities; (13) ‘fair and reasonable conditions’ means appropriate conditions, including possible financial terms or royalty-free conditions, taking into account the specific circumstances of the request for access, for example the actual or potential value of the results or background to which access is requested and/or the scope, duration or other characteristics of the exploitation envisaged; (14) ‘funding body’ means a body or organisation, as referred to in point (c) of Article 62(1) of the Financial Regulation, to which the Commission has entrusted budget implementation tasks under the Programme; (15) ‘international European research organisation’ means an international organisation, the majority of whose members are Member States or associated countries, whose principal objective is to promote scientific and technological cooperation in Europe; (16) ‘legal entity’ means a natural person, or a legal person created and recognised as such under Union, national or international law, which has legal personality and the capacity to act in its own name, exercise rights and be subject to obligations, or an entity which does not have legal personality as referred to in point (c) of Article 197(2) of the Financial Regulation; (17) ‘widening countries’ or ‘low R&I performing countries’ means countries where legal entities need to be established in order to be eligible as coordinators under the ‘widening participation and spreading excellence’ component of the ‘Widening Participation and Strengthening ERA’ part of the Programme; from the Member States, those countries are Bulgaria, Croatia, Cyprus, Czechia, Estonia, Greece, Hungary, Latvia, Lithuania, Malta, Poland, Portugal, Romania, Slovakia and Slovenia, for the whole duration of the Programme; for associated countries, it means the list of eligible countries as defined based on an indicator and published in the work programme. Legal entities from outermost regions as defined in Article 349 TFUE shall be also fully eligible as coordinators under this component; (18) ‘non-profit legal entity’ means a legal entity which by its legal form is non-profit-making or which has a legal or statutory obligation not to distribute profits to its shareholders or individual members; (19) ‘small and medium-sized enterprise’ or ‘SME’ means a micro, small or medium-sized enterprise as defined in Article 2 of the Annex to Recommendation 2003/361/EC (27); (20) ‘small mid-cap’ means an entity that is not an SME and that has up to 499 employees where the staff headcount is calculated in accordance with Articles 3 to 6 of Annex to Recommendation 2003/361/EC; (21) ‘results’ means any tangible or intangible effect of a given action, such as data, knowhow or information, whatever its form or nature and whether or not it can be protected, as well as any rights attached to it, including intellectual property rights; (22) ‘research output’ means the results generated by a given action to which access can be given in the form of scientific publications, data or other engineered results and processes such as software, algorithms, protocols and electronic notebooks; (23) ‘Seal of Excellence’ means a quality label which shows that a proposal submitted to a call for proposals exceeded all of the evaluation thresholds set out in the work programme, but could not be funded due to lack of budget available for that call for proposals in the work programme and might receive support from other Union or national sources of funding; (24) ‘strategic R&I plan’ means an implementing act laying out a strategy for realising content in the work programme covering a maximum period of four years, follows a broad mandatory multi-stakeholder consultation process and specifies the priorities, suitable types of action and forms of implementation to be used; (25) ‘work programme’ means a document adopted by the Commission for the implementation of the specific programme in accordance with Article 14 of Decision (EU) …/… ((+)) or a document equivalent in content and structure adopted by a funding body; (26) ‘contract’ means an agreement concluded between the Commission or the relevant funding body with a legal entity implementing an innovation and market deployment action and supported by Horizon Europe blended finance or EIC blended finance; (27) ‘reimbursable advance’ means the part of the Horizon Europe blended finance or EIC blended finance that corresponds to a loan under Title X of the Financial Regulation, but that is directly awarded by the Union on a non-profit basis to cover the costs of activities corresponding to an innovation action, and which is to be reimbursed by the beneficiary to the Union under the conditions provided for in the contract; (28) ‘classified information’ means European Union classified information as defined in Article 3 of Decision (EU, Euratom) 2015/444 as well as classified information of Member States, classified information of third countries with which the Union has a security agreement and classified information of international organisation with which the Union has a security agreement; (29) ‘blending operation’ means an action supported by the Union budget, including within a blending facility or platform as defined in point (6) of Article 2 of the Financial Regulation, that combines non-repayable forms of support and/or financial instruments from the Union budget with repayable forms of support from development or other public finance institutions, as well as from commercial finance institutions and investors; (30) ‘Horizon Europe blended finance’ means financial support to a programme implementing innovation and market deployment action, consisting of a specific combination of a grant or reimbursable advance and an investment in equity or any other repayable form of support; (31) ‘EIC blended finance’ means direct financial support provided under the EIC to an innovation and market deployment action consisting of a specific combination of a grant or reimbursable advance and an investment in equity or any other repayable form of support; (32) ‘research and innovation action’ means an action primarily consisting of activities aiming to establish new knowledge or to explore the feasibility of a new or improved technology, product, process, service or solution. This may include basic and applied research, technology development and integration, testing, demonstration and validation on a small-scale prototype in a laboratory or simulated environment; (33) ‘innovation action’ means an action primarily consisting of activities directly aiming to produce plans and arrangements or designs for new, altered or improved products, processes or services, possibly including prototyping, testing, demonstrating, piloting, large-scale product validation and market replication; (34) ‘ERC frontier research action’ means a principal investigator-led research action, including ERC Proof of Concept, hosted by single or multiple beneficiaries receiving funding from the European Research Council (ERC); (35) ‘training and mobility action’ means an action geared towards the improvement of the skills, knowledge and career prospects of researchers, based on mobility between countries and, if relevant, between sectors or disciplines; (36) ‘programme co-fund action’ means an action to provide multi-annual co-funding to a programme of activities established or implemented by legal entities managing or funding R&I programmes, other than Union funding bodies; such a programme of activities may support networking and coordination, research, innovation, pilot actions, and innovation and market deployment actions, training and mobility actions, awareness raising and communication, dissemination and exploitation, and provide any relevant financial support, such as grants, prizes and procurement, as well as Horizon Europe blended finance or a combination thereof. The programme co-fund action may be implemented by those legal entities directly or by third parties on their behalf; (37) ‘pre-commercial procurement action’ means an action the primary aim of which is to realise the pre-commercial procurement implemented by beneficiaries that are contracting authorities or contracting entities; (38) ‘public procurement of innovative solutions action’ means an action the primary aim of which is to realise the joint or coordinated public procurement of innovative solutions implemented by beneficiaries that are contracting authorities or contracting entities; (39) ‘coordination and support action’ means an action contributing to the objectives of the Programme, excluding R&I activities, except when undertaken under the component ‘widening participation and spreading excellence’ of the part ‘Widening participation and strengthening the ERA’; and bottom-up coordination without co-funding of research activities from the Union that allows for cooperation between legal entities from Member States and associated countries in order to strengthen the ERA; (40) ‘inducement prize’ means a prize to spur investment in a given direction by specifying a target prior to the performance of the work; (41) ‘recognition prize’ means a prize to reward past achievements and outstanding work after it has been performed; (42) ‘innovation and market deployment action’ means an action which embeds an innovation action and other activities necessary to deploy an innovation in the market, including the scaling-up of companies, Horizon Europe blended finance or EIC blended finance; (43) ‘indirect actions’ means R&I activities to which the Union provides financial support and which are undertaken by participants; (44) ‘direct actions’ means R&I activities undertaken by the Commission through its JRC; (45) ‘procurement’ means procurement as defined in point (49) of Article 2 of the Financial Regulation; (46) ‘affiliated entity’ means an entity as defined in Article 187(1) of the Financial Regulation; (47) ‘innovation ecosystem’ means an ecosystem that brings together at Union level actors or entities whose functional goal is to enable technology development and innovation; it encompasses relations between material resources (such as funds, equipment, and facilities), institutional entities (such as higher education institutions and support services, research and technology organisations, companies, venture capitalists and financial intermediaries) and national, regional and local policy-making and funding entities; (48) ‘project-based remuneration’ means remuneration that is linked to the participation of a person in projects, is part of the beneficiary’s usual remuneration practices and is paid in a consistent manner.

Article 3 Programme objectives 1. The general objective of the Programme is to deliver scientific, technological, economic and societal impact from the Union’s investments in R&I so as to strengthen the scientific and technological bases of the Union and foster the competitiveness of the Union in all Member States including in its industry, to deliver on the Union strategic priorities and to contribute to the realisation of Union objectives and policies, to tackle global challenges, including the SDGs by following the principles of the 2030 Agenda and the Paris Agreement, and to strengthen the ERA. The Programme shall thus maximise Union added-value by focusing on objectives and activities that cannot be effectively realised by Member States acting alone, but in cooperation. 2. The Programme has the following specific objectives: (a) to develop, promote and advance scientific excellence, to support the creation and diffusion of high-quality new fundamental and applied knowledge, of skills, technologies and solutions, to support training and mobility of researchers, to attract talent at all levels and contribute to the full engagement of the Union’s talent pool in actions supported under the Programme; (b) to generate knowledge, strengthen the impact of R&I in developing, supporting and implementing Union policies and support the access to and uptake of innovative solutions in European industry, in particular SMEs, and in society to address global challenges, including climate change and the SDGs; (c) to foster all forms of innovation, facilitate technological development, demonstration and knowledge and technology transfer, strengthen deployment and exploitation of innovative solutions; (d) to optimise the Programme’s delivery with a view to strengthening and increasing the impact and attractiveness of the ERA, to foster excellence-based participation from all Member States, including low R&I performing countries, in the Programme and to facilitate collaborative links in European R&I.

Article 4 Programme structure 1. For the specific programme referred to in point (a) of Article 1(2) and the EIT, the Programme shall be structured in parts as follows, which contribute to the general and specific objectives set out in Article 3: (a) Pillar I ‘Excellent Science’, with the following components: (i) the ERC; (ii) Marie Skłodowska-Curie Actions (MSCA); (iii) research infrastructures; (b) Pillar II ‘Global Challenges and European Industrial Competitiveness’, with the following components, taking into account that SSH play an important role across all clusters: (i) cluster ‘Health’; (ii) cluster ‘Culture, Creativity and Inclusive Society’; (iii) cluster ‘Civil Security for Society’; (iv) cluster ‘Digital, Industry and Space’; (v) cluster ‘Climate, Energy and Mobility’; (vi) cluster ‘Food, Bioeconomy, Natural Resources, Agriculture and Environment’; (vii) non-nuclear direct actions of the JRC; (c) Pillar III ‘Innovative Europe’, with the following components: (i) the EIC; (ii) European innovation ecosystems; (iii) the EIT. (d) Part ‘Widening Participation and Strengthening the ERA’, with the following components: (i) widening participation and spreading excellence; (ii) reforming and enhancing the European R&I System. 2. The broad lines of activities of the Programme are set out in Annex I of this Regulation.

Article 5 Defence research and development Activities to be carried out under the specific programme referred to in point (c) of Article 1(2) and which are laid down in Regulation (EU) …/… ((+)), shall have an exclusive focus on defence research and development, with objectives and broad lines of activities aiming to foster the competitiveness, efficiency and innovation capacity of the European defence technological and industrial base.

Article 6 Strategic planning and implementation and forms of Union funding 1. The Programme shall be implemented by means of direct management or by means of indirect management by the funding bodies. 2. Funding under the Programme may be provided by means of indirect actions in any of the forms laid down in the Financial Regulation, however grants shall be the main form of support under the Programme. Funding under the Programme may also be provided through prizes, procurements and financial instruments within blending operations and equity support under the Accelerator. 3. The rules for participation and dissemination laid down in this Regulation shall apply to indirect actions. 4. The main types of action to be used under the Programme are defined in Article 2. The forms of funding referred to in paragraph 2 of this Article shall be used in a flexible manner across all objectives of the Programme with their use being determined on the basis of the needs and the characteristics of the particular objectives. 5. The Programme shall also support direct actions. Where those direct actions contribute to initiatives established under Article 185 or 187 TFEU, that contribution shall not be considered to be part of the financial contribution allocated to those initiatives. 6. The implementation of the specific programme referred to in point (a) of Article 1(2) and the EIT’s KICs shall be supported by a transparent and strategic planning of R&I activities as laid down in the specific programme referred to in point (a) of Article 1(2), in particular for the pillar ‘Global Challenges and European Industrial Competitiveness’ and cover also relevant activities in other pillars and the ‘Widening participation and strengthening the ERA’ part. The Commission shall ensure the early involvement of Member States and extensive exchanges with the European Parliament, to be complemented by consultations with stakeholders and the general public. Strategic planning shall ensure alignment with other relevant Union programmes and consistency with Union priorities and commitments and increase complementarity and synergies with national and regional funding programmes and priorities, thereby strengthening the ERA. Areas for possible missions and areas for possible Institutionalised European Partnerships shall be established in Annex VI. 7. Where appropriate, in order to allow faster access to funds for small collaborative consortia, a fast track to research and innovation procedure (FTRI procedure) may be proposed under some of the calls for proposals dedicated to select research and innovation actions or innovation actions under the Pillar ‘Global Challenges and European Industrial Competitiveness’ and the ‘European Innovation Council’ Pathfinder. A call for proposals under the FTRI procedure shall have the following cumulative characteristics: (a) bottom-up calls for proposals; (b) a shorter time-to-grant, not exceeding six months; (c) a support provided only to small collaborative consortia composed of maximum six different and independent eligible legal entities; (d) a maximum financial support per consortium not exceeding EUR 2,5 million. The work programme shall identify the calls for proposals which use the FTRI procedure. 8. Activities of the Programme shall be delivered primarily through open, competitive calls for proposals, including within missions and European Partnerships.

Article 7 Principles of the Programme 1. Research and innovation activities carried out under the specific programme referred to in point (a) of Article 1(2) and under the EIT shall have an exclusive focus on civil applications. Budgetary transfers between the amount allocated to the specific programme referred to in point (a) of Article 1(2) and the EIT and the amount allocated to the specific programme referred to in point (c) of Article 1(2) shall not be allowed and unnecessary duplication between the two programmes shall be avoided. 2. The Programme shall ensure a multidisciplinary approach and shall, where appropriate, provide for the integration of SSH across all clusters and activities developed under the Programme, including specific calls for proposals on SSH related topics. 3. The collaborative parts of the Programme shall ensure a balance between lower and higher TRLs, thereby covering the whole value chain. 4. The Programme shall ensure the effective promotion and integration of cooperation with third countries and international organisations and initiatives based on mutual benefits, the Union interests, international commitments and, where appropriate, reciprocity. 5. The Programme shall assist widening countries to increase their participation in it and to promote a broad geographical coverage in collaborative projects, including through spreading scientific excellence, boosting new collaborative links, stimulating brain circulation as well as through the implementation of Article 24(2) and Article 50(5). Those efforts shall be mirrored by proportional measures by Member States, including through setting attractive salaries for researchers, with the support of Union, national and regional funds. Without undermining the excellence criteria, particular attention shall be paid to geographical balance, subject to the situation in the field of R&I concerned, in evaluation panels and bodies such as boards and expert groups. 6. The Programme shall ensure the effective promotion of equal opportunities for all and the implementation of gender mainstreaming, including the integration of the gender dimension in R&I content. It shall aim to address the causes of gender imbalance. Particular attention shall be paid to ensuring, to the extent possible, gender balance in evaluation panels and in other relevant advisory bodies such as boards and expert groups. 7. The Programme shall be implemented in synergy with other Union programmes while aiming for maximal administrative simplification. A non-exhaustive list of synergies with other Union programmes is included in Annex IV. 8. The Programme shall contribute to increasing public and private investment in R&I in Member States, thereby helping to reach an overall investment of at least 3 % of Union GDP in research and development. 9. When implementing the Programme, the Commission shall continue to aim for administrative simplification and a reduction of the burden for the applicants and beneficiaries. 10. As part of the general Union objective of mainstreaming climate actions into Union sectoral policies and Union funds, actions under this Programme shall contribute at least 35 % of the expenditure to climate objectives where appropriate. Climate mainstreaming shall be adequately integrated in R&I content. 11. The Programme shall promote co-creation and co-design through the engagement of citizens and civil society. 12. The Programme shall ensure transparency and accountability of public funding in R&I projects, thereby preserving the public interest. 13. The Commission or the relevant funding body shall ensure that sufficient guidance and information is made available to all potential participants at the time of publication of the call for proposals, in particular the applicable model grant agreement.

Article 8 Missions 1. Missions shall be programmed within the pillar ‘Global Challenges and European Industrial Competitiveness’, but may also benefit from actions carried out within other parts of the Programme as well as complementary actions carried out under other Union programmes. Missions shall allow for competing solutions, resulting in pan-European added-value and impact. 2. Missions shall be defined and implemented in accordance with this Regulation and the specific programme, ensuring the active and early involvement of the Member States and extensive exchanges with the European Parliament. The missions, their objectives, budget, targets, scope, indicators and milestones shall be identified in strategic R&I plans or the work programmes as appropriate. Evaluations of proposals under the missions shall be carried out in accordance with Article 29. 3. During the first three years of the Programme, a maximum of 10 % of the annual budget of Pillar II shall be programmed through specific calls for proposals for implementing the missions. For the remaining years of the Programme that percentage may be increased subject to a positive assessment of the mission selection and of the management process. The Commission shall communicate the total budgetary share of each work programme dedicated to missions. 4. Missions shall: (a) using SDGs as sources for their design and implementation, have a clear R&I content and Union added-value, and contribute to reaching Union priorities and commitments and the Programme objectives referred to in Article 3; (b) cover areas of common European relevance, be inclusive, encourage broad engagement and active participation from various types of stakeholders from the public and private sector, including citizens and end-users, and deliver R&I results that could benefit all Member States; (c) be bold and inspirational, hence have wide, scientific, technological, societal, economic, environmental or policy relevance and impact; (d) indicate a clear direction and clear objectives, be targeted, measurable and time-bound and have a clear budgetary envelope; (e) be selected in a transparent manner and be centred on ambitious, excellence-based and impact-driven, but realistic goals and on research, development and innovation activities; (f) have the necessary scope, scale and mobilisation of the resources and leverage of additional public and private funds required to deliver their outcome; (g) stimulate activities across disciplines (including SSH) and encompass activities from a broad range of TRLs, including lower TRLs; (h) be open to multiple, bottom-up approaches and solutions which take into account human and societal needs and benefits and recognise the importance of diverse contributions to their achievement; (i) benefit from synergies with other Union programmes in a transparent manner as well as with national and, where relevant, regional innovation ecosystems. 5. The Commission shall monitor and evaluate each mission in accordance with Articles 50 and 52 and Annex V, including progress towards short, medium and long-term targets, covering the implementation, monitoring and phasing-out of the missions. An assessment of the first missions established under the Programme shall take place no later than 2023 and before any decision is taken on creating new missions, or on continuing, terminating or redirecting ongoing missions. The results of that assessment shall be made public and shall include, but not be limited to, an analysis of their selection process and of their governance, budget, focus and progress to date.

Article 9 The European Innovation Council 1. The Commission shall establish the EIC as a centrally managed ‘one-stop shop’ for implementing actions under Pillar III ‘Innovative Europe’ which relate to the EIC. The EIC shall focus mainly on breakthrough and disruptive innovation, targeting especially market-creating innovation, while also supporting all types of innovation, including incremental. The EIC shall operate in accordance with the following principles: (a) clear Union added-value; (b) autonomy; (c) ability to take risk; (d) efficiency; (e) effectiveness; (f) transparency; (g) accountability. 2. The EIC shall be open to all types of innovators including individuals, universities, research organisations and companies (SMEs, including start-ups, and, in exceptional cases, small mid-caps) as well as single beneficiaries and multi-disciplinary consortia. At least 70 % of EIC budget shall be dedicated to SMEs, including start-ups. 3. The EIC Board and the management features of the EIC are described in Decision (EU) …/… ((+)).

Article 10 European Partnerships 1. Parts of the Programme may be implemented through European Partnerships. The involvement of the Union in European Partnerships shall take any of the following forms: (a) participation in European Partnerships set up on the basis of memoranda of understanding or contractual arrangements between the Commission and the partners referred to in point (3) of Article 2, specifying the objectives of the European Partnership, related commitments of the Union and of the other partners regarding their financial and/or in-kind contributions, key performance and impact indicators, the results to be delivered and reporting arrangements. They include the identification of complementary R&I activities that are implemented by the partners and by the Programme (Co-programmed European Partnerships); (b) participation in and financial contribution to a programme of R&I activities, specifying the objectives, key performance and impact indicators, and the results to be delivered, based on the commitment of the partners regarding their financial and/or in-kind contributions and the integration of their relevant activities using a Programme co-fund action (Co-funded European Partnerships); (c) participation in and financial contribution to R&I programmes undertaken by several Member States in accordance with Article 185 TFEU or by bodies established pursuant to Article 187 TFEU, such as Joint Undertakings or by the EIT’s KICs in accordance with the EIT Regulation (Institutionalised European Partnerships). Institutionalised European Partnerships shall be implemented only where other parts of the Programme, including other forms of European Partnerships, would not achieve the objectives or would not generate the necessary expected impacts, and where justified by a long-term perspective and a high degree of integration. European Partnerships in accordance with Article 185 or Article 187 TFEU shall implement a central management of all financial contributions, except in duly justified cases. In the case of central management of all financial contributions, project level contributions from one participating state shall be made on the basis of the funding requested in proposals from legal entities established in that participating state, unless otherwise agreed among all participating states. The rules for Institutionalised European Partnerships shall specify, among other things, the objectives, key performance and impact indicators, and the results to be delivered, as well as the related commitments for financial and/or in-kind contributions of the partners. 2. European Partnerships shall: (a) be established for the purpose of addressing European or global challenges only in cases where the objectives of the Programme would be achieved more effectively through a European Partnership than by the Union alone and when compared to other forms of support under the Programme; an appropriate share of the budget of the Programme shall be allocated to those actions of the Programme that are implemented through European Partnerships; the majority of the budget in Pillar II shall be allocated to actions outside European Partnerships; (b) adhere to the principles of Union added-value, transparency and openness, and to having impact within and for Europe, strong leverage effect on sufficient scale, long-term commitments of all involved parties, flexibility in implementation, coherence, coordination and complementarity with Union, local, regional, national and, where relevant, international initiatives or other European Partnerships and missions; (c) have a clear life-cycle approach, be limited in time and include conditions for phasing-out the Programme funding. 3. European Partnerships under points (a) and (b) of paragraph 1 of this Article shall be identified in strategic R&I plans before being implemented in work programmes. 4. Provisions and criteria for the selection, implementation, monitoring, evaluation and phasing-out of European Partnerships are set out in Annex III.

Article 11 Review of missions and partnership areas By 31 December 2023, the Commission shall carry out a review of Annex VI to this Regulation as part of the overall monitoring of the Programme, including missions and Institutionalised European Partnerships established pursuant to Article 185 or 187 TFEU and present a report on the main findings to the European Parliament and the Council.

Article 12 Budget 1. The financial envelope for the implementation of the Programme for the period from 1 January 2021 to 31 December 2027 shall be EUR 86 123 000 000 in current prices for the specific programme referred to in point (a) of Article 1(2) and for the EIT and EUR 7 953 000 000 in current prices for the specific programme referred to in point (c) of Article 1(2). 2. The indicative distribution of the amount referred to in paragraph 1 for the specific programme referred to in point (a) of Article 1(2) and for the EIT shall be: (a) EUR 23 546 000 000 for Pillar I ‘Excellent Science’ for the period 2021-2027, of which: (i) EUR 15 027 000 000 for the ERC; (ii) EUR 6 333 000 000 for MSCA; (iii) EUR 2 186 000 000 for research infrastructures; (b) EUR 47 428 000 000 for Pillar II ‘Global Challenges and European Industrial Competitiveness’ for the period 2021-2027, of which: (i) EUR 6 893 000 000 for cluster ‘Health’; (ii) EUR 1 386 000 000 for cluster ‘Culture, Creativity and Inclusive Society’; (iii) EUR 1 303 000 000 for cluster ‘Civil Security for Society’; (iv) EUR 13 462 000 000 for cluster ‘Digital, Industry and Space’; (v) EUR 13 462 000 000 for cluster ‘Climate, Energy and Mobility’; (vi) EUR 8 952 000 000 for cluster ‘Food, Bioeconomy, Natural Resources, Agriculture and Environment’; (vii) EUR 1 970 000 000 for the non-nuclear direct actions of the JRC; (c) EUR 11 937 000 000 for Pillar III ‘Innovative Europe’ for the period 2021-2027, of which: (i) EUR 8 752 000 000 for the EIC; (ii) EUR 459 000 000 for European innovation ecosystems; (iii) EUR 2 726 000 000 for the EIT; (d) EUR 3 212 000 000 for Part ‘Widening Participation and Strengthening the ERA’ for the period 2021-2027, of which: (i) EUR 2 842 000 000 for ‘widening participation and spreading excellence’; (ii) EUR 370 000 000 for ‘reforming and enhancing the European R&I System’. 3. As a result of the Programme specific adjustment provided for in Article 5 of Regulation (EU, Euratom) 2020/2093 the amount referred to in the paragraph 1 for the specific programme referred to in point (a) of Article 1(2) of this Regulation and for the EIT shall be increased by an additional allocation of EUR 3 000 000 000 in constant 2018 prices as specified in Annex II to Regulation (EU, Euratom) 2020/2093. 4. The indicative distribution of the amount referred to in paragraph 3 shall be as follows: (a) EUR 1 286 000 000 in constant 2018 prices for Pillar I ‘Excellent Science’, of which: (i) EUR 857 000 000 in constant 2018 prices for the ERC; (ii) EUR 236 000 000 in constant 2018 prices for MSCA; (iii) EUR 193 000 000 in constant 2018 prices for research infrastructures; (b) EUR 1 286 000 000 in constant 2018 prices for Pillar II ‘Global Challenges and European Industrial Competitiveness’, of which: (i) EUR 686 000 000 in constant 2018 prices for cluster ‘Culture, Creativity and Inclusive Society’; (ii) EUR 257 000 000 in constant 2018 prices for cluster ‘Civil Security for Society’; (iii) EUR 171 000 000 in constant 2018 prices for cluster ‘Digital, and Industry and Space’; (iv) EUR 171 000 000 in constant 2018 prices for cluster ‘Climate, Energy and Mobility’; (c) EUR 270 000 000 in constant 2018 prices for Pillar III ‘Innovative Europe’, of which: (i) EUR 60 000 000 in constant 2018 prices for European innovation ecosystems; (ii) EUR 210 000 000 in constant 2018 prices for the EIT; (d) EUR 159 000 000 in constant 2018 prices for Part ‘Widening Participation and Strengthening the ERA’, of which: (i) EUR 99 000 000 in constant 2018 prices for ‘widening participation and spreading sharing excellence’; (ii) EUR 60 000 000 in constant 2018 prices for ‘reforming and enhancing the European R&I System’. 5. In order to respond to unforeseen situations or to new developments and needs, the Commission may, within the annual budgetary procedure, deviate from the amounts referred to in paragraph 2 up to a maximum of 10 %. There shall be no such deviation in respect of the amounts referred to in point (b)(vii) of paragraph 2 and the total amount set out for Part ‘Widening Participation and Strengthening the ERA’ of paragraph 2. 6. The amount referred to in paragraphs 1 and 3 of this Article for the specific programme referred to in point (a) of Article 1(2) and for the EIT, may also cover expenses for preparation, monitoring, control, audit, evaluation and other activities and expenditures necessary for managing and implementing the Programme, including all administrative expenditure, as well as evaluating the achievement of its objectives. The administrative expenses related to indirect actions shall not exceed 5 % of the total amount of indirect actions of the specific programme referred to in point (a) of Article 1(2) and of the EIT. Moreover, the amount referred to in paragraphs 1 and 3 of this Article for the specific programme referred to in point (a) of Article 1(2) and for the EIT may also cover: (a) in so far as they are related to the objectives of the Programme: expenses relating to studies, to meetings of experts, information and communication actions; (b) expenses linked to information technology networks focusing on information processing and exchange, including corporate information technology tools and other technical and administrative assistance needed in connection with the management of the Programme. 7. If necessary to enable the management of actions not completed by 31 December 2027, appropriations may be entered in the Union budget beyond 2027 to cover the expenses provided for in paragraph 6. 8. Budgetary commitments for actions extending over more than one financial year may be broken down into annual instalments over several years. 9. In accordance with point (a) of the second subparagraph of Article 193(2) of the Financial Regulation, in duly justified cases specified in the financing decision and for a limited period, activities supported under this Regulation and the underlying costs may be considered eligible as of 1 January 2021, even if they were implemented and incurred before the grant application was submitted.

Article 13 Resources from th