Disclaimer: This impact assessment commits only the Commission's services involved in its preparation and does not prejudge the final form of any decision to be taken by the Commission.

TABLE OF CONTENTS

1..... Introduction.. 5

1.1. Policy context 5

1.2. Scope of this impact assessment 6

1.3. Procedural issues and consultation of interested parties. 8

1.3.1. Impact Assessment Inter-Service Steering Group. 8

1.3.2. Review by the Impact Assessment Board. 9

1.3.3. Consultation and expertise. 9

1.3.4. Results of the stakeholder consultation. 10

2..... Problem definition.. 10

2.1. Key challenges in the EU rail sector 10

2.2. The main problems that require action. 12

2.3. Problem drivers. 14

2.3.1. Fragmentation of R&I efforts. 14

2.3.2. Low leverage of EU rail R&D investment 16

2.3.3. Limited and uncoordinated participation of stakeholders along the rail value chain 17

2.3.4. High costs, risks and lead times of R&I investments. 19

2.4. Most affected stakeholders and needs assessment 19

2.4.1. The railway community. 19

2.4.2. Other industrial sectors. 20

2.4.3. The European Commission and the Members States. 20

2.4.4. Passengers, users and EU citizens. 20

2.4.5. Academia, research community and SMEs. 21

2.5. Baseline scenario. 21

2.6. Subsidiarity. 22

2.6.1. Legal basis. 22

2.6.2. Necessity and EU added value. 22

3..... Objectives. 23

3.1. General objectives. 23

3.2. Specific objectives and operational objectives. 23

4..... Policy options. 26

4.1. Option 1 – Baseline – Horizon 2020 Collaborative Research Projects. 26

4.2. Option 2 – Contractual PPP. 26

4.3. Option 3 – Institutional PPP. 26

4.4. Option 4 – Coordination within ERA.. 27

5..... Assessing the impacts. 27

5.1. General approach to the assessment of impacts. 27

5.1.1. Input impacts and cost-effectiveness. 28

5.1.2. Economic, social and environmental outcomes. 28

5.2. Input impacts and cost-effectiveness. 29

5.2.1. Focus and coordination of research efforts. 29

5.2.2. Leverage of EU rail R&I funding. 30

5.2.3. Broad stakeholder participation and sustained networks. 32

5.2.4. Mitigation of innovation risks. 34

5.2.5. Operational performance. 35

5.2.6. Cost-effectiveness. 36

5.3. Economic, social and environmental outcomes. 39

5.4. Risk assessment 42

6..... Comparing the options. 45

6.1. Comparison of the options. 45

6.2. Preferred option. 47

6.2.1. Proposed governance structure. 48

6.2.2. Budget 51

7..... Monitoring and evaluation.. 52

8..... Annexes. 53

Annex I: Abbreviations. 53

Annex II: Key developments in the rail sector 53

Annex III: Overview of existing EU rail R&I projects. 53

Annex IV: EU rail R&I objectives and key priorities. 53

Annex V: Results of the Public Consultation. 53

Annex VI: Schematic comparison of the key governance elements of the options. 53

Annex VII: Summary of the cost-effectiveness analysis. 53

Annex VIII: Technology Readiness Levels (TRL) 53

Executive Summary Sheet

Impact assessment accompanying the proposal for a Council Regulation establishing a Shift2Rail Joint Undertaking

A. Need for action

Why? What is the problem being addressed? Maximum 11 lines

Innovation throughout the full rail value chain is a strategic enabler both to complete the Single European Railway Area – which is crucial to making rail a more attractive mode and encouraging a modal shift from road and air – and to boost the competitiveness of the European rail sector, confronted with increasing competition from the US and emerging Asian countries. Yet, past rail R&I efforts at EU level have not succeeded in supporting new technologies enabling the further integration of diverse national railway ecosystems and of different rail subsystems. This is namely due to the high level of fragmentation in national standards, the lack of a systems approach to research funding, and the difficulty in ensuring broad and coordinated participation of the different stakeholders along the rail value chain (manufacturers of rolling stock, infrastructure and signalling equipment, railway undertakings and infrastructure managers). Furthermore, the market uptake and impact of EU rail R&I projects under previous framework programmes has been low and slow, due to low operational margins of the rail industry, long product lifecycles, and funding gaps in the innovation cycle.

What is this initiative expected to achieve? Maximum 8 lines

The initiative is expected to accelerate the penetration of technological innovations that will support the creation of a truly integrated and interoperable EU railway market, thereby increasing the competitiveness of the EU rail sector, vis-à-vis both other transport modes and foreign competitors. This will, in turn, contribute to raising the quality, reliability and cost-efficiency of EU rail services. This can be achieved by effective and efficient governance mechanisms better aligning EU rail R&I efforts to support the completion of the SERA. These mechanisms include the development of a common, long-term, innovation-driven R&I agenda, with improved coordination of all key actors from the rail sector across Europe. It should also put in place adequate pathways for a more rapid commercial exploitation of research results.

What is the value added of action at the EU level? Maximum 7 lines

Levels of rail R&I funding have historically been low and what investment does take place suffers from fragmentation and inefficiencies, due to significant differences among national programmes and railway systems. The pooling and coordination of R&I efforts at EU level stands a better chance of success given the transnational nature of the infrastructure and technologies to be developed in support of the SERA, and the need to achieve a sufficient mass of resources. Action at EU level will help to rationalise research programmes and ensure interoperability of the systems developed. This standardisation will open a wider market and promote competition.

B. Solutions

What legislative and non-legislative policy options have been considered? Is there a preferred choice or not? Why? Maximum 14 lines

The present analysis uses H2020 Collaborative Research as a baseline against which the different forms of governance are analysed. The baseline entails a continuation of the FP7 Collaborative Research model, while integrating H2020 improvements, such as simplified monitoring arrangements and more emphasis on demonstration. The contractual PPP (cPPP) option entails the establishment of a flexible contractual agreement between the Commission and private partners to work towards a common programme, based on a roadmap drawn up by the latter, using standard collaborative research and innovation projects. The institutional PPP (iPPP) option involves creating a dedicated administrative structure for coordinating rail R&I, in the form of a Union body under Article 187 of the TFEU, thereby providing a framework for public and private players to work together and take joint decisions. The option of putting the European Railway Agency (ERA) in charge of R&I coordination entails a modification of the Agency's founding Regulation to enable it to undertake R&I activities next to its role as a regulatory authority. The four options are compared along a range of key parameters, such as focus on SERA, leverage, participation, operational performance and cost-effectiveness. The analysis concludes that, despite the longer set-up time, the iPPP option provides the most appropriate governance structure to ensure long-term strategic vision, broad participation and firm commitments.

Who supports which option? Maximum 7 lines

The public consultation reveals that there is strong and broad-based support for the iPPP option, which is judged to be nearly twice as effective as any other option, and emerges as the preferred option regardless of the type of organisation or the field of activity. Only 7.8% of respondents (from different stakeholder groups) believe it would be ineffective against 79% that believe it would be very effective or effective. In contrast, the baseline option was largely considered to be very ineffective or neutral in meeting the stated policy objectives. The cPPP and ERA options score similarly to the baseline scenario. A strong point of the ERA option would nevertheless be its capacity to improve interoperability. One concern regarding the iPPP option is the need to tailor governance arrangements adequately to ensure equal access for all stakeholders.

C. Impacts of the preferred option

What are the benefits of the preferred option (if any, otherwise main ones)? Maximum 12 lines

Under an iPPP, the coordination, programming and execution of rail R&I activities would be the responsibility of a single, dedicated administrative structure, ensuring more continuity and less fragmentation of R&I efforts. The development of a strategic long-term plan and of detailed work programmes, in close cooperation with all market players, will ensure the quality and relevance of future R&I projects in terms of supporting the competitiveness of the rail sector. The leading role played by the Commission will also ensure the alignment of the strategy with SERA objectives of high societal relevance such as standardisation, high safety levels and sustainability of EU railway systems. The stable nature of the iPPP and the firm, legally binding, commitments from the EU and industry partners will ensure a direct leverage effect at least 30% higher than other options. It will also give confidence to private partners, thus stimulating higher indirect investment levels, as well as attracting funding from other sources. The iPPP also ensures broad and balanced stakeholder participation, thanks to a flexible and transparent management of membership conditions and advisory roles.

What are the costs of the preferred option (if any, otherwise main ones)? Maximum 12 lines

A relative disadvantage of the iPPP is that the strong steer of the Commission would mean that the R&I agenda is aligned above all with SERA policy goals and this would reduce the short term industry relevance of the project portfolio. It also takes about 2 years to set up the relevant structures. In terms of cost-effectiveness the administrative costs of iPPP option are higher than other options, but the fact that industry commits to covering half of the running and winding down costs, means operating an iPPP is in fact 17% to 35% less costly for the Commission than other options considered.

How will businesses, SMEs and micro-enterprises be affected? Maximum 8 lines

The proposed initiative will affect all actors in the rail sector (rail supply industry, rail undertakings, rail vehicle leasing companies, rail infrastructure managers and regulatory and safety bodies), by proposing a range of novel business, operational and service solutions that support the search for a "best-in-class" profile for rail. The iPPP option will enable a targeted approach towards SMEs, with different levels of membership and specific, lighter conditions for SME participation.

Will there be significant impacts on national budgets and administrations? Maximum 4 lines

National budgets will not be directly impacted. The operational budget will be provided through H2020 and co-financed by industry. Indirectly, improved organisation of rail R&I efforts will contribute to lower infrastructure and operating costs – thus reducing the scale of subsidies paid out to the sector by national governments. Member States will also gain new possibilities to channel their rail R&I funding in a more efficient manner.

Will there be other significant impacts? Max 6 lines

Boosting and improving rail R&I investments will lead to more effective and efficient rail R&I, which in turn results in economic (competitiveness and operational efficiency of the sector, induced macroeconomic impacts for wider economy), social (employment, safety, security, service quality) and environmental (reduced pollution, noise, congestion) improvements. Given that the exact scope of activities of the future implementing structure is still being defined, the assessment of these impacts is done only at a general level.

D. Follow up

When will the policy be reviewed? Maximum 4 lines

The initiative will take into account the lessons learned with existing iPPPs. An evaluation of the implementation of the Regulation would be carried out by the Commission three years after the start of the activities of the iPPP, aimed at assessing whether the partnership in its setup is efficient and effective. This evaluation would be underpinned with quarterly and annual monitoring processes at project and programme level.

1. Introduction 1.1. Policy context

In its White Paper on a Roadmap to a Single European Transport Area, adopted on 28 March 2011 (hereinafter the 2011 White Paper)[1], the Commission stresses the need to create a Single European Railway Area (SERA) to achieve a more competitive and resource-efficient European transport system, and to address major societal issues such as rising traffic demand, congestion, security of energy supply and climate change.

Consequently, in January 2013, it adopted proposals for a 4th Railway Package[2] aimed at removing remaining administrative, technical and regulatory obstacles holding back the rail sector in terms of market opening and interoperability, so as to increase the efficiency of rail transport and facilitate cross-border activities. In parallel, it has set up a "Connecting Europe Facility"[3] to help complete the European single market by providing funding for high-performing and sustainable transport infrastructure.

The overarching goal of establishing an internal market for rail will necessarily imply the emergence of innovative approaches in business models, services and products, throughout the whole rail value chain. This will, in turn, require a dramatic increase in research and innovation efforts. The EU’s new programme for research and innovation (R&I), Horizon 2020 (H2020)[4], will run from 2014 to 2020 with an estimated total budget of EUR 70.2 billion, of which roughly 8% would go towards support to smart, green and integrated transport[5]. A key objective of H2020 is to improve the efficiency of EU funding and better address societal challenges by pooling together existing R&I efforts and expertise, namely through Public-Private Partnerships (PPPs). Under the current Seventh Framework Programme for Research (FP7)[6], PPPs have already been implemented in the form of:

· institutional PPPs (iPPPs), in the areas of aeronautics (SESAR (Single European Sky ATM Research) and Clean Sky), pharmaceutical research (Innovative Medicines Initiative or IMI), fuel cells and hydrogen (FCH), embedded systems (ARTEMIS) and nanoelectronics (ENIAC) or;

· contractual PPPs (cPPPs), such as the Factory of the Future Energy-efficient Buildings, Green Cars and Future internet partnerships launched under the European Economic Recovery Plan.[7]

H2020 intends to build on this partnering approach in the period 2014-2020. In its Communication of 10 July 2013 on "Public-private partnerships in H2020: a powerful tool to deliver on innovation and growth in Europe"[8], the Commission proposes a "first wave" of 6 iPPPs and 8 cPPPs to be established – or continued – under H2020. Alongside this "first wave", the Commission also calls for a Joint Undertaking in the railway sector, justifying such a move by the scale of R&I efforts required to consolidate EU leadership in rail technologies and the policy need to complete the SERA.

1.2. Scope of this impact assessment

This impact assessment seeks to assess how EU R&I investments in the rail sector can be better coordinated to accelerate the penetration of technological innovations required for an integrated, efficient and attractive EU railway market. The present analysis builds on existing studies adapting them to the specific issue of coordinating R&I in rail, namely:

· The impact assessment accompanying the H2020 proposals[9], which extensively describes the beneficial impacts to Europe's economy and society of better coordinating EU R&I funding. In particular, it highlights the relevance of partnering between the EU and private partners to make the R&I cycle more efficient, to improve coordination between actors and to shorten the time from research to market.

· The impact assessments accompanying the proposals to set up each of the Horizon 2020 "first wave" PPPs, which assess the different partnership approaches that can be implemented to achieve improved coordination.

This proportionate impact assessment builds on the conclusions of the mentioned assessments (see Box 1) and, at this stage, focuses exclusively on the impact of the governance structure that will be set up to implement rail R&I activities. The scope of the activities that will be covered by the future rail R&I implementing structure is not assessed as it is still undecided. In fact, defining this very scope will be the task of the future implementing structure once it is established.

Previous analyses by the Commission identifying potential rail R&I areas (see Annex IV), as well as an industry proposal for a "Shift2Rail" initiative, describing potential R&I activities to be carried out by 2020 in order to preserve the long-term competitiveness of the EU rail sector[10], will serve as a valuable input when defining the future rail R&I agenda. However, at this stage, they are only indicative and still need to be aligned to the SERA objectives and negotiated with the full range of rail stakeholders.

The reason for presenting this initiative relating to the governance structure for rail R&I, before having a precise R&I agenda, is that it is important to ensure the necessary legislative decisions can be taken in time to launch activities as close to the start of Horizon 2020 as possible. This responds directly to the call from the European Council to prioritise the impact of the Multiannual Financial Framework on growth and jobs. This time pressure means that work on setting up the implementing structure and on defining the concrete rail R&I agenda must be conducted in parallel.

The absence of a concrete rail R&I agenda means the analysis of economic, social and environmental impacts can only be conducted at a general level. The different options, which reflect alternative implementing structures available under the Horizon 2020 regulatory framework (see Box 1), are instead assessed in terms of their ability to effectively and efficiently implement the EU rail R&I agenda and achieve EU rail transport policy goals. For each option, a proportionate cost-effectiveness analysis is provided, quantifying the administrative costs of the dedicated implementing structures.

Box 1 – The Horizon 2020 regulatory framework and lessons learned under FP7 Priorities for transport and rail related research The proposed regulatory framework for Horizon 2020 identifies a number of research and innovation priorities, under the theme "Societal Challenges" that should be supported through EU funding, including the specific objective of "achieving a European transport system that is resource-efficient, environmentally-friendly, safe and seamless for the benefit of citizens, the economy and society". It argues that "accelerating the development and deployment of new technologies and innovative solutions for vehicles, infrastructures and transport management will be key to achieve a cleaner and more efficient transport system in the Union; to deliver the results necessary to mitigate climate change and improve resource efficiency; to maintain European leadership on the world markets for transport related products and services". It adds that "these objectives cannot be achieved through fragmented national efforts alone" and that activities in this field "will support the implementation of the White Paper on Transport aiming at a Single European Transport Area"[11]. 8.23% of the total Horizon 2020 budget, which is estimated at EUR 70.2 billion, would be earmarked for this specific objective. Considering existing commitment appropriations in the aviation, road, waterborne and urban sectors, as well as cross-cutting issues, it is estimated that a budget of around EUR 450-500 million may be available for rail sector research and innovation activities. Established governance options Next to collaborative research projects, the proposed regulatory framework for Horizon 2020 allows for the establishment of public-private partnerships to support the development and implementation of research and innovation activities of strategic importance to the Union's competitiveness and industrial leadership or to address specific societal challenges. Such partnerships may take one of the following forms: Joint undertakings established on the basis of Article 187 TFEU or contractual agreements between the Union and private partners. Article 19 of the Horizon 2020 Regulation sets out a number of criteria that must be met when selecting areas for public-private partnerships, namely: a. the added value of action at Union level; b. the scale of impact on industrial competitiveness, sustainable growth and socio-economic issues; c. the long-term commitment from all partners based on a shared vision and clearly defined objectives; d. the scale of resources involved and the ability to leverage additional investments in research and innovation; e. a clear definition of roles for each of the partners and agreed key performance indicators over the period chosen. A more detailed description of the two PPP types is provided in Chapter 4. The legislation also foresees a single set of rules that will apply to all parts of Horizon 2020, including the Joint Undertakings, unless there is a well justified need for a specific derogation (see Box 2 for more information on a summary of simplification measures under Horizon 2020 compared to FP7). Lessons learnt under FP 7 There is no precedent for a PPP on rail under FP7. As a new initiative, it would have to base itself on the lessons learned from existing PPPs under FP7 (contractual PPPs and institutional PPPs). An assessment of PPPs under FP7[12] showed that they can play a significant role in mitigating market failures that are hindering R&I activities necessary for the resolution of technological challenges. In particular the stable and long-term framework of institutional PPPs through the development of strategic R&I agendas succeeds in bringing together key stakeholders from relevant industrial sectors (almost 30% of call participants in all institutional PPPs were SMEs) and to leverage significant private investment (€ 1 EU contribution was matched by about € 1.5 in private investment for all iPPPs taken together). PPPs under Horizon 2020 will differ from those created under FP7 by the possible extension of their range of activities to demonstration and deployment. They will also address several recommendations formulated for future PPPs: · The PPP needs to be open to new participants during its implementation; · The commitment from industry needs to be stronger; · A stronger focus is needed on generating measurable output and innovation; · The structures and instruments used for implementation need to become simpler and less bureaucratic[13], e.g.: o Reduced administrative costs for participants; o Faster processes for the selection proposals and the management of grants; o Decreased financial error rate.

1.3. Procedural issues and consultation of interested parties

This impact assessment is prepared by the Directorate-General for Mobility and Transport (DG MOVE), in coordination with the Directorate-General for Research and Innovation (DG RTD) to support the legislative proposal on an EU coordinated approach to Research and Innovation in the rail sector under Horizon 2020 in support to the completion of the Single European Railway Area (Agenda Planning reference 2013/MOVE/040). It also represents the ex-ante evaluation required for legislative proposals occasioning budgetary expenditure of the type which it accompanies.

1.3.1. Impact Assessment Inter-Service Steering Group

DG MOVE was assisted, for the preparation of this IA, by an inter-service Steering Group set up in May 2013, to which the following Directorate Generals were invited to contribute: SG, LS, RTD, BUDG, ECFIN, ENTR, MARKT, COMP, ENV, CLIMA, CNECT, TRADE, REGIO and EAC. The Group met 3 times[14] and SG, RTD, MARKT, ENTR and ENV actively participated in the work of the group. The last meeting took place on 13 September 2013, in view of discussing a draft IA to be submitted to the Impact Assessment Board.

1.3.2. Review by the Impact Assessment Board

This impact assessment was reviewed by the Commission Impact Assessment Board on 16 October 2013. Based on the Board's recommendations, the impact assessment has been revised according to the following lines. The scope of the initiative has been better described, outlining which elements have already been determined under Horizon 2020 (desirable format of coordinating mechanisms, funding, etc.), why action is needed now, and providing more details on how lessons learned and evaluations of existing programmes have been taken into account. In the problem definition, the logical link exists between more R&I efforts and the completion of the Single European Railway Area has been explained. The components that make up the different policy options, particularly as regards governance, have been outlined in more detail, in particular providing an explanation of the different modalities available within the iPPP option, i.e. joint undertaking and joint technology initiative. A clearer assessment of the expected implementation costs for public authorities has been provided. Also, the differences between the categories of stakeholders and specific Member States that might benefit more from this initiative than others have been highlighted. Finally, more references to the views of different stakeholder groups have be provided throughout the report.

1.3.3. Consultation and expertise

A web-based open consultation was launched on 28 June 2013. It was open for 12 weeks, until 19 September 2013, and provided all interested stakeholders with a possibility to express their views. 372 responses were received, including 152 responses from individual citizens and 220 from representatives of organisations or institutions. Responses came from 24 different EU countries and are thus highly representative of the whole EU. 60% of responses came from the five countries that currently receive the largest shares of current EU funding for rail research, namely France, Spain, Italy, Germany and the United Kingdom.

The majority of respondents were private companies (42%), followed by research organisations and universities (21.8%), industry associations and chambers of commerce (11.5%), SMEs (10%) and public authorities (5.5%). The remainder included NGOs, self-employed people or other. Respondents were mostly from the rail supply industry (rolling stock, vehicle components, construction and building), with just 5% of responses coming from infrastructure managers and 4% from railway undertakings. A detailed summary of the results can be found in Annex V.

This online consultation was complemented by individual meetings with sector representatives. As the initiative was initially led by the rail supply industry, it was important to ensure that other segments of the rail sector were sufficiently involved in the process and had the opportunity to express views. Between June and September 2013, the Commission services met, among others, with the following organisations: UNIFE (rail supply industry), CER (incumbent railway undertakings), UIP (wagon keepers), EIM (independent infrastructure managers), UITP (urban transport operators) and EPTO (private passenger transport operators).

A stakeholder hearing was also organised on 12 September 2013, to which 85 stakeholder representatives participated. It follows from the above that the Commission's minimum standards of consultation are respected.

1.3.4. Results of the stakeholder consultation

The vast majority of stakeholders strongly agree with the problems identified by the Commission – that is that current rail R&I efforts focus insufficiently on interoperability issues and standardisation, and fail to lead to the market take-up of innovative solutions. Fragmentation of R&I efforts along the innovation cycle, with insufficient focus on development, prototyping and large-scale demonstration activities is considered to be a major blocking point to developing innovative products that can be taken up by users both in the rail passenger and freight divisions. The current EU R&I framework is seen to have limited capacity in terms of achieving strong leverage of EU funds and a critical mass of stakeholders. Also, long renewal cycles typical to the rail sector are viewed as severely restricting private investment in R&I. On all these issues, the level of disagreement is very low, never exceeding 6.4% of respondents, and it is difficult to highlight specific patterns, although the key trends have been developed in Annex V.

Based on this appraisal of the current situation, a majority of stakeholders (53.5%) considers that the continuation of collaborative research in its current set-up would be largely ineffective in addressing the identified problems. Just 28% of respondents believe a status quo could be effective. Of these, close to half represent research organisations or academia, against just 25% of private companies, 14% of public authorities and 9% of SMEs.

According to stakeholders, key objectives of any future rail R&I initiative should primarily focus on ensuring continuity and a long-term vision for R&I investments, accelerating market take-up, ensuring synchronicity of innovations in the rail value chain, maximising return on investment, promoting interoperability and standardisation, and building sustained partnerships among all relevant stakeholders.

2. Problem definition 2.1. Key challenges in the EU rail sector

Ambitious EU goals on climate change, energy use and environmental protection mean that the railway sector will have to take on a larger share of transport demand in the next decades. The 2011 White Paper aims for 30% of road freight over 300 km to shift to other modes such as rail or waterborne transport by 2030, and more than 50% by 2050. It also aims for a majority of medium-distance passenger transport to go by rail by 2050.

However, rail still finds it difficult to challenge the dominance of road transport. Although there have been positive developments in some markets, such as the UK, Sweden, Denmark, France, Germany, Austria and Belgium, namely thanks to heavy investments in high-speed train infrastructure[15], the modal share of both freight and passenger rail has fallen significantly in most Eastern and Southern European countries. Overall, the modal share of intra-EU rail freight transport fell from 19.7% in 2000 to 17.1% in 2010[16], while that of intra-EU passenger rail remained fairly constant at 6.3%[17]. Employment in railways (both passenger and freight) has dropped by 25% from 2000 to 2010 to just over one million people.[18]

Reversing the trend in rail's modal share will thus be crucial to preserving jobs in the sector. However, this will not be easy without a step-change in the level of service as passenger satisfaction continues to lag behind many other sectors, with more than half of respondents to the Eurobarometer 2012 rail survey dissatisfied with their national and regional rail systems[19].

Revitalising the railways is thus a key goal of the EU’s transport policy. Modernising the sector — notably through the introduction of new technologies — is essential, if rail is to be able to compete successfully with other modes of transport and on potentially profitable markets: in particular, long-distance container transport for freight, and high-speed international services for passengers. Indeed, rail transport continues to rely to a large extent on public subsidies (some EUR 46 billion annually, split more or less evenly between service operations and infrastructure)[20] and will increasingly be faced with governments' spending constraints.

New technologies can do much to help modernise Europe’s railways, while reducing operational and infrastructure costs and creating new business opportunities for the European rail supply industry. ERTMS (European Rail Traffic Management Systems) is a prime example of how to improve the potential of Europe's railways and to help create a unified railway area, while also opening significant business opportunities for the European rail industry, both in and outside the EU. The take-up of ERTMS projects in countries such as Argentina, China, India, South Korea and Taiwan shows the global potential of the technology.

However, although significant investments in high technology products (such as ERTMS, as well as high-speed trains, automated metro systems, etc.) have been made in the EU in past years, the European rail supply industry is coming under pressure. Although it still leads at world level, accounting for more than EUR 49 billion of the EUR 131 billion global rail market[21], latest available data shows that employment in the rolling stock industry, which employs around 160.000 people, decreased by around 2% from 2004-2008[22].

A recent Commission study on the competitiveness of the railway supply industry[23] shows that Asia is steadily overtaking Europe as the largest rail supply market, namely thanks to massive investments in R&I. In the past decade, overall R&D expenditure in absolute terms has fallen significantly in the EU (although differences exist between countries – see figure 1 for data on the six main EU countries active in the rail industry), as well as in Japan, while it has surged in China, Korea and the US. Although the study does not provide 2008 data for China, separate data from the EU Industrial R&D Scoreboard[24] shows that the R&D expenditure of China Railway and China Railway Construction alone amounted to close to 1.5 billion USD (in constant 2005 prices) in 2011.

Figure 1: R&D expenditure in railway equipment for selected countries (million USD in constant 2005 prices), 2000 and 2008 (2000 and 2011 for China)

The long-term competitive success of European rail, both vis-à-vis foreign competition and other transport modes, thus depends on continuous product, service and process innovation, which, in turn, requires large-scale and coordinated investments in R&I.

2.2. The main problems that require action

As outlined in the 2011 White Paper, innovation throughout the whole of the rail value chain is a strategic enabler to complete the SERA and to boost the competitiveness of the rail sector[25]. Yet, in the past, R&I efforts in the rail sector at EU level have suffered from two main problems.

1) Firstly, R&I efforts at EU level have not been sufficiently targeted towards the broader policy goal of completing the SERA despite the fact that creating an internal market for rail will help to strengthen the competitiveness of the EU industry by creating economies of scale. This problem is highlighted in the stakeholder consultation. 89% of respondents agreed that R&I efforts have not succeeded in supporting new technologies enabling the integration of railway ecosystems and their different sub-systems (rail manufacturers, railway undertakings and infrastructure managers), against just 3.4% disagreeing. Numerous respondents to the stakeholder consultation point out that innovation is essential for improving the interoperability of the rail system and for overcoming the technical differences of the different railway systems across Member States, which represent the main barriers to achieving the SERA.

2) Secondly, the market uptake and impact of EU rail R&I projects under previous framework programmes has been low and slow. As in other sectors, the commercialisation of publicly-funded research results represents a bottleneck in the innovation process. A study of the impacts of transport research projects in FP5 and FP6[26] finds that the main outputs produced by transport research were academic outputs and transport modelling tools. Neither technological nor policy-relevant outputs were as prevalent. Furthermore, the report finds that between 30 and 60% of transport research results go entirely unexploited[27]. A report on FP7 implementation[28] also finds that only half of transport projects have led to reported "foreground results"[29]. This is relatively low compared to other sectors such as health, nanotechnologies, energy, environment or security (see table 1). Transport projects also produce relatively few publications and Intellectual Property Rights (IPR).

Table 1: Key outcomes of FP7 Cooperation projects

Priority areas (FP7 Cooperation projects) || Number of processed final reports || Share of projects with at least 1 IPR reported || Average number of publications per project || Average number of reported foregrounds per project

Health || 206 || 26.7% || 23.4 || 0.83

Food & Agriculture || 52 || 15.4% || 11.2 || 0.10

Nanotechnologies || 119 || 39.5% || 12.3 || 1.28

Energy || 36 || 30.6% || 5 || 1.92

Environment || 92 || 7.6% || 13 || 0.84

Transport || 98 || 11.2% || 0.8 || 0.50

Socio-economic sciences || 70 || 0.0% || 4.5 || 0.36

Space || 26 || 3.8% || 4.4 || 0.04

Security || 26 || 11.5% || 1.8 || 0.65

General Activities || 6 || 16.7% || 42 || 0.50

The share of unexploited research is significantly higher if the actual commercialisation of research results is considered. Among the reported foreground results for transport, only 24% concerned commercial exploitation of R&D results (see table 2).

Table 2 – Type of foreground results per sector

Priority areas (FP7 Cooperation projects) || General advancement of knowledge || Commercial exploitation of R&D results || Exploitation of R&D results via standards || Exploitation of results through EU policies || Exploitation of results through (social) innovation

Health || 62% || 25% || 1% || 4% || 9%

Food & Agriculture || 0% || 20% || 20% || 0% || 60%

Nanotechnologies || 42% || 49% || 4% || 3% || 1%

Energy || 74% || 23% || 0% || 3% || 0%

Environment || 39% || 3% || 3% || 45% || 10%

Transport || 39% || 24% || 0% || 33% || 4%

Socio-economic sciences || 12% || 12% || 0% || 52% || 24%

Space || 0% || 0% || 0% || 100% || 0%

Security || 6% || 53% || 0% || 12% || 29%

General Activities || 0% || 0% || 0% || 100% || 0%

These findings are also confirmed by an assessment of selected rail transport projects funded under Framework Programmes 4, 5 and 6, conducted by the European Rail Research Advisory Council (ERRAC), which finds that only 25% of rail research projects present a strong market uptake, whereas half are qualified as having weak market uptake[30]. Furthermore, 88% of respondents to the stakeholder consultation find that EU rail R&I focuses insufficiently on market uptake (with just 3.1% disagreeing, mainly private companies in various sectors). Many respondents point out that the lack of market uptake is largely due to the fact that EU funding is "estranged" from market needs. Research needs to focus much more on business and end-user needs and include closer-to-market activities, such as demonstration and validation activities. At the same time, uptake of research outcomes will require the rail sector to increase profitability.

2.3. Problem drivers

Four important drivers have been identified as contributing to the two main problems discussed above.

2.3.1. Fragmentation of R&I efforts

Fragmentation of funding for R&I is a major issue in the EU, where 90% of R&I budgets are spent nationally, without coordination across countries, thereby negatively affecting the efficiency of public funding of R&I in Europe[31]. As pointed out in the stakeholder consultation, national funds for R&I in the rail sector are largely viewed as closer to market needs than EU funds, causing rail companies to turn primarily to these and thereby hampering a coordinated EU R&I effort, oriented towards achieving the SERA. What's more, coordination of R&I efforts in the rail sector is even further constrained due to fragmentation can be seen among national railway ecosystems[32], among subsystems of the rail system, and along the innovation life cycle.

1. Fragmentation among railway ecosystems:

The fragmentation of R&I efforts among national ecosystems emerges as a key issue with 84% of respondents to the public consultation agreeing or strongly agreeing that this is a problem against just 2.5% disagreeing (mainly rail research organisations, as well as public railway undertakings and infrastructure managers).

The rail industry in Europe is a patchwork of disparate systems and networks, each applying diverse technical and operating standards, within national borders. Contrary to the US, where most rail traffic is freight-oriented, or to Asia, where passenger traffic is predominant, the European railway network mixes passenger and freight rail services, creating challenges in terms of interoperability and traffic management. Also, EU countries have 19 different signaling systems, use different widths of track gauges and operate electrified railway networks at many different voltages.[33]. This makes the construction of pan-European vehicles a challenging task – often ruled out as impractical and too expensive. Instead, the sector develops small series of vehicles, tailored to the inherent constraints of unique infrastructure, electrification or control-command systems in relatively small national markets.

This high level of product customisation and lack of European standardisation not only prevents the creation of single European railway market, it also results in increased production costs and low operational margins. This, in turn, inhibits significant investments into speculative technology-oriented research. Indeed, total R&D investments in the rail sector are relatively low compared to the road and air sectors (see figure 2). Low operational margins also limit market uptake of innovations, leading to slow renewal of vehicle stocks and product ranges, so that the average age for locomotives in Europe is 27 years[34]. Also, the small size of the separate ecosystems makes it difficult to create a critical mass of resources and stakeholders to undertake ambitious innovation programmes.

Figure 2 – Total R&D investments per mode and trends in R&D intensity[35]

That said, advances are being made, with multiple train services operating across borders such as Thalys, Eurostar, EuroCity, TGV and Oresundtrain. Differences in standards are usually bridged with compatible or specially made equipment (e.g. trains capable of running on different gauges, switchable overhead cables). Some differences are also gradually being overcome with the introduction of a unified signaling system, called European Train Controlling System (ETCS), developed as part of the European Rail Traffic Management System (ERTMS) initiative, under the authority of the European Railway Agency (ERA). Similar efforts will have to be pursued in the future, for instance to integrate fragmented rail ticketing systems and broader supply chain systems. This means underlying R&I activities need to be properly coordinated and synchronised to ensure the interoperability of solutions.

2. Fragmentation among the subsystems of the rail sector

On top of the segmentation of railway ecosystems, the lack of coordination among different components of the rail system – i.e. manufacturers of infrastructure, rolling stock and signalling equipment, railway undertakings and infrastructure managers – means a large set of disparate and sometimes conflicting technical solutions are developed. In spite of regulatory efforts to adopt technical specifications for increased interoperability, several points remain open due to a lack of technological solutions (e.g. electro-magnetic compatibility between railway vehicles and the network's electrical installations).

Past research projects have mostly focused on just one component of the rail system, rather than on improving the system as a whole and on creating a real EU-wide network. What's more, the complex interactions between rail system components limit the potential of improving one specific segment of the system without touching upon other segments. For instance, the introduction of high-capacity or high-speed trains can only help to increase capacity if accompanied by infrastructure changes, such as removal of loading-gauge limits and switch and crossing constraints.

3. Fragmentation along the innovation life cycle

Projects funded under existing EU research programmes have a typical duration of 3-4 years which is often not enough to go through all stages of the innovation cycle, from basic research to the competitive market. The total length of innovation cycle depends on the sector and the type of innovation, but for highly complex technologies, it is often 15 to 20 years long and implies high capital intensity[36]. Hence such technologies require a consistent multiannual programmatic approach.

Previous EU R&I projects have focused primarily on pre-competitive innovation at low Technology Readiness Levels (TRLs) so that projects require follow-up activities to lead to innovation [37]. As a result, a significant part of knowledge generated by EU R&I projects never finds its way to the market. 90.5% of respondents to the public consultation consider that EU R&I efforts are too fragmented along the innovation cycle (against just 0.8% disagreeing), and 85-95% are in favour of more support to development, prototyping and demonstration activities.

These different forms of fragmentation of rail R&I efforts thus make it difficult to develop ambitious, large-scale and long-term innovation programmes capable of proposing breakthrough solutions that have a real impact on the whole system and that can be deployed in the complete SERA.

2.3.2. Low leverage of EU rail R&D investment

For the 47 rail projects funded under the FP7-Transport budget line, the average share of private funding was just 34%, with only three projects obtaining more than 40% private funding[38]. This is partly due to the relatively low participation rates of private companies, which means that the EU has had to contribute higher levels of funding in these projects. Indeed, the average Commission contribution for the participation of academic or research organisations in projects was around 75% to 80%, against around 55% for private companies (see figure 3). By increasing the participation of industry and SMEs, the leverage and effectiveness of EU funding can be increased.

Figure 3: Amount of Commission funding per type of participant in FP7 rail projects

Additionally, enterprises lag behind in project coordination. Only 28% of FP7-Transport rail projects were coordinated by private companies against 43% for university and research organisations. This results in a situation in which most projects target relatively low technology levels, instead of demonstration projects, thereby limiting indirect leverage effects linked to additional private investments after project completion.

2.3.3. Limited and uncoordinated participation of stakeholders along the rail value chain

Under previous framework programmes, annual work programmes elaborated by the Commission in consultation with stakeholders served as the basis for ensuring coherence of rail R&I activities. However, projects were then selected individually through competitive calls for proposals, so that their specific objectives were not necessarily aligned with other projects and with overall EU policy goals. 77% of respondents to the public consultation found that EU R&I activities are not adequately coordinated (only 6% disagreed, half of which were research organisations). Separate calls lead to the formation of ad-hoc consortia, set up according to the specific needs of the project. Such a system hinders continuous collaborations of partners beyond single projects, resulting in reduced confidence and a lack of willingness to share information – two essential factors in projects developing outputs with direct commercial value.

What's more, this system has resulted in projects that do not necessarily represent stakeholders along the whole value chain. As shown in Figure 4, transport and freight operators were involved in less than 10% of all FP5 and FP6 transport projects, despite their participation being essential to achieving integrated rail system solutions that fit with market needs. The various consultation processes made it quite clear how important it was to involve the whole rail value chain in EU-funded projects, and users in particular to ensure R&I efforts correspond to real business needs.

Figure 4: Transport research partnerships (participation in % of partnerships)

In terms of geographical representation, participation of partners from the new Member States remains limited. The Czech Republic was the only new Member State to have partners participate in more than 10 of the 47 rail projects under FP7-Transport (see figure 5). Partners from other new Member States were involved in less than 5 projects.

Figure 5: Frequency of participation in FP7 rail consortia according to nationality (number of projects)

The lack of balanced and coordinated stakeholder participation results in R&I efforts that are not sufficiently oriented towards finding integrated solutions that have a real impact on the whole system, within the entire SERA. This finding is confirmed in the public consultation, where stakeholders agree that a balanced involvement of all actors, ensuring that their interests are properly respected so as to safeguard a “system approach”, is essential. Many stakeholders stress that end users (operators, competent authorities…) are usually not sufficiently involved in EU R&I, which does not favour the market uptake of projects results. It was also considered important to involve all rail market segments in rail R&I, taking local and regional needs into consideration as well. On the other hand, respondents warned that EC requirements to ensure that EU co-funded projects are inclusive of a wide range of stakeholders can lead to weaker proposals, a dilution of efforts and the inability to focus on specific business priorities. It is therefore important to ensure a flexible approach to achieving balanced participation.

2.3.4. High costs, risks and lead times of R&I investments

Innovation is generally characterised by high financial risks. In the rail sector these are further increased by:

· Complex interactions within the system. The interdependency of the different rail segments means that a specific innovation (e.g. a new high-speed locomotive) needs to be accompanied by timely innovation in other segments, such as infrastructure or business models, for it to have an impact on the whole system. Furthermore, an innovation in one segment could have negative impacts on other segments if not coordinated properly. Synchronicity between innovations is crucial.

· Long product lifecycles: A locomotive can be used for 40 years, compared to the typical renewal cycles of 7 years in the automotive industry or 20 years in the airline industry. 87% of respondents to the public consultation agree that this inhibits the rapid deployment of more innovative rail technologies.

· Unequal distribution of innovation benefits: 81% of respondents to the public consultation agree that innovation in the rail sector creates positive externalities that cannot be reaped by the innovator, thus reducing his incentives to invest. Furthermore, effective deployment of innovations can require the participation of stakeholders that have no incentive to invest in these technologies – or even a negative business case and thus needs adequate supporting arrangements.

· Lack of synergies with other innovative sectors: The rail market makes insufficient use of technologies emerging in other industrial sectors, leading to delays in the introduction of new technologies that could provide advanced, customer-focused industrial solutions. For instance, technologies developed in the aerospace and road sectors, such as composite materials, safe wireless communications, collision avoidance systems, positioning systems, could be adapted to the needs of rail.

These risks need to be managed carefully, through effective risk-sharing and funding arrangements, to allow for effective participation in innovation, along the whole value chain, to ensure that innovations can be deployed across the system.

2.4. Most affected stakeholders and needs assessment 2.4.1. The railway community

The proposed initiative will affect all actors in the rail sector, by proposing a range of novel business, operational and service solutions that support the search for a "best-in-class" profile for rail[39]. In particular, the following actors will be affected:

· Rail supply industry, which encompasses manufacturers of products and components for railway operation (i.e. rolling stock and locomotives, electrification, signalling, control command, telecommunication and track equipment), as well as their suppliers and service companies. These companies are present in all Member States and their future depends on the competitive edge they can derive from the timely development and deployment of innovative and integrated rail technologies and procedures. Such an initiative will help open new market perspectives, offering significant employment opportunities and reinforcing European leadership.

· Rail Undertakings running passenger and freight services will benefit from innovations enabling increased reliability and quality of services. A more efficient use of resources and optimised operating models will help to reduce operating costs.

· Rail vehicle leasing companies or Rolling stock companies that lease out trains to rail undertakings will benefit from increased interoperability and standardisation of products, enabling them to broaden their client base and increase operational margins.

· Rail infrastructure managers, responsible for the safety, planning, construction, operation, management and maintenance of rail infrastructure, will benefit from innovations in the field of command and control, harmonisation of specifications and increased line capacity, helping to overcome network saturation and ensure better intermodal connections. Innovations in the field of assets, safety and energy management will also help to significantly reduce maintenance costs.

· Rail Regulatory and Safety bodies that are responsible for promoting and/or enforcing competition and health and safety on the railway will benefit from advances in communication (command-control technologies, interoperability across applications, etc.), and surveillance technologies.

2.4.2. Other industrial sectors

The structural transformation of the rail sector thanks to the penetration of technological innovation might also impact on players from other industrial sectors, including actors in economic sectors that could become tiered-suppliers to rail original equipment manufacturers (ICT and telecommunications sectors, composite material manufacturers, etc.) and those that make use of the goods and services provided by the rail supply industry (transportation, public administration, civil engineering, manufacturing, etc.)

2.4.3. The European Commission and the Members States

Improved organisation of rail R&I efforts will help contribute to the EU policy goal of a more integrated, efficient and sustainable transport system. Lower infrastructure and operating costs will help reduce the scale of subsidies paid out to the sector by national governments. Retaining European leadership in the rail sector will also help to create new high quality European jobs in the vehicle technology and project management fields.

It can be expected that the Member States that currently have the highest participation rates in FP7 projects (i.e. Germany, Italy, the United Kingdom, France, Spain, Belgium and Sweden[40]) will be the ones that will benefit most from the initiative in absolute terms, also considering these countries represent 89% of all tonne-km and 70% of all passenger-km in Europe. However, countries with lower participation in FP7 rail research, in particular some Central and Eastern European countries with an important railway industry, such as the Czech Republic, Slovakia and Poland, could in particular benefit from a more inclusive and SERA focused initiative.

2.4.4. Passengers, users and EU citizens

The initiative will indirectly affect passenger and freight rail transport services users as it will ultimately result in improved reliability and quality of services. Also, improved competitiveness of the rail sector, combined with increased capacity, will help it to take on an increased share of transport demand, thereby contributing to reducing traffic congestion and CO2 emissions. Additionally, the introduction of innovative technological solutions will help to improve the performance of rail in terms of noise pollution, thereby having an indirect beneficial effect on citizens' health and wellbeing.

2.4.5. Academia, research community and SMEs

The initiative will provide universities, research centres and innovative SMEs with longer-term organisational and financial stability, generating a better environment for the development of high-value ideas. More than 120 research institutes from 23 Member States[41] are already active in rail research at European level (either as partners or former partners of FP6/FP7 projects and/or as members of the EURNEX association[42]).

2.5. Baseline scenario

The baseline scenario implies a continuation of the Collaborative Research model applicable under FP7, integrating improvements foreseen in the Commission's proposals for the next EU research and innovation programme, Horizon 2020[43]. The most notable changes include the stronger focus on innovation and close-to-market actions, including demonstration activities, as well as a significant simplification of procedures (see Box 1).

Box 2 – Simplification (Horizon 2020 compared to FP7): summary[44] · Single set of simpler and more coherent participation rules, which increases the accessibility and attractiveness of the programmes. · Moving from differentiated funding rates according to beneficiaries and activities to a simplified system consisting of a single reimbursement rate (maximum of 100 % of the total eligible costs of the research project, with a ceiling of 70 % for close-to-market actions and programme co-funded actions) for all activities and participants. · Replacing the four methods to calculate overhead or «indirect costs» with a single flat rate · Major simplification under the forthcoming financial regulation, which introduces more flexible budgetary and procurement procedures. · Successful applicants to get working more quickly: average time to grant to be reduced to around 250 days (from the current average of around 330 days under FP7). · Simplification of processes, including time-recording requirements, limited ex-post audits, no declaration on interest on pre-financing. · Lighter administrative requirements for beneficiaries applying for smaller grants. · More flexibility in grant rules to facilitate involvement of partners with specific expertise.

The FP will be implemented through (bi-)annual work programmes, based on inputs provided by the technology platform (ERRAC), in consultation with Member States and stakeholders. The work programmes will be subject to approval of Member States in the Programme Committee and will be implemented by the Commission or an Executive Agency. Based on previous experience, the work programmes will cover a broad range of topics, depending Member State policies and stakeholders' interests. They will include the schedule of the "calls for proposals" that will be published during the year. Each call for proposals will cover a specific research area. Specific objectives will be set at the project level, rather than programme level. Proposed projects will be submitted by consortia composed of a range of actors from industry and academia, coming from a minimum of three different Member States or associated countries. The Commission will select the best proposals and award financial support to the projects. The conditions for granting the EU financial support will be governed through grant agreements with each consortium. The Commission or a delegated Agency will manage these grant agreements. Based on previous experience, projects will generally have only a modest demonstration component and limited industrial participation.

2.6. Subsidiarity 2.6.1. Legal basis

The EU's right to act in this area is set out in the Treaty on the Functioning of the European Union, which states the overall objectives of EU industrial (Article 173) and research policy (Title XIX). In particular, Article 187 enables the EU to set up joint undertakings or any other structures necessary for the efficient execution of the Union's research, technological development and demonstration programmes. EU action in the field of rail transport is grounded in Articles 58, 90 and 100 setting the basis for internal market in the context of an EU Common Transport Policy.

2.6.2. Necessity and EU added value

Research and innovation in general suffer from important market and systemic failures that justify public intervention, in particular in parts of the innovation life cycle further removed from market implementation[45]. In the rail sector, high risks linked to long product lifecycles, interdependencies between the different rail segments, unequal distribution of innovation benefits and the need for significant investments create additional barriers, on top of generic innovation barriers, which justify additional policy efforts.

The level of funding for rail R&I has historically been low and what investment does take place suffers from fragmentation and inefficiencies, due to significant differences among national programmes[46]. The pooling and coordination of R&I efforts at EU level stands a better chance of success given the transnational nature of the infrastructure and technologies to be developed in support of the SERA, and the need to achieve a sufficient mass of resources. Action at EU level will help to rationalise research programmes and ensure interoperability of the systems developed. This standardisation will open a wider market and promote competition.

Numerous studies point to the added value of EU intervention[47], namely in helping to efficiently and effectively organise cross-border actions, and in bringing together compartmentalised national research funding so as to achieve the scale needed to tackle societal challenges. Also, ex-post valuation of previous framework programmes has demonstrated that EU funding increases the strategic importance of research projects and has a stronger additionality than national research programmes (e.g. projects without EU funding would have a smaller scale, reduced scope, or not be carried out at all).

3. Objectives

The 2011 White Paper for Transport emphasised the need to create a Single European Railway Area. This ambitious EU policy goal requires the whole of the rail sector to increase its business performance, providing its customers with the efficiency and quality of services they demand. This cannot be done without the emergence of innovative solutions for delivering enhanced productivity, capacity and reliability.

The present initiative is also linked to one of the Europe 2020 flagship initiatives – the Communication on Innovation Union[48], which states that given the scale and urgency of the societal challenges and the scarcity of resources, Europe's efforts and expertise on research and innovation must be pooled and a critical mass achieved to accelerate the pace of change leading to new growth and jobs in Europe.

3.1. General objectives

Innovation throughout the full rail value chain is a strategic enabler to completing the SERA. The general objective of the proposed initiative is consequently to better align EU rail R&I efforts to support the completion of the SERA, while accelerating the market take-up of innovative solutions, thereby increasing the competitiveness of the EU rail sector, vis-à-vis both other transport modes and foreign competitors. This will, in turn, contribute to raising the quality, reliability and cost-efficiency of EU rail services.

3.2. Specific objectives and operational objectives

Table 3 shows how the general objective has been translated into specific and operational objectives.

Table 3: Specific and operational objectives

Specific objectives || Operational objectives

Foster focused, coordinated and long-term investment in EU rail R&I || Develop a long-term strategic vision (e.g. master plan) with detailed multi-annual work programmes and investment plans

Ensure the strategic vision, work programmes and projects are aligned with key EU policy objectives of achieving a SERA and industry competitiveness

Ensure consistency and coherence between different projects, enabling synchronicity of innovations along the rail value chain

Increase the leverage of EU rail R&I funding || Improve industry involvement to acquire more private co-financing

Ensure strong and long term ex ante commitment from EU and industry as regards financing and participation

Establish sustained networks and knowledge exchange between diverse stakeholders || Ensure balanced participation of diverse stakeholders along the entire value chain, all technical subsystems and all MS.

Ensure long-term continuity of partnerships, with enhanced trust and exchanges of knowledge between stakeholders, disciplines and projects

Mitigate risks linked to innovation || Develop close-to-market projects that meet industry's needs, and that include large scale system-level demonstrators to validate research results

Establish a strong IPR protection and management framework

Increase the operational performance and effectiveness of rail R&I || Ensure a rapid implementation of improved rail R&I activities

Ensure an adequate success rate of proposals that ensures balance between resources and demand

Reduce time-to-grant to enable a rapid start-up of project activities

Reduce share of administrative costs of fund management

Given the nature of the initiative, which is to identify the optimal governance structure of rail R&I, the operational objectives remain rather generic indicating the scope and direction of intended change. Quantitative targets cannot be set for these objectives; at this stage, however the progress will be measured according to the monitoring indicators outlined in Section 7.

Figure 6 aims to illustrate how the objectives are linked to the problems and drivers identified in Chapter 2.

Figure 6 – Intervention Logic

4. Policy options

Since R&I activities supporting the rail industry are foreseen under H2020, the options considered for implementing rail R&I activities include the continuation of Collaborative Research, as well as the different forms of PPPs that can be created in accordance with H2020 (contractual and institutional). In addition, the report considers a fourth option, in which R&I activities are coordinated by the European Railway Agency. The different policy options are outlined below and a detailed table providing a systematic description of their content and key components of each option can be found in Annex VI.

4.1. Option 1 – Baseline – Horizon 2020 Collaborative Research Projects

As indicated in section 2.4, the baseline implies a continuation of the Collaborative Research (CR) model applicable under FP7, integrating H2020 improvements, such as simplified monitoring arrangements and more emphasis on demonstration.

4.2. Option 2 – Contractual PPP

The contractual PPP (cPPP) option aims to implement a common programme through a contractual agreement, following a Commission Decision, between the Commission and private partners. Private partners develop a multi-annual roadmap and set out their own commitments in the contractual agreement. They cover the costs of their own internal governance. Annual or multi annual work programmes are developed by the Commission based on the roadmap drawn up by the private partners. Member States are consulted.

The implementation of the contractual PPP uses Framework Programme collaborative research and innovation projects managed by the Commission services or an Executive Agency. An overall tentative budget for the period 2014-2020 is earmarked, but the cPPP relies on annual budgets subject to an annual decision of the European Parliament and the European Council.

4.3. Option 3 – Institutional PPP

The institutional PPP option (iPPP) involves the creation of a dedicated administrative structure for coordinating R&I, in the form of a Joint Undertaking (JU) – a Union body under Article 187 of the TFEU – as foreseen under Article 19 of H2020, when justified by the scope of the objectives pursued and the scale of the resources required.

The iPPP is an independent legal entity with a governance system of its own, as established in its founding regulation. iPPPs have an Administrative Board in charge of strategic decision-making, and an executive director, in charge of day-to-day management, as well as other (advisory) bodies, depending on specific operational and governance needs. Members of the iPPP include the Commission, industry, not-for profit research associations and, sometimes, Member States. Conditions for membership are set out in the founding regulation. Other stakeholders, including non-EU public or private organisations, may participate in the iPPP provided that they fully adhere to its regulations and obligations.

The iPPP has a dedicated budget and staff and provides a framework for public and private players to work together and take joint decisions. The role of public partners is to ensure alignment with public policy goals, while private partners maintain the focus to employability and profit maximisation. The iPPP is in charge of programming and implementing research projects in an integrated way according to an agreed (master) plan. It pulls together funds from different sources (including Commission contributions and legally-binding financial commitments from members), which are jointly managed. It is responsible for the related communication and dissemination activities. The principles applicable under Horizon 2020 should in principle be respected in an iPPP, but derogations may be granted in exceptional and duly justified cases.

4.4. Option 4 – Coordination within ERA

Like Option 3, this option would provide a dedicated administrative structure for rail R&I, but within the administrative framework of ERA. ERA would be tasked with the elaboration and implementation of the strategy and work programme for rail R&I under the supervision of its Administrative Board, which unites representatives of the Commission and Member States. The rail sector would be represented on an advisory level.

This option would entail a modification of the ERA Regulation to cater for the following aspects:

· providing ERA with an ad-hoc grant from the H2020 budget, which, under the new Financial Regulations can only be accepted if expressly provided in the relevant sector-specific acts and authorised in ERA's basic act;

· enabling ERA to conduct budget implementation tasks and to actively undertake railway research activities at Union level;

· providing ERA with the necessary human resources to deal with a significantly increased operational budget, assuming an Commission contribution of EUR 64 million per year for rail R&I under H2020, against ERA's current annual budget of roughly EUR 25 million a year.

5. Assessing the impacts 5.1. General approach to the assessment of impacts

The four policy options identified and presented in Chapter 4 have been compared along a range of key parameters selected for their relevance in assessing public intervention in R&I.

The comparison of these parameters was carried out in an evidence-based manner, proportionate to the scope of the impact assessment, which focuses on the impact of the institutional set-up of the implementing structure for rail R&I. A range of qualitative and, where available quantitative, evidence was used, including:

· Findings presented in the Impact Assessments accompanying the H2020 proposals and the proposed first wave of institutional PPP initiatives under H2020

· Monitoring and evaluation results and statistical analyses of previous and on-going Framework Programmes

· Literature review and various external study results

· The results of the online public consultation and various meetings with stakeholders

The four options are compared assuming the EU will contribute to half of industry estimates of total EU rail R&I needs for the period 2014-2020[49] – i.e. a global allocation of EUR 450 million under H2020. It is assumed that the remainder of these identified financial needs would be covered by industry itself. It is also assumed that the scope of activities that will be undertaken by each of the institutional options will be similar and in line with the H2020 strategic research agenda and the rail technology roadmap[50].

5.1.1. Input impacts and cost-effectiveness

Given that the scope of this impact assessment is the type of implementing structure that will be put in place to carry out rail R&I activities and that the exact scope of activities is still being defined, the assessment and comparison of the four options focuses mainly on the input impacts – i.e. on the resources invested into delivering the results.

The parameters used are those considered as crucial to enabling major technological advances in the rail sector and are aligned with the specific objectives of the initiative:

1. Focus and coordination of research efforts. Limitations in funding mean that EU intervention should focus on areas essential to achieving the EU policy goal of completing the SERA, while also ensuring the long-term competitiveness and growth of the sector. Strong coordination is essential as the fragmentation of R&I efforts among many isolated projects with diverse objectives reduces their capacity to serve a specific European goal.

2. Leverage of EU rail R&I funding. High leverage of private and public resources, translated into firm commitments from all parties involved, is a key ingredient for the success of the implementing structure.

3. Broad stakeholder participation and sustained networks. The innovation process should gather all key players across Europe in long-term partnerships. The involvement of the full rail value chain, including the users (railways), will help to ensure an approach aimed at improving the system as a whole and a greater uptake of innovations.

4. Mitigation of innovation risks. Low profitability, combined with the high financial and technological risks associated with rail research, mean that risk-sharing, IPR protection mechanisms, as well as measures aimed at a more rapid commercial exploitation of research results, are essential to stimulate long-term and large-scale private investment.

5. Operational performance and cost-effectiveness. The implementing structure should provide a simple, efficient and cost-effective framework for granting R&I funding, ensuring value-for-money and facilitating industry and SME participation.

5.1.2. Economic, social and environmental outcomes

Improvements in the above-mentioned parameters will lead to more effective and efficient rail R&I, which in turn results in economic (competitiveness and operational efficiency of the sector, induced macroeconomic impacts for wider economy), social (employment, safety, security, service quality) and environmental (reduced pollution, noise, congestion) impacts.

However, given that the scope of this impact assessment is restricted to the incremental impact of the implementing structure and does not consider the scope of the R&I activities, the analysis of economic, social and environmental impacts can only be conducted at a very high level. The four policy options are compared on the basis of the differences in scale, timing and relevance of investments they will enable.

5.2. Input impacts and cost-effectiveness 5.2.1. Focus and coordination of research efforts

In the case of a continuation of the CR model, the work programme would be driven by the Commission, with industry and research stakeholders providing input through various consultation mechanisms and platforms, but having no formal decision-making powers on its content. Activities under the work programme would be funded on a project basis. Under FP7, more than 80 rail-related projects have been funded since 2007[51], with calls funded under different themes. This makes it difficult for the sector to have a clear view of the available types of funding. Also, with such a multitude of non-coordinated individual projects, the risk of overlap and/or of generating uncoordinated technologies or redundant rail projects is significant. "Bottom-up" project initiation does not allow for a comprehensive programmatic approach or a consistent coverage of the agenda and is not suited to ambitious long-term developments requiring a large scale of investment, coordination, synchronisation and ex-ante commitments across different projects. As pointed out by stakeholders in the public consultation, the lack of long term approach and the discontinuity between projects and work programmes under the CR model means the results of previous projects are rarely taken into account and a lot of effort is wasted. To overcome these issues, the Commission would have to develop a substantial management capacity and significant technical expertise to ensure coordination of activities, partnerships and results.

According to an evaluation of existing research PPPs in the European Economic Recovery Plan[52], the establishment of cPPPs enables improved coordination between the Commission and industry representatives leading to better defined objectives and a stronger focus on a limited number of research sectors than with CR. This is namely thanks to the development of a multi-annual strategy in the form of a roadmap. Indeed, the topics of calls show a strong correlation with objectives established in the roadmap. Also, as cPPPs coordinate research activities across several FP7 themes, projects can be of a larger scale and of a cross-thematic nature, enabling a more coherent approach than with CR. Indeed, average EU funding per project for the three existing cPPPs in 2010 and 2011 was between EUR 3.5 and 4.1 million, which is slightly higher than for FP7-Transport rail projects, where average EU funding per project was around EUR 3.1 million (although similar to overall FP7 funding levels of roughly EUR 4 million per project). The lead role in the PPP is taken by the private partners, who define the multi-annual roadmap. The Commission has the final say on the work programme, which ensures it is aligned with broader EU transport policy objectives. However, given the bottom-up approach for proposals, R&I priorities are steered by industry rather than by the Commission. Also, as the standard rules for calls for proposals would apply, the arguments developed above for CR in terms of results coordination also apply.

Under an iPPP, the coordination, programming and execution of rail R&I activities would be the responsibility of a single, dedicated administrative structure. The development of a strategic long-term plan (covering both the timeframe of the financial framework and beyond), in close cooperation with all market players, would be the first task of the new structure, helping to ensure a stronger relevance and policy coherence of funded projects than in CR. Industry participation ensures that the projects would be linked with the market and support the competitiveness of the rail sector (vis-à-vis other modes and third countries). Co-governance arrangements, with a leading role for the Commission, would ensure that the R&I agenda is fully aligned with the SERA objectives. Furthermore, the strategy would be endorsed by the European Council. The iPPP would act as a single contact point for information on all rail R&I, making it easier for the sector to know what funding is on offer, and ensuring more continuity and less fragmentation of R&I than under CR. R&I programmes would be managed through an Administrative Board in a transparent, coherent and long term manner. As in other options, a substantial management capacity and a high level of technical expertise will be required for the structure to work effectively. Compared to CR, one difficulty may consist of attracting such expertise to an iPPP structure with a limited lifespan.

In the ERA option, the established structures, technical expertise and stakeholder networks of the Agency would theoretically be well geared for taking on a strong coordination role, similar to an iPPP. A strategic long-term plan would be developed in line with EU policy goals. However, although industry would be consulted in defining the strategic plan through existing technology platforms, as in the CR option, its involvement would not be as direct as in the PPP options. This could reduce the industry relevance of the R&I agenda and work programmes. What's more, there is a risk that the strategic agenda would focus on a restricted number of topics, such as standardisation and deployment of interoperable railway systems, given ERA's core mandate and field of expertise. Other areas where the Agency lacks expertise, such as passenger information, ticketing and revenue management systems, could end up excluded from the scope. In fact, a recent evaluation of ERA[53] highlights the tension between ERA's role in standard-setting and any potential role it could play in research and innovation activities. Indeed, the introduction of standards is likely to shift the focus of innovation from the best way to meet a need to the best way to comply with the standard.

These findings are partially reflected in the results of the public consultation. 50-60% of respondents felt that the CR, cPPP and ERA options would be ineffective in developing the required long-term vision for rail R&I or in ensuring the necessary project coordination and synchronicity of innovations. On the other hand, 80% of respondents thought an iPPP would be effective. Also, only 20-25% of respondents felt that the CR and cPPP options could contribute significantly to the EU policy goal of improved interoperability (mainly research organisations and public authorities, as well as some private companies), while 75% believed both the iPPP and ERA options would achieve this.

5.2.2. Leverage of EU rail R&I funding

In the CR option, H2020 rules would apply. This means EU funding would cover up to 100% of project budgets, as well as the Commission's administrative costs and up to 25% of partners' administrative costs. The maximum EU funding rate would be lower for demonstrating activities (70 %), but so far these have not been so frequent. That said, the average share of EU funding for the 47 rail projects under FP7-Transport was 66%. When one looks at FP7-Transport projects in general, the findings are rather similar, with an average share of EU funding of 65% - i.e. a leverage effect of 1.5. One can expect that the leverage of H2020 CR projects will be similar or slightly higher, given the increased support to close-to-market projects, which should attract a higher share of additional funding.

cPPPs allow for a greater industry involvement than CR meaning their potential for leveraging private funds should be greater. However, while the pre-defined budget ensures some continuity, the legal commitment from industry participants is limited to single project grant agreements. Thus, although cPPPs established so far have announced industry funding levels of 50%, in practice, EU grants of 50%, 75% and 100% of costs have been awarded. Therefore the direct private leverage effect has been rather limited and industry co-funding has not reached the 50% target. Average EU funding levels for the combined first calls of existing cPPPs was in fact 66% - i.e. a direct leverage effect of 1.5, similar to CR.[54] Nevertheless, given the strong industry involvement and focus on closer-to-market activities, significant indirect leverage effects can be expected, with additional R&I investments by the private sector in parallel and after programme completion, as technologies that are mature enough to be included in privately funded development programmes are taken up.

The stable nature of iPPPs and the firm commitment from the EU gives confidence to both private and public partners, thus creating the conditions to attract higher levels of financing, and from a wider range of sources, than under CR and cPPP. Furthermore, industry participants are required to commit themselves in a legally-binding manner, for the full duration of the iPPP, to specific financial contributions (in cash or in-kind) and to certain tasks and activities. The scale of the direct leverage effect will depend on the scale of private sector commitments, which will, in turn, depend on the governance arrangements of the iPPP and the assurances provided to private partners in terms of return on investment. Current iPPPs under FP7 must achieve at least 50% co-financing from the industry – i.e. a direct leverage effect of at least 2, while iPPPs under H2020 are likely to be even more ambitious (see table 4). On top of this, the iPPP will trigger even more significant indirect leverage effects than the cPPP thanks to the strong industry commitment.

Table 4: Current and proposed funding of iPPPs

In the ERA option, the leverage impacts would be similar to that of CR and cPPP. Rail R&I would be mainly financed form the EU budget and there would be no formal commitment from industry to participate in the programme (whether in terms of financial contribution or in terms of tasks and activities). Indeed, the structure of ERA would difficultly allow for co-financing for private partners without leaning towards an iPPP model or creating serious conflict of interest issues in light of ERA's role in the fields of vehicle authorisation and certification of railway undertakings. Lastly, given that industry would have only an indirect influence on the work programme, the relevance of the R&I agenda could be less pertinent and therefore assumed to reach lower leverage rates than in the case of a PPP.

5.2.3. Broad stakeholder participation and sustained networks

Under the CR option, industry and research stakeholders would be able to provide their input through various consultation mechanisms and platforms. Rules of participation in the open calls system would favour broad and transnational consortia, with numerous participants, ensuring high representativeness. However, such large consortia can be difficult to drive and some partners are included more for representative purposes than for technical ones, so that commitment is not always very strong. Also, the balance of participation could not be actively managed. As explained in the problem definition, CR projects under previous framework programmes have not achieved balanced engagement among different types of stakeholders or at a regional level. Under FP7, research organisations and universities absorbed on average 65% of EU funding against just 16% for large business enterprises and 16% for SMEs. NGOs, umbrella organisations and foundations, accounted for the remainder[55]. Rail projects under FP7-Transport presented a more balanced picture, with 50% of funding going to business, against 38% for research organisations and academia. Lastly, CR does not enable the continuous collaboration of project partners beyond single projects, resulting in reduced confidence among partners and a lack in the willingness to share information.

There is general consensus that cPPPs, with their system of open calls, bring together a wide range of industrial stakeholders and are inclusive.[56] The participation of organisations not belonging to the Industrial Research Associations, which represent the private side of the partnership, is around 75% and they receive around 70% of the whole Commission funding. On average in the two first calls, large industry absorbed 31% of EU funding across the three existing cPPPs, compared with the FP7 average of 16%, while SMEs represented 22%[57]. This indicates that cPPP programmes are of higher relevance for industry and SMEs than CR programmes. However, the current cPPP setup does not provide for advisory mechanisms enabling all key actors of the value chain to be involved. Given the predominance of large industrial players among the private participants observed in current cPPPs[58], there is a risk that actors from other segments of the rail value chain (railway undertakings, rail vehicle leasing companies, infrastructure managers, etc.) may be excluded. Also, cPPPs have not reached geographical parity (88% of participations stem from the 15 old Member States, with only 5% from Member States having joined the EU after 2004, 6% from Associated Countries, and even less for third countries)[59].

Within an iPPP, a mix of different governance elements (i.e. different levels of membership and consultative committees) would ensure that stakeholders from the full rail value chain could either be consulted or directly involved in the decision-making process. The principles of shared management by public and private partners would be transparent to all stakeholders. The conditions for membership and advisory roles could be actively managed by the Administrative Board so as to ensure broad stakeholder participation along the full value chain, bringing in partners and advisers with specific expertise, deepening strategic partnerships and building sustained relationships. This would also enable a targeted approach towards SMEs and geographical parity. This flexible partnership can be developed and fine-tuned considering mutual interdependencies and participation capability of different stakeholders. Of course, the governance arrangements of the iPPP will be instrumental in enabling broad participation. If these are not appropriately tailored, there is a risk that some players, with fewer financial or human resources, could be excluded. Experience in the Clean Sky iPPP shows that openness to stakeholders can be a problem when a large share of funding is earmarked for the main private contributors[60], whereas other iPPPs operating through open and competitive procedures have succeeded in bringing together a large number of partners, including newcomers and SMEs. Budget allocations of existing iPPPs reveal a fairly balanced multidisciplinary participation, with research organisations and universities absorbing on average 44.5% of EU funding whilst industry accounts for 33.5% and SMEs for 20.5% of EU funds, which is higher than in CR. The remainder goes to other organisations, such as NGOs, umbrella organisations and foundations.[61]

In the ERA option, representative organisations of the rail sector would participate in the Management Board, but without voting rights (only the Commission and Member States have voting rights). Although theoretically the existing governance structure could be altered via an amendment of the ERA Regulation, in practice, it would be extremely difficult to grant industry more power without seriously compromising the Agency's role as a regulatory authority. At the same time, the Agency has established working parties with representatives of rail sector organisations and national safety authorities, which provide it with good connections to the relevant market players. However, the network of stakeholders involved would have to be widened to include the urban and light rail market segment, as well as business enterprises, SMEs, the research community and academia. Given that ERA would coordinate projects similarly to the way existing executive agencies do under FP7, one can consider that the participation rates in projects would be broadly similar to the CR option.

In the public consultation, none of the options score particularly well on ensuring equal access for all stakeholders. The CR option scores best (36% considering it to be effective), followed by the iPPP option (30%), with ERA and cPPP scoring just 23% and 19% respectively). The iPPP option is nevertheless considered much more effective at building sustained networks (80% believe it to be effective, against 4% considering it ineffective, compared to only 17-25% of stakeholders believing the three other options could be effective).

5.2.4. Mitigation of innovation risks

In the case of CR, it is likely that R&I projects would be similar to FP7, i.e. at low to medium Technology Readiness Levels. Although H2020 emphasises the need to bring the projects closer to the market, knowledge and technology-related objectives, rather than direct commercialisation-related objectives, tend to prevail in CR. The potential of deployment of projects remains modest.[62] Projects financed would thus be with a modest demonstration component, typically covering TRLs from 2 to 5. IPR policy would be based on the principles set out in the H2020 rules for participation and dissemination and specific clauses would be established within individual grant agreements. This means companies have to put significant efforts into the proposal phase, without having a clear view on the IP rights that will cover the results. Also, there is no IPR framework for multiple projects, which represents a risk for companies wishing to be involved in several projects.

cPPPs have a clear objective of aiming for results nearing market readiness. Although there is not yet any statistically significant data on finished projects to assess the actual market effects of cPPPs, it can nevertheless be said that the participation of commercial entities in projects has been higher. Questioned cPPP stakeholders[63] tend to agree that that cPPPs are more effective in achieving market impact than standard CR projects. At the same time, existing cPPPs tend to focus on short-term actions rather than on a longer-term approach and risk-sharing measures. IPR policy would be based on the principles set out in H2020, with detailed specifications defined within the contractual agreement between the Commission and private partners. Compared to CR, this enables more clarity for companies wishing to get involved.

iPPPs have capability to develop projects in a synchronised manner covering all TRL levels. The inclusion of large scale demonstration activities in the research programme will reduce the risk for private research and innovation investment compared to CR and cPPP. Partners would be required to commit to demonstration activities, while EU co-financing rates would gradually drop as the projects reach market readiness so that the operational risk is transferred to the private sector. IPR policy would be based on the principles set out in the H2020 rules for participation and dissemination. Specific rules would be defined within membership agreements between the iPPP and the private partners, which, like the cPPP, enables more clarity for companies deciding to get involved than in CR. As a basic rule, results generated jointly would be owned by the iPPP while results generated individually would be owned by the iPPP participant generating these results.

In the ERA option, the management of IP rights and the type of research projects funded would likely be similar to the CR option. Some higher TRL projects aimed at deployment of standardised solutions via the Technical specifications for interoperability (TSIs) could be anticipated. However, the Agency's lack of skills and expertise in relation to the commercial aspects of technology development could hinder the development of higher TRL projects.

In the public consultation, neither the CR, nor the cPPP and ERA options score well in terms of mitigating innovation risks and accelerating market uptake (only 13-20% of respondents viewing them as effective). On the other hand, the iPPP option is considered effective by three quarters of respondents, against 5% considering it ineffective. Among these, many are active in the field of railway operations, but also in the rail supply industry).

5.2.5. Operational performance

The assessment of the operational performance of the different options is based on an analysis of the average set-up time, success rates of calls for proposals and time-to-grant.

In CR, no time will be lost in setting up new structures and a new wave of rail R&I calls under H2020 can be launched as of 2014. The average success rate of calls for proposals for CR projects in FP7 is 19%[64], which is considered to be quite low. On the one hand, this can be a sign of the high attractiveness of the programme and the application of stringent selection criteria (113,508 proposals were submitted for a total of 379 concluded calls over the period 2007-2012, out of which 20,190 were retained for negotiations). On the other hand, low success rates can indicate lack of sufficient funding or overly vague and broad definition of priorities. Reasons differ for each specific programme but over- (or indeed under‑)subscription indicates that there is a problem in the balance between resources and demand. Low success rates mean considerable efforts are dissipated in unsuccessful proposals and this acts as a serious deterrent to industry, in particular to SMEs. It can nevertheless be mentioned that success rates of FP7-Transport projects have been higher (25%)[65] and it is also anticipated that the success rate in general may improve under H2020 given the possibility to fine-tune procedures and the larger focus on demonstration and close-to-market activities. The average time-to-grant for CR under FP7 has been improving steadily but remains high, at 320 days in 2012[66]. The Commission expects that time-to-grant will be reduced to 250 days (i.e. 70 days less) under H2020 thanks to simplification measures, enabling successful applicants to get to work more quickly.

Compared with CR, the cPPP will take slightly longer to launch the first series of cross-thematic calls – likely around 9-12 months, based on experience of the first three cPPPs[67]. The outcome of calls in existing cPPPs is slightly higher, with 30% of successful proposals in 2010 (out of 251 submitted proposals), but just 21% in 2011 (out of 400 submitted proposals).[68] Average time-to-grant was also shorter than under FP7, at 280 days[69]. It is likely that, similarly to CR, new rules under H2020 will enable cPPPs to improve success rates and shorten time-to-grant by around 70 days.

The iPPP entails the establishment of a new structure, following the adoption of a Council Regulation, which is likely to take 6-9 months. For past iPPPs the set up time after the adoption of the regulatory framework has been of just over 2 years on average. It is nevertheless assumed that the set-up time for a new iPPP could be reduced quite significantly (to around 1.5 years[70]), both thanks to prev