EXPLANATORY MEMORANDUM

1. CONTEXT OF THE PROPOSAL

The set of proposals for "Horizon 2020", drawn up fully in line with the Commission Communication 'A Budget for Europe 2020'[1], wholly supports the Europe 2020 strategy, which identified research and innovation as central to achieving the objectives of smart, sustainable and inclusive growth. The set consists of the proposals for:

(1) a Framework Programme for Horizon 2020 (Treaty on the Functioning of the European Union – 'TFEU'),

(2) a single set of Rules for Participation and Dissemination (TFEU),

(3) a single specific programme to implement Horizon 2020 (TFEU), as well as

(4) a single proposal for the parts of Horizon 2020 corresponding to the Euratom Treaty.

The overall political narrative and background to these legislative proposals is provided by a Commission Communication adopted together with them, which addresses a number of major cross-cutting elements such as simplification and how the approach to innovation has been strengthened.

Horizon 2020 contributes directly to tackling the major societal challenges identified in Europe 2020 and its flagship initiatives. It will contribute equally to creating industrial leadership in Europe. It will also increase excellence in the science base, essential for the sustainability and long term prosperity and wellbeing of Europe. To achieve these aims, the proposals include a full range of support that is integrated across the research and innovation cycle. Horizon 2020 therefore brings together and strengthens activities currently funded under the 7th Framework Programme for research, the innovation parts of the Competitiveness and Innovation Framework Programme, and the European Institute of Innovation and Technology. In this way, the proposals are also designed to realise a substantial simplification for participants.

2. RESULTS OF CONSULTATIONS WITH THE INTERESTED PARTIES AND IMPACT ASSESSMENTS

The preparation of the four proposals took full account of the responses to an extensive public consultation based on a Green Paper, "From challenges to opportunities: towards a common strategic framework for EU research and innovation funding", COM(2011)48. Views were expressed by the European Council, Member States and a wide range of stakeholders from industry, academia and civil society.

The proposals also rely on two in-depth impact assessments, drawing on stakeholder consultations, internal and external evaluations, and contributions from international experts. The assessments found that the Horizon 2020 option would bring more clarity of focus, best achieve the necessary critical mass of effort at programme and project level, and lead to greatest impact on the policy objectives and downstream economic, competitiveness, and social benefits, while at the same time helping to simplify matters by e.g. easing the administrative burden for participants, streamlining the applicable rules and procedures, ensuring consistency between instruments and pointing to a new risk/trust balance.

3. LEGAL ELEMENTS OF THE PROPOSAL

3.1 Legal base

The proposal integrates research and innovation activities in a seamless way in order to achieve the policy objectives.

As such, Horizon 2020 will be based on the TFEU Titles "Industry" and "Research and technological development and space" (Articles 173 and 182). The related Rules for participation and dissemination will be based on the same TFEU Titles (Articles 173, 183 and 188). The "Industry" basis in both cases will relate predominantly to the European Institute of Innovation and Technology (EIT), which will be funded by a financial contribution from Horizon 2020. The EIT will not appear at the specific programme level.

It is recalled that innovation activities have been explicitly included in various Framework Programmes based on the Research Title of the Treaty on the Functioning of the European Union and that the current Framework Programmes also includes a range of innovation activities. As a consequence, the specific programme that will implement Horizon 2020 will be based on the TFEU Title "Research and technological development and space" (Article 182) as the activities foreseen in them will fall under those covered by this Title.

The proposal for the Euratom research and training programme contributing to Horizon 2020 is based on Article 7 of the Euratom Treaty.

3.2 Subsidiarity and proportionality principles

The proposals have been designed to maximise Union added value and impact, focusing on objectives and activities that cannot be efficiently realised by Member States acting alone. Union level intervention can strengthen the overall research and innovation framework and coordinate Member States' research efforts thereby avoiding duplication, retaining critical mass in key areas and ensuring public financing is used in an optimal way. Union level intervention enables continent-wide competition to select the best proposals, thereby raising levels of excellence and providing visibility for leading research and innovation. The Union level is also best placed to support trans-national mobility, thereby improving training and career development for researchers. A Union level programme is more able to take on high risk and long-term R&D, thereby sharing the risk and generating a breadth of scope and economies of scale that could not otherwise be achieved. Union level intervention can leverage additional public and private investments in research and innovation; contribute to the European Research Area whereby knowledge, researchers and technology circulate freely; and accelerate the commercialisation and diffusion of innovations across the Single Market. Union level programmes are also needed to support policy making as well as the objectives set by a range of policies. Full evidence is presented in the accompanying impact assessments.

4. BUDGETARY IMPLICATION

The budget of all proposals is presented in current prices. The legislative financial statement attached to this proposal sets out the budgetary, human and administrative resource implications. The Commission may use, on the basis of a cost-benefit analysis, existing executive agencies for the implementation of Horizon 2020, as provided for in Council Regulation (EC) No 58/2003 laying down the statute for executive agencies to be entrusted with certain tasks in the management of Union programmes.

2011/0401 (COD)

Proposal for a

REGULATION OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

establishing Horizon 2020 - The Framework Programme for Research and Innovation (2014-2020)

(Text with EEA relevance)

THE EUROPEAN PARLIAMENT AND THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty on the Functioning of the European Union (TFEU), and in particular Articles 173(3) and 182(1) thereof,

Having regard to the proposal from the European Commission,

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

Having regard to the opinion of the European Economic and Social Committee[2],

Having regard to the opinion of the Committee of the Regions[3],

Acting in accordance with the ordinary legislative procedure,

Whereas:

(1) The Union has the objective of strengthening its scientific and technological bases by achieving a European Research Area ("ERA") in which researchers, scientific knowledge and technology circulate freely, and encouraging the Union to become more competitive, including in its industry. To pursue those objectives the Union should carry out activities to implement research, technological development and demonstration, promote international cooperation, disseminate and optimise results and stimulate training and mobility.

(2) The Union also has an objective to ensure that the conditions necessary for the competitiveness of the Union's industry exist. For this purpose, action should be aimed at fostering the better exploitation of the industrial potential of policies of innovation, research and technological development.

(3) The Union is committed to achieving the Europe 2020 strategy[4], which has set the objectives of smart, sustainable and inclusive growth, highlighting the role of research and innovation as key drivers of social and economic prosperity and of environmental sustainability and setting itself the goal to increase spending on Research and Development to reach 3 % of gross domestic product (GDP) by 2020 while developing an innovation intensity indicator. In this context, the Innovation Union flagship initiative sets out a strategic and integrated approach to research and innovation, setting the framework and objectives to which future Union research and innovation funding should contribute. Research and innovation are also key factors for other Europe 2020 flagship initiatives, notably on resource efficient Europe, an industrial policy for the globalisation era, and a digital agenda for Europe. Moreover, for achieving the Europe 2020 objectives relating to research and innovation, Cohesion policy has a key role to play through building capacity and providing a stairway to excellence.

(4) At its meeting of 4 February 2011, the European Council supported the concept of the Common Strategic Framework for Union Research and Innovation funding to improve the efficiency of research and innovation funding at national and Union levels and called on the Union to rapidly address remaining obstacles to attracting talent and investment in order to complete the ERA by 2014 and achieve a genuine single market for knowledge, research and innovation.

(5) The European Parliament has called for a radical simplification of Union research and innovation funding in its Resolution of 11 November 2010[5], has highlighted the importance of the Innovation Union to transform Europe for post-crisis world, in its resolution of 12 May 2011[6], has drawn attention to important lessons to be learned following the interim evaluation of the Seventh Framework Programme in its resolution of 8 June 2011[7] and has supported the concept of a common strategic framework for research and innovation funding in its resolution of 27 September 2011[8].

(6) The Council of the European Union called on 26 November 2010 for future Union funding programmes to focus more on Europe 2020 priorities, address societal challenges and key technologies, facilitate collaborative and industry-driven research, streamline the instruments, radically simplify access, reduce time to market and further strengthen excellence.

(7) The importance of a coherent strategic approach was also underlined in opinions delivered by the European Research Area Committee on 3 June 2011[9], the Committee of Regions on 30 June 2011[10], and the European Economic and Social Committee on 13 July 2011[11].

(8) The Union Budget Review adopted by the Commission on 19 October 2010 put forward key principles which should underpin the future Union budget, namely focussing on instruments with proven Union added value, becoming more results-driven and leveraging other public and private sources of funding and it proposed to bring the full range of Union instruments for research and innovation together in a Common Strategic Framework.

(9) The Commission Green Paper 'From Challenges to Opportunities: Towards a Common Strategic Framework for EU Research and Innovation funding'[12] identified key questions on how to achieve those ambitious objectives and launched a broad consultation, in the course of which stakeholders and Union institutions largely agreed with the ideas presented therein.

(10) In the Communication 'A Budget for Europe 2020'[13], the Commission proposed to address with a single Common Strategic Framework for Research and Innovation the areas covered in the period 2007-2013 under the Seventh Framework Programme for Research and the innovation part of the Competitiveness and Innovation Framework Programme, as well as the European Institute of Innovation and Technology (EIT) in order to serve the Europe 2020 Strategy target of raising spending on Research and Development to 3 % of GDP by 2020. In that Communication, the Commission also committed to mainstream climate change into Union spending programmes and to direct at least 20 % of the Union budget to climate-related objectives. Climate action and resource efficiency are mutually reinforcing objectives for achieving sustainable development. The specific objectives relating to both should be complemented through the other specific objectives of Horizon 2020. As a result it is expected that at least 60% of the overall Horizon 2020 budget should be related to sustainable development. It is also expected that climate-related expenditure should exceed 35% of the budget, including mutually compatible measures improving resource efficiency. The Commission should provide information on the scale and results of support to climate change objectives. Climate-related expenditure under Horizon 2020 should be tracked in accordance with the methodology stated in that Communicaiton.

(11) Horizon 2020 - the Framework Programme for Research and Innovation in the European Union (hereinafter 'Horizon 2020'), focuses on three priorities, namely generating excellent science in order to strengthen the Union's world-class excellence in science, fostering industrial leadership to support business, including small and medium-sized enterprises (SME) and innovation and tackling societal challenges, in order to respond directly to the challenges identified in the Europe 2020 strategy by supporting activities covering the entire spectrum from research to market. Horizon 2020 should support all stages in the innovation chain, especially activities closer to the market including innovative financial instruments, as well as non-technological and social innovation, and aims to satisfy the research needs of a broad spectrum of Union policies by placing emphasis on the widest possible use and dissemination of knowledge generated by the supported activities up to its commercial exploitation. The priorities of Horizon 2020 should also be supported through a programme under the Euratom Treaty on nuclear research and training.

(12) The Joint Research Centre (JRC) should provide customer-driven scientific and technical support to Union policies while flexibly responding to new policy demands.

(13) In the context of the knowledge triangle of research, education and innovation, the Knowledge and Innovation Communities under the European Institute of Innovation and Technology should strongly contribute to addressing the objectives of Horizon 2020, including the societal challenges, notably by integrating research, education and innovation. In order to ensure complementarities across Horizon 2020 and the adequate absorption of funds, the financial contribution to the European Institute of Innovation and Technology should be made in two allocations, with the second subject to a review.

(14) Horizon 2020 should contribute to the aims of the European Innovation Partnerships in line with the flagship initiative Innovation Union, bringing together all relevant actors across the whole research and innovation chain in view of streamlining, simplifying and better coordinating instruments and initiatives.

(15) Simplification is a central aim of Horizon 2020 which should be fully reflected in its design, rules, financial management and implementation. Horizon 2020 should aim to attract the strong participation of universities, research centres, industry and specifically SMEs and be open to new participants, as it brings together the full range of research and innovation support in one common strategic framework, including a streamlined set of forms of support and uses rules for participation with principles applicable to all actions under the programme. Simpler funding rules should reduce the administrative costs for participation and will contribute to a reduction of financial errors.

(16) In accordance with Article 182(1) TFEU, the framework programme fixes the maximum overall amount and the detailed rules for Union financial participation in the framework programme and the respective shares in each of the activities provided for.

(17) This Regulation should lay down, for the entire duration of Horizon 2020, a financial envelope constituting the prime reference, within the meaning of point [] of the Interinstitutional Agreement of XX/201Z between the European Parliament, the Council and the Commission on cooperation in budgetary matters and on sound financial management, for the budgetary authority during the annual budgetary procedure.

(18) It is appropriate to ensure a correct closure of Horizon 2020 and its predecessor programmes, in particular regarding the continuation of multi-annual arrangements for their management, such as the financing of technical and administrative assistance.

(19) The implementation of Horizon 2020 may give rise to supplementary programmes involving the participation of certain Member States only, the participation of the Union in programmes undertaken by several Member States, or the setting up of joint undertakings or other arrangements within the meaning of Articles 184, 185 and 187 TFEU.

(20) With the aim of deepening the relationship between science and society and reinforcing public confidence in science, Horizon 2020 should favour an informed engagement of citizens and civil society on research and innovation matters by promoting science education, by making scientific knowledge more accessible, by developing responsible research and innovation agendas that meet citizens' and civil society's concerns and expectations and by facilitating their participation in Horizon 2020 activities.

(21) The implementation of Horizon 2020 should respond to the evolving opportunities and needs from science and technology, industry, policies and society. As such, the agendas should be set in close liaison with stakeholders from all sectors concerned, and sufficient flexibility should be allowed for new developments. External advice should be sought on a continuous basis during Horizon 2020, also making use of relevant structures such as European Technology Platforms, Joint Programming Initiatives and the European Innovation Partnerships.

(22) Horizon 2020 should contribute to the attractiveness of the research profession in the Union. Adequate attention should be paid to the European Charter for Researchers and Code of Conduct for the Recruitment of Researchers[14], together with other relevant reference frameworks defined in the context of the European Research Area, while respecting their voluntary nature.

(23) The activities developed under Horizon 2020 should aim at promoting equality between men and women in research and innovation, by addressing in particular the underlying causes of gender imbalance, by exploiting the full potential of both female and male researchers, and by integrating the gender dimension into the content of projects in order to improve the quality of research and stimulate innovation. Activities should also aim at the implementation of the principles relating to the equality between women and men as laid down in Articles 2 and 3 of the Treaty on European Union and Article 8 TFEU.

(24) Research and innovation activities supported by Horizon 2020 should respect fundamental ethical principles. The opinions of the European Group on Ethics in Science and New Technologies should be taken into account. Research activities should also take into account Article 13 TFEU and reduce the use of animals in research and testing, with a view ultimately to replacing animal use. All activities should be carried out ensuring a high level of human health protection in accordance with Article 168 TFEU.

(25) The European Commission does not explicitly solicit the use of human embryonic stem cells. The use of human stem cells, be they adult or embryonic, if any, depends on the judgement of the scientists in view of the objectives they want to achieve and is subject to stringent Ethics Review. No project involving the use of human embryonic stem cells should be funded that does not obtain the necessary approvals from the Member States. No activity should be funded that is forbidden in all Member States. No activity should be funded in a Member State where such activity is forbidden.

(26) To achieve maximum impact, Horizon 2020 should develop close synergies with other Union programmes in areas such as education, space, environment, competitiveness and SMEs, the internal security, culture and media and with the Cohesion Policy funds and Rural Development Policy, which can specifically help to strengthen national and regional research and innovation capabilities in the context of smart specialisation strategies.

(27) SMEs constitute a significant source of innovation and growth in Europe. Therefore a strong participation of SMEs, as defined in Commission Recommendation 2003/361/EC of 6 May 2003[15], is needed in Horizon 2020. This should support the aims of the Small Business Act[16].

(28) With the aim to achieve the greatest possible impact of Union funding, Horizon 2020 is to develop closer synergies, which may also take the form of public-public partnerships, with national and regional programmes that support research and innovation.

(29) A greater impact should also be achieved by combining Horizon 2020 and private sector funds within public-private partnerships in key areas where research and innovation could contribute to Europe's wider competitiveness goals and help tackle societal challenges. The public-private partnerships in the form of Joint Technology Initiatives launched under Decision No 1982/2006/EC of the European Parliament and of the Council of 18 December 2006 concerning the Seventh Framework programme of the European Community for research, technological development and demonstration activities (2007-13)[17] may be continued using more fit-for-purpose structures.

(30) Horizon 2020 should promote cooperation with third countries based on common interest and mutual benefit. International cooperation in science, technology and innovation should be targeted to contribute to achieving the Europe 2020 objectives to strengthen competitiveness, contribute to tackling societal challenges and support Union external and development policies, including by developing synergies with external programmes and contributing to the Union's international commitments such as the achievement of Millennium Development Goals.

(31) In order to maintain a level playing field for all undertakings active in the internal market, funding provided by Horizon 2020 should be designed in accordance with state aid rules so as to ensure the effectiveness of public spending and prevent market distortions such as crowding-out of private funding, creating ineffective market structures or preserving inefficient firms.

(32) The need for a new approach to control and risk management in Union research funding was recognised by the European Council of 4 February 2011, asking for a new balance between trust and control and between risk-taking and risk avoidance. The European Parliament, in its Resolution of 11 November 2010 on simplifying the implementation of the Research Framework Programmes, called for a pragmatic shift towards administrative and financial simplification and states that the management of European research funding should be more trust-based and risk-tolerant towards participants. The interim evaluation report of the Seventh Framework Programme for Research (2007-2013) concludes that a more radical approach is needed to attain a quantum leap in simplification, and that the risk-trust balance needs to be redressed.

(33) The financial interests of the Union should be protected through proportionate measures throughout the expenditure cycle, including the prevention, detection and investigation of irregularities, the recovery of funds lost, wrongly paid or incorrectly used and, where appropriate, penalties. A revised control strategy, shifting focus from minimisation of error rates towards risk-based control and fraud detection, should reduce the control burden for participants.

(34) It is important to ensure sound financial management of Horizon 2020 and its implementation in the most effective and user-friendly manner possible, while also ensuring legal certainty and the accessibility of the programme to all participants. It is necessary to ensure compliance with Regulation (EU) No XXXX/2012 [new financial regulation] and with the requirements of simplification and better regulation.

(35) Effective performance management, including evaluation and monitoring, requires development of specific performance indicators which can be measured over time; are both realistic and reflect the logic of the intervention; and relevant to the appropriate hierarchy of objectives and activities. Appropriate coordination mechanisms should be put in place between the implementation and monitoring of Horizon 2020, and the monitoring of progress, achievements and functioning of the ERA.

(36) Since the objectives of Horizon 2020 cannot be sufficiently achieved by Member States in strengthening the overall research and innovation framework and coordinating efforts across the Union, and can therefore, by reason of avoiding duplication, retaining critical mass in key areas and ensuring public financing is used in an optimal way, be better achieved at Union level, the Union may adopt measures, in accordance with the principle of subsidiarity as set out in Article 5 of the Treaty on European Union. In accordance with the principle of proportionality, as set out in that Article, Horizon 2020 does not go beyond what is necessary in order to achieve those objectives.

(37) For reasons of legal certainty and clarity, Decision No 1982/2006/EC should be repealed,

HAVE ADOPTED THIS REGULATION:

TITLE I ESTABLISHMENT

Article 1 Subject matter

This Regulation establishes Horizon 2020 - the Framework Programme for Research and Innovation (2014-2020) ("Horizon 2020") and determines the framework governing Union support to research and innovation activities and fostering better exploitation of the industrial potential of policies of innovation, research and technological development.

Article 2 Definitions

For the purposes of this Regulation the following definitions apply:

(a) 'research and innovation activities' means the whole spectrum of activities of research, technological development, demonstration and innovation, including the promotion of cooperation with third countries and international organisations, dissemination and optimisation of results and stimulation of the training and mobility of researchers in the Union;

(b) 'direct actions' mean research and innovation activities undertaken by the Commission through its Joint Research Centre;

(c) 'indirect actions' mean research and innovation activities to which the Union provides financial support and which are undertaken by participants;

(d) 'public-private partnership' means a partnership where private sector partners, the Union and, where appropriate, other partners, commit to jointly support the development and implementation of a research and innovation programme or activities ;

(e) 'public-public partnership' means a partnership where public sector bodies or bodies with a public service mission at regional, national or international level commit with the Union to jointly support the development and implementation of a research and innovation programme or activities.

Article 3 Establishment of Horizon 2020

Horizon 2020 is hereby established for the period from 1 January 2014 to 31 December 2020.

Article 4 Union added value

Horizon 2020 shall play a central role in the delivery of the Europe 2020 strategy for smart, sustainable and inclusive growth by providing a common strategic framework for the Union's research and innovation funding, thus acting as a vehicle for leveraging private investment, creating new job opportunities and ensuring Europe's long-term sustainable growth and competitiveness.

Article 5 General objective, priorities and specific objectives

1. Horizon 2020 shall contribute to building an economy based on knowledge and innovation across the whole Union by leveraging sufficient additional research, development and innovation funding. Thereby, it shall support the implementation of the Europe 2020 strategy and other Union policies, as well as the achievement and functioning of the European Research Area (ERA). The relevant performance indicators are set out in the introduction of Annex I.

2. This general objective shall be pursued through three mutually reinforcing priorities dedicated to:

(a) excellent science;

(b) industrial leadership;

(c) societal challenges.

The specific objectives corresponding to each of those three priorities are set out in Parts I to III of Annex I, together with the broad lines of the activities.

3 The Joint Research Centre shall contribute to the general objective and priorities set out in paragraphs 1 and 2 by providing scientific and technical support to Union policies. The broad lines of the activities are set out in Part IV of Annex I.

4. The European Institute of Innovation and Technology (EIT) set up by Regulation (EU) No 294/2008 of the European Parliament and of the Council[18] shall contribute to the general objective and priorities set out in paragraphs 1 and 2 with the specific objective of integrating the knowledge triangle of research, innovation and education. The relevant performance indicators for the European Institute of Innovation and Technology are set out in the introduction of Annex I and the broad lines of that specific objective and the activities are set out in Part V of Annex I.

5. Within the priorities and broad lines referred to in paragraph 2, account may be taken of new and unforeseen needs that arise during the period of implementation of Horizon 2020. This may include responses to emerging opportunities, crises and threats, to needs relating to the development of new Union policies, and to the piloting of actions foreseen for support under future programmes.

Article 6 Budget

1. The financial envelope for the implementation of Horizon 2020 shall be EUR 87740 million, of which a maximum of EUR 86198 million shall be allocated to activities under Title XIX of the Treaty on the Functioning of the European Union (TFEU).

2. The amount for activities under Title XIX TFEU shall be distributed among the priorities set out in Article 5(2) as follows:

(a) Excellent science, EUR 27818 million;

(b) Industrial leadership, EUR 20280 million;

(c) Societal challenges, EUR 35888 million.

The maximum overall amount for the Union financial contribution from Horizon 2020 to the non-nuclear direct actions of the Joint Research Centre shall be EUR 2212 million.

The indicative breakdown for the specific objectives within the priorities and the maximum overall amount of the contribution to the non-nuclear direct actions of the Joint Research Centre are set out in Annex II.

3. The European Institute of Innovation and Technology shall be financed through a maximum contribution from Horizon 2020 of EUR 3194 million as set out in Annex II. A first allocation of EUR 1542 million shall be provided to the European Institute of Innovation and Technology for activities under Title XVII of the Treaty on the Functioning of the European Union. A second allocation of up to EUR 1652 million shall be provided, subject to the review set out in Article 26 (1). This additional amount shall be provided on a pro-rata basis, as indicated in Annex II, from the amount for the specific objective "Leadership in enabling and industrial technologies" within the priority on industrial leadership set out in paragraph 2(b) and from the amount for the priority on societal challenges set out in 2(c).

This funding in two multiannual allocations shall cover:

(a) in the first allocation, the ongoing developments of the current Knowledge and Innovation Communities (hereinafter KICs) and seed money for the launch of the second wave of three new KICs

(b) in the second allocation, the ongoing developments of the KICs already launched and the seed money for the launch of the third wave of three new KICs

The second allocation shall be made available following the review set out in Article 26(1) taking into account in particular:

(a) the agreed timing of the creation of the third wave of KICs;

(b) the programmed financial needs of the existing ones according to their specific development;

(c) the contribution of the European Institute of Innovation and Technology and its KICs to the Horizon 2020 objectives.

4. The financial envelope of Horizon 2020 may cover expenses pertaining to preparatory, monitoring, control, audit and evaluation activities which are required for the management of Horizon 2020 and the achievement of its objectives, in particular studies and meetings of experts, as far as they are related to the objectives of Horizon 2020, expenses linked to information technology networks focusing on information processing and exchange, together with all other technical and administrative assistance expenses incurred by the Commission for the management of Horizon 2020.

Where necessary, appropriations may be entered in the budget beyond 2020 to cover technical and administrative assistance expenses, in order to enable the management of actions not yet completed by 31 December 2020.

5. In order to respond to unforeseen situations or new developments and needs, and to take into account the provisions of paragraph 3 of this article, the Commission may, following the interim evaluation of Horizon 2020 as referred to in Article 26(1)(a) of this Regulation, within the annual budgetary procedure review the amounts set out for the priorities in paragraph 2 and the indicative breakdown by specific objectives within these priorities set out in Annex II and transfer appropriations between the priorities and specific objectives up to 10 % of the total initial allocation of each priority and up to 10 % of the initial indicative breakdown of each specific objective. This does not concern the amount set out for the direct actions of the Joint Research Centre in paragraph 2 or the contribution to the European Institute of Innovation and Technology set out in paragraph 3.

Article 7 Association of third countries

1 Horizon 2020 shall be open to the association of:

(a) acceding countries, candidate countries and potential candidates, in accordance with the general principles and general terms and conditions for the participation of those countries in Union programmes established in the respective framework agreements and decisions of association councils or similar agreements;

(b) selected third countries that fulfil all of the following criteria:

(i) have a good capacity in science, technology and innovation;

(ii) have a good track record of participation in Union research and innovation programmes;

(iii) have close economic and geographical links to the Union;

(iv) are European Free Trade Association (EFTA) members or countries or territories listed in the Annex to Regulation (EU) No XX/2012 of the European Parliament and the Council establishing a European Neighbourhood Instrument[19].

2. Specific terms and conditions regarding the participation of associated countries in Horizon 2020, including the financial contribution, based on the gross domestic product of the associated country shall be determined by international agreements between the Union and the associated countries.

TITLE II IMPLEMENTATION

CHAPTER I IMPLEMENTATION, MANAGEMENT AND FORMS OF SUPPORT

Article 8 Implementation by means of a specific programme and the contribution to the European Institute of Innovation and Technology

Horizon 2020 shall be implemented through a consolidated specific programme and a financial contribution to the European Institute of Innovation and Technology.

The specific programme shall set out one Part for each of the three priorities set out in Article 5(2) and one Part for the non-nuclear direct actions of the Joint Research Centre.

Article 9 Management

1. Horizon 2020 shall be implemented by the Commission in accordance with Regulation (EU) No XXXX/2012 [New Financial Regulation].

2. The Commission may also entrust part of the implementation of Horizon 2020 to the funding bodies referred to in Article [55(1)(b)] of Regulation (EU) No XXXX/2012 [New Financial Regulation].

Article 10 Forms of Union support

1. Horizon 2020 shall support indirect actions through one or several of the forms of funding provided for by Regulation (EU) No XX/2012 [New Financial Regulation] in particular grants, prizes, procurement and financial instruments.

2. Horizon 2020 shall also support direct actions undertaken by the Joint Research Centre.

3. Where the Joint Research Centre direct actions contribute to initiatives established under Article 185 or Article 187 TFEU, this contribution shall not be considered as part of the financial contribution allocated to these initiatives.

Article 11 Rules for participation and dissemination of results

The rules for participation and dissemination of results laid down in Regulation (EU) No XX/2012 [Rules for participation and dissemination] shall apply to indirect actions.

CHAPTER II PROGRAMMING

SECTION I GENERAL PRINCIPLES

Article 12 External advice and societal engagement

1. For the implementation of Horizon 2020, account shall be taken of advice and inputs provided by: advisory groups of independent, high level experts set up by the Commission; dialogue structures created under international science and technology agreements; forward looking activities; targeted public consultations; and transparent and interactive processes that ensure responsible research and innovation is supported.

2. Full account shall also be taken of relevant aspects of the research and innovation agendas established by European Technology Platforms, Joint Programming Initiatives and European Innovation Partnerships.

Article 13 Cross-cutting actions

1. Linkages and interfaces shall be implemented across and within the priorities of Horizon 2020. Particular attention shall be paid in this respect to the development and application of key enabling and industrial technologies, to bridging from discovery to market application, to cross-disciplinary research and innovation, to social and economic sciences and humanities, to fostering the functioning and achievement of the ERA, to cooperation with third countries, to responsible research and innovation including gender, and to enhancing the attractiveness of the research profession and to facilitating cross-border and cross-sector mobility of researchers.

2. Where an indirect action is supported which is of high relevance to several of the priorities set out in Article 5(2) or to several specific objectives within those priorities, the financial amount for that action may be combined from the amounts allocated to respectively each priority or specific objective concerned.

Article 14 Evolving nature of science, technology, innovation, markets and society

Horizon 2020 shall be implemented in a manner ensuring that the priorities and actions supported are relevant to changing needs and take account of the evolving nature of science, technology, innovation, markets and society, where innovation includes business, organisational and social aspects.

Article 15 Gender equality

Horizon 2020 shall ensure the effective promotion of gender equality and the gender dimension in research and innovation content.

Article 16 Ethical principles

1. All the research and innovation activities carried out under Horizon 2020 shall comply with ethical principles and relevant national, Union and international legislation, including the Charter of Fundamental Rights of the European Union and the European Convention on Human Rights and its Supplementary Protocols.

Particular attention shall be paid to the principle of proportionality, the right to privacy, the right to the protection of personal data, the right to the physical and mental integrity of a person, the right to non-discrimination and the need to ensure high levels of human health protection.

2. Research and innovation activities carried out under Horizon 2020 shall have an exclusive focus on civil applications.

3. The following fields of research shall not be financed:

(a) research activity aiming at human cloning for reproductive purposes;

(b) research activity intended to modify the genetic heritage of human beings which could make such changes heritable;

(c) research activities intended to create human embryos solely for the purpose of research or for the purpose of stem cell procurement, including by means of somatic cell nuclear transfer.

4. Research on human stem cells, both adult and embryonic, may be financed, depending both on the contents of the scientific proposal and the legal framework of the Member States involved. No funding shall be granted for research activities that are prohibited in all the Member States. No activity shall be funded in a Member State where such activity is forbidden.

5. The fields of research set out in paragraph 3 may be reviewed within the context of the interim evaluation set out in Article 26(1) in the light of scientific advances.

Article 17 Complementarity with other Union programmes

Horizon 2020 shall be implemented in a way which is complementary to other Union funding programmes, including the Structural Funds.

SECTION II SPECIFIC FIELDS OF ACTION

Article 18 Small and medium-sized enterprises

1. Particular attention shall be paid to ensuring the adequate participation of, and innovation impact on, small and medium-sized enterprises (SME) in Horizon 2020. Quantitative and qualitative assessments of SME participation shall be undertaken as part of the evaluation and monitoring arrangements.

2. Specific actions shall be undertaken within the specific objective "Leadership in enabling and industrial technologies" set out in Point 1 of Part II of Annex I and each of the specific objectives under the priority "Societal challenges" set out in Points 1 to 6 of Part III of Annex I. These specific actions shall take the form of a dedicated SME instrument that is targeted at all types of SMEs with an innovation potential and shall be implemented in a consistent manner and tailored to the needs of SMEs as set out under the specific objective "Innovation in SMEs" in Point 3.3.(a) of Part II of Annex I.

3. The integrated approach set out in paragraphs 1 and 2 is expected to lead to around 15% of the total combined budget for the specific objective on "Leadership in enabling and industrial technologies" and the priority "Societal challenges" going to SMEs.

Article 19 Public-private partnerships

1. Horizon 2020 may be implemented through public-private partnerships where all the partners concerned commit 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.

2. Involvement of the Union in those partnerships may take one of the following forms:

(a) financial contributions from the Union to joint undertakings established on the basis of Article 187 TFEU under the Seventh Framework Programme, subject to the amendment of their basic acts; to new public-private partnerships set up on the basis of Article 187 TFEU; and to other funding bodies referred to in Article [55(1)(b)(v) or (vii)] of Regulation (EU) No XX/2012 [New Financial Regulation]. This form of partnerships shall only be implemented where the scope of the objectives pursued and the scale of the resources required justify it;

(b) entering a contractual agreement between the partners referred to in paragraph 1, which specifies the objectives of the partnership, respective commitments of the partners, key performance indicators, and outputs to be delivered including the identification of research and innovation activities that require support from Horizon 2020.

3. Public-private partnerships shall be identified in an open and transparent way based on all of the following criteria:

(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 the 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.

Article 20 Public-public partnerships

1. Horizon 2020 shall contribute to the strengthening of public-public partnerships where actions at regional, national or international level are jointly implemented within the Union.

Particular attention shall be paid to joint programming initiatives between Member States.

2. Public-public partnerships may be supported either within, or across, the priorities set out in Article 5(2), in particular through:

(a) an ERA-NET instrument using grants to support public-public partnerships in their preparation, establishment of networking structures, design, implementation and coordination of joint activities as well as topping up of individual joint calls and of actions of a transnational nature;

(b) Union participation in programmes undertaken by several Member States in accordance with Article 185 TFEU.

For the purposes of point (a), top-up funding shall be conditional on a significant level of prior financial commitments of the participating entities to the joint calls and actions. The ERA-NET instrument may include an objective to harmonise rules and implementation modalities of the joint calls and actions. It may also be used in order to prepare for an initiative pursuant to Article 185 TFEU.

For the purposes of point (b) such initiatives shall only be proposed in cases where there is a need for a dedicated implementation structure and where there is a high level of commitment of the participating countries to integration at scientific, management and financial levels. In addition, proposals for initiatives referred to in point (b) shall be identified on the basis of all of the following criteria:

(a) a clear definition of the objective to be pursued and its relevance to the objectives of Horizon 2020 and broader Union policy objectives;

(b) clear financial commitments of the participating countries, including prior commitments to pool national and/or regional investments for transnational research and innovation;

(c) the added value of action at Union level;

(d) the critical mass, with regard to the size and the number of programmes involved, the similarity of activities and the share of relevant research they cover;

(e) the efficiency of Article 185 TFEU as the most appropriate means for achieving the objectives.

Article 21 International cooperation with third countries and international organisations

1. Entities established in third countries and international organisations shall be eligible to participate in indirect actions of Horizon 2020 under the conditions set out in Regulation (EU) XX/XX [Rules for Participation]. International cooperation with third countries and international organisations shall be promoted across and within Horizon 2020 to achieve, in particular, the following objectives:

(a) strengthening the Union’s excellence and attractiveness in research and innovation as well as its economic and industrial competitiveness;

(b) tackling effectively global societal challenges;

(c) supporting the Union's external and development policy objectives, complementing external and development programmes.

2. Targeted actions with the objective of promoting cooperation with specific third countries or groups of third countries shall be implemented on the basis of common interest and mutual benefit, taking into account their scientific and technological capabilities and market opportunities, and the expected impact.

Reciprocal access to third country programmes should be encouraged. In order to maximise impact, coordination and synergies with initiatives of Member States and associated countries shall be promoted.

Cooperation priorities shall take into account developments in Union policy and opportunities for cooperation with third countries, as well as possible deficiencies in third country intellectual property systems.

3. In addition, horizontal and cross-cutting activities to promote the strategic development of international cooperation shall be implemented under Horizon 2020 under the specific objective "Inclusive, innovative and secure societies" set out in Point 6.3.2(d) of Part III of Annex I.

Article 22 Information, communication and dissemination

The European Commission shall implement information and communication actions concerning Horizon 2020, including communication measures concerning supported projects and results. Budget allocated to communication under Horizon 2020 shall also contribute to covering the corporate communication of the Union's political priorities as far as they are related to the general objective of this Regulation.

Activities to disseminate information and carry out communication activities shall be an integral task under all of the actions supported by Horizon 2020.

In addition, the following specific actions shall be supported:

(a) initiatives aimed at widening awareness and facilitating access to funding under Horizon 2020, in particular for those regions or types of participant that are underrepresented;

(b) targeted assistance to projects and consortia to provide them with access to the necessary skills to optimise the communication and dissemination of results;

(c) actions which bring together results from a range of projects, including those that may be funded from other sources, to provide user-friendly databases and reports that summarise key findings;

(d) dissemination to policy makers, including standardisation bodies, to promote the use of policy relevant results by the appropriate bodies at international, Union, national and regional level;

(e) initiatives to foster dialogue and debate on scientific, technological and innovation related issues with the public, and to take advantage of social media and other innovative technologies and methodologies;

CHAPTER III CONTROL

Article 23 Control and audit

1. The control system set up for the implementation of this Regulation shall be designed so as to provide reasonable assurance of achieving adequate management of the risks relating to the effectiveness and efficiency of the operations as well as the legality and regularity of the underlying transactions, taking into account the multi-annual character of programmes as well as the nature of the payments concerned.

2. The control system shall ensure an appropriate balance between trust and control, taking into account administrative and other costs of controls at all levels, so that the objectives of Horizon 2020 can be achieved and the most excellent researchers and the most innovative enterprises can be attracted to it.

3. As part of the control system, the audit strategy for expenditure on indirect actions under Horizon 2020 shall be based on the financial audit of a representative sample of expenditure across the whole framework programme. This representative sample shall be complemented by a selection based on an assessment of the risks related to expenditure.

Audits of expenditure on indirect actions under Horizon 2020 shall be carried out in a coherent manner in accordance with the principles of economy, efficiency and effectiveness in order to minimize the audit burden of the participants.

Article 24 Protection of the financial interests of the Union

1. The Commission shall take appropriate measures ensuring that, when actions financed under this Regulation are implemented, the financial interests of the Union are protected by the application of preventive measures against fraud, corruption and any other illegal activities, by effective checks and, if irregularities are detected, by the recovery of the amounts wrongly paid and, where appropriate, by effective, proportionate and deterrent penalties.

2. The Commission or its representatives and the Court of Auditors shall have the power of audit, on the basis of documents and on-the-spot checks and inspections, over all grant beneficiaries, contractors, subcontractors and other third parties who have received Union funds under Horizon 2020.

Without prejudice to paragraph 3, audits by the Commission may be carried out up to four years after the final payment.

3. The European Anti-Fraud Office (OLAF) may carry out on-the-spot checks and inspections on economic operators concerned directly or indirectly by such funding in accordance with the procedures laid down in Council Regulation (Euratom, EC) No 2185/96[20] with a view to establishing whether there has been fraud, corruption or any other illegal activity affecting the financial interests of the Union in connection with a grant agreement or grant decision or a contract concerning Union funding.

4. Without prejudice to paragraphs 1, 2 and 3, cooperation agreements with third countries and international organisations and grant agreements and grant decisions and contracts resulting from the implementation of this Regulation shall expressly empower the Commission, the Court of Auditors and the OLAF to conduct such audits, on-the-spot checks and inspections.

CHAPTER IV MONITORING AND EVALUATION

Article 25 Monitoring

1. The Commission shall annually monitor the implementation of Horizon 2020, its specific programme and the activities of the European Institute of Innovation and Technology. This shall include information on cross-cutting topics such as sustainability and climate change, including information on the amount of climate related expenditure.

2. The Commission shall report and disseminate the results of that monitoring.

Article 26 Evaluation

1. Evaluations shall be carried out in a sufficiently timely manner to feed into the decision-making process.

(a) Not later than end 2017, the Commission shall carry out, with the assistance of independent experts, a review of the European Institute of Innovation and Technology. The second allocation of funds to the European Institute of Innovation and Technology as set out in Article 6(3) shall be made available following this review. The review shall assess the progress of the European Institute of Innovation and Technology against all of the following:

(i) the level of consumption of the first allocation of funds set out in Article 6(3), differentiating between the amount of money used for the development of the first wave of KICs and the effect of the seed money for the second phase, and the ability of the European Institute of Innovation and Technology to attract funds from the partners in the Knowledge and Innovation Communities and from the private sector, as set out in Regulation XX/2012 [revised EIT Regulation];

(ii) the agreed timing for the creation of the third wave of Knowledge and Innovation Communities and the programmed financial needs of existing ones according to their specific development; and

(iii) the contribution of the European Institute of Innovation and Technologies and the Knowledge and Innovation Communities to the priority on societal challenges and the specific objective on "leadership in enabling and industrial technologies" of the programme Horizon 2020.

(b) Not later than end 2017, and taking into account the ex-post evaluation of the Seventh Framework Programme to be completed by the end of 2015 and the review of the European Institute of Innovation and Technology, the Commission shall carry out, with the assistance of independent experts, an interim evaluation of Horizon 2020, its specific programme, including the European Research Council, and the activities of the European Institute of Innovation and Technology, on the achievements (at the level of results and progress towards impacts) of the objectives of Horizon 2020 and continued relevance of all the measures, the efficiency and use of resources, the scope for further simplification, and Union added value. That evaluation shall also take into consideration aspects relating to access to funding opportunities for participants in all regions, for SMEs and for promoting gender balance. That evaluation shall additionally take into account the contribution of the measures to the Union priorities of smart, sustainable and inclusive growth and results on the long-term impact of the predecessor measures.

(c) Not later than end 2023, the Commission shall carry out, with the assistance of independent experts, an ex-post evaluation of Horizon 2020, its specific programme and the activities of the European Institute of Innovation and Technology. This shall cover the rationale, implementation and achievements, as well as the longer-term impacts and sustainability of the measures, to feed into a decision on a possible renewal, modification or suspension of a subsequent measure.

2. The performance indicators for the general objectives and for the European Institute of Innovation and Technology, as set out in the introduction of Annex I to this Regulation, and for the specific objectives as established in the specific programme, including relevant baselines, shall provide the minimum basis for assessing the extent to which the objectives of Horizon 2020 have been achieved.

3. Member States shall provide the Commission with data and information necessary to permit the monitoring and evaluation of the measures concerned.

4. The Commission shall communicate the conclusions of those evaluations of Horizon 2020, accompanied by its observations, to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions.

TITLE III

FINAL PROVISIONS

Article 27 Repeal and transitional provisions

1. Decision No 1982/2006/EC is repealed with effect from 1 January 2014.

2. However, actions initiated under Decision No 1982/2006/EC and financial obligations related to those actions shall continue to be governed by that Decision until their completion.

3. The financial allocation referred to in Article 6 may also cover the technical and administrative assistance expenses necessary to ensure the transition between this programme and the measures adopted under Decision No 1982/2006/EC.

Article 28

This Regulation shall enter into force on the third day following that of its publication in the Official Journal of the European Union.

This Regulation shall be binding in its entirety and directly applicable in all Member States.

Done at Brussels,

For the European Parliament For the Council

The President The President

ANNEX I Broad lines of the specific objectives and activities

Horizon 2020 has the general objective to build an economy based on knowledge and innovation across the whole Union, while contributing to sustainable development. It will support the Europe 2020 strategy and other Union policies as well as the achievement and functioning of the European Research Area.

The performance indicators for assessing progress against this general objective are:

– the Europe 2020 R&D target (3 % of GDP);

– the Europe 2020 innovation headline indicator.

This general objective shall be pursued through three distinct, yet mutually reinforcing, priorities, each containing a set of specific objectives. They will be implemented in a seamless manner in order to foster interactions between the different specific objectives, avoid any duplication of effort and reinforce their combined impact.

The Joint Research Centre shall contribute to the general objective and priorities of Horizon 2020 with the specific objective of providing customer-driven scientific and technical support to Union policies.

The European Institute of Innovation and Technology (EIT) shall contribute to the general objective and priorities of Horizon 2020 with the specific objective of integrating the knowledge triangle of research, innovation and education. The indicators for assessing the performance of the EIT are:

– organisations from universities, business and research integrated in the Knowledge and Innovation Communities;

– collaboration inside the knowledge triangle leading to the development of innovative products and processes.

This Annex sets out the broad lines of those specific objectives and activities referred to in Article 5(2), (3) and (4).

Part I. Priority 'Excellent science'

This Part aims to reinforce and extend the excellence of the Union’s science base and to consolidate the European Research Area in order to make the Union’s research and innovation system more competitive on a global scale. It consists of four specific objectives:

(a) The European Research Council (ERC) shall provide attractive and flexible funding to enable talented and creative individual researchers and their teams to pursue the most promising avenues at the frontier of science, on the basis of Union-wide competition.

(b) Future and emerging technologies shall support collaborative research in order to extend Europe’s capacity for advanced and paradigm-changing innovation. It shall foster scientific collaboration across disciplines on radically new, high-risk ideas and accelerate development of the most promising emerging areas of science and technology as well as the Union wide structuring of the corresponding scientific communities.

(c) Marie Curie actions shall provide excellent and innovative research training as well as attractive career and knowledge-exchange opportunities through cross-border and cross-sector mobility of researchers to best prepare them to face current and future societal challenges.

(d) Research infrastructure shall develop European research infrastructure for 2020 and beyond, foster their innovation potential and human capital, and complement this with the related Union policy and international cooperation.

Each of these has been proven to have high Union added value. Together, they form a powerful and balanced set of activities which, in concert with activities at national and regional levels, span the breadth of Europe’s needs regarding advanced science and technology. Bringing them together in a single programme will enable them to operate with greater coherence, in a rationalised, simplified and more focused way, while maintaining the continuity which is vital to sustain their effectiveness.

The activities are inherently forward-looking, building skills in the long term, focusing on the next generation of science, technology, researchers and innovations and providing support for emerging talent from across the whole of the Union and associated countries, as well as worldwide. In view of their science-driven nature and largely ‘bottom-up’, investigator-driven funding arrangements, the European scientific community will play a strong role in determining the avenues of research followed under the programme.

Part II. Priority 'Industrial leadership'

This Part aims to speed up development of the technologies and innovations that will underpin tomorrow’s businesses and help innovative European SMEs to grow into world-leading companies. It consists of three specific objectives:

(a) Leadership in enabling and industrial technologies shall provide dedicated support for research, development and demonstration on ICT, nanotechnology, advanced materials, biotechnology, advanced manufacturing and processing and space. Emphasis will be placed on interactions and convergence across and between the different technologies.

(b) Access to risk finance shall aim to overcome deficits in the availability of debt and equity finance for R&D and innovation-driven companies and projects at all stages of development. Together with the equity instrument of the Programme for the Competitiveness of Enterprises and SMEs, it shall support the development of Union-level venture capital.

(c) Innovation in SMEs shall stimulate all forms of innovation in SMEs, targeting those with the potential to grow and internationalise across the single market and beyond.

The activities shall follow a business-driven agenda. The budgets for the specific objectives ‘Access to risk finance’ and ‘Innovation in SMEs’ will follow a demand-driven, bottom-up logic, without predetermined priorities. These shall be complemented by the use of financial instruments and a dedicated SME instrument following a policy driven logic within the Part on 'Societal challenges' and the specific objective ‘Leadership in enabling and industrial technologies’.

Horizon 2020 will take an integrated approach to the participation of SMEs, which could lead to around 15 % of the total combined budgets for all specific objectives on societal challenges and the specific objective 'Leadership in enabling and industrial technologies' being devoted to SMEs.

The specific objective ‘Leadership in enabling and industrial technologies’ shall follow a technology-driven approach to develop enabling technologies that can be used in multiple areas, industries and services. Applications of these technologies to meet societal challenges shall be supported together with the Societal challenges.

Part III. Priority 'Societal challenges'

This Part responds directly to the policy priorities and societal challenges identified in the Europe 2020 strategy and aiming to stimulate the critical mass of research and innovation efforts needed to achieve Union's policy goals. Funding shall be focused on the following specific objectives:

(a) Health, demographic change and well-being;

(b) Food security, sustainable agriculture, marine and maritime research, and the bio-economy;

(c) Secure, clean and efficient energy;

(d) Smart, green and integrated transport;

(e) Climate action, resource efficiency and raw materials;

(f) Inclusive, innovative and secure societies.

All the activities shall take a challenge-based approach, focusing on policy priorities without predetermining the precise choice of technologies or solutions that should be developed. The emphasis shall be on bringing together a critical mass of resources and knowledge across different fields, technologies and scientific disciplines in order to address the challenges. The activities shall cover the full cycle from research to market, with a new focus on innovation-related activities, such as piloting, demonstration, test-beds, support for public procurement, design, end-user driven innovation, social innovation and market take-up of innovations.

Social sciences and humanities shall be an integral part of the activities to address all the challenges. In addition, the underpinning development of these disciplines shall be supported under the specific objective ‘Inclusive, innovative and secure societies’. Support will also focus on providing a strong evidence base for policy making at international, Union, national and regional levels. Given the global nature of many of the challenges, strategic cooperation with third countries shall be an integral part of each challenge. In addition, cross-cutting support for international cooperation shall be provided under the specific objective ‘Inclusive, innovative and secure societies’.

The specific objective ‘Inclusive, innovative and secure societies’ also includes an activity to close the research and innovation divide with specific measures to unlock excellence in less developed regions of the Union.

The Joint Research Centre’s activities shall be an integral part of Horizon 2020, in order to provide robust, evidence-based support for Union policies. This shall be driven by customer needs, complemented by forward-looking activities.

The EIT shall play a major role by bringing together excellent research, education and innovation thus integrating the knowledge triangle. The EIT shall do so primarily through the Knowledge and Innovation Communities (KICs). In addition it shall ensure that experiences are shared beyond the KICs through targeted dissemination and knowledge sharing measures, thereby promoting a faster uptake of innovation models across the Union.

PART I EXCELLENT SCIENCE

1. European Research Council (ERC)

1.1 Specific objective

The specific objective is to reinforce the excellence, dynamism and creativity of European research.

Europe has set out its ambition to move to a new economic model based on smart, sustainable and inclusive growth. This type of transformation will need more than incremental improvements to current technologies. It will require much higher capacity for science-based innovation fuelled by radical new knowledge, allowing Europe to take a leading role in creating the technological paradigm shifts which will be the key drivers of productivity growth, competitiveness, wealth and social progress in the future. Such paradigm shifts have historically tended to originate from the public-sector science base before going on to lay the foundations for whole new industries and sectors.

World-leading innovation is closely associated with excellent science. Once the undisputed leader, Europe has fallen behind in the race to produce the very best cutting-edge science and has played a secondary role to the United States of America in the major post-war technological advances. Although the Union remains the largest producer of scientific publications in the world, the United States of America produces twice as many of the most influential papers (the top 1 % by citation count). Similarly, international university rankings show that US universities dominate the top places. And 70 % of the world’s Nobel Prize winners are based in the USA.

One part of the challenge is that, while Europe and the United States of America invest similar amounts in their public-sector science bases, the Union has nearly three times as many public-sector researchers, resulting in significantly lower investment per researcher. Moreover, US funding is more selective about allocating resources to the leading researchers. This helps to explain why the Union’s public-sector researchers are, on average, less productive and, altogether, make less combined scientific impact than their far less numerous US counterparts.

Another major part of the challenge is that in many European countries the public sector still does not offer sufficiently attractive conditions for the best researchers. It can take many years before talented young researchers are able to become independent scientists in their own right. This leads to a dramatic waste of Europe’s research potential by delaying the emergence of the next generation of researchers, who bring new ideas and energy, and by enticing excellent researchers starting their career to seek advancement elsewhere.

Furthermore, these factors compound Europe’s relative unattractiveness in the global competition for scientific talent. The ability of the US system to offer more resources per researcher and better career prospects explains how it continues to attract the best researchers from across the world, including tens of thousands from the Union.

1.2 Rationale and Union added value

The ERC was created to provide Europe’s best researchers, both women and men, with the resources they need to allow them to compete better at global level, by funding individual teams on the basis of pan-European competition. It operates autonomously: an independent Scientific Council made up of scientists, engineers and scholars of the highest repute and expertise establishes the overall scientific strategy and has full authority over decisions on the type of research to be funded. These are essential features of the ERC, guaranteeing the effectiveness of its scientific programme, the quality of its operations and peer-review process and its credibility in the scientific community.

Operating across Europe on a competitive basis, the ERC is able to draw on a wider pool of talents and ideas than would be possible for any national scheme. The best researchers and the best ideas compete against each other. Applicants know they have to perform at the highest level, the reward being flexible funding on a level playing field, irrespective of local bottlenecks or the availability of national funding.

Frontier research funded by the ERC is thereby expected to have a substantial direct impact in the form of advances at the frontiers of knowledge, opening the way to new and often unexpected scientific and technological results and new areas for research which, ultimately, can generate the radically new ideas which will drive innovation and business inventiveness and tackle societal challenges. This combination of excellent individual scientists with innovative ideas underpins every stage of the innovation chain.

Beyond this, the ERC has a significant structural impact by generating a powerful stimulus for driving up the quality of the European research system as a whole, over and above the researchers and projects which the ERC funds directly. ERC-funded projects and researchers set a clear and inspirational target for frontier research in Europe, raise its profile and make it more attractive for the best researchers at global level. The prestige of hosting ERC grant-holders and the accompanying ‘stamp of excellence’ are intensifying competition between Europe’s universities and other research organisations to offer the most attractive conditions for top researchers. And the ability of national systems and individual research institutions to attract and host ERC grant-winners sets a benchmark allowing them to assess their relative strengths and weaknesses and reform their policies and practices accordingly. ERC funding is therefore in addition to ongoing efforts at Union, national and regional levels to reform, build capacity and unlock the full potential and attractiveness of the European research system.

1.3 Broad lines of the activities

The fundamental activity of the ERC shall be to provide attractive long-term funding to support excellent investigators and their research teams to pursue ground-breaking, high-gain/high-risk research.

ERC funding shall be awarded in accordance with the following well-established principles. Scientific excellence shall be the sole criterion on which ERC grants are awarded. The ERC shall operate on a ‘bottom-up’ basis without predetermined priorities. The ERC grants shall be open to individual teams of researchers of any age and from any country in the world, working in Europe. And the ERC shall aim to foster healthy competition across Europe.

The ERC shall give particular priority to assisting excellent starting researchers to make the transition to independence by providing adequate support at the critical stage when they are setting up or consolidating their own research team or programme.

The ERC shall also give support, as necessary, to emerging new ways of working in the scientific world with the potential to create breakthrough results and facilitates exploration of the commercial and social innovation potential of the research which it funds.

By 2020, the ERC therefore shall aim to demonstrate: that the best researchers are participating in the ERC’s competitions, that ERC funding has led directly to scientific publications of the highest quality and to the commercialisation and application of innovative technologies and ideas and that the ERC has contributed significantly to making Europe a more attractive environment for the world’s best scientists. In particular, the ERC shall target a measurable improvement in the Union’s share of the world’s top 1 % most highly cited publications. In addition it shall aim at a substantial increase in the number of excellent researchers from outside Europe whom it funds and specific improvements in institutional practices and national policies to support top researchers.

The ERC’s Scientific Council shall continuously monitor the ERC’s operations and consider how best to achieve its objectives by means of grant schemes that emphasise clarity, stability and simplicity, both for applicants and in their implementation and management, and, as necessary, to respond to emerging needs. It shall endeavour to sustain and further refine the ERC’s world-class peer-review system which is based on transparent, fair and impartial treatment of proposals so that it can identify ground-breaking scientific excellence and talent regardless of a researcher’s gender, nationality or age. Finally, the ERC shall continue conducting its own strategic studies to prepare for and support its activities, maintain close contacts with the scientific community and other stakeholders and look to make its activities complement research conducted at other levels.

2. Future and Emerging Technologies (FET)

2.1. Specific objective

The specific objective is to foster radically new technologies by exploring novel and high-risk ideas building on scientific foundations. By providing flexible support to goal-oriented and interdisciplinary collaborative research on various scales and by adopting innovative research practices, the aim is to identify and seize opportunities of long-term benefit for citizens, the economy and society.

FET shall promote research beyond what is known, accepted or widely adopted and shall foster novel and visionary thinking to open promising paths towards powerful new technologies, some of which could develop into leading technological and intellectual paradigms for the decades ahead. FET shall foster efforts to pursue small-scale research opportunities across all areas, including emerging themes and grand scientific and technological (S&T) challenges that require federation and collaboration between programmes across Europe and beyond. This approach shall be driven by excellence and extends to exploring pre-competitive ideas for shaping the future of technology, enabling society to benefit from multi-disciplinary research collaboration that needs to be engaged at European level by making the link between research driven by science and research driven by societal challenges or by industrial competitiveness.

2.2. Rationale and Union Added Value

Radical breakthroughs with a transformative impact increasingly rely on intense collaboration across disciplines in science and technology (for instance, information and communication, biology, chemistry, earth system sciences, material sciences, neuro- and cognitive sciences, social sciences or economics) and with the arts and humanities. This requires not only excellence in science and technology but also new attitudes and novel interactions between a broad range of players in research.

While some ideas can be developed on a small scale, others may be so challenging that they require a large federated effort over a substantial period of time. Major economies worldwide have recognised this, and there is growing global competition to identify and pursue emerging technological opportunities at the frontier of science which can generate a considerable impact on innovation and benefits for society. To be effective, these types of activity need to be built up quickly to a large scale, by federating across programmes at European, national and regional levels around common goals to build critical mass, foster synergies and obtain optimum leveraging effects.

The FET programme shall address the entire spectrum of science-driven innovation: from bottom-up, small-scale early explorations of embryonic and fragile ideas to building new research and innovation communities around transformative emerging research areas and large and federated research initiatives built around a research agenda aiming to achieve ambitious and visionary goals. These three levels of engagement each have their own specific value, while being complementary and synergistic. For example, small-scale explorations can reveal needs for developing new themes that can lead to large-scale action based on roadmaps. They involve a wide range of research players, including young researchers and research-intensive SMEs, and stakeholder communities (civil society, policymakers, industry and public researchers), clustered around research agendas as they take shape, mature and diversify.

2.3. Broad lines of activities

While the FET programme aims to be visionary, transformative and unconventional, its activities shall follow different logics, from completely open to varying degrees of structuring of topics, communities and funding.

The activities shall give firmer shape to different logics for action, on the appropriate scale, identifying and seizing opportunities of long-term benefit for citizens, the economy and society:

(a) By fostering novel ideas ('FET Open'), FET shall support embryonic science and technology research exploring new foundations for radically new future technologies by challenging current paradigms and venturing into unknown areas. A bottom-up selection process widely open to any research ideas shall build up a diverse portfolio of targeted projects. Early detection of promising new areas, developments and trends, along with attracting new and high-potential research and innovation players, will be key.

(b) By nurturing emerging themes and communities ('FET Proactive'), FET shall address a number of promising exploratory research themes with the potential to generate a critical mass of inter-related projects that, together, make up a broad and multi-faceted exploration of the themes and build a European pool of knowledge.

(c) By pursuing grand interdisciplinary S&T challenges ('FET Flagships'), FET shall support ambitious large-scale, science-driven research aiming to achieve a scientific breakthrough. Such activities will benefit from the alignment of European and national agendas. The scientific advance should provide a strong and broad basis for future technological innovation and economic application in a variety of areas, plus novel benefits for society.

The right mix of openness and varying degrees of structuring of topics, communities and funding shall be defined for each activity in order to address optimally the objectives pursued.

3. Marie Curie Actions

3.1. Specific objective

The specific objective is to ensure optimum development and dynamic use of Europe’s intellectual capital in order to generate new skills and innovation and, thus, to realise its full potential across all sectors and regions.

Well-trained, dynamic and creative researchers are the vital raw material for the best science and the most productive research-based innovation.

Although Europe hosts a large and diversified pool of skilled human resources for research and innovation, this needs to be constantly replenished, improved and adapted to the rapidly evolving needs of the labour market. Today only 46 % of this pool works in the business sector, which is much lower than in Europe’s main economic competitors, e.g. 69 % in China, 73 % in Japan and 80 % in the United States. In addition, demographic factors mean that a disproportionate number of researchers will reach retirement age in the next few years. This, combined with the need for many more high-quality research jobs as the research intensity of the European economy increases, will be one of the main challenges facing European education, research and innovation systems in the years ahead.

The necessary reform must start at the first stages of the researchers’ careers, during their doctoral studies or comparable post-graduate training. Europe must develop state-of-the-art, innovative training schemes, consistent with the highly competitive and increasingly inter-disciplinary requirements of research and innovation. Strong involvement of businesses, including SMEs and other socio-economic actors, will be needed to equip researchers with the innovation skills demanded by the jobs of tomorrow. It will also be important to enhance the mobility of these researchers, as it currently remains at too modest a level: in 2008, only 7 % of European doctoral candidates were trained in another Member State, whereas the target is 20 % by 2030.

This reform must continue through every stage of researchers’ careers. It is vital to increase the mobility of researchers at all levels, including mid-career mobility, not only between countries but also between the public and private sectors. This creates a strong stimulus for learning and developing new skills. It is also a key factor in cooperation between academics, research centres and industry across countries. The human factor is the backbone of sustainable cooperation which is the key driver for an innovative and creative Europe able to face challenges to society, and key to overcoming fragmentation of national policies. Collaborating and sharing knowledge, via individual mobility at all stages of a career and via exchanges of highly skilled research and innovation staff, are essential for Europe to re-take the path to sustainable growth and to tackle societal challenges.

If Europe is to match its competitors in research and innovation, it must entice more young women and men to embark on research careers and provide highly attractive opportunities and environments for research and innovation. The most talented individuals, from Europe and elsewhere, should see Europe as a pre-eminent place to work. Gender equality, high-quality and reliable employment and working conditions plus recognition are crucial aspects that must be secured in a consistent way across the whole of Europe.

3.2. Rationale and Union added value

Neither Union funding alone nor Member States individually will be able to address this challenge. Although Member States have introduced reforms to improve their tertiary education institutions and modernise their training systems, progress is still uneven across Europe, with big differences between countries. Overall, scientific and technological cooperation between the public and private sectors generally remains weak in Europe. The same applies to gender equality and to the efforts to attract students and researchers from outside the ERA. Currently around 20 % of the doctoral candidates in the Union are citizens of third countries, whereas about 35 % in the United States of America come from abroad. To speed up this change, a strategic approach that goes beyond national borders is required at Union level. Union funding is crucial to create incentives for and encourage the indispensable structural reforms.

The European Marie Curie actions have made remarkable progress to promote mobility, both transnational and intersectoral, and to open research careers at European and international levels, with excellent employment and working conditions following the European Researchers Charter and Code. There is no equivalent in Member States as far as their scale and scope, funding, international character, generation and transfer of knowledge are concerned. They have strengthened the resources of those institutions able to attract researchers internationally and thereby encouraged the spread of centres of excellence around the Union. They have served as a role model with a pronounced structuring effect by spreading their best practices at national level. The bottom-up approach taken by Marie Curie actions has also allowed a large majority of those institutions to train and upgrade the skills of a new generation of researchers able to tackle societal challenges.

Further development of the Marie Curie actions will make a significant contribution to development of the European Research Area. With their Europe-wide competitive funding structure, Marie Curie actions will encourage new, creative and innovative types of training such as industrial doctorates, involving education, research and innovation players who will have to compete globally for a reputation of excellence. By providing Union funding for the best research and training programmes following the Principles for Innovative Doctoral Training in Europe, they will also promote wider dissemination and take-up, moving towards more structured doctoral training.

Marie Curie grants will also be extended to the temporary mobility of experienced researchers and engineers from public institutions to the private sector or vice versa, thereby encouraging and supporting universities, research centres and businesses to cooperate with one another on a European and international scale. With the aid of their well-established, transparent and fair evaluation system, Marie Curie actions will identify excellent talents in research and innovation in an international competition which gives prestige and therefore motivation for researchers to advance their career in Europe.

The societal challenges to be addressed by highly skilled researchers and innovation staff are not just Europe’s problem. These are international challenges of colossal complexity and magnitude. The best researchers in Europe and the world need to work together across countries, sectors and disciplines. Marie Curie actions will play a key role in this respect by supporting staff exchanges that will foster collaborative thinking via the international and intersectoral knowledge-sharing that is so crucial for open innovation.

Extension of the co-funding mechanism of the Marie Curie actions will be crucial to expand Europe’s pool of talents. The numerical and structural impact of Union action will be increased by leveraging regional, national, international and private funding to create new programmes and to open existing ones to international and intersectoral training, mobility and career development. Such a mechanism will forge stronger links between research and education efforts at national and Union levels.

All the activities under this challenge will contribute to creating a whole new mindset in Europe that is crucial for creativity and innovation. Marie Curie funding measures will strengthen pooling of resources in Europe and thereby lead to improvements in coordination and governance of researchers’ training, mobility and career development. They will contribute to the policy goals outlined in the Innovation Union, Youth on the Move and the Agenda for New Skills and Jobs and will be vital to turn the European Research Area into reality.

3.3. Broad lines of the activities

(a) Fostering new skills by means of excellent initial training of researchers

The goal is to train a new generation of creative and innovative researchers, able to convert knowledge and ideas into products and services for economic and social benefit in the Union.

Key activities shall be to provide excellent and innovative training to early-stage researchers at post-graduate level via interdisciplinary projects or doctoral programmes involving universities, research institutions, businesses, SMEs and other socio-economic groups from different countries. This will improve career prospects for young post-graduate researchers in both the public and private sectors.

(b) Nurturing excellence by means of cross-border and cross-sector mobility

The goal is to enhance the creative and innovative potential of experienced researchers at all career levels by creating opportunities for cross-border and cross-sector mobility.

Key activities shall be to encourage experienced researchers to broaden or deepen their skills by means of mobility by opening attractive career opportunities in universities, research institutions, businesses, SMEs and other socio-economic groups all over Europe and beyond. Opportunities to restart a research career after a break shall also be supported.

(c) Stimulating innovation by means of cross-fertilisation of knowledge

The goal is to reinforce international cross-border and cross-sector collaboration in research and innovation by means of exchanges of research and innovation personnel in order to be able to face global challenges better.

Key activities shall be to support short-term exchanges of research and innovation staff among a partnership of universities, research institutions, businesses, SMEs and other socio-economic groups, both within Europe and worldwide. This will include fostering cooperation with third countries.

(d) Increasing the structural impact by co-funding the activities

The goal is, by leveraging additional funds, to increase the numerical and structural impact of Marie Curie actions and to foster excellence at national level in researchers’ training, mobility and career development.

Key activities shall be, with the aid of a co-funding mechanism, to encourage regional, national and international organisations to create new programmes and to open existing ones to international and intersectoral training, mobility and career development. This will increase the quality of research training in Europe at all career stages, including at doctoral level, will foster free circulation of researchers and scientific knowledge in Europe, will promote attractive research careers by offering open recruitment and attractive working conditions and will support research and innovation cooperation between universities, research institutions and enterprises and cooperation with third countries and international organisations.

(e) Specific support and policy action

The goals are to monitor progress, identify gaps in the Marie Curie Actions and to increase their impact. In this context, indicators shall be developed and data related to researchers’ mobility, skills and careers analysed, seeking synergies and close coordination with the policy support actions on researchers, their employers and funders carried out under the specific objective ' Inclusive, innovative and secure societies'. The activity shall further aim at raising awareness of the importance and attractiveness of a research career and at disseminating research and innovation results emanating from work supported by Marie Curie actions.

4. Research Infrastructures

4.1 Specific objective

The specific objective is to endow Europe with world-class research infrastructures which are accessible to all researchers in Europe and beyond and fully exploit their potential for scientific advance and innovation.

Research infrastructures are key determinants of Europe’s competitiveness across the full breadth of scientific domains and essential to science-based innovation. In many fields research is impossible without access to supercomputers, radiation sources for new materials, clean rooms for nanotechnologies, databases for genomics and social sciences, observatories for Earth sciences, broadband networks for transferring data, etc. Research infrastructures are necessary to carry out the research needed to address grand societal challenges — energy, climate change, bio-economy and lifelong health and wellbeing for all. They propel collaboration across borders and disciplines and create a seamless and open European space for online research. They promote mobility of people and ideas, bring together the best scientists from across Europe and the world and enhance scientific education. They drive excellence within the European research and innovation communities and can be outstanding showcases of science for society at large.

Europe must establish an adequate, stable base for building, maintaining and operating research infrastructures if its research is to remain world-class. This requires substantial and effective cooperation between Union, national and regional funders for which strong links with the cohesion policy will be pursued to ensure synergies and a coherent approach.

This specific objective addresses a core commitment of the Innovation Union flagship initiative, which highlights the crucial role played by world-class research infrastructures in making ground-breaking research and innovation possible. The initiative stresses the need to pool resources across Europe, and in some cases globally, in order to build and operate research infrastructures. Equally, the Digital Agenda for Europe flagship initiative emphasises the need to reinforce Europe’s e-infrastructures and the importance of developing innovation clusters to build Europe’s innovative advantage.

4.2. Rationale and Union added value

State-of-the-art research infrastructures are becoming increasingly complex and costly, often requiring integration of different equipment, services and data sources and extensive transnational collaboration. No single country has enough resources to support all the research infrastructures it needs. The European approach to research infrastructures has made remarkable progress in recent years with implementing the ESFRI roadmap for infrastructures[21], integrating and opening national research facilities and developing e-infrastructures underpinning a digital European Research Area. The networks of research infrastructures across Europe strengthen its human capital base by providing world-class training for a new generation of researchers and engineers and promoting interdisciplinary collaboration.

Further development and wider use of research infrastructures at Union level will make a significant contribution to development of the European Research Area. While the role of Member States remains central in developing and financing research infrastructures, the Union plays an important part in supporting infrastructure at Union level, fostering the emergence of new facilities, opening up broad access to national and European infrastructures, and making sure that regional, national, European and international policies are consistent and effective. It is not only necessary to avoid duplication of effort and to coordinate and rationalise use of the facilities, but also to pool resources so that the Union can also acquire and operate research infrastructures at world level.

The efficiencies of scale and scope achieved by a European approach to construction, use and management of research infrastructures, including e-infrastructures, will make a significant contribution to boosting Europe’s research and innovation potential.

4.3. Broad lines of the activities

The activities shall aim at developing the European research infrastructures for 2020 and beyond, fostering their innovation potential and human capital and reinforcing European research infrastructure policy.

(a) Developing the European research infrastructures for 2020 and beyond

The aims shall be to ensure the implementation and operation of the ESFRI and other world-class research infrastructures, including the development of regional partner facilities; integration of and access to national research infrastructures; and the development, deployment and operation of e-infrastructures.

(b) Fostering the innovation potential of research infrastructures and their human capital

The aims shall be to encourage research infrastructures to act as early adopters of technology, to promote R&D partnerships with industry, to facilitate industrial use of research infrastructures and to stimulate the creation of innovation clusters. This activity shall also support training and/or exchanges of staff managing and operating research infrastructures.

(c) Reinforcing European research infrastructure policy and international cooperation

The aim shall be to support partnerships between relevant policymakers and funding bodies, mapping an