EUROPEAN COMMISSION Brussels, 3.7.2019 COM(2019) 315 final REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL Annual Report on Research and Technological Development Activities of the European Union and Monitoring of Horizon 2020 in 2018



REPORT FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT AND THE COUNCIL EU research and technological development activities and monitoring of Horizon 2020 in 2018 1. Background This annual report on the EU’s research and technological development activities and the dissemination of results has been prepared pursuant to Article 190 of the Treaty on the Functioning of the European Union and Article 7 of the Euratom Treaty. It provides a concise, non‑exhaustive overview of key measures taken in 2018. 2. Political context The Communication on A renewed European agenda for research and innovation – Europe’s chance to shape its future, which the Commission prepared for the informal European Council in Sofia on 16 May 2018, placed research and innovation (R&I) at the heart of agenda for jobs, growth, fairness and democratic change, and of preparations for the future of the EU. Against that backdrop, the Commission adopted legislative proposals for spending programmes under the 2021-2027 EU budget, which are now the subject of inter‑institutional negotiations. In 2018, the EU economy continued to expand for the fifth year in a row, but global uncertainties are looming. Macroeconomic indicators such as employment and investment returned to pre-financial crisis trends, but sluggish productivity improvements continue to hold back economic growth. By November, the European Fund for Strategic Investments had supported projects in all Member States for a total investment value of €360 billion, of which two thirds are from private resources. Horizon 2020 has contributed directly to these positive developments, creating around 592,000 new jobs between 2014 and 2018. The EU kept issues relating to the digital single market high on the agenda. Apart from ensuring the protection of personal data, the new General Data Protection Regulation (which entered into force on 25 May 2018) will also support R&I. The Commission supported the mutualisation of national efforts in artificial intelligence. Again, Horizon 2020 played a key role, in particular by supporting the creation of a new joint undertaking on high‑performance computing that should ensure Europe’s strategic autonomy in this field. Energy and climate remained at the top of the global and European agenda. A special Intergovernmental Panel on Climate Change (IPCC) report to policy‑makers highlighted dramatically the urgency of addressing climate change. The Commission continued to implement the EU’s energy and climate commitments in line with the 2015 Paris Agreement on Climate Change and the United Nations sustainable development goals (SDGs). Therefore, the Commission implemented the legislation necessary to reach the EU’s nationally determined contribution to reduce greenhouse gas emissions by 40% by 2030 (compared to 1990). Furthermore, the European Commission presented in November 2018 its vision for achieving net-zero greenhouse gas emissions by 2050. The long-term strategy outlines the technological, economic and societal transformations required to achieve climate neutrality, and ensuring a socially fair transition This level of commitment should underpin the EU’s global leadership in this area, consistent with the influential role advocated by President Juncker in his 2018 ‘state of the Union’ address. 3. Policy framework Horizon Europe On 7 June, the Commission adopted its proposals for Horizon Europe, the R&I policy framework for 2021-2027 (the period of the next multiannual financial framework). The legislative package consists of proposals for: ·a Regulation establishing Horizon Europe and laying down the rules for participation; ·a Decision for a specific programme implementing Horizon Europe; and ·a Regulation establishing the research and training programme of the European Atomic Energy Community (Euratom) for 2021-2025. The package seeks to simplify the rules further, while ensuring continuity, e.g. the key principles of EU R&I framework programmes (excellence, impact and openness) will continue to apply. It was drawn up on the basis of extensive consultations with stakeholders and public figures, and other important input, such as LAB FAB APP – Investing in the European future we want , the report from the independent high‑level group on maximising the impact of EU R&I programmes (chaired by Pascal Lamy). By the end of 2018, the Competitiveness Council had agreed a partial general approach on the main Regulation and the European Parliament had endorsed in plenary a report on the package from its Industry, Research and Energy (ITRE) Committee. The Commission’s proposals are structured around three pillars: ·open science;

·global challenges and industrial competitiveness; and ·open innovation. There will be an additional part on strengthening the European Research Area (ERA). Reflecting the importance of tackling climate change in line with the Union's commitments to implement the Paris Agreement and the SDGs, Horizon Europe has a climate mainstreaming target of at least 35% of the overall financial envelope. As regards the openness of programming, a strategic planning process has been proposed, which will provide multiannual strategic orientationsbased on a co-design approach with Member States and stakeholders. This inclusive process will also favour synergy with other EU programmes and policies, and ongoing dialogue with civil society. The second pillar (‘global challenges and industrial competitiveness’) will involve the launch of a limited number of ‘missions’ co-designed with end-users and based on a cross‑sectoral, cross‑disciplinary pattern and clear objectives from inception. Inspired by the report Missions: Mission-oriented research & innovation in the European Union, the mission approach will accentuate the directionality of R&I policy. Under the third pillar (‘open innovation’), two complementary instruments will be used to channel European Innovation Council (EIC) support for breakthrough and market‑creating innovations along the continuum from R&I to market deployment and the scaling-up of companies: ·the pathfinder for advanced research will support research conducive to transformational change and potential market_creating innovations; and ·the accelerator will provide tailor‑made blended finance in support of market-creating innovation and the scaling-up of innovative companies. European Semester As part of the European Semester economic policy cycle, the Commission issued reports on each Member State. A total of thirteen Member States received country‑specific recommendations highlighting challenges related to the quality and efficiency of national R&I systems, with a focus on: ·achieving higher scientific quality, a stronger science base and more impact through public R&I investments; ·improving science-business links; and ·removing bottlenecks that affect the business environment and innovation investments. Open innovation The first phase of an EIC pilot (see section 4.2) saw support given to a significant number of innovators, with 1,276 projects funded for a total of €731.15 million by the end of the year. The Commission took steps to ensure that European innovative businesses had better access to finance, which is a driver of productivity. It launched VentureEU, a pan‑European venture capital fund of funds programme that aims to double the amount of venture capital available in Europe. The 2018 edition of Science research and innovation performance of the EU stressed that the EU’s economic prosperity and social model depend on its ability to create and disseminate innovation. The EU needs to embrace emerging innovations and technologies to overcome a severe productivity problem and sustain economic growth. Open science The Commission established governance arrangements for the European Science Cloud (EOSC), which seeks to tap the potential of EU R&I by linking ‘people, data, services and training, publications […] across borders and scientific disciplines’. It convened the first meeting of the EOSC board, composed of Member State and associated countries’ representatives.

In the light of technological and institutional developments, the Commission updated its Recommendation on access to and the preservation of scientific information. In order to speed up the transition to open access, it worked with national funding agencies to support the implementation of Plan S. Open to the world International cooperation in R&I has enhanced the EU’s influence as a global actor, in a context in which growing attention is being paid to science diplomacy. Horizon 2020 continued to support operational and scientific work by the Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES) and the Intergovernmental Panel on Climate Change (IPCC). Dedicated Horizon 2020 calls support the creation of additional scientific knowledge as well as the functioning of these bodies, thus promoting multilateralism. Together with Germany and Finland, the Commission co-organised the second Arctic science ministerial, which culminated in the adoption of a joint statement by the EU, 23 countries and six indigenous people’s organisations. In line with the EU’s longstanding commitment to Atlantic Ocean R&I cooperation, the Commission signed cooperation agreements with Argentina and Cape Verde to strengthen and enhance R&I cooperation on ‘blue growth’ and tackle the challenges linked to the Atlantic, including ocean observation, food security, polar research and climate variability. Other policy measures The Commission published two milestone Communications on global R&I‑related challenges: ·A sustainable bioeconomy for Europe: strengthening the connection between economy, society and the environment updated the EU’s bioeconomy strategy. R&I will continue to play a key role across three sets of actions to be launched from 2019: ostrengthening and scaling up the bio-based sectors; odeploying local bioeconomies across Europe; and ounderstanding the ecological boundaries of the bioeconomy; and ·A clean planet for all: a European strategic long term vision for a prosperous, modern, competitive and climate neutral economy sets out how the EU has started to implement the transformation needed to achieve a climate‑neutral economy and outlines seven concrete successful pathways. It also highlights the importance of harnessing finance and R&I deployment to support the wide range of activities needed to make the climate‑neutral economy a reality. Work continued to implement the 20 policy measures set out in the Communication on Accelerating clean energy innovation, which contribute through R&I to achieving the objectives of the Energy Union. The high-level strategy group on industrial technologies published its policy approach to key enabling technologies (KETs), validating the six KETs identified in 2009 and suggesting the inclusion of two new KETs: ·artificial intelligence; and ·digital security and connectivity. The Group of Chief Scientific Advisors (GCSA – the successor group to the Scientific Advice Mechanism High‑Level Group (SAM HLG)) delivered an important scientific opinion on Novel carbon capture and utilisation technologies and issued guidance on sensitive regulatory challenges, such as gene‑editing. It also interacted directly with the general public. Other high-level initiatives addressing important cross‑cutting policy priorities included the European Battery and the Communications On the road to automated mobility: an EU strategy for mobility of the future and Endocrine disruptors. Research aspects are particularly relevant to the implementation of the proposed strategies.

4. Implementation of Horizon 2020 4.1 Response to calls By the end of 2018, a total of 679 Horizon 2020 call deadlines had passed, with 191,731 eligible proposals submitted, requesting a total EU financial contribution of €290.3 billion. Of those proposals, 23,250 were selected for funding, bringing the overall success rate of eligible proposals in the first five years to 12.13%. A total of 21,599 grant agreements had been signed by the end of December, with a budget allocation of €38.97 billion in EU funding. In 2014-2018, participants in EU Member States received 91.5% of the funding, with the rest going to those from associated countries (7.2%) and non‑EU countries (1.3%). While the participation share of associated countries (7.2%) is in line with the funding received, that of non‑EU countries is significantly higher (3.9%), indicating an interest in international openness, decoupled from funding. Higher education organisations (HES) remain in first place in terms of funding received (39.8%), while 25.9% of EU funding under pillars 2 and 3 goes to SMEs. 4.2 Key features of Horizon 2020 EIC pilot first phase The High‑Level Group of Innovators (HLGI), which was appointed to help Commissioner Moedas set up the EIC, issued a report, Funding-Awareness-Scale-Talent (FAST), which highlighted pathways to improve support for market‑creating innovation in the EU. On the basis of the report and earlier policy steps from the College of Commissioners, a pilot for the EIC was included in the 2018-2020 work programme. In line with the HLGI’s recommendations, the pilot incorporates all relevant Horizon 2020 innovation financing in a single scheme encompassing the SME instrument, the Fast Track to Innovation, FET Open and the Horizon prizes. This part of the work programme should support up to 1,000 projects, with an overall budget of €2.7 billion. Its impact will be assessed against the following indicators: -new markets developed; -private investment attracted; and -growth of the businesses supported. The European Council of June 2018 asked the Commission to develop a second phase of the initiative, which would be aimed at developing blended finance solutions and experimenting with new arrangements for programme management. International cooperation Scientific cooperation continues to be a key pillar of the EU’s international relations. The Commission updated R&I roadmaps with key partners, at both country and regional levels. These combine policy dialogue with cooperation at project level, mainstreamed in the Horizon 2020 work programme activities. In particular, the Commission updated the science and technology roadmaps for cooperation with: ·at country (bilateral) level – Australia, Brazil, Canada, China, India, Japan, South Korea, Mexico, New Zealand, Russia, South Africa and the United States; and ·at regional level– the African Union, south‑east Asia, the Eastern Partnership, the Community of Latin America and Caribbean States, the Mediterranean and Middle East, and the Western Balkans. At project level, activities under the Marie Skłodowska-Curie Actions continue to account for more than half of all third-country participations in Horizon 2020.

Widening participation The Commission published an extensive assessment of the participation patterns and R&I performance of eligible countries in Spreading excellence & widening participation in Horizon 2020. Overall, the widening of countries’ participation is in line with their national R&I investment. A total of 44 grants were signed to implement ‘spreading excellence’ projects, for an amount of €62.38 million. Of these, 13 will help to establish ERA chairs in Czechia, Cyprus, Estonia, Lithuania, Luxembourg, Portugal, Slovakia and Slovenia. A new pilot action– Widening fellowships – was introduced in 2018, modelled on the MSCA Individual Fellowships. They will provide additional opportunities to around 120 researchers of any nationality to undertake a fellowship in a widening country. The Policy Support Facility also provided support for policy reforms in ‘widening’ countries, e.g. a peer review of Estonia’s R&I system in view of its planned R&I and entrepreneurship strategy for 2021-2027. The Forward project was launched as part of the new EU strategy for the outermost regions. Teaming institutions and stakeholders from the Azores, the Canary Islands, Guadeloupe, French Guiana, La Réunion, Madeira, Martinique, Mayotte and Saint Martin, the project will involve an initial analysis of R&I ecosystems and develop a common strategy and thematic action plans. Social science and the humanities (SSH) A total of 136 topics across the ‘industrial leadership’ and ‘societal challenges’ pillars explicitly required SSH contributions. The third monitoring report on the integration of SSH in Horizon 2020 found that 32% of the projects financed under SSH‑flagged topics are coordinated by an SSH partner. While economics and sociology are well represented, there is still a need to improve the integration of other SSH disciplines such as law, history and anthropology. Gender Various forms of support contributed to positive trends in this area; for example: ·national contact points networks organised specific training events on the gender dimension; and ·the Commission and the Helsinki Group released Guidance to facilitate the implementation of targets to promote gender equality in research and innovation, which covered the designing of frameworks conducive to introducing gender quotas for decision‑makers. Climate action and sustainable development The Horizon 2020 Regulation set the expected budget share for climate action and sustainable development over the duration of the programme at 35% and 60% respectively. Up to and including 2018, expenditure had reached at least 30% for the former and 69% for the latter. Additional efforts are ongoing, in particular through the dedicated focus areas. Synergies with other programmes A report was published on the mutual learning exercise on widening participation and ensuring synergies between the EU’s R&I programmes and cohesion policy, in which 12 Member States and one associated country had participated. It found that, while there may be regulatory bottlenecks at project level, effective synergies will depend on the capacity to promote policy dialogue at programme level. European Court of Auditors special report 28/2018 made the case for promoting further communication on the seal of excellence (SoE). To date, 35 different SoE schemes have been designed by European Structural and Investment Fund managing authorities in 15 Member States. 5. Euratom Council Regulation (Euratom) 2018/1563 established the framework of the Euratom research and training programme for 2019-2020. Indirect actions

By the end of 2018, three calls had been concluded, with 136 eligible proposals submitted, requesting a total Euratom financial contribution of €500.8 million. Of these, 47 were selected for funding, with a Euratom contribution of €196.9 million, bringing the overall success rate of eligible full proposals since 2014 to 34.56%. Direct actions implemented by the Joint Research Centre (JRC) The direct actions of the programme, implemented by the JRC covered research and training on the following areas: • nuclear safety, including safety of reactor, fuel and fuel cycle, nuclear waste management, environmental monitoring and emergency preparedness and response; • nuclear safeguards non-proliferation and security, including combatting illicit trafficking and nuclear forensics. • basic science knowledge and standards and reference materials essential for nuclear safety, security and safeguards, including research on non-energy applications of nuclear science as medical and space applications. The research conducted and experience gained, in particular in nuclear safety and non‑proliferation foster the necessary capacities for knowledge management and to provide education and advanced training in nuclear fields. This allows the JRC to meet the demand for scientific and technical support on EU‑related policies. Research and training programme Support from the research and training programme led to the publication of more than 800 articles in peer‑reviewed, high‑impact journals and over 800 PhDs in fusion physics and technology. Over 900 researchers were provided with access to research infrastructures. 6. JRC non‑nuclear direct actions Last year was a breakthrough year for the JRC’s knowledge management activities, with the launch of four knowledge centres, bringing their number to 6: ·in response to consumer concerns, the Knowledge Centre on Food Fraud and Quality provides access to up-to-date scientific knowledge on food fraud and food quality issues; ·by making the latest innovative solutions and research insights available, the Knowledge Centre on Global Food and Nutrition Security aims to improve action to reduce food insecurity and malnutrition in food‑insecure countries; ·the Competence Centre on Technology Transfer is a primary platform for policy support and capacity‑building in technology transfer at the EU, national, regional and local levels; and ·the Competence Centre on Foresight provides direct strategic and future-oriented input into EU policy‑making. Other key achievements concerned: -vehicle emissions – the JRC prepared to take on the role of checking (on behalf of the Commission) vehicles’ compliance with the ‘real drive emissions’ requirements; and -SDGs – the JRC contributed to the Commission’s reflection paper A sustainable Europe by 2030 , in particular through a qualitative foresight analysis. 7. European Institute of Innovation and Technology (EIT) In the course of 2018, the EIT continued to provide financial support to the six existing KICs. In addition, the EIT funded activities aiming at fostering the collaboration among KICs (cross-KIC activities) on key aspects of KICs’ operations in order to increase their impacts on e.g. human capital and skills development, communication and outreach. The total EIT financial contribution for the implementation of KICs’ Business Plans 2018 amounted to € 400M million..