Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions - Reviewing Community innovation policy in a changing world
Date: 2009-09-02
Institutions: European Commission
Subjects: cooperation policy, economic recession, globalisation, innovation, management of resources, new technology, scientific progress, the EU's international role

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COMMISSION OF THE EUROPEAN COMMUNITIES 

Brussels, 2.9.2009 
COM(2009) 442 final 

COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN 
PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL 
COMMITTEE AND THE COMMITTEE OF THE REGIONS 

Reviewing Community innovation policy in a changing world 

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TABLE OF CONTENTS 

1. 

2. 

2.1. 

2.2. 

2.3. 

2.4. 

3. 

4. 

Introduction .................................................................................................................. 3 

Progress achieved......................................................................................................... 4 

Improving framework conditions................................................................................. 4 

Helping to trigger more and quicker market uptake of innovative products and 
services......................................................................................................................... 5 

Building synergies........................................................................................................ 6 

Stepping up financial support for research and innovation.......................................... 7 

Lessons to be learnt and challenges to be mastered..................................................... 7 

Conclusion.................................................................................................................. 11 

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Reviewing Community innovation policy in a changing world 

1. 

INTRODUCTION 

‘Innovation is the ability to take new ideas and translate them into commercial outcomes by 
using  new  processes,  products  or  services  in  a  way  that  is  better  and  faster  than  the 
competition’1.  

Innovation  cannot  be  organised  by  decree.  It  comes  from  people,  and  only  people  — 
scientists,  researchers,  entrepreneurs  and  their  employees,  investors,  consumers  and  public 
authorities — will make Europe more innovative. But they do not act in a vacuum. They act 
with a mindset and in a framework which either discourages or incites them to enter unknown 
territories. 

Innovation  is  the  precondition  for  the  creation  of  a  knowledge-based,  low-carbon  economy. 
Mastering this transformation is crucial to remain competitive in the globalised world and to 
achieve wider societal goals in a sustainable way under the pressure of demographic changes, 
the climate challenge, scarce resources and new security threats.  

Innovation enables European industries to position themselves at the upper end of the global 
value chain, making Europe the world market leader in energy and resource efficient products 
and technologies and equipping us with the means needed for global action. Moreover, only 
in an environment that supports innovation can R&D efforts result in real gains. 

That  is why the re-launched Lisbon  Partnership for growth and jobs has put innovation and 
entrepreneurship  at  the  centre  and  called  for  decisive  and  more  coherent  action  by  the 
Community and the Member States. On this basis, an ambitious European innovation policy 
has  been  launched  and  the  Small  Business  Act  (SBA)  has  been  agreed2.  Thanks  to  this 
partnership  approach,  progress  can  today  be  reported.  Almost  all  Member  States  have 
improved  their  innovation  performance.  The  innovation  gap  between  the  EU  and  its  key 
competitors, the US and Japan, has narrowed.  

As  new  competitors  are  emerging  and  challenges  are  getting  bigger,  the  EU  must  not  only 
sustain  the  recent  positive  trend,  but  further  improve  it.  While  the  economic  crisis  risks 
reducing  available  resources,  from  previous  recessions,  such  as  in  the  case  of  Finland,  we 
know  that  prioritising  investment  in  research  and  innovation  is  possible  and  can  play  a  key 
role to enable a sustainable economic recovery. 

The aim of this communication is to identify remaining gaps and propose policy orientations 
on how to fill them.  

1 

2 

‘Creating  a  National  Innovation  Framework’,  Science  Progress,  Richard  Nedis  &  Ethan  Byler,  April 
2009. 
COM(2005) 488, endorsed by the Council Conclusions of 28-29.11.2005 
(http://ue.eu.int/ueDocs/cms_Data/docs/pressData/en/intm/87210.pdf),  and  COM(2006)  502,  endorsed 
by the Council Conclusions of 4.12.2006; 
http://www.consilium.europa.eu/uedocs/cms_Data/docs/pressdata/en/intm/91989.pdf. 

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2. 

PROGRESS ACHIEVED  

2.1. 

Improving framework conditions  

Guided  by  the  Lisbon  Partnership  for  Growth  and  Jobs,  the  EU  has  since  2005  worked  to 
improve  framework  conditions  for  innovation.  Member  States  and  their  regions  were 
encouraged  and  helped  (in  particular  through  cohesion  policy)  to  improve  their  innovation 
policies  by  implementing  national  and  regional  innovation  strategies  and  developing 
evaluation. 

At  Community  level,  access  to  the  single  market  has  been  made  easier,  the  availability  of 
cost-effective  inputs  has  been  improved,  competition  policies  fostered,  and  conditions  for 
entrepreneurship  and  for  the  growth  of  new  ventures  strengthened.  The  Commission  has 
called  for  integrated  flexicurity  policies  to  modernise  labour  markets  and  urged  Member 
States  to  put  education  and  skills  high  on  their  agenda.  With  the  SBA,  the  EU  and  the 
Member  States  have  undertaken  to  make  the  EU  a  breeding  ground  for  entrepreneurs  and 
SMEs. Moreover, partnerships have been established with key industrial sectors, defining and 
agreeing on the long-term framework conditions for a competitive industrial European base. 

The removal of barriers to the proper functioning of the internal market for goods and the 
implementation  of  the  Services  Directive  by  Member  States  will  remove  a  broad  range  of 
administrative and legal obstacles to doing business. As a consequence, innovative SMEs will 
have easier access to markets and public administrations will be modernised.  

Meanwhile,  it  is  also  acknowledged  across  the  EU  that excellence  in  education,  skills  and 
training is a pre-requisite for innovation. Lifelong learning has become a policy priority, and 
reforms  in  education  and  training  systems  in  Member  States  aim  to  increase  investment  in 
human capital, facilitate innovation and promote a more entrepreneurial culture. The actions 
implemented under the New Skills for New Jobs strategy will help to ensure a better match 
between  skills  and  labour  market  needs,  to  better  assess  and  anticipate  the  skills  needs  of 
individuals and companies and to promote a general up-skilling of the European workforce. 
The  updated  Strategic  Framework  for  Education  and  Training  (ET  2020)  sets  out  a 
comprehensive  policy  agenda  in  support  of  Member  States’  education  and  training  reforms. 
Implementation  of  the  EU  e-skills  strategy  fosters  the  digital  skills  of  the  European 
workforce3. 

The modernisation of the EU’s state aid rules has provided Member States with an effective 
public  policy  tool  to  support  R&D  and  innovation.  Member  States  are  now  in  a  position  to 
grant  a  number  of  different  types  of  state  aid  for  innovation  without  having  to  notify 
individual  measures  to  the  Commission  and  with  a  low  administrative  burden.  Since  the 
modernisation  of  the  state  aid  rules  in  2006,  new  aid  instruments  have  been  created  in 
Member  States,  including  30  schemes  for  young  innovative  companies.  The  Community 
Guidelines  for  State  Aid  for  Environmental  Protection,  revised  in  2008,  provide  for  the 
possibility of  higher  aid intensity for eco-innovation4. In recent  years,  there has also been a 
trend in Member States to complement R&D subsidies and grants with tax incentive schemes, 

3 
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COM(2009) 116 proposing a renewed strategy for ICT R&D and innovation. 
OJ C 82, 1.4.2008, p. 1. 

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which  have  had  a  positive  impact  on  private  R&D  investment.  The  Commission  has 
facilitated the dissemination of good practice via a network of national experts5.  

Finally,  non-technological  aspects  of  the  innovation  process,  such  as  design  and  marketing, 
are  increasingly  important  to  getting  more  innovative  products  and  services  in  the 
marketplace.  In  this  respect,  the  European  Union  Office  for  Harmonisation  in  the  Internal 
Market (Trademarks and Designs) has lowered the cost for European trademark registration 
applications twice in the last five years. The new rate (40 % lower than previously charged) 
has reduced the cost of obtaining trademark protection throughout the EU to an all-time low. 
The average time needed to complete the registration process has also been cut by 50 %6. 

2.2. 

Helping to trigger more and quicker market uptake of innovative products and 
services  

The EU has recognised and used regulation and standardisation as powerful tools to provide 
the right incentives and stimulate markets for innovative products and services.  

New rules on car emissions aim to trigger substantial innovations in the European automotive 
industry and will result in cleaner, affordable European cars — innovations that should keep 
this industry globally competitive. The Emission Trading Scheme (ETS) Directive will foster 
innovation  in  renewable  energy  production  and  encourage  the  construction  of  more 
environmentally  friendly  power  plants,  including  new  carbon  capture  and  storage  (CCS) 
technologies. The Strategic Energy Technology Plan helps to accelerate the development of 
low-carbon  technologies  essential  to  achieving  the  "20-20-20"  objectives  by  2020.  The 
REACH  and  cosmetics  legislation  provide  major  incentives  for  innovation  in  alternative 
substances.  The  Action  Plan  on  Sustainable  Consumption  and  Production  and 
Sustainable  Industrial  Policy7  sets  out  a  harmonised,  integrated  legal  framework  to  foster 
innovation  towards  more  energy-efficient  and  environmentally  friendly  products.  Where 
industry fails to set itself ambitious targets, the revised Eco-Design Directive provides a legal 
basis for promoting the market introduction of more environmentally friendly products both 
in  terms  of  energy  efficiency  and  resource  efficiency.  This  includes  using  appropriate 
incentives,  public  procurement  and  product  labelling  to  ensure  that  demand  underpins  this 
policy.  

European  standardisation  policy8  has  evolved  to  support  innovation,  with  a  stronger 
commitment  to  an  open  market-led  standard-setting  process,  including  a  collaborative, 
consensus-based  approval  process  for  the  development  of  domestic  and  international 
standards, and to the voluntary use of standards, the inclusion of new knowledge in standards 
and easier access to standards-setting processes, notably for SMEs. For instance, SMEs now 
make up 27 % of ETSI’s membership and enjoy reduced fees. 

Moreover, demand  can drive innovation by  encouraging  innovators to meet new, advanced 
needs.  In  this  context,  the  potential  of  existing  EU  public  procurement  rules  to  support 
innovation is large and their use can be explored further9.  

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See COM(2006) 728. 
In 2008, over 87 000 applications were received by OHIM for Community trademarks. 
COM(2008) 397. 
COM(2008) 133. 
http://www.proinno-europe.eu/doc/procurement_manuscript.pdf  

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The Lead Market Initiative (LMI), launched in 2008, has identified markets for innovative 
products and services where innovation is both needed and possible and where the use of the 
above-mentioned  instruments  influencing  the  capacity  to  quickly  put  new  products  on  the 
market  in  a  more  focused  way  can  make  a  real  difference  (bio-based  products,  eHealth, 
sustainable construction, protective textiles, recycling, and renewable energy).  

2.3. 

Building synergies 

The development of the European Research Area since 2000 has led to several initiatives to 
encourage  a  more  coherent  research  and  innovation  system  in  Europe.  Recent  policy 
initiatives aimed at creating an internal market for knowledge by supporting the mobility of 
researchers and the access to and the circulation, transfer and exploitation of knowledge and 
technologies  ('5th  freedom').  In  particular,  to  address  the  relatively  poor  up-take  of  research 
results  in  Europe,  the  Commission  proposed  voluntary  guidelines  to  improve  research 
collaboration and knowledge transfer between public research and industry10. The increasing 
coordination between EU and Member State levels provides a more effective framework for 
pooling resources for new research infrastructures and for joint strategic research programmes 
addressing  major  societal  challenges  and  better  protection  of  intellectual  property  rights, 
along  with  a  new  strategic  European  framework  for  international  science  and  technology 
cooperation11.  

Collaboration  on  research  and  innovation  has  been  reinforced.  In  recent  years,  new  public-
private partnerships have been set up in various fields using different instruments and legal 
bases. Five Joint Technology Initiatives (JTI) have been set up, each as an independent legal 
entity  with  substantial  budget  allocations  from  the  Seventh  Framework  Programme12. 
Furthermore,  under  the  European  Economic  Recovery  Plan,  public-private  partnerships  for 
green cars, energy-efficient buildings and ‘factories of the future’ are being launched.  

The  European  Institute  of  Innovation  and  Technology  has  been  created  to  stimulate  and 
deliver world-leading innovation by bringing together higher education, research and business 
around a common goal. Knowledge and innovation communities will soon be established to 
address  major  societal  challenges  such  as  climate  change  mitigation  and  adaptation, 
sustainable energy and the future communication and information society.  

Finally,  the  Commission  has  helped  to  strengthen  collaboration  among  different  innovation 
actors  and  supported  mutual  policy  learning  between  innovation  policy  makers  and  public 
innovation  support  bodies  at  different  levels.  In  particular,  a  soft  EU  policy  framework  has 
been put in place to raise the level of excellence of clusters13 in the EU Member States and to 
promote  cluster  cooperation  as  a  way  to  improve  innovation  capability  and  strengthen 
positions in global markets.  

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COM(2007)  182  -  Improving  knowledge  transfer  between  research  institutions  and  industry  across 
Europe: embracing open innovation – Implementing the Lisbon agenda 
See COM(2008) 588. 
Innovative  Medicines  (IMI)  with  a  Community  contribution  of  €1  billion;  Embedded  Computing 
Systems  (ARTEMIS)  —  €420  million;  Aeronautics  (Clean  Sky)  —  €800  million;  Nanoelectronics 
(ENIAC) — €450 million; and Fuel Cells & Hydrogen (FCH) — €470 million. 
See COM(2008) 652. 

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2.4. 

Stepping up financial support for research and innovation  

European  research  policies  and  programmes  have  been  reinforced  to  better  support 
innovation. The Seventh Research Framework Programme, with its substantially increased 
budget of €54 billion for the period 2007-2013, suppor ts commercially relevant research, in 
particular  through  Joint  Technology  Initiatives  and  participation  in  joint  research  initiatives 
set up by Member States. Knowledge transfer activities and support for mobility, international 
cooperation and infrastructures also have strong relevance for innovation. The Commission is 
also  facilitating  private-sector  research  coordination  through  the  European  Technology 
Platforms. EU research in  key areas such  as  ICT,  health,  security,  space  or  marine  sciences 
has increased. While improving conditions for SME participation in research programmes is 
an  ongoing  task,  the  Framework  Programme  provides  specific  schemes  for  SMEs,  both  for 
research intensive ones and those with limited research capacity. A new risk-sharing finance 
facility (RSFF) has been set up together with the EIB to provide loans to private and public 
entities for high-risk R&D projects. 

Cohesion  Policy  is  providing  a  stable  and  strategically  targeted  source  of  innovation 
financing, which has increased strongly to 25% of the overall budget in the period 2007-2013, 
compared  to  11%  in  the  period  2000-2006.  Some  €86  billion  in  over  380  of  the  455 
operational programmes of the Structural Funds for regional development has been earmarked 
to support research and innovation.  

Under  the  EU  rural  development  policy  some  337  million  €  are  provided  to  support  the 
development  of  new  products,  processes  and  technologies  in  the  agricultural,  food  and 
forestry  sectors,  with  additional  funds  coming  from  the  Leader  programme.  Investments  in 
broadband  infrastructure  and  other  innovation  projects  in  rural  areas  will  be  further  re-
enforced following the Health-Check of the Common  Agricultural Policy  and as part of  the 
EU Recovery Package. 

Within the Competitiveness and Innovation Framework Programme (CIP), the EU has a 
specific  programme  dedicated  to  SMEs  and  innovation  outside  the  Research  Framework 
Programme  with  an  annual  average  budget  of  €225m  for  the  period  2007-2013.  A  specific 
amount has been set aside for the take-up of environmental technologies, in particular through 
co-investment in risk capital funds that provide equity for firms investing in eco-innovation. 
These venture capital instruments help SMEs gain access to innovation finance.  

The  Commission  also  helped  Member  States  and  regional  authorities  to  build  on  synergies 
between the main EU innovation funding instruments – FP7, CIP and Cohesion policy14. 

3. 

LESSONS TO BE LEARNT AND CHALLENGES TO BE MASTERED  

The  Innovation  Scoreboard15  shows  clearly  that  Europe  is  already  today  the  continent  with 
some  of  the  most  innovative  countries  and  regions  of  the  world.  If  we  analyse  what  these 
countries and regions have in common, we find a striking pattern. They are usually spending 
above  the  average  for  education,  training  and  lifelong  learning,  have  the  highest  share  of 
R&D spending in GDP and have instruments to support the uptake of new technologies and 

14 

15 

COM(2007)  474,  16.8.2007  –  "Competitive  European  Regions  through  Research  and  Innovation  –  a 
contribution to more growth and more and better jobs".  
http://www.proinno-europe.eu/EIS2008/website/docs/EIS_2008_Final_report.pdf 

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products  in  the  public  and  private  sectors.  Experience  also  shows  that  these  countries  are 
better prepared to make use of the exchange of best practices and to learn from others. The 
same  holds  true  for  companies:  it  is  not  necessarily  the  absolute  amount  of  R&D  spending 
that  matters;  it  is  the  innovative  climate  within  an  undertaking  that  makes  the  difference  in 
competitiveness terms16. The challenge today is to replicate these success stories throughout 
the EU. 

Indeed, despite efforts at both EU and Member State level, innovation and entrepreneurship 
are  not  yet  sufficiently  recognised  as  values  everywhere  in  Europe,  while  the  failure  they 
sometimes  imply  continues  to  be  stigmatised.  New  technologies  are  often  met  with 
scepticism,  and  public  debate  tends  to  underplay  the  importance  of  scientific  insight  and 
evidence and often remains focused on concerns and potential threats to human health or the 
environment.  

At  the  same  time,  Europeans  are  increasingly  responsive  to  the  need  to  master  new  global 
challenges,  such  as  security,  climate  change  or  the  need  for  more  social  justice  on  a  global 
scale. This is clearly an asset, if accompanied by a better understanding of the need to invent, 
innovate and use new technologies to address these challenges. In this context, demographic 
change  in  the  European  Union  will  inevitably  have  strong  effects  on  the  political,  cultural, 
social and economic character of our societies. An ageing population, while triggering a shift 
in demand, may also look at the concept of innovation from a different, perhaps more hesitant 
perspective. It will be very important to address this issue at an earlier stage and to make sure 
that the mindset of society remains favourable towards innovation. Otherwise, despite its rich 
and  knowledgeable  human  resources,  the  EU  runs  the  risk  of  being  sidelined  by  its 
competitors and not reaching the level of excellence needed to secure high living standards. 
To avoid this, innovation must be accepted and recognised as the key to achieving the EU’s 
strategic policy targets.  

Innovation  is  mainly  driven  by  entrepreneurs.  This  implies  the  need  to  foster  a  policy  and 
regulatory  framework  that  promotes  globally  competitive  EU  industries  and  rewards 
investment  in  research  and  innovation  of  both  products  and  processes  including  innovative 
forms of work organisation. The social partners have an important role to play in this context. 
While  modern  legislation,  self-regulation  and  corporate  social  responsibility  clearly  guide 
such efforts, it remains important to carefully watch new regulations and to ensure that they 
do  not  unnecessarily  increase  burdens  on  industry  or  discourage  innovation,  and  that  they 
more broadly promote open and fair global markets. 

The role that public authorities can play for innovation must be recognised and built on. The 
monitoring of Member State innovation policies17 clearly shows a tendency to a broadening of 
the  scope  of  their  innovation  strategies  and  a  trend  towards  measures  with  wider  societal 
goals.  In  spite  of  these  efforts,  it  appears  that  the  potential  for  using  the  public  sector’s 
purchasing power to drive innovation remains largely untapped. Given the foreseeable budget 
constraints,  the  fact  that  public  services  might  have  to  deliver  the  same  or  better  levels  of 
service  with  fewer  resources  must  become  a  powerful  engine  for  innovation.  New 
technologies,  in  particular  ICT,  can  also  help  improve  the  quality,  efficiency  and 
responsiveness of public service provision.  

16 
17 

See ‘Global Innovation 1000’, Booz Allen Hamilton, 2005. 
INNO Policy TrendChart European Innovation Progress Report 2008. 

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Innovation also needs investors willing to take risks and willing to go beyond short term profit 
expectations. 

Finally,  the  competitiveness  of  European  industries  and  their  innovation  capabilities  will 
particularly  depend  on  access  to  and  mastering  of  key  enabling  technologies  which  are 
associated  with  high  R&D  intensity,  rapid  innovation  cycles,  high  capital  expenditure,  and 
highly-skilled  employment.  The  scope,  size  and  degree  of  complexity  related  to  the 
development and deployment of such technologies require consensus among all actors about 
such  technologies,  and  stronger  cooperation  and  a  strategic  approach,  not  only  at  European 
level but also by Member States and Regions fostering stronger partnerships between research 
communities and industry18. 

Removing critical bottlenecks in the framework conditions for entrepreneurs  

Despite  improvements19,  the  EU  innovation  system  continues  to  suffer  from  shortcomings 
that  negatively  influence  the  market  rewards  and  incentives  for  private  investment  in 
innovation  which  as  a  consequence  remains  lower  than  that  of  our  main  competitors:  the 
single  market  needs  to  be  completed  in  a  number  of  areas,  the  legal  framework  for  the 
protection  of  intellectual  property  remains  incomplete,  the  venture  capital  market  is 
fragmented  and  the  level  of  equity  funding  low,  the  standardisation  process  is  not  yet 
sufficiently  synchronised  with  research  results  and  market  needs,  the  knowledge  triangle 
between  business,  education  and  research  needs  to  be  further  strengthened,  and  the  EU  still 
lacks  critical  infrastructure  to  enable  innovation.  Despite  progress  already  achieved,  the 
efforts to increase the capacity of the EU educational systems to contribute to an innovative 
and agile knowledge society must continue. 

An  adequate  legal  framework  to  protect  knowledge  properly  is  a  precondition  for  an 
innovative society. In the area of Intellectual Property Rights, among other things as a result 
of  the  failure  to  introduce  a  Community  patent,  the  EU  is  still  not  providing  favourable 
conditions  for  the  development  and  diffusion  of  innovation.  The  European  patent  system  is 
costly  and  fragmented,  discouraging  innovation  compared  to  the  US  and  Japan20.  The 
difference in patenting costs in comparison to these countries is significant and is not being 
reduced. It is high time to change this situation.  

Commission efforts on copyright policy have been aiming to further develop the emerging EU 
cross-border  market  for  the  dissemination  of  knowledge.  The  development  of  new  digital 
products,  services  and  business  models,  which  thrive  on  openness,  needs  a  supportive  and 
predictable legal framework. 

It  is  necessary  to  better  acknowledge  the  weight  of  services  as  an  attribute  of  modern 
industrialised  countries  and  their  innovation  potential  for  the  economy  and  the  society  at 
large. For services innovation to be taken up more widely, it is necessary to increase the level 
of confidence in new services and to better customise research and innovation support to the 
specific  needs  of  such  services.  Innovation  also  requires  completing  critical  infrastructures 

18 

19 

20 

The Commission is planning to present in 2009 a specific communication on future policy orientations 
for key enabling technologies. 
See European Innovation Scoreboard 2008 at 
http://www.proinno-europe.eu/EIS2008/website/docs/EIS_2008_Final_report.pdf. 
See B. Van Pottelsberghe, 2006 at   
http://www.solvay.edu/EN/Research/Bernheim/documents/wp06002.pdf. 

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(such as broadband and electricity grids) and unlocking their potential with new services and 
applications. Notably, further efforts are needed to promote e-skills and the use of ICT for a 
sustainable economy and to address the challenges of the future internet, such as software-as-
a-service and cloud computing. 

Despite  significant  efforts21,  progress  towards  improving  the  international  competitiveness 
and  performance  of  the  European  venture  capital  sector  —  a  key  provider  of  finance  for 
innovation — has been slow. The structural deficiencies of the European early-stage finance 
market  persist,  including  the  absence  of  private  investors,  fragmentation  of  the  market  and 
low  returns.  The  economic  recession  is  making  fund-raising  and  the  exit  environment  even 
more difficult.  

Enhancing the governance of the EU innovation system  

While a number of initiatives have been undertaken by the Community, the needed synergies 
between  policies  and  instruments  at  different  levels  have  not  yet  been  created  across  the 
European Union. The relatively slow take-off of the recently launched Lead Market Initiative 
is a good example of this.  

The coordination of policies to support innovation at regional, national and EU level has to 
improve  significantly  and  a  better  governance  system  is  needed,  based  on  the  principles  of 
subsidiarity, but better exploiting the added value of setting common objectives, agreeing on 
common  actions  and  sharing  best  practises  among  Member  States.  Cooperation  with  third 
countries  and  in  particular  best  practice  exchange  with  the  US  should  also  be  substantially 
enhanced. 

The level of funding to support innovation centrally at EU level has remained modest both in 
relation  to  the  EU  budget  and  compared  to  many  national  budgets,  representing  an  even 
smaller  share  than  the  5%  of  public  spending  on  research  under  the  Research  Framework 
Programme. Even the total of € 67 million availa ble in 2009 to stimulate market uptake for 
eco-innovation  to  address  resource  efficiency  and  climate  change  appear  modest  in  view  of 
the  importance  of  these  challenges.  On  the  other  hand,  the  increased  share  of  investment 
allocated  to  innovation  under  Cohesion  Policy  plays  an  important  role  to  build  up  research 
and innovation capacity in the "convergence" regions. 

As such, however, there is no lack of innovation support programmes in the EU in terms of 
numbers.  The  problem  is  a  lack  of  critical  mass  and  coherence.  Today,  innovation  support 
involves  seven  different  Commission  services,  various  agencies  and  20  committees  with 
representatives  from  Member  States.  A  recent  public  consultation  on  the  effectiveness  of 
public  support  for  innovation  suggests  a  gap  between  what  companies  expect  and  what  or 
how  innovation  support  schemes  deliver.  The  large  majority  of  companies  call  for  quicker 
procedures,  and  75%  of  the  companies  surveyed  expect  simplified  rules  for  participating  in 
EU  projects.  Indeed,  the  complexity  of  Community  funding  programmes  adds  to  the 
multitude  of  schemes  existing  at  national  and  regional  level  and  makes  access  to  relevant 
funding difficult. This calls for clear structures and substantial simplification of participation 
rules  for  all  innovation  funding,  regardless  of  its  origin.  This  would  strengthen  the  overall 
innovation system and enable a more efficient use of funds and instruments, ensuring better 
participation by SMEs.  

21 

See COM(2007) 853. 

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4. 

CONCLUSION 

The analysis of the progress achieved in recent years shows that the EU has rightly identified 
innovation as a key driver for a prosperous future. However, making the EU a vibrant space 
for innovation requires continuous attention and calls for a better exploitation of the potential 
of  the  partnership  between  the  Union  and  its  Member  States  by  taking  more  focussed  and 
better coordinated actions at all levels. 

Therefore,  based  on  the  analysis  of  achievements  so  far  and  the  lessons  learnt  presented  in 
this Communication, and as requested by the European Council, the Commission intends to 
explore  the  feasibility  of  proposing  to  the  Member  States  before  spring  2010  a  European 
Innovation Act encompassing all the conditions for sustainable development and which would 
form an integral and crucial part of the future European reform agenda.  

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