COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Council Regulation on the ECSEL Joint Undertaking
Date: 2013-07-10
Institutions: European Commission
Subjects: electronic component, industrial investment, information technology, innovation, joint venture, nanotechnology, public-private partnership, research and development, sustainable development













EUR-Lex - 52013SC0256 - EN











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52013SC0256

COMMISSION STAFF WORKING DOCUMENT EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT Accompanying the document Proposal for a Council Regulation on the ECSEL Joint Undertaking /* SWD/2013/0256 final */









COMMISSION STAFF WORKING DOCUMENT
EXECUTIVE SUMMARY OF THE IMPACT ASSESSMENT
Accompanying the document
Proposal for a Council Regulation
on the ECSEL Joint Undertaking
Introduction
This document describes the impact
assessment for a Joint Technology Initiative (JTI) on electronic components and
systems set up as a Joint Undertaking on the basis of Article 187 TFEU. It ties
in with the EU Framework Programme for Research and Innovation Horizon 2020.
Under the Seventh Framework Programme, two
Joint Undertakings (JUs) designated as ENIAC and ARTEMIS were established
respectively in the fields of nanoelectronics and embedded computing systems.
They sought to increase and leverage private and public investments in research
and innovation in two complementary domains of high importance for the
industrial fabric in Europe.
Building on the experience gained with
ENIAC and ARTEMIS, the present initiative is based on a simplified single
structure, a focused scope of actions reinforcing the synergies between the
areas of electronic components and embedded systems, and a major simplification
of the implementation modalities. The initiative is a central pillar of the
EU’s strategy for electronic components and systems in Europe.
The procedure that was followed is in accordance
with the Commission’s guidelines for ex-ante impact assessments.
1.         PROBLEM DEFINITION
1.1       Context
Apart from being a significant industry
with more than €1000 billion in turnover worldwide, electronic components and
embedded systems are at the origin of most productivity improvements across the
whole of the economy and play a key role in addressing societal challenges.
More specifically, Europe is facing two
main challenges in electronic components and systems. One is to be in control
of the key elements of the value chain (i.e. design, manufacturing and
integration in final products), that are essential to ensure the sustainability
of value creation from electronics in Europe including the competitiveness of
many other European industrial sectors. The other is to bridge large gaps in Europe’s innovation chains and better transform its research excellence into commercial
successes.
In addressing the above challenges Europe must cope with fierce global competition, declining market shares of its industry,
high costs of R&D&I and fast-paced technology development.
·                        
The close relationship between the electronic
components industry and the rest of the industrial fabric is of paramount
importance for Europe. A weakening of its electronic manufacturing industry
will likely lead to gradual disappearance of the rest of the value chain. This
not only has an impact on the industry itself but will affect jobs and growth
in a large part of our economy.
·                        
The outlook for European embedded computing
systems companies is more positive though challenges are faced here also, i.e.
the core ICT platforms, at application and content level, mostly dominated by
non-EU actors, and embedded systems increasingly networked and connected to the
internet, leading to new business opportunities but also new players and
threats from non-EU industries that dominate the web today.
·                        
Growth of the electronic components and systems
compounded market was higher than 6 % per year over the last ten years and
with equivalent projections for the next decade. Growth in the sector is
fuelled by innovations with at least 15 % of turnover spent on R&D.
With the increasing costs of R&D and the important spill over effect across
the economy, public-private partnerships become a must.
·                        
Mastering increasing technology and production
complexity is essential to be able to compete and requires heavy investments,
in the range of billions of euros both in R&D&I and in production and
design facilities. European investments have been insufficient and policies too
fragmented so far, leading to a declining share of the worldwide semiconductor
market for European players, presently below 10 %. Member States have
their own priorities in promoting their industry but the level of support
needed for this industry is beyond their individual resources.
1.2       Problem
drivers in implementation
Both interim evaluations of the ENIAC and ARTEMIS
JUs highlighted issues to be addressed in the setup of a new JU in order to
strengthen and improve its relevance, effectiveness, efficiency, and research
quality. 
An
integrated European strategy in electronic components and systems
The second interim evaluation recommended
that the JTIs need an overarching European research strategy. Such a strategy
would avoid duplication of efforts, allow the development of a sustainable
electronic components and systems industrial ecosystem, and provide an effective
means for European stakeholders to keep pace with technology, to get access to
advanced components and to consolidate leadership in electronic systems for key
economic sectors.
Provide a
legal base for a more efficient implementation
Both interim evaluations recommended the
implementation of the future JTI on a legal basis that is better attuned to the
specificities of Public-Private Partnerships with a lighter administrative
overhead and greater flexibility. 
Improved
governance and strategic planning
Both interim evaluations observed that the
Governing Board spends too much time on operational monitoring and too little
time on discussing strategic issues. The administrative burden should be
reduced in order to attract the participation from high-level industry
representatives. 
Strengthened
commitment and alignment with priorities of Member States
Both interim evaluations recommended that
Member States should commit to a multi-annual funding system. This would allow
for strategic agenda setting and allow stakeholders to plan ahead. The latter
is essential considering the size of the investments and the need for a
sustaining research over a longer period of time.
Harmonisation
of conditions for participation
The interim evaluations highlighted the
need for harmonisation between national procedures and criteria among the
participating Member States. Member State participation rules, funding rates
and procedures should be harmonised and synchronised wherever possible. 
Streamlined
operations including better monitoring and evaluation
Both interim evaluations recommended
various recommendations as how to streamline operations and provide for a
better monitoring and evaluation. In particular it is recommended that the
evaluation and selection process should be reviewed to improve the match of the
project portfolio with the overarching strategy.
2.         Analysis
of subsidiarity
This European initiative is proposed in the
context of the implementation of Horizon 2020:
‘Joint Undertakings established in FP7
under Article 187 of the Treaty, for which further support may be provided
under the above conditions are: the Innovative Medicines Initiative (IMI),
Clean Sky, Single European Sky ATM Research (SESAR), Fuel Cells and Hydrogen
(FCH), and Embedded computing systems (ARTEMIS) and Nanoelectronics (ENIAC).
The latter two may be combined into a single initiative.’
It is clear that no single Member State hosts all the companies necessary to address the whole chain of any
application industry that relies on electronic components and systems. By its
collaborative nature, the initiative allows the creation of consortia with
partners from across Europe in order to bring out the best in the European
ecosystem and reduce fragmentation.
The current ARTEMIS and ENIAC JUs provided
a major opportunity to cooperate across Europe, create critical mass and
leverage investments. Their first and second interim evaluations strongly
recommended continuing a similar initiative under Horizon 2020.
3.         Objectives
Europe must remain
at the forefront of technology development and move more quickly towards
exploitation in order to be competitive. The proposed initiative is the central
pillar of an EU industrial strategy for electronics that aims at reversing
the current trend of declining market share of production in Europe, creating
in the next seven years an additional 250 000 jobs in the sector and
drawing more than €100 billion of additional private investment in innovation
and production in the field[1].
In more detail, the goals of the present initiative are:
·                        
to contribute to the development of a strong and
globally competitive electronics components and systems industry in the Union;
·                        
to ensure the availability of electronic
components and systems for key markets and for addressing societal challenges,
aiming at keeping Europe at the forefront of technology development, bridging
the gap between research and exploitation, strengthening innovation
capabilities and creating economic and employment growth in the Union;
·                        
to align strategies with Member States to
attract private investment and contribute to sound public finances by avoiding
unnecessary duplication and fragmentation of efforts, and easing participation
for actors involved in research and innovation;
·                        
to maintain and grow semiconductor and smart
system manufacturing capability in Europe, including leadership in
manufacturing equipment and materials processing;
·                        
to secure a commanding position in design and
systems engineering including embedded technologies;
·                        
to provide access for all stakeholders to a
world-class infrastructure for the design and manufacture of electronic
components and embedded and smart systems;
·                        
to build a dynamic ecosystem involving
innovative small and medium sized enterprises (SMEs), strengthening existing
clusters and nurturing the creation of new clusters in promising new areas.
The initiative therefore aims (i) to create
a critical mass of public and private investment at EU level, (ii) to bridge
the gap of the so-called ‘valley of death’ from research to the market by
facilitating multi-disciplinary research and technology development along the
full innovation chain, covering Technology Readiness Levels 2 to 8, including
pilot lines and large-scale application experiments, and (iii) to bring
together the actors in the value and innovation chains, including users and
SMEs, to address the inherent complexity in the design and manufacturing of
electronic components and systems.
4.         Policy options
Five options have been assessed for
implementing the JTI on electronic components and systems:
·                        
(a) Rely on the existing ENIAC and ARTEMIS
initiatives by renewing and adapting their mandate in the new context of
Horizon 2020;
·                        
(b) Undertake the planned activities without a
dedicated PPP using the standard practices applying to collaborative projects
under Horizon 2020;
·                        
Launch a single new PPP replacing the existing
ENIAC and ARTEMIS, which could take the form of:
·              
(c) A contractual PPP (without a dedicated legal
entity);
·              
(d) A bipartite institutional PPP (a dedicated
legal entity without Member State participation);
·              
(e) A tripartite institutional PPP (a dedicated
legal entity with Member State participation).
Two options have been discarded: ‘no action
at all’ (i.e. stopping all public support at EU level in the area), and ‘early
winding-up of existing JTIs’ (i.e. stopping the ARTEMIS and ENIAC JUs before
their normal end of life in 2017).
5.         Assessment
of impacts
The economic impact
covers:
·                        
Competitiveness, trade and investment aspects –
the leverage effect of the initiative on private and public funds, the scale of
investment and critical mass, the potential for cooperation and bridging the
gap from technology development to market;
·                        
Research and innovation – synergy with
industrial and national priorities, the extent to which the initiative will
foster excellence, facilitating progress towards a European Research Area;
·                        
Stakeholders – industry – technology providers
and users including SMEs, RTOs and universities, the EU, Member States and
regions, and the citizen/consumer who is to benefit from the initiative.
The societal impact
examines:
·                        
Employment – linked to the economic impact. The
industrial sectors addressed by the initiative are a major direct employer of
highly skilled technical people;
·                        
Potential to address societal challenges in
domains relevant to Europe’s citizens (e.g. transport, health, energy) – the
development and deployment of electronic components and systems is crucial for
those societal drivers.
The environmental impact mainly relates to
reduction of energy consumption.
An EU contribution of €1.2 billion would
leverage an overall investment programme of some €8 billion by 2020. This would
be a significant part of the overall investment announced by industry. The
administrative overhead for the EU would be in the range of 2 % of its
operational contribution.
6.         Comparison
of options
Three interconnected levels of comparing
options are presented. 
The first level concerns the relative
merits of the five options compared to the baseline option (a) along the three
axes of effectiveness, efficiency and coherence.
   || Objectives || Option (b) || Option (c) || Option (d) || Option (e) 
 Effectiveness || 1.1 Boost competitiveness || - || + || + || + 
 1.2 Cover innovation & value chain || - || + || + || + 
 1.3 Solve societal challenges and create new markets || - || - || = || + 
 3.1 Maintain and grow manufacturing in EU || - || - || - || + 
 3.2 Leadership in E&M || - || - || - || = 
 4.1 Availability of electronic components || - || - || = || + 
 4.2Leadership in system engineering || - || = || + || + 
 Efficiency || 2.1 Structure and perform excellent multi-disciplinary research || = || = || + || + 
 2.3 Mobilise and pool resources || - || - || - || + 
 5.2 Efficient implementation of programme || + || = || + || + 
 5.3 Synergies for exploitation of results and fostering SME growth || - || - || + || + 
 5.4 Ease participation in projects with strong European dimension || + || + || + || = 
 5.6 Cooperation and coordination of stakeholders || - || = || + || + 
 Coherence || 2.2 Align strategies || - || = || = || + 
 3.3 Support high TRLs || - || - || - || + 
 5.1 Set strategic research and innovation agenda || - || = || + || + 
 5.5 Access to design and manufacturing infrastructure || - || = || + || + 
 5.7 Maintain human skills || = || = || = || = 
The second concerns the criteria listed in
the proposal for Horizon 2020 to identify PPPs:
·                        
Options (a) and (e) offer most added value of
action at EU level (most coherence);
·                        
Option (e) has the strongest scale of impact
on industrial competitiveness, sustainable growth and socio-economic issues
(most effectiveness);
·                        
Options (a) and (e) show the strongest long-term
commitment from all partners on a shared vision and clearly defined objectives
(most effectiveness and coherence);
·                        
Option (e) is the strongest in the scale of
resources involved and the ability to leverage additional investments in
research and innovation (most efficiency);
·                        
Options (c), (d) and (e) allow for a clear
definition of roles for each of the partners (most efficiency and coherence).
The third level concerns the options in
view of the improvements identified in the interim evaluations.
   || Option (b) || Option (c) || Option (d) || Option (e) 
 An integrated European Strategy || - || - || + || + 
 Allow for a more efficient implementation || - || = || = || + 
 Improved governance and strategic planning || - || - || + || + 
 Strengthened commitment and alignment with priorities of Member States || - || - || - || = 
 Harmonisation of conditions of participation || = || + || + || = 
 Streamlined operations including better monitoring and evaluation || = || = || + || + 
In conclusion, the preferred option for achieving critical mass and a high return on investment is (e) ‘Implement a tripartite
institutional Public-Private Partnership’,
i.e. a partnership based on a roadmap for R&D&I with a scope from
components to systems, pooling of resources to support a significant number of
large-scale actions crossing the valley of death, and aligning of strategies
and funding (regional, national and EU level).
Option (e) is to be implemented by
setting up a new legal entity under Article 187 TFEU. It would take the form of
a ‘PPP body’ following the model financial regulation for PPP bodies referred
to in Article 209 of the Financial Rules, charged with indirect management
according to Article 58.1(c)(iv). It would take over all rights and obligations
of the current ARTEMIS and ENIAC JUs.
7          Evaluation
and monitoring
Three levels of evaluation and monitoring
will be organised.
At the initiative level, the Commission
will carry out a mid-term and final evaluation of the JU with the assistance of
independent experts. These evaluations will look at the progress towards
achieving the strategic objectives, the efficiency/effectiveness of the
implementation and the commitment of the private members in and beyond
projects. The Commission will notify the Council and the European Parliament of
the conclusions.
At the level of projects, a mechanism will
be put in place to measure the progress and the quality of each project. In
addition, the use and dissemination of results will be monitored during and
after the project lifetime, in accordance with the recommendations of the
second interim evaluation panel. Progress towards the set of objectives of the
JTI as identified above will be annually monitored against a set of Key Performance
Indicators (KPI) as identified in the impact assessment. 
The accounts of the JU will be examined
annually by an independent audit body. The operational capability of the JU
will also be assessed annually based on a report by the Executive Director,
against some seven KPIs as identified in the impact assessment.
In addition, qualitative monitoring will be
carried out on other important aspects such as:
·                        
Openness and transparency of procedures;
·                        
Coordination between the JTI, other EU
initiatives, and national and regional actions;
·                        
Avoidance of conflict of interest;
·                        
Financial auditing;
·                        
Monitoring of good governance.
[1]               As announced by industry for the proposed partnership.