EU funding for industry: support to strategic value chains

  By Anca Wlizło

Looking for the next European Champions in leading industries

For several decades, global supply chains have moved raw materials, goods and services across continents, bringing resources and products to our doorsteps. As a result, countries lay their bets on identifying and nurturing their competitive advantages. While global supply chains remain critical, disruptions such as the pandemic or the chip shortage crisis have highlighted Europe's vulnerability in many strategic sectors, and the increasing weight of environmental considerations impact supply chains and choices. As a result, the EU's industrial strategy focuses on building strategic autonomy and mitigating risks and vulnerabilities.

To do so, the EU is increasingly looking to support the next European champions in strategic industries. One instrument in particular seems best fit to support Europe's need to secure strategic autonomy while delivering targeted support: Important Projects of Common European Interest (IPCEIs).

IPCEIs can draw on the many funding sources Europe provides and channel the funds to private sector research and innovation projects up to the stage of first industrial development in vulnerable sectors.

As of January 2022, a minimum of four Member States will be required to create an IPCEI. Interest has, however, already been skyrocketing at national level, going from just 4 Member States participating in the first IPCEI on Batteries, to 23 Member States and hundreds of applicants for the IPCEI on Hydrogen.

Although IPCEIs are not a new instrument, they have been receiving more attention in the past few years due to the flexibility they offer and the support they provide to private initiatives across borders:

• IPCEIs offer significantly higher levels of financing than that of the more usual EU or public funding programmes. 
  

The first IPCEI on Microelectronics offered € 1.75 billion in financing to the 29 participating companies, while the two IPCEIs on Batteries offered a combined € 6.1 billion to the 59 participating organisations.

• IPCEIs fill the gap in funding projects that have the potential to benefit more than one country and exploit cross-border synergies.
  

General State aid programmes are country specific, meaning that they only fund projects implemented on their territories and which offer benefits at local, regional or national level. 

Where are the opportunities right now?

What to do next?

1. Mobilising Member State support for creating or joining a multinational funding framework such as an IPCEI or MCP is essential. Given the pressure put on national budgets by the various financing needs, building the case for joining such an initiative needs careful preparation.

Some Member States – such as the Netherlands, Poland or Spain – have already publicly expressed their reservations about creating too many IPCEIs, preferring to dedicate the instrument to exceptional situations. However, all three countries have joined the most recent Cloud IPCEI, proving they are open to negotiations.

2. Once a Member State has joined an IPCEI, intense competition follows during the project selection phase. To optimise a project's chance of being chosen for financing, each selection criterion must be analysed and addressed, and a thorough funding strategy prepared.

Most often, positioning your project to obtain IPCEI financing starts much earlier than the moment the call for projects is launched. Our team has navigated the different stages and requirements of the process, from building interest for an IPCEI, answering early calls for interest to full submission of applications.