The State of the Union address (SOTU-20, 16.09.20) formulated some main challenges and solutions for perspective rather numerous and urgent socio-economic issues. Commission’s orientation for scientific community includes the directions with serious implications for national recovery and resilience. Although the main priorities for years to come are those on strengthening the European social market economy, there are the fields where the scientists’ ambitions can correlate with the member states’ prosperity; this is where the researchers can make a difference…
The European Commission promised to drive a sustainable and transformational recovery that will give the states the needed facilities to lead sustainable and resilient economies while following the EU’s policy objectives, especially in the green and digital transitions, which are crucial to building a prosperous and sustainable future.
The following are some examples in perspective spheres of science and research which might be interesting for the European scientists. However, the researchers are supposed to follow both the national challenges and the common European priorities in order to strive for financial support from the EU institutions:
= In medical and human life research: the EU will create a new “European health union”, with a future-proof and properly funded EU4Health program, a reinforced European Medicines Agency (EMA) and a strengthened European Centre for Disease Prevention and Control (ECDPC).
Debates on new EU’s competences in the field of health will take place during a forthcoming Conference on the Future of Europe (November 2020). Besides, the Commission intends to create an EU-wide agency for biomedical advanced research and development (BARDA) to enhance Europe’s capacity to respond to cross-border pandemic threats. The pandemic has shown that the present health systems are being based on a “limited model”, which valued more wealth and wellbeing above the public health.
= In political economy: reinforcing Europe’s social market economy and protecting workers and businesses from internal and external shocks. The Commission intends to put forward a draft legislation concerning setting minimum wages in the states: “minimum wages work – and it is time work paid”, argued the Commission President in her address.
Besides, the EU’s industry strategy shall be reviewed and adapted to increased competition.
The Commission made clear that the EU wants a global agreement on digital taxation, and would do it alone if other states don’t follow: “I want Europe to be a global advocate for fairness”, she noted and added: “everyone must have access to minimum wages either through collective agreements or through statutory minimum wages”. There have been already several examples in the EU states that a well-negotiated minimum wage could secure jobs and create fairness – both for workers and for the companies.
The Commission has authorized more than €3 trillion euro in support to companies and industry in the member states through budget means, as well as recovery and resilience facility.
Just two examples: first, creating new European Hydrogen Valleys to modernise manufacturing and industries, to power vehicles and transport modes; this would bring new life to metropolitan and rural areas. The second example is construction sector with all the offices and residential buildings. Presently, the buildings people live and work in generate about 40 percent of all emissions: the idea is to make the buildings less wasteful, less expensive and more sustainable. Modern research has proved that the construction sector can even be turned from a carbon source into a carbon sink, if organic building materials like wood and smart technologies like applications on artificial intelligence (AI) are applied. Thus, the NextGenerationEU program will be a driving force for transition to housing-renovation in the states and make them leaders in circular economy. But this is not just an environmental or economic project: it needs to be a new cultural project for Europe. Every movement has its own look and feel: cultural communities need to give “systemic change” through a distinct national aesthetics with matching style and sustainability!
= In natural science
a) emissions reduction: the European Commission proposed a further increase the 2030-target for emissions reduction from the initial 40 percent to at least 55 percent. This will put the EU on track for climate neutrality by 2050 and for meeting its Paris Agreement obligations. The carbon border adjustment mechanism will help ensure that all member states will follow the Europe’s lead. Some financial support has been dedicated to the “green deal”: about 37 percent funding from the EU recovery plan will be invested in the green transition’s objectives, including a so-called “lighthouse” European projects to involve hydrogen, green building and 1 million electric charging points.
Commission President has called for a new “European Bauhaus” – a co-creation platform for architects, engineers and designers, to launch the modern “architectural style” reflecting European aspirations for making a first ever climate neutral continent.
While emissions dropped 25 percent since 1990, the states’ economy grew by more than 60 percent; the difference is that there are more technologies, more expertise, more investment and ambitious goals towards circular economy with carbon neutral production.
b) digital agenda: President von der Leyen stressed that “Europe must now lead the way on digital”; the Commission intends to create a common plan for a “digital European decade” with clearly defined goals for 2030, such as connectivity, skills and digital public services. The Commission has announced investments in the size of 20 percent from the NextGenerationEU’s budget on digital society and economy.
Besides, the EU wants to create “a European cloud” as part of NextGenerationEU – based on GaiaX application.
The second aspect in digitalisation is technology, and in particular artificial intelligence (AI): presently AIs are already becoming widely used, e.g. in agro sector and in precision farming, in more accurate medical diagnosis, in safe autonomous driving, to name a few. However, a legislative basis shall be developed too: the Commission will soon propose a secure European e-identity; one that can trust and use anywhere in Europe to do anything from paying taxes to renting a bicycle, i.e. technology where people can control themselves what data and how is used.
= Governance issues: the EU states are encouraged to submit their National Reform Programs and their recovery and resilience plans in a single integrated document. This document will provide an overview of the reforms and investments that a state undertakes in the coming years, in line with the objectives of the EU’s Recovery & Resilience Facility, RRF (as a central pillar of NextGenerationEU program). The EU’s aim is to instigate new national new growth strategies based on the European Green Deal and on the concept of competitive sustainability.
There are four dimensions of competitive sustainability: environmental sustainability, productivity, fairness and macroeconomic stability; they are identified in the last year’s ASGS (annual sustainable growth strategy) and should remain the guiding principles for the RRF’s implementation. The EU states can prepare recovery and resilience plans that include a coherent package of reforms and public investment projects to be implemented up to 2026 in order to be supported by the EU Recovery and Resilience Facility.
The Recovery and Resilience Facility will provide a total of €672.5 billion to support investment and reforms. Grants worth a total of €312.5 billion will be provided to the states under the Facility and the remaining €360 billion will be provided in loans. Funding under the Facility will be made available in accordance with the estimated costs of the proposed reforms and investments contained in recovery and resilience plans to be submitted by the states. The estimated cost should be in line with the expected impact of the reforms and investments.
It is important to know the procedures according to which the EU grants are allocated by the member states: the main principle is the so-called “allocation key” which will fix a maximum possible amount for the RRF’s grant component for a single state. For about 70 percent of the total of €312.5 billion available in grants, the allocation key will take into account a state’s population, the inverse of its GDP per capita, and its average unemployment rate over the past 5 years (2015-2019, compared to the EU average).
As to remaining 30 percent, 2015-2019 unemployment rates would be taken into account with an observed loss in real GDP during 2020 and a cumulative loss in real GDP during 2020-21.
An EU state may also request a loan under the RRF: the maximum volume of loans for each state will not exceed 6.8 percent its Gross National Income. However, an increase will be possible in exceptional circumstances subject to available resources.
The Commission is expecting that the RRF will enter into force from January 2021; and the deadline for the submission of the states’ plans is the end of April 2021. However, the Commission encourages states to submit their preliminary draft plans already by mid-October 2020; afterwards the states may finalize their plans following the initial presentation of the drafts to the Commission. The Commission is ready to assist the states on the preparation of their plans.
In order to be feasible, the national investment and reform plans shall: a) contribute to effectively addressing challenges identified in the relevant country-specific recommendations; b) contain measures that effectively contribute to green and digital transitions; and c) contribute to strengthening the growth potential, job creation and economic and social resilience of the state.
Another important notice: the RRF is dealing with a broad concept of investment as capital formation in areas such as fixed capital, human capital and natural capital. Fixed capital relates to investments in e.g. infrastructure, buildings, as well as in research, innovation, patents and/or software. Human capital is accumulated by means of spending on health, social protection, education, training and skilling. Natural capital is enhanced by actions aiming at increasing the share of renewable natural resources, protecting or restoring the environment, and by mitigating/adapting to climate change.
Seven “golden requirements”: The Commission strongly encourages the researchers in the states to include in their recovery and resilience plans investment and reforms in the following priority areas:
- Power up: the frontloading of future-proof clean technologies and acceleration of the development and use of renewables.
- Renovate: the improvement of energy efficiency of public and private buildings.
- Recharge and Refuel: the promotion of future-proof clean technologies to accelerate the use of sustainable, accessible and smart transport, charging and re-fuelling stations and extension of public transport.
- Connect: the fast rollout of rapid broadband services to all regions and households, including fiber and 5G networks.
- Modernise: the digitalisation of public administration and services, including judicial and healthcare systems.
- Scale-up: the increase in the EU’s industrial data cloud capacities and the development of the most powerful, cutting edge, and sustainable processors.
- Reskill and upskill: the adaption of education systems to support digital skills and educational and vocational training for all ages.
Additional information in the links: – Recovery and Resilience Facility – Grants allocation; and – The European Semester.
= New industry strategy: the first draft was presented to the states in March 2020 to ensure industry could lead the twin green and digital transition. The last six months have only accelerated that transformation – at a time when the global competitive landscape is fundamentally changing. This is why the Commission will further update industry strategy in the first half of next year and adapt the necessary competition framework.
= In diplomatic service: President von der Leyen pledges to use Europe’s “diplomatic strength and economic clout to broker agreements that make a difference” on ethical, human rights and environmental issues.
= In entrepreneurship: the SMEs shall be the motors of national economies; around 40 million people have already applied for short-time work schemes and 16 EU countries will soon receive almost €90 billion from the special EU fund-SURE to support workers and companies. Therefore the potentials for the supported research in corporate engineering and business technology are enormous…