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An EU Competitiveness Fund is coming. How should it look?

Greg Arrowsmith, Secretary General, EUREC

ETIP-PV Steering Committee member

4 June 2025

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Contextualising the Comp Fund 1/4

BUT DON’T GET TOO EXCITED, WE’VE BEEN HERE BEFORE…

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Contextualising the Comp Fund 2/4

Today’s paradigm: interventionist industrial policy

Net Zero Industry Act (2023-24)

Non-price criteria: resilience criteria & others

Antwerp Declaration (Feb 2024)

“Europe should not only be a continent of industrial innovation, but should remain a continent of industrial production”
“Eliminate regulatory incoherence, conflicting objectives, unnecessary complexity in legislation and over reporting”

Letta Report (April 2024)

“actions to break down existing barriers, promote consolidation, and enhance the competitiveness of the Single Market”

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Contextualising the Comp Fund 3/4

Draghi Report (Sept 2024)

Innovation: €10 bn for US ARPA style funding at EU level; done in UK, DE (<> EIC)
Energy:

EU energy too expensive (today’s energy market design (spot market to set prices) partly to blame)
Speed up permitting; upgrade grids

Heitor Report (Oct 2024)

“Provide increased, better focused and ring-fenced funding across the full spectrum of RD&I. This requires an increase in the budget for the next Framework Programme to 220 billion Euro”

Competitiveness Progress Report (Feb 2025)

“The cost of producing a photovoltaic module is estimated to be about 60% higher in the EU than in China. These differences result from higher investment, labour and energy costs, as well as lower scales of production and a lack of vertical integration.”

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Contextualising the Comp Fund 4/4

EC sets new path forward, sets out instruments

Clean Industrial Deal communication

Go further: European preference?
Suggests conditions on Foreign Direct Investment in EU

Industry Decarbonisation Bank coming

Inspired by ‘Hydrogen Bank’ of Innovation Fund
Carbon emission reduction as a metric to enable technology-neutral support across industrial sectors
Carbon contracts for difference

Industrial Decarbonistion Accelerator Act coming

Extension of NZIA to industrial products and the factories that make them

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Official statements on Comp Fund

“To develop strategic technologies and manufacture them here in Europe”, “support IPCEIs”; ”increase R&D”
“accompany European projects along the entire investment journey”; access conditional on “national plans combining key reforms and investments”
“one-stop shop for EU funding”; must accommodate 100 bn Ind Decarb Bank
Get there via a Clean Industrial Deal call in Horizon Europe WP 2026-27

Commissioner Dombrovskis speaking 14 May

EC wants to streamline & consolidate funds, “e.g. Cohesion fund, EFRD, ESF+, JTF, Social Climate Fund, IF”, which “often address similar areas but with different rules”
EC wants “the flexibility to address priorities that might emerge”

All these concerns shape Competitiveness Fund’s design

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UvdL political Guidelines July 2024: “This is why I will put forward a new European Competitiveness Fund as part of our proposal for a new and reinforced budget in the next multiannual financial framework. This investment capacity will invest in strategic technologies – from AI to space, clean tech to biotech - to ensure that we develop strategic technologies and manufacture them here in Europe. And it will ensure that we use the power of our budget to leverage and de-risk private investment in our common goals. The European Competitiveness Fund will support Important Projects of Common Interest (IPCEIs) so that Europe can use its collective strength to invest together in ambitious common projects – as has already been done on a smaller scale with batteries, hydrogen and microelectronics. I will make IPCEIs simpler and faster to get financed and off the ground. The first new set of common projects will be proposed in early 2025.” https://commission.europa.eu/document/download/e6cd4328-673c-4e7a-8683-f63ffb2cf648_en?filename=Political%20Guidelines%202024-2029_EN.pdf

“accompany European projects along the entire investment journey”: Competitiveness Compass https://commission.europa.eu/document/download/10017eb1-4722-4333-add2-e0ed18105a34_en

“The planned Competitiveness Fund will offer strong support to innovative industry for sustainable investment in the next MFF and a one-stop-shop simplified access to EU fundings. It will focus on projects with European added value, such as clean tech, while also supporting industrial decarbonisation. EU funding will provide significant further investments in the infrastructure and connectivity required to complete the Energy Union” IDB’s funds to “aim for EUR 100 billion in funding based on funds in the Innovation Fund, additional revenues resulting from parts of the ETS as well as the revision of InvestEU” The chipping in of ‘Auctioning Revenues’ could be demanded as part of the national plans. “[…] The Bank will be placed within the governance of the future Competitiveness Fund”

https://commission.europa.eu/document/download/9db1c5c8-9e82-467b-ab6a-905feeb4b6b0_en?filename=Communication%20-%20Clean%20Industrial%20Deal_en.pdf

Latter comment by Dombrovskis:

“Flexibility” means “porosity”, and the porosity will be one way. It would be naïve to think the money will flow in any direction but out. Comp Fund will, I’m sure, be raided for emergencies (defence, wildfires, farmers compensation, …). A step back for the ‘innovation’ community compared to the clearly defined budget for ‘Framework Programmes’ in previous MFFs.

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Leaked Competitiveness Fund structure

Source: Science Business

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Slide leaked 14 May; backlash; climbdown 20 May

President Ursula von der Leyen promises “self-standing FP10” “tightly connected” to the new Competitiveness Fund.

Could the backlash have been expected? Yes

FP10 conspicuously absent from Clean Industrial Deal communication (26 Feb)
EP’s (11 Mar) & Member States’ (12 Mar) positions: Save the FP!
EP rejects in its 7 May resolution on MFF “the idea of an umbrella Competitiveness Fund merging existing programmes”

We’re left guessing: what does the top level of the EC understand FP10 to be?

…from EP, Council of Ministers

Reaction

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Where’s FP10 - here?

Source: Science Business

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Or just here?

Source: Science Business

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Will FP10 be understood to apply only to mean ERC & EIC? In her political guidelines, UvdL says “[To increase r&d spending] To do this, we will expand the European Research Council and the European Innovation Council.”

Draft Report by C Ehler: enthusiastic only about ERC and EIC, too, in Nov 2024: he proposed an “expanded European Research Council (ERC) and European Innovation Council (EIC) should be at the heart of the part of FP10 dealing with a European competition of ideas and that this part should receive half of the FP10 budget;” [substantially reworded] (https://www.europarl.europa.eu/doceo/document/ITRE-PR-765325_EN.pdf)

Are the parts with the FP10 label given a protected budget and the unlabelled parts subject to the vagaries of the political crises or priorities of the day?

En passant, we notice that the slide does not have explicitly ‘ARPA’ style anywhere (although the official statements are compatible with ARPA approach)

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A bureaucracy that efficiently handles its budget

Dispenses funding regularly; no “stop-go-stop-go”
Maintains infrastructure for robust proposal evaluation
Accumulates experience in its administrators…
… to keep institutional memory of previous projects & approaches
… like today’s Horizon Europe!

EUREC wish (letter Feb):

Keep collaborative research at the centre of the EU’s funding programme. The tool for transnational research. A specific & unique feature.

ETIP-PV wish (with other ETIPs – joint letter April):

Don’t force projects to be big

Retain the Framework Programme’s best features

A bigger question than the label: how will collaborative research operate?

=> Recommendation 1: Comp Fund needs strong collaborative research component

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Energy in Comp Fund

Source: Science Business

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38 bn EUR 2020-2030: an un-ignorable and presumably much coveted sum

Dwarfs the 15 bn 2021-2027 for Climate, Energy, Mobility cluster
My guess: it’ll be less about innovation, less about cleantech, more about financing for heavy industry decarbonisation

Some its resources destined for the Industrial Decarbonisation Bank
European Parliament ENVI committee already once pushed in 2022 for a ‘Climate Investment Fund’

(based on interviews for REALIZE project winter 2024-25):

Relax the requirement for innovation
Offer IRA-type support (production subsidies)
“RES Sovereignty fund”

(Yes, I’ve changed my mind since 2022)

A revision to Innovation Fund’s primary legislation, the Emissions Trading Directive, comes in 2026

Future of the Innovation Fund

=> Recommendation 2:

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There’s no constituency fighting for IF because it hasn’t existed long enough to build a set of loyal clients and it hasn’t yet a got a track record of success that can be admired. It’s peripheral to env/climate ministers or climate NGOs interests (although NGOs focused on financing do care).

In the archive of Science Business, an article where I say Innovation Fund should stay focused on innovation: https://sciencebusiness.net/viewpoint/viewpoint-environment-committee-wrong-call-time-innovation-fund

But now I now support the combination as in the next slide. We have more elements to play with today than in 2022: the CID calls, the NZIA NPCs. In PV, it is urgent to get any manufacturing industry started in Europe (esp in the areas where we are very behind: ingots, wafers, cells, modules). Innovative manufacturing can come in a second step.

BTW, where’s the ind decarb bank?

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From this (-2027)…

Future of the Innovation Fund

(recommendation 2)

…to this

(Comp Fund era):

Increasing technology maturity / decreasing technology risk

Horizon Europe Cluster 5

Innovation Fund

IF ‘small scale projects’

grants, c 12 M EUR

FP-style projects

Comp Fund for early deployment

‘CID call’-style

Clean Industrial Deal call to be trialled in WP 2026-27, 300 M EUR p.a., 7-10 ‘fit-for-deployment’ projects p.a. in each of ‘cleantech’ and ‘industry decarb’. Within project, I recommend

Detailed business plan written within project as early deliverable, followed by go/no-go gate
Another go/no-go to check continued relevance of business place before major part of IA budget is drawn down
Make IF application as eligible cost

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Innovation Fund without ‘Innovation’ assessment criterion, simplified or lighter GHG avoidance assessment, probably beefier made-in-EU requirements, remain performance-based (i.e. deliver GHG avoidance to receive at least part of the grant)

“European Solar Bank” (production premium)

Offering “auctions as a service” or “grants as a service” to Member States

Future of the Innovation Fund

(recommendation 2)

Increasing technology maturity / decreasing technology risk

FP-style projects

Comp Fund for early deployment

‘CID call’-style

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Comp Fund in synergy with other measures to promote innovation in RETs

Future of the Innovation Fund

Increasing technology maturity / decreasing technology risk

FP-style projects

Comp Fund for early deployment

‘CID call’-style

Non-Price Criteria under NZIA

Innovation
Environmental profile

Indicative target 5% innovative renewables

=> recommendation 3: Member States must play their part

Do they…

Commit national ETS auctioning revenues to the Industrial Decarbonisation Bank or equivalent national initiatives, also in cleantech?
Use the “innovation” and “environmental profile” NPCs in their auctions for public RES support?
Have a clear strategy on 5% innovative RES (only 10 MS so far)?
Take part in the ‘Grants-as-a-service’ or ‘Auctions-as-a-service’ offer of the European Commission?

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How do these guys’ roles

relate to EUPI-PV?

Source: Science Business

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Its purpose & history…

Exists a forum to suggest Work Programme topics on PV to the European Commission. ETIP-PV is the EC’s counterpart, represented by Solar Power Europe
Set up after 2½ years of discussions

But research roadmaps less important in WP 2026-27. In Comp Fund, too?

For WP 2026-27, EC promises “less prescriptive, more open and bottom-up topics”, the funding of “a larger number of projects funded per topic” and an increase in project size
No mention of partnerships in the leaked Comp Fund slide. Ambivalence towards them in some parts of DG RTD. Rosalinde van der Vlies to ETIP-Wind: let’s create a small-P partnership without the administrative overhead of a big-P ‘Partnership’

Not another group of experts sitting above or next to the SET Plan St Group, please
A lot of energy research is applied research that can be programmed.
And it should be programmed (by a representative group of experts), to align intent and focus scarce resources

A future for EUPI-PV in Comp Fund?

EUPI-PV: the European Co-programmed Partnership in PV

=> recommendation 4: keep space for programmed research

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Look to a WP 2025 topic to see how that might work: D3-05 solar thermal storage

“The project must include a clear go/no-go milestone ahead of entering the demonstration phase. Before this go/no-go milestone, the project must deliver the detailed engineering plans, a techno-economic assessment, and all needed permits for the demonstrator. The project proposal is expected to present a clear and convincing pathway and timeline to obtaining the permits.”

“Plans for the exploitation and dissemination of results for proposals submitted under this topic are expected to include a strong business case and sound exploitation strategy. The exploitation plans are expected to include preliminary plans for scalability, commercialisation, and deployment (feasibility study, business plan) indicating the possible funding sources to be potentially used (in particular the Innovation Fund).”

Example of the ‘CID’-call character of a WP 2025 topic

Back-up slide

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