Sectors
In the face of major challenges our society is encountering – energy transition, COVID-19 pandemic, geopolitical challenges – the European Union puts a strong emphasis on actively supporting key sectors. Among them are microelectronics, batteries, hydrogen, mobility, and cloud computing, which not only shape the future of Europe but also benefit from significant public funding.
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The microelectronics sector faces stiff global competition. Europe is well-positioned in terms of innovation capacity, but factories tend to be located elsewhere due to a less favorable cost structure. This is especially true for wafer production and front-end manufacturing, where the required investments are substantial and increase as technological nodes and component performance decrease.
The sector received significant public funding in 2018 and 2023 through the IPCEI on Microelectronics (1.9 billion euros for 43 projects in 4 Member States plus the United Kingdom) and the IPCEI ME/CT (8.1 billion euros for 68 projects in 14 Member States) aimed at strengthening European technological advancement and coordination among stakeholders. In 2022, the European Commission launched the European Chips Act, which enables financing for gigafactories producing microelectronic components, the first of their kind in Europe.
European economics has supported 26 projects in the microelectronics industry under these initiatives, with a total public funding of 10.7 billion euros directed towards wafer manufacturers, IDM (Integrated Device Manufacturers), and foundries.
Europe has set highly ambitious goals for the electrification of transportation and intermittent renewable energies. These goals require a massive reliance on electric batteries. This is why battery production has become a strategic priority for the European Union, which seeks to reduce its dependence on imports of Asian batteries. China currently holds a 76% share of the global battery market.
It is therefore crucial for the EU to develop an innovative and competitive European battery industry to ensure its economic sovereignty and achieve its environmental objectives. The battery industry received significant public funding in 2019 and 2021 through the IPCEI on Batteries and IPCEI EuBatIn, two major collaborative projects with the participation of 12 member states contributing €6.1 billion to around sixty companies across the entire battery value chain. This includes raw material extraction, battery cell and pack design and manufacturing, and recycling.
In March 2023, Europe continues to implement its battery action plan, considering batteries as one of the key technologies under its Net-Zero Industry Act. The Critical Raw Materials Act demonstrates the EU’s commitment to supporting investments upstream in the battery sector’s value chain, with the aim of ensuring a secure and sustainable supply of critical raw materials.
Furthermore, numerous battery gigafactory projects are currently in development, funded through R&D project support (up to the initial industrialization phase) and the Temporary Crisis & Transition Framework.
european economics has supported 24 projects across the battery value chain, with a total public financing of €7.0 billion.
Massive volumes of green and low-carbon hydrogen will need to be produced in the coming decades to decarbonize highly CO2-emitting industrial sectors such as steelmaking, refineries, cement production, and chemicals. Hydrogen will also be used in heavy mobility applications (trucks, ships, trains) and for storing renewable and intermittent energy sources like photovoltaic solar and wind power.
The European Union has set a goal of achieving an installed capacity of at least 6 GW of electrolyzers for green and low-carbon hydrogen production by 2024, a target that is expected to increase to 40 GW by 2030. As part of the strategic roadmap established by the European Commission in 2020, substantial public funding supports the development of value chains for electrolyzers and fuel cells, as well as investments in hydrogen production, transportation, and distribution.
In July 2022 and September 2022, the European Commission approved two IPCEIs (Important Projects of Common European Interest) that will kickstart the development of the European market for green and low-carbon hydrogen. Under the IPCEI Hy2Tech, 15 member states are providing €5.4 billion in funding for 41 projects primarily focused on the production of electrolyzers and fuel cells. The Hy2Use IPCEI, on the other hand, mobilizes €5.2 billion in public funding from 13 member states for 35 projects aimed at deploying hydrogen usage in industry.
Two additional IPCEIs on hydrogen are currently under evaluation by the European Commission: Hy2Mobility for hydrogen applications in mobility and Hy2Infra for the deployment of hydrogen transport and distribution infrastructure. In 2022 and 2023, several billion euros have also been allocated by some member states to decarbonize strategic sectors such as steelmaking.
European economics has supported 78 projects across the green and low-carbon hydrogen value chain with a total public financing amount of €12.9 billion.
According to the European Medicines Agency, 80% of pharmaceutical active ingredients are manufactured in China and India, and 40% of the medicines marketed in the European Union are imported.
Anti-cancer drugs (chemotherapies), anti-infectives (vaccines), and nervous system medications (anti-epileptics, anti-Parkinson’s drugs) have been particularly affected by these shortages.
In response to this situation, Europe has made health and biotechnology one of the major focuses of its industrial policy and has established numerous opportunities for public funding to encourage investments in HealthTech, which encompass three major technology categories:
- Biotechs, primarily focused on healthcare, especially oncology.
- Medtechs, involving new technologies for medical devices and diagnostics.
- eHealth, encompassing new tools for digital transformation, device connectivity, telemedicine, and the integration of AI for diagnosis.
In 2022, the European Commission approved its first IPCEI (Important Project of Common European Interest) in healthcare. Sixteen member countries are participating to support the development of new therapies, such as molecules or advanced treatments.
Renewable Energies (RE) such as solar, wind, geothermal, hydropower, and tidal energy, as well as biofuels and biogas, have an opportunity to contribute to decarbonization alongside low-carbon nuclear energy.
The REPowerEU initiative, adopted by the European Commission on May 18, 2022, enables member states to access state aid or European subsidies to develop and expedite the deployment of RE. A budget of 72 billion euros has been allocated for this purpose.
It is worth noting that solar energy holds a significant place in the ambitions of the European Union, which aims to double its photovoltaic solar capacity by 2025 and install 600 GW of production capacity by 2030. Europe is investing in supporting the sector in the manufacturing and development of solar panel technologies to reduce its dependence on panels manufactured in China.
The Cloud has become a significant element of the digital economy and is destined to become an essential building block of the overall economy, providing the necessary tools for innovation in sectors far beyond the digital realm, such as autonomous vehicles, automated production chains, smart buildings, IoT devices, distributed electrical grid management, and massive climate data processing. However, the primary providers of these services are often non-European companies that may be subject to foreign legislations not adhering to data protection standards.
In order to ensure the digital sovereignty of member states and provide them with the necessary cloud capabilities to participate in future technological advancements, while also upholding Europe’s environmental commitments, in 2021 the European Commission approved the IPCEI on Next Generation Cloud Infrastructure and Services (IPCEI-CIS) with a total budget of approximately 1.5 billion euros. It brings together 11 member states: France, Germany, Italy, Spain, Belgium, Luxembourg, Slovenia, Hungary, Czech Republic, Poland, and Latvia. The primary objective of IPCEI-CIS is to develop a green European Cloud offering in cutting-edge technological areas, such as edge computing.
Microelectronics
The field of microelectronics, with its numerous applications in sectors such as automotive, energy, or digital technology, is considered strategically important in Europe and is the subject of numerous opportunities for public funding.
Battery
The electrification of mobility and the increasing prominence of intermittent energy sources require Europe to have a robust battery industry. Significant public funding is being mobilized to achieve this goal.
Hydrogen
Hydrogen is considered a key sector for Europe to achieve carbon neutrality by 2050. Massive public funding is directed towards the value chain of electrolyzers and fuel cells, as well as decarbonization projects.
Health & Biotechs
The COVID-19 pandemic has highlighted certain shortcomings in the biotechnology research and innovation system, as well as a strong dependence on Asia and the United States in the pharmaceutical industry
Energy
It has become evident that the European Union must accelerate its energy transition due to the war in Ukraine and the surge in gas prices
Cloud
The Cloud is essential for the digital economy and is becoming critical for the entire economy, including innovation in various sectors.