EIT woos Juncker Plan money to make up for lost EU budget

Tibor Navracsics in Budapest, 5 May 2015, (EIT, with permission)

This article is part of our special report Innovation.

SPECIAL REPORT / The European Institute of Innovation and Technology (EIT) is seeking to recoup funding lost to the Juncker investment plan from other funding sources. One idea being explored is to get money back from… the Juncker Plan.

The European Commission wants to raid the EIT budget for the seven-year period from 2014-2020 to help fund the European Fund for Strategic Investment (EFSI), the chief funding vehicle of the Juncker investment plan.

The proposed cut amounts to €350 million over the seven-year period, which would see the EIT budget slashed from €2.7 billion down to €2.35, a 13% decrease

The issue is still under discussion because the details of the Juncker Plan are still being debated in so-called “trilogue” talks between the European Commission, Parliament and Council.

But the Commission has signaled it wants to achieve agreement by the end of June, and the EIT appears resigned to the fact that it is in the firing line.

Peter Olesen, the EIT governing board chairman, said that the cut would be “hard to accept because we have a credibility issue with our partners”. He was speaking in an interview with EURACTIV in Budapest, where the EIT is holding its annual innovation forum.

>> Read the full interview: EIT chief: ‘We will be able to satisfy Parliament’

The Knowledge Innovation Communities (or KICS) are the key channels for EIT ideas and funding, and leaders of the KICS voiced disquiet over cuts during the conference.

“We have to be honest, it’s difficult,” said Bertrand Van Ee, the CEO of the Climate KIC, in a press conference on Wednesday (6 May), referring to the cuts.

Budapest conference considers cuts

The cuts would be required over a two-year period meaning that they would affect the KICS budget plans for next year.

Olesen suggested the EIT should try to accept the cut and make the most of the money left.

“I have been working in corporate life for 25 years, and I have seen many times that when you get a cut it hurts you, but it can also make you more creative and focus on more important things,” he told EURACTIV.

EU officials in Budapest told EURACTIV that the European Investment Bank (EIB), a key decision maker under the proposed EFSI management, is wary of making Juncker Plan investments into educational projects such as schools, because the value of these projects is unlikely to be attractive to the private sector.

Education remains a priority for the Juncker Plan, however. “The penny has now dropped in the EIB that the EIT provides a perfect vehicle for project funding because the KICS are looking to create precisely the sort of viable projects that have a social and educational value that the EIB is looking for,” one EU official told EURACTIV.

“What they lose on the swings they are likely to gain on the roundabouts,” said another.

Investment possibilities from Juncker Plan

Tibor Navracsics, the Hungarian Commissioner for Education, Youth, Culture and Sport, has met with the EIB in the past fortnight, at which the subject was raised, and a formal dialogue has now opened up between the EIT and the EIB.

“I am aware that education is not the easiest investment decision [for the EIB] and it is clear infrastructure projects are more attractive,” Navracsics told EURACTIV when he spoke to journalists on the fringes of the Budapest conference.

“The EIT is a dedicated target for private investment because it has functioning relations with private business and there are established private business models, so we can reimburse some of the EFSI investment through the attractiveness of the KICs projects,” Navracsics added.

Richard Pelly, a consultant who until 2013 was the executive director of the European Investment Fund, said that money diverted from the EIT to EFSI was “not money ripped away from research”, but had the capacity to be re-committed through the Juncker Plan to “applied research invested in public private models rather than ‘once committed-forever lost’ money”. It would therefore benefit the KICS longer term, he believed.

“I do not believe that there will be a full guarantee” from EFSI that money will be recouped through the Juncker Plan, Olesen told EURACTIV. “But there are certainly opportunities to get the KICS recognised as eligible vehicles for funding under the plan,” he siad.

“To that end we have started a dialogue with the European Investment Bank and Fund,” he confirmed.

The centrepiece of the European Commission's efforts to foster research cooperation across the EU is the European Institute of Innovation and Technology, originally modelled on the US-based Massachusetts Institute of Technology (MIT).

The EIT is the brainchild of Commission President José Manuel Barroso, who first pushed the idea in February 2005.

The EIT's aim is to strengthen the European 'knowledge-triangle' of research, education and technology-transfer by providing a world-class model for teaching and research partnerships between academia and business.

In December 2009, the EIT launched its first three innovation clusters – the Knowledge and Innovation Communities (KICs) – focusing on climate change, energy and information technology.

Under the EU's Horizon 2020 research and innovation programme, the EIT’s budget will increase significantly.

The EIT was set to receive €2.7 billion for 2014-2020, 3.5% of the overall EU research and innovation budget. This represents a significant increase from the initial EIT start-up budget, which was around €300 million for 2008 to 2013. But is subject to a cut following the Commission's new investment plan (the Juncker Plan).

European Institute of Innovation & Technology

Subscribe to our newsletters