An independent Expert group investigates how competitiveness in R&I policies can be defined with the current global challenges and geopolitical tensions.
As Europe navigates through global challenges and competitive pressures, a robust and forward-thinking strategy for research and innovation (R&I) is more crucial than ever. The Expert group on the economic and societal impact of research and innovation (ESIR) provides evidence-based policy advice to the European Commission in their last report on why Europe requires a systemic R&I policy, focusing on the definition of competitiveness and two illustrative case studies: the circular economy and green hydrogen.
Competitiveness, in the broadest sense, refers to the ability of an economy to provide high standards of living for its citizens relative to other countries. Traditionally, this concept has been closely tied to productivity, the efficiency of an economy using resources to produce goods and services. However, the authors argue for a more nuanced and long-term perspective on competitiveness that integrates sustainability, social well-being, and economic performance. This redefined competitiveness suggests a “competitive EU economy as a fore-runner in maximising the societal value gained by using the Earth’s limited natural resources while at the same time minimising the environmental and social costs”. This systemic approach aligns with the EU’s broader policy goals, including the green and digital transition, allowing sustainable growth and equitable resource distribution. It is based on two building blocks: (i) to adopt resource and material productivity as key targets for R&I policy, and (ii) to build social attractiveness in the EU, meaning “to be truly attractive for skilled labour and capital, but also in general as a society and a place to live and work”.
The circular economy represents a paradigm shift from the traditional linear economic model, where products are made, used, and disposed of. Instead, the circular economy emphasises reducing initial resource use, increasing product durability, enhancing reuse and recycling processes, and improving overall resource efficiency. Applying circular economy principles to critical sectors such as cement, steel, plastic, and aluminium could significantly reduce emissions and resource consumption. By 2050, these interventions could cut emissions by up to 40%, demonstrating the potential for productivity growth through sustainable practices. Europe’s push towards a circular economy positions it as a leader in sustainable innovation. The report highlights the strategic benefits of being a first mover in this domain by fostering technological innovations (e.g., pushing for the reuse of secondary raw materials) and social innovations such as sharing and repairing. Early adoption of circular practices can create lead markets, giving European companies a competitive edge in developing and exporting cutting-edge technologies and sustainable products. The circular economy also exemplifies the need for a systemic approach to competitiveness. It requires coordinated efforts across various policy domains, including industrial policy, environmental regulation, and R&I incentives.
Green hydrogen, produced using renewable energy sources, is another critical area in which the EU aims to lead. This technology holds promise for decarbonising various sectors, including heavy industry and transportation, which are traditionally hard to electrify. Investing in green hydrogen infrastructure and technology can drive productivity by creating new industries and job opportunities. It also supports the EU’s climate goals by reducing dependency on fossil fuels and lowering greenhouse gas emissions. Europe’s early investments in green hydrogen can establish it as a global leader in this emerging field, notably by supporting cutting-edge research and innovation. The EU can capitalise on first-mover advantages by developing a robust green hydrogen sector, creating new markets and setting international standards for clean energy technologies. Similar to the circular economy, the EU’s green hydrogen initiative underscores the importance of a systemic approach since unanswered questions remain open, such as the role of green hydrogen in Europe in a global market and which part of the value chain the EU should focus on. The question of sustainability assessment in the case of green hydrogen imports from outside of the EU also requires new evaluation methodologies and tools. Therefore, beyond looking at R&I, the case of green hydrogen also shows the integration of energy policy and industrial strategy to build a comprehensive ecosystem supporting innovation and market development.
ESIR stresses that Europe’s long-term competitiveness hinges on adopting a systemic R&I policy that balances economic performance with sustainability and social well-being. It also supports allocating funds towards the Green Deal for the next R&I Framework Programme (FP10). The EU can navigate global challenges more effectively and sustainably by redefining competitiveness to include the dimensions mentioned before. Through the case studies of the circular economy and green hydrogen, the report demonstrates how Europe can leverage its strengths and adopt a forward-looking approach to R&I. By embracing a systemic perspective, Europe can ensure that its competitiveness strategy is not only about economic success but also about creating a fairer, greener, and more inclusive future.