Advanced Materials are a key technology for the EU’s competitiveness and to achieve the green and digital transitions. They refer to materials, whether bio-based or synthetic, that are intentionally designed and engineered to have new or enhanced properties and/or targeted or enhanced structural features, to achieve superior performance. They can have multiple applications, such as the production of renewable energy, batteries, zero-emission buildings, electronics, medicines and medical devices, agricultural equipment, packaging, satellites, planes and defence equipment. With so many uses, the demand for advanced materials is expected to increase significantly in the coming years. That’s why they are in the list of 10 critical technology areas for the Union’s economic security.
How is the EU progressing?
The EU is lagging behind the United States and Japan in terms of innovation in advanced materials. The EU is responsible for only 15% of patents in advanced materials behind the United States, which holds 28%, and Japan, which claims 24%. Moreover, when it comes to total research and development expenditures, the EU’s investment of 19.8 billion EUR pales in comparison to the United States’ substantial 50.3 billion EUR expenditure. Another factor to consider is that the patent trends in the EU have remained stable, whereas countries like China, the US, and Japan are experiencing a rise in patent applications, signalling a more dynamic and potentially competitive environment in those countries.
The EU’s relative lag in both patent share and R&D investment points to a need for a strategic reassessment and increased funding to bolster its position in the global advanced materials market. That’s why, in February 2024, the Commission published its Communication on Advanced Materials for Industrial Leadership. The aim of this initiative is to create a dynamic, secure and inclusive ecosystem for advanced materials in Europe. Indeed, the Advanced Materials industry in the EU faces several challenges.
What are the challenges?
- The research and innovation (R&I) ecosystem in advanced materials across the EU is highly fragmented. This fragmentation is primarily due to the fact that only a few Member States have dedicated advanced materials strategies, while others integrate materials research into broader national programs. Without a unified and coordinated approach, public investment in R&I for advanced materials remains dispersed and fails to adequately bolster EU competitiveness and innovation capacity.
- Private investments do not match the growing demands of the advanced materials industry. This imbalance highlights a critical gap in funding that needs to be addressed to support future developments and technological advancements.
- The development of advanced materials using traditional methods is a lengthy process, typically requiring 10 to 30 years. However, the adoption of AI in research and development could significantly shorten this timeline. As an example, AI has enabled the prediction of nearly 400,000 stable crystal structures, which marks a substantial advancement for clean energy and electronics.
- There is a notable lack of testing and experimentation facilities, especially for SMEs. This deficiency hinders the ability of these businesses to innovate and test new materials, thus impacting the overall pace of advancement in the sector.
- The sector also suffers from a shortage of skills in science, technology, engineering, and mathematics (STEM). This talent and skills gap poses a significant challenge to the growth and innovation potential of the industry, which requires a highly skilled workforce.
What is the European Commission doing?
The new EU strategy for advanced materials is composed of five pillars which we will explore in this article.
Pillar 1: European R&I for Advanced Materials
The European Commission intends to strengthen the research and innovation ecosystem for advanced materials across Europe.
To achieve this, the Commission plans to collaborate with Member States (and associated countries such as Norway or the UK) under the Horizon Europe programme framework to establish a unified set of objectives and priorities for advanced materials R&I. For now, these priorities focus on energy, mobility, construction, and electronics.
Additionally, the Commission will explore R&I initiatives necessary to facilitate the substitution of critical raw materials with alternative advanced materials.
Pillar 2: Fast track from lab to fab
The Commission wants to fast-track advanced materials from laboratory settings to manufacturing facilities by creating of a “materials commons.” This concept involves establishing a European digital infrastructure dedicated to the R&I of advanced materials. Such an infrastructure would dramatically speed up the design, development, and testing phases of new materials, using AI, to enhance these processes in a controlled environment.
In addition, by 2024, the Commission will help SMEs access relevant technology infrastructures through a single-entry catalogue for testing and upscaling innovative advanced materials.
Furthermore, the Commission plans to collaborate with stakeholders to consider the potential of funding new open innovation test beds for applications of advanced materials related to mobility.
Pillar 3: Increasing capital investment and access to finance
The EU will set up a new partnership with the industry under Horizon Europe named ‘Innovative Materials for EU.’ This partnership targets a substantial investment totalling 500 million EUR for the period of 2025-2027, with at least half of this amount, 250 million EUR, expected to come from private sources.
Additionally, the Innovation Fund, with a budget of 40 billion EUR available from 2020 to 2030, aims to facilitate the market introduction of solutions that help decarbonize the European industry. This fund supports the manufacture of advanced materials, excluding mining materials, that substantially reduce greenhouse gas emissions. Examples of such support include the production of lightweight solar panels or innovative building roof components. The fund also finances activities related to recycling or reuse of critical materials.
The Strategic Technologies for Europe Platform (STEP) is another significant initiative, designed to boost investments in critical technologies across digital, clean, and biotech sectors, with advanced materials included within its scope. The first projects under STEP are anticipated to receive funding by the end of 2024.
In parallel, the European Innovation Council (EIC) work programme for 2024 continues to drive forward the innovation in advanced materials, with a specific budget allocation of 132 million EUR to support the twin transition. The 2024 work programme includes EIC Challenges that address innovation in concrete production, nanomaterials, and solar-to-x technologies and scale up innovations in the areas of quantum components and renewable energy sources.
Lastly, InvestEU is the EU’s instrument for catalysing private investments in EU priority areas, positioning it as a crucial instrument for boosting investments in advanced materials within the EU. The European Investment Bank already approved in 2023 an Invest EU operation for a fund that will invest in early-stage hardware companies with focus on innovation in advanced materials. Our next opinion will focus on InvestEU so stay tuned for more detailed information about this instrument.
Pillar 4: Fostering the production and use of advanced materials
The Commission recognizes the pivotal role of public procurement in promoting the production and utilization of advanced materials. By establishing a stable public demand and opening markets, public procurement becomes instrumental in encouraging the adoption of these innovative materials. The 2023 Energy Efficiency Directive mandates that public procurers must prioritise products, services, buildings, and works that demonstrate high energy efficiency performance. Further, the EU Public Procurement Directives provide the flexibility to award contracts based not solely on the lowest price but also on other essential criteria related to the contract’s subject matter, such as the enhanced performance and functionalities offered by advanced materials.
In an effort to further stimulate this market, the European Commission plans to mobilize the “Big Buyers” community. This initiative seeks to enhance collaboration among public buyers with substantial purchasing power and promote the strategic use of public procurement for innovative and sustainable solutions.
Additionally, the Commission is set to launch the Advanced Materials Academy in collaboration with the European Institute of Innovation and Technology. This academy aims to accelerate the development of curricula and credentials for skills in the sector. Academia, companies and research organisations will partner to ensure that the courses on advanced materials are of the highest quality.
By 2025, the Commission will launch studies to perform an in-depth analysis of production and use of advanced materials and the patent landscape.
Pillar 5: Overall governance framework
The Commission will set up a Technology Council for advanced materials to advise on the implementation of this EU strategy for advanced materials. This Council will be composed of Member States (ministries in charge of research and sectorial/industrial policy), research and industrial stakeholders and the European Commission.
What can companies do?
To implement the all the actions mentioned above, the Commission will rely on input from the industry and particularly SMEs, as they are a key target of some of these activities. Lykke Advice can help your company get in touch with the relevant people in the Commission to ensure that your voice is heard by EU policymakers.
Lykke Advice can also assist your business in navigating the application process for funding instruments that include advanced materials in their scope, which can often be complex and time-consuming.
Finally, the EU is at a turning point as the European elections in June will change the composition of the Parliament but also of high-ranking officials of the Commission. It is essential that the implementation of this strategy for advanced materials remains a priority in the next mandate. Lykke Advice can help your company ensure it is the case. Don’t hesitate to contact us to know more about our services!
by Farweb