EU industrial policy in the making. From ad hoc exercises to key instrument: how to make IPCEIs fit for the long run

This policy paper analyses Important Projects of Common European Interest (IPCEIs) and their growing role in the making of a more active EU industrial policy. It starts out by discussing three waves of IPCEIs which are linked to particular phases in the development of this instrument. From 2018 to 2021 the first wave triggered an experimentation and learning phase which was followed by a second wave, in which IPCEIs could consolidate due to the availability of European funding and some improvements in their governance. With the continued popularity and an emerging third wave of IPCEIs, we need to reflect on the question whether they are fit for the long run. This policy paper sets out to address this question based on an analysis of IPCEI development and implementation processes, interviews with stakeholders, and the available literature. It makes recommendations on how to best transform IPCEIs from repeated and strongly national ad hoc exercises to a more permanent and effective tool of EU industrial policy. This policy paper suggests, first, that the EU and its Member States need to agree on more predictable IPCEI funding. In the best-case scenario, new European funding would substitute for the European recovery plan on a more permanent basis, allowing EU co-financing for future IPCEIs. In addition, more budgetary leeway should be given to Member States willing to invest in common industrial policy priorities. Further improvements for the predictability of IPCEI funding could also be achieved by modifications of national budgeting. Second, there is still significant room for improvement for the current IPCEI governance arrangements. At the national level, there should be further harmonisation and simplification of bureaucratic procedures. The creation of a European exchange forum for Member States to discuss best practice examples could be useful in this regard. In addition, an EU level support structure for IPCEI applicants and participants could help ensure that enterprises, especially from Member States with lower technical and administrative capacities, can have a more equal access to IPCEIs. Finally, the Commission needs to increase its resources to accelerate the lengthy notification processes of IPCEIs.