STEP: Provisional agreement to boost investments in critical technologies

Negotiators from Parliament and Council on Wednesday morning reached a provisional political agreement on establishing the “Strategic Technologies for Europe Platform” (STEP).

The platform, which the Commission presented as part of the midterm revision of the Multiannual Financial Framework (MFF) 2021-2027, aims to consolidate and enhance Europe’s standing in crucial technological fields. These fields include digital technologies, clean and resource-sufficient technologies, such as net-zero technologies, and biotechnologies. By streamlining various EU programmes and funds, awarding a ‘Sovereignty Seal‘ to relevant projects, and showcasing them in a ‘Sovereignty Portal, STEP is set to channel significant investments into these projects, drive innovation, and address critical labour and skills shortages.

A step towards a European Sovereignty Fund

As a result of the MFF revision, STEP can rely on EUR 1.5 billion in additional funding for the European Defence Fund. This is well below the EUR 10 billion in additional funding which the Commission had proposed and which Parliament had asked to reinforce by EUR 3 billion.

Parliament has successfully pushed for a two-tier evaluation, with an interim evaluation due at the end 2025, to inform decision-making on the post-2027 MFF, and a final evaluation due in 2031, when all relevant programmes have been closed. The interim evaluation will assess the impact of STEP on reducing the Union’s strategic dependencies and should be accompanied by a legislative proposal to revise the Regulation or by legislative proposals for other initiatives that presume similar objectives.

Other improvements MEPs managed to obtain include:

• Coherence between STEP and the Union’s industrial policy, notably the forthcoming Net-Zero Industry Act and Critical Raw Materials Act;
• A clearly defined role for the Commission in implementing STEP;
• Geographical balance and compliance with labour law to be considered in calls for STEP projects;
• The removal of the Sovereignty Seal if a company relocates the project outside the Union
• Cohesion projects fulfilling the STEP objectives should be reported to the Commission and displayed in the Sovereignty Portal to facilitate access to funding;
• A funding cap of 20% for STEP projects under the European Fund for Regional Development (ERDF) to safeguard Cohesion policy

On Tuesday, Parliament agreed with the Belgian Council presidency on the two other parts of the MFF revision package: the Ukraine Facility and the MFF regulation amendment.

Quotes

Cristian-Silviu Busoi, MEP (EPP, Romania), Chair of the Committee on Committee on Industry, Research and Energy, said:

“STEP was negotiated under intense time pressure and, despite the complexity of the file, we have prevailed thanks to our teams! It sends a strong signal, following the conclusion of negotiations for the Net-Zero Industry Act and the Multiannual Financial Framework today, to now have STEP in place. We demonstrate to our industries and financial markets that they receive full political support and a legislative framework to invest and become more competitive, thereby transforming the EU. STEP aims to reinforce, leverage, and steer all EU funds, both existing and new, towards investments in deep and digital, clean and bio-technologies within the EU, and in individuals capable of integrating these technologies into the economy.”

José Manuel Fernandes (EPP, PT), co-rapporteur for the Committee on Budgets, said:

“The European Union needs to reinforce its competitiveness and strategic autonomy. We need to invest in our innovative technologies using existing programmes, financial instruments and funds. It is unfortunate that the Council cut all the funding proposed by the Commission and the Parliament. That is why we are promoting synergies, simplification and the reduction of bureaucracy. We managed to improve the Sovereignty Seal to give visibility to quality projects and facilitate their access to financing opportunities. We have also secured a 100% co-financing rate for cohesion policy funds without harming cohesion policy’s objectives: we have established a maximum cap of 20% from the ERDF to be used for STEP priorities. It is important to highlight that this achievements give more responsibility to the Member States’ national authorities who are responsible to select their quality projects with added value to the EU’s strategic autonomy.”

Christian Ehler (EPP, DE), co-rapporteur for the Industry, Research and Energy Committee, said:

“With STEP and the Net-Zero Industry Act concluded on the same day, we have created a comprehensive framework of legislation and financing opportunities for the future of European industry. For the Parliament, it was of utmost priority to enable European funds and cohesion funds to provide sufficient and targeted funding for industry to secure sufficient investments in strategic technologies within Europe. At the same time, we regret the substantial cuts by the Council, in particular on Horizon Europe, where Member States do not live up to their promises on sufficiently funding for innovation and investments.“

Next steps

The provisional political agreement still has to be formally approved by the Council, as well as by the Committees on Budgets and on Industry, Research and Energy, and the Parliament’s plenary during the 26-29 February session.

Background

On 20 June 2023, the Commission presented the mid-term revision of the EU’s Multiannual Financial Framework 2021-2027. The revision included the proposal for a regulation establishing a Strategic Technologies for Europe Platform (‘STEP’) to support European leadership on critical technologies, as well as the Ukraine Facility and key changes to the regulation on the multiannual financial framework (MFF).