The Evolution and Impact of Important Projects of Common European Interest (IPCEI) on European Integration and Competitiveness

Abstract

The European Union (EU) has long recognized the necessity of fostering large-scale, cross-border projects to achieve its strategic objectives. The Important Projects of Common European Interest (IPCEI) framework, established under Article 107(3)(b) of the Treaty on the Functioning of the European Union (TFEU), provides a legal basis for such initiatives by allowing Member States to support projects that are deemed crucial for the EU’s economic growth, technological advancement, and societal well-being. This research report delves into the historical development of IPCEIs, examines the criteria for project selection, explores their application across various strategic sectors, and analyzes their role in enhancing European industrial resilience and strategic autonomy. Furthermore, the report assesses the overall economic and political impact of IPCEIs on EU integration and competitiveness, offering a comprehensive understanding of their significance within the European context.

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1. Introduction

The European Union’s commitment to fostering economic growth, technological innovation, and societal well-being has led to the establishment of various frameworks aimed at supporting large-scale, cross-border projects. Among these, the Important Projects of Common European Interest (IPCEI) stand out as a pivotal mechanism that enables Member States to collaborate on projects of significant strategic importance. By providing a legal basis for such collaborations, IPCEIs facilitate the pooling of resources and expertise, thereby addressing market failures and societal challenges that individual Member States might struggle to tackle independently.

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2. Historical Development of IPCEIs

The concept of IPCEIs is rooted in Article 107(3)(b) of the TFEU, which allows for state aid that promotes the execution of important projects of common European interest. This provision was designed to enable Member States to support projects that contribute to the EU’s strategic objectives, particularly in areas where market failures or societal challenges are prevalent. The formalization of IPCEIs began in 2018 with the approval of the first IPCEI on microelectronics, involving Germany, France, Italy, and the United Kingdom. This initiative marked a significant step towards fostering cross-border collaboration in strategic sectors. Subsequently, the EU has approved multiple IPCEIs across various sectors, including batteries, hydrogen, and cloud computing, reflecting a growing recognition of the need for coordinated action to achieve the EU’s strategic goals. (competition-policy.ec.europa.eu)

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3. Criteria for Project Selection

The selection of projects under the IPCEI framework is guided by specific criteria to ensure that they align with the EU’s strategic objectives and deliver tangible benefits across Member States. These criteria include:

• Significant Contribution to EU Objectives: Projects must contribute concretely and clearly to one or more Union objectives, such as sustainable growth, competitiveness, or addressing societal challenges. (change-climate.com)

• Cross-Border Impact: Projects should involve multiple Member States, with benefits extending beyond the financing countries to a wide part of the Union. (change-climate.com)

• Positive Spillover Effects: Projects must have systemic effects on multiple levels of the value chain or other sectors, leading to broader economic and societal benefits. (change-climate.com)

• Co-Financing by Beneficiaries: Projects require co-financing by the beneficiaries to demonstrate commitment and shared responsibility. (change-climate.com)

• Environmental Considerations: Projects must respect the principle of phasing out environmentally harmful subsidies, aligning with the EU’s sustainability goals. (change-climate.com)

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4. Application Across Strategic Sectors

IPCEIs have been applied across various strategic sectors, reflecting the EU’s commitment to enhancing its industrial capabilities and technological sovereignty. Notable applications include:

4.1 Microelectronics

The first IPCEI, approved in 2018, focused on microelectronics, aiming to strengthen Europe’s position in this critical sector. The initiative involved several Member States and led to significant advancements in semiconductor technologies, contributing to the EU’s digital transformation. (competition-policy.ec.europa.eu)

4.2 Batteries

Recognizing the strategic importance of battery technologies for electric mobility and energy storage, the EU approved two IPCEIs on batteries. These initiatives aimed to develop a European battery value chain, reducing dependency on non-EU suppliers and enhancing the EU’s competitiveness in the global market. (europeaneconomics.com)

4.3 Hydrogen

The EU has initiated multiple IPCEIs in the hydrogen sector, focusing on developing a sustainable hydrogen economy. These projects aim to advance hydrogen technologies, infrastructure, and applications, contributing to the EU’s green transition and energy security. (europeaneconomics.com)

4.4 Cloud Computing

The Next Generation Cloud Infrastructure and Services IPCEI, approved in 2023, focuses on developing advanced cloud computing technologies. This initiative aims to enhance Europe’s digital infrastructure, supporting the EU’s digital strategy and fostering innovation across various sectors. (ec.europa.eu)

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5. Role in Enhancing European Industrial Resilience and Strategic Autonomy

IPCEIs play a crucial role in bolstering European industrial resilience and strategic autonomy by:

• Reducing Strategic Dependencies: By developing critical technologies within Europe, IPCEIs decrease reliance on non-EU suppliers, enhancing the EU’s autonomy in strategic sectors. (europeaneconomics.com)

• Strengthening Internal Value Chains: IPCEIs promote the integration of European value chains, fostering collaboration among Member States and enhancing the EU’s industrial capabilities. (europeaneconomics.com)

• Fostering Innovation and Technological Leadership: By supporting breakthrough innovations, IPCEIs position Europe at the forefront of technological advancements, contributing to global competitiveness. (europeaneconomics.com)

Many thanks to our sponsor Esdebe who helped us prepare this research report.

6. Economic and Political Impact on EU Integration and Competitiveness

The implementation of IPCEIs has had significant economic and political impacts on EU integration and competitiveness:

• Economic Growth and Job Creation: IPCEIs have led to substantial investments, driving economic growth and creating high-quality jobs across Member States. (europeaneconomics.com)

• Enhanced Competitiveness: By developing critical technologies and infrastructure, IPCEIs have strengthened the EU’s position in global markets, enhancing its competitiveness. (europeaneconomics.com)

• Political Cohesion: The collaborative nature of IPCEIs fosters political cohesion among Member States, promoting unity and shared objectives within the EU. (europeaneconomics.com)

Many thanks to our sponsor Esdebe who helped us prepare this research report.

7. Conclusion

The IPCEI framework represents a strategic tool for the European Union to address market failures, promote innovation, and achieve its long-term objectives. By facilitating large-scale, cross-border collaborations, IPCEIs enhance European industrial resilience, strategic autonomy, and competitiveness. Their impact extends beyond economic growth, contributing to political cohesion and the overall integration of the EU. As the EU continues to navigate global challenges, the role of IPCEIs in shaping its industrial and technological landscape will remain pivotal.

Many thanks to our sponsor Esdebe who helped us prepare this research report.

References

• European Commission. (2021). Important Projects of Common European Interest (IPCEI). Retrieved from (competition-policy.ec.europa.eu)

• European Economics. (2024). IPCEI: The EU’s Strategic Compass for Industrial Competitiveness and Resilience. Retrieved from (europeaneconomics.com)

• European Parliament. (2022). Important projects of common European interest: State of play. Retrieved from (europarl.europa.eu)

• European Commission. (2023). New Important Projects of Common European Interest taking shape. Retrieved from (ec.europa.eu)

• European Commission. (2024). Commission sets up Joint European Forum for Important Projects of Common European Interest (IPCEIs). Retrieved from (ec.europa.eu)

• Change Climate. (2024). IPCEIs IMPORTANT PROJECTS OF COMMON EUROPEAN INTEREST. Retrieved from (change-climate.com)