I3U Commitment 15 Screening of the regulatory framework Vienna, I3U Project Meeting & Technical Workshop, 14-15 September 2015 Johannes Pöschl, Sandra Leitner

Screening of the regulatory framework (commitment 15) Focus areas: Eco-innovation (C18) and European Innovation Partnerships (EIP – C29) Rationale Regulation to deal with market failures Regulatory framework is main driver of Eco-innovation and innovation in many EIPs where innovations are not self-enforcing (Rennings, 1998) Regulatory failures - outdated regulations may lead to socially suboptimal results and hinder further innovation (Pelkmans and Renda, 2014) Implementation and enforcement of rules also play a crucial role Inconsistencies of rules and practices hamper the development of high growth innovative firms (EC, 2014) Regulatory failure can also be if the policy leads to deviation from a long-term goal

What can be done and what has happened so far? Solution Review rules and practices for inconsistencies and constant screening and careful adaptation of regulatory rules to set right incentives Single innovation market & Top down action plans vs. National Innovation Systems Rarely isolated regulations but a net of laws, by-laws, implementation rules Regulatory areas related to the EIP Water: water, environmental, innovation, SME, regional development, industrial, agricultural, energy, IPR, education, migration, … What has happened so far within Horizon 2020? Six-Step approach analysis conducted for raw materials and water (Peter et al., 2014) Workshops on the regulatory screening in the areas raw materials and water EU Secretariat-General: regulation has currently a high priority (Peter) Differences in regulatory frameworks imposed barrier in innovations and reduces market size of cosmetic product, which led to significant economic loss. (Shweta and Swarnlata, 2008) https://ideas.repec.org/a/ids/ijtrgm/v1y2008i4p419-431.html

The relationship between regulation and innovation 1. Define sufficiently narrow area 2. Scope area (involve stakeholders) 3. Identify barriers and drivers 4. Screen regulatory landscape 5. Analyze links of regulation and innovation 6. Recommendations Body of EU law 2. Scope area (involve stakeholders) Source: Berr (2008), Pelkmans and Renda (2014)

Instruments and types of impact Instruments with respect to regulation Market based instruments changing incentives (tax, fee, subsidies) Command and control (bans, standards) Impact Stimulate innovation in the desired field (e.g. Eco-Innovation) but additional costs for other firms, which overall can be offset or not (Porter-Hypotheses) Fast transition to newer technologies but without adaptation lock-in effects likely Uncertainty depending on transparency and frequency of change of regulatory requirements Environmental: resource efficiency, waste reduction, recycling Instrumente zur Förderung von Umweltinnovation S.35

Screening of the regulatory framework – Commitment map

Overlaps with commitment 15 Strong Overlaps Eco-Innovation (18) European Innovation Partnerships (29) Standardization (16) Public Procurement (17) Other Overlaps With almost all other commitments: SMEs (7), EU Patent (14, 22), Access to Finance (11, 12), International Talent (30), …