From Fragmentation to Strategic Autonomy: A Deep-Dive into the Evolution, Impact, and Future of EU Industrial Partnerships

Executive Summary

The European Union's industrial partnerships represent a cornerstone of its research and innovation (R&I) policy, having evolved over two decades from informal advisory forums into sophisticated, legally-structured instruments central to the EU's strategic objectives. This report provides an exhaustive analysis of this evolution, tracing the history of these public-private partnerships (PPPs) from their conceptual origins in the early 2000s, through the successive Framework Programmes (FP7, Horizon 2020), to their current, highly structured form under Horizon Europe.

The journey began with the creation of European Technology Platforms (ETPs) in 2003, an initial policy experiment designed to combat the fragmentation of Europe's research landscape and stimulate private R&D investment to meet the ambitious goals of the Lisbon Strategy. This model matured under FP7 with the establishment of large-scale, institutionalised Joint Technology Initiatives (JTIs) for strategic sectors, a planned evolution that was complemented by the reactive, crisis-driven creation of more agile contractual PPPs (cPPPs) in response to the 2008 financial crisis. Horizon 2020 formalized this dual-track system, significantly increasing the budget dedicated to partnerships and cementing their role as a primary tool for implementing industrial and societal priorities.

Under the current Horizon Europe programme (2021-2027), the partnership landscape has been rationalized into three distinct types—Co-programmed, Co-funded, and Institutionalised—each with a specific governance structure and purpose. These partnerships are no longer merely sectoral R&D support mechanisms; they have become the principal vehicles for driving the EU's overarching political agendas: the European Green Deal and the Digital Decade. Furthermore, in response to geopolitical shifts and crises like the COVID-19 pandemic, these instruments have been increasingly "securitized," with a new focus on achieving "Open Strategic Autonomy" in critical areas such as raw materials, semiconductors, and medicines.

A critical evaluation of their performance reveals a mixed legacy. Partnerships have been successful in leveraging private investment, fostering cross-border collaboration, and aligning strategic research agendas. However, they have not resolved the persistent innovation gap between Member States, with funding remaining heavily concentrated in high-performing R&I ecosystems. The administrative complexity of these partnerships, flagged in audits by the European Court of Auditors, remains a significant barrier, particularly for SMEs. While SME participation is a stated goal, the policy has shifted from broad support to backing a smaller number of high-potential firms, a change with significant implications for the wider innovation ecosystem.

Looking ahead, the future of these partnerships is being debated within the context of the next Framework Programme, FP10. Proposals to consolidate R&I funding within a broader "European Competitiveness Fund" signal a potential paradigm shift, where the logic of industrial competitiveness and strategic autonomy could become the dominant driver of EU R&I policy. This report concludes with strategic recommendations for policymakers, industry stakeholders, and the research community on how to navigate this evolving landscape, optimize the effectiveness of the partnership model, and balance the competing goals of scientific excellence, industrial competitiveness, and strategic resilience.

Part I: The Genesis and Historical Trajectory of EU Industrial Partnerships

The emergence and evolution of industrial partnerships within the European Union's research and innovation policy framework is not an isolated phenomenon. It is a direct and continuous response to a set of persistent strategic challenges that have defined the EU's economic and political ambitions for over two decades: the need to enhance global competitiveness, the imperative to integrate a fragmented research landscape, and the goal of leveraging private capital to achieve public policy objectives. This historical trajectory reveals a policy instrument that has morphed in form and function, adapting to shifting economic conditions and escalating political ambitions, from informal advisory bodies to legally-mandated, multi-billion-euro enterprises.

Section 1: The Rationale for Partnership – Combating Fragmentation and Boosting Competitiveness (2000-2006)

The turn of the millennium marked a pivotal moment for the European Union's self-perception and economic strategy. Faced with intensifying global competition, particularly from the United States, the EU embarked on an ambitious project to transform its economy. This political will created the fertile ground from which the first seeds of industrial partnership would grow.

The Policy Imperative

The policy environment of the early 2000s was defined by two landmark strategic commitments that would shape EU R&I policy for the next decade. First, the Lisbon Strategy, adopted by the European Council in March 2000, set the audacious goal for the EU to become "the most competitive and dynamic knowledge-based economy in the world" by 2010. This was not mere rhetoric; it established a clear political mandate for policies that would foster innovation and integrate Europe's economic and scientific assets. A core component of this strategy was the creation of a European Research Area (ERA), a concept aimed at breaking down barriers between national research systems to enable better coordination and interoperability.

Second, to give this ambition a quantifiable target, the European Council in March 2002 established the Barcelona Objective. This committed the Union to increasing its overall spending on R&D to approach 3% of its Gross Domestic Product (GDP) by 2010, with a crucial stipulation: two-thirds of this investment was to come from the private sector. This objective immediately framed the central problem for policymakers. The EU's public coffers alone would be insufficient; the challenge was to create conditions that would stimulate a massive increase in private R&D investment.

Analysis of the European R&I landscape at the time revealed two primary obstacles. The first was the fragmentation of research efforts. Collaboration was weak not only across national borders but also between the public sector (universities, research institutes) and the private sector (industry). The second was the relative stagnation of private investment in research, which lagged behind that of global competitors. The Barcelona Objective made it clear that simply increasing public funding through the Framework Programmes would not be enough to close this gap. A new mechanism was needed to bridge these divides and actively leverage private-sector resources. This line of thinking led directly to the conclusion that the EU needed to move beyond its traditional role as a passive funder of research projects and become an active facilitator of strategic public-private partnerships.

This context reveals that the initial push for partnerships was driven by a clear-eyed assessment of the EU's structural weaknesses. The 3% target was not just a number; it was an admission that public funds were a necessary but insufficient condition for competitiveness. The EU had to find a way to convince private industry to invest more, and to invest more collaboratively. The partnership model was conceived as the solution—a policy experiment in financial and strategic engineering designed to de-risk private R&D investment. By offering industry a formal role in shaping the strategic direction of EU-funded research, the Commission created a powerful incentive for co-investment. If a company's own research priorities were reflected in an EU funding call, the business case for participating and co-financing became substantially stronger.

The First Instrument: European Technology Platforms (ETPs)

In response to this policy imperative, the European Commission, with the backing of the European Council, launched its first formal foray into research partnerships: the European Technology Platforms (ETPs), established from 2003 onwards. The ETPs were designed as industry-led stakeholder fora, a novel concept at the time. Their purpose was to bring together all relevant actors within a specific technological area—including industry leaders, research organisations, public authorities, financial institutions, and user groups—to develop a common vision and a shared set of priorities.

The primary function of the ETPs was advisory. They were not funding bodies themselves but were tasked with a three-stage process: first, bringing stakeholders together to create a vision document for their technology; second, elaborating a detailed Strategic Research Agenda (SRA) outlining medium- to long-term research priorities; and third, outlining an implementation plan for the SRA that would mobilize both public and private investment. These SRAs were intended to serve as crucial input for the Commission in defining the work programmes and funding calls of the EU's Framework Programmes, beginning with the Sixth Framework Programme (FP6) and significantly influencing the design of the Seventh (FP7).

The Commission deliberately adopted a bottom-up, flexible, and industry-led approach, acting as a catalyst rather than a director. This strategy proved highly successful in mobilizing stakeholders. Within just two years, by 2005, 25 ETPs had been established across a remarkably diverse range of sectors, including nanomedicine, road transport, photovoltaics, manufacturing, forestry, and textiles.

Early assessments of the ETP model were positive, acknowledging their success in bringing together a broad range of stakeholders to develop joint visions and SRAs that genuinely influenced EU research priorities. However, these evaluations also identified emerging weaknesses. There were concerns about the low level of involvement from Small and Medium-sized Enterprises (SMEs) and end-users, a lack of coordination between different ETPs, and a risk that they could become "closed shops" dominated by large industrial incumbents, thereby reinforcing existing power structures rather than opening up the innovation ecosystem. Despite these challenges, the ETPs successfully established the principle of industry co-steering EU research policy, laying the foundational logic for all subsequent partnership models.

To provide context for this period of policy development, the EU's financial commitment to research was growing steadily, as demonstrated in the table below.

Table 1: Evolution of EU R&I Framework Programmes (FP1-FP9)
Programme ID	Time Period	Budget (billions of €)	Key Thematic/Strategic Focus
FP1	1984–1987	3.8	Energy (especially nuclear) and ICT dominate funding.
FP2	1987–1991	5.4	Shift in focus towards ICT (40% of budget); industry & materials share grows.
FP3	1990–1994	6.6	ICT remains largest field, but life sciences share increases; focus on natural sciences.
FP4	1994–1998	13.2	Major budget increase; introduction of horizontal programmes for international cooperation and mobility.
FP5	1998–2002	15.0	Consolidation of thematic and horizontal programmes; project sizes begin to grow significantly.
FP6	2002–2006	16.3	First mention of the "European Research Area"; introduction of large-scale "Integrated Projects" and "Networks of Excellence".
FP7	2007–2013	50.5	Major budget increase and 7-year duration; focus on technological research; formal introduction of Joint Technology Initiatives (JTIs).
FP8 (Horizon 2020)	2014–2020	77.0	Shift from pure research to innovation and market deployment; structured around "Excellent Science," "Industrial Leadership," and "Societal Challenges".
FP9 (Horizon Europe)	2021–2027	95.5	Focus on driving the "Twin Transitions" (Green and Digital) and achieving "Open Strategic Autonomy".

Section 2: Formalization and Expansion under FP7 (2007-2013)

The Seventh Framework Programme (FP7), with its dramatically increased budget of over €50 billion, marked a new phase of ambition for EU research policy. It was during this period that the partnership model underwent a critical evolution, branching into two distinct forms: one born of long-term strategic planning, and the other forged in the crucible of an unexpected global crisis. This bifurcation would define the landscape for years to come.

Escalating Ambition: The Birth of Joint Technology Initiatives (JTIs)

The very success of the ETPs in developing ambitious, large-scale Strategic Research Agendas created a new problem: the existing funding instruments within FP6 were insufficient to implement them. Pan-European challenges like developing a hydrogen economy, pioneering nanoelectronics, or building the next generation of cleaner aircraft required a level of long-term commitment, scale, and financial firepower that standard collaborative projects could not provide.

The EU's response was the creation of Joint Technology Initiatives (JTIs), formally introduced within FP7 in 2007. This represented a monumental leap from the advisory role of the ETPs. JTIs were established as full-fledged institutional public-private partnerships, set up as legal entities known as Joint Undertakings (JUs) under Article 187 of the Treaty on the Functioning of the European Union (TFEU). This gave them a distinct legal personality, their own dedicated staff, and, most importantly, a ring-fenced budget drawn from both the EU and their private partners. They were empowered to adopt their own research agendas and launch their own calls for proposals, making them operationally independent of the Commission's standard work programmes.

Five initial JTIs were launched, each targeting a strategic industrial sector and building on the work of an established ETP:

Innovative Medicines Initiative (IMI): Partnering with the pharmaceutical industry to accelerate the development of new medicines.
Clean Sky: Collaborating with the aeronautics industry to develop cleaner air transport technologies.
Fuel Cells and Hydrogen (FCH): Advancing the development of hydrogen and fuel cell technologies.
ARTEMIS: Focusing on embedded computing systems.
ENIAC: Targeting nanoelectronics technologies.

These JTIs were highly effective in their primary goals. Ex-post evaluations of FP7 concluded that the JTIs and other PPPs successfully boosted industry participation, attracted significant private co-investment (achieving strong leverage effects), and contributed demonstrably to the competitiveness of key European industries.

Disruption and Reactive Innovation: The 2008 Financial Crisis and Contractual PPPs (cPPPs)

While the JTIs represented a path of deliberate, strategic escalation, the second major development in FP7 was an unplanned, reactive innovation. The global financial crisis of 2008 triggered a severe economic downturn, creating an urgent need for swift policy action to stimulate the economy and support investment in research and development, which was seen as a key driver of future growth.

The JTI model, however, was ill-suited for rapid response. The process of establishing a Joint Undertaking was slow and cumbersome, requiring a legislative proposal from the Commission and approval from the Council and Parliament. A more agile instrument was needed.

In response, as part of the European Economic Recovery Plan of 2008, the Commission launched the first three contractual Public-Private Partnerships (cPPPs). These were established in three key areas with high potential for economic stimulus and job creation:

Factories of the Future (FoF)
Energy-efficient Buildings (EeB)
European Green Cars Initiative (EGCI)

Unlike the institutional JTIs, these cPPPs were based on a simpler contractual arrangement—a memorandum of understanding—signed between the European Commission and the relevant industry associations. This structure allowed for much faster implementation. The Commission committed to ring-fencing a certain amount of funding within the standard FP7 work programmes for topics defined in consultation with the industry partners, who in turn committed to leveraging this with their own investments.

This crisis-born innovation created a parallel, more flexible track for industrial partnerships. It proved to be a highly successful model, launching 366 projects with a combined public-private investment of €2.4 billion under FP7. The experience demonstrated that the EU's partnership landscape was not shaped by a single, linear progression but by a dual dynamic. The JTIs were the product of long-term strategic planning, creating heavy-duty, permanent structures for grand challenges. The cPPPs, in contrast, were the product of pragmatic improvisation in the face of an external shock, providing a lighter, faster tool for more immediate needs. This dual-track system—one institutional and heavy, the other contractual and light—would become the foundational blueprint for the more structured approach adopted in Horizon 2020.

Section 3: Simplification and Strategic Focus in Horizon 2020 (2014-2020)

The launch of Horizon 2020, the eighth Framework Programme, was accompanied by a clear mandate for simplification. The preceding years had seen a proliferation of different partnership types and initiatives, creating what some observers called a "new form of fragmentation". Horizon 2020 aimed to bring order to this landscape by formalizing and streamlining the dual-track system that had emerged during FP7, while simultaneously elevating partnerships to a central role in the programme's architecture.

Rationalizing the Landscape

Horizon 2020 consolidated the various partnership models into two main categories, providing clearer definitions and legal bases for each:

Institutional Public-Private Partnerships (iPPPs): These were the direct successors to the FP7 Joint Technology Initiatives. They continued to be run as Joint Undertakings (JUs), legal entities established under Article 187 of the TFEU, designed for large-scale, long-term, high-risk collaboration between the EU and industry. The governance and rules for these JUs were simplified to better align with the rest of Horizon 2020. Prominent examples included Clean Sky 2 (aviation), the Bio-Based Industries JU (BBI JU), and ECSEL (Electronic Components and Systems for European Leadership), which was a significant merger of the previous ARTEMIS and ENIAC JTIs with the EPoSS ETP.
Contractual Public-Private Partnerships (cPPPs): The agile, crisis-response tool from FP7 was mainstreamed and given a formal legal basis under Article 25 of the Horizon 2020 regulation. The original three cPPPs (Factories of the Future, Energy-efficient Buildings, and the renamed European Green Vehicles Initiative) were continued due to their success. They were joined by a new wave of cPPPs in other strategic areas, including 5G Infrastructure, the Big Data Value Association (BDVA), Photonics, Robotics (SPARC), and the Sustainable Process Industry (SPIRE).

This rationalization provided a clearer, two-tiered structure for industrial engagement, with the iPPPs serving as the heavyweight instruments for deep, long-term integration and the cPPPs offering a more flexible, industry-advised model for a wider range of sectors.

Alignment with H2020 Pillars and a Growing Share of the Pie

A key strategic shift in Horizon 2020 was the explicit alignment of partnerships with the programme's new three-pillar structure. The partnerships were primarily situated within Pillar 2, 'Industrial Leadership', and Pillar 3, 'Societal Challenges'. This positioning cemented their role not as peripheral activities, but as core implementation tools for achieving the central objectives of the Framework Programme: strengthening Europe's industrial base and tackling major societal issues.

This strategic centrality was matched by a dramatic increase in financial commitment. The share of the Framework Programme budget dedicated to PPPs was projected to more than double, rising from 9.1% in FP7 to an anticipated 21.5% for Horizon 2020. This represented a point of no return for the partnership model. By ring-fencing over a fifth of the entire Horizon 2020 budget for these industry-co-steered initiatives, the Commission was making a clear statement about its policy priorities. This move provided a powerful mechanism for directing research towards industrial needs and leveraging private investment. However, it also introduced a degree of rigidity into the system. This "golden handcuffs" dynamic meant that while the partnerships provided strategic direction and financial leverage (the "gold"), they also locked a significant portion of the budget into pre-defined technological paths and stakeholder groups, reducing the overall flexibility of the Framework Programme to respond to new, unforeseen challenges that might fall outside the scope of the established partnership roadmaps.

Performance and Evaluation

Mid-term evaluations of the Horizon 2020 partnerships, particularly the cPPPs, yielded positive results. A 2018 expert group report found that the cPPPs had substantially achieved their targets of increasing the role of industry in defining R&I strategies and promoting projects with higher Technology Readiness Levels (TRLs). They were shown to be more efficient than standard Horizon 2020 calls, performing better on key metrics like time-to-grant and success rates. Furthermore, they were successful in attracting higher-than-average SME participation.

However, the evaluation also highlighted areas for improvement. It called for more focused, challenging, and dynamically updated roadmaps to ensure that the partnerships remained at the cutting edge and did not become locked into outdated priorities. This critique directly reflects the tension inherent in the "golden handcuffs" model. The report also pointed to the need for better alignment between the roadmaps and the actual calls for proposals, and for a more robust and harmonized set of Key Performance Indicators (KPIs) to better monitor impact. These findings would directly inform the next iteration of the partnership model under Horizon Europe.

Part II: The Current Landscape – Partnerships in the Horizon Europe Era (2021-2027)

The launch of Horizon Europe, the EU's ninth and most ambitious Framework Programme with a budget of €95.5 billion, heralded another significant evolution in the design and purpose of industrial partnerships. Building on the lessons from Horizon 2020, the new programme introduced a more streamlined and impact-driven approach. Partnerships are no longer just tools for sectoral R&D; they have been elevated to become the primary implementation instruments for the EU's defining political priorities of the decade: the green and digital transitions and the pursuit of strategic autonomy. This marks a shift from supporting specific technologies to orchestrating systemic transformations across the entire European economy.

Section 4: A New, Rationalised Architecture

In an effort to address the "new fragmentation" that had emerged from the proliferation of different partnership types, Horizon Europe introduced a simplified and more coherent policy approach. The landscape was rationalized into three distinct partnership types, each with a clear purpose, governance structure, and implementation mode. This new architecture aims to be more strategic, transparent, and focused on delivering measurable impact.

The three pillars of the new partnership model are:

Co-programmed European Partnerships: These are the direct successors to the Horizon 2020 contractual PPPs (cPPPs). They are based on a non-binding Memorandum of Understanding (MoU) signed between the European Commission and private partners, typically industry associations. The key feature is that the EU's financial contribution is implemented through standard calls for proposals within the relevant Horizon Europe work programmes, with industry providing input on priorities. Private partners commit to their own investments and additional activities (e.g., market deployment, skills development) to complement the EU funding. Examples include the partnerships on Artificial Intelligence, Data and Robotics; Made in Europe; and Globally competitive Space Systems.
Co-funded European Partnerships: This model evolves from the previous ERA-NET and European Joint Programme (EJP) schemes. It directly tackles the fragmentation of national research funding by bringing together a consortium of EU Member States, research funders, and other public authorities. This consortium implements a joint programme of activities, most notably launching its own transnational calls for proposals. Horizon Europe provides co-funding for these activities, typically at a rate of 30% or 50%. This model ensures strong alignment between EU and national research priorities. Examples include Driving Urban Transitions (DUT), Water4All, and the European Partnership on Innovative SMEs.
Institutionalised European Partnerships: Representing the highest level of integration, these are long-term partnerships established on the basis of EU legislation—either Article 187 TFEU for partnerships with industry or Article 185 TFEU for those with Member States. They are the successors to the Horizon 2020 Joint Undertakings and are implemented by dedicated legal bodies with their own governance structures. This resource-intensive model is used only when it can be proven that the objectives cannot be achieved through other means, such as standard Horizon Europe calls or the other partnership types. Prominent examples include the Clean Hydrogen JU, Key Digital Technologies (KDT) JU, and the Innovative Health Initiative (IHI).

A crucial element underpinning this new architecture is the mandatory development of a Strategic Research and Innovation Agenda (SRIA) for every partnership. The SRIA is a long-term vision document, co-developed and agreed upon by all partners, which translates the partnership's high-level objectives into concrete roadmaps and measurable goals. It serves as the strategic foundation for all of the partnership's activities, including the annual work programmes and calls for proposals, ensuring strategic alignment from the outset.

A Parallel Tool: Industrial Alliances

Running parallel to these formal, R&I-focused partnerships, the Commission has increasingly utilized a more flexible instrument: Industrial Alliances. These are not funding mechanisms under Horizon Europe but are voluntary, strategic initiatives that bring together the entire value chain of a given sector—including public and private actors, financial institutions, civil society, and trade unions. Their primary purpose is to identify and overcome barriers to industrial scale-up, map value chains to identify strategic dependencies, and mobilize investment to build resilient European industrial ecosystems.

This approach allows the EU to pursue a sophisticated, two-speed industrial policy. The formal Horizon Europe Partnerships act as the "heavy machinery," designed for long-term, capital-intensive R&I to push the technological frontier over a decade. The Alliances, in contrast, serve as a "rapid deployment force." They are strategic fora that can be launched quickly to tackle immediate industrial challenges, coordinate actors, and catalyze investment outside the formal R&I framework. This was exemplified by the European Battery Alliance, launched in 2017 to rapidly address the EU's dependency on Asian battery manufacturing, which predated and complemented the formal Horizon Europe partnership on batteries. Other key examples include the European Raw Materials Alliance (ERMA) and the Industrial Alliance on Processors and Semiconductor Technologies, both launched in 2020 to address critical dependencies exposed by geopolitical events. This dual approach enables the EU to be both a long-term strategic R&I planner via its Partnerships and a nimble industrial crisis manager via its Alliances.

The table below provides a clear typology of how these partnership instruments have evolved across the Framework Programmes.

Table 2: Typology of EU Industrial Partnerships Across Framework Programmes
Key Characteristic	ETP (FP6/FP7)	JTI / iPPP (FP7/H2020)	cPPP (FP7/H2020)	Co-programmed (HE)	Co-funded (HE)	Institutionalised (HE)
Primary Goal	Aligning research priorities; defining vision	Implementing large-scale, high-risk R&I agendas	Rapidly implementing industry-relevant R&I	Joint programming of R&I with industry	Aligning EU & national R&I programmes	Deep, long-term integration for strategic goals
Legal Basis	Commission recognition; no dedicated legislation	Article 187 TFEU; Council Regulation	Contractual Arrangement with Commission	Memorandum of Understanding (MoU)	Horizon Europe Grant Agreement	Article 185/187 TFEU; Council Regulation
Key Partners	Industry, academia, regulators, civil society	EU (Commission), Industry Associations	EU (Commission), Industry Associations	EU (Commission), Private Partners (e.g., associations)	EU (Commission), National Funders, Public Authorities	EU, Member States and/or Industry
Main Output/Implementation	Strategic Research Agenda (SRA) to influence FP calls	Dedicated Joint Undertaking (JU) launching its own calls	Ring-fenced topics within FP work programmes	Calls within Horizon Europe work programmes	Joint calls launched by the partnership consortium	Dedicated JU launching its own calls
Example	MANUFUTURE, Waterborne ETP	Clean Sky, IMI, ECSEL	Factories of the Future, 5G-PPP, SPIRE	AI, Data & Robotics, Made in Europe	Driving Urban Transitions (DUT), Innovative SMEs	Clean Hydrogen, Key Digital Technologies (KDT)

Section 5: Driving the Twin Transitions – The Green Deal and Digital Decade

Under Horizon Europe, partnerships have been explicitly repurposed as the engine for the EU's two defining long-term strategies: the European Green Deal and the Digital Decade. This represents a profound evolution in their mission. They are no longer just supporting specific sectors or technologies; their mandate is now to orchestrate systemic, cross-cutting transformations essential for the EU's future sustainability and competitiveness.

Partnerships as the Engine of the Green Deal

The European Green Deal, with its legally binding target of achieving climate neutrality by 2050, is a project of unprecedented scale that is fundamentally reliant on breakthroughs in research and innovation. The Commission has designated Horizon Europe as a key enabler of this transition, with over 35% of its budget allocated to climate-related objectives, and partnerships are the primary channel for this investment.

A new wave of "green partnerships" was launched with the specific aim of driving the massive transformations required in environment, society, and the economy. Key examples include:

Clean Aviation Joint Undertaking (CAJU): As the successor to Clean Sky, this institutionalised partnership is central to decarbonizing one of the most challenging sectors. Its Strategic Research and Innovation Agenda (SRIA) is focused on developing and demonstrating disruptive technologies—such as hybrid-electric and hydrogen-powered aircraft—with the goal of reducing net greenhouse gas emissions by no less than 30% compared to 2020 technology, enabling an entry-into-service of these new aircraft by 2035.
Circular Bio-based Europe Joint Undertaking (CBE JU): This €2 billion institutionalised partnership between the EU and the Bio-based Industries Consortium (BIC) is the successor to the BBI JU. Its mission is to advance competitive, circular bio-based industries in Europe. The CBE JU's SRIA sets out strategic priorities across the entire value chain, from ensuring sustainable feedstock and developing innovative biorefineries to creating novel bio-based products, all with a focus on circularity and environmental performance.
Clean Hydrogen Joint Undertaking: This partnership is a central pillar of the EU's Hydrogen Strategy. It aims to accelerate the development and deployment of a European value chain for clean hydrogen technologies, which are seen as critical for decarbonizing heavy industry, transport, and the energy sector.
Towards Zero-emission Road Transport (2ZERO): This co-programmed partnership aims to accelerate the transition to zero-emission road mobility, covering battery electric and fuel cell vehicles for a wide range of applications.

Securing the Digital Transition

In parallel, partnerships are at the heart of the EU's strategy for "Europe's Digital Decade," which aims to bolster digital sovereignty, strengthen industrial competitiveness, and ensure the digital transition is human-centric and aligned with European values. The focus is on developing leadership in key enabling technologies and critical digital infrastructure.

Key partnerships and alliances driving this transition include:

Key Digital Technologies (KDT) Joint Undertaking: As the successor to the ECSEL JU, the KDT JU is a cornerstone of the EU's digital strategy. Its overarching objective is to support the digital transformation and reinforce the EU's strategic autonomy in electronic components and systems. Its SRIA focuses on enabling European industries to design, manufacture, and use the most innovative technologies in microelectronics, underpinning everything from AI to the Internet of Things.
European Alliance for Industrial Data, Edge and Cloud: This alliance aims to strengthen the position of EU industry in the next generation of computing technologies. It focuses on meeting the needs of European businesses that process sensitive data, which is crucial for building a competitive European data economy.
Industrial Alliance on Processors and Semiconductor Technologies: Launched in direct response to the global chip shortage and the EU's dependency in this critical sector, this alliance brings together key actors from across the electronics value chain to boost Europe's competitiveness and capacity in semiconductor design and manufacturing.
Smart Networks and Services Joint Undertaking (SNS JU): This partnership is leading the charge on future communication technologies, including 6G, aiming to ensure European leadership in the development and standardization of smart networks.

This dual focus on the green and digital transitions demonstrates the elevated role of partnerships. They are no longer siloed instruments for incremental progress in one industry. Instead, they are designed as large-scale, cross-sectoral platforms for re-engineering entire economic systems—from how we produce energy and food to how we move and manufacture goods—in a way that is both sustainable and digitally sovereign.

Section 6: Responding to Geopolitical Shifts and Crises

The Horizon Europe era has been defined not only by long-term strategic planning but also by the need to respond to profound external shocks and a rapidly changing geopolitical landscape. The COVID-19 pandemic and growing international tensions have accelerated a "securitization" of EU R&I policy, with industrial partnerships increasingly framed as essential tools for building resilience and achieving strategic autonomy.

The COVID-19 Catalyst

The COVID-19 pandemic served as a brutal stress test for global supply chains, exposing Europe's critical dependencies, particularly in the health sector. The crisis demonstrated the paramount importance of a robust domestic R&I ecosystem and the power of public-private collaboration to deliver rapid solutions, from vaccines to diagnostics.

This experience directly shaped the design of the EU's flagship health partnership under Horizon Europe, the Innovative Health Initiative (IHI). With a total budget of €2.4 billion, the IHI is a deliberate departure from its predecessor, the pharma-focused IMI. Its founding principle is the cross-sectoral integration of technologies. It explicitly brings together the pharmaceutical, medical technology, biotechnology, and digital health industries to pioneer a more integrated approach to healthcare. The IHI's mission is to move the focus from "disease care to health care," covering the entire spectrum from prevention and diagnosis to personalized treatment and management. The pandemic provided the undeniable justification for this integrated model, proving that future health challenges could only be tackled by breaking down the silos between different industrial sectors.

The Era of "Open Strategic Autonomy"

In parallel with the pandemic, a more assertive geopolitical environment has propelled the concept of "Open Strategic Autonomy" to the forefront of EU policy. This concept does not advocate for protectionism or isolationism. Rather, it emphasizes the EU's ability to act autonomously in strategically important areas by "de-risking" dependencies, strengthening its own industrial capacities, and diversifying its partnerships, all while maintaining an open, rules-based economy.

Research and innovation are central to this strategy, and partnerships and alliances have become the EU's primary instruments for putting this concept into practice. This has led to the launch of a new generation of initiatives explicitly designed to address critical vulnerabilities:

European Raw Materials Alliance (ERMA): Established in 2020, ERMA's mission is to build resilient European value chains for critical and strategic raw materials, such as rare earths and magnets, which are essential for the green and digital transitions but are dominated by non-EU suppliers.
Critical Medicines Alliance: Launched in early 2024, this alliance aims to tackle the persistent problem of medicine shortages by identifying supply chain vulnerabilities and proposing solutions to strengthen the security of supply for critical medicines within the EU.
Alliance for Zero-Emission Aviation (AZEA): This alliance complements the Clean Aviation JU by bringing together a wider range of public and private stakeholders to prepare the entire aviation ecosystem for the entry-into-service of hydrogen and electric aircraft, addressing issues beyond pure R&D, such as airport infrastructure and fuel supply.

This shift towards strategic autonomy has also introduced a new "research security" dimension to EU R&I policy. Recognizing that international cooperation can carry risks of malign influence or misuse of technology, Horizon Europe includes safeguarding measures. Article 22.5 of the Horizon Europe regulation allows the EU, in a limited number of duly justified cases related to strategic assets, interests, autonomy, or security, to restrict participation in specific funding calls to entities established only in Member States or a select group of associated countries.

This securitization represents a significant change in the underlying logic of EU industrial partnerships. For two decades, the dominant rationale was primarily economic: fostering competitiveness, driving growth, and creating jobs. Now, a parallel logic of security and resilience has become equally, if not more, important. The success of a partnership is increasingly judged not only on its scientific or economic merit but also on its contribution to reducing the EU's strategic dependencies and enhancing its ability to act autonomously on the world stage. This has profound implications for the future direction of EU R&I funding and the nature of its international collaborations.

Part III: A Critical Evaluation – Winners, Losers, and Performance

While EU industrial partnerships are designed to achieve lofty strategic goals, a critical evaluation requires a grounded analysis of their real-world performance. This involves examining the distribution of funding to understand who the primary beneficiaries are, scrutinizing independent audits to assess their operational effectiveness, and weighing their documented successes against their persistent shortcomings. This evaluation reveals a complex picture of a powerful policy instrument that, while effective in many respects, also perpetuates certain structural imbalances and faces significant administrative challenges.

Section 7: The Distribution of Funding – An Unbalanced Picture

The allocation of funds across the EU's Framework Programmes has never been intended to follow a principle of juste retour (getting back what you put in); it is based on competitive, excellence-based selection. However, the resulting distribution patterns reveal significant and persistent imbalances that have major policy implications.

The Geographical Divide

The most prominent and politically sensitive imbalance is the geographical distribution of funding, which reflects the "innovation divide" between the EU's older and newer Member States.

Horizon 2020: Analysis of the programme's funding distribution shows a stark concentration. Over 95% of the total budget was allocated to research teams from the EU15 Member States (and associated countries like the UK), with research teams from the EU13 (the countries that joined in 2004 or later) receiving less than 5% of the total budget. The top three recipients—Germany, the UK, and France—dominated the allocations. This disparity is largely driven by the size, maturity, and performance of the national R&I systems in the EU15, as well as their stronger and more established connections to European research collaboration networks.
Horizon Europe: Despite the introduction of dedicated "Widening Participation and Spreading Excellence" measures designed to close this gap, early data from Horizon Europe suggests the fundamental imbalance persists. A 2024 report on SME participation shows that 68% of participating SMEs are from the 12 R&I high-performing (non-widening) Member States, while only 18% are from the widening countries. While the share of collaborative projects involving widening countries has risen to 58%, the concentration of funding and high-value participation remains a challenge.

This persistent funding gap points to a "Matthew Effect" in EU innovation policy: "to those who have, more will be given." The excellence-based funding model, by its very nature, tends to favor those actors and ecosystems that already possess strong research capacity, extensive networks, and a proven track record of winning grants. This creates a self-reinforcing cycle where high-performing countries and institutions are best positioned to secure funding, which in turn further strengthens their capacity, potentially widening the innovation gap with the rest of the Union. This dynamic presents a fundamental tension between the goal of funding world-class excellence and the political objective of fostering cohesion and balanced development across all Member States.

The Beneficiary Profile and the SME Conundrum

Beyond geography, funding is also concentrated among specific types of organizations. In Horizon 2020, Higher Education establishments (HES) and Private for-profit companies (PRC) were the two dominant categories of applicants, together accounting for nearly three-quarters of all applications. In Horizon Europe, large organizations continue to lead the majority of collaborative consortia.

The role and success of Small and Medium-sized Enterprises (SMEs) present a more complex and evolving story. SME participation has been a longstanding political priority, and Horizon 2020 successfully met its target of allocating over 20% of its budget from the Industrial Leadership and Societal Challenges pillars to SMEs.

However, the transition to Horizon Europe has brought about a significant strategic shift:

Funding Share vs. Participant Share: The overall share of Horizon Europe funding going to SMEs has increased, surpassing the symbolic 20% threshold to reach €6.6 billion in the first three years. This increase, however, is largely driven by the new EIC Fund, which provides direct equity investments (€1.26 billion) in addition to grants. The share of grant funding alone is only marginally above Horizon 2020 levels.
Fewer, but Better-Funded, SMEs: While the funding amount has increased, the share of SMEs as a percentage of total participants has actually decreased, from 41.1% in Horizon 2020 to 33.9% in Horizon Europe. The absolute number of participating SMEs has remained roughly constant.

This data reveals a clear policy shift. The EU is moving away from the broad-based support of the Horizon 2020 SME Instrument towards a more targeted strategy of providing larger amounts of capital (including equity) to a smaller, more select group of high-potential, deep-tech SMEs, primarily through the European Innovation Council (EIC). This is an explicit application of the "backing champions" logic, which, while potentially more efficient in creating high-growth companies, marks a departure from a more inclusive support model.

On a positive note, the success rate of SME applications has improved dramatically, rising from just 12% in Horizon 2020 to 19.9% in Horizon Europe, a change attributed to a significant increase in the quality of proposals submitted by SMEs.

The table below provides a snapshot of these key distributional shifts between the two Framework Programmes.

Table 3: Horizon 2020 vs. Horizon Europe Funding Distribution Snapshot
Metric	Horizon 2020 (Full Programme)	Horizon Europe (First 3 Years)	Key Trend
Geographical Distribution	EU15 received >95% of funding	Non-Widening countries account for 68% of SME participants	Persistent concentration of participation and funding in high-performing R&I Member States.
SME Participant Share	41.1% of total participants	33.9% of total participants	Decrease in the relative share of SMEs, indicating a more selective approach.
SME Funding Share	~17% of total budget (grants)	>20% of total budget (grants + equity)	Overall funding share increased, largely due to the introduction of EIC equity investments.
SME Success Rate	12.0%	19.9%	Significant improvement in success rates, linked to higher quality proposals from SMEs.

Section 8: Auditing the Partnerships – The European Court of Auditors' (ECA) Perspective

The European Court of Auditors (ECA) provides an essential, independent check on the financial management and performance of the EU's Joint Undertakings. While the ECA's annual reports consistently give the JUs' accounts a clean bill of health—meaning there is no evidence of widespread fraud or misuse of funds—they also consistently highlight a series of significant risks and recurring errors that point to systemic challenges in the partnership model.

The ECA's key findings often revolve around three areas:

Contribution Shortfalls: The public-private partnership model is predicated on the principle of leverage, where EU funding is matched by contributions from private partners. However, the ECA has found that this is not always fully realized. Its 2023 report noted that for the Horizon 2020 programme, private partners in some JUs, such as the Circular Bio-Based Europe (CBE) JU and the European High-Performance Computing (EuroHPC) JU, had failed to deliver their targeted in-kind contributions. This raises questions about the true leverage effect of the public investment and the strength of the private sector's commitment.
Implementation Delays and Unused Funds: The complexity and scale of the projects undertaken by JUs can lead to significant delays. The ECA has observed that some JUs have accumulated large amounts of unused EU funding due to these delays in project implementation. A particularly stark example is Fusion for Energy (F4E), the JU for the ITER nuclear fusion project, where the ECA has repeatedly warned of significant risks related to cost increases and milestone revisions.
Persistent Errors in Cost Declarations: The most frequent and systemic issue identified by the ECA is the high rate of errors in the costs declared by beneficiaries. These are not typically fraudulent but are errors in applying the complex eligibility rules. The most common errors are found in the calculation of personnel costs (e.g., using incorrect hourly or daily rates, including ineligible bonuses) and equipment costs. The ECA has also noted that these errors are disproportionately common among SMEs and newcomers to the Framework Programmes. In one audit sample, SMEs accounted for 11% of the participants but contributed 25% of the total errors, suggesting that the administrative burden of the programmes is a particularly high hurdle for smaller, less experienced organizations.

These recurring audit findings are more than just accounting issues. They reveal a fundamental friction between the strategic ambition of the partnership model and the administrative reality of its implementation. The very features that make partnerships strategically powerful—their large scale, complex consortia, and reliance on leveraged contributions—also make them administratively fragile and complex to manage. The persistent error rate, especially among the SMEs the programme aims to support, indicates that the system's complexity can act as a barrier to entry and successful participation, undermining its own objectives.

Section 9: Overall Assessment – Successes and Shortcomings

After two decades of evolution, the EU's industrial partnership model has a substantial track record. A balanced assessment reveals a policy instrument with documented successes in achieving many of its core objectives, but also one that continues to grapple with persistent shortcomings and unintended consequences.

Documented Successes

Leveraging Private Investment: A primary goal from the outset, partnerships have proven effective at mobilizing private capital. Across all Horizon Europe partnerships, every euro invested from the EU budget attracts an additional €1.63 from other sources, demonstrating a significant leverage effect.
Boosting Cross-Border and Cross-Sectoral Collaboration: Partnerships are highly effective at breaking down silos and fostering collaboration. They bring together diverse actors from different countries and sectors—industry, academia, public bodies, and civil society—who might not otherwise collaborate, creating durable networks and fostering interdisciplinary R&I.
Aligning Strategic Agendas: The process of developing shared Strategic Research Agendas (SRAs and SRIAs) has been successful in creating common visions and aligning research priorities at the EU, national, and even regional levels, helping to address the initial problem of research fragmentation.
Enhancing Industrial Competitiveness: In key sectors, partnerships have made tangible contributions to European industrial competitiveness. The ex-post evaluation of FP7, for example, credited JTIs with greatly contributing to the competitiveness of industries as diverse as pharmaceuticals, aeronautics, and fuel cells.

Persistent Shortcomings

The Unmet 3% Target: The original sin of EU R&I policy remains. Despite two decades of partnerships designed specifically to increase private and public investment, the EU as a whole has still not reached the Barcelona Objective of spending 3% of GDP on R&D. The current figure hovers around 2.2-2.3%.
A New Form of Fragmentation: The very success of the partnership model has led to a new problem. The proliferation of different types of PPPs (ETPs, JTIs, cPPPs, EIPs, KICs) by the end of the Horizon 2020 period had created a "new form of fragmentation," resulting in a complex, overlapping, and often confusing landscape for potential participants. This reveals a central paradox of strategic steering: each attempt to solve fragmentation by creating a new, targeted instrument has inadvertently added another layer of complexity to the overall system. While Horizon Europe's rationalization into three types was a direct response, the ongoing debate about a new "Competitiveness Fund" for FP10 suggests that policymakers still perceive the system as too fragmented.
High Administrative Burden: As the ECA audits consistently show, the complexity of the application and reporting procedures remains a significant barrier to participation, increasing the administrative cost for beneficiaries and leading to a high rate of non-fraudulent errors.
The "Innovation Valley of Death": While partnerships are effective at funding R&I activities, the EU system as a whole still struggles to consistently bridge the gap between research results and successful market deployment and commercialization. Getting innovations out of the lab and into the market remains a key challenge that future programmes aim to address more effectively.

In sum, the EU industrial partnership is a powerful but imperfect tool. It has succeeded in its core mechanics—leveraging money and fostering collaboration—but has been less successful in solving the deeper, structural challenges of the European R&I system, such as the investment deficit and the innovation divide.

Part IV: The Future of EU Industrial Partnerships

As the Horizon Europe programme matures, attention is rapidly turning towards the design of its successor, the 10th Framework Programme (FP10), set to launch in 2028. The discussions surrounding FP10 are taking place in a radically different context than previous programmes, shaped by intense geopolitical competition, the urgent demands of the twin transitions, and a growing consensus that the EU must bolster its economic security and competitiveness. This has ignited a high-stakes debate about the very structure of EU R&I funding, with profound implications for the future of industrial partnerships.

Section 10: Towards FP10 – A New Paradigm for Competitiveness?

The future architecture of EU R&I funding is currently the subject of intense and consequential debate within the European institutions. The central question is whether to continue with the established model of a standalone Framework Programme or to radically restructure funding to create a more integrated, competitiveness-focused instrument.

The High-Stakes Debate and the "European Competitiveness Fund"

A key proposal, reportedly being explored by the European Commission under President Ursula von der Leyen, is to consolidate several major EU funding programmes—including FP10, Digital Europe, Erasmus+, and others—into a single, overarching "European Competitiveness Fund".

The rationale for such a dramatic overhaul is to tackle what some see as the persistent weaknesses of the current system. A leaked Commission briefing note argued that the existing programmes are "fragmented and incomplete," plagued by overlaps, varied rules, and a lack of strategic steer that makes it difficult for industry to navigate and benefit from EU funding. A consolidated fund, the argument goes, would eliminate this fragmentation and create a "seamless flow from fundamental research to applied research to start-ups to scale-up and global manufacturing," providing coherent support across the entire innovation journey.

Conflicting Visions

This proposal has generated significant uncertainty and a strong reaction from the research and innovation community, creating two conflicting visions for the future:

The Pro-Consolidation Vision: This view, seemingly favored by parts of the Commission's leadership, prioritizes industrial competitiveness and strategic autonomy above all else. It argues that to compete with the US and China, the EU must concentrate its resources and streamline its instruments to better support industry, particularly in high-tech, dual-use, and close-to-market innovations.
The Pro-Standalone FP10 Vision: This view is championed by the European Parliament, university associations, and many research lobbies. They argue that FP10 must remain an independent, self-standing programme to protect its "outstanding brand" as the world's most renowned research programme. They fear that subsuming it into a broader competitiveness fund would lead to the neglect of fundamental, curiosity-driven research—the bedrock of future breakthroughs—and undermine the independence of excellence-based bodies like the European Research Council (ERC).

The Likely Outcome and Shifting Priorities

The intense political pushback from the research community appears to have influenced the debate. The emerging consensus, as articulated by President von der Leyen in May 2025, points towards a compromise: FP10 will likely remain a "self-standing programme," but it will be "tightly connected" to the new European Competitiveness Fund.

The precise nature of this "tight connection" remains the crucial, multi-billion-euro question that will define the negotiations over the next year. However, the direction of travel is clear. Regardless of the final architecture, the emphasis of EU R&I policy is shifting. There will be a greater focus on industrial collaboration, close-to-market innovations, and technologies that are critical for Europe's security, defence, and strategic autonomy.

This debate can be seen as the logical endpoint of the 25-year evolution traced in this report. The partnership model began as a tool to influence research (ETPs). It evolved into a mechanism to implement specific research agendas (JTIs/cPPPs). Under Horizon Europe, it became the driver of systemic industrial and societal transformation (Green Deal/Digital). The proposal for a Competitiveness Fund represents the final potential step in this trajectory: subsuming the entire R&I framework within an overarching industrial competitiveness and security strategy. The fierce debate this has provoked is a fundamental clash between the two founding logics of EU R&I policy: supporting excellent, bottom-up science versus steering top-down innovation to meet strategic goals. The final structure of FP10 will determine which of these two logics will be dominant for the next decade.

Section 11: Concluding Analysis and Strategic Recommendations

The evolution of EU industrial partnerships from niche advisory bodies to central pillars of industrial and geopolitical strategy is a testament to their adaptability as a policy instrument. They have successfully mobilized private capital, forged powerful collaborative networks, and provided a crucial mechanism for steering Europe's vast R&I ecosystem towards common goals. However, their journey has also been marked by persistent challenges, including administrative complexity, a widening innovation divide, and a recurring cycle of fragmentation and simplification. As the EU stands on the cusp of designing its next Framework Programme, stakeholders must draw on the lessons of the past to shape a more effective, inclusive, and impactful future for these partnerships.

For EU and National Policymakers:

Radically Simplify to Boost Inclusivity: The European Court of Auditors' consistent findings of high error rates, especially among SMEs and newcomers, are a clear signal that the administrative burden of participation is too high. Policymakers should use the design of FP10 as an opportunity to radically simplify rules and procedures. This should include expanding the use of lump-sum funding, which has been shown to reduce administrative costs for beneficiaries by 14-30%, and providing more targeted support and simplified templates for less experienced participants.
Address the Participation Gap Systemically: The persistent innovation divide between Member States will not be solved by "widening" measures alone. A more systemic approach is needed. This should involve creating stronger and more explicit synergies between partnership participation and the EU's Cohesion Funds. For example, national or regional cohesion funding could be used to build the capacity of research institutions and SMEs in widening countries to enable them to participate more successfully in competitive partnership calls, creating a virtuous cycle of capacity-building and integration.
Provide Clarity and Stability in FP10: The uncertainty surrounding the structure of FP10 and its relationship with a potential European Competitiveness Fund is counterproductive. It hinders long-term planning for all stakeholders, including international partners like the UK and Switzerland whose association is critical for the programme's success. The Commission must provide clarity on the governance, budget allocation, and operational links between the different funding instruments to avoid creating yet another layer of complexity and fragmentation that will need to be "simplified" in the future.

For Industry Stakeholders (Large Firms and SMEs):

Shape the Agenda Proactively: The development of the Strategic Research and Innovation Agenda (SRIA) is the most critical phase for influencing a partnership's direction. Industry actors, both large and small, must engage proactively and collectively in this process to ensure that the partnership's long-term priorities align with their own technological roadmaps and market needs.
Leverage Partnerships Beyond Funding: While grants are the most visible output, the strategic value of partnerships extends far beyond direct funding. They should be viewed as platforms for de-risking long-term, pre-competitive R&D, building strategic alliances across value chains, influencing the development of future standards and regulations, and gaining invaluable market and technological intelligence.
Navigate the Differentiated SME Landscape: SMEs should adopt a tailored approach. For those with disruptive, deep-tech innovations seeking to scale up rapidly, the European Innovation Council (EIC) is the primary destination. For the broader universe of innovative SMEs, the collaborative projects within Pillar II partnerships offer an invaluable pathway to access international networks, integrate into European value chains, and collaborate with leading universities and corporations.

For the Research Community (Universities and Research Organisations):

Advocate for a Balanced FP10: The research community must continue to make a strong case for a balanced FP10 that preserves the integrity of excellence-driven, fundamental research (Pillar 1, including the ERC) alongside the more directed, mission-oriented innovation of the partnerships (Pillar 2). Both are essential for a healthy and competitive R&I ecosystem.
Embrace Cross-Sectoral and Systemic Thinking: The most ambitious and impactful partnerships, such as the IHI and CBE JU, are those that are explicitly cross-sectoral and aim for systemic change. Researchers and institutions that can break down disciplinary silos and contribute to these large-scale, integrated challenges will be best positioned for success.
Engage with the "Research Security" Debate: The new emphasis on strategic autonomy and research security presents both challenges and opportunities. The research community must actively engage in the debate on how to strike the right balance between the tradition of open, international scientific collaboration and the legitimate need to safeguard the EU's strategic interests and assets, helping to shape responsible and proportionate policies in this sensitive area.