As the European Union prepares the next phase of Horizon Europe 2028–2034, the debate has evolved far beyond research policy. It now sits at the center of Europe’s industrial future. Sluggish productivity growth, capital outflows to the United States, China’s aggressive industrial policy, and widening gaps in deep-tech scale-up capacity have transformed EU innovation funding into a defining competitiveness challenge.
Against this backdrop, Orgalim — representing Europe’s engineering, electrical, mechanical, and ICT industries — has positioned Horizon Europe not merely as a research framework, but as the EU’s primary industrial innovation engine. For Europe to maintain technological relevance, the programme must directly strengthen its industrial base, not just its academic excellence.
Europe’s €2.7 Trillion Industrial Backbone Demands Strategic Reform
Orgalim represents industries generating approximately €2.7 trillion in annual turnover and supporting more than 11.5 million jobs across the EU. These sectors underpin advanced manufacturing, automation, industrial semiconductors, digital systems, renewable energy technologies, and processing of strategic raw materials, including lithium critical to Europe’s battery supply chains.
Rather than focusing exclusively on early-stage science, Orgalim argues that success must be measured by Europe’s ability to convert research into scaled industrial production, global exports, and long-term employment within Europe.
The European Innovation Paradox: Strong Research, Weak Industrialization
The EU consistently produces world-class research and robust patent pipelines across sectors such as hydrogen systems, industrial AI, robotics, advanced batteries, and next-generation manufacturing technologies. Europe also plays a strategic role in supply chains tied to lithium processing and other critical raw materials.
Yet large-scale commercialization frequently happens elsewhere.
From semiconductor fabs to battery gigafactories and clean-tech equipment manufacturing, Europe often leads in discovery but lags in industrial deployment. This persistent innovation gap weakens Europe’s global standing and deepens technological dependency.
For Orgalim, Horizon Europe 2028–2034 represents a structural opportunity to close this divide — not through minor adjustments, but through systemic reform.
Budget Scale Matters — But Structure Matters More
The European Commission has outlined an indicative budget of nearly €175 billion for the next Horizon Europe cycle. Orgalim welcomes the ambition and the commitment to simplification and faster time-to-grant procedures.
However, the association stresses that funding volume alone will not fix Europe’s scale-up deficit. Without a decisive shift toward applied research, higher Technology Readiness Levels (TRLs), and stronger industrial governance, additional resources may simply reproduce past inefficiencies.
Europe does not lack ideas. It lacks industrialization speed and capital-intensive deployment mechanisms capable of competing globally.
Governance Reform: Embedding Industry at the Core
A central pillar of Orgalim’s position concerns governance reform. Historically, Horizon Europe priorities have been shaped by political missions and administrative processes, with insufficient direct input from industrial value chains responsible for commercialization.
This structural disconnect weakens Europe’s innovation throughput.
Orgalim proposes the creation of an industry-anchored Technology Council to ensure that programme design reflects real-world constraints — including supply-chain dynamics, regulatory frameworks, global competition, and capital allocation pressures.
In sectors tied to strategic autonomy, raw materials, and advanced industrial systems, early alignment between research and deployment is critical.
Bridging the “Valley of Death” in Industrial Innovation
One of Europe’s most persistent weaknesses is the “valley of death” between research breakthroughs and market deployment. While Horizon Europe has introduced innovation instruments, Orgalim argues that mid-to-high TRL phases remain under-supported.
Large-scale demonstrators, pilot lines, and first-of-a-kind industrial installations are capital-intensive and high-risk. These are precisely the stages where technologies linked to lithium value chains, clean manufacturing, and advanced digital infrastructure must prove viability.
To address this, Orgalim proposes an Industrial Innovation Booster that spans multiple pillars of the programme. The goal is continuity — enabling technologies to move seamlessly from applied research to full industrial validation without fragmentation.
Competitive Risk-Sharing Is Essential
Funding structure is another key battleground. Orgalim explicitly challenges standardized 70% funding caps for companies, particularly in capital-heavy industrial research.
Industrial R&D decisions are global decisions. European firms compare EU co-funding conditions with incentive structures in the United States and Asia. Where public risk-sharing is stronger abroad, scale-up investments migrate.
Without competitive funding mechanisms, Europe risks financing early-stage breakthroughs only to see industrial value creation occur outside the EU.
Public-Private Partnerships as Strategic Bridges
Orgalim views public-private partnerships (PPPs) as vital transmission belts between EU strategy and industrial execution. Long-term industrial transformation — particularly in advanced manufacturing, clean tech, and strategic raw materials processing — requires stable, collaborative frameworks.
However, rigid co-funding requirements that mandate cash contributions may distort participation and undervalue in-kind industrial investments such as engineering expertise, production facilities, and integration capabilities.
Europe’s innovation deficit is not caused by insufficient industrial engagement — it is driven by frameworks misaligned with how industry actually innovates.
A Stronger Focus on Applied Research
Orgalim’s proposal to allocate 60% of the Horizon Europe budget to applied research under Pillar 2 is a strategic statement about Europe’s global position.
While basic research excellence remains indispensable, Europe’s comparative weakness lies in industrial scale-up. In a world shaped by supply-chain resilience, tech sovereignty, and control over critical raw materials, applied research determines economic power.
Investing in Key Enabling Technologies
Rather than fragmenting funding across politically driven missions, Orgalim calls for sustained investment in key enabling technologies:
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Advanced manufacturing systems
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Industrial semiconductors
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Automation and robotics
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Photonics
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Advanced materials
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Digital infrastructure
These cross-cutting technologies underpin multiple industries simultaneously and generate compound returns across the European economy.
Strategic focus on enabling technologies strengthens Europe’s competitiveness across automotive, energy, aerospace, clean tech, and lithium-based battery ecosystems.
While supporting EU strategic autonomy, Orgalim warns against isolationism. European engineering industries operate within deeply integrated global innovation networks.
Excluding trusted partners such as the UK, Switzerland, or Norway could weaken Europe’s industrial ecosystems. Competitiveness in the modern global economy depends on selective openness combined with targeted industrial policy — not autarky.
Horizon Europe as an Instrument of Industrial Survival
Ultimately, Orgalim frames Horizon Europe 2028–2034 as more than a research programme. It is an instrument of industrial survival.
The central challenge is translation: converting EU-funded research into production capacity, export revenues, and high-skilled employment within Europe. Without effective translation, increased budgets risk subsidizing innovation that matures in foreign industrial systems.
Orgalim’s call for a €200 billion nominal budget signals urgency in a global landscape where competing powers deploy industrial policy measured in trillions.
A Defining Moment for Europe
As negotiations intensify, policymakers face a strategic choice. Should Horizon Europe primarily generate knowledge, or should it serve as a decisive lever for industrial power in a fragmented and highly competitive world?
Orgalim’s position is clear: without deeper industry integration, stronger emphasis on applied industrial research, competitive risk-sharing mechanisms, and governance aligned with market realities, Europe risks becoming a continent of ideas without industries.
In the global race for tech leadership, control over raw materials, and dominance in lithium-driven energy transitions, Horizon Europe 2028 may determine whether Europe remains an industrial force — or drifts into long-term dependency.
