FinancialGuy Writes!

It is with great pleasure that today I have the first ever interview of a President of a European Institution by an EU policy blogger!

I asked Mercedes Bresso, President of the Committee of the Regions, about the role of regions in European innovation and the Innovation Union and the transition to a low carbon economy.

FinancialGuy: Many people believe that the Innovation Union strategy and the potential benefits it can bring – especially when combined with the progression towards a low carbon economy – can make Europe economically competitive long into the future. Do you agree?

President Bresso: I agree that a major boost for eco-innovation can be provided by stricter environmental targets and standards establishing challenging objectives and ensuring long-term predictability.

Low-carbon economies require drastically reducing carbon dioxide emissions into the environment, for example from energy use, electricity production and transportation.

Technology is an essential but not sufficient ingredient in this process. The importance of a multidisciplinary approach is being increasingly recognised in emergent scientific disciplines, like Industrial Ecology, integrating technical, environmental and social frames of reference for designing and managing socio-technological processes in a more sustainable manner. This can help speed up societal and technological evolution towards a state of resource use with more efficiency and with less unusable side products.

Cities and regions can contribute to energy efficiency and the use of renewable energy sources in many ways: “green” public purchasing; tax incentives for businesses and households; increasing public investment in low carbon technologies; ensuring compliance with energy efficiency regulations in public buildings…

The Covenant of Mayors and the European Green Capitals already booked impressive results, not the least in terms of governance. They could be further integrated and possibly expanded to include water, raw materials and waste management. The transition to a more resource-efficient society can create unprecedented opportunities for stimulating research and innovation, trade and the economy as a whole.

FinancialGuy: Since many companies that are similar in nature tend to locate together – for example in The City of London or via Montenapoleone in Milan – there must be some regions of the EU set to really benefit in terms of job creation and economic growth. Are there examples of European cities or regions that are already benefiting from pursuing growth via innovation?

President Bresso: Yes, and there are in fact annual innovation awards for best projects in areas of selected themes linked to economic modernisation. For example, the Regio Star awards stimulate the exchange of experience and provide visibility for progressive-thinking. The 21 thematic finalists for 2011 are short listed for four awards under the two headings of “economic competitiveness” at regional level and “low carbon economy” in an urban context (CityStars). These projects present innovative and significant urban, regional or national initiatives that are contributing to important European priorities.

FinancialGuy: Do you think that there are things that can be done at a regional level to help stimulate this potential growth? If so, what?

President Bresso: Stimulating this growth potential requires concerted action across many policy fields, like research and innovation, industry, ICT, skills and employment, to name just a few.
These and other policies play important roles in enabling cities and regions to address important societal challenges like: healthcare; reducing energy consumption and cutting greenhouse gas emissions; greener modes of transport; protecting farmland and local food supply chains; e-government;, education and lifelong learning; pre-school care and care for the elderly, etc.

FinancialGuy: Should government funds be made available to invest in this infrastructure? If so, should it be EU, Member State or regional funding?

President Bresso: Government funds have a very important role in encouraging innovation. In a recent opinion on the EU budget review, the Committee of the Regions has stressed the importance of ensuring that the structural funds take a strategic approach, through a system of conditions and incentives. We also proposed that Territorial Pacts be drawn up, laying down timetables, objectives, resources and incentives agreed between all the parties involved.

Many European programmes are envisaging a shift towards revolving funds like loans. The European Investment Bank plays an important role in providing finance to innovative companies. Right now its financing schemes have been mostly accessible to larger companies, and there have been recommendations made towards improving access to small and medium enterprises.

Experimentation and pilot projects can be fostered by introducing seed money and technical assistance schemes, in partnership with the private sector, in order to speed up implementation of the new technologies developed in research laboratories. Other possibilities could include, for example, issuing Europe 2020 bonds. These long-term European project bonds could provide adequate investment for networks and other energy infrastructure, and could be repaid with the resulting financial returns.

FinancialGuy: What role do you think that private investment funding (business angels, venture capital, etc) can play in stimulating this growth?

President Bresso: Credit is an important driver of economic activity, but is not always readily accessible and easily affordable. This is particularly the case for SMEs, in the wake of the recent financial crisis.

Venture capital is a vital source of growth for small and medium enterprises (SMEs). Therefore, facilitating venture capital investment within the EU is crucial for good economic growth. The European Commission recently published a report addressing cross border venture capital investment, outlining the double taxation problems that arise when venture capital is invested cross-border, as well as possible solutions.

FinancialGuy:Do you think that there should be greater role in the future for corporations, for example, to invest in universities, vocational training schemes and other potential stimuli?

President Bresso: Universities should be seen as drivers of innovation in their regions. They should be encouraged to explore new avenues of cooperation between public institutions and the private sector, for example through joint public and private innovation funds. Higher education has a key role in local and regional development, and should cooperate with local and regional authorities and socio-economic players.

FinancialGuy: Thank you President Bresso. I – and I am sure my readers will also – have found this very interesting.

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