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Brussels, 7th January 2008

Coordinated action to accelerate the development of innovative markets of high value for Europe – the Lead Markets Initiative

Concerted action through key policy instruments will speed up market development of fast-growing products and services, without interfering with competitive forces. The first six areas - eHealth, protective textiles, sustainable construction, recycling, bio-based products and renewable energies - which have been identified for the "Lead Market Initiative" (LMI) are highly innovative, respond to customers’ needs, have a strong technological and industrial base in Europe and depend more than other markets on the creation of favourable framework conditions through public policy actions. The initiative calls for the urgent coordination of policy through ambitious action plans for these markets, rapidly bringing visible advantage for Europe’s economy and consumers.

How does the Lead Market Initiative (LMI) process work?

The LMI identifies promising emerging markets which could be supported by such concerted policy action and outlines a process to streamline the necessary legal and regulatory environments and accelerate the growth of demand.

To be successful, the process needs to:

  • incorporate global market needs and customer preferences to maximise market potential;
  • facilitate the acceptance of EU standards and approaches by non-EU markets, notably in domains affected by global trends (e.g. environmental issues);
  • aim at reducing the cost of bringing new products or services into the market, by easing market access and measures to facilitate demand.

An action plan for the next years is presented for each market with a set of policy instruments boosting the competitiveness of the lead markets:

  • Improving legislation: it is designed to foster innovation and avoid imposing burdens on innovative business and facilitate an integrated approach along the value chain
  • Encouraging public procurement for such innovative goods and services
  • Standardisation, labelling and certification: encourage standards that facilitate the operation of products and business processes with each other and raise the recognition and confidence of users in innovative products and services;
  • Complementary instruments such as business and innovation support services, training, communication, financial support and incentives.

Six markets of high economic and societal value were identified for the initial stage of the initiative: eHealth, protective textiles, sustainable construction, recycling, bio-based products and renewable energies

1. eHealth can help to deliver better care for less money

eHealth tools or solutions include products, systems and services that go beyond simple internet-based applications, for instance tools for health authorities and professionals and as personalised health systems for patients and citizens.

Without significant reforms, including better use of eHealth, health expenditure is expected to increase from 9% of GDP at present to around 16% by 2020 in response to an 'ageing' Europe. Despite substantial research and development investments in eHealth, ICT investment in this area has lagged behind that in other service sectors.

Technical and organisational solutions often fail to be taken up because the market is strongly fragmented between different social security systems, a lack of interoperability between the various systems and lack of legal certainty.

Standardising various information exchange formats, for instance and certifying of interoperable systems should effectively overcome the interoperability barriers. Other measures within the framework of the LMI are clarification and guidance for applying the legal framework, networking of public procurers, as well as information of users, doctors, health managers and public authorities on eHealth benefits.

European citizens would greatly benefit from cost reductions, coupled with better efficiency of the healthcare systems through the wider development of eHealth.

2. Sustainable construction: towards sustainable development

The construction market accounts for 10% of GDP and 7% of the workforce. Buildings account for the largest share of the total EU final energy consumption (42%) and produce about 35% of all greenhouse emissions.

Insufficiently coordinated regulations, coupled with the predominantly local business structure, lead to considerable administrative burdens and to a high fragmentation of the sustainable construction market. There is a lack of knowledge on possibilities within the existing legal framework for public procurement that could facilitate demand for innovation-oriented solutions.

A different, more goal-oriented approach to construction in the form of a lead market on sustainable construction solutions is needed. Besides applying its better regulation policy, the EU may further render the regulatory framework more efficiently by accompanying measures and awareness campaigns. Standardisation measures can improve the situation and introduce concepts relevant for sustainability.

The LMI could considerably speed up the access of citizens and business to new buildings features with enhanced quality of life and working conditions.

3. Technical textiles for intelligent personal protective clothing and equipment: increasing the knowledge content and the added-value

Protective textiles are clothing and other textile-based systems which protect users from hazards and dangers in the conditions in which they operate. The current size of the market in the EU is estimated at € 10 billion, with around 200,000 jobs directly or indirectly related to these products and services.

Swifter development and use of European standards in the global market, combined with appropriate measures for the protection of intellectual property, e.g. through support services for smaal and medium sized enterprises (SMEs), would accelerate the increase in demand for protective textiles. Public procurement has an important role to play, but there is fragmentation of demand for protective textiles at the level of local authorities.

The action plan proposed by the Commission integrates all necessary actions in a synchronised way to favour the innovation of new products and accelerate growth. Other measures should facilitate public procurement for innovative protective textile products; strengthen awareness of intellectual property protection and SME involvement in the development of standards.

Citizens will also benefit from access to better products for key services such as civil protection, for instance in case of pandemics or terrorist actions with high risks to the population.

4. Bio-based products: innovative use of renewable raw materials

Bio-based products are made from renewable, biological raw materials such as plants and trees. The long term growth potential for bio-based products will depend on their capacity to substitute fossil-based products and to satisfy various end-used requirements at a competitive cost.

Europe is well placed in the markets for innovative bio-based products, building on a leading technological and industrial position. Perceived uncertainty about product properties and weak market transparency however hinder the fast take-up of products.

The Commission's action plan for this lead market integrates all necessary actions in a synchronised way to favour the innovation of the new products and services. The actions range from improving the implementation of the present targets for bio-based products over standardisation, labelling and certification to ensure the quality and consumer information on the new products to harnessing the purchases of public authorities to show the way to the future.

European citizens will greatly benefit from reduced dependency on fossil products and of reduced emission of pollutants, through the wider use of these bio-based products. In the medium term, additional capacity could also help to reduce prices of average goods.

5. Recycling: proper and effective waste management

Recycling reduces waste going to disposal, consumption of natural resources and improves energy efficiency. It therefore plays an essential role in the move towards sustainable consumption and production. The recycling sector has a turnover of € 24 billion and employs about 500,000 persons. The EU has around 30% of world share of eco-industries and 50% of the waste and recycling industries.

Despite significant market potential, barriers to market development remain. There is also significant potential to improve efficiency and capacity, by encouraging innovation and introducing more effective processes and technologies. This would save costs, energy, and natural resources and help Europe to be less dependent on raw materials prices.

The Commission proposes an action plan that integrates all necessary actions in a synchronised way to favour the innovation of the new products and services in the recycling market area. The actions range from standardisation, labelling and certification to ensure the quality of and product information on recycling products as well as the environmental friendliness of the recycling process.

European citizens will benefit from the consolidation of the position of Europe’s industry as a world leader, while environmental advantages will be significant.

6. Renewable energy: CO2-neutral energy sources

The European renewable energy sector has an annual turnover of € 20 billion and provides jobs to 300.000 people while meeting approximately 8.5% of Europe's energy needs. The European Council in March 2007 set a binding target of a 20% share of EU energy consumption for renewable energy by 2020.

The development of renewable resources is held back by three factors:

  • The external costs of energy use are not fully reflected in energy prices.
  • Important learning curve effects which would lower prices in several technologies are exploited more slowly on account of present low levels of demand.
  • The fragmentation of renewable energy support systems and the existence of administrative and market barriers mean that the potential of the internal market is not fully exploited.

The main elements of the renewable energy action plan are removing barriers to the integration of renewable energy sources in the EU energy system and simplifying authorisation procedures. A coordinated approach for standard setting and labelling on technologies as well as mobilising public and private financing are other measures to help reaching the 20% target by 2020.
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