1. Combining EU funding sources from Horizon 2020 and ERDF for ambitious industrial projects Principles to combine EU instruments in support of R&D&I Luuk Borg, Policy Officer Key Enabling Technologies A.4 Components DG Connect

2. Combining EU funding sources H2020 and ESIF – Legal basis: The H2020 Rules for Participation (Article 31) and for the Common Provisions Regulation on the ESIF (Article 55(8)) both deviate from the Financial Regulation (Article 129) as they allow for the funding of the same action by two different instruments, subject to the absence of double funding. What is combined funding? Combined funding is the possibility to use different public funding sources, including EU funding sources, within a programme, project or a group of projects. It seeks to exploit complementarities and synergies while at the same time needs to avoid overlaps and exclude double-financing. Combining public funding sources for ambitious industrial projects

3. Potential cases of combining Horizon 2020 & ESIF Two potential cases of combined funding for the same industrial project 1.Simultaneous / additional / parallel use of funds for the same industrial project: the simultaneous use of different public funding sources in the same industrial project e.g. H2020 money and ESIF that are used together to fund different cost items within a single industrial project 2.Sequential funding for the same industrial project: the sequential use (in time) of different public funding sources in separate successive subprojects of the same industrial project e.g. first ESIF for R&I infrastructure, then Horizon 2020 for innovation activities

4. 1."non-substitution principle" The use of a Union funding instrument to substitute the non-Union contribution to another Union instrument is not allowed: ESIF cannot be used to substitute the national or private contribution to H2020 projects. Substitution of a non-Union contribution (eg. to a Horizon 2020 project) with Union funding (eg. ESIF) is not possible 2. "no double funding principle" It will be possible to award a grant under Horizon 2020 for an industrial project which is also funded by an ESIF grant but the absence of double funding should be ensured. The two Union grants (Horizon 2020 and ESIF) may not cover the same cost item. Basic budgetary principles

5. Funding of the same industrial project by two different EU instruments is allowed, subject to the absence of double funding This requires strict cost accounting practices at the end beneficiary level so that they are able to separate and appropriately record the cost items clearly from the very beginning of the action so that it is clear in their accounts which cost item is supported by the H2020 project and which by the ESIF project  Identify packages of cost items for submission under either of the funds. The budget structure should allow to identify for the ESIF part where the activity will be carried out / for who’s benefit it is (necessary condition for ESIF funding). Combining Horizon 2020 & ESIF for ambitious industrial projects - Simultaneous use of EU funding sources

6. Example: Industrial project with combined funding from Horizon2020 & ESIF Industrial project description (master plan) Work packages (ideally geographically attributable) and definition of cost items Horizon2020 proposal and budget Incl. public or private co-funding … But no ESIF! ESIF proposal and budget Incl. public or private co-funding + specifying which Operational Programme will co-fund and where … But no Horizon 2020! Combining Horizon 2020 & ESIF for ambitious industrial projects

7. ESIF MS/region Horizon 2020 public/ private co- funding public/ private co- funding ESIF of MS/reg + public/private co-funding Horizon 2020 + public/ private co- funding Industrial project Grant agreement Horizon 2020 Grant agreement ESIF Example: Industrial project with combined funding from Horizon2020 & ESIF

8. What is a cost item ? A cost item is the amount declared as eligible for Union funding under a budget category. Depending on the budgeting approach, the budget category may be defined per activity (e.g. costs of training activities), per nature (e.g. personnel costs, costs for durable equipment or for consumables, etc.) or by a combination of the nature and activity (e.g. costs of personnel assigned to the training activities). The amount declared as eligible corresponds to the costs complying with the eligibility conditions set out in the corresponding basic act. Since only costs incurred in relation to the action funded by the grant are eligible, a cost item is limited to the costs of the resources consumed for the action (for example the personnel costs for the hours actually worked on the action or the depreciation costs of equipment corresponding to the duration of the action and the rate of actual use for the action). Combining Horizon 2020 & ESIF for ambitious industrial projects

9. Example of regular simultaneous funding under Horizon 2020 Company X member of consortium in receipt of grant under Horizon 2020 for a close-to-market action -80% of working time of personnel assigned to Horizon 2020 action Remaining 20% working time of personnel can be assigned to ESIF action and may be declared as eligible for ESIF grant No double funding principle -Beneficiary will declare as eligible 80% of personnel costs and will receive only 70% of those personnel costs (70% reimbursement rate for close-to-market action) Remaining 30% of eligible costs not covered by the Horizon2020 grant may not be reimbursed by a grant under ESIF and have to be covered by the beneficiary No substitution principle Combining Horizon 2020 & ESIF for ambitious industrial projects

10. For the relevant Horizon 2020 topics, proposers will be encouraged to actively seek for possibilities of combined funding (additional or sequential) from national, regional or structural fund programmes.  proposers will be encouraged to actively seek contacts with regional/national authorities as Managing Authorities whose Smart Specialisation Strategies correspond to their R&I activities, and stimulate the interest of the Regions / Member States in their industrial project. Actions combining different sources of public financing will need to include a concrete financial plan detailing the intended use of these funding sources for the different parts of their activities, aiming at ambitious activities of industrial scale. Combining Horizon 2020 & ESIF for ambitious industrial projects Horizon 2020 topic description and conditions of the call

11. Combining Horizon 2020 & ESIF for ambitious industrial project Look at eligibility of activities: localisation (e.g. region), type of cost items (e.g. equipment) in combination with beneficiaries and timeline Prepare financial master plan for industrial project: group activities in projects (=set of cost items for certain beneficiaries), identify costs and funding options for each (ESIF, H2020, national funds,…), contact Managing Authorities,… Prepare H2020 proposal (project & consortium) =>self-standing multi- national project Define scope of industrial project (incl. beneficiaries), detailed activities, budget (private/public) Prepare ESIF proposal (projects + beneficiaries) for each region/country involved taking into account Smart Specialisation Strategies Submit H2020 and ESIF proposals including master plan for industrial project)

12. Example : Industrial project with combined funding Horizon 2020 proposal to be delivered: Industrial project description (master plan including information on parts depending on other financial sources) (*) Horizon 2020 part => self- standing grant agreement Combining Horizon 2020 & ESIF for ambitious industrial projects (*) Modalities on sort of proof for existence of other funding sources being worked out

13. Evaluation Horizon 2020 Evaluators: look into this to appreciate the entire project … and negotiate this part of the budget. ESIF Managing Authority: … look into this to appreciate the entire project and looks into this part of the budget and checks the eligibility of the type of proposed costs, the location of the operation, etc. Industrial project description (master plan) Work packages (ideally geographically attributable) and definition of cost items Horizon2020 proposal and budget Incl. public or private co-funding … But no ESIF! ESIF proposal and budget Incl. public or private co-funding + specifying which OP will co-fund and where… But no H2! Example : Industrial project with combined funding Combining Horizon 2020 & ESIF for ambitious industrial projects

14. ESIF MS/region Horizon 2020 Private Funding ESIF of MS/reg + private funding Horizon 2020 H2020 + private funding Industrial project Eligible cost under Horizon2020 grant Grant agreement ESIF Example (specific case): JU/JTI (Art. 187 TFEU) project There are 2 levels of legal agreements: (1) Regulation on the set-up of the JTI (no grant, but a programme contribution, i.e. the Art 55(8) CPR derogation does not apply and a combination of funds is not allowed) (2) Projects: these are grants, i.e. the different cost items can be funded by H2020 or ESIF Comment: Co-funding from purely private sources (i.e. no public contribution) to release ESIF funds is allowed under the ESIF regulations, but MS/regions have to foresee this "full cost model"

15. MS/region 3: Projects partners & work packages in its territory MS/region 1: Projects partners & work packages in its territory MS/regio n 2: Projects partners & work packages in its territory Horizon 2020 For innovati on actions 70% of eligible cost ERDF Hypothetical budget structure for a "normal" multi-country FP7-style research project Horizon 2020 MS/region 4: Projects partners & work packages in its territory ERDF NB: State aid rules need to be respected! ► Horizon 2020 budget not considered as state aid ► ESIF/national/ regional funding is subject to state aid rules, i.e. - max. aid intensities - individual notification thresholds Etc. apply Own public budget Private Horizon202 0 grant agreement ESIF Grant agreemen t Project Combination in same project Horizon 2020 Privat e

16. State aid EU funding centrally managed by the EC either directly or indirectly (i.e. by the EC, by its Executive Agencies, by Joint Undertakings (Art 185, Art 187) or by any other implementing bodies where the Union funding is not directly or indirectly under the control of Member States) does not constitute state aid. Where such Union funding is combined with other public funding, only the latter shall be considered for determining whether notification thresholds and maximum aid intensities are respected. Horizon 2020: not considered as state aid ESIF/national/regional funding: subject to state aid rules max. aid intensities individual notification thresholds Combining Horizon 2020 & ESIF for ambitious industrial projects

17. Billion EUR Less developed regions164.3 Transition regions31.7 More developed regions49.5 Cohesion Fund66.4 European territorial cooperation8.9 Of which Cross border cooperation6.6 Transnational cooperation1.8 Interregional cooperation0.5 Outermost regions and northern sparsely populated regions 1.4 Youth Employment initiative3.0 TOTAL325.1

18. Billion EUR Less developed regions164.3 Transition regions31.7 More developed regions49.5 Cohesion Fund66.4 European territorial cooperation8.9 Of which Cross border cooperation6.6 Transnational cooperation1.8 Interregional cooperation0.5 Outermost regions and northern sparsely populated regions 1.4 Youth Employment initiative3.0 TOTAL 325.1 Around 80% goes to the less developed regions & countries Between €80-100 billion will be invested in innovation-drivers and take-up, notably reserach and innovation projects, SME competitiveness, digital growth and energy efficiency / renewable energies. € 70 billion for ESF investments in skills, life-long learning, social integration, employment services, social innovation … Via the Cohesion Fund around € 66 billion will go into trans-european transport connections and environmental projects Around 80% goes to the less developed regions & countries Between €80-100 billion will be invested in innovation-drivers and take-up, notably reserach and innovation projects, SME competitiveness, digital growth and energy efficiency / renewable energies. € 70 billion for ESF investments in skills, life-long learning, social integration, employment services, social innovation … Via the Cohesion Fund around € 66 billion will go into trans-european transport connections and environmental projects

19. Billion EUR Less developed regions164.3 Transition regions31.7 More developed regions49.5 Cohesion Fund66.4 European territorial cooperation8.9 Of which Cross border cooperation6.6 Transnational cooperation1.8 Interregional cooperation0.5 Outermost regions and northern sparsely populated regions 1.4 Youth Employment initiative3.0 TOTAL 325.1 Thematic concentration* means that around €90 billion will go into research & innovation, SME competitiveness and ICT. That means on average per person per year the following is available for R&I, SME and ICT: More developed regions:€ 12.40 Transition regions:€ 25.20 Less developed regions: € 42.00 *) more developed regions: 80% of ERDF (at least 20% for low carbon) Transition regions: 60% of ERDF (at least 15% for low carbon) more dev. Regions: 50% of ERDF (at least 12% for low carbon) Thematic concentration* means that around €90 billion will go into research & innovation, SME competitiveness and ICT. That means on average per person per year the following is available for R&I, SME and ICT: More developed regions:€ 12.40 Transition regions:€ 25.20 Less developed regions: € 42.00 *) more developed regions: 80% of ERDF (at least 20% for low carbon) Transition regions: 60% of ERDF (at least 15% for low carbon) more dev. Regions: 50% of ERDF (at least 12% for low carbon)

20. Questions? 20