Innovation Europe > News > Innovation EU Vol1-1 > The Lead Market Initiative

The Lead Market Initiative (LMI) is one of the most important innovation policies in the EU, involving member states, industry, other stakeholders and the European Commission.

Launched by the European Commission in 2008, following the EU’s 2006 Broad Based Innovation Strategy, the LMI received the full support of the EU member states, which are keen to exploit existing national and regional initiatives to create the right framework to foster lead markets.

European citizens will benefit from both the positive impact on growth and employment – the identified areas could represent three million jobs and E300bn by 2020 – and from the access to enhanced goods and services.

The LMI will foster the emergence of lead markets’ high economic and societal value. On the basis of stakeholder consultations, six markets have been identified against a set of objective criteria:

• eHealth
• Protective textiles
• Sustainable construction
• Recycling
• Bio-based products
• Renewable energies.

These markets 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 measures. For each market, a plan of action for the next three to five years has been formulated.

The key features of the six lead market areas are:

• They are highly innovative
• They already have a strong technology and industry base in Europe
• Lead market areas are quite broad. They are not dependent on or focusing on a single product or single technology.
• They are strongly influenced by public policy measures, such as legislation, to facilitate the uptake of products and services in these markets
• The six market segments provide solutions of broader strategic, societal, environmental and economic challenges.

The policy measures presented for each lead market are grouped in the following categories:

• Legislation
• Public procurement
• Standardisation, labelling, certification
• Complementary activities (mainly business and innovation support services, training and financial support).

These action plans are being implemented by the member states and the European Commission. However, the commitment of the regional authorities, the use of structural funds and the boost in investment by the private sector, expected from such a coherent approach, are key for the success of this initiative.

Lead market areas

eHealth

eHealth tools or solutions include products, systems and services that go beyond internet-based applications, for instance tools for health authorities and professionals and 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 R&D 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, and there is a lack of compatibility between the various systems, as well as a lack of legal certainty.

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

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

Protective textiles

The current size of this market – clothing and other textile-based systems that protect the wearers from hazards and dangers in, for example, the workplace – in the EU is estimated at €10bn, 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, 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 local authority level.

The action plan proposed by the Commission synchronises all such necessary actions to favour the innovation of new products and accelerate growth.

Citizens will 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.

Sustainable construction

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

Insufficiently co-ordinated regulations, coupled with the predominantly local business structure, lead to considerable administrative burden 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-orientated solutions.

A different, more goal-orientated approach to construction is needed. Besides applying its better regulation policy, the EU can make the regulatory framework more efficient by accompanying measures and awareness campaigns. Standardisation measures will improve the situation and introduce concepts relevant for sustainability.

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

Recycling Recycling reduces waste going to disposal and 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 €24bn and employs about 500,000 persons. The EU has around 30% of the 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 to synchronise all necessary actions 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 recycling products, as well as the environmental friendliness of the recycling process.

European citizens will be able to benefit from the significant environmental advantages.

Bio-based products

Bio-based products are made from renewable, biological raw materials derived from crops, biowaste or 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 extremely well placed in the markets for innovative bio-based products, building on a leading technological and industrial position. Perceived uncertainty about product properties and also weak market transparency, however, hinder the fast take-up of products.

The Commission’s plan for this lead market synchronises all necessary actions to favour the innovation of new products and services, ranging from improving the implementation of present targets for bio-based products over standardisation to labelling and certification to ensure the quality of new products.

European citizens will benefit from reduced dependency on fossil products and 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 goods.

Renewable energy

The European renewable energy sector has an annual turnover of €20bn and provides jobs to 300,000 people, while meeting approximately 8.5% of Europe’s energy needs. The European Council set a binding target in March 2007 of a 20% share of EU energy consumption for renewable energy by 2020.

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 co-ordinated approach for standard setting and labelling on technologies as well as mobilising public and private financing are other measures to help reach the 20% target by 2020.

Implementing the LMI

While Europe plays a leading role globally in terms of science provision and number of graduates in science and technology, it has less success in converting sciencebased findings into commercially valuable innovations.

More innovation-friendly market framework conditions are needed in Europe to reduce the time to market of new goods and services. As a result, companies will see a quicker return on their R&D and innovation investment, while public investment in R&D and innovation programmes should attain greater outputs (measured in jobs, products new to market, patents, and so on).

Public authorities within member states can promote the quick take-up of innovations by implementing a number of policy initiatives. For example, they can put measures in place, within the existing legal framework, to procure more innovative goods and services. Such public procurement, standardisation and legislation are forms of demand-side innovation policy.

This complements supply-side policy, which mainly uses public investment through grants to stimulate innovation in the EU, member states, regions or cities, such as those to knowledge institutions that research new products or services that can benefit Europe.

The LMI uses a number of demand-side policy instruments that work in synergy. These are tailored to bring down barriers for innovative goods and services in six market areas. The result will be to give industry the opportunity to turn these innovations into world wide leading products or services in new high-growth, lead markets, building on the EU’s industrial dynamics.

For more information, visit: www.ec.europa.eu