EU to Bet on AI, Advanced Research and Clean Tech in Bid to Compete
(Bloomberg) -- The European Union will propose establishing an advanced research project agency modeled on US government entities to invest in strategic technologies as part of a broader drive to boost the bloc’s competitiveness.
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The bloc will also call for building new aggregated supercomputing infrastructure for artificial intelligence. The plans are included in a new draft strategy the EU will release at the end of January alongside proposals to cut regulation, improve access to funding, lower energy costs and mitigate dependencies linked to critical materials, according to people familiar with the matter and documents seen by Bloomberg.
The so-called Competitiveness Compass, due next month, aims to set out a guide for the next five years to compete with the likes of the US and China. The goal is to implement many of the recommendations presented last year by former European Central Bank President Mario Draghi, but the document doesn’t address the thorniest issue — exactly how to find the hundreds of billions of euros needed to implement the plans.
And the EU is also finding itself falling behind the US again, with President Donald Trump launching ambitious fossil-fuel plans aimed at lowering energy costs. He also helped announce this week a $100 billion joint venture aimed at funding AI infrastructure.
The EU report is set to warn that without a significant change, the EU will put its future as an economic powerhouse, investment destination and manufacturing center at risk. It lays out a set of plans that will have to be fleshed out in the coming months in specific proposals and legislation.
To improve access to funding, the EU will review its merger rules and launch a competitiveness fund in its next budget inspired by Advanced Research Projects Agencies that the US government uses to invest in strategic technologies such as AI, advanced materials and robotics, the people said.
Elsewhere, AI initiatives will seek to establish “mega AI factories” for start-ups, researchers, and industry to train, develop and improve their AI models. This builds on a €1.5 billion ($1.6 billion) plan the EU unveiled last year to establish seven AI facilities.
But the bloc has to contend with stiff competition in that field. In one of the last moves under Joe Biden’s administration, the US introduced a three-tier system to curb sales of AI chips used in data centers to many EU member states.
The strategy will set out a number of areas where the EU will need to focus on to improve productivity, the people said. These include closing the innovation gap, especially with the US digital sector; transitioning to a climate-neutral economy with lower energy prices; and dealing with a challenging security environment with vulnerable supply chains.
Other EU initiatives will be developed in the fields of cloud and quantum computing as well as space and biotech. The bloc aims to start rolling out dozens of initiatives over the next two years to address these issues.
The EU will also present a new state aid framework later this year and propose introducing a European preference in public procurement contracts in critical sectors and technologies.
To tackle high energy prices for households and industry, the European Commission plans to present a plan that will seek to deepen market integration, enable the broader use of guarantees and risk-reduction instruments to promote long-term power purchase agreements. It will also feature demand flexibility services and better tariff methodologies.
More details will be unveiled in an Affordable Energy Action Plan and a Clean Industrial Deal that will be presented next month.
The EU will also promise to deliver an unprecedented simplification effort to help deliver on a goal of cutting reporting obligations by at least 25%. It will propose creating a new category for mid-sized firms it says will allow more than 30,000 companies to benefit from similar regulations to those currently reserved for smaller enterprises.
In order to mitigate supply chain dependencies, the bloc’s executive arm will propose a platform for the joint purchase of critical raw materials, even as it continues to strike trade deals with like-minded countries around the world.
Boosting the bloc’s competitiveness is no easy task. Draghi’s report assessed that the bloc needs additional investments of as much as €800 billion each year through 2030, meaning an investment-to-GDP rate last seen in the 1970s.
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