Ahead of their next discussion in November, Member States should ensure that the EU’s future competitiveness funding provides strong support for bio-based industries and strengthens Europe’s long-term competitiveness.

The EU Council’s proposal for the next Multiannual Financial Framework introduces welcome improvements to the principles guiding the allocation of EU competitiveness funding. However, the indicative funding available for several programme areas of strategic importance to the forest industry would be lower than in the European Commission’s proposal. 

From the forest industry’s perspective, the Council’s proposal takes steps in the right direction by placing greater emphasis on excellence and competitive project selection. At the same time, further improvements are needed to ensure that the EU’s future budget provides sufficient support for research, innovation, industrial renewal and the forest-based bioeconomy. 

Stronger emphasis on excellence and competitive selection 

The most significant positive development concerns the principles for allocating funding under the European Competitiveness Fund. 

The Commission’s proposal aims to support EU competitiveness in strategic sectors and at different stages of the investment cycle. The Council adds greater clarity by referring to open, competitive and fair award procedures and emphasising a commitment to excellence. 

These additions are well aligned with the forest industry’s position that EU funding should be allocated on the basis of excellence and competitive project selection. 

Market failure recognised, but only partially 

The Council’s proposal also recognises market failure as a justification for support under the InvestEU instrument within the European Competitiveness Fund. The Council introduces an explicit reference to addressing market failures or suboptimal investment situations. 

This is a welcome clarification. However, market failure is not established as a general allocation principle for competitiveness funding as a whole. 

The forest industry has called for market failure, high innovation potential, research and innovation added value, and support for first industrial deployment to serve as binding criteria across EU competitiveness funding. These objectives are reflected only partially in the Council’s proposal. 

Bioeconomy funding would remain insufficient 

The Council’s proposal does not strengthen the position of the bioeconomy. As in the Commission’s proposal, the bioeconomy would be included in the European Competitiveness Fund’s policy window for health, biotechnology, agriculture and bioeconomy. 

However, the Council does not propose a dedicated funding window or a minimum allocation for the bioeconomy. Furthermore, the indicative allocation for this policy area would be reduced from approximately EUR 20 billion in the Commission’s proposal to EUR 15.7 billion. 

This would represent a substantial reduction in funding, particularly as the forest industry already considered the level proposed by the Commission insufficient. 

Less funding for research and innovation 

The Council maintains the link between Horizon Europe and the European Competitiveness Fund. This supports the forest industry’s objective of creating a more coherent pathway from research and piloting to commercialisation and industrial deployment. 

However, the indicative funding for Horizon Europe would be reduced from approximately EUR 155 billion to EUR 140 billion. 

Although the proposed structure could improve coordination between different stages of innovation, its impact would be limited if less funding were available. Europe needs sufficient resources not only for research but also for scaling up innovations and bringing new industrial solutions to the market. 

Key industrial priorities remain unaddressed 

Several other priorities identified by the forest industry are absent from the Council’s proposal. 

Technological neutrality is not established as a binding principle for funding decisions. No specific reference is made to biogenic carbon capture, utilisation and storage or to industrial frontrunners that have already substantially reduced their dependence on fossil fuels. 

Without clearer recognition of these issues, important industrial decarbonisation solutions and investment needs risk being overlooked in the future EU funding framework. 

The proposed reductions to the Connecting Europe Facility and military mobility funding are also a concern, particularly in the current security environment. Investments in military mobility should, wherever possible, support infrastructure that serves both defence needs and transport-intensive industries. 

Procedural progress, but strategic gaps remain 

Overall, the Council’s proposal strengthens the principles governing EU competitiveness funding through a clearer emphasis on excellence and competitive allocation. 

However, these improvements are accompanied by concerns regarding the future support for research, innovation and the bioeconomy. The position of the bioeconomy is not strengthened, funding levels for key programme areas would be reduced, and several substantive priorities of the forest industry remain unaddressed. 

Further work is therefore needed to ensure that the EU’s 2028–2034 Multiannual Financial Framework supports industrial renewal, first industrial deployment and the competitiveness of Europe’s forest-based bioeconomy at the scale required.