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(2) The Union’s industry has proven its inbuilt resilience but its competitiveness must also be ensured in the future. High inflation, labour shortages, post-COVID supply chain disruptions, Russia’s war of aggression against Ukraine, rising interest rates, and increases in energy costs and input prices are weighing on the competitiveness of the Union’s industry and have highlighted the importance for the Union to secure its open strategic autonomy and reduce its strategic dependence on third countries in various sectors. Those pressures on the Union’s industry are paired with strong, but not always fair, competition on the fragmented global market. The Union has already launched several initiatives to support its industry, such as the Green Deal Industrial Plan, set out in the Commission communication of 1 February 2023 entitled ‘A Green Deal Industrial Plan for the Net-Zero Age’, a Regulation of the European Parliament and of the Council establishing a framework for ensuring a secure and sustainable supply of critical raw materials (the ‘Critical Raw Materials Act’), a Regulation of the European Parliament and of the Council establishing a framework of measures for strengthening Europe’s net-zero technology products manufacturing ecosystem (the ‘Net-Zero Industry Act’), the new Temporary Crisis and Transition Framework for State aid, set out in the Commission communication of 17 March 2023 entitled ‘Temporary Crisis and Transition Framework for State aid measures to support the economy following the aggression against Ukraine by Russia’, the European Union Recovery Instrument established by Council Regulation (EU) 2020/2094 and Regulation (EU) 2023/435 of the European Parliament and of the Council . While those solutions provide fast, targeted and, in some cases, temporary support, the Union needs a more structural answer to the investment needs of its industries, safeguarding cohesion, creating quality jobs, and preserving the level playing field in the internal market, while facilitating access to funding. The Union should work to prevent relocation, to transfer production facilities of critical technologies back from third countries, and to attract new facilities to prevent strategic dependencies.

(5) To qualify as critical, technologies should be required either to bring an innovative element with a significant potential to the internal market, or to contribute to reducing or preventing the strategic dependencies of the Union. When assessing the economic potential of critical technologies to the internal market, account should be taken of the fact that measures carried out in a single Member State can have spillover effects in other Member States. When assessing whether a technology contributes to reducing or preventing the strategic dependencies of the Union, account should be taken of the analysis carried out at Union level to identify the risks which have potential effects on the entire Union. The Commission should issue guidance on how the technologies in the three sectors within the scope of this Regulation could be considered to be critical, as well as the conditions on the basis of which those technologies can qualify as critical, in order to promote a common interpretation of the projects, companies and sectors to be supported under the relevant programmes in light of the common strategic objectives of the relevant programmes and this Regulation. In that guidance the Commission should also clarify the notion of value chain and associated services that are critical for and specific to the development or manufacturing of the final products. That guidance should be without prejudice to other guidance on specific programmes.

(6) There is a need to support critical technologies in the following sectors: digital technologies and deep tech innovation, clean and resource-efficient technologies, and biotechnologies. Deep tech innovation should be understood to be those that have the potential to deliver transformative solutions, rooted in cutting-edge science, technology and engineering, including innovation that combines advances in the physical, biological and digital spheres. Digital technologies should include, in particular, those that contribute to the targets and objectives of the Digital Decade Policy Programme 2030, as well as multi-country projects as defined in Decision (EU) 2022/2481. Clean and resource-efficient technologies should include, in particular, net-zero technologies as defined in the Net-Zero Industry Act. Biotechnologies should be understood to be the application of science and technology to living organisms, as well as parts, products and models thereof, to alter living or non-living materials for the production of knowledge, goods and services, including the technologies referred to in the statistical definition of biotechnology of the Organisation for Economic Cooperation and Development, as well as the Union List of Critical Medicines as referred to in the Commission communication of 24 October 2023 entitled ‘Addressing medicine shortages in the EU’ and their components. Projects recognised as strategic under the Net-Zero Industry Act, where those projects comply with the criteria of resilience and competitiveness defined in the Net-Zero Industry Act, and under the Critical Raw Materials Act should be automatically deemed to contribute to the objectives of this Regulation. Digital technologies and deep tech innovation, clean and resource-efficient technologies and biotechnologies which are the subject of an important project of common European interest (IPCEI) approved by the Commission pursuant to Article 107(3), point (b), of the Treaty of the Functioning of the European Union (TFEU) should be deemed critical, and individual projects within the scope of such an IPCEI should be eligible for funding, in accordance with the rules of the relevant programme, to the extent that the identified funding gap and the eligible costs have not yet been completely covered.

(7) Strengthening the development and manufacturing capacity of technologies in the Union will not be possible without a sizeable skilled workforce. However, labour and skills shortages, which have increased in all sectors including those considered key for the green and digital transitions, are expected to increase further in light of demographic change and endanger the rise of technologies in the relevant sectors identified in this Regulation. It is therefore necessary to boost the participation of more people in the labour market of the relevant sectors, in particular through investments in learning and life-long learning, the enhancement of relevant skills and the creation of quality jobs and apprenticeships for young and disadvantaged persons who are not in employment, education or training. Such support will complement a number of other actions that have the aim of meeting the skills needs stemming from the green and digital transitions outlined in the EU Skills Agenda set out in the Commission communication of 1 July 2020 entitled ‘European Skills Agenda for sustainable competitiveness, social fairness and resilience’. Those actions have an important role to play in promoting a mindset of reskilling and upskilling, boosting the competitiveness of Union undertakings, in particular SMEs, and contributing to the creation of quality jobs with a view to realising the full potential of the green and digital transitions in a socially fair, inclusive and just manner.

(8) The scale of investment needed for the green and digital transition requires a full mobilisation of funding available under existing Union programmes, including those granting a budgetary guarantee for financing and investment operations and implementation of financial instruments and blending operations. Such funding should be deployed in a more flexible manner, to provide timely and targeted support for critical technologies in strategic sectors. Therefore, a Strategic Technologies for Europe Platform (STEP) should be set up in order to contribute to providing an answer to Union investment needs by helping to better channel the existing Union funds towards critical investment, including in Union-wide and cross-border projects, that have the aim of supporting the development or manufacturing of critical technologies in strategic sectors, while preserving a level playing field in the internal market, preserving cohesion and that have the aim of achieving a geographically balanced distribution of projects financed under the STEP in accordance with the respective programme mandates.

(9) When implementing programmes and activities under this Regulation, the Commission and Member States are encouraged to promote and prioritise projects in Net-Zero Acceleration Valleys as defined in the Net-Zero Industry Act, projects in territories included in the territorial Just Transition Plan referred to in Regulation (EU) 2021/1056 of the European Parliament and of the Council , and in less-developed and transition regions, as well as in more developed regions in Member States whose average GDP per capita is below the EU-27 average measured in purchasing power standards and calculated on the basis of Union figures for the period 2015 to 2017.

(10) The STEP should mobilise resources within the existing Union programmes, including InvestEU established by Regulation (EU) 2021/523 of the European Parliament and of the Council , Horizon Europe established by Regulation (EU) 2021/695 of the European Parliament and of the Council , the European Defence Fund established by Regulation (EU) 2021/697 of the European Parliament and the Innovation Fund established by Directive 2003/87/EC of the European Parliament and of the Council , the European Regional Development Fund (ERDF) and the Cohesion Fund established by Regulation (EU) 2021/1058 of the European Parliament and of the Council , the European Social Fund Plus (ESF+) established by Regulation (EU) 2021/1057 of the European Parliament and of the Council , the Just Transition Fund (JTF) established by Regulation (EU) 2021/1056 of the European Parliament and of the Council , the Recovery and Resilience Facility established by Regulation (EU) 2021/241 of the European Parliament and of the Council , the EU4Health Programme established by Regulation (EU) 2021/522 of the European Parliament and of the Council , and the Digital Europe Programme established by Regulation (EU) 2021/694 of the European Parliament and of the Council . Resources mobilised with those Union programmes should be accompanied by additional funding of EUR 1,5 billion to the European Defence Fund for projects that contribute to the STEP objectives.

(11) A Sovereignty Seal should be awarded to projects contributing to the STEP objectives, provided that the project has been assessed and complies with the minimum quality requirements, in particular eligibility, exclusion and award criteria, provided in calls for proposals under Horizon Europe, the European Defence Fund, the Innovation Fund, the EU4Health Programme or the Digital Europe Programme, regardless of whether the project has received funding under one of those instruments. Those minimum quality requirements are established with a view to identifying high-quality projects. The Sovereignty Seal should be awarded in line with the specific eligibility conditions defined in the calls for proposals under the programmes concerned, which may include geographical limitations, if appropriate and foreseen in the respective legislative acts governing those programmes. When preparing the scope of the calls for proposals that could be awarded a Sovereignty Seal, the Commission should include, where appropriate, the requirement for project proposals to indicate how they are expected to contribute to the strengthening and structuring of local networks of industrial actors and to job creation. Those calls should, where possible and appropriate, be continuously open. The Sovereignty Seal should be used as a quality label, to help projects attract public and private investments by certifying its contribution to the objectives of STEP. Moreover, the Sovereignty Seal should promote better access to Union funding, in particular by facilitating cumulative or combined funding from several Union instruments. Member States should also be encouraged to take into account the Sovereignty Seal when granting financial support through their own programmes.

(16) While the STEP relies on the reprogramming and reinforcement of existing programmes for supporting strategic investments, and reducing the Union’s strategic dependencies, it is also an important element for testing the feasibility and preparation of possible new interventions to support sovereignty and competitiveness in strategic sectors and to strengthen the Union’s industrial policy. The STEP should in particular serve as a basis for considering possible similar actions, such as a European Sovereignty Fund.

(17) The Commission should carry out an interim evaluation of this Regulation, in which it should assess the relevance of the actions undertaken under this Regulation in reducing the Union’s strategic dependencies and in strengthening its autonomy. It should also assess the feasibility of expanding the Sovereignty Portal to combine all existing publicly available websites and provide information on Union programmes under direct, shared and indirect management in a single portal as well as the feasibility of setting up a simulator to provide guidance to project promoters on the Union programmes or funds for which their particular project could be eligible.

(20) In order to keep a high level of ambition in meeting climate objectives in cohesion policy, while at the same time allowing for flexibility between the Cohesion Fund and the ERDF, the amount of the climate contribution of the Cohesion Fund that exceeds 37 % of its total allocation should be allowed to be taken into account when calculating the climate contribution of the ERDF on the one hand and the amount of the climate contribution of the ERDF that exceeds 30 % of its total allocation should be allowed to be taken into account when calculating the climate contribution of the Cohesion Fund on the other.