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Transport Research Market Uptake (Market-up)

Final Report Summary - MARKET-UP (Transport Research Market Uptake (Market-up))

Executive Summary:
Market-up was born as a response to the need of implementing tailored policies and actions that promote the uptake of transport RTD results and technologies in the market, leading to safer, less polluting and smarter European transport systems. The transport industry at large accounts for about 7% of GDP and over 5% of total employment. As such, transport represents one of the main pillars of the European economy with high contribution to strengthening the research potential of European regions and establishing research- driven clusters.
While transport is capable of offering significant benefits, it also causes many negative externalities, such as environmental impacts and safety concerns. Against this background, transport activity is expecting to continuously increase in the coming decades, being set to double by 2030. The increase will generate further social impacts that can affect the European economy. The European transport system needs to be optimised to meet the demands of enlargement, enhanced mobility and sustainable development, thus addressing the enormous challenges to be faced in the coming years.
All these elements underline the need for innovation processes and thus, the adoption of advanced technologies in the market which are sustainable from a social, economical and an environmental point of view. Policies exist that promote transport research results and related technologies, however, much of the existing potential is unrealised because of different barriers hindering an effective absorption of RTD by the market. In this context, a more comprehensive approach of ”push“ and ”pull“ policies is needed which considers the different stages of innovation processes, i.e. scientific research, development, demonstration and the deployment of innovative technologies. Furthermore, the interaction among topic related policies and measures needs to be understood as well as the existing institutional capacities and the role of key stakeholders in the transport arena.
A key issue for Market-up has been to derive conclusions for policies and measures that can accelerate innovation processes and support the deployment and market uptake of existing transport technologies as well as the diffusion of new low emission transport systems. Identification of key players for innovation, how innovation spreads in the market and how it could be stimulated through networks, as well as the impact of policy measures on the development of transport systems have been important topics of Market-up. Next to the drivers for innovation, Market- up aimed at detecting both social and technical barriers for the uptake of transport research results in the market.
Via this identification process the project sought to contribute to the increased role of the transport sector in delivering a low carbon economy, and in the search of tools to achieve two main goals: the uptake of transport research results in the market; and the access to European research funding for all transport-related actors, including the weakest ones.
Market-up started in October 2010 and has been successfully completed in September 2012. The project involved scientific and industrial transport key players as well as innovation intermediary organisations from the countries Portugal, Belgium, Germany, Italy, Slovakia, and Hungary.
During the two years of project duration, Market-up has succeeded in responding to the set goals, producing a set of recommendations addressing the market uptake of results and involvement of weak players

Project Context and Objectives:
”Innovation culture“ will be a central element of the EU's economic policy over the next 10 years and that is an enormous opportunity for the transport sector: with its ever-increasing demand the transport system needs to be optimised to meet the demands of enlargement and sustainable development. Focusing on the market uptake of new technologies is strongly needed and Market-up is designed looking ahead to that challenge.

Market uptake of transport research results (Market-up project) aimed to identify barriers (both social and technical) and drivers for the market uptake of transport research results and, via this identification process, to contribute to the increased role of the transport sector in delivering a low carbon economy. The project looks forward to tools that enable the achievement of two main goals: a) that research results are uptake by the market; and b) that European research supporting covers all actors, including the weakest ones.

The policy framework under which the Market-up project was developed evolved substantially since the submission of the proposal and adoption of the DOW. In March 2010 the European Commission presented the ”Europe 2020“ strategy (EC, 2010) and, as a key part of such strategy, in October, just a few days after the official kick-off of Market-Up activities its Flagship Initiative ”Innovation Union“ was announced, aiming to improve framework conditions and access to finance for research and innovation so as to ensure that innovative ideas can be turned into products and services that create growth and jobs (EC, 2010a). This Innovation Union Communication has a substantial impact on the work of Market-up. First because it presents the strategy and the commitments of the European Commission that will frame the European research and innovation policy until 2020. And second because it broadly recognises some of the premises that sustain the work of Market-up: the need to get more innovation out of research and to enhance the cooperation between the worlds of business and science; the urgency to remove barriers for entrepreneurs to bring ”ideas to the market“, including through better access to finance for SMEs and the commitment to launch European Innovation Partnerships which will aim to accelerate research, development and market deployment of innovations to tackle major societal challenges. Amongst other aspects the Communication notes that during the technology transfer and start-up phase, new companies face a "valley of death" where public research grants stop and it is not possible to attract private finance (EC, 2010a).

Developments within the European Transport Policy were also relevant. The adoption in 2011 of a new White Paper on Transport Policy is a major milestone (EC, 2011), being in line with the flagship initiative ”Resource efficient Europe“, also set up in the Europe 2020 Strategy. The White Paper recognizes the importance of the development and deployment of new technologies and innovative transport systems in achieving the objectives of the European Transport Policy. Moreover it commits the European Commission to devise an innovation and deployment strategy for the transport sector, in close cooperation with the Strategic Energy Technology Plan (SET-plan), identifying appropriate governance and financing instruments, in order to ensure a rapid deployment of research results (EC, 2011). Another key policy development occurred later in 2011, when the European Commission adopted a Communication on the ”Horizon 2020“, the new master programme to finance research and innovation in the EU, which will now concentrate all existing Union research and innovation funding (EC, 2011a). Amongst the key novelties introduced with Horizon 2020 we underline three which focus on improving the market uptake of research results: i) the integration of research and innovation by providing seamless and coherent funding from idea to market; ii) more support for innovation and activities close to the market, leading to a direct economic stimulus; iii) a strong focus on creating business opportunities out of our response to the major concerns common to people in Europe and beyond, i.e. 'societal challenges'.

Two other important aspects for which relevant developments are expected in short and medium term regard the completion of the European Research Area (ERA) and the Strategic Transport Technology Plan (STTP). More specifically, and as consequence of the ongoing work being developed in the Strategic Transport Technological Plan (STTP) and developments on the European research and development agenda (with the adoption of the Proposal for Horizon 2020), Market-up broad objectives have been reoriented in order to provide also answers to the following key questions: i) are there problems/issues in innovation and market take up that are transport-specific?; ii) how can the public sector help the transport manufacturing and service industry in better managing innovation cycles?; iii) how can innovation and market take-up in the transport sector be better focused towards transport policy objectives?

From the work developed in Market-up, the following elements can represent important contributions to the work in STTP:
• Availability of SSI figures in all transport modes identifying the current structure of the actors and their links that influence innovation. An exhaustive inventory of research actors per MS and per mode in the EU 27 organised along the central set of actors: political system, education and research system, industrial system and infrastructure system;
• An assessment of major barriers and drivers to uptake of transport results, taking into account the function of TIS they are mostly present and a specific assessment of barriers faced by transport SME's;
• Evaluation of existing funding instruments for transport research and how they address specific phases along the innovation cycle; and
• An illustration of barriers and drivers of transport research and innovation market uptake on seven specific case studies, accompanied by a communication package.

The specific objectives for Market-up were:
• To establish a theoretical understanding of the processes of innovation, and in particular the role and mechanisms of action for research policy, taking into account the results from previous and on-going related projects looking forward for cooperation activities
• To identify relevant present and future trends and context of RTD initiatives per transport sectoral areas
• To assess progress of the industrial research in the transport sector through a mapping of existing competencies in the EU-27
• To identify and assess barriers and drivers (social, economical and technical) for the market uptake of transport research results in Europe.
• To analyse barriers and weak players in the field of RTD as applied to SMEs in the transport sectors
• To assemble evidence through the conduction of selected case studies on transport innovation along the different modes and to assess, through the case studies, research-funding instruments available (i.e. European Research Area and its integration with structural funds, national, regional, local as well as private sector) and other innovative financial and other policy instruments and its potential for wide adoption; this analysis will explore the synergies and interdependencies across the various public and private R&D funding mechanisms and potentially identify some strengths and weaknesses of existing schemes
• To produce targeted recommendations for different transport actors on roles for an easier uptake of transport results
• To look forward to the conditions and mechanisms necessary to built up a self sustainable network (market-oriented permanent infrastructure of services) after 2013

Market-up project was structured along seven building blocks:

The objective of the first activity (WP1 - Innovation Theory and Trends in RTD Initiatives in Transport) was to develop the theoretical foundations for an analysis of innovation in the various modes of the transport sector, creating the theoretical basis and the analytical framework to the downstream activities in the project. This was complemented with the identification of transport innovation trends that could contribute to (re) define the innovation clusters for case studies in WP3.

The second activity (WP2 – Characterisation of the context of RTD initiatives per sectoral areas) was targeted to obtain an overall picture of innovation systems/R&D competencies and of the existent conditions in the different transport sub-sectors. It included a desk research component to identify actors, regions and its inter-relations, evaluate concentration of funding (modes, actors, regions) upon which a mapping of competences was drawn. An assessment of the barriers and drivers to uptake of transport results and more specifically the barriers to SME was conducted in this activity.

Selected cases on transport innovation and with high potential for market uptake were object of a detailed analysis. That assessment was developed in WP3 – Selected case studies on transport innovation, enabling to obtain more concrete data on its context of development (i.e. key players, institutional and policy settings, market structures, etc.) serving as basis for the development of recommendations towards a more targeted uptake of transport research results. For each case study a review of the current status of innovation and R&D in that specific topic was discussed, and a backwards review of progress established. The idea was to provide clear examples, easy to communicate, about the uptake of previous R&D activities and establish the link to existing challenges by drawing conclusions from past experiences and providing recommendations to address challenges that are now being faced in these areas. A synthesis of case studies enables to obtain detail insights on different modes and an overall perspective at the global level.

The fourth activity (WP4- Research Funding Instruments) was targeted to identify and assess research-funding instruments and other policy support instruments available to SMEs and identify innovative economic and financial instruments. An identification of the different funding instruments and assessment of its potential to promote SME participation was be carried out. Conditions for success of different research-funding instruments were evaluated, based on the theoretical framework drawn in WP1 against the knowledge obtained in WP2 and WP3 (case studies). A set of funding instruments factsheets was produced.

In WP5 - Recommendations towards market uptake of transport results: actors and roles, specific policy recommendations on potential for uptake of transport results and technologies and involvement of actors (encouraging weak players) were formulated. Given the differences between the case studies, the recommendations attend to a set of core aspects from the strategic, economic, technical and organisational perspectives, addressing in particular the markets and players and target particularly the ongoing processes of the STTP and the preparation of Horizon 2020.

The other two pillars under which Market-Up was anchored, which constitute its main supporting structures are respectively a sound management structure (WP7 - Management and Coordination) and a strong and effective dissemination basis (WP6 – Dissemination and Exploitation), aiming at the broader dissemination of the project results beyond the borders of the Market-Up partnership. NCP's network and Technological Platforms were involved in the validation and discussion of findings as well as they are asked to accompany and comment the different outputs of Market-Up.

The analysis undertaken in Market-up provides important insights into the functioning of the European transport research and innovation system. It focused mostly on the aspects related with the market uptake of transport research results and on the engagement of weaker players particularly SMEs, while developing a unique overview of the system in terms of the mapping of competences and overview of financial instruments. Policy conclusions were wrapped out and a set of recommendation produced oriented to the two aspects identified: recommendations for improving the market take up of research results and recommendations to encourage the involvement of weak players.

Project Results:
The policy framework under which the Market-up project is being developed evolved substantially since the submission of the proposal and adoption of the DOW. In March 2010 the European Commission presented the ”Europe 2020“ strategy (EC, 2010) and, as a key part of such strategy, in October, just a few days after the official kick-off of Market-Up activities its Flagship Initiative ”Innovation Union“ was announced, aiming to improve framework conditions and access to finance for research and innovation so as to ensure that innovative ideas can be turned into products and services that create growth and jobs (EC, 2010a).

This Innovation Union Communication has a substantial impact on the work of Market-up. First because it presents the strategy and the commitments of the European Commission that will frame the European research and innovation policy until 2020. And second because it broadly recognises some of the premises that sustain the work of Market-up: the need to get more innovation out of research and to enhance the cooperation between the worlds of business and science; the urgency to remove barriers for entrepreneurs to bring ”ideas to the market“, including through better access to finance for SMEs and the commitment to launch European Innovation Partnerships which will aim to accelerate research, development and market deployment of innovations to tackle major societal challenges. Amongst other aspects the Communication notes that during the technology transfer and start-up phase, new companies face a "valley of death" where public research grants stop and it is not possible to attract private finance (EC, 2010a).

Developments within the European Transport Policy were also relevant. The adoption in 2011 of a new White Paper on Transport Policy is a major milestone (EC, 2011), being in line with the flagship initiative ”Resource efficient Europe“, also set up in the Europe 2020 Strategy. The White Paper recognizes the importance of the development and deployment of new technologies and innovative transport systems in achieving the objectives of the European Transport Policy. Moreover it commits the European Commission to devise an innovation and deployment strategy for the transport sector, in close cooperation with the Strategic Energy Technology Plan (SET-plan), identifying appropriate governance and financing instruments, in order to ensure a rapid deployment of research results (EC, 2011).

Another key policy development occurred later in 2011, when the European Commission adopted a Communication on the ”Horizon 2020“, the new master programme to finance research and innovation in the EU, which will now concentrate all existing Union research and innovation funding (EC, 2011a). Amongst the key novelties introduced with Horizon 2020 we underline three which focus on improving the market uptake of research results:
• The integration of research and innovation by providing seamless and coherent funding from idea to market;
• More support for innovation and activities close to the market, leading to a direct economic stimulus;
• A strong focus on creating business opportunities out of our response to the major concerns common to people in Europe and beyond, i.e. 'societal challenges';

In addition to these novelties, improving the market uptake of research results is also mentioned in the presentation of the three key priorities of Horizon 2020. The first priority - Excellent Science - focuses on raising the level of excellence in Europe's science base and ensuring a steady stream of world-class research to secure Europe's long-term competitiveness. In the second key priority – Industrial Leadership – access to risk financing and support for SMEs are noted as areas where increased activities will be undertaken. For the third priority – Societal Challenges – Horizon 2020 will cover activities from research to market with a new focus on innovation-related activities, such as piloting, demonstration, test-beds, and support for public procurement and market uptake. This is then reflected in the budget that will prioritise spending with immediate impact on growth and jobs through major investment in risk finance, SMEs and large scale pilots and demonstrators for key technologies. Another aspect that is addressed in the preparation of Horizon 2020 is the simplification of access to EU research and innovation funding. The FP7 interim evaluation report concluded that major steps towards further simplification were needed (EC, 2010b), and the Commission proposed substantial changes in this field in the hope of making the programme more attractive and inclusive for researchers and to industry.

All in all, Horizon 2020 is intended to give stronger support to the market take-up of innovation. This will include more proof-of-concept, piloting and demonstration. It will involve a better use of the potential of research infrastructures, as well as setting technical standards, pre-commercial procurement and strengthened loan and equity financing. It also aims to further involve SMEs in research and innovation activities. The Communication notes that SMEs have significant innovation potential and they have the agility to bring revolutionary technological breakthroughs and service innovation to the market (EC, 2011a) and an integrated approach is proposed to engage SMEs in Horizon 2020: increased simplification, a new SME specific instrument, a dedicated activity for research-intensive SMEs and improved access to risk financing.

Two important aspects for which relevant developments are expected in short and medium term regard the completion of the European Research Area (ERA) and the Strategic Transport Technology Plan (STTP). For the ERA the aim is to build a genuine single market for knowledge, research and innovation, enabling researchers, research institutions and businesses to circulate, compete and co-operate across borders. In the Innovation Union Communication the European Commission has committed to deliver the ERA before the 2014 deadline. Regarding the STTP, the European Commission issued a public consultation in May 2011 and in its report it notes that the STTP, which should be finalised by the autumn 2011, will outline priorities for transport research and innovation areas, in this report also referred to as technology areas (EC, 2011b). By the end of September 2012, just few days before the conclusion of this deliverable the STTP communication was launched. In this communication, three initial Research and Innovation areas (R&I areas) and, within these areas, ten fields with a clear EU added value on which research and innovation (R&I) should focus were identified, being those considered as having significant potential for helping achieve the White Paper's objectives by 2030 — or by 2050.

All these developments impact the work of Market-up, particularly its policy recommendations. First, it places the issue of market uptake at the heart of policy discussions on the European research policy for the future. Second, it puts forward a set of proposals, framing a roadmap on how to improve the market uptake of research results. Accordingly, in its policy recommendations Market-up does not need to demonstrate the concepts behind its proposal, which are now rather universally accepted by policy makers . Similarly instead of developing a roadmap independent from the one the European Commission is presenting, Market-up will look to the European Commission roadmap and comment on the scale of the challenge to address the weaknesses and challenges identified throughout the project.

Innovation Theory and Trends in RTD Initiatives in Transport

The objective of WP1 was to develop the theoretical foundations for an analysis of innovation in the various modes of the transport sector. The overall theoretical approach used is the system of innovation analysis, applied specifically to an industrial sector is called in the literature a 'sectoral system of innovation' (SSI). The SSI identifies the current structure of the actors and their links that influence innovation in a sector. This has been transformed into a dynamic methodology, the 'Technological Innovation System' (TIS), which adds an assessment of seven innovation functions that are performed by a sectoral system of innovation. The TIS then enables an overall assessment of how well an innovation system is performing in developing new technologies and bringing them to the market. The TIS is dynamic in the sense that it provides the basis for assessing the future possibilities of the technology.

The literature on innovation systems was reviewed and the theoretical fundamentals for success of transport research initiatives were discussed. We then undertake a qualitative analysis to identify the main innovation trends in transport. Finally, the analytical framework that has been developed is described.

The rationale for policy to support innovation and investment in the context of low carbon energy technologies is discussed. These considerations apply equally to the transport sector:
• Creating technology options, or bringing them forward in time, improve the flexibility of policy, which all studies agree is important both for reducing costs and for winning public acceptance.
• Reducing uncertainties about the performance of a technology before it is adopted on a large scale increases the option value of a policy.
• Reducing costs to future investors and consumers, and enabling environmental problems to be solved sooner has appreciable positive external benefits.

Special provision for rapid approval of projects and contract payments are necessary for the effective involvement of SMEs and start-ups in EU R&D programmes.

The most comprehensive typology of the structure of the innovation process comes from Bergek et al. (2008), who describe seven functions of innovation in a TIS: Knowledge creation, Guidance of search (what external factors promote or inhibit innovation and which aspects – e.g. performance, safety, environmental impact are externally imposed on innovators), Entrepreneurial experimentation, Resource (financial, human) mobilisation, Legitimation (acceptance in society, adoption of suitable legislation and standards), Market formation (strength of demand), Development of externalities or knowledge diffusion through networks (the strength of knowledge sharing in innovation networks). Together with the identification of relevant actors in an innovation system, these functions provide the basis for an assessment of the strength of R&D in a sector. We have identified innovation trends in the following aspects and sectors of transport: Rail, road, electromobilty, air, maritime sector, inland waterways and intermodal.

D.1.1 reports an initial SSI assessment for the transport industries (Initial results of sectoral systems of innovation analyses were given for road, air, rail and maritime modes) and describes how the SSI can be developed into a TIS for the case studies in subsequent work packages of the Market-Up project (figures 1 and 2).

SSI analyses innovation in an industrial sector through a system analysis, which main objective is the identification of actors and their interrelationships. The structure identifies three central sets of actors in a sectoral innovation system: the industrial system (i.e. the manufacturing firms), the education and research system as an important source of research and the political system. Intermediaries are also important, as they are organisations that specialise in bringing the different actors in the system together. Markets as drivers of demand and the 'infrastructure' for innovation – venture capital, standards setting etc. are also considered in the SSI. Framework conditions may refer to the social and political environment within which the innovation system operates.

The SSI was guiding method to develop the base work towards the mapping of competences. Given the common sources of information data was gathered for both actors and funding schemes simultaneously, and was aggregated across thematic areas, which correspond to a general collection of information that crosses all modes of transport and the six transport fields identified for the case studies in Work Package 3 (WP 3). The analytical framework defined for adoption in case studies was the Technological Innovation System (TIS) methodology. The TIS emphasises the identification of actors: industrial, research and governmental/regulatory involved in innovation and the performance of seven innovation functions, enabling for an overall assessment of how well an innovation system is performing in developing new technologies and bringing them to the market.
The established framework allowed to derive conclusions on key issues affecting the functioning of an innovation system, i.e.:
• the specifics, actors and dynamics of innovation of the different transport modes;
• the present and future trends in innovation for the different sectors;
• the understanding of factors determining whether a public RTD funding program is successful.
Innovation trends have been identified in the following aspects and sectors of transport: rail, road, electromobilty, air, maritime sector, inland waterways and intermodal. Comparing the collected Innovation Trends with the objectives and the challenges stated by the European Commission transport policies, it's possible to identify a common direction towards more environmentally sustainable transport, both from the point of view of the reduction of GHG emission, the use of renewable energy and the introduction of less-polluting fuel and vehicles. The trends identified in electromobility (Vehicle-to-Grid vehicle interaction and plug-in Electric Hybrid Vehicles), air transport (Improvements in fuel efficiency for GHG mitigation and Alternative aviation fuel) and in rail (preserve track and wagon integrity) confirm this common approach and highlight the attention of the European Commission to environmental issues in the transport research priorities. From the perspective of European industry we can also observed a general commitment to environmental issues mostly explained by the side benefits of the environmental policy: increase efficiency, reduce emission and comply with EU regulation.

Strongly related with this trend, there is recognition that the current dependency on oil as energy source is unsustainable and there is a need to diversify energy sources: for this purpose all modes are looking to limit their oil dependency, both increasing the efficiency and the use of alternative energies. For this reason one can consider the current move towards electric vehicles as a trend in itself (or, in a wider perspective towards ”grid-connected vehicles“, as in some formulations the engine can be hybrid or based on fuel cells but still connected to the electric power network). On the one hand electric engines are generally more efficient, but, perhaps more importantly, they allow a vehicle, vessel or aircraft to be supplied with a wide range of primary energy sources – from Oil or Coal to renewable wind or solar power. For this reason it is a strong response to both the oil dependency issue and GHG emissions challenge.

Another common and relevant trend identified in all the transport modes is the increasing application of ICT technologies to transport and the respective investment in this innovative research area. Rail transport trends as well as road trends are the most relevant examples. In particular, in the identified rail innovation trends the application of information technologies systems has been applied to enhance the role of rail services in long distance transport as well as to address and improve safety and security in rail transport. The same trend could be observed in the Inland Waterways and in Maritime, where the application of Intelligent Transport Systems could lead to a better safety, security, efficiency and environmental use of the inland navigation transport. As mentioned in the respective identified trend (annexed), in 2005 a called ”RIS-directive“ has introduced in Europe a harmonized system: the River Information Services (RIS) with the specific objective of harmonized services traffic management all over Europe. A similar trend could be observed in the port management, where the increasing of ship dimension as well as the number of containers required better logistics services, also for time-saving and reduction of emission.

Another interesting innovation trend and the respective research activities are identified in the use of new materials. Even if these challenges are not specifically mentioned in the EC transport agenda, it's important to observe that EC is highly investing in this research field and that its application is wider than just in the transport sector. At a glance, it's possible to observe that innovation trend in new material application is present in all the transport modes, from rail and road to air and maritime. It is also interesting to notice that many spillover effects in new materials technologies are imported to transport sector by others sectors (for example energy, environment, health, civil construction, etc.).

Investment in safety and security is another important trend where innovation plays an important role: air transport is leading the research of both deterrence and detection systems to improve the security in civil and military aviation. As highlighted by the EC transport agenda, safety on the European road and rail network figure as one of the priorities of Europe and a challenge for the future. As reported in the innovation trends collected, addressing safety and security issues in rail transport is a current and future trend, especially when it comes to review and develop better IT infrastructure (e.g. Geographical Information System to develop a more efficient traffic management system), preserve track and wagon integrity (climate change) and improve ultrasonic testing of wheel sets. Especially in terms of safety, the maritime sector has been exposed to multi faceted challenges that required enhanced reliability, in order to carry greater volumes of goods over extreme weather conditions and longer distances with increased efficiency (due to the oil prices), reduced CO2 emissions and also responding to more sophisticated customer expectations. These challenges require the innovation and research in design, development, manufacture and operation of innovative vessels and ship systems, optimised for the changing conditions, as well as appropriate transport and operation concepts. Regarding safety, in road sector there are many good example of the application of ITS to vehicle in order to improve safety issue (for example large-scale testing of the first generation of robust platform-independent v2v and v2i communications).

Indirectly related to the environmental sustainability as well as to the introduction of new material, it is possible to identify a trend in the preservation of integrity and as well as renovation of the means of transport: especially in maritime sector and in rail many investments have been made in order to prolong the life and the use of vessels, of rail tracks and of wagons.
Competencies in the transport sector for the EU27
Market-up undertook an in-depth analysis on the specificities of the different transport modes, providing an overall picture of innovation systems/ R&D competencies and existent framework conditions. A country and mode specific application of the Sectoral System of Innovation (SSI) approach to characterize the context, identify the actors and analyse funding sources in each country of the EU-27 was conducted. The goal was to identify and define the roles of actors and regions involved in transport research.
Key findings have been discovered in the following:
• Innovation systems per transport mode and respective key actors in the EU27;
• Barriers and drivers to the uptake of transport results;
• Barriers faced by SME in the transport sector.

The European Commission presents a thorough overview of R&D efforts in Europe in the 2011 edition of its Innovation Union and Competitiveness Report (EC, 2011c).
One of its main indicators measures the achievement of the 3% R&D investment target, as investment in research and innovation is a key driver of growth and innovative ideas for the future of Europe. According to the report, during the period 2000-2007, the EU R&D intensity stagnated as a result of a parallel increase in GDP and Gross Expenditure on R&D (GERD). More recently, EU R&D intensity has grown from 1.85% of GDP in 2007 to 2.01% in 2009 as the result of a decrease in GDP and widespread budgetary prioritisation of public R&D funding combined with the resilience of private investment in R&D. Between 1995 and 2008, total research investment in real terms rose by 50% in the EU. However, performance was higher in the rest of the world, as the world economy became more knowledge-intensive (EC, 2011c). Figure 3 represents the share of GDP invested in R&D in the various European countries.

As it can be seen there are substantial differences across Europe, which are exacerbated if the level of analysis is further detailed to consider regional expenditure. This is certainly important in terms of market uptake, as less investment in R&D is surely reflected in the capacity to attain better results in research phases and then to ensure their successful penetration in the markets. However, it is also important to understand how much of this investment is promoted by the public sector and how much derives from industry and business, as these are much more likely to focus their R&D efforts in marketable products and services. The conclusions from the Commission analysis in the Innovation Union and Competitiveness Report are very clear: the EU under-investment in R&D is most visible in the business sector where Europe is falling further behind the United States and the leading Asian economies (EC, 2011c). (see Figure 4)

The Figure shows the contribution of public and private bodies for R&D expenses in several world blocs. The first conclusion that emerges regards the relatively minor differences across countries in the investment in public R&D: with the exception of China, public R&D investment in 2009 varies between 0.65% of GDP in the United States and 0.78% of GDP in South Korea (i.e. less than 0.15%). What really makes the difference between these trading blocs is the volume of private investment in R&D and that is where Europe is falling behind, with 1,25% of GDP in 2009 against 2.01% in the United States, 2.54% in South Korea and 2.70% in Japan. Another interesting element to consider is that investment in R&D is increasing at much higher rates in the Asian countries than in Europe and the United States.

A substantial part of the Market-up resources devoted for Work Package 2 was invested in the mapping of competences for transport research in all European Member States for six modes of transport: rail, road, air and aeronautics, maritime, inland waterways and intermodal sector. This work was split between all partners of the Market-up project which were asked to perform focused desk research to identify key players and gather insights on the framework conditions for research in that Member State for that specific mode and gather information on local or regional funding sources.
From these efforts Market-up was able to prepare systematic information, but the challenge here is to subtract policy messages and conclusions from this work. In other words, by looking into the framework conditions for research separately in each Member State and in each mode are there any patterns or conclusions which are relevant for consideration at European level?

A first aspect that clearly emerges from this analysis regards the difficulty that Market-up partners faced in identifying the key players on transport research and innovation on a given Member State. The current information systems in place, such as the NCPs network or the Transport Research Knowledge Centre (TRKC) , fail to allow a straightforward identification of key players and relevant competences across the EU. Most companies involved in EU research projects do have personal and corporate networks that facilitate identification of potential partners, but this absence of effective and independent information sources can make it potentially difficult for potential newcomers to get to know who is working in which field.
A second issue that was covered in this analysis regarded the capacity to identify national or regional funding sources and to evaluate the complementarities between the various funding schemes. For several Member States national or regional funding instruments were identified; however in some cases these funding lines did not cover all modes of transport.

The analysis has been performed on the assembled data and a map of competencies has been developed. A simplified map, displaying the distribution of competencies based on the numbers of approved projects is shown in the next Figure (Figure 5).

From the analysis performed we can conclude that EU funding programmes, such as the FP7 play an important role in building up competences for transport research across Europe. However, it also seems clear that the presence of national research funding programmes, complementary or additional to the European programmes, is key to achieve high levels of capacity on transport research and innovation.

This conclusion is particularly relevant since in most cases Market-up failed to identify a national funding instrument for research on specific transport modes. This may not imply that such funding instruments do not exist, however, it shows the difficulties in identifying them. In most countries there is a lack of structured information on how to finance transport research and this appears to be an area where improvements are possible.

Barriers and drivers to market uptake of RTD results
Market-up created a ranking system intended to provide a better understanding of the relative importance of the different inducements and blocking mechanisms identified for the uptake of RTD results in the transport sector.

Assessment of barriers and drivers has followed the TIS (Technological Innovation Systems) methodology, being the main barriers identified classified in relation to the respective TIS function. In order to ascertain more information on the barriers and drivers, we have created a basic ranking system. This is intended to provide a better understanding of the relative importance of the different inducement and blocking mechanisms identified in the transport sector. Main barriers and drivers have been ranked according to the expected impact. (see Table 1)

The most important barriers are in the bottom right, with severe and lasting impacts. Absent or inaccessible monetary resources and external funds have the capacity to cripple the development and the uptake of new ideas. Lock-ins and the domination of incumbents (often leading to inefficient monopolies) are hard to break, especially because of the conflict of interest with the well established and leading institutions in the transport sector. Last but not least, the interoperability problems and the lack of unified standards have a profound impact on transport innovation, and are difficult to address. This is perhaps the best area where policy efforts should be concentrated to achieve considerable gains across Europe.

In relation to drivers, the last group (bottom right) contains the most powerful drivers that also possess long duration. They are mostly related to the need to change current unsustainable operational practices across all areas, although the transport sector is perhaps even more affected than others. Peak oil, the scarcity of energy and materials will drive a profound change in the way we live, travel, and innovate. Designs will have to be modified to reflect the changes that have taken place since the industrial revolution, while consumers, becoming increasingly aware of the situation, will be increasingly driven towards more sustainable products and services, generating demand and innovations in this area. This fundamental change in mindsets should be taken advantage of when designing policy instruments to facilitate transport research in the future (see Table 2)

Market-up focused in its analysis particularly on the difficulties encountered by SMEs while per-forming research, in-novation and devel-opment activities. Barriers have been identified relating to SMEs' experiences with FP7 as well as to further impediments of investing in R&D.

A ranking system has been applied in order to provide a better understanding of the relative importance, severity and impact of the listed barriers (see Table 3).

The most relevant and complex barriers to SMEs are those located in the bottom right, with severe and long term impacts, namely inadequate innovation policy for transport (both at national and European level), regulatory aspects and weak institutional co-ordination, absent or inaccessible monetary resources and external funds, adoption of environmental technologies, lack of data on the current transport system. These barriers, having the capacity to limit the business strategy and the uptake of new ideas, are harder to overtake and in some case depend on policy negotiation and financial regulation at national and European level.

The related report 'Characterisation of the context of RTD initiatives per sectoral area', together with six Annexes organised per transport mode and presenting the actors and funding schemes for transport research per Member State is available at www.market-up.org

Case studies on transport innovation for a better knowledge on the market uptake of results

Market-up undertook a detailed assessment of seven Cases representing different innovative clusters in the transport sector, shedding light on:
• key players (and investors) involved and their roles,
• the policy and institutional setting in which innovation is realised,
• the financial and funding schemes adopted (European, national, regional, local, other),
• the influence of contextual elements over innovation development,
• innovative practices in place (policy, operators, users),
• market structures,
• barriers and drivers.

The TIS analysis of each case study in WP3 provides lessons on the functionality of the TIS and the factors that are important for successful market take-up of the innovation in focus. Some issues noted are case-specific, and, therefore, are not important in the context of this analysis. Those are left out here. But the issues which have impact on the successful functioning of TIS in several of the investigated cases, allow to identify how well the system is functioning and to determine how the functional pattern should develop to reach higher functionality or ”targeted“ functional pattern (see Table 4)

Electromobility show case (EM)
Over the last few years Electric Vehicles (EVs) have been dominating car manufacturing showrooms, appearing to be at the top of carmakers research priorities. However, these novelties are failing to reach out to the market out in the streets, where penetration of EVs is still incipient. Market-up tried to understand why and concluded that battery technology appears to be the highest hurdle for electric vehicles to technologically succeed. Within the Research system the most relevant problems occur at entrepreneurial experimentation, market formation and legitimation. For successful uptake of EVs more than demonstration projects is needed, suggesting the launch of experimentation initiatives, in which people try EVs for longer periods of time, showing them the technology meets their daily/weekly mobility needs.

Liquid biofuels for surface transport (BF)
The extent of GHG saving with biofuels depend on the biofuels pathway. The analysis shows that the main blocking mechanism for a rapid introduction of liquid biofuels for surface transport is the structure of the industry, mainly the automotive vehicle industry dominated by the large OEMs and the technology networks attached. It also points out to the regulatory uncertainty, as the legal framework still fails to take account of all aspects related with biofuels environmental performance (e.g. changes in land use). To arrive at a socially acceptable production of liquid biofuels Market -up recommends concentrating efforts on promotion and alignment of biofuels policies with those in related sectors, such as agriculture, forestry and rural development.

Maritime and Green Technologies: SO2 Abatement Technology (SO)
Shipping is the primary means of transport worldwide and although representing the most environmental efficient mode of transport regulatory pressures and fuel costs have been driving efforts to green maritime
transport. Research indicates that this move may increase European's industry competitiveness, especially if it manages to remain at the forefront of innovation in this field. Market-up analysis show that barriers for increased adoption of maritime green technologies include lack of finance and standardization and the availability of skilled labour, and recommends increased financial stimulation mechanisms and regulation through market based measures to increase market take up of green technologies.

Versatile efficient and longer wagons for Intermodal Transport (LW)
A general change in freight structure strives for more transport of processed high valued goods with low density and higher space requirement, in contrast to transport of bulk cargo and heavy goods. This trend leads to a growing share of combined intermodal transport and palletized consignments that demand a new generation of wagons – versatile (suitable for container of different sizes, semitrailer, swap bodies and other loads), longer (to transport more TEUs and pallets per wagon) and lighter (fewer bogies per cargo unit). A consortium of EU institutions developed a versatile, efficient and long wagon for intermodal transport within a FP7 project but the case study analysis showed that the lengthy process of railway tracks revitalization, building of corridors and new tracks and the limited number of inland terminals and restrictions on their capacity are relevant barriers for uptake of this technology.

Maritime and inland waterways container transferium (CT)
The continuous growth of container flows in the Western-European ports has led to an increased pressure on the land side, including the hinterland road network of the ports. The container transferium is an inland container terminal located near a port and its functional pattern is aimed at improving efficiency in and around the seaport by means of combining container flows on the port transferium link. The purpose of a container transferium, being close to the port and having very fast and frequent barge connections with the port (which is possible with inland terminals) is to serve trucks away from port. The case study shows that one of the success factors in practical operation of the transferium is that a truck should have the possibility to make a turnaround at the transferium. In addition, good road infrastructure is of utmost importance, ensuring easy access to the transferium for road hauliers.

Rail freight cargo sprinter (CS)
Modal shift towards rail or maritime transport has the potential to substantially improve the environmental performance of freight transport. This is not easy as road transport has much more flexibility and new, innovative solutions are necessary to make rail more attractive to shippers. Market-up analysed issues related with the uptake of the 'rail cargo sprinter concept' that may have the capability to match road regarding technical, operational, commercial and service development. Even though the technology itself has been developed in 1996, the last 14 years have not seen much proliferation of the technology. The train costs, insufficient track capacity in suburban areas and unpaid externalities were identified as relevant blocking mechanisms, which can be addressed by increasing competition, cooperation and fostering interoperability or by addressing track access charges and transhipment costs

Biofuels for aviation (BA)
The aviation industry is one of the fastest growing sources of GHG emissions and the production of biofuels Jetfuels by using the Fischer-Tropsch synthesis ('Biomass-to-Liquid') or hydroprocessed oils ('Hydrotreated Renewable Jet') is amongst the most promising option to tackle this growth. This case identifies a lack of resources to set up large-scale production of aviation biofuels as the most pressing blocking mechanism for the system. Knowledge development within the aviation biofuels innovation system is very promising as well as the influence on the direction of search and experimentation activities by the actors within the system. Furthermore, the legitimation of this green alternative to conventional fossil aviation fuels is at a high level. Market formation and resource mobilisation are at a low level and these are the areas where more focus is needed.

For several of the investigated cases (EM, BF, CS, BA) there are problems in the area of market formation. The reasons in each of the cases might be different. For a better functionality of the TIS, to reach success on market take-up of such innovations a change in the ”market regime“ might be required. This would mean a change in the rules of the game in the market where already substitute technologies exist.

Legitimation of an innovation is important for its successful path to the market. For several of the innovation cases investigated (EM, BF, BA, CT) the need to prove the benefits of the innovation has been important in the legitimation context. The functionality of TIS appeared to be sub-optimal for the cases where there were problems with demonstration of benefits of the innovation. In contrary, where the positive benefits have been clearly demonstrated or proven (like in CT case), this had positive impacts on functionality of TIS and facilitated market take-up of the innovation.

Some of the cases (BF, BA, CT) showed signs of the negative impacts from alternative technologies, possibly those already on the market. The impacts could range from already taking up market niche to the contradictory policies, which would support the innovation on one hand but also support the competition as well.

Resource mobilization plays a very important role in all of the case studies. The case studies analyzed show that efficient actions in resource mobilization ensure the successful market up-take of the innovations in the different transport sectors.

External factors to TIS, like developments in the economy, can have favourable or unfavourable impacts on the TIS. The outcomes seem to be dependent on the functional pattern of the TIS. For example, an innovation aimed at optimization of a process and efficiency increases is likely to benefit from the increases in competitive pressures in the economy.
The case studies cover a variety of cases with different economic grounds. We see that the cases with a strong business case have a much better functionality of the TIS, which lead to better results or potential for successful and fast market take-up of the innovation.
The cases investigated have demonstrated that the impacts of the policies and specific political actions are great for the innovations in transport sector. Specific (project oriented) or general political support is demonstrated to be crucial for optimal functionality of the TIS. It is interesting that this conclusion is supported by data obtained in every single case study investigated.

A pilot demonstration can show the industry the benefits and weaknesses of the business case. The impacts on the functionality of TIS can be positive, but also adverse.

In cases investigated, where similar or technologically linked TIS exist (like BA, or SO), there were knowledge spillovers observed. These have played a positive role in improving the functional pattern of the TIS.

Main inducement and blocking mechanisms

Each of the case studies investigated has allowed the researchers of the consortium to identify the inducement and blocking mechanisms relevant for the innovation. The most important ones, those which are characteristic for several of the case studies are described here.

? Inducement mechanisms
The most important inducement mechanism, identified in all the innovation cases investigated, is the government support. This support could be monetary, involve development of specific regulations, or be in the form of regulations and practical solutions for problems in the market take-up process of the innovations. Here the factor of the political acceptability or viability can play a role: innovations that ”help to win votes“ have higher chances of getting political support.

The real or perceived need or usefulness of the innovation to the society is another inducement mechanism which facilitates the market take-up of an innovation. This was observed in the cases of EM, BF and BA.

Presence of no opposition to the innovation can be a facilitating mechanism for the market take-up of an innovation, like it was observed in the case of CT. In other cases, where the opposition from the competing industry, conservatism in the market or the structure of the mature market created the opposition (like with BD, BA, SO) for the innovation, this was a barrier for bringing of the product to the market.

Often the presence of infrastructure for use of the product is an important inducement mechanism for the market take-up of an innovation, like it was seen in the cases of EM and CS. Sometimes the infrastructure impacts the technical specifications of the innovative product, like in the case of LW.

It was noted that a change needs stimulus external to the developers of the innovation to bring it to the market, like it was in the cases of BF, BA and SO. The stimulus could come from the political level making the use of a technology obligatory, or reaching of some intended results obligatory by the potential market of the innovation.

? Blocking mechanisms
The blocking mechanism for an innovation case could arise from alternative technologies (those already on the market or also those emerging), like it was noted in the case of CT and BF. This would usually be done by taking up the niche in the market. Sometimes, the existing market structure itself (with the players in it) is organized in such a way that it does not allow the entry of new companies or technologies with different scale of operations, like it is in the case of CS.

For some products that have to be brought to the market the knowledge of the potential customer can be a problem. Often the potential clients are not aware of the benefits of the innovative product, like it was observed in the case of CT and BF. This barrier to innovation can be overcome with informing the potential client about the economic benefits of the innovation.

For some of the cases investigated (like EM, SO) a barrier was the state of development of the technology at the current moment of the time. The customer just does not consider the technology ”good enough“ or is expecting further dramatic improvements in the technology in very near future, thereby being better off by postponing the choice.

A very important blocking mechanism for some of the innovations (EM, BA, CS, SO) are the cost-related issues. These are related to the high price of the innovative product which means too long payback period in comparison with the current alternative.

Key policy issues

In case the successful market take-up of an innovation is desired, the policy should aim at remedying poor functionality in relevant TISs by strengthening or adding inducement mechanisms and weakening or removing the blocking mechanisms. Here the key policy issues related to TIS that should be dealt with in order to reduce systematic weaknesses of the TIS are summarised in the context of the investigated case studies.

The most important policy issue, which comes out of analysis of all the case studies, is the one of ensuring the economic viability of the innovation. This includes creating or supporting a market situation in which the innovation is economically viable. Different measures could be applied here. Depending on the innovation, those measures could range from ”cheap“ or state guaranteed loans, to measures that make the ”unfavoured“ competing technological option too expensive for the customer.

Another important issue, which was observed for the innovation cases investigated, is the impact of the innovation on the level of externalities that the public has to bear as a result of the innovation. The importance of this issue is more from the public perspective, because a company does not always care how ”green“ the innovation that it produces is.

The international policy goals, in this case the policy goals of the European Union are very important in the context of market take-up of the innovations. For several innovative cases (EM, BF, BA, LW) those goals were important, because they were linked with the possibility to phase out the current technology, which means increasing the market potential of the new technology.

An important aspect for increasing the functional performance of a TIS is the development of a standardised infrastructure. It is very important for most of the innovation cases investigated (like EM, BF, CT, BA and CS). This is closely linked with the fostering of competition in the market the innovation is about to enter.

Cases like BF and BA showed that politically targeting the manufacturing industry to make their products suitable for use with the innovation (in this case: biofuel) can be an important political issue for successful market take-up of some innovations.
Research funding instruments
Research funding instruments play an important role in shaping research activities, including their priorities, the phase of the innovation cycle that is addressed but also in encouraging the participation of weak players. However, as the previous chapter shows they also play a prominent role in creating research and innovation capacities in regions and countries.

Being aware of the importance of research funding instruments for incentivising the market uptake of transport research, Market-up devoted its Work Package 4 to focus on this topic. The activities included an analysis of the available research instruments to facilitate market uptake of research results, looking into the issue of the involvement of SMEs, and the analysis of relevant measures for the market uptake of project results. Additionally, it also reviewed the potential role of the so-called innovative economic and financial instruments, which include relatively new mechanisms and incentives to the market take up of research results.

The specific results of this analysis were presented in D4.1; however relevant policy messages also result from this work and will be discussed in this chapter. These are differentiated across three policy specific aspects:
• How the current funding landscape can provide support for entrepreneurs to bring ”ideas to the market“;
• The role of funding instruments to encourage the participation of weak players in research activities; and
• The orientation of the funding instruments to address the 'societal challenges' as defined in the Horizon 2020 Communication.

The assessment of funding instruments performed in Market-up was closely linked with this case study analysis, reviewing how each instrument addresses specific innovation functions and accordingly allowing an understanding of whether it is focusing on the functions more related with market uptake, aiming to address the ”valley of death“. In Work Package 4 a screening of available instruments for funding transport research was performed and then the relevant ones were selected for detailed analysis . From a global universe of 175 mechanisms Market-up was able to analyse in detail 54 mechanisms which have been organised in a matrix form, aiming to give a more general visualization of the financing transport landscape by positioning the mechanisms in function of the stage of innovation cycle and the main actors the mechanisms are addressed to.
This matrix (see Table 5) combines the different stages of the innovation process in one axis with the potential beneficiaries or actors of Research & Innovation support in the other axis. With this simple construction it is possible to address two dimensions considered as crucial in this process: what for (i.e. for what stages of the innovation process is the financial support intended?) and to whom (to which players is this financial support granted?).

Looking to figure above it can be noted that the stages for which a higher number of instruments were identified are on the provision of financial support to the development of innovation (R&D activities) and the investment in financing the research infrastructure. At the other end one can observe that financing instruments for supporting commercialization appear in a lower number, i.e. support to grant protection of Intellectual Property Rights for innovations, technology transfer or internationalization activities, as well as those focusing in stimulating demand for the innovations. Although this analysis does not take into account that some instruments are broader in budget and scope than others, it provides an indication that it is easier to find research funding mechanisms for the phases of basic or applied R&D and demonstration than for the market pull phases of commercialization, market accumulation or diffusion.

In addition to this matrix the financing instruments were also reviewed in Work Package 4 to determine whether they included specific provisions for push measures which may increase a project's success in bringing their innovations to the market. Implementation of dissemination and communication plan emerges as the most common market measure promoted by the funding instruments, by a wide margin, being present in the vast majority of the instruments reviewed. It is then followed by incentives to demonstration activities, which feature in more than half of the instruments. However, the remaining measures only feature in a minority of the instruments reviewed. In particular, there are very few funding mechanisms push for Technology Transfer Assessments, Identification of additional investment and Support creation of new high-tech firms.

It is important to consider the stage of development of a certain project result to efficiently define the type of support it needs for getting close to the market. In the case of pilot scale applications and prototypes, measures such as demonstration activities addressed to specific targets can contribute to raise interest; however frequently these type of results need additional funding once the project has ended. It is at this point where measures like professional support for business plan development, market research and business strategy definition can open the doors for investment opportunities: both private such as venture capital, business angel or corporate funding, and public in programmes like Competitiveness and Innovation Programme (CIP) or European Investment Bank (EIB).

This analysis signals that most of these funding mechanisms seem to be much more focused on promoting measures that increase the visibility of the project, e.g. dissemination and communication plan or end user involvement, rather than those which would focus in fostering the market take up of innovation, such as the preparation of a business plan or the identification of additional financing for follow-up activities. The picture one gets from this analysis is that the funding schemes have little focus on financing closer-to-market activities or market analysis and development plans, which reflects the ”valley of death“ noted in the Innovation Union Communication (EC, 2010a).

Furthermore, encouraging involvement of end user has been found a positive measure for technology transfer or increment of market demand. This involvement can be analysed from two perspectives; on the one hand, ensure that all relevant information about a project or innovation reach the end user through a sound communication plan implemented during the project, or on the other hand, directly require the participation of end users as a member of the consortium and take part in the project´s activities.
The analysis has also pointed out measures that could have a strong impact for reaching a certain readiness to the market, but they are not being extensively implemented. This is the case of the requirement of developing a business plan, financial plan or feasibility study, carrying out a market research, or even a technology transfer assessment. Although, the measures least implemented by the mechanisms analysed were the identification of additional investment (financing sources, e.g. equity financing, CIP) and the support for the creation of new high-tech firms e.g. through incubators, support to academic spin offs, etc.
Market Up has also focused on a more detailed analysis on two aspects, the actor involvement and the measures for market uptake.
From a very basic perspective, without considering all the variables that influences the market, the investment in RTD and Innovation, and most important the right investment towards measures for readiness to the market will contribute to create awareness on a specific innovation, increasing interest or even demand from the market and eventually encourage market penetration of such innovation.
Regarding to the assessment of innovative financing instruments, it is feasible to assume given the number of innovative private financing methods compared to public financing methods, that there is more freedom to create new and inventive financial tools in the private sector. This is likely to be a direct result of the fact that the private sector has a tangible financial gain as motivation, and therefore will strive to meet the financing needs of companies. Furthermore, given the lack of funding support as a result of the financial crisis, both in terms private and public sources, new private mechanisms such as crowd sourcing/funding have realised increased support and particularly embody an 'innovative financing mechanism'.
However, that is not to say that private innovative methods provide a better service than public counterparts. Particularly given that not all of them would necessarily support transport research, which can often foresee a long development period that will not result in a return in the near future.
Therefore in conclusion there are both clear advantages and disadvantages in the innovative public and private transportation research funding options. Public methods are always going to be slower than public services looking to make a profit based mainly on a solid business plan, however they could be far less suited to the particular needs of transport research.
Policy recommendations
The analysis undertaken in Market-up provides important insights into the functioning of the European transport research and innovation system. It focused mostly on the aspects related with the market uptake of transport research results and on the engagement of weaker players particularly SMEs, while developing a unique overview of the system in terms of the mapping of competences and overview of financial instruments. Most of the aspects discussed in this document do have policy implications and merit attention by policy makers.
Improving the market take up of research results
There are several aspects discussed in the previous chapters which present relevant insights regarding the issue of the market uptake of transport research results.

The first regards the actual investment in R&D. Lack of private investment in research and development activities are often seen as a major barrier weakness of the European research and innovation system. However, the analysis performed in Market-up actually reveals that in the specific case of transport private investment by European companies is much higher than average and European based players have a leadership role in R&D investment at worldwide level. We have to assume that this investment is strongly oriented towards market applications, as companies would only seek technological breakthroughs or innovative solutions if these would allow them to take an economic benefit or achieve a competitive advantage in the future.

If we relate this observation with the fact that transport is a sector where standards and regulations are highly detailed but that at the same time there is a need to better focus research and innovation efforts in addressing societal challenges, one may conclude that policy makers can boost R&D and ensure it targets societal challenges by adopting regulation which rewards companies that invest in innovation. Indeed, if European Regulation is designed in a way that gives companies that come up with innovative solutions a competitive advantage that it is very likely that it would have two beneficial effects: it would create further incentives for RDI investment and it would ensure a focus of such investment in addressing societal challenges.

A concrete example of how to implement such policy making process can be obtained by analysing emission regulations on passenger cars. The emissions of air pollutants, such as nitrogen oxides (NOx), total hydrocarbon (THC), non-methane hydrocarbons (NMHC) or carbon monoxide (CO) are regulated by the definition of ”Emission Standards“ which establish limit values that all new cars need to comply in order to access the European market . When a new ”Euro Class“ is announced to enter into force in a couple of years all car makers have a very strong incentive to develop the necessary solutions to meet the new standards, otherwise they take the risk to be ruled out of the market: the ”Euro 6“ standard is scheduled to enter into force in January 2014 reducing the emissions of NOx from diesel cars, from 180mg/km to 80mg/km, and all cars emitting more than this will not be allowed. Accordingly car makers will need to develop a compliant vehicle, however the incentive to reduce emissions will stop at the limit value and there will be no benefit from developing a car with, e.g. 50mg/km.

This contrasts with the European Regulation of GHG emissions from passenger cars, where the legislator instead of defining a limit value opted for an average emissions level. According to the Regulation, manufacturers are obliged to ensure that their new car fleet does not emit more than an average of 130 grams of CO2 per kilometre (g CO2/Km) by 2015 and 95g by 2020 . Because it is an average level and because a longer term indicative target is defined from the onset there is a clear incentive for the industry to keep their RDI efforts even after achieving the target: they will get a market advantage from having a lower than average vehicles by allowing them to still commercialize better than average vehicles (there are also financial instruments in which such company can benefit) and the indicative target gives an important indication that RDI efforts in this area should be maintained as they will be rewarded in the future.

In conclusion the European transport industry already has a leading position in terms of R&D investment. In order to improve the market uptake of research results policy makers are recommended to ensure that all Regulation and Standards adopted or reviewed are detailed in a way that rewards innovative solutions, notably by adopting provisions with technology neutrality, that promotes overachievement of targets and establishes indicative objectives for the medium and longer terms.

Another important aspect identified in Market-up regards the existence of a ”valley of death“, a phase in the innovation cycle where funding instruments fail to provide adequate support. This is reflected by both a certain concentration of funding in earlier phases of the innovation cycle (e.g. knowledge production) and a certain absence of focus on financing closer-to-market activities, market analysis and development plans. In order to address this issue policy makers are invited to increase the amount of closer to market activities in financing instruments. In the case of the European research and development financing programme, the European Commission has proposed that the new programme, i.e. the Horizon 2020, should address this issue, which is a welcome move that should be backed by both the European Parliament and Council. The European Commission is also recommended to increase its capacity to support financed projects in completing their innovation cycles. This implies increased provisions to ask projects to include aspects such as market research or preparation of business plans, but also to ensure that guidance material is available and that proposal evaluators take these aspects into account.

For example, the focus of FP7 projects on dissemination seems to be a potential success story. The fact the Commission pushes for appropriate dissemination of project activities results both in the call for proposals, in the evaluation and negotiation process and in its project monitoring has certainly contributed to the fact that the expert group performing the interim evaluation of the FP7 ”is encouraged by the attention given to dissemination“ (EC, 2010b).
Although dissemination seems to be well implemented and acknowledged by all participants as an important measure for creating visibility and closeness to the market, exploitation and sustainability plans on the other hand do not seem to have the same level of success. As for the case of dissemination, the EC also encourages the definition of sound and viable exploitation and sustainable plans for the projects, however, these usually encounter difficulties for implementation because of the lack of funding after the finalisation of the project.

It should also be clear that funding closer-to-market applications may imply funding projects which are increasingly riskier (i.e. projects that may actually fail). When approaching market stages of the innovation cycle one should assume that the projects with higher potential will easily get corporate or private funding, as potential market results incentivise companies to invest in those projects. However, there are projects which may be promising but which have high risks and fail to get private funding. Policy makers should discuss whether EU money should be invested in targeting such projects, having in mind that such financing is likely to result in many ”failures“. In order to be able to assess this, the European Commission may need to improve its capacity to deal with aspects such as marketing of innovation and business plans. One criterion to chose such projects is to focus on those that contribute to the achievement of longer term targets established in the Horizon 2020 programme.

Accordingly, policy makers are invited to consider increasing the capacity of the European Commission services to work on supporting projects to include readiness to the market measures in their activities. Guidance material should be prepared and a proficient application of such measures and activities should be clearly assessed in the proposal evaluation procedures. In order to minimise the ”valley of death“ successful projects should be granted easier access to follow-up projects and/or specific funding lines to bring their results (closer to) the market. This should be done in a way that does not hamper the current competitive system for obtaining EU funding (e.g. assessment of ”project success“ and ”market potential“ by independent experts).
Encouraging weak players
From the analysis of Market-up it clearly emerges that one of the weaknesses of the European transport research and innovation system is the concentration of competences. This concentration is occurring at two levels:
• Across Member States, where strong divergences in terms of transport research competences were observed;
• Within private research organisations, as research investment is concentrated in a small group of (large) companies and also a small number of companies dominate participation in FP7 projects, especially in some Member States.

This suggests there is a need to act at two levels: first there is a need to increase opportunities for certain Member States to improve their capacities on transport research; second, the European funding programmes need to be more open to a higher number of participants.

For the first aspect, it seems crucial that Member States implement national or regional funding mechanisms, complementary to European funding, as this seems to be an aspect that strongly influences the observed pattern in terms of research capabilities for transport research across Europe. The European Commission should also maintain the incentives for involvement of partners from different countries in their funding for collaborative projects, but also foster Member State's investment in complementary funding, notably through other financial instruments (e.g. cohesion funds).
Regarding the second aspect, it was detected in Market-up that the existing information networks – such as the NCPs or the TRKC – seem to fail to provide an efficient platform to identify key players and competences on transport research. This aspect is particularly penalising for newcomers who, in the absence of informal networks, may need to rely on these for identifying and contacting potential research partners to build consortiums. This is particularly relevant for SMEs, that being smaller and more specialized companies are less likely to have established networks of contacts and financial capacity to overcome this barrier. Accordingly there seems to be a continuing need to support in all EU Member States (on a national level) participation of new players in European research projects, with the improved use of recent FP supporting structures (NCPs) and other relevant information providing networks on the European and national levels. The European Commission should continue to fund activities that allow NCPs to work together and exchange best practices and information. In addition the European Commission should consider targeted funding for building capacity for NCPs working in countries with lower participation in research programmes or NCPs activities targeting weaker players (e.g. SMEs). Finally, establishing a network of regional contact points complementary to national contact points seems relevant and the European Commission should consider funding activities in this area.

In addition to the lack of support from established independent experts that can provide useful information on partners, funding schemes and opportunities, many SMEs and other weaker players have difficulties to engage with networks which are important to prepare successful proposals (e.g. public-private partnerships or the technological platforms). Possibilities for all players to engage with these networks and have full access to relevant information on the European transport R&D funding should be increased, and specific funding lines to create resources for increased SMEs and their representing bodies participation in such networks should be created.

It is worth noting that the FP7 includes a target for SME participation which, together with calls with SME oriented tasks, seems to be an effective instrument to ensure high levels of engagement of SMEs in the programme. Assuming such an instrument is maintained the focus should then be on measures that enlarge the number of total SMEs involved.

It is also worth noting that an up-to-date assessment such as the one prepared in the framework of Market-up could be a useful tool for supporting the work of NCPs and RCPs. Accordingly the European Commission should consider developing a methodology to map competences on transport research and innovation at national and regional level and prepare a tool to ensure that such mapping is frequently updated – either centrally at European level or based on input by NCPs and RCPs. This can be implemented through the implementation in European regions of the Self Assessment tool provided in Europe 2020 Flagship Initiative Innovation Union (EC, 2010a) to regional transport research and innovation systems. It is important that such tool also covers information on funding instruments and devotes appropriate attention to the engagement of weaker players, such as SMEs.

Potential Impact:
Potential impact to be generated from Market-Up should be understood along several dimensions:

The first refer to impacts directly related with the project specific objectives, as the identification of key players for innovation, how innovation spreads in the market, how it could be stimulated in networks, and what impact different policy measures have;

The second one refers to the more broad impact the project is expected to have on the transport industry, the EC's actions and policies in that sector, and society in general. This relates in particular with the capacity to derive conclusions for policies and measures which can accelerate innovation and support the deployment and market uptake of existent technologies as well as the diffusion of new low emissions transport systems, addressing all transport modes;

The third group refers to the contributions to EC strategic policies (EU 2020 vision) that the project could generate, thus maintaining coherency with the former and contributing to their realization. Together all of these impacts compose the total impact the project is expected to have.

Market-up Key Messages are below summarised
1. Across the main global economic blocks (e.g. European Union, Japan, USA), public investment in research, development and innovation (RDI) is relatively stable, ranging between 0.65% to 0.78% of GDP (0.74% in the EU). However, private investment in general in RDI does vary substantially between regions and the underinvestment in the private sector in Europe is identified as a weakness of the European research and innovation system. However, this general picture is not reflected in the specific case of transport, where private investment amounts for more than 90% of the estimated total transport RDI effort and where European companies invest far more than foreign competitors. Accordingly, lack of investment from the private sector does not seem to be a weakness of the European transport research and innovation system.
2. There are substantial differences in the investment in RDI across the EU-27. The total investment in RDI as share of GDP, the data on the participation on European-funded research activities and the dominant share few companies of corporate RDI investment all suggest that while the volume of corporate investment in R&D does not appear to threaten research and innovation capabilities in transport, its concentration can prove to be a weakness.
3. It is difficult to identify the key players on transport research and innovation on a given topic. Information systems in place, such as the NCPs network or the Transport Research Innovation Portal (TRIP, previous TRKC), fail to allow a straightforward identification of key players and relevant competences across the EU. Such absence of effective and independent information sources can make it potentially difficult for potential newcomers to get to know who is working in which field and accordingly pool resources with them and join competitive proposals.
4. EU funding programmes, such as the FP7, play an important role in building up competences for transport research across Europe, but the presence of national research funding programmes, complementary or additional to the European programmes, is key to achieve high levels of capacity on transport research and innovation.
5. The analysis of transport related funding instruments provides evidence for the existence of the ”valley of death“, i.e. a funding gap at an intermediate stage of the innovation process, between basic research and commercialization of a new product. It seems easier to find research funding mechanisms for the phases of basic or applied R&D and demonstration than for the market pull phases of commercialization, market accumulation or diffusion. Moreover, most funding schemes analysed showed little focus on financing closer-to-market activities, market analysis and development plans.
6. Most funding instruments analysed in Market-up are oriented towards engaging industrial partners, research organisations and/or education institutions in collaborative projects. Many of them have specific provisions to ease the involvement of SMEs and a trend towards increased use of these provisions was identified. This is important as a mechanism to involve weak players in transport research and can potentially play a prominent role in increasing the market uptake of research results.
7. A great effort needs to be made to achieve the objective of orienting European R&D investment towards addressing societal challenges. In FP7 there seems to be an unbalanced investment split across modes, in which air transport appears to be benefiting from a high proportion of R&D investment while cross-modal issues, which are critical to achieve ”smart, green and integrated transport“ seem to be underfinanced.
8. Both the mapping of competences and the identification of funding instruments are key deliverables of the Market-up project. Since comprehensive data sources do not exist, there is a need to develop such activity in more detail, however the experience with Market-up suggests that such effort should be done in a way that allows for easy and frequent update of these results as such aspects are continually evolving.

Main dissemination activities & exploitation of results

The dissemination plan strategy was produced, the web site has been launched and several newsletters have been produced. Furthermore Market-up established a Linked-in and Twitter profiles. The list of all dissemination activities is part of this document, however herewith the most relevant activities are presented.

From the onset (i.e. DoW), Market-up dissemination & exploitation strategy has been established mostly based on maximising the synergies with other projects and events addressing the main target groups working in these fields: transport industries and SMEs involved in R&D activities in Europe, development, NCPs, technological platforms, associations etc., rather than dedicate large efforts towards the realisation of own events. A review workshop has been planned in project midterm aiming at focused discussion with a limited number of participants.

Articulation with several related projects have been promoted, the most visible ones with the participation in GHG TransporD and REACT project events (this last with a presentation) and the organisation of a special session at TRA 2012 involving some projects working on transport innovation: REACT, InnoSutra, GHG TransporD, Optimism.

The contact and interaction with STTP has been promoted, looking to maximise the synergies between the Market-up work and the strategic approach followed in STTP. Stakeholders' contributions to the STTP conference have been reviewed and incorporated in D21, particularly in relation to the assessment of barriers. One EC officer involved in the development of the STTP has attended the review workshop and the comments made in relation to the type of analysis and assessments were included in the analysis. This collaboration was deepened by organising a special session in the TRA 2012, which allowed for direct contact with transport research stakeholders and also STTP and DG RTD officials.

The other major related initiative with which Market-up established contact was the Transport Research Innovation Portal (TRIP – previous TRKC) with the presence of its coordinator in the review workshop and a follow-up meeting in TRA 2012. Results of the project, e.g. mapping of actors per mode, are of major interest to TRIP Portal and a dissemination strategy has been agreed between the two projects, in particular:
• in case Market-up material is used in Country profiles or Programmes sections, a special issue of Flash report to all TRIP users in order to thank Market up project for it
• Market-up publication of deliverables announced in TRIP newsletter

Additionally each partner dedicate efforts towards the dissemination & exploitation of Market-up project at country level as well as via the participation in other events, in particular industrial forums (where both Clepa and EMEC largely disseminate the project via their networks in the automotive and maritime sectors).

Below an overview of major dissemination activities is given.

Market-up leaflet
A two page leaflet was produced and disseminated in events as TRA 2012. The leaflet was available from web site and each partner print and disseminate in local activities (see Figure 6).

Newsletters
Several newsletters have been produced during Market-up project. Newsletters reached a wider audience (aprox. 13.000 target readers) being disseminated centrally by Innova but also at national level by each of the partners.
Newsletters have been used as tool to raise awareness on the project presenting the key results achieved and activities.

REACT workshop & final conference

Market-up was present at the REACT workshop in Milan workshop at the Politecnico di Milano on the 8th of February 2011 to establish the connection between the two projects. Market-up presence was ensured by the Italian partner – Innova.

Market-up has also prepared and presented a paper at REACT final conference in Belgrade in May 2011. TIS represented the project at that event.

Paper authors: Köhler J, Vieira J, Frencia C, Szendro G, Carvalho D,
Paper title: Market uptake of transport research: Transport's innovation system and trends towards climate friendly mobility in Europe

Review Workshop
Review Workshop was held in Brussels in October 2011 (see Figure 7)

About 30 persons took part in this event where the results achieved in the first year were discussed and a brainstorming participatory session, with the aim to discuss and questioned the paradigms beyond transport innovation.

Relevant stakeholders participating include the EC (Project Officer and STTP), UNIFE, EUCAR, Business Europe, Interface Europe, TRIP (Transport Research Innovation Portal), Hellenic Institute of Transport and the two industrial partners in the project EMEC and CLEPA.

TRA 2012 – Special session
A special session during TRA 2012 in Athens dedicated to the subject: ”Research and innovation policies to enhance the uptake of sustainable transport solutions“ has been organised by Market-up, involving 4 related projects: Market-up, GHG TransporD, Innosutra and Optimism (see Figure 8)

Show cases
A non technical communication package of each of the 7 case studies was produced. Show cases have been prepared in electronic format so that they could be easily viewed and downloaded from project web site. Additionally some partners print and disseminate them at national level

Executive summary of project final report
The Summary is presented as a publishable document illustrating the main activities performed and key messages identified. The Executive Summary will be sent to policy makers involved in innovation and transport related issues. The aim is to raise awareness on the project results to an even wider audience and try to provide input to future transport and innovation related policy making.

List of Websites:
Market-up website (www.market-up.org) will be available online until November 2013 (see Figure 9). All final results from project will be available for download; however from the 30 September 2012 (with the finalisation of Market-up) there are no further announcements or updates, which mean that information is from that date static.
From November 2013, the web site will be transferred to a page inside TIS web site. All project results (deliverables) are available from TRIP

Market-up contacts
(see figure 10)