19 Jul 2021

The Digital Transition

Towards a Resilient and Sustainable Post-Pandemic Recovery

Working Group Report of the New Industrial Strategy for Europe Task Force

Andrea Renda / Lorenzo Pupillo / Rosanna Fanni / Carolina Polito

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The digital transformation is a key pillar of the new industrial strategy for Europe, with high expectations for its potential to relaunch Europe’s industrial leadership. It is also a key pillar of the ‘twin transition’, which the European Commission adopted as a defining element of its agenda for future sustainable growth. In this respect, the digital transformation must not be considered in isolation from the rest of the industrial strategy, but rather as an enabling process that must be consistent with the aim to develop human-centric, resilient and sustainable industrial ecosystems in Europe. Every policy choice, from those related to connectivity to the use of artificial intelligence (AI) and the collection and sharing of data, should be aligned with these principles and goals.

Against this backdrop, the Digital & Data Working Group of the CEPS Industrial Policy Task Force developed policy recommendations in three key areas: 5G, AI, and edge/cloud computing. The recommendations reflect upon how technologies can become a driving force to support the digital transformation within the EU value system.

  • For 5G and connectivity technologies more generally, the Working Group recommends a careful evaluation of the conditions that must be met for the 5G rollout. This requires smart policies for radio frequency allocation, low-power and low-energy consumption operation and connectivity, and embedded cybersecurity in network design and management architecture. The need to ensure adequate return on investment and efficient use of resources calls for infrastructure-sharing agreements, as well as a broader connectivity mix, beyond 5G, especially in rural or non-densely populated areas.
  • For what concerns AI and industrial transformation, EU funding should be linked more effectively to strategic EU priorities, such as the ‘twin transition’, the Industry 5.0 vision, and sustainability. In addition, the environmental footprint of large-scale digital transition projects needs to be closely scrutinised. The need for trustworthy AI development needs attention for the well-being and rights of workers, as well as investment in the safety and security of AI application.
  • In the area of edge/cloud computing and industrial data sharing, an interoperable single market for the Internet of Things (IoT) and edge applications should be fostered, in order for the EU to reap the full value of industrial data. Data governance is still fragmented and uncoordinated, and the recently proposed Data Governance Act does not go as far as clarifying and streamlining the key elements of future data spaces. The role of emerging projects such as GAIA-X and the European Alliance for industrial data, cloud and edge needs to be defined in more detail, and the links between data spaces and IoT/edge data ecosystems should be clarified. A dedicated regulatory ‘compliance-by-design’ mechanism is needed for any members joining GAIA-X.