Europe's innovation problem is not too much regulation, it is too little orchestration

Whenever Europe falls behind in a strategic technology, the diagnosis is the same: too much regulation, too little risk appetite. Europe does regulate heavily, and simplifying would help. But the binding constraint is not strictness; it is the failure to turn science into industrial scale.  

Europe produces world-class research, capable entrepreneurs, promising companies and serious industrial buyers. What it lacks is the committed, aggregated demand that turns those buyers into anchor customers, and with it the capital and manufacturing capacity that scale requires.

What Japan is doing differently

Take critical materials recycling. Several European players are reaching commercial scale: HyProMag has opened a magnet-recycling plant in Germany, and Carester’s CareMag is building one of Europe’s first large-scale rare earth recycling and refining plants in France. But each assembled the missing piece itself: Carester’s CareMag project through a ten-year Stellantis agreement and Japanese state and industrial backing; HyProMag through industrial buyers. The science was not the binding constraint. Bankable demand was, and in Europe a company still secures it deal by deal.

In Japan, the state does more of that orchestrating. Through JOGMEC and METI, the government reduces risk and turns strategic need into financeable demand: equity, loans and guarantees that the private sector will not provide alone, stockpiles, recycling targets, and consortia lining up buyers, researchers and processing capacity. There is no single platform at scale, and recycling meets only a fraction of demand, but it lowers the barrier to the innovator-to-buyer interface Europe has, until recently, left to private initiative. The technology gap is small; the commercialisation gap is larger.

Lessons from Warp Speed and NASA

For European startups the constraint is rarely the science; it is reaching scale at the speed the challenge demands. Europe cannot match American scale-up capital, and neither can Japan. What it can do is manufacture scale on the demand side, buying a solution before it exists. When NASA needed cargo flown to the Space Station, it did not build and operate the vehicle itself; it part-funded development and bought delivery as a service. That combination drew in private capital and helped build the commercial launch industry that leads the world. Operation Warp Speed applied the same principle to vaccines, combining advance purchases with public funding and manufacturing coordination.

Europe is beginning to build this instrument through the Raw Materials Mechanism, while proposals for a JOGMEC-style Critical Raw Materials Centre point in the same direction. But today’s tools remain too close to voluntary matchmaking; they should be used more forcefully in two ways. The first is public: an EU-aggregated pre-purchase pooling member states behind a clearly specified solution that does not yet exist. The second is corporate: the at-scale buying of Europe’s large global companies, with the demand and balance sheets to call a market into being; Japan has them too. Guaranteed demand will not make European supply cheaper than China’s at the start. But that gap should not be dismissed as an inefficient subsidy. It should be treated as a strategic autonomy premium: the price of resilience against geopolitical shocks, export restrictions and supply disruption. Paid upfront, it buys the volume and time to drive costs down to where they compete, a scale Europe has the power to generate, driven by procurement rather than deregulation.

Cluster or fall behind

Europe has the ingredients: research, talent, corporations, procurement budgets. What is missing is the connective infrastructure that turns them into industries: aggregated demand, larger-scale patient capital to move from pilot to plant, and institutions to orchestrate the two.

That connective tissue does not assemble itself. Innovation develops when researchers, entrepreneurs, investors, buyers and test-beds sit in one place; a physical hub is only half of it. What turns proximity into companies is an orchestrated commercialisation program that defines the problem, lines up the right players and carries solutions to market. Europe funds plenty of clusters and hubs; what it rarely runs is a program accountable for carrying named ventures to a first commercial contract. Without it, results come too slowly and at too small a scale. The place and the program must be built together, concentrating both the supply side and the demand side of innovation.

The opportunity grows with global connections to like-minded economies. Japan, South Korea, the United Kingdom, Canada, and Australia face the same vulnerabilities and seek alternatives to concentrated dependencies. Connecting European innovators to these ecosystems with targeted programs can open access to buyers, capital and expertise no single region can reache alone, providing the scale to compete in markets shaped by China.

The technologies that will decide competitiveness and strategic autonomy are already in European laboratories and startups. The science is there, and so is the ambition. What is needed now is the orchestration to turn them into industrial outcomes, and the confidence to build it in connection with the world.

This OpEd was adapted from Victor’s contributions during the panel discussion “From Design to Recovery: Closing the Loop in Advanced Materials” at the EIT RawMaterials Summit, 2026.