Regulation and legislation play a critical role in shaping the development and adoption of emerging technologies, essential for Europe’s future in areas such as green tech, healthcare, digital transformation, industrial advancements, and space exploration. Rapidly advancing technologies often outpace existing frameworks and introduce challenges for innovators and regulators. Conforming innovative tech to regulations can be costly and time-consuming and introduce legal uncertainties for innovators. To both support the development and market uptake of new technologies while also ensuring the safety and security of consumers and the environment, regulatory frameworks should provide clarity and be flexible to accommodate the rise of emerging tech. The New European Innovation Agenda (NEIA) proposes regulatory experimentation – ‘safe spaces’ to test technologies and help regulators adapt – as a crucial step toward a future-ready regulatory framework. Regulatory experimentation spaces include:
- Regulatory sandboxes: a controlled environment with certain regulatory exemptions that enable experimentation with product/service development.
- Testbeds: a physical/digital environment that allows for testing and experimenting with emerging technologies.
- Living labs: an open innovation ecosystem that involves end-users and stakeholders in the innovation process.
In this context, key questions were asked to understand the challenges of the EU regulatory environment concerning emerging technologies:
- How does the EU regulatory environment affect innovation and the uptake of emerging technologies, particularly in the areas of deep and digital technologies, biotechnologies and clean technologies?
- How can regulatory experimentation spaces such as regulatory sandboxes, testbeds and living labs be used to help European innovators develop and scale up new emerging technologies?
Our recent study, “Innovative Practices in Legislation around Emerging Tech,” commissioned by the European Innovation Council and SMEs Executive Agency (EISMEA) and implemented by 4Front, Visionary Analytics and the EFIS Centre, addresses these questions. The study focused on beneficiaries of European Innovation Council (EIC) programmes that support emerging technologies.
Regulatory bottlenecks in emerging tech
Emerging technologies carry risks, such as consumer safety, data privacy, and environmental impact, making regulation essential. However, unclear or overly complex regulations can burden innovators, particularly SMEs and start-ups with limited resources. Poorly adapted regulations, fragmented rules across EU member states, or underdeveloped EU-wide frameworks can create disadvantages for emerging technologies and can slow innovation, increase costs, discourage investment, and in some cases, drive companies to relocate to countries with more flexible regulatory environments.
Regulatory uncertainty – whether from unclear compliance, safety or market requirements – can delay product development and market entry, and impact business models. Not only can this impact innovation potential, but it can raise concerns about the safety, efficacy or ethical implications of new technologies, hindering consumer and investor confidence.
Regulatory experimentation spaces and regulatory learning
Regulatory experimentation spaces, such as sandboxes, testbeds, and living labs, can help to create more flexible and anticipatory regulatory frameworks. These tools are useful to ensure regulations act as drivers of emerging technologies, not barriers. They can offer opportunities to test innovations, anticipate technology trends, and assess potential regulatory reforms.
Sandboxes, most likely to benefit technologies which are closer to the market, offer a space to test innovations under regulatory supervision. They can help assess the impact of potential regulatory reforms, providing opportunities to fine-tune before rolling out changes more widely.
Testbeds are valuable for areas that need rigorous technical validation, such as telecommunications, smart cities and the Internet of Things (IoT), by providing a controlled environment for testing and ensuring that new technologies are compatible with existing systems. For regulators, while testbeds can create opportunities to anticipate technology trends, regulatory learning mechanisms need to be further developed to fully exploit their usefulness.
Living labs are particularly useful for technologies with strong elements of user interaction, providing realistic testing environments to help ensure their market relevance. Examples include smart city solutions, autonomous vehicles, and urban development. When paired with public procurement living labs can be useful for developing solutions in the public sector. However, like testbeds, regulatory learning mechanisms should be better integrated into living labs so they can better gather insights to anticipate and address the social and technical aspects and impacts of emerging technologies.
For these experimentation spaces to drive broader systemic change, our study finds that they should be more targeted to areas of technology where they can have the greatest impact. To achieve this, a clearer understanding of these spaces is needed, as well as stronger evidence of their impact.
Recommendations
Our study provides recommendations for the European Commission that promote the adoption of more anticipatory regulatory approaches.
Firstly, a broader policy mix is recommended. This includes proactive measures like technology-specific reviews, sector-specific guidelines for less regulated areas, cross-sector dialogues, and capacity-building initiatives through training and networks on emerging tech and legislation.
Secondly, to support regulatory experimentation spaces, our study suggests awareness-raising activities, developing cross-border frameworks for sandboxes, creating an EU-level platform and organising workshops to share best practices, integrating regulatory learning into living labs and testbeds, and pairing experimentation spaces with other innovation support programmes and procurement practices.
The study comes at a pivotal time for the European Commission, providing useful insights relevant to the Commission’s priorities for 2024-2029, which aim to raise the EU’s competitiveness through a stronger focus on research and innovation, science and technology, and frontier (digital) technology. The Commissioner-designate for Startups, Research and Innovations, Ekaterina Zaharieva, has been tasked with streamlining regulatory frameworks and supporting innovative startups and scaleups, incorporating tools such as regulatory sandboxes to facilitate the testing and deployment of new technologies. Our study recommendations align with this goal, making suggestions to help regulators keep pace with emerging tech while supporting the further development of regulatory experimentation spaces.
Find out more
To discover more, including case studies on key technologies and innovative legislation practices, you can read the full report here.
