Dual-use innovation: Confronting the challenges and delivering EU security and competitiveness

The EU is navigating a complex security and defence (S&D) transition. Responding with speed and certaint  is difficult at a time of geopolitical upheaval. Europe is meeting the sharp wake-up call heralding the end of the peace dividend with a significant absence of preparedness. At the same time, the Union must confront new global threats to its economic competitiveness. It stands at an inflection point, where security and defence ambitions are no longer peripheral – they are existential.

Defence innovation must be understood as a lever for the EU to respond to this new reality, allowing the Union to position Europe’s industrial defence as the driver of its global competitiveness and the key to determining its future. Despite many new instruments – such as the SAFE1 facility, the Defence Industrial Strategy (2024) and the Readiness Roadmap 2030 – Europe’s defence production and technological agility lag significantly behind the United States and key global competitors.

The EU’s industrial defence bottlenecks are deep- rooted and structural. National sovereignty concerns and disharmony among the EU27 impede collective action, while Single Market deficits prevent the scale and direction of the industrial response needed. This has resulted in security incrementalism, where siloed, short- term actions replace systemic and long-term strategic direction. There is no amount of financing, smart policy or political rhetoric that can compensate for the decisive and collective action needed.

This paper advocates for the design of an EU dual- use innovation framework spanning technologies, infrastructures and financing frameworks that serve both civilian and military purposes. This will help the Union overcome the current impasse and drive its international security and competitiveness.

Achieving this is a complex endeavour. It involves fundamental changes to the regulatory environment and reforms to the Union’s approach to trans-national collaboration across the entire innovation spectrum – from industry, to investment, to infrastructures. Dual-use innovation must permeate all EU territories. Delivery depends on more than higher defence-related spending.

It requires a ‘whole of government’ and ‘dual-use by design’ approach, through upgraded governance systems, legislation and institutional capacity, navigated by a high level of ‘buy-in’ from political, policy, industrial and civil society actors. In short, dual-use innovation must be re-positioned from being part of the EU’s innovation agenda to acting as its driving force.

A new arsenal of EU, industrial, defence-driven policy and investment measures have taken shape, with more on the way to respond to the Union’s industrial defence-readiness needs and production capacity deficits. Success requires a clearer understanding of the trade-offs associated with an industrial effort of this magnitude. Improved strategic coordination is underway but must be strengthened under the new Readiness Roadmap and proposed Defence Semester.

The European Commission’s proposals related to the next Multiannual Financial Framework (MFF) seek to embed defence spending across key policy instruments. However, the scope for defence-related innovation to serve a broader range of EU objectives (e.g. targeting the EU’s multiple transition challenges and boosting sub-national preparedness efforts) has, so far, been vastly under-acknowledged. A dual-use innovation approach can help to bridge solutions – across military and non-military contexts – thereby confronting a range of societal challenges and strengthening the mileage of innovation defence investments. It could unlock political, societal and financing tensions.

The paper sets out a pathway for the operationalisation of dual-use innovation in four policy settings that are, themselves, important EU priorities. A dual-use approach across these settings will build the momentum needed to set out a more pervasive EU effort, not least because they can generate significant multiplier effects. They are:

Delivering the EU’s quadruple transitions – security, energy, digital/tech and demographic;

Ukraine’s EU accession – serving both reform and reconstruction goals;

EU infrastructure security – extending the reach of critical entities in what they do, whom they serve and how they connect to each other;

Place-based innovation ecosystems and preparedness – ensuring the entire EU geography is connected to and delivers on the Union’s security and defence needs.

The paper proposes seven key recommendations: 

Key recommendation #1: The European Commission must prepare now for a strategic EU response to dual-use innovation to ensure its embedding across the policy and funding framework of the post-2027 programming period.
Key recommendation #2: Embed dual-use innovation as a central pillar of the European Defence Semester. The Semester should act as the EU’s strategic surveillance and coordination platform for dual-use innovation, capturing spillovers, monitoring cross-sectoral and cross-border innovation flows and analysing territorial impacts. A flagging mechanism would support intermediaries to signpost, match-make and facilitate trans-nationa activity at the dual-use innovation interface.
Key recommendation #3: Harness public procurement as a driver of dual-use innovation. The Defence and Security Procurement Directive review and the Rapid Adoption Action Plan should embed systemic approaches to dual-use innovation.
Key recommendation #4: Advance dual-use innovation as a driver of societal resilience. Position EU dual-use innovation as a strategic enabler in delivering the Union’s security, energy, digital and demographic transitions. The reach of dual-use innovation can support how we transfer, extend and leverage solutions to deliver complex, quadruple transitions.
Key recommendation #5: Strengthen Ukraine’s accession and reconstruction efforts through dual-use innovation. Ukraine’s dual-use innovation model forms the backbone of the country’s defence system and holds the key to supporting its long-term recovery.
Key recommendation #6: Reinforce the dualuse innovation function of the EU’s critical infrastructures. These entities are enablers of the EU’s S&D transition. They can be served by dual-use innovation solutions to strengthen their security, while their purpose can be deepened and transformed to better support and diffuse dual-use innovation.
Key recommendation #7: Adopt a place-based approach to dual-use innovation, grounded in the post-2027 Cohesion Policy and a reinforced Defence Industrial Strategy. This must guarantee a continued role for EU regions to adopt a place-driven approach to the EU’s security and defence transition. It includes ex-ante assessments of regional security realities, and a reinstated, reinforced and reformed Smart Specialisation agenda.

Europe has the capacity to transform its dual-use agenda from incrementalism to strategic integration, anchoring innovation, industry and defence in a single, purposeful trajectory. Committed action now will determine whether it can truly act as both a security provider and an industrial power in an era of systemic uncertainty.

The scale of the task ahead is significant. The Union’s capacity and collective will to navigate the bottlenecks and challenges is far from assured. Delivery will require far greater coherence, urgency and political resolve than has been so far visible. But the returns are high. They are central to safeguarding the Union’s future.

Read the full Discussion Paper here.
 

Alison Hunter is Senior Adviser on regional policy, innovation and industrial growth at the European Policy Centre.

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