Stimulating innovation through the deployment of European regulatory sandboxes
- Read our memorandum : https://www.enroute2024.be/fr (in French or Dutch only)
But what exactly is a regulatory sandbox or testbed? Regulatory sandboxes give companies the freedom to test innovative technologies, products, services and working methods in a real, but controlled environment. In short, they allow companies to experiment with innovations within a safe legal framework.
In August 2023, the European Commission published guidelines on the subject, proposing the following definition:
- « (…) regulatory sandboxes are schemes that enable the testing of innovations in a controlled real world environment, under a specific plan developed and monitored by a competent authority. They are usually organised on a case-by-case basis, may involve a temporary loosening of applicable rules and feature safeguards to preserve overarching regulatory objectives, such as safety and consumer protection.” Guidance on regulatory sandboxes, testbeds, and living labs in the EU, 29.8.2023, European Commission
There are two approaches to setting up a sandbox: one where the demand (and the identification of a regulatory barrier) is initiated by innovators (bottom-up approach) and another where the regulator identifies the legislative provisions to be tested and calls on interested organisations to apply (top-down approach).
Some recently approved regulations include the establishment of a sandbox. The Net-Zero Industry Act (NZIA), which promotes the European clean-tech industrial base, allows Member States to set up sandboxes in partnership with businesses and possibly other stakeholders. The aim is to enable innovative net-zero technologies to be developed, tested and validated in a controlled real-world environment for a limited period before they are marketed or put into service. Additional measures (the Implementing Act) must define the eligibility and selection principles for participation in regulatory sandboxes; the procedure for applying for, participating in, monitoring, exiting and terminating sandboxes; the procedure for assessing the performance of regulatory sandboxes; and the conditions applicable to participants.
The AI Act goes further by requiring each Member State to establish at least one regulatory sandbox (which may be set up in collaboration with other Member States, with technical support from the Commission). These sandboxes can be set up in physical, digital or hybrid form and can accommodate both physical and digital products. Setting up AI regulatory sandboxes is intended to contribute to the following objectives, among others: improving legal certainty, promoting the sharing of best practices through cooperation with authorities, promoting innovation and competitiveness, facilitating the development of an AI regulatory environment, speeding up access to markets, particularly for small and medium-sized enterprises (SMEs), including start-ups, etc.
Participation in AI regulatory sandboxes focuses on issues that raise legal uncertainty for suppliers and potential suppliers, covering the development, training, testing and validation of AI systems.
These examples are certainly positive steps forward, and we therefore invite the Member States (and our regions) to develop this tool in consultation with the industry. Agoria also believes that the European authorities should allow the use of experimentation clauses (i.e. the legal basis for sandboxes) when drafting or reviewing legislation more broadly in the next legislative term. And, as Jelle Hoedemaekers, Data Economy Expert at Agoria says: "If we want regulatory sandboxes to work for industry, it is essential that there is also feedback to the legislator so that laws can be changed if they are blocking innovation."
Sustainable prosperity will be the key focus for future government agreements. In its Memorandum 2024, Agoria calls on policymakers to address the challenges of industrial policy, ecological transition, and digitalization. To assist them in this endeavor, our roadmap provides concrete recommendations in twelve areas. Agoria sees many opportunities on the path to sustainability.
Discover our roadmap for sustainable prosperity (in French or Dutch).
If you have any questions or suggestions regarding the content of our Memorandum 2024, please feel free to send an email to enroute2024@agoria.be so that we can incorporate your input into our discussions with political parties.
