LIST OF RECOMMENDATIONS AND CONCLUSIONS
1. We agree with the value of a target for renewable
electricity generation but we must not lose sight of the principal
objective, which is to introduce non-polluting, sustainable forms
of energy on a large scale (paragraph 15).
2. The EPSRC has a large area of science to fund
but it is hard to accept that energy research, given its economic
and environmental importance to the UK, should receive such a
small slice of the cake (paragraph 22).
3. Half the membership of the EPSRC's council
is from industry and we fear that this may lead to conservatism.
We regret that technologies with the potential of wave and tidal
or hydrogen are given so little funding. The EPSRC should be given
a stronger lead by Government to ensure that investment is consistent
with wider energy policy (paragraph 23).
4. We appreciate that
striking the right balance between funding applied and blue-skies
research is difficult but we urge EPSRC to ensure that researchers
with innovative, if risky, projects get the funding they need
5. We agree with the Government that there are
merits in placing fusion research under the auspices of the EPSRC
but we have reservations about its commitment to the technology.
To maintain the UK's position in this field, we believe it should
remain a special case for funding with a ring-fenced budget. We
will be watching the operation of the new funding arrangement
for nuclear fusion research at Culham with great interest (paragraph
6. It is pleasing
to see that the Research Councils are beginning to improve the
way they are working together and in particular that they put
in a successful joint bid to the Spending Review on sustainable
energy (paragraph 29).
7. We urge the Research Councils to make an early
decision on the continuation of funding of the Tyndall Centre
to avoid any interruptions in the Centre's research programme,
and to increase its resources (paragraph 32).
8. We welcome the
cross-Council programme on sustainable energy. The Research Councils'
expenditure on energy research has been pitiful and this investment
is a step in the right direction. But it only remains a step,
which we hope will be followed up vigorously in the future. If
UK technologies are to succeed the scale of investment must increase
rapidly (paragraph 34).
9. We will await the development of a UK Energy
Research Centre and a National Energy Research Network with great
interest but we are concerned that its remit is too narrow and
aims to modest to turn energy RD&D into deployed technologies
10. We understand that UKERC will provide "a
focal point for data and information on UK energy research funding".
If this means that the Centre will provide a one-stop shop for
those seeking energy-related RD&D funding then it is a proposal
that we warmly welcome (paragraph 36).
11. We have no doubt that the Research Councils
are funding world-class research into low carbon energy, but is
our impression that instead of driving these exciting new technologies
forward they have a passive, unadventurous approach. There will
be few sleepless nights in our competitor countries (paragraph
12. We do not understand why the functions of
the Carbon Trust could not have been taken on by existing Government
bodies. We suspect that its formation was primarily a political
gesture to bolster the Government's green credentials (paragraph
13. It is too soon to judge the effectiveness
of the Carbon Trust but we detect a lack of urgency. It must be
an active partner of the UK Energy Research Centre in its provision
of advice and information on funding (paragraph 42).
14. The DTI seems to be looking for reasons not
to invest in RD&D. The Government must be doing more than
filling in the gaps left by the private sector and drive forward
important technologies (paragraph 47).
15. The Government has expressed its concern that
the UK does not derive sufficient commercial benefit from the
excellence of its science base. The DTI's inability to fund properly
energy RD&D projects is a clear case of its policies betraying
the fine words of its Ministers (paragraph 48).
16. The UK is spending much less than its competitors
on energy RD&D. The PIU money and the Research Councils' new
Sustainable Energy Programme provide a welcome and long-overdue
boost to energy RD&D in the UK. We are pleased to see the
Chief Scientific Adviser recommending further increases in the
future and strongly urge the Government to make a commitment to
this end over a defined period (paragraph 57).
17. We support the idea of a single entry portal
for those seeking support for RD&D in fuel cells but believe
there is merit in extending the concept to embrace all new energy
technologies (paragraph 60).
18. The coordination of public funding bodies
and research policy in the field of energy RD&D has been poor.
We shall be monitoring the progress of Government and the Research
Councils in improving coordination with great interest. The establishment
of a UK Energy Research Centre is a step forward but we have little
confidence that it has the remit to solve the problem (paragraph
19. It is reasonable to ask how the Government
can have an energy RD&D policy that does not embrace a vision
of which technologies should be backed (paragraph 65).
20. The Government has the option of creating
a framework of incentives, such as tax credits for RD&D, which
will devolve the responsibility for picking winners (and inevitably
some losers) to industry; but it also has to make choices and
take risks too, especially in its support for RD&D, where
it cannot avoid setting some priorities. The Government has an
important role in identifying those of Britain's strengths that
are consistent with the industrial environment and the market.
It should provide a clear and unambiguous focus. (Paragraph 65).
21. The Government seems nervous of being accused
of picking winners. As a result tough decisions have been avoided.
We should be selecting all of those research projects for funding
which we have the capacity to execute and which have a reasonable
chance of delivering solutions and significant benefit for UK
society (paragraph 67).
22. Britain's energy structures are too complicated.
As a result, efforts to stimulate RD&D are fragmented and
directionless. No public body or Minister is taking responsibility
for driving forward technological innovation and deployment (paragraph
23. Much bolder action is needed to make non-carbon
technologies play a significant contribution to the UK's energy
mix. For this reason, we recommend the creation of a Renewable
Energy Authority. It should emulate the function of UKAEA in driving
the nuclear industry after the World War II. The Authority would
subsume the UKERC and the Carbon Trust, the DTI's energy programme
and the energy policy unit. It would:
1. conduct applied research and development in
2. conduct demonstration programmes, usually but
exclusively in collaboration with industry;
3. provide a fast-track planning service to non-carbon
energy applications; and
4. supervise infrastructural modifications to
the grid and distribution netwoks to facilitate the connection
of distributed generation (paragraph 68).
24. We are puzzled by the Government's assertion
that privatisation and liberalisation has not led directly to
a decline in energy RD&Dit has led to a dramatic decline,
by far the largest decline in all OECD countries. The forces that
drove innovation in the past are at least as strong as they ever
were and it seems hard to believe that the Chief Scientific Adviser's
energy group and several of our witnesses are so ill-informed.
We are concerned that the Government is poorly placed to stimulate
energy RD&D investment in industry if it is in a state of
denial over its causes (paragraph 71).
25. The fall in private sector RD&D expenditure
has been higher than would have been expected from simply improving
its focus. We conclude that there has been a real and damaging
reduction in the amount of private energy RD&D spend since
privatisation and liberalisation of the market (paragraph 72).
26. We recommend that the Government establish
demonstration projects to establish how distributed sources of
electricity generation can be incorporated into local networks,
in particular the development of metering systems to allow domestic
generation to export power to the network (paragraph 79).
27. United Utilities rightly recognises the value
of non-technical research into commercial and regulatory initiatives
for distribution networks. We recommend that the Economic and
Social Research Council make provision for such studies (paragraph
28. We appreciate the commercial constraints on
companies and recommend that the Government and the regulator
work to create a better environment for RD&D (paragraph 82).
29. It is disappointing that the UK's experience
in the North Sea oil and gas industry is not being employed to
develop new marine energy technologies. Clearly the incentives
for oil and gas companies are insufficient, a situation which
the Government should remedy (paragraph 85).
30. We are pleased that the UK Government supports
an EU target of 3% of GDP invested in RD&D but given the strong
link between investment and productivity, we are disappointed
that it has not adopted this "aspiration" for the UK.
We recommend that the Government does so (paragraph 87).
31. The Government should recognise that even
companies not regularly making a profit need to think long term
and invest in RD&D and should consider introducing mechanisms
that provide that incentive (paragraph 91).
32. The existence and nature of R&D tax credits
are not well understood by companiesparticularly the smaller
onesand the rules of the R&D tax credit seem to be
too complicated or inadequately explained. The Government should
remedy these problems, since if energy RD&D is to be resuscitated
in the UK in the field of low carbon technologies, a clear and
significant tax incentive is much-needed (paragraph 92).
33. The Government has failed to encourage an
environment that encourages technical innovation, to provide sufficient
direct investments and to make any significant response to the
scale of market failure (paragraph 93).
34. The proposed UK Energy Research Centre and
Network should play a crucial role in bringing forward the next
generation of skilled people for the energy sector. We recommend
that it adopt this as a key part of its mission (paragraph 98).
35. We recommend that the Government recognises
low and non-carbon energy as a shortage area, recognising its
importance in combatting climate change (paragraph 99).
36. It is hard to imagine the nuclear skills situation
improving, since the Energy White Paper has all but ruled out
new nuclear build. Even with no new nuclear build, nuclear engineers
will be needed for many years to come to deal with decommissioning
and storage but few graduates will be inspired to join an industry
in its death throes (paragraph 105).
37. We argued in our report on Science Education
from 14 to 19 that science education needed to be made more relevant.
There are few better examples of a subject that could enthuse
our schoolchildren than non-carbon energy, which has the power
to tackle the potentially catastrophic effects of climate change
38. We consider CO2 sequestration
to be a necessary part of the transition to a non-carbon fuel
economy. Nevertheless, it is important that its use should not
act as a disincentive to the elimination of carbon-based fuels
39. We commend the Government's positive approach
to CO2 sequestration. There is a real opportunity
in the North Sea with enhanced oil recovery as the initial economic
driver. Policy mechanisms are needed to ensure that it happens
and that there is an agreement on the legal and environmental
issues of CO2 storage (paragraph 111).
40. We believe that the UK should play to its
strengths and exploit its natural resources. As such, the continued
use of coal has a role in the UK's energy mix provided that CO2
emissions are substantially reduced. We therefore support investment
in clean coal technologies, for export as well as UK use, in tandem
with CO2 sequestration (paragraph 114).
41. The Carbon Trust's RD&D budget is not
very large and we dispute the Government's assertion that it has
the funding to make a significant impact on energy efficiency
RD&D (paragraph 119).
42. The housing market is driven by Government
regulations and it is our view that these have not been tough
enough in the past (paragraph 122).
43. We welcome the Government's pledge to make
major revisions of its building regulations and recommend that
these are demanding, recognising that these can be a powerful
stimulus to innovation by manufacturers (paragraph 122).
44. We await the revised building regulations
in the hope they will provide the market pull for innovative energy-efficient
products. We hope they are able to compensate for the lack of
technology push generated by the feeble level of public RD&D
funding in this area (paragraph 124).
45. We find it hard to reconcile the Government's
apparent lack of interest in a relatively mature technology with
the enthusiasm of the International Energy Agency. We recommend
that the Government follow up the IEA's report with its own assessment
of the role that hydro can play in the UK's energy supply (paragraph
46. We recommend that the Government commission
a cost-benefit assessment of different solar technologies (paragraph
47. We are pleased to see that wave and tidal
energy has received greater governmental attention since our predecessors'
report. We hope that the recent increases in funding represent
the first stage in building capacity, leading to investment commensurate
with the potential of wave and tidal energy. We can look forward
in the near future to investment commensurate with wave and tidal
energy's potential impact on the UK's energy supply (paragraph
48. Wave and tidal energy has enormous potential
and can deliver a clean and predictable energy supply. We recommend
that the UK should make a major investment in this niche market
and aim to generate at least 5% of its electricity using wave
and tidal technologies by 2020 (paragraph 138).
49. We welcome the attention being given to hydrogen
RD&D by the Government. There is a UK big opportunity to take
the lead here in a key area of energy research (paragraph 154).
50. We are struck by the particularly high number
of public funding bodies active in bioenergy. The Government should
simplify its support schemes in this area (paragraph 158).
51. We support policies to encourage less wastage
and more reuse and recycling but it is inevitable that there is
waste and Government policy should place no obstacles in the way
of technologies that can harness waste which cannot be recycled
to generate power (paragraph 162).
52. For the Government to keep the nuclear option
open, participation in the Generation IV Forum is essential to
give the UK a stake in the direction of future technologies. We
recommend that provision is made for British companies to participate
actively (paragraph 167).
53. We applaud BNFL's investment in pebble bed
reactors and the long-term view it is taking of reactor technologies
in an uncertain climate. We will watch the development of the
technology with interest (paragraph 169).
54. Public opinion is a major obstacle to new
nuclear build but this should not preclude the funding of research
which could go a long way to addressing public concerns into the
waste and safety of existing systems. We believe that the Government
should not underestimate the public's pragmatism and should not
be afraid of people's ability to balance its legitimate concerns
with the great dangers posed by climate change (paragraph 170).
55. We recommend that the Government monitor technological
developments in transmutation and keep it under review as part
of its radioactive waste management strategy (paragraph 175).
56. The Government's announcement that new nuclear
build would require another public consultation and another White
Paper is perplexing. The Government says with great pride that
this is "the most significant consultation on energy policy
ever carried out in the UK". There would have been no shortage
of views expressed on the nuclear issue and unless the situation
changes substantially, which seems unlikely, a further consultation
would simply involve the same people repeating the same arguments
57. The nuclear industry faces a continuing decline
unless positive steps are made now. The only way to keep the nuclear
option open is for the Government to indicate that it would in
have no objection in principle to granting permission for new
reactors to be built, even on a modest scale, to send a clear
message that the technology has a future. It should benefit from
its status as a carbon-free source of energy (paragraph 179).
58. The next generation of fission reactors is
likely to be the last. Nuclear fission power should be used to
keep the UK's CO2 emissions as low as possible until
fusion power and other non-carbon technologies are commercially
available (paragraph 180).
59. We conclude that the progress in fusion research
has been substantial in recent years. Together with the huge impact
that fusion could have in reducing carbon emissions, we consider
it be foolish not to at least maintain the current level of resources
invested in UK fusion research (paragraph 188).
60. From 2003, EURATOM funding for the UK's national
fusion programme will decline from 25% to 20%. We would like the
Government's reassurance that it will compensate UKAEA for this
loss in income (paragraph 190).
61. The UK has been fortunate to host JET but
it must not waste this good fortune. We recommend that the Government
invests resources to maintain the UK's domestic fusion programme
with a view to building a major facility in the future. We believe
that fusion power will become a reality and the UK must benefit
from the fruition of this technology (paragraph 191).
62. The UK can only play a significant role in
international programmes if it is done from a strong national
base. Participation in multinational ventures must be used to
complement a strong domestic RD&D base (paragraph 197).
63. At present the transmission companies and
network operators have little obligation or incentive to invest
in bringing forward and installing the technology needed to make
large-scale renewable generation a reality. The lack of these
incentives discourages industry to tackle the problems remaining
with many exciting new energy technologies. We are pleased that
the Government appreciates the need to revise the regulatory framework.
In selecting the methods of energy generation for the future,
account will need to be taken of the potential changes needed
in the distribution network infrastructure (paragraph 202).
64. If the UK is to stand a chance of reaching
its renewables target, it needs to stimulate development of less
mature technologies now. The Renewables Obligation fails to provide
this incentive. It should be reformed or replaced with a mechanism
that will (paragraph 208).
65. We recommend that the Government introduce
a tax incentive that distinguishes between: fossil fuel with carbon
capture; carbon neutral technologies; nuclear fission and mature
non-carbon technologies; maturing non-carbon technologies 10 to
15 years into the market; non-carbon technologies 5-10 years into
market; and nascent renewable technologies in their first 5 years
of commercial use (paragraph 209).
66. Ofgem should establish a more supportive framework
for innovation and RD&D toward the new "climate friendly"
technologies. Ofgem must be more willing to allow RD&D against
companies' profits when looking at prices (paragraph 213).
67. While we agree with many of its sentiments,
we remain disappointed with the White Paper, largely because that
is what it is, a document full of sentiments with few practical
policy proposals that give us any confidence that its targets
(and aspirations) can be met. It has ducked a central issuewhether
to provide a future for the nuclear power industryand failed
to give a lead. On the specific issue of RD&D, it makes all
the right noises but fails to pledge any further investment nor
provide any further direct incentives to industry to do so. RD&D
investment in the UK is set to remain at the bottom of the international
league table (paragraph 215).
68. There is no prospect of achieving the target
of 10% renewable generation by 2010 or the aspiration of 20% by
2020. There is no chance of meeting the Government's targets for
CO2 reductions if current policies and market conditions
remain in place (paragraph 216).
69. Given the importance of reducing UK carbon
emissions, we propose a Renewable Energy Act at the earliest opportunity.
The Act should include the following provisions:
1. The establishment of a Renewable Energy Authority
(REA) with UK-wide responsibility for co-ordinating and promoting
RD&D in renewable energy and disbursement of funds for that
2. The replacement of the Climate Change Levy
and the Renewables Obligation with a unified Carbon and Renewable
Energy Tax to be levied on the electricity generators, the yield
from which should be hypothecated to the REA (paragraph 217).
70. Despite recent increases in Government energy
RD&D funding, investment is pitiful in absolute terms and
in comparison with out international competitors. We believe the
UK should be investing more, on economic grounds and to ensure
that the technology is suited to Britain's national needs and
takes advantage of our strengths. By repeating the not picking
winners mantra, the Government has failed to take a lead. We consider
the following areas to be our strengths, reflecting the UK's natural
sources and research strengths :
1. Offshore technologieswind, wave and
2. Nuclear fusion
3. Nuclear fission (paragraph 218).
71. Offshore technologies should be funded at
least on a par with fusion (currently £23.5 million a year)
and fission should be funded at £10 million a year to fund
participation in the Generation IV Forum and boost the academic
skills base (paragraph 218).
72. Investments in RD&D must be complemented
by policies to stimulate the market. Grants for deployment and
tax incentives must be employed to greater extent, commensurate
with the threat from global climate change (paragraph 219).