Memorandum submitted by PLATFORM (U15)
PLATFORM is an interdisciplinary organisation
working on issues of environmental and social justice. It specialises
in research and analysis into environmental, development and human
rights implications of the energy economy, with a particular focus
on oil and gas corporations.
SUMMARY
It is essential that strategies for addressing
climate change are long-term. Given the timescales of energy investment,
we need to be thinking decades ahead. For this reason, we have
focussed on energy research and development, in which the activities
now can lead to energy infrastructure that will last into the
middle of this century.
Looking specifically at R&D carried out
in the public sector (in higher education institutions), we find
an enormous skewing towards fossil fuels. British universities
carry out an estimated £67 million per year of R&D targeted
at the exploration and production of oil and gas, about £40
million of this funded by the public purse. In contrast, Government
spends only £19 million per year on R&D on renewable
energy sources, shared between universities and the private sector.
The role of research and development in making
industries more competitive is well accepted. The consequence
of the imbalance of energy R&D is thus an entrenching of fossil
fuels, undermining the possibility of a transition to renewable
energy sources.
The policy context is the emphasis of science
policy on "wealth creation". Applied in an unqualified
manner as at present, this tends to reinforce the status quo in
the energy economy, as the larger oil and gas industry has far
more resources than nascent renewable energy companies to match
government funds and to facilitate application of technologies.
A key element determining the Government's success
in addressing climate change will be its ability and willingness
to address conflicts in other areas of policy—such as in
this case, science policy.
CLIMATE CHANGE
POLICY—THE
LONG-TERM
VIEW
1. The British Government is recognised
as a world leader in calling for strong and effective action to
prevent climate change. The Prime Minister has indicated that
he will use the opportunity of Britain's chairmanship of the G8
in 2005 to press for further international action on climate change.
This is a key opportunity not just to raise the issue but also
to demonstrate leadership by example through Britain's own actions.
2. Climate change is clearly a long-term
issue, with wide-ranging implications. In light of this, it is
very welcome that the Government has not only set an ambitious
target for emission cuts in the timeframe of the Kyoto Protocol,
but also looked at a longer-term framework. In particular, the
February 2003 White Paper "Our Energy Future—Creating
a low carbon economy" set a target of cutting the UK's
carbon dioxide emissions by 60% by 2050.
3. In order to achieve this target, changes
will be necessary at a systemic and structural level, and not
restricted to those areas that are currently considered within
the domain of shorter-term action to mitigate climate change.
In particular, it will clearly be necessary to reduce the use
of fossil fuels. Part of this can be achieved by a reduction in
total energy use, such as through efficiency measures and industrial
reforms. A transition in energy sources will also be necessary,
not just from oil to gas, but also from fossil fuels to renewable
energies. Government policy is to increase the share of renewables
in electricity generation to 10% by 2010, and 20% by 2020.
4. Energy investment decisions are inherently
long-term. The lifetime of new energy infrastructure is measured
in decades rather than years. For example, a new oil platform
or power station built today might be expected to still be producing
in at least 2030, and possibly beyond. For this reason, it is
important to be thinking well-ahead. As the White Paper states,
"Leaving action until the last minute is not a serious option
. . . We need early, well-planned action to provide a framework
in which businesses and the economy generally, including the jobs
and skills base, can adjust to the need for change, and encourage
new technologies".
ENERGY RESEARCH
AND DEVELOPMENT—EXTENSIVE
ACTIVITIES ON
OIL AND
GAS
5. However the element of energy development
that impacts the furthest into the future is in research and development
(R&D). Current R&D might lead to new technologies in which
the actual investment occurs in 10 or more years' time, before
the productive life of that investment even begins. In the case
of fossil fuels, the same applies to geological surveys of available
resource.
6. We have carried out considerable research
into the R&D and training carried out in universities, in
the field of oil and gas. In March 2003, PLATFORM, the New Economics
Foundation and Corporate Watch published the report "Degrees
of Capture: Universities, the Oil Industry and Climate Change".
It was published both as a 30-page policy paper and as a 90-page
full report. We would be happy to send these to the Committee
if they would assist in its inquiry.
7. Since then, we have met with officials
of the Engineering and Physical Sciences Research Council (EPSRC),
and corresponded with the Natural Environment Research Council
(NERC), the Office of Science and Technology, the Scottish Executive,
the Scottish Science Advisory Committee and a number of academics
and university Vice Chancellors.
8. Our research found that British universities
carry out an estimated £67 million per year worth of R&D
targeted at the upstream (exploration and production) oil and
gas industry. This is heavily focussed on geological surveying
and technological development, which aim to expand existing levels
of oil production. Nearly two thirds of this amount—about
£40 million per year—is funded by the public purse,
largely through the two Research Councils NERC and EPSRC. Only
7% of the R&D addresses the environmental and safety aspects
of oil production.
9. Although such analysis is not routinely
published, these figures are not disputed by the Research Councils.
NERC stated in its response to the "Degrees of Capture"
report that it accepted that "the facts relating to NERC
are largely well researched and correct".[32]
Similarly, EPSRC did not challenge the factual content of the
report, but argued that the extent of oil and gas R&D is beyond
its control, and commented that it is declining over time.[33]
CONSEQUENCES OF
ENERGY R&D—ENTRENCHING
THE FOSSIL
FUEL ECONOMY
10. Given the long time frames of R&D
and subsequent energy investment, this work in British universities
is counter-productive to the aim of cutting carbon dioxide emissions
by 60% by 2050, for two reasons.
11. Firstly, oil and gas R&D directly
adds to the available oil and gas reserve base, both by finding
new fields and by enabling technologies to extract previously
uneconomic resources. As such, it pushes out the horizon of continued
production. The current global reserves to production ratio is
41 for oil and 67 for gas—meaning that at current rates
of consumption, oil and gas reserves will last respectively 41
and 67 years.[34]
In general, once reserves are classified as proven, they are committed
to being extracted: the considerable capital expended "upfront"
in exploration and field development is required to be recouped
through the income from production.
12. Secondly, oil and gas R&D enhances
the competitive position of these energy sources relative to their
alternatives, such as renewable energy sources, not just in terms
of price, but also in terms of delivery capacity or deployability—such
as the gearing of infrastructure and resources to renewable-based
production. In other words, R&D that contributes to oil and
gas production serves to entrench those fuels' role in the energy
economy.
RENEWABLE ENERGY
R&D DWARFED BY
OIL AND
GAS R&D
13. The Government has made some welcome
moves to expand renewable energy R&D. The 2003 Energy White
Paper announced the provision to the Research Councils of £8
million of research funding for renewable energy over three years,
as part of a £28 million total investment in sustainable
energy research.[35]
According to Department of Trade and Industry figures, the Government
spends £19 million a year on renewable energy R&D in
total, shared between private sector and universities.[36]
14. However, these figures are dwarfed by
Government funding of oil and gas R&D, even in universities
alone. When it is borne in mind that the oil majors carry out
far more of their R&D in-house rather than in universities,
we see a considerable imbalance in the total innovation investment
between fossil fuels and renewables. This is not an imbalance
to which the Government needs to contribute.
15. If the approach to technology substitution,
from fossil fuels to renewables, is to be a market-based one—as
government policy intends—reduction of the costs, and increase
of the deployability, of renewable energy sources themselves is
not the only thing that is required. Within a market approach,
renewable sources are employed in competition with other (conventional)
sources, so it is the relative rather than absolute price and
deployability that are relevant.
SCIENCE POLICY
CONFLICTS WITH
CLIMATE CHANGE
POLICY
16. As such, there are strong arguments
for the phasing out of Government support for oil and gas R&D
over the short term, with the exception of those which directly
relate to mitigating the negative environmental and safety impacts
of operations. This would make sense not just in relation to climate
change, but also in the interests of competition and innovation—for
small, nascent industries, such as renewable energy to receive
more government support in order to get established, than mature,
profitable industries such as oil and gas, which have the resources
to fund R&D by themselves.
17. The policy context of this situation
is the gearing of science policy, especially since 1993, towards
industrial applicability—indeed, "wealth creation"
is a key element of the mission statements of the Research Councils.
Since bigger industries have more resources to match funding for
research, and more capacity to commercialise the results, current
government research policy is de facto biased towards projects
that support bigger industries and, as a result, favours oil and
gas over renewables.
18. Given the wide-ranging implications
of climate change, the key to effective Government policy will
be its ability to address conflicts with other policies—in
the jargon, to approach the issue in a "joined-up" way.
19. The 2003 Energy White Paper identifies
the role of Government as being "to create a market framework,
reinforced by long-term policy measures, which will give investors,
business and consumers the right incentives to find the balance
that will most effectively meet our overall goals." However,
at present, in relation to higher education R&D, science policy
considerations are taking precedence over climate change policy.
As a result, the opposite incentives are being given to those
that will meet the Government's goals.
20. Following publication of our "Degrees
of Capture" report, we wrote to a number of Government
departments, including DEFRA and DTI. The Office of Science and
Technology (OST) replied on behalf of all Government departments.
It restated Government policy to ensure "that higher education
institutions collaborate with industry and other organisations
to achieve long-term economic and social benefits from the work
they undertake". Our concern was not at this policy per
se, but at its unqualified application, regardless of other
priorities.
21. The OST letter suggested that "to
provide incentives for, or to discourage activity in, particular
areas" would be a constraint on academic freedom. However,
this appears to miss the point. Government sets the framework
for higher education research priorities, and in particular the
focus on industrial applicability—and academic researchers
must already make their choices within this framework. A more
sophisticated approach is needed, to recognise that not all business
applications of university research are necessarily in the public
interest.
22. Furthermore, it is not correct to state
that particular sectors are not encouraged by the government.
For example, pushing for greater oil and gas R&D within universities
is one of the key aims of PILOT, the Government-sponsored taskforce
on North Sea oil.
CONCLUSION
23. Government science policy is well aware
of the role of research and development in contributing to industrial
competitiveness. However, in the case of energy, the skewed balance
of R&D will enhance the competitiveness not just of British
companies over foreign ones, but also of oil and gas over renewables.
24. Oil and gas companies already invest
considerable resources in the research and development which underpins
their future success. There is a strong case that government support
is not required to supplement that, and indeed is counter-productive
in relation to climate change policy, and should therefore be
phased out within a short timescale.
25. To decline to address the impact on
the energy economy of research and development risks locking Britain
in to dependence on fossil fuels—and undermining the Government's
commendable moves to address climate change in other areas of
policy.
30 September 2004
32 Letter from Andrew Richardson, Secretary to Council,
NERC, to PLATFORM, 28 April 2003. Despite accepting the factual
analysis of "Degrees of Capture", it criticised
the report's lack of discussion of NERC's renewable energy funding,
as outlined in NERC's five-year strategy, "Science for a
sustainable future 2002-07". Since then we have written to
NERC with comments on that strategy [29 July 2003]. A reply to
those comments was promised [on 12 August 2003], but never materialised. Back
33
Meeting of Greg Muttitt and James Marriott of PLATFORM, with
Peter Hedges and Alicia Greated of EPSRC, 30/7/04. Back
34
BP Statistical Review of World Energy 2003. Back
35
Energy White Paper, "Our Energy Future-Creating a low carbon
economy", February 2003, p 60 (para 4.60). Back
36
Department of Trade & Industry press release, 22/10/02, "UK
needs to catch up with Europe on renewables". Back
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