Select Committee on Innovation, Universities, Science and Skills Minutes of Evidence

Examination of Witnesses (Questions 160 - 179)



  Q160  Chairman: A significant amount of this money is going into private sector R&D.

  Dr Wall: Yes.

  Q161  Chairman: Do you feel that that is appropriate?

  Dr Wall: I think that only time will tell in the projects that are funded and certainly the Research Councils are part of the process in looking at the strategy in the projects that will be funded.

  Q162  Dr Blackman-Woods: You will know that this is of real interest to the research community in particular and some particular universities. I am really unclear as to who is making the decision about where ETI money goes. Do you simply fund what they tell you to fund?

  Dr Wall: I would not say "simply" because we have a seat on the Technical Committee that helps develop the strategy and we nominate a director to the board, so we are part of the discussion process and the decision-making process, but only one part amongst the other members of ETI.

  Dr Clarke: The decision making on what projects ETI support will be made by the ETI Board—that is very, very clear and it is part of the legal agreement of setting up the partnership—and the public sector in the form of EPSRC, TSB and the Government Chief Scientific Adviser all have membership of that Board. The Chief Scientific Adviser is there in a kind of observer role but the Board membership is being restructured at the moment in line with changes in DS is that TSB and EPSRC will have formal voting rights on that Board just as the private sector did.

  Professor Bruce: I think that you have touched on an issue which is of real concern to the research community. Alison will correct me if my numbers are wrong but my understanding is that something like £60 million of the EPSRC budget has been committed to the ETI. Although I am an absolutely enthusiastic supporter of the concept of ETI—I believe it is the right thing to do to tackle a key problem in technology transfer—I really feel that there is a problem of perhaps robbing Peter to pay Paul here and if we starve ultimately the funding for the long-term research into things like fuel cells, batteries and photovoltaics, the longer-term renewable technologies that we are going to need in 20 to 40 years as opposed to 10 to 20, then we will not really make the right investment in developing the scientific breakthroughs that are essential to deliver those technologies. It is a relatively small amount of money we fund on the science base: £60 million is in many ways a drop in the ocean in terms of commercialisation budgets.[1]

  Q163  Chairman: That was my point, Dr Wall. This money which was coming out of basic research was to actually prop up commercial enterprises and I would have thought that you would have been squealing about that.

  Dr Wall: I think we said all through the discussions with DIUS on our delivery plan that we thought that ETI must be funded over and above what we are already funding on energy because we are very committed to that long-term research activity.

  Q164  Graham Stringer: Specifically on that point—I was not going to ask this question but that answer was interesting—is it not likely, such as one can judge the future, that breakthroughs in fuel cell technology will be made by the huge automobile companies which are putting a lot more money into fuel cell technology than those relatively small amounts of money? What I am trying to say is something that really reinforces the Chairman's point and that is, would this money not be better spent in academic research rather than in areas where the work is probably going on in larger amounts elsewhere?

  Dr Clarke: If you look at the description of where the funding is being spent—and you talk about academic research—the key thing which has perhaps been lacking over the last few years which goes back to this complexity of the funding body arrangements has been a very clear focus in one area/group for derisking of technology after it has been through academic research and we have been in a position where—

  Q165  Graham Stringer: Can you tell me what "derisking technology" means.

  Dr Clarke: In simplistic terms, we have a position, for the sake of argument, with a new marine power device which, in terms of the funding of the technology for it and the design of the machine, it may have been developed in a university, some have come out of UK universities and machine designs are always in test tanks in universities right now but at very small-scale proving the fundamental principles of whether that is science and that engineering technology could be applicable to the benefits in that particular application. You then have a huge step to go from something in a test tank in a lab to something which is commercially viable and which a company, E.ON for the sake of argument, would actually pick up and put into operation in the North Sea. It is a huge step to go there. When I talk about derisking, it is that process of saying, "So, here is the fundamental science and engineering of this potential product", but there are many other things that need to be brought to bear to actually turn that into a realisable commercially viable machinery and some of those things are down to engineering and technology again to the point that we are now doing it in scale of actually putting in manufacturing plants that can make those things at scale and others are just down to the minutia of how we are going to service it, how we are going to train people to actually go and deal with this new machinery when it goes wrong and all those kinds of issues. Derisking is a process of starting to work through that logically and put all that capability in place.

  Q166  Dr Gibson: What is "risking technology" then?

  Dr Clarke: If we are derisking, we must be risking.

  Q167  Dr Gibson: Of course. How do you know what you are doing?

  Dr Clarke: The essence for the Energy Technologies Institute is to help do exactly that which is to understand the risks at the front end of the process, where we have something that is coming out of the lab, I call it that, and the university potentially, and to actually understand the risks that go with it. Some of the studies we have done just in the last few months have been very quick have been very quick and very superficial around offshore wind technologies, for instance. We have identified some straightforward areas which there are major risks in taking the next generations of technology out into the market and, having identified those risks, the remit for my group now around particularly the technology side is, can we actually go and close those gaps? If we have identified, for instance, that this thing will work fantastically except for the gearbox in it as nobody has done a gearbox that is viable in this machine. Everything else that we have looks great and the remit of my group would be, okay, we will go and find somebody who can develop the gearbox if it cannot be bought off the shelf that is appropriate and suitable and whether we can integrate that with the rest of the science and technology to make a complete package. As you go through that process, you start to then identify, okay, this is what you have to do to make it commercially viable because we have shown that the technology can be done, so you look at commercial viability and you then get all the issues around training, skills and capacity in the market to actually produce that kind of knowledge.

  Q168  Graham Stringer: Is it possible to deal with the more fundamental point about why you are putting money into fuel cell technology when vast amounts of money are being put in by General Motors, Ford, Honda and other major companies?

  Dr Clarke: I can comment generically. ETI is currently not putting funding into fuel cells and we actually do not have a plan at the moment to put funding into fuel cells without doing an awful lot more analysis into this with our partners and with other groups around the UK to understand whether it is worth putting any money into fuel cells. At the moment, ETI certainly is not and we have no plan to.

  Dr Golby: I would like to pick up on that point. It is important that we put our money where we can get best value for it and the important point here is that, when we look internationally and in the public sector/private sector, we need to make sure that we do not duplicate and we actually support people where they have the better chance of delivering. The key point I wanted to make is that I think there is a funding issue here. The way I like to think of this process is pure research, ETI getting pure research from the two, applied research and a demonstration piece of technology, and then the Environmental Transformation Fund assists with deployment, i.e. scaling up to the right scale. My view as an investor in the ETI is that we invested on the basis of matched funding. I think that the Government have come up with matched funding but it has probably has got there through taking money from other areas in the pure research area, and I see that Alison is nodding at that. I guess that my real concern is if you look at the Environmental Transformation Fund, I think that the CSR settlement for the next three years is £370 million which is quite small in terms of real scaling-up issues and, of that £370 million, I think there is only about £170 million that is not already committed to schemes that are in existence, rebadging of schemes into ETF. I have a real concern that actually we are still not putting sufficient money in this to make the progress that we need in the timescale that we have available.

  Q169  Graham Stringer: Obviously, the downside of having different focuses for funding bodies is that you have overlap and inefficiency. Can you explain the difference between the Energy Research Partnership and the Renewable Advisory Board. They both give strategic advice; they both have industry representatives on them. What is the real difference?

  Dr Golby: The difference is that the Energy Research Partnership is not a government body and the now Prime Minister asked for it to be formed but it brings together academia, industry and all the plethora of government departments involved in energy research and it is a self-sustaining body; it meets because the principals want to meet and it is able to give independent advice to the Government which the Government are free to take or not take as they so wish. It is not actually part of the funding landscape; we have no funds; we cannot make commitments but we can make, I think, analytical comment about the whole sector.

  Q170  Dr Iddon: I want to focus on the Research Councils. Obviously, people apply for grants in the responsive mode funding model and that funds the research projects for three years which is rather a short term. Directed funding is also available. Do we have the balance right? For example, the Royal Society of Chemistry—Professor Bruce, our organisation, and I declare a registered interest on that issue—believe that eight-year projects would be better especially in the renewables area because the research takes that long to be proven. My first question is, do we have the balance right? My second question is, is there enough flexibility in the Research Council systems to allow movement between one and the other? Perhaps I could address those questions first to Alison.

  Dr Wall: First of all, throughout all of our systems there is no rule that any grant should only be three years' long and one of the messages that we are constantly talking to the research community about is that they should fit the length and size of the research grant to match the problem that they would like to tackle. So, it could be a short feasibility study or a big six-year programme grant and we are happy to receive proposals across the whole range. Secondly, I think we do agree that where there is excellence of research and relevance, then we should be investing longer term in research teams and that is exactly what we are doing through our sustainable power generation and supply programme where those teams were awarded four years' worth of money and then, through a peer review process, we are gradually refreshing the portfolio and giving them another four years' worth of money. So, they will have had eight years' worth of funding in the end subject to peer review check halfway. I think that we would very much agree with that.

  Q171  Dr Iddon: What about people outside the Research Councils?

  Professor Bruce: I would agree with your concerns. Alison is quite right, there is nothing prohibiting referees on proposals recommending a longer period of time or at least endorsing a longer period of time that applicants have requested, but it is true to say that the culture is that it does tend to be short term with EPSRCs funding remit. If you look at the Medical Research Council, the problem with climate change is similar in a sense to trying to find improvements in cancer treatment, it is a long-term role, and I think that as we move to these long-term major challenges, we do have to move to longer term funding because this three-year period when really within one-and-a-half years you are starting to think, this grant is going to end in another 18 months, what is going to happen to the people? The skills base will be lost. We will lose the personnel because their contracts will come to an end. SUPERGEN, to use the acronym that relates to Alison's comment, is an excellent programme in two senses within the EPSRC programme. One is that it helps to foster collaboration. We have been very badly collaborating with each other in research and we need to collaborate in order to tackle these big problems. One of the great things about that is that it is a consortium-based system. You have to apply as a consortium and be funded as a consortium. Frankly, I think it will take us three or four years to learn to work together. What I do hope is that EPSRC will take an eight-year view of this funding and not a four year. It is a four-year term with the possibility of renewal and I think that it is going to take us several of those first few years to learn how to work together. I think that the real productivity for this will come in the second phase of the funding, so I hope that it is an eight year and not a four plus four.[2]

  Q172  Mr Marsden: Just on those points, Professor Bruce, we have had evidence from E.ON suggesting that they have a concern that the focus of academic research should be more focused on sector priorities and I think that certainly looked at from the outside—and you are talking about eight years—many academics in other disciplines would give their eye teeth to be given grants that work for eight years, but clearly the points that you have been making about the need to build up teams and everything is a significant one. The question I have—and I wonder if I could perhaps ask Dr Wall to comment on this—is, on the one hand, we have the industries' concerns and on the other hand the logistical concerns of people about building up teams. Is it not possible to have a situation where you have perhaps a two-stroke system whereby you say that the first four years is very much blue sky stuff but that, when you actually come to the second four years, you should be focusing much more on technical application?

  Dr Wall: That would be possible. That is not the approach we have taken at the moment in the sustainable power generation and supply programme.

  Q173  Mr Marsden: May I ask why.

  Dr Wall: I think that we have very much put those consortia together with major funding to tackle problems of relevance. So, we wanted to bring leading research in together in those collaborations, develop critical mass and then testing them for four to eight years. I should say that some of the first round funding has been renewed and will have eight years. On the other side, I would say that we do have investigator-led responsive mode and we see some activity in the energy area in responsive mode but we would certainly welcome more and that is very much where we think the blue skies research should be.

  Q174  Mr Marsden: Do you think that the concerns of people who are at the sharp end like E.ON are misplaced?

  Dr Wall: I do not think I have heard anything from E.ON that I thought was misplaced.

  Q175  Mr Marsden: I am not putting words into E.ON's mouth and Dr Golby may wish to comment, I am merely picking up the points that you made in your written submission.

  Dr Golby: I have two comments. Firstly, there is an urgency about the issue of trying to address the climate change and I think that there is a need to really focus on applied research to get technology that is existing there or thereabouts through deployment because we have some critical challenges to meet over the next decade or so. I think that there should be a focus on applied research. In terms of blue sky research, I think that there is an issue that there should be a long-term nature to that, but equally I think that there should be the opposite side of that coin and what I do not see sufficient of across the whole spectrum is when we are actually stopping work and saying, "No, that has not delivered the goods, we now want to take the balance of that cash and redeploy to something that we think can deliver". That I think was the focus of our comment here, that we seem to have an environment in which, once projects are started, they continue to fruition irrespective of whether they are really delivering the ultimate goods. My view would be to put in a system that allowed us to divert, to test and learn—let us see if it works, if it is not making progress, then stop it, let us use that cash to better effect elsewhere.

  Q176  Dr Iddon: Dr Golby, the profits in the fuel industry at the moment are pretty good. Do you think there is enough investment going from the energy production industry into the applied research? Why should you make the statement that we will need more applied research being carried out in the universities? Should industry not be carrying out more of the applied research?

  Dr Golby: I think that is a fair point. Let me just make a point about the profits of my company/my industry. Yes, we do make large absolute profits by individual measures of the order of £700 million, but let me contrast that to the in excess £1 billion a year that we are investing in new infrastructure and new technologies into deployment. So, yes, the profit figures look high but there are some investment programmes not just this year but probably for the next 10 or 15 years. The point you make about research is valid and an unintended consequence of privatisation of this sector was that research collapsed. I think that has been built back and been built back quite strongly and evidence of that is, for example, the £50 million commitment that my company has made to the Energy Technologies Institute. So, I think that industry has started to invest very heavily in research and development from, I have to accept, a very low level after privatisation.

  Q177  Dr Iddon: Do I get the message right from your submission that you feel that there ought to be more research directed at the renewables industry? Is that your view?

  Dr Golby: I think that there is a landscape here; I think that renewables does play a significant part in that, so I would like to see more money going there. Also, I would like to see a greater focus on energy demand reductions and energy efficiency because, if we are really going to make progress here, we have to stop the wastage and, quite frankly, energy increasingly is a scarce resource and we ought to be treating it as such and, frankly, we are rather profligate in the way in which we use it, so I would like to see equal balance in that direction also.

  Q178  Dr Iddon: May I turn to you, Dr Clarke, and ask whether the Energy Technologies Institute fund short term or long term or is there a mixture as there is in the Research Councils of three years and longer projects?

  Dr Clarke: The answer is that we are finding out because ETI as a partnership, a formal legal partnership, has only been formed for just over a month. We are moving very fast towards setting up and launching our first projects which we expect will be in the areas of offshore wind and marine. The focus of ETI, as I said before, is around technology demonstrations and technology integration to a system level to prove a full system in a relevant environment and the impact of that says that we will not have any one model or any one standard for how a project must operate. It does not have to be three years. The reality is that we have established a set of outcomes that we are seeking to achieve through ETI which relate to reducing CO2 emissions in line with UK targets, increasing security of supply, increasing international collaboration around the energy landscape and energy R&D and increasing the skills and capacity base that we can access. Within those outcomes, I imagine that the projects we will fund, some may take as long as five years, some may be as short as 18 months, but the reality is that a typical project will probably be two to four years because by the time you say, "I am going to create an engineering design, I am going to engineer a real system at a relevant scale and put it, for the sake of argument, into the water in the North Sea or in a major test tank", that kind of programme is unlikely to take less than two years, more like three to four years.

  Professor Bruce: I would like to make the comment that both of you have asked questions related to timescales and maybe I could say something about that. A lot of the things we have heard particularly from Paul I would endorse in what I would class at technology rather than science. What we have to understand here is that we are looking at a vast range of science and technology and, if I can break it down, wind and wave I would call—and I know that some people will say that this is rather too black and white—scientifically mature but technologically adolescent and in that area is a role for ETI and I think that you have to always look critically at stopping funding in areas where it is clearly not going forward. If we are looking at the challenge of 20 to 40 years, fuel cells, photovoltaics, batteries for storage, these are problems which we do not have the scientific understanding and knowledge to solve because, if we had, we would be far further down the route of having these things. For hydrogen economy and fuel cells, we need to have to storage hydrogen and we have to generate hydrogen. No-one has a clue how to do that really. A mass of money has been spent on this doing the obvious things. They will come from the innovative, creative ideas, left-field ideas—what we are good at in this country is coming up with really innovative concepts—and that is part of the science base and I think that we cannot say that four years from now that will be all over and we could move on to the technology. That could take ten years of developing the fundamental science around it, but we have a track record in this country of success in that area and what we then have to learn to do is pull that, once it goes to that point, through the technology.

  Dr Iddon: May I turn now to a comment that the Environment Agency have made about environmental impacts of renewable technologies. They are interested in life-cycle analyses of each technology from cradle to grave of the use of the technology and they do not think that sufficient research is being put into the environmental impact of renewable technologies, not just greenhouse gas emissions but other environmental impacts as well. Do you agree with the Environment Agency or do you dispute that comment?

  Q179  Chairman: I ask that you be really brief in your answers because we are hopelessly behind time due to very poor chairmanship!

  Dr Wall: Very quickly, I would say that increasing the proportion of the energy portfolio related to the environment is one of the things we would like to do in the coming three years, working with our colleagues in the Natural Environment Research Council.

1   Note from the witness: EPSRC may say that the £60 million will still go to basic science within ETI funded projects but that is not the role of the ETI, is not where its focus will be. The £60 million will not be peer reviewed as basic science and will disappear into the £1 billion ETI budget. Back

2   Note from the witness: Concerning the question of balance between managed and responsive mode funding, I believe in an area like climate change one does need to direct research funds and hence research towards this topic. Provided managed means this and not a prospective set of topics then the balance is about right. Back

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