Examination of Witnesses (Questions 160
- 179)
WEDNESDAY 30 JANUARY 2008
DR PAUL
GOLBY, DR
DAVID CLARKE,
PROFESSOR PETER
BRUCE FRSE AND
DR ALISON
WALL
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 Boardthat
is very, very clear and it is part of the legal agreement of setting
up the partnershipand 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 ETII believe it
is the right thing to do to tackle a key problem in technology
transferI 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 pointI was not going to ask this question but that
answer was interestingis 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 spentand you
talk about academic researchthe 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 ChemistryProfessor Bruce, our organisation,
and I declare a registered interest on that issuebelieve
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 outsideand you are talking about eight
yearsmany 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 haveand
I wonder if I could perhaps ask Dr Wall to comment on thisis,
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 learnlet
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 calland I know that some people will say that
this is rather too black and whitescientifically 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 ideaswhat we are good at in
this country is coming up with really innovative conceptsand
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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