Examination of Witnesses (Questions 380
- 399)
WEDNESDAY 26 MARCH 2008
MALCOLM WICKS
MP, SIMON VIRLEY
AND KATHRYN
NEWELL
Q380 Graham Stringer: I do not blame
this Government when the wind does not blow!
Mr Virley: —to give the
right incentives.
Q381 Graham Stringer: But you can
make estimates, and I come back to the question. Is a turbine
with a load factor of 7%, or 10%, for that matter, reasonable
to subsidise?
Malcolm Wicks: Commercially I
hope we would not see much of that in the future, as the industry
becomes more sophisticated about siting. The load factor, of course,
for offshore wind is quite a lot higher—40% comes to mind
but I would need to check that—which is one of the reasons
for offshore.
Q382 Dr Blackman-Woods: What consideration
has been given to the Energy Research Partnerships' recommendation
that there should be a linear supply chain of research funders
established?
Ms Newell: I presume you are referring
to the diagram where we talk about innovation going from the Research
Councils through the ERP and the Environmental Transformation
Fund?
Q383 Dr Blackman-Woods: Yes.
Ms Newell: The ERP have obviously
been reviewing this and it is something they continue to look
at. Although we often express support for innovation as a linear
line, innovation, as I am sure you all know, does not really work
like that. There is a lot of cycling back and a lot of jumping
ahead, and we use it as shorthand to be able to demonstrate that
some of these organisations have a unique position. We would also
say that we see the ETI particularly as being a very new organisation,
it has only just had its first proposals, but now we expect to
see it in operation quite quickly, so we need to allow time for
the ETI to become established and start supporting research. The
TSB was itself only newly formed as an arm's length body last
July, and is currently developing its strategy for energy, so
we expect the ETI and the TSB to be developing complementary portfolios.
Those organisations both have a different focus in terms of their
priorities, with the TSB very much focused on United Kingdom competitiveness
and ETI on CO2 reduction, so they operate a slightly different
space.
Q384 Dr Blackman-Woods: You have
not mentioned, or if you did I did not catch it, the Environmental
Transformation Fund, which is what the Energy Research Partnership
was saying it was to get away from this idea of overlap and being
very clear that something might move from the ETI into the Transformation
Fund. Have you considered that?
Ms Newell: The Environmental Transformation
Fund will become operational from April this year; it brings together
some of the existing programmes and activity under BERR and Defra's
headings, and also the Carbon Trust.
Q385 Dr Blackman-Woods: So are you
accepting that there should be this linear chain and there should
not be overlap with very specific remits for different funders?
Ms Newell: The overall aim is
that they will mainly operate in separate spaces. However, the
boundaries between some of these organisations will be slightly
fuzzy depending on the technology. If I could use an example,
perhaps, of marine, perhaps under the ETI we might see the support
for marine going as far as single prototypes going in the water,
and then we might see the Marine Renewables Deployment Fund encompassed
under the ETF supporting commercial deployment. For other technologies
you may see the boundaries shifting slightly one way or another,
but the key here for us is to work together to make sure we do
not operate in each other's spaces and we do have individual roles.
Malcolm Wicks: I would add to
that the obvious point, Chairman, that there is never a final
chapter to a technology. Photovoltaics, for example, are being
deployed in Germany quite a lot; we are trying to develop them
here and encourage them; and we now read quite a lot about the
second and third generation of photovoltaics, and much of that
in Britain would be in the province, say, of the Research Councils
but also some industries, ideas about nanotechnology and its potential
for all sorts of things, not least photovoltaics. So, although
something could be deployed, obviously the old R&D story continues.
Q386 Dr Blackman-Woods: Moving on
to the Technologies Institute, it was set up obviously to accelerate
technology development but the intellectual property from ETI-funded
projects is likely to remain with industrial partners, is it not,
and how will SMEs fare if that is the scenario?
Malcolm Wicks: That is a very
good question. You are right that the intellectual property would
stay with the company, and I think rightly so, but is your question
how would that then favour —
Q387 Dr Blackman-Woods: Will SMEs
therefore be disadvantaged because they are not likely to be,
or are less likely to be, an industrial partner?
Malcolm Wicks: They would have
to pay, obviously, the proper amounts for using the IP but what
I would say, and I suppose I am thinking back to my brief period
as science minister, Chairman, when I looked at science and innovation,
it seemed to me that in a number of these fields, and I am thinking
of fuel-cell technology when I visited Ceres, which was at one
stage quite a small company, and when I think of bioscience, it
is quite often the smaller company, sometimes the spin-out company
from the university, that is particularly good at invention and
developing IP itself.
Q388 Dr Blackman-Woods: Indeed.
Ms Newell: The ETI has set out
some principles about how they will manage IP, and this is quite
a balancing act because it needs to reflect the investment risk
that private partners are making as well as recognition from the
public sector who would like to see wider benefits coming from
this. So basically what has been established is a set of guidelines
about how the members will benefit and how they will manage individual
projects, but the principles themselves do need to be flexible
to reflect the fact that, as the Minister has suggested, a lot
of innovation rests with small companies, and I think all the
members of ETI are keen that they engage with the best people
in the business and the people who have got the ideas. So I think
they are sensitive to the need that this flexibility needs to
be able to be used to attract these small companies into ETI and
to get support, and to reflect that they will want to get some
returns, so I think there is the flexibility there for small companies
to benefit but it needs to be developed as we progress forward.
Q389 Dr Blackman-Woods: So they are
likely to be partners with larger industries?
Ms Newell: It will depend on the
nature of the projects that are supported. If ETI could procure
research, and if that is the case, then maybe ETI and its members
would hold most of the IP for the research. If they are more in
a partnership where the SMEs are bringing something to the party
in terms of finance or their base IP, then I think that will need
to be reflected in how they are rewarded.
Q390 Dr Blackman-Woods: You may be
aware that there is some concern in the academic community that
the funds that are going through EPSRC to ETI are, in fact, just
a recycling of money that really would have supported basic research
for long-term technological departments in universities in any
case. How would you respond to their concerns and to other concerns
expressed about how the decision about the ETI and where it was
going to be located was reached? Are you dealing with that set
of concerns from the academic community?
Malcolm Wicks: My view is that
more and more money is now being spent on the science of energy
and research and development. I have a figure here, but I need
to make sure I have the period of time right, that the main component
is some £63 million on Research Councils. Over what period
is that?
Ms Newell: That is annual.
Malcolm Wicks: Of £63 million
on the Research Council's energy programme, not just renewables,
£20 million is being committed by the Technology Strategy
Board, £10 million for the Carbon Trust,[1]
and then, as you know, the European Union Framework Programme
Seven which British scientists and researchers have always been
very good at accessing, mainly because they are very good scientists.
So you could always argue whether there is enough but I think
there is a good deal of research money now available—
Q391 Dr Blackman-Woods: But the question
is whether it is new money, or have you simply focused money that
was already available which would have been earmarked for basic
research in universities into ETI?
Malcolm Wicks: Certainly most
of the ETI money is new because it is public-private partnership.
We have managed to get major companies like Shell and BP, because
the idea is to have a 50:50 partnership.
Q392 Dr Blackman-Woods: The ability
for ETI to fund projects that are 100% is dependent on them getting
state aid approval from the EU. Can you update us on the progress
of that bid?
Ms Newell: Yes. I believe that
this is progressing well with the European Commission and we are
expecting a decision in the next month or so. My understanding
is that there have been some questions but we are addressing them.
Q393 Dr Blackman-Woods: Minister,
you mentioned Framework Programme Seven. Would it be beneficial,
do you think, to co-ordinate bids to the programme in order to
maximise United Kingdom success?
Malcolm Wicks: I am not sure,
to be honest. I suppose probably that is a question to ask DIUS,
because DIUS would have responsibility for Framework Programme
7 now. I once had responsibility but I had better not trespass
into old territory on that.
Q394 Dr Blackman-Woods: I am sure,
Chairman, we can direct that question to DIUS, but has consideration
been given to how United Kingdom research in renewables will interact
with the European Institute for Innovation and Technology?
Ms Newell: Yes. This is the very
recent announcement you are talking about?
Q395 Dr Blackman-Woods: Yes.
Ms Newell: I think we expect ETI
perhaps to be an organisation that might be involved in that.
It is quite a new announcement so we have not exactly structured
our approach to that yet.
Q396 Dr Blackman-Woods: But what
we are asking is will you give consideration to how the ETI will
feed into the EIT at European level?
Ms Newell: The ETI has a remit
to deal with international and European issues as well, so it
is very natural that it will give consideration to how it will
engage at European level.
Malcolm Wicks: That is very important
because we are faced with global issues and certainly with European
issues, and now we have European targets very helpfully in terms
of carbon reductions and the renewables targets we have mentioned,
and it is very important that we see more European collaboration
certainly on science and technology. It would be absurd if every
country was trying to do the same.
Q397 Chairman: What is the chance
of us getting the Institute here in the United Kingdom? Have we
made a bid for that?
Malcolm Wicks: The European Institute?
I do not know, Chairman.
Q398 Chairman: Would it be possible
to let us know what initiative has been made to try and get it
here?
Malcolm Wicks: Yes, I will ask
DIUS. I will say the Select Committee asked and I am sure they
will answer!
Q399 Dr Turner: Our total government
public spend on R&D in this country in renewable energy, or
in energy at all, pales into insignificance compared with other
countries and the historic spend on R&D, for instance, of
the late lamented CEGB. Are you satisfied that we are putting
enough resource into RD&D, and that we are arriving now at
a mechanism where you have not got little bodies with little pockets
of money falling over each other and making life difficult, because
it has been very difficult for these small innovative companies
to fight their way through the funding system up till now? The
ETI looks like a big step forward, but it is still hard for companies
to get that far, and then we find cases like the Marine Renewables
Deployment Fund, which seemed a great idea when it was launched
about three years ago by one of your predecessors but where there
has not yet been any take-up because nobody has been able to fit
the criteria. So was it premature? Because you need a lot of work
before companies are at that point where they could fulfil the
criteria of the Marine Renewables Deployment Fund.
Malcolm Wicks: My brief response,
and I use the word "momentum" again, is that I think
there is now a great deal of momentum behind funding in terms
of R&D and Deployment. My colleague has mentioned the Technology
Strategy Board, only just really established as an arm's length
organisation; the ETI, a brand new organisation, and the developments
we have just heard about in Europe. On the Marine Renewables Deployment
Fund, the issue is this: that we put that in place because we
are hopeful that following an R&D stage the kit can be deployed
in the water, and so far, although we expect a couple of new applications
quite soon, the technology is really not at that stage. It is
important to remember about wave and tidal that very few bits
of kit, if I can put it simply, have been tested in the water
for sufficient lengths of time to prove their viability. As soon
as a proper application comes forward we have the money to spend,
so I do not think we should apologise for having a pot of money
ready to bring forward deployment.
1 Note from the witness: "The Technology
Strategy Board and Carbon Trust funding is additional to that
of the Research Council's energy programme". Back
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