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


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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