The Future of Marine Renewables in the UK: Government Response to the Committee's Eleventh Report of Session 2010-12 - Energy and Climate Change Contents

Appendix: Government Response


The Department broadly welcomes the Committee's report on "The Future of Marine Renewables in the UK" (HC 1624), published on 19th February 2012. It is encouraging that the Committee shares the Department's view that the emerging wave and tidal sector has the potential to benefit the UK in terms of creating an increasing level of secure, renewable energy generation in the period to 2030 and beyond.

The Government has clearly set out its vision for the wave and tidal energy sectors as part of its overall renewables policy in the UK Renewable Energy Roadmap, published in July 2011. As noted in the Government's evidence to the select Committee, the UK now has the most advanced marine energy testing and deployment infrastructure and the world's most comprehensive support regime. This has been further underlined by the Government's proposals to offer support to wave and tidal stream energy at 5 ROCs/MWh under the Renewables Obligation through its banding review and by the recent launch for applications of DECC's £20m Marine Energy Array Demonstrator (MEAD). The development of the Feed-in-Tariff with Contract for Difference under the Government's Electricity Markets Reform and the creation of the Green Investment Bank will ensure that the appropriate levels of support are in place in good time to provide the long-term investment certainty needed to commercialise the industry.

The Government is committed to continuing to work with partners across the public sector and with the industry to ensure the success of marine energy in the UK. The ministerially-chaired Marine Energy Programme Board and its various working groups form the main instruments for this activity and the Low Carbon Innovation Coordination Group (LCICG) ensures that various support initiatives across the public sector innovation funding bodies and Devolved Administrations operate in a complementary manner.

In its report the Committee raised a number of detailed comments on a range of issues. These are dealt with separately below.

Responses to conclusions, recommendations and comments:

29. While we recognise that funding is limited in the current economic climate, we nevertheless feel that the Government's funding for marine renewables represents a modest investment for what is a world leading industry with the potential to bring significant benefits to the UK.

It is necessary for Government to fund a number of innovative low carbon technologies in order to meet our 2050 targets, ensure secure future energy supplies at the lowest possible cost to the consumer and create new commercial opportunities. The LCICG Technology Innovation Needs Assessment (TINA) project has worked to identify those technologies likely to be important in delivering our energy and climate change targets while also generating economic benefit for the UK. Marine energy is one technology family covered by the TINA process although there are other technologies, such as offshore wind, that are likely to generate greater low carbon and long-term growth benefits for the UK. Government investment in these low-carbon technologies needs to be proportionate to their potential benefits.

Although, as noted above there is a need to ensure that Government resources are shared appropriately across a range of policy priorities, the Government believes that it has created both the world's most comprehensive and most generous support environment for the development and deployment of marine energy. In addition to the grant support measures which were outlined in Annex B to the Government's evidence paper to the Committee a number of additional support measures have been launched. Over the last two years, the sector has benefitted from innovation support from DECC's Marine Renewables Proving Fund (total £22m), the Energy Technologies Institute, the Scottish Government and the Technology Strategy Board. In addition, since the beginning of the year, DECC has launched the call for applications for its £20m MEAD fund, the Technology Strategy Board, Scottish Enterprise and Natural Environment Research Council (NERC) have announced a £10.5m research fund, the Scottish Government have launched the £103m Renewable Energy Investment Fund (REIF) and the Scottish Government are continuing the development of their £18m Marine Renewables Commercialisation Fund (MRCF) to be launched later in the year. In addition, under the current Renewables Obligations (RO) banding review proposal, marine energy will receive 5 ROCs/MWh with a 30MW cap over the life of the RO scheme for capacity deployed up to 2017.

We believe that, cumulatively, these schemes represent an appropriate level of funding to assist the sector's development towards commercialisation.

33. There may be a case for the LCIG to adopt a more specific cost reduction goal. The Technology Strategy Board (TSB) explained that if the Government set out clearly the extent of cost reductions that it expected the industry to achieve over a set timescale, it would be easier to assess the prospects for the sector and to make decisions and funding in the future.

35. The Low Carbon Innovation Group is right to focus on reducing the cost of energy, but it should be more specific about the progress it would like to see. Without setting out its expectations clearly, it will be difficult to assess the efficacy of policies and to make decisions on the future funding for the marine energy sector. We recommend that DECC and the LCIG adopt a formal cost of energy target of 14p/kWh by 2020. This will give a clear indication of Government expectations to the industry.

The LCICG's TINA project has looked into the potential cost reduction innovation can deliver for low carbon technologies. The issues surrounding the setting of any meaningful cost reduction trajectories are complex, especially given the still early stage of development of the marine energy sector and the large uncertainties around future costs. Because of these uncertainties, the Department does not agree with the Committee's recommendation that we should adopt a formal cost of energy target at this point in time. However, DECC will continue to review whether the development of cost reduction trajectories for the sector would be helpful, and over what timescales.

40. As things stand, both the industry and the Department view the 200-300MW figure as a "soft target", which they hope will be exceeded. The Minister said that setting a target for the longer term (beyond 2020) "may be something that we will want to revisit".

The Department does not view the 200-300MW figure set out in the Roadmap as a "soft target". In publishing the Renewable Energy Roadmap in July 2011, we set ranges for all technologies to recognise the uncertainty in projections to 2020, but made clear that the ranges were not limits to our ambition. If sectors are able to reduce costs and, therefore, achieve higher levels of deployment then this is welcome.

We also undertook to publish an annual update on the Roadmap in which we will provide an update on progress on deployment of key renewable technologies and actions to accelerate additional deployment, such as those carried out under the Marine Energy Programme.

41. We recognise the Department's concerns about introducing a deployment target to soon in the development of the technology. However, we also recognise the value that targets can have in demonstrating political commitment to the sector. A more visionary approach from Government could help to boost confidence and to drive the pace of development of the sector. The Government should not rule out setting an ambitious deployment target for marine renewables in the future and should consider introducing such a target if cost reductions to 2020 remain on track.

Given the considerable uncertainty over which technologies will emerge as the most economically efficient and appropriate to deliver the necessary carbon reductions and energy security over the coming decades, we need to ensure that we retain the maximum possible flexibility in delivering these goals. Through the Electricity Market Reform and supporting policies, the UK's aim is to provide the framework for competition between all low carbon technologies - renewables, nuclear power and carbon capture and storage - to drive innovation and cost reduction, and to hedge against the risk of one technology failing to reduce costs or to maintain public acceptability. Setting targets for specific renewables technologies could lead to a situation where the UK might be foregoing the most cost-effective carbon savings.

44. A key risk associated with an overly complex funding landscape is that money may be wasted. As well as the potential for duplication and overlap between schemes, there are also inefficiencies associated with projects having to apply to multiple schemes and the administrative costs associated with running multiple organisations.

The Low Carbon Innovation Coordination Group (LCICG) has recently expanded its remit and membership - and now includes all of the key UK public-sector backed funders of low carbon innovation - including Scotland and other Devolved Administrations. The strengthened LCICG will facilitate closer working across government departments and other publicly funded organisations, to ensure public support is focused on key technology areas and value for money is optimised. The close partnership working approach adopted by LCICG members should ensure scheme overlap is avoided and that it achieves better outcomes than a single organisation could deliver.

A single body focused on low carbon innovation would find it challenging to absorb and manage the broad remits of the existing organisations in the landscape. The existing innovation landscape allows for synergies to be drawn on and captured from sectors beyond low carbon, such as the Research Councils focus on the highest quality academic research; Technology Strategy Board focus of driving innovation through wealth creation, especially supply chain collaboration and knowledge transfer; and the Department of Energy and Climate Change, delivering secure energy on the way to a low carbon future.

46. However, the current membership of the LCIG excludes one of the UK's major funders of marine renewables: the Scottish Government.

In late 2011 the Low Carbon Innovation Coordination Group (LCICG) was expanded to include the Scottish Government and Scottish Enterprise. Other parties with a direct interest in innovation in low carbon technologies have also joined the group, including Ofgem, Welsh Assembly and the Department for Transport.

50. At a time when resources are limited, it is essential that money is spent wisely and efficiently. The complicated funding landscape for marine renewables creates a risk of overlaps and inefficiencies in the way the programmes are funded. We are pleased that the Minister acknowledged that the funding landscape is too complex and recommend that DECC take steps (beyond the creation of the Low Carbon Innovation Group) to address this problem.

The Government's Low Carbon Innovation Delivery Review recently looked closely at the landscape for the support of low carbon innovation in the UK. The review concluded that, whilst the landscape has been more complex than ideal, there are compelling reasons for the continued involvement of a range of organisations in providing innovation support - including for marine energy. The technology development needs of marine energy are diverse with innovation important at all stages of technology development. The sector benefits from having a range of support programmes that can address those different innovation needs in different ways and a single organisation would have difficulty delivering this range.

The funding landscape for marine renewables, as well as other low carbon technologies, has been recently simplified by the closure of the Regional Development Agencies (RDAs) and the DECC's decision to no longer fund the Carbon Trust via a core grant, from the end of March 2012. 

With multiple programmes there is indeed a risk of overlap or inefficiencies however that risk is being managed by the Low Carbon Innovation Coordination Group (LCICG). The LCICG is ensuring that the range of Marine support programmes are part of a coordinated portfolio of support without unproductive overlaps and will ensure that the portfolio is clear and accessible to industry. The Scottish and Welsh Governments, who make their own independent decisions on how to utilise their innovation funding, have recently joined the LCICG  which will further ensure that all UK public sector backed innovation funders have clear sight of each others' programmes and plans. With these and other changes being implemented by the LCICG, the coordinated Marine innovation programme will deliver the maximum impact from available public sector innovation funding.

60. The Scottish fund will go some way to making up the funding "shortfall" that is perceived by some members of the industry, although this may be more through luck than design; it is not clear to us whether DECC had any knowledge of the Scottish Government's plans ahead of Mr Salmond's announcement.

DECC was not party to the internal discussions on budget allocation within the Scottish Government or on the decisions concerning the timing of their announcement. We would not, necessarily expect to be included in such internal policy and political discussions by a devolved government.

62. The £20m funding provided by DECC to underpin a world-leading industry is not large, even when combined with the additional funding provided by the Scottish Government. DECC must ensure maximum value for money and must avoid duplication and overlaps between the schemes. The Department should identify how it will achieve this. We urge DECC to try to keep the industry in mind when discussing options with the Scottish Government and recommend that DECC minimises bureaucracy for applicants, for example through running a joint pre-qualification process.

As already outlined above, the LCICG acts to ensure that there is effective coordination between the various funding bodies across Government and the Devolved Administrations. DECC has ensured that the industry and the Devolved Administrations have been closely involved in the work undertaken by the Marine Energy Programme Board (MEPB) and its Finance Working Group in supporting the design of the MEAD. Similarly DECC officials have attended all the Scottish Marine Energy Group (MEG) meetings which have brought together interested Scottish public sector bodies and the marine energy sector to advise on the design of the Scottish Government's funding for the sector. DECC and the Scottish Government are actively working to ensure that any potential bureaucracy related to the application processes to DECC's MEAD and the Scottish Government's MRCF are minimised. However, the different timings of the development and launch of the two schemes has precluded a formal joint pre-qualification process.

66. The Minister told us that wave and tidal were not within the initial key priority areas for the [Green Investment] Bank but that he expected some of the 20% of the portfolio that will be used outside of the priority areas to go to marine renewables. He went on to tell us that large-scale marine renewable funding opportunities were not likely to be available until "later in this decade at least", when commercial scale projects might start to appear.

67. We welcome the initial support from the Department for accessing other sources of funding such as [...] and Green Investment Bank.

As the Minister noted at the Select Committee evidence session, given the current early stage of development of the marine energy sector, it is not currently a priority area for the Green Investment Bank (GIB). The selection of the GIB initial five priority sectors was made against the criteria of:

  • green impact;
  • additionality;
  • capacity for commercial investment in mature infrastructure over the period to 2015;
  • and the importance of complementing, and not duplicating, other Government policies including financial support.

As a relatively early-stage technology compared with other green sectors, marine energy displayed relatively low commercial investability in mature infrastructure within the time-frame considered. Other government policies and finance initiatives are focused on prioritising financial support for marine energy at its current stage of development. Government and the GIB Board will reconsider priority sectors periodically.

While at least 80% of the funds committed by the Bank over the Spending Review period will be invested in the priority sectors, the intention is for the Bank to be given an overall broad remit to focus on green infrastructure. This would include the marine energy sector. All potential investments will be assessed by the Bank against green impact, sound finances and additionality.

Once the sector has reached deployment at a commercial scale, it will be able to seek funding for deployment projects from the GIB alongside any other renewables developers. However, as with the potential for discretionary investments outside current priority areas, all decisions on funding will be taken in the round and on a commercial basis by the Bank. Any marine project applying for funding will need to compete with other eligible applicants.

67. As the UK is a leader in the development of wave and tidal energy, DECC should actively promote the potential benefits of marine energy at the European level and maximise the opportunities for UK-based marine renewable projects to benefit from European funding schemes.

The UK, through DECC, is already leading the development of a European Member State Ocean Energy Interest Group. This has the express purpose of securing an active partnership between interested Member States, industry via the European Ocean Energy Association and their members and the European Commission to help develop the marine energy sector together as quickly as possible. This includes pressing for increased funding for marine energy through EU funding programmes.

The first product of the Interest Group was a Position Paper, "Towards European industrial leadership in Ocean energy in 2020", developed and supported by the UK, Denmark, France, Ireland, Norway, Spain and Portugal, along with Belgium and the Netherlands who have longer term interests. This was distributed to all Member States and to the Commission by Charles Hendry during the last EU Energy Council meeting in Brussels last November. Follow-up meetings are now taking place involving the Commission to discuss joint next steps. These meetings will also involve the Management Board of the European Energy Research Alliance's Ocean Energy initiative under the EU's Strategic Energy Technology Plan. This in turn, has strong links with the Ocean Energy work going on under the International Energy Agency.

The intention is to use this activity to move the industry forward in a coherent way ,that builds the Commission's and other partners' confidence to encourage them to invest in the sector. UK leadership aims to ensure that our interests play a central part in this development and our companies and researcher community have access to increased EU level support.

72. This was despite the fact that the industry itself had proposed a 300MW limit on the total volume of capacity supported at this level in order to limit the total costs to the consumer. Although witnesses told us that the likelihood of there being considerably more than 300MW of capacity in the water before 2017 was very low, it nevertheless seems strange that DECC does not intend to apply a cap, given the recent difficulties experienced with feed-in tariffs for solar PV.

The Department has undertaken both modelling of the potential for marine energy deployment and analysis of sector plans for deployment to 2020. On the basis of this work DECC is content that an overall deployment cap was not necessary and that the proposed 30MW project cap provided sufficient protection against significantly higher levels of deployment. This position was endorsed by the Finance Working Group of the MEPB. Significantly greater than anticipated deployment of marine energy will only occur if previous deployment has considerably driven down the cost of marine energy. Given the expected level of deployment and timescale considered to 2017, this is extremely unlikely. However, in this very improbable case, the Department would have the powers to adjust the RO bands accordingly.

74. The Minister told us that he was not in a position to say what the likely costs of marine energy would be in 2017 and therefore did not know what level of support would be offered beyond 2017. However, he also told us that the Government planned to provide more clarity as plans for electricity market reform were developed. He said "by 2013-14, the industry will have absolute certainty about what the forward long-term funding arrangements will be—well before we come to the end of the ROC regime".

75. The industry needs clarity about the level of revenue support it can expect to receive beyond 2017 as soon as possible. We welcome the Minister's commitment to provide absolute certainty on this issue by 2013-14. We will monitor whether DECC keeps to this timetable and urge the Department to deliver its decision in 2013 rather than 2014.

77. Revenue support should be reduced over time as technologies mature and costs fall. The Government needs to consider carefully how it will implement any changes to the level of revenue support in future, including the rate at which reductions are made and the criteria that are used to determine when reductions are introduced. Government must communicate its intentions on both these points clearly to industry at the same time as it announces the level of support that will be provided beyond 2017. Above all, the Government must avoid a repeat of the situation with solar PV Feed-in Tariffs, where drastic reductions were made at very short notice.

78. The Government has proposed increasing the level of support to wave and tidal energy devices that are deployed before 2017. Since very little deployment is expected before this date, the overall cost to the consumer will be insignificant. However, looking beyond 2017, the Government will need to balance the interests of consumers against the needs of the industry. The Government should consider capping the total volume of capacity that can benefit from revenue support in any future support regime, perhaps at the level of any deployment target.

The Feed-in Tariff with Contract for Difference (FiT CfD) scheme is aimed at: providing revenue stability for low carbon technologies; allowing industry the confidence to invest in these technologies; and decarbonising UK electricity generation. To achieve this we recognise that it is imperative that we allow industry as much visibility of the scheme as possible, and will therefore shortly be publishing a Draft Operational Framework which will set out information on the CfD arrangements including details of how strike prices will be set and FiT CfDs allocated. Between the publication of the Draft Operational Framework and its finalisation we will continue to work closely with industry to ensure that the detail of how the FiT CfD scheme is to operate is clear, ahead of the expected implementation date in 2014.

Information on revenue support levels will be provided in good time to allow investment decisions to be made. Government is focused on ensuring that appropriate support is provided to achieve decarbonisation in a manner which minimises the cost to the consumer. As part of this, Government may adjust levels of revenue support offered to reflect maturation of technologies and falling costs. However the Government would ensure that it has provided the industry with appropriate visibility of the changes required, with sufficient notice, before implementing them.

82. The availability of grid connections will be a critical factor in determining the future of wave and tidal power in the UK. We welcome DECC's acknowledgement of this and urge the Department to ensure that investment in new grid connections keeps pace with development of the industry.

DECC has already improved grid access for new generators by introducing an enduring 'Connect and Manage' grid access regime in August 2010. The regime built on successful interim arrangements introduced by Ofgem, and is enabling all types of new generation to connect to the network much more quickly. This is particularly the case with tidal power, where 14 projects (Islay Tidal Farm, Duncansby Stages 1-3, Marwick Head Wave Farm Stages 1-3, Stromness Wave Farm Stages 1-3, Meygen Stages 1-4) with a total capacity of 438MW have benefitted from 'Connect and Manage' by having their connection dates advanced by an average of over six years.

The long-term solution to connecting new generation is investment in the network. It is for network transmission owners to propose the scale, location and timing of new network investment based on information such as generation project timescales. The vast majority of wave and tidal projects planned so far would connect to the Scottish Hydro Electric Transmission (SHETL) network in Northern Scotland. SHETL has submitted publicly available plans to Ofgem for approval for network development from 2013-21 which include the network potentially required to accommodate marine energy. DECC is maintaining a close interest in these plans given their potential importance to meeting the Government's 2020 renewable energy targets.

83. The transmission charging regime was also highlighted as a concern. Under the current arrangements, higher charges are levied for generators that are located further from the main centres of demand. This means that wave and tidal generators situated in remote areas like North Scotland will have to pay some of the highest charges for using the national grid (in the case of Orkney, this is compounded by the need to pay an additional charge for a link to the mainland). Witnesses told us that high transmission charges may impede the development of the industry.

84. At the time of taking evidence, the regulator Ofgem was in the process of assessing the current charging regime, to consider whether it is still suitable given the changing nature of the generation mix and the challenges of decarbonising the electricity system. Witnesses to our inquiry were hopeful that the outcome of this review would improve the situation for wave and tidal. On 20 December 2011, Ofgem published its initial findings, which recommended incrementally changing the current approach rather than moving to a "socialised cost" model, where all generators would pay a uniform charge, regardless of type and location. Ofgem is due to conclude its consultation and make a final recommendation in Spring 2012.

DECC has submitted a Government response to Project TransmiT - Ofgem's consultation on the transmission charging regime. The response welcomed Ofgem's review process to ensure that the charging regime would deliver our shared goals of facilitating low carbon electricity generation and maintaining security of supply, whilst minimising consumer costs. The DECC response supported Ofgem's recommendations to rule out the full socialisation option because of significantly increased network costs and therefore high additional costs to the consumer. DECC supported the development of a charging regime based on the "Improved Investment Cost Related Pricing (ICRP)" option on the basis that this approach has the potential to better reflect the burden that generators impose on the system. In supporting this approach, DECC stressed the need for future development of the charging regime to take full account of the impact of the "Improved ICRP" option on overall network and generation costs as well the investment decisions of new and existing generators across GB. The response also encouraged Ofgem to consider the concerns raised by the developers of renewable generation on the Scottish Islands to ensure that the outcome of Project TransmiT treats the Scottish Islands fairly.

87. Requirements on the industry to underwrite the cost of new grid connections place an excessive burden on individual developers. DECC should use the Marine Energy Programme Board to explore opportunities for establishing consortia that could collectively underwrite new links. [...] If this approach is unsuccessful, DECC may need to consider the case for Government taking on this liability.

The requirement for industry to underwrite the cost of new grid connections is well established practice that minimises the risks of stranded or under-utilised assets, and therefore unnecessary costs to the consumer. DECC is also aware of concerns expressed by some generators that the arrangement can act a s a barrier to entry. We therefore welcome the fact that Ofgem, as the independent regulator, is currently consulting on a proposal that would more accurately reflect the balance of risk between the generator, the transmission network owner and the consumer.  The "Connection and Use of System Code Modification Proposal 192: Enduring User Commitment" (CMP192) would reduce the up-front underwriting obligation placed on new generators, including those connecting in offshore locations, and significantly reduce the securities required against those obligations.  Ofgem intends to make a final decision in April 2012, and if the proposal is accepted, it would take full effect from April 2013.  DECC will continue to follow the development of CMP192 closely but, in the light of the progress that has been made, and subject to Ofgem's final decision on the proposal, we currently see no need for any additional measures relating specifically to the underwriting obligations of marine energy projects. 

88. Several witnesses noted the "one-stop-shop" approach adopted by Marine Scotland and suggested that other UK marine licencing bodies could consider following this example.

DECC is aware of the work being carried out by Marine Scotland on consenting and licensing. Streamlining the licensing process for marine energy - through a similar approach to Scotland or through different means - is an issue which is included, amongst other things, in the work of the Offshore Renewable Energy Licensing Group (ORELG) convened by the Marine Management Organisation (MMO) and whose membership includes both DECC and Marine Scotland.

Under the auspices of the MEPB, DECC has set up a Working Group on Planning and Consenting, which ensures that the sector can feed into the work carried out by Marine Scotland and the MMO on developing the licensing and consenting framework for marine energy across the UK. The Department will continue to monitor the development of this framework, ensuring it is streamlined and effective.

92. The development of wave and tidal energy must not happen at the expense of marine biodiversity. Because of the lack of data about marine wildlife in UK waters, developers may only discover that an area is environmentally sensitive late in the development process, leading to costly changes in plans. Identifying potentially sensitive areas in advance of leasing rounds would avoid this risk and reassure conservation organisations that the deployment of marine renewables will not threaten marine flora and fauna. We recommend that DECC cooperates with the industry and other interested stakeholders to deliver a baseline survey of areas of strategic interest, in advance of any further leasing rounds. The Marine Energy Programme Board would provide a good forum for this discussion. In addition, an agreement is needed on the criteria that would be used to determine whether a particular area was too environmentally sensitive to allow development. This could be drawn up by an independent body of expert marine scientists, like the Science Advisory Panel for the Marine Conservation Zones, supported by relevant statutory bodies, such as the Joint Nature Conservation Committee, Natural England and the Marine Management Organisation. This body could also have the power to review whether criteria have been appropriately applied when disputes emerge.

The Government is committed to ensuring that the development of marine renewable energy does not occur at the expense of the marine environment. The Department's role in facilitating marine energy development is recognised.  Indeed Environmental survey work in advance of future deployment is a function of DECC's Strategic Environmental Assessment (SEA) work.  The purpose of the SEA process is to determine potential environmental sensitivity in relation to projected activities.

To balance the requirement of project developments with environmental protection effectively, consideration beyond simply identifying "sensitive areas" will be needed. Indeed an understanding of the likely effects of marine energy device deployment (for permitting and assessment purposes) will only be as good as our understanding of the baseline environmental conditions prior to deployment and the potential effects from the technologies being deployed on those features and any far-field effects. Currently the understanding of these issues is not well developed for wave and tidal technologies, nor, in some cases, for offshore wind. DECC recognise this.  For this reason, we continue to look to conduct targeted research on the potential effects of technologies on different features under the auspices of the Offshore SEA programme.  DECC's Offshore SEAs are subject to a wide consultation process both on the scope and the environmental reports.  The Statutory Advisers listed in paragraph 92 are on the SEA steering group and are consulted throughout the SEA process.

In addition to identification of potential sensitivities by DECC through the Offshore SEA programme, there is a requirement for developers to consider the potential environmental impacts of a deployment as part of their project development and consenting process. In particular developers must conduct Environmental Impact Assessments and where relevant, gather data for the purpose of Habitats Regulations Assessment, prior to applying for consent for a project.  On this basis it is highly unlikely that a developer would only find out that an area "was environmentally sensitive late in the development process".

Due to the current uncertainties around the links between areas' sensitivity and effect of technologies on these different areas, we do not believe that setting criteria to identify areas being "...too environmentally sensitive to allow development..." would be sensible at this point in time. To date no exclusion zones have been put in place for marine renewables on such a basis.  A preferred approach, where appropriate, is that of Adaptive Environmental Management, otherwise known as "Deploy and Monitor". We are currently adopting this approach for Tidal Energy Ltd's Deltastream project in the Ramsay Sound, off the coast of Pembrokeshire.  An extensive monitoring programme is helping us to understand how marine mammals respond to the unit during a 12 month pilot. This is being overseen by an Environmental Management Committee comprising the developer and key statutory stakeholders, including DECC. In the current early stage of development of this sector, the scoping stage for developments and earlier dialogue between  developers and  key statutory stakeholders (such as JNCC, MMO and others) for such developments may be more useful than the setting of prescriptive criteria.

Rather than using the Marine Energy Programme Board or the Science Advisory Panel for the Marine Conservation Zones (or establishing a new group) we recommend the forum for discussion of baseline surveys and criteria should remain with the already established SEA Steering Group, since this incorporates the range of valid stakeholders and undertakes such discussions as part of its role supporting the SEA process.  The Marine Energy Programme Board can feed into these discussions through the work of its Planning and Licensing Working Group.

95. We are concerned about the shortage of skilled scientists and engineers in the workforce. The Government must encourage more students into these disciplines now so that they are able to take advantage of the new jobs that could be created through a UK-based wave and tidal industry. We note that students may be more likely to select science and engineering subjects if they felt confident that there would be suitable jobs available once they qualified. The level of confidence that DECC can provide about the future of the wave and tidal industry in the UK may therefore have an impact on education and training choices.

STEM skills will be needed to make the transition to a green economy, both in key energy sectors (including marine renewables) and more widely across the economy. This will assist the UK to lower carbon emissions and make better use of resources.

The STEM pipeline is improving at all levels:

  • Uptake of science, technology, engineering and mathematics subjects at GCSE and A level has been rising steadily. In 2011 A level Chemistry (up 9.2%), Mathematics (up 7.8%), Biology (up 7.2%), Physics (up 6.1%) and Further Mathematics (up 5.2%) were amongst the top-ten year-on-year increases
  • At undergraduate level, in 2010/11 the number of UK-domiciled STEM entrants was up by 1% (non-STEM subjects saw a decrease of 1%)
  • In 2010/11 UK domiciled STEM PhD entrants were up 6%

However more needs to be done to continue this push and improve the relevance of what students learn. Many (up to 50%) STEM graduates choose not to work in STEM occupations. While this is a valid choice, there is more we can do to raise the profile of a range of STEM occupations.

There is a range of measures in place to encourage uptake of STEM subjects:

  • STEMNET ensures all young people understand the importance of Science, Technology, Engineering and Mathematics. This includes the Ambassador Programme, a unique network of over 28,000 volunteers in science and engineering careers who work with schools across the UK to raise awareness of the range of STEM careers and provide scientific activities
  • National Science and Engineering Week includes thousands of events and activities to show how science and engineering relate to everyday life, including the Big Bang Fair. The Fair celebrates young people's achievements in science and engineering and ensures talent is nurtured for the future. In 2011 there were over 29,000 participants increasing from 20,000 in 2010. Registrations for the 2012 Fair currently stand at 46,000.

At Higher Education level, The higher Education Funding Council For England (HEFCE) runs a £350 million support programme for Strategic and Vulnerable Subjects. This includes the National HE STEM Programme which runs from August 2009 to July 2012 which has three core strands of activity:

  • Activities to widen participation within and across the STEM disciplines at HE level working with schools
  • HE curriculum developments focusing on course delivery and design, student support and knowledge and skills
  • Activities to encourage those currently within the workforce and society without a level 4 qualification to engage in further study to develop enhanced knowledge and skills.

The Government's Autumn Statement contained several measures to improve STEM provision:

  • An investment of £10m over five years from 2013-14 in Project Enthuse, matched by investment from the Wellcome Trust, to improve the quality of science teaching in schools
  • Offering undergraduates access to mentoring support drawn from the existing network of STEM Ambassadors to give undergraduates insight into STEM occupations and provide role models at a time when many will make their career choices
  • Sector Skills Councils with support from the CBI will lead an industry group to 'kitemark' the courses they value. This will allow employers to tell young people, or those investing in young people's skills development, which courses they feel best prepare students for employment in particular sectors or occupations.

Vocational support for STEM skills and STEM careers is also essential. Skills for Sustainable Growth published in November 2010 set out a vision for radical reform of the Further Education and Skills system to deliver skills for sustainable growth. Apprenticeships are at the centre of the workplace training offer, with their effectiveness in delivering job-related, transferable skills. This type of training is likely to be relevant in providing STEM skills for a future marine industry.

Work is ongoing to develop better routes into and through the Apprenticeships programme. This includes:

  • Enabling those with very low or no qualifications to gain the skills they need to take up a place
  • Developing a navigable progression route into and through the Apprenticeships programme which clearly leads to higher learning
  • Encouraging further education colleges and providers to work closely with Higher Education institutions and employers.
  • A new duty on schools to secure access to independent, impartial careers guidance for pupils aged 13 to 16 which must include information on all post-16 options, including Apprenticeships.

99. We recommend that DECC establishes a new working group under the Marine Energy Programme to consider public engagement. Its remit should include identifying best practice and suggesting methods for effective public engagement ahead of any new marine energy projects. It could also collate a list of common concerns expressed by members of the public so that they can be addressed up front in the development of any new project. Public understanding and acceptance of new technologies is important in its own right, but it may also contribute to a smoother, more consensual and therefore quicker planning and consenting process.

Under the regulatory mechanisms which currently exist the public are engaged at the strategic level at a number of stages throughout the SEA process, and at the project level (if the array qualifies as nationally significant), through the Infrastructure Planning Commission process, and are now being further engaged through Statements of Public Participation as part of the marine planning process. It may be that better use can be made of existing mechanisms of public engagement both at the strategic and project level by a range of different formal and informal methods.

The wave and tidal sector has already begun to interact with the public to both address and affect their view of the industry. The recent Crown Estate leasing rounds have included stakeholder and public engagement activities. At the Committee Evidence Session in December 2011 The Crown Estate noted that they saw this as an area where they planned to do more work when launching future leasing rounds. Work is being done by technology and project developers in the context of their individual deployment projects and further work has been done in the context of the creation of Marine Energy Parks and the UK's marine energy testing centres at EMEC in Orkney and Wave Hub in Cornwall. However, as of yet, a best practice approach to public engagement has yet to emerge.

The need to manage public engagement effectively will increase as the sector moves towards a commercial deployment phase. The deployment of increasingly large arrays of devices in the marine environment is likely to raise both positive and negative opinion in the communities around which they are deployed. There is likely to be support for deployments because of the economic opportunities which they will bring but equally some might be concerned that (despite this being an integral part of the approvals process) sufficient measures have not been put in place to ensure protection of the environment. Others may have concerns about the disruption of other traditional marine activities, for example, fishing, transport, leisure and tourism etc.

Public engagement, therefore, will become an increasingly important stakeholder management issue for the sector. There will remain a need for action at a range of levels (including local consultation by project developers). However, there is scope for DECC to work with the sector on this. The Department intends to include this within the ongoing work programme of the Marine Energy Programme Board although we do not see the need to prioritise the creation of a specific public engagement working group at the present time. However, we will continue discussions with the trade associations, technology and project developers, testing centres and other sector stakeholders on how best to take this forward and move towards the development of a sector best practice.

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Prepared 17 May 2012