3 Strengthening Engagement
36. The complexity and breadth of domestic and international
parties involved with low carbon innovation suggest a need for
an effective co-ordination mechanism to strengthen engagement.
The LCICG has been tasked with fulfilling that function.
37. The LCICG aims to set clear goals to 2020. During
2014 and 2015, it will plan for a prioritised innovation portfolio
for 2015-2020.[65] It
will use the following criteria to develop its future programme:
· impact
on energy policy objectives; impact on economic growth objectives;
impact on knowledge, skills and capabilities;
· the
additionality of government funding; the timing and availability
of suitable projects;
· the
delivery risk, leverage and materiality; and
· the
likelihood of subsequent successful commercialisation.[66]
Full details can be found in the LCICG Strategic
Framework.
38. To achieve its goals, while operating on finite
public resources, it will need to engage effectively with the
innovation community. There is scope for greater synergy between
and beyond LCICG members according to the Minister, who told us
that the LCICG is: 'more active in its component parts than as
a body as a whole".[67]
39. The NAO first reported in 2010 that the LCICG
needed to improve its engagement with the innovation community,
and in 2013 the NAO reported that DECC and the NAO had found it
difficult to obtain information from stakeholders which confirmed
the effectiveness of the LCICG's engagement.[68]
Composition of LCICG membership
40. The LCICG includes members from the major public
sector organisations that support low carbon innovation. The LCICG's
core members include DECC, the Department for Business Innovation
and Skills, the Energy Technologies Institute (ETI), the Research
Councils (RCUK), the Technology Strategy Board (TSB) and the Scottish
Government. The LCICG also has a number of associate members such
as the Department for Environment, Food and Rural Affairs (DEFRA)
and the Office of Gas and Electricity Markets (Ofgem) (see figure
1, page 6).
41. The composition of the LCICG and its ability
to coordinate within, and engage beyond, its membership remains
an ongoing concern. We received written evidence from SSE, an
energy supplier that is not one of the ETI's industry members,
about knowledge sharing: "ETI is an unusual public-private
organisation. We have concerns about the governance of the ETI
because the sharing of knowledge is controlled to a large extent
by the private (rather than public sector) ETI members".[69]
In response to this concern ETI that knowledge sharing was kept
in-house, Mr Clarke said that information was made available to
the public, albeit not immediately.[70]
42. Mr McDowall of the UCL Institute for Sustainable
Resources, also questioned the choice of core and associate LCICG
members. For example, Ofgem plays an influential role in low carbon
innovation by setting the research & development (R&D)
spending of the regulated parts of the UK energy industry, yet
it is only an associate rather than core member of the LCICG.[71]
Dr Hollinshead acknowledged that DECC would consider Ofgem becoming
a full member of the LCICG if there were no conflict of interest
with Ofgem's role as a regulator.[72]
There is also further scope for flexible LCICG membership as
ETI said that it invites industrial groups on an ad hoc basis
to engage in LCICG discussions.[73]
43. We conclude that the governance of the LCICG
is muddled, with an unhelpful mix of core and associate members
and inadequate transparency on decision-making and information
sharing. Ofgem should be a core member of the Low Carbon Innovation
Co-ordination Group. If the Government considers that there may
be a conflict of interest with Ofgem's role as a regulator, it
should explain in its response to us why this is the case. We
further recommend that the LCICG reassess its membership structure
regularly to reflect developments in the low carbon innovation
sector, including encouraging greater participation from ad-hoc
members and developing sub-groups when appropriate.
LCICG member objectives
44. The NAO reported that some LCICG core members
have different objectives.[74]
For example, the TSB focuses on improving UK economic growth by
supporting business-led innovation, while the ETI aims to demonstrate
how the most carbon could be saved at the lowest cost.[75]
These different objectives could result in differing views from
LCICG members on the merits of supporting different UK innovators.
For example, the TSB could decide to support an innovative company
with greater export potential, while the ETI could prefer to back
an innovative company with a greater carbon reduction potential.
It is also possible to imagine a situation whereby the TSB and
ETI are competing with one another to fund an innovative company
that has both great export potential and great carbon reduction
potential.
45. Similarly, there may be conflicting objectives
within members of the ETI, for example two of its members, EDF
and E.ON are competitors within the energy market. We were concerned
that competition between members of an organisation like the ETI
may be limiting cooperation on low carbon innovation. Dr Hollinshead
recognised the tension between Government wanting to share information
publicly and private companies wanting to capitalise on it, while
protecting their own commercial know-how.[76]
46. We highlighted in Chapter 2 the complexity of
issues involved in developing low carbon innovations; the differing
objectives between and within LCICG members adds further complexity.
We welcome the different perspectives that different LCICG members
bring, but we are concerned that this creates a blurring of policy
objectives which could lead to both gaps and duplications of public
support towards important policy delivery, thereby hindering effective
outcomes on low carbon innovation. Greater accountability and
transparency on decision-making could help redress this.
47. The LCICG is tasked with coordinating complex
and important Government policy objectives. DECC provides one
part-time member of staff to act as the LCICG's secretariat for
strategic and policy oversight.[77]
The level of direct engagement between ministers and the LCICG
is light, according to the Minister, "[the LCICG] does not
meet with ministers very often. We only have a very strategic
oversight role".[78]
Given the complexity of the LCICG's internal membership structure
and the overall policy objectives, we are concerned that this
minimal level of direct engagement by Ministers and part-time
support by the secretariat may be insufficient to steer the LCICG
to deliver its policy outcomes. The lack of resource for the LCICG
may be a contributing factor to the poor communication between
the LCICG and its stakeholders (see paragraph 49).
48. The LCICG is the key tool for delivering the
Government's low carbon objectives, but there is a mismatch between
the resources allocated by the Government and its level of ambition.
We recommend greater ministerial engagement with the LCICG along
with a better resourced secretariat.
Communication
49. One of the most worrying things we heard in this
inquiry was the consistent evidence that the LCICG's external
engagement with the wider innovation community was erratic and
poorly targeted and that this was impeding the development of
low carbon innovation.[79]
For example, Professor Fisk of CIBSE was concerned that insufficient
feedback to the engineering community on LCICG funded projects
had hindered the adoption of new innovative techniques.[80]
There was also criticism about the lack of external engagement,
particularly consultation beyond the LCICG members on its new
strategic framework and the 11 TINAs[81]
ETI acknowledged that although the LCICG had published three years'
worth of projects within the previous 12 months, the LCICG needed
to improve how it targeted communications at the right institutions
and organisations.[82]
Ms Baker of EEF was clear about the inadequacy of LCICG communication:
The [LCICG] strategic framework has been published
this month, and it was only by looking on their website in preparation
for [this evidence session] that I discovered it. I had not seen
a press release. We had not been notified that it had been published…
There needs to be a change in communication. There needs to be
a communication culture, press releases, more engagement with
the press, newsletters.[83]
50. The NAO reported that the LCICG has developed
its own website to improve its engagement with innovators.[84]
The "Low Carbon Funding Landscape Navigator" web tool
holds details on funding opportunities from the LCICG members
and other international organisations such as the EU.[85]
However, we heard evidence that, while the website was useful,
wider industry knowledge about its existence was very weak. Mr
Corbett, Mainstream Renewable Energy, said he had not known about
the existence of the LCICG nor its website until two weeks prior
to our evidence session.[86]
Similar views on weak engagement by the LCICG were expressed by
Dr Edge of RenewableUK and Dr Leese of the Mineral Products Association.[87]
51. The Minister recognised that improving communication
was a priority and that work was now underway to communicate with
different audiences such as SMEs and different sectors.[88]
In particular, Dr Hollinshead, stated that his team had held six
meetings with small businesses to improve engagement with SMEs.
He said that the launch of the LCICG strategic framework in February
2014 was also part of the Government's external engagement strategy
on low carbon.[89]
52. The LCICG Strategic Framework should be the
Government's main way of engaging innovators for this complex
policy area. Yet given that the NAO first reported in 2010 and
again in 2013 that LCICG communications needed to improve, we
were surprised and disappointed to hear witnesses express continual
frustration at the lack of consultation and publicity surrounding
the framework and its launch. We consider that a lack of staff
for the LCICG Secretariat may contribute to the ineffective communication
between LCICG and relevant stakeholders. The Department for Energy
and Climate Change, along with other LCICG members, must develop
a communication strategy which will strengthen their engagement
with non-LCICG members in the wider UK innovation sector. The
LCICG should proactively identify relevant parties and communicate
with them regularly.
International engagement
53. Efforts to improve external engagement should
not be confined to the UK. We established earlier [see paragraph
30 'valley of death'] that UK innovators needed international
collaborators to scale up their innovations, to learn from other
countries about what works well, and to help secure new markets.
We were pleased to hear that the TSB is establishing a network
of catapult centres to help companies collaborate internationally,
particularly by providing support to navigate European bureaucratic
processes.[90] The Minister
told us that DECC was focussing its efforts on international collaboration
on the EU's Horizon 2020 Programme which has €5.2bn allocated
for energy technologies between 2014 and 2020[91].
Professor Skea highlighted that UK innovators should not miss
opportunities to engage with international partners beyond the
EU such as South Korea, India and the USA.[92]
65 LCICG "Coordinating Low Carbon Technology Innovation Support. The LCICG's Strategic Framework",
(2014) p 28 Back
66
LCICG "Coordinating Low Carbon Technology Innovation Support. The LCICG's Strategic Framework",
(2014) p 41 Back
67
Q194 [Gregory Barker] Back
68
National Audit Office. Public funding for innovation in low carbon technologies in the UK.
October 2013 p 29 Back
69
LCI0008 Back
70
Q11 [Mr Clarke] Back
71
Q46 [Mr McDowall], Q195 [Sir Robert Smith] Back
72
Q195 [Dr Hollinshead] Back
73
Q12 [Mr Clarke] Back
74
National Audit Office. Public funding for innovation in low carbon technologies in the UK.
October 2013 p 18 Back
75
National Audit Office. Public funding for innovation in low carbon technologies in the UK.
October 2013 p 18 Back
76
Q196 [Mr Hollinshead] Back
77
LCI0023 Back
78
Q187 [Mr Barker] Back
79
Qq46, 49, 50 [Dr Edge, Ms Baker, Mr McDowall, Dr Maclean] Back
80
Q11 [Professor Fisk] Back
81
Q97 [Mr McDowall] Back
82
Q15 [Mr Clarke] Back
83
Q49 [Ms Baker] Back
84
National Audit Office. Public funding for innovation in low carbon technologies in the UK.
October 2013 p 29 Back
85
www.lowcarbonfunding.org.uk Back
86
Q103 [Mr Corbett] Back
87
Q49 [Dr Edge], Q104 [Dr Leese] Back
88
Qq187-192 [Gregory Barker, Dr Hollinshead] Back
89
Qq188-189 [Dr Hollinshead] Back
90
Q28 [Mr Saunders] Back
91
Q198 [Gregory Barker] Back
92
Q18 [Professor Skea] Back
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