Building a low-carbon
economy
The UK’s innovation challenge
19th July 2010
www.theccc.org.uk
Main messages
Current levels of public expenditure for RD&D should be
regarded as a minimum:
• cuts would be detrimental to the achievement of our
climate goals;
• a funding increase should be considered as an urgent
priority as financial pressures ease.
The Government should address current uncertainties by
setting out its strategy for meeting the 2050 target.
Delivery bodies – whatever the precise institutional
structure – should be aligned to Government objectives.
Support should cover all stages of innovation with
improved monitoring.
Structure of presentation
Background to review
The case for intervention
Technologies the UK needs to develop
and deploy
Provision of public sector support
The required institutional framework
Terms of reference
To review the effectiveness of research and
innovation arrangements in the UK related to
achieving our climate change goals
The Committee should:
• Consider issues at a high strategic level,
• Draw on existing information and analysis, and
• Have scope to decide itself in which areas/sectors to
place greatest attention
4
The innovation system
Source: Energy Research Partnership
Our approach
Map
Identify Assess the
technologies Consider
potential current levels
to the UK’s institutional
technology of public
RDD&D arrangements
paths to 2050. support.
capabilities.
Structure of presentation
Background to review
The case for intervention
Technologies the UK needs to develop
and deploy
Provision of public sector support
The required institutional framework
The case for intervention
Low levels of innovation in sectors crucial to climate change mitigation
Manufacturing
Agriculture
Mining/quarrying
Utilities
Construction
0% 1% 2% 3% 4% 5% 6% 7% 8%
R&D as % of value added
Source: ONS/CCC
Dominant designs, lack of product differentiation, uncertainty
and knowledge spillovers mean that support is required
Energy RD&D funding low by
historical standards
UK public sector expenditure on energy RD&D (1974-2008)
1400
1200
NUCLEAR FISSION
$USD millions
1000
ALL OTHER ENERGY RD&D
800
600
400
200
0
1986
2005
1974
1975
1976
1977
1978
1979
1980
1981
1982
1983
1984
1985
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2006
2007
2008
Source : IEA
Low compared to other countries
International comparisons of public sector energy
RD&D spend (2007)
0.10%
0.09%
0.08% UK is failing to exploit the
0.07% opportunities offered by a
0.06% low-carbon economy
% GDP
0.05%
0.04%
0.03%
0.02%
0.01%
0.00%
Source: IEA
Structure of presentation
Background to review
The case for intervention
Technologies the UK needs to develop
and deploy
Provision of public sector support
The required institutional framework
Technology pathways to 2050
Broadly consistent view of which technologies required to meet
2050 targets
Illustrative
scenario
Develop and Deploy
Smart Electric
Offshore Aviation
Marine CCS meters/ vehicle
wind techs
grids techs
Technologies not yet competitive with high-carbon alternatives
UK has relevant capabilities
UK well placed to accelerate development
Deploy
Advanced
Nuclear Heat Industry
insulation
fission pumps CCS
materials
UK appears to lack an advantage
Unlikely to influence direction of development
– but may develop some components and participate in
international collaborations
Research & Develop
Solar Hydrogen Agricul-
Energy Adv. Industry
PV (3rd fuel cell ture
storage biofuels techs
gen) vehicles techs
Technologies further from market
Unclear which country has, or will have, an advantage
Potential for UK to lead (or continue to lead) some research
Structure of presentation
Background to review
The case for intervention
Technologies the UK needs to develop
and deploy
Provision of public sector support
The required institutional framework
Low-carbon RDD&D spend
Very difficult to
estimate, data
Estimated spend in 2009/10 not routinely
collected
£ 550 million
Power
£5 billion
deployment Transport
support* £0.5bn
Buildings & industry
RD&D
Agric & Waste
Other
* Deployment support comprises two-third levies
and one-third expenditure
Consider funding changes
Gas CCS • A gas CCS demonstration could
demonstration mean the UK becomes a leader
• Offshore wind
Increased • Marine generation (demonstration)
funding for other • Electric vehicles
areas • Radical aviation technologies
Any cuts to public expenditure on low-carbon RD&D would
be detrimental to the achievement of our climate goals
Deployment barriers
Removing barriers to deployment is just as important
as supporting RD&D
Power
• Current electricity market arrangements will not
deliver required investments
• Planning approval for wind projects remains a barrier
Transport
• Increase resources for developing battery charging
network for EVs
Buildings
• Resolve outstanding design questions on Renewable
Heat Incentive including precise levels of support
Structure of presentation
Background to review
The case for intervention
Technologies the UK needs to develop
and deploy
Provision of public sector support
The required institutional framework
Long-term objectives & focus
Objectives to 2050 and beyond but only a
strategy to 2020.
Government should:
Set out objectives and desired
outcomes for meeting 2050 targets
Identify level and form of public
support
International engagement
Government strategy should set out how
to:
Increase UK influence on the design of
European programmes
Collaborate with other countries
Influence international arrangements
Delivery bodies
Delivery bodies should:
Have objectives that are consistent with
Government objectives
Deliver better continuity and integration
of support
Provide clearer signposting of support
Monitoring and evaluation
Improved monitoring and evaluation
requires:
Main messages
Current levels of public expenditure for RD&D should be
regarded as a minimum:
• cuts would be detrimental to the achievement of our
climate goals;
• a funding increase should be considered as an urgent
priority as financial pressures ease.
The Government should address current uncertainties by
setting out its strategy for meeting the 2050 target.
Delivery bodies – whatever the precise institutional
structure – should be aligned to Government objectives.
Support should cover all stages of innovation with
improved monitoring.
Future work of the Committee
• Review of the second phase cap for the Carbon Reduction Commitment
2010
• Advice on the level of the fourth budget
• Review of renewable energy ambition
• Advice on the Scottish cumulative emissions budget
• Third annual report to Parliament
2011
• Advice on use of offset credits to meet the second carbon budget
• Review of international shipping emissions
• Review of sustainable bioenergy
• Advice on inclusion of international aviation & shipping in carbon budgets
2012
• Fourth annual report to Parliament