Building a low-carbon economy The UK’s innovation challenge 19 th July

Main messages Current levels of public RD&D spend are a minimum: cuts will damage achievement of our climate goals funding increases should be an urgent priority as financial pressures ease Government should address current uncertainties by setting out its strategy for meeting the 2050 target The landscape of delivery bodies should: be aligned with Government objectives provide seamless coverage of all stages of innovation be simple to understand and access implement improved monitoring

Background to the review The case for intervention Technologies the UK needs to develop & deploy Provision of public sector support The required institutional framework Presentation structure

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, decide on which areas/sectors to place greatest attention Terms of reference 4

The innovation system: RDD&D Source: Energy Research Partnership

Our approach Identify potential technology paths to 2050 Map technologies to the UK’s RDD&D capabilities Assess the current levels of public support Consider institutional arrangements

Background to the review The case for intervention Technologies the UK needs to develop & deploy Provision of public sector support The required institutional framework Presentation structure

Dominant designs, lack of product differentiation, uncertainty and knowledge spillovers mean that support is required The case for intervention Source: ONS/CCC Low levels of innovation in key sectors for climate change mitigation

Energy RD&D funding: historically low UK public sector energy RD&D spend $USD millions Source : IEA

Compared to other countries: low Source: IEA UK is failing to exploit the opportunities offered by a low-carbon economy

Background to the review The case for intervention Technologies the UK needs to develop & deploy Provision of public sector support The required institutional framework Presentation structure

Technology pathways to 2050 Broadly consistent view of technologies required to meet 2050 targets Illustrative scenario

Develop and Deploy Offshore wind MarineCCS Smart grid &smart meters Aviation Electric vehicle ● Technologies not yet competitive with high-carbon alternatives ● UK has relevant capabilities ● UK well placed to accelerate development

Deploy Nuclear fission Heat pumps Advanced insulation materials Industry CCS ● UK appears to lack an advantage ● Unlikely to influence direction of development ● may develop some components ● can participate in international collaborations

Research & Develop Solar PV 3 rd gen Energy storage Hydrogen fuel cell vehicles Adv. biofuels Agricul- ture techs Industry techs ● Technologies further from market ● Unclear which country has, or will have, an advantage ● Potential for UK to lead/continue to lead some research areas

Background to the review The case for intervention Technologies the UK needs to develop & deploy Provision of public sector support The required institutional framework Presentation structure

Low-carbon RDD&D spend Very difficult to estimate, data not routinely collected

Consider funding changes Any cuts to public expenditure on low-carbon RD&D would be detrimental to the achievement of our climate goals A gas CCS demonstration could mean the UK becomes a leader Gas CCS demonstration Offshore wind Marine generation (demonstration) Electric vehicles Aviation: radical technologies Increased funding for other areas

Deployment barriers Barriers to deployment are as important as RD&D support 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 and early adopter support for EVs Buildings Resolve outstanding design questions on Renewable Heat Incentive including precise levels of support

Background to the review The case for intervention Technologies the UK needs to develop & deploy Provision of public sector support The required institutional framework Presentation structure

Today: Objectives to 2050 and beyond but a strategy only to 2020 Government should: Long-term objectives & focus Set out objectives and desired outcomes for meeting 2050 targets Identify level and form of public support

Government strategy should focus on increasing: International engagement UK influence on the design of European programmes Collaboration with other countries Influence on international arrangements

Delivery bodies should: Delivery bodies Have objectives that are consistent with Government objectives Deliver better continuity and integration of support Provide clearer signposting of support

Improved monitoring and evaluation requires: Monitoring and evaluation Increased capacity to produce good quality monitoring and evaluation information Consistent collection and reporting of spend data Increased resources for measuring long- term performance

Main messages Current levels of public RD&D spend are a minimum: cuts will damage achievement of our climate goals funding increases should be an urgent priority as financial pressures ease Government should address current uncertainties by setting out its strategy for meeting the 2050 target The landscape of delivery bodies should: be aligned with Government objectives provide seamless coverage of all stages of innovation be simple to understand and access implement improved monitoring

Future work of the Committee Review of the second phase cap for the Carbon Reduction Commitment Advice on the level of the fourth budget Review of the second phase cap for the Carbon Reduction Commitment 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 Advice on use of offset credits to meet the second carbon budget Review of international shipping emissions Review of sustainable bioenergy Review of renewable energy ambition Advice on the Scottish cumulative emissions budget Third annual report to Parliament 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 Fourth annual report to Parliament Advice on inclusion of international aviation & shipping in carbon budgets Fourth annual report to Parliament