Playing to national strengths The UK example

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So what do these various considerations mean for future policy in a country like the UK? Perhaps above all else, there is a need for a more open, transparent approach to setting the UK's low carbon priorities. Many of the factors that have been discussed in this chapter may be already considered in decision making. But it is difficult to tell how far this is the case. The continuing rhetoric about not picking winners is not helpful. It is contradicted by the existence of a range of policies in many countries that successfully give specific support to individual options or groups of technologies. It also obscures an important debate about what the priorities should be, and how technologies should be supported.

As this chapter has noted, UK policy mechanisms that are supposed to be technology neutral such as the Renewables Obligation end up favouring those options that are nearest to market. There is little evidence that mechanisms of this kind are sufficient to also encourage innovation in the next generation of renewable energy technologies. Options such as wave and tidal power and thin film PV require more than this. The government already recognises this to some extent with additional forms of support, for example through the Carbon Trust's 'Marine Energy Accelerator'. The Renewables Obligation itself is being reformed with bands that provide more support to emerging technologies and less for commercialised options (DTI, 2006b). This will revive a principle that was used in the obligation's predecessor support policy, the Non Fossil Fuel Obligation.

In the late 1990s René Kemp and others made the generic case for taking the context and development stage of different technologies into account (Kemp et al., 1998). Their 'strategic niche management' framework directly informs the Dutch approach to 'niche experiments' (see Chapter 7). This approach protects nascent technologies from normal competitive pressures for a fixed period to allow them to develop and mature, while fostering new networks of firms and other actors. Staffan Jacobsson and his colleagues ( Jacobsson and Lauber, 2006) have provided empirical examples where this approach has been successful. Their studies of solar PV and wind energy in Germany reveal technology specific approaches that include R&D, demonstration programmes and market support through the feed-in tariff system. These policies provided steady, tailored support to each technology as it moved from one stage of innovation to the next. While some commentators have criticised the feed-in tariff as 'expensive' (IEA, 2007a), this misses the point. The feed-in tariff is not only designed to achieve carbon abatement, but is also intended to stimulate innovation and the development of a domestic manufacturing industry. Seen through this broader lens, the feed-in tariff is more likely to be good value for money.

An important lesson from this evidence is that innovation policies need to be more technology specific. Just how specific is open to discussion. This lesson does not mean that government micro-management is required, for example to the extent that each variant of CCS technology should have a ring-fenced budget. But it does mean that support programmes need to be more focused in a way that takes account of clear differences of scale and stage of development. It also means that these programmes need to take account of changes in associated infrastructure, rules and regulations that could be required for new technologies to be deployed.

This change of approach has significant implications for governments' roles and for the ways in which they interact with industries and lobby groups. An end to the philosophy of technology neutrality -or at least the imposition of some limits on its use - will mean that 'the market' can no longer be blamed if things do not go as planned. Governments will be more exposed to charges that they have made the 'wrong' choice. Some technologies they support will succeed, while others will fail to deliver. What matters is how failures are dealt with, and that they are not compounded through efforts to avoid upsetting vested interests. As the Stern Review notes, clear exit strategies for technology programmes are crucial (Stern, 2006b). This does not mean, however, that market mechanisms to support innovation should be abandoned. Competitive pressures will have a vital role to play in encouraging innovation. Market support programmes can build in incentives for cost reduction, and can help to identify which projects within a technological category should be supported.

Another lesson from this chapter is that the UK needs to spend much more overall on energy innovation. This is a common conclusion in other countries - even in the US where budgets are an order of magnitude higher (Kammen and Margolis, 1999; Gallagher et al., 2006). A number of US commentators have said that an energy innovation programme on the scale of the Manhattan or Apollo projects is needed to combat climate change and energy insecurity (Kammen and Nemet, 2005). In recent years, UK R&D spending has started to rise again. So has spending by government agencies such as the Carbon Trust and by consumers through their energy bills (though consumers are not often aware of this). A new Energy Technologies Institute has been created, and is another sign that resources are being increased. But the magnitude of R&D and other technology support funding is only part of the story. While funding for basic R&D and 'blue sky' science and technology should be increased, there is a particularly strong case for rebalancing spending too. This would make more resources available to support technologies across the infamous 'valley of death'. Technologies such as CCS, advanced electricity networks and fuel cell vehicles need such support soon so that their developers have a chance to prove them. The costs and risks will be high, but the potential rewards in terms of emissions reductions are substantial.

If innovation policy is to shift towards more explicit priority setting, the process of deciding which technologies to support and how to support them will need to be clear. Criteria for decision making are required which include many of the factors discussed in this chapter. These include current and potential future costs, risks, the diversity of different portfolios (including variety, balance and disparity), the potential for UK competitive advantage, the stage of technology development and so on. This process should also take previous prioritisation exercises into account. For example, the UK's Chief Scientific Adviser set up a review group to look at energy technology priorities in the run up to the 2003 Energy White Paper. It used many of the criteria suggested here plus others to come up with a shortlist of six technology areas in which there was potential for radical technical change (Chief Scientific Adviser's Energy Research Review Group, 2002). These were CCS, energy efficiency, hydrogen production and storage, nuclear waste handling and storage, solar PV and wave and tidal power. Going further back, the Foresight process (Martin and Irvine, 1984) has also sought to put forward technological priorities through a number of panels that have covered energy technologies. According to a revealing assessment by the former head of the Parliamentary Office of Science and Technology (Euroabstracts, 1998), those in Foresight were discouraged by the government from coming up with priority technologies; that is, from 'picking winners'. However, as panel members deliberated about the future, this is exactly what many of them wished to do.

The institutional arrangements for innovation policy will also be important. The Energy Technologies Institute is seen by many as a national focus for priority setting, though it exists alongside a myriad of other agencies and government departments that have responsibilities for energy technologies. It is useful to note that the US debate is also exploring institutional arrangements. Some argue that a new US agency like DARPA, which was set up by President Eisenhower in 1957 to develop military technologies, could commercialise energy technologies. Others point out that while DARPA has been very successful, such a monolithic model would not work for energy (Bonvillan, 2007). They argue that while DARPA has a single important customer (the US government), energy technologies need to be commercialised and sold to individuals and companies in private markets.

Finally, future energy technology programmes will also need to have robust evaluation and review procedures. Evaluations are currently carried out within the UK government, though it is not clear how systematic the process is. As other authors have noted (Gallagher et al., 2006), conducting evaluations is far from simple. It is difficult to measure either the outputs (for example in terms of economic returns) or outcomes (in terms of successful innovations) of technology support programmes. A combination of qualitative and quantitative criteria will need to be used to assess the broader impacts of these programmes. Qualitative performance targets are often written in to US technology programmes at the start. Adjustments to portfolios to account for the relative success or failure of different options should then be made regularly. There will need to be a careful trade-off between withdrawing support when technologies show the first signs of failing to deliver, and providing more patient support that acknowledges the long-term nature of many developments (Foxon, 2003). But patience will have to run out at some stage.

What priority technologies for the UK might stem from this analysis? An illustrative portfolio is suggested below. It emphasises the likely contribution of technologies to industrial development as well as to other energy policy goals such as carbon emissions reduction. The portfolio would also take into account the need for diversity (especially disparity) and support for technologies at different stages of development. Options that will soon face the 'valley of death' are also a key focus. This leads to the following prioritisation:

(i) The first priority could be technologies with serious potential to stimulate new UK-based industry, in addition to deployment to meet energy policy goals, and also a strong case for specific RD&D to help cross the 'valley of death'. Candidate options include wave, tidal, some micro-generation technologies, some elements of CCS systems, and possibly nuclear waste management.

(ii) The second priority could be for those technologies that would be important for the UK, but could be partly pursued through international collaboration. A range of support is justified, but with a strong element of co-operation with other countries, for example on demonstration projects. Candidate options might include CCS, fuel cell vehicles, low energy buildings, offshore wind power and 'active' electricity network technologies.

(iii) The third priority might be technologies that have a limited potential to contribute to competitive advantage for UK-based firms. Here, some capacity building would be considered, and possibly programmes to demonstrate or commercialise technologies if UK conditions differ significantly from those elsewhere. Candidate technologies could include more efficient domestic appliances and smart metering.

There are some conspicuous omissions from these lists. New nuclear power has been left out since it is not an area of UK industrial competence, despite substantial capacities in the past. New reactor designs are based on proven technologies and are being developed abroad. More advanced concepts, particularly nuclear fusion, are not getting any closer to commercial reality despite decades of generous R&D support. Onshore wind is absent because the UK missed its opportunity for competitive advantage in this technology a long time ago. It, too, is well proven and able to compete with other technologies without special support. However, considerable changes are needed to the electricity grid so that wind turbines can be sited in the most appropriate locations.

Of course, this is only an illustrative portfolio, designed to show how an emphasis on any one criterion could lead to particular results. A more in-depth assessment process would be required to test and develop this fully against the full range of criteria. Furthermore, to command wider legitimacy, this process would need to proceed with significant deliberative input from stakeholders and the public. Whatever portfolio of technologies governments support in the future, openness and transparency in decision-making processes will be a key consideration. Given the urgency of tackling climate change, it is tempting to move to a more closed, technocratic model in future. However, this chapter and others in this book suggest otherwise: the deliberative features of these processes need to be strengthened and adapted to widen participation. Without such an open approach, there is an increased risk that historical inertia due to technical and institutional 'lock-in' will prevail, and that the plurality of new and existing technologies required for a more sustainable energy future will not be deployed.

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Renewable Energy Eco Friendly

Renewable Energy Eco Friendly

Renewable energy is energy that is generated from sunlight, rain, tides, geothermal heat and wind. These sources are naturally and constantly replenished, which is why they are deemed as renewable.

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