WEDNESDAY 23 OCTOBER 2002

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Members present:

Dr Ian Gibson, in the Chair
Mr Parmjit Dhanda
Mr David Heath
Mr Mark Hoban
Dr Brian Iddon
Geraldine Smith
Bob Spink
Dr Desmond Turner

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Memorandum submitted by the Engineering and Physical Research Council

Examination of Witnesses

PROFESSOR JOHN O'REILLY, Chief Executive and MR PETER HEDGES, Energy and Environment Programme Manager, Engineering and Physical Sciences Research Council, examined.

Chairman

  1. Thank you very much for coming, Professor O'Reilly and Dr Peter Hedges, who has been with us before I believe, and we have met in other circumstances. It is really nice to see you and thank you for giving us your time to help us in our inquiry Towards a Non-Carbon Fuel Economy: Research, Development and Demonstration. You will know it is a very important feature of the Government's policy energy delivery now and the world is revolving around us in terms of companies and different technologies and so on so we welcome your views on it and how your organisation works. I invite you to say one or two words at the beginning but can I say at the beginning we have only 45 minutes with you, which is far too short.
  2. (Professor O'Reilly) Thank you, Chairman. We are very pleased to have the opportunity to discuss this with you. Energy in general and these issues in particular are something the EPSRC places very great emphasis on and has for a very long time indeed, as did its predecessor. Just for your colleagues I should say I am the chief executive of the EPSRC, which has a very broad responsibility in terms of research in engineering and the physical sciences generally. Peter Hedges is the programme manager responsible for the programme area where the primary responsibility and co-ordination of our activities in relation to energy comes. In our discussions with you I will be more likely to respond to your questions of a broad policy and thrust nature and as we get down to levels of fine detail then Peter will be more likely to respond to your questions.

  3. Peter, you agree with that I take it?
  4. (Dr Hedges) Yes, that is fine. Thank you.

  5. Thank you very much indeed. Let me kick off and throw you an easy one to begin with, they get harder as we go on. You say in your submission to us that you are spending 9 million in the current year on low and non-carbon energy technology research. It is not really clear how much you are spending on all energy research. Can you clarify that?
  6. (Professor O'Reilly) Yes, that is a good question, can I turn to Peter for the full figure.

    (Dr Hedges) Yes. It is very difficult to estimate and the reason it is difficult to estimate is because the nature of basic research in energy is such that there is a wide range of basic research in engineering and science, in combustion for example, which you can argue is energy related and as such, as we have done in this case for the evidence we have provided, we do a search of grants databases and make an analysis of grants to make sure we have captured as many of the grants as we can but in the whole spectrum of energy it is such a wide area, my guess is it is probably at least twice maybe three times the size but it depends how far you go down the chain, how blue skies do you go in terms of the very basic research.

  7. We understand that issue. We have had it in other inquiries. You are saying twice or thrice?
  8. (Dr Hedges) I would have thought so. If the Committee is particularly interested in that area we would need to do some more work on the figures.

  9. If you could give us a figure which may be more accurate.
  10. (Dr Hedges) Sure.

  11. It may be interesting to you too.
  12. (Dr Hedges) Yes, and certainly we can come with that figure.

  13. We understand it is very difficult in basic research.
  14. (Professor O'Reilly) Just to be clear, Chairman, it is a matter of how far down one drills. A lot of the work in materials, for example, has very direct application to energy but is not necessarily by the applicants focused uniquely on that. It is a matter of whether you include all of that figure or a part of that figure and so on.

  15. You say, also, there is a "large portfolio of research relevant to the power sector with a total value in excess of 24 million". Does that mean how much you spend in energy research in any one year, is that the figure?
  16. (Dr Hedges) That figure almost certainly would be the current value of grants at that particular time. It is confusing because we will quote figures in different ways. In general when we talk about the value of our portfolio of research that will be the total value of current grants at any one time. The figure that is quoted for the total value of grants relevant to the power sector is in a document we published about a year ago which looked at all of the research grants which we found which had relevance to the power companies.

  17. You list "conventional energy technology", what the heck is that? Why are you funding conventional research, I thought you were an innovatory organisation.
  18. (Professor O'Reilly) There is huge scope for improvement in existing technologies and it is extremely relevant of course to this inquiry because the step towards a no carbon economy is in the first instance a lower carbon economy. So anything which can be done in terms of improvement of efficiency and so on is itself a very major contribution. If you think of conventional generation, and indeed transmission and so on, improving the efficiency of that reduces the demand. It is those sorts of issues that we are alluding to.

    Bob Spink

  19. Would that include clean burning coal?
  20. (Dr Hedges) Yes.

    Dr Turner

  21. That is listed separately under CO2 sequestration.
  22. (Dr Hedges) No, the two things are actually quite different. CO2 sequestration is essentially about the technology of extracting the carbon dioxide from the fuel you are burning and putting it back down usually into deep storage in oil wells for example. Clean coal is really all about how you can use coal as a clean technology. There is a carbon sequestration element to that but there is also technology concerning gasification and other technologies which are not necessarily carbon sequestration.

    Chairman

  23. You talk also about funding energy research "at a level commensurate with its importance in addressing the issue of resource efficiency and climate change". How did you come to that conclusion? Does that really mean you have enough?
  24. (Professor O'Reilly) What it means, Chairman, is that EPSRC has a budget and a very wide remit across a huge range of technologies, therefore we have to make judgments. That is done through a process of consultation very widely with the industry, with users, with researchers and so on and our process through our advisory panels and then to Council produces a balance of programmes. It decides essentially of the budget that is available currently how much should be distributed within transport, within energy, within information and communications technologies, what priority should be given to nanotechnology and so on. Of course separately indeed we do make the case for special allocations, as has come up from time to time through for example the spending reviews.

    Dr Turner

  25. Whichever way you catch your figures, whether it is two per cent taking your strictly energy related graphs or a wider interpretation, you cannot get it above six per cent of your total budget, yet you say that you place a great deal of importance and a high premium on the importance of energy research. It does not seem to be reflected in your spending patterns?
  26. (Professor O'Reilly) I will start and then I will ask my colleague to give you more detail, if I might, Dr Turner. EPSRC has nine programme areas. They include things like chemistry, physics, infrastructure and the environment and so on. If you take our budget and spread it across those then the first result before we start doing anything clever would be to say well maybe one ninth goes into each. We do it much more subtly than that. Then if you say that energy and particularly the things we are focusing on here come in as part of our total responsibility for infrastructure and environment I think you start to see where it comes from. It is partly to do with the sheer breadth of our remit that determines the percentage which goes into any particular focused area at any time.

  27. That energy is a cross-disciplinary subject so it is cropping up in all nine sectors?
  28. (Professor O'Reilly) Many, that is true, and when I focus on infrastructure and environment that is where the primary co-ordination and lead comes from. You are absolutely right, I alluded already to the research within materials, for example, some of which would be captured under energy, some others would not be because of its nature but it is extremely relevant to the long term activities in energy, in chemistry and so on. We have a programme to make sure that there is good connectivity with other research councils for my science interface work. You will be hearing from other colleagues in other councils. That is the sheer scale of the size of the canvass that we address.

    (Dr Hedges) In terms of the infrastructure and environment programme which I have responsibility for, essentially its EPSRC's programme which focuses on quality of life issues. In that sense we are not just looking at energy but also wider issues of sustainability and other important quality of life issues. I just had a quick tot up in my head, the total amount of funding over the next four to five years for my programme - it is a managed programme, we have a structured series of programmes - is probably of the order of 35 to 40 per cent of the budget as a whole being invested in energy which is not just the activities that we are funding through our sustainable power generation programme which we mention in the documentation. We have mentioned also we are in discussions with the Carbon Trust for activities on low carbon innovation and from my programme we contribute to the support of the Tyndall Centre, for example. We are funding research also on the impacts of climate change. The actual portfolio investment in energy is a large part of the managed programmes which we are trying to support but recognising that there are other issues like transport, urban sustainability and other issues which are equally important in terms of addressing quality of life issues in the short and medium and longer term.

    Geraldine Smith

  29. Can I ask you how you decide which technologies you are going to fund and support? How do you make those decisions?
  30. (Professor O'Reilly) Again we will do the double act, I will start and Peter may enhance further. We would start from the premise that as a research council it is very, very important that we support the knowledge base right across the patch in some sense because that is the base from which it is possible to make decisions and to move forwards. Then in terms of where we might decide to have specific focused programmes and to give particular priority, as I indicated previously we do that through a consultation process taking advice both from the research community and from the potential user community. We have two main panels, one is called the Technical Opportunities Panel, which is saying what are the special technical opportunities which could be addressed, the other is a User Panel which is informed much more by what is the user pull and the applications' need. The mix of those is that their researchers are predominately academics on the Technical Opportunities Panel and predominately industrialists and similar on the other panel. Those would feed in to Council which would make final decisions on them.

    (Dr Hedges) With regard to the specifics in the energy area, the area where you could argue we are making most active choices in terms of picking technologies is our sustainable power generation programme, and I will come on to that in a moment. I think it is important to stress that one of what we hope is a feature of our activities in energy is that we are conscious of the need to ensure that there is a mixture of opportunities, a mixture of research which will support the ability of future energy suppliers to make choices about which technologies they use essentially. It is very difficult at this time to make any sensible judgment about, for example, what renewable energy sources are likely to be the most viable, not necessarily now but in five, ten or 15 years' time. We have the target of making ten per cent renewables by 2010 which is half, we are hoping to go for 20 per cent by 2020. The technologies which are likely to achieve the figures in 2010 may be very different from those in 2020. Wave and tidal energy, for example, which was the subject of your inquiry last year, is not necessarily a technology which is going to be viable in the next two, four, five, ten years but certainly may well be viable in 15 or 20 years. It is important that we have a mix of activities to support that range of possibilities. The short answer in terms of how we have chosen the priorities we have set so far is we had a very wide ranging consultation exercise with colleagues in both academia and industry which has identified a range of priorities for our sustainable power generation programme and we will be rolling through those over the next four or five years. The discussions though are very much ongoing, and for example we do try and consult as widely as we can. For example we are meeting Friends of the Earth and hopefully other NGOs later in the year to get their views. It is not just that we are talking to big business, we are trying to consult as widely as we can.

  31. If you fund a number of technologies, is there not a danger that you spread yourself too thinly? Would it not be better if perhaps you concentrate on fewer?
  32. (Professor O'Reilly) That is an important issue that we do have to address. We do have some priority areas that we put particular focus on. I would go back to saying that there is a certain responsibility for an organisation like EPSRC to make sure that at least there is a certain level in the broad knowledge base which will inform decisions about where priorities will go to make sure that one can make those choices. Peter Hedges mentioned the choices which may have to be made in, let us say, the 2020 time frame compared with 2010. If the knowledge base is not there then we are not well equipped in the UK to do that.

    (Dr Hedges) If I can just add as well, what we are trying to do in the sustainable power generation and supply programme is rather than fund lots of individual grants which do have the risk that you tend to have little control over what is done, we are supporting research in a more strategic way. So we are looking to establish what we are calling research consortia, which is essentially a group of four or five or six universities working in concert with a level of funding that is commensurate with that so we are talking two or three million pounds over, say, four years. The hope is by doing that we are getting more added value by having groups working together and in a much more multi-disciplinary way. The hope is that by doing that there will be more opportunity for the technology to be spun out and get out and be used in power generation.

  33. What input does industry have in setting your research priorities?
  34. (Professor O'Reilly) A high priority, I mentioned previously. Throughout EPSRC that is true in that 50 per cent of our Council is industry and 50 per cent of our two main panels are industry, so that is one sense. The other is that we engage with them in many other ways. In addition to our research programme focus, which is where Peter Hedges comes from, we have a sector focus so we develop sector briefs, we dialogue with sectors in order to establish that. As an indication and a broad indication rather than in this specific area, 40 per cent of EPSRC grants have substantial meaningful industrial engagement in the grants themselves. When you bear in mind that our total remit includes mathematics and pure chemistry and so on you can see that as you get to the more strongly applied end it is very substantial indeed.

  35. Can I ask you what input you have had into the Government's White Paper?
  36. (Dr Hedges) Certainly. We had a discussion between ourselves and our other research council colleagues and we agreed that the most sensible approach to try and maximise our input to the White Paper consultations was to put in a combined research councils' input which we have done. I am not sure if it is published yet but it will be published on the NERC website. The hope there is that by working together we can present much more of the multi-disciplinary approach. I think one of the key things in energy research is although we do spend a lot of time talking to our industrial colleagues about what they see as being research priorities, energy is one of the areas where it is very important that you do not forget the Government regulatory and public acceptability dimension. I am sure we will come back on to that later. Again one of the advantages of the multi-disciplinary approach is that social science convention is very important in the overall portfolio of research.

  37. Obviously the White Paper will have an effect on your research strategy.
  38. (Dr Hedges) Yes.

  39. How would delays affect you, would they interrupt your long term planning? Would delays cause you a problem?
  40. (Dr Hedges) Delays in the White Paper?

  41. To the publication of the White Paper?
  42. (Dr Hedges) No, it would not cause us a particular problem if it was slightly delayed. It informs a lot of our long term planning and certainly it influences it. You have to realise that planning and implementing research programmes is itself very long term. We have been talking to 2010/2020 and those are the sort of time frames that we look at often for the outturn of our research. We tend to be on relatively substantial time frames.

  43. Finally, can I just ask you, you are funding hydro power research and you are only putting 4,000 into geothermal.
  44. (Dr Hedges) Yes.

  45. Can you tell us have you written these technologies off as a waste of money?
  46. (Dr Hedges) The actual portfolio of research we fund represents two things. We have what we call our managed programmes where we support research in a more strategic way, where we try to a certain extent to pick winners or to pick key technology areas. In the past we have had major managed programmes to look just at photovoltaics for example or just at fuel cells and the fact that we are spending quite a lot of money in those areas reflects the fact that we have had specific activities in those areas. In areas like geothermal power where actually most of the research issues are not necessarily technological ones, they are more concerned with a geology or other areas - which my colleagues from NERC would be able to answer much better in the later session - I recall that a particular research grant was to a mathematician who was working on aspects of modelling of geothermal power. One of the strengths of our responsive mode system, which is where academics can come in with ideas at any time, is that you will find all kinds of interesting research which an academic is doing because of their curiosity. Whereas there are big themes in this list which indicate where we have had strategic programmes there are other minor areas which are primarily curiosity driven rather than strategically driven by us.

    Bob Spink

  47. You mentioned the figure of 20 per cent renewables, could you confirm for us where you got that target from? Do you view that as an achievable target? If so, on what evidence do you base that view?
  48. (Professor O'Reilly) The figure is not, of course, our view, it is an aspiration of others. We have a view on it. We view it as a challenging target but it is a challenge that we believe is achievable if there is sufficient commitment to it and we are very enthusiastic about playing our part in enabling the UK to address it.

  49. Whose figure is it and on what evidence do you form the view that it is challenging but worthwhile?
  50. (Professor O'Reilly) The challenging thing is this is really based on the timescale and the volume of research that needs to go up but it is the Government.

    (Dr Hedges) Yes.

    (Professor O'Reilly) It is essentially a Government figure is my understanding of the 20 per cent.

  51. Did you look around the world at what other governments are achieving at the moment and what they are aiming at?
  52. (Dr Hedges) If you look at the power generation mixes of different countries they do vary enormously, as I am sure you are aware. If you look immediately across the Channel, France has a very high dependence on nuclear power. They have made the strategic decision to go that way. On the other hand, if you move slightly further up the coast to reach Denmark, Denmark at the moment, as far as I am aware at least, has the highest proportion of renewable energy which is about 17/18 per cent, of that order.

    (Professor O'Reilly) It is.

    (Dr Hedges) There are a range of technical issues as to why it is quite difficult to get up to that 20 per cent figure which is not necessarily to do with how feasible it is to generate the power, it is how you distribute it and it is used. You will all be familiar with the fact that at half time in the World Cup Final everyone turns their kettle on and the fact that there are power stations in Wales which are precisely designed to meet that kind of power demand. When you have a power generation system which is very renewables orientated unless you have an intermediate energy storage issue then there is the problem that the demand is much less controllable. You cannot turn power stations on and off at will because the wind may not be blowing or if it is tidal power the tide may not be going in the right direction. There are all these difficulties associated with it. That is another reason why it is a major challenge.

    (Professor O'Reilly) If I might add, briefly, Chairman, that is relevant to the question which was asked earlier as well. Going for only one technology exposes you too much to the vagaries of some of them. One of the challenges which comes with many renewable sources is this control and management of the network when you have fluctuating supply sources. It is another reason why it is important that we address a mix of technologies rather than simply say "We are going to go just for this one".

    Chairman: The difficulty with these inquiries is having only 45 minutes we never get through it all and we will submit questions to you in writing. We need to get through as much as possible , so if we can sharpen up the answers.

    Dr Turner: Dr Hedges, obviously you are not a sailor because if you were you would not have made those comments about the tide but I will leave that aside.

    Chairman: He is the Admiral of the House of Commons fleet, which is half a boat I think.

    Dr Turner

  53. This Committee in its wisdom in its Wave and Tidal Energy Report recommended that EPSRC should introduce a managed programme for wave and tidal energy technology. You indicated earlier on a sort of passive approach to future technologies whereas if you were to run a managed programme you could stimulate the more rapid development of those technologies. You do not seem to be taking that approach. As far as we can tell you do not seem to have adopted the recommendation that we made about introducing a managed programme in this area. Can you tell us, in fact, how much of your efforts in renewable energy research is part of managed programmes and how much is down to response?
  54. (Professor O'Reilly) Can I come in first and then Peter will answer the second part of your question. You may be aware that we are expecting the outturn from a spending review very shortly and across all the councils together we have put forward a major proposal for a substantial activity, a substantial programme, in energy towards a sustainable energy economy. Clearly within that wave and tidal generation features very large indeed. In the timescales in which one works with spending reviews and so on, I would see that as at least in part responding very much to the recommendations of the Committee. There is no sense in which we would deviate from your recommendation on that. I do not know whether you want to pick up on the second point.

    (Dr Hedges) Yes. I think there are two questions. I am afraid I cannot answer the question on what proportion of the figures we have quoted are managed and responsive, we would have to come back with that. I am sorry about that. With regards to the specific recommendation, as I say we had already strategically made the decision that we needed to rationalise our support for energy and had launched our sustainable power generation and supply programme. One of the initial priorities of that was wave and tidal energy and we are in the latter stages of developing a research consortia in that area. The consortia has been invited to apply for up to 3 million over four years and involves a group of seven universities: Edinburgh, Herriot Watt University, Lancaster, Strathclyde, Robert Gordon, Allander Institute and SEEF, whatever that means, I am sorry I do not know the acronym. It does involve a wide range of companies: Marine Current Turbines, IT Power Limited, Engineering Business Limited, Corus, Talisman Energy, Ocean Power Delivery and others. That particular activity is I would not say totally just in response to the recommendations of this Committee but the recommendations of this Committee were one of the factors that led us to go down that road.

  55. Okay. But at the moment you are working primarily in responsive mode. What are the chances of success for an applicant, given that the application passes peer review? What are their chances of getting funding under your responsive mode at the moment?
  56. (Professor O'Reilly) First of all, across the patch, until relatively recently the figure across EPSRC for all applications in terms of success rate was around about 34 per cent. It has been lower in the last year and it varies from programme to programme. The success rate, of course, is a result of two things: one is the funds available and the other is the demand for funds.

  57. Are you able to tell us what the success rate is in renewable energy projects?
  58. (Dr Hedges) Most of those proposals will come to the engineering responsive mode and the success rate varies from meeting to meeting. The overall percentage would be of the order of 20 to 25 per cent on average. That would be an estimate. We can come back with a precise figure just for the renewable energy grants if you would be interested in that.

  59. Is this low percentage down to lack of disposable funds?
  60. (Professor O'Reilly) If I might come in. It sounds a low percentage. Somewhere around about 30 per cent is very much in line with many similar organisations around the world. My own view is that if the success rate of highly regarded proposals is between one in two to one in three then the system itself is a workable and sustainable one. When success rates get to be very low then I think it is not. My general thrust is to see what we can do to make sure that the very best teams are very well supported. We have done quite a lot of work within EPSRC on looking at success rates, looking at the performance of researchers and making sure that we have mechanisms to channel resources towards very strong teams. Part of that is what Peter Hedges has done through the managed programme but also making sure that funds come in large enough for lumps to leading teams so in a sense they can make their own judgments about the tactics and priorities and so on.

    Chairman

  61. I am not quite sure about the figures of success. Is it 20 to 25 or 34?
  62. (Professor O'Reilly) Thirty-four was the figure that I quoted that until the recent past had been an average across all of EPSRC, across all its programmes. In the most recent times, in about the last year, it has generally been lower than that and that is a balance of the funds that were available to allocate relative to the demand that was coming forward. Then Peter quoted a figure which was within the programme that he specifically manages, which is infrastructure and environment, and energy primarily comes within that programme. I would be very happy, if the Committee would like it, to get, let us say, the success rates for each of our programmes over the last year. That is quite straightforward.

  63. That would be helpful. We want is it one in three, one in two, that kind of thing.
  64. (Professor O'Reilly) We would generally quote it as a percentage. I would emphasise that it is very different between responsive mode and managed programmes very often. It is important not to think of responsive mode, I might say, it seems to me, in terms of purely passive. We provide a great deal of signposting of priorities and so on and through consultations we do push out that we would like to see proposals in this particular area, so it is not hard and fast totally passive to managed, it is more a continuum between those in terms of the way we work.

    Mr Hoban

  65. In your evidence you say that 60 per cent of your research portfolio is conducted in collaboration with industry. What proportion of that is basic research as opposed to applied research?
  66. (Professor O'Reilly) This is specifically in this area?

  67. Absolutely.
  68. (Dr Hedges) It is one of those difficulties of how you define basic and applied, I am afraid. It is a very difficult question to answer. I would have thought that you could argue that any research which is involving a company is not basic research but, on the other hand, the company may argue that it is basic research on the assumption it is not technology product orientated research they would do. It is not about product development, that is most important. None of the research would be about product development or about technology demonstration, that is where our remit stops. Our remit stops before then and the DTI's remit starts. Some will be more basic than others. I am sorry that it is such a bad answer but it is a very difficult question.

    (Professor O'Reilly) It is worth noting, Chairman, that EPSRC's mission is to support basic, strategic and applied research, so it is very much within our mission to look across that patch. I take solace from the fact that it is difficult to define which is which. You can interpret that it is our job to support research, if you see what I mean.

    Dr Turner

  69. Would it be right to say that you stop at the point of proof of concept?
  70. (Professor O'Reilly) That would certainly be true. Even proof of concept for some things would be beyond EPSRC on its own. As we move more towards applied research we would engage strongly with the Department of Trade and Industry and with industry itself. That would probably be the strongest differentiator, I think, the extent to which it is driven from the fundamental research base through to the extent to which there is close engagement to facilitate early take-up where that is appropriate because it has reached that stage.

    Mr Hoban

  71. If I can just check my understanding. If your collaboration with industry tends to be more towards the applied end, if it is straightforward research with universities, it is towards the basic?
  72. (Professor O'Reilly) That is not absolutely true. It is absolutely true that if it is university led it is most likely and generally will be very basic research but very refreshingly, I think, industry comes to us and says "Actually we want the academics to do the basic research and we are willing to partner with you in order that we can have close connectivity with that". It is genuinely a spectrum but as a top level cut on what you say it is true, if there is very applied research then it would be very unlikely for there not to be very close industrial engagement in that.

  73. You mentioned the switch between the funding that you would provide and the funding that the DTI would provide. I think one of the areas that concerns people is that you fund R&D but actually getting it to the demonstration phase is quite difficult. What more do you think needs to be done to move more of this research from R&D into demonstration?
  74. (Dr Hedges) That question can be answered at two levels. We are conscious that in the past our programmes have not been as well integrated with the DTI's programmes as they could have been. I think one of the things that we mentioned in our evidence is the proposal for a National Energy Research Centre and I think one of the advantages such a centre would bring is that of greater co-ordination between the different funding agencies with different responsibilities. There is a variety of funding mechanisms, for example the Link Scheme, where you can specifically encourage research which is more development orientated and we do fund a lot of research in those kinds of areas. It is important that there is a proper spectrum of Government funded research between the basic and the demonstration activities.

    (Professor O'Reilly) At the top level, if I might, Chairman, I am a great fan of partnership in this area and I think the partnerships that EPSRC is able to broker between academics and industry through our collaborations with the DTI are very powerful indeed. Whilst it may be the case that one says has it got us far enough towards demonstration, I think the figure I quoted is something like 40 per cent of grants having strong meaningful industrial engagement, which is a very positive side, as are the take-ups of the research and the spin-outs. I am not being complacent, I fully recognise what you are saying, but I think the mechanism and the commitment at least is strongly there. I think this initiative of the energy centre is a very positive one in this particular area.

  75. Can you just give us a quick flavour as to the sort of companies you are partnering with in terms of size and the sort of areas they are interested in?
  76. (Professor O'Reilly) Yes. In this area Peter would be better to do that.

    (Dr Hedges) We thought you might ask that question so we have prepared an answer. Just a list of grants that are currently involved in our renewable energy projects are BP Solar, the Energy Savings Trust, Greater London Authority - not all companies - Johnson Matthey, Marine Current Turbines, National Grid, National Power, Scottish Power, and, as I have mentioned, in our biomass consortium, for example, Powergen, Alsthom, Rural Generation Limited, B9 Energy Limited, which is an SME, and there are many others.

    Mr Hoban: Thank you very much.

    Chairman

  77. Can you give us a list of those too?
  78. (Dr Hedges) Yes, we certainly can.

    Chairman: Thank you very much.

    Dr Turner

  79. The new research centre that you are envisaging, will that have facilities for demonstrators?
  80. (Dr Hedges) It is a little early to say at the moment. We are working very closely with our other research council colleagues to discuss what the nature of that centre should be. One of the key issues that everybody has identified is this need for greater co-ordination of the national focus. Whether the centre has specific demonstration activities or whether it is networked with demonstration activities that are elsewhere is an open question.

  81. As you may or may not be aware a lot of the difficulties that renewables demonstrators have is getting suitable locations not just for grid connection but because of the complexity of the planning process and if you can get through all those in one place it makes life a lot easier.
  82. (Professor O'Reilly) It is perhaps worth mentioning that the exact form of the centre is still in discussion. One of the models that is certainly receiving a lot of attention is that it is not necessarily one physical centre but is a co-ordination of activities.

    Chairman: I wonder if we can get through with three minutes for each of the next questions from Members of the Committee.

    Mr Dhanda

  83. Do you feel that there is a skills shortage amongst personnel in the energy industry?
  84. (Professor O'Reilly) Skills is a very big issue. It is a big issue for EPSRC and it is a lot of what we do. It is certainly the case that we need to put a big focus on skills. We were very pleased with the Roberts Review which of course has provided a way in which that can be addressed by lifting the remunerations.

  85. In which areas would you say the weaknesses are?
  86. (Professor O'Reilly) In relation to energy or generally?

  87. Yes.
  88. (Professor O'Reilly) To be honest, in relation to energy my personal view is that there is a general requirement for skills that we can seek to address.

    (Dr Hedges) There has been a specific study which the DTI have commissioned on skills in the nuclear industries in particular and that is seen as being one area where there are major concerns. Echoing John's point, the impression that we get from our colleagues in industry is that there are skills shortages across the board. The research community in the area and in universities is not enormous.

  89. How does that tie in with the MScs and PhDs that you are sponsoring because you are sponsoring less than you were before, is that fair to say?
  90. (Dr Hedges) The numbers do vary a little bit and the indiction in the figures is that numbers are going down. My guess is that if you had figures for the following year they may be going up because ----

    Chairman

  91. Could you send us that too?
  92. (Dr Hedges) Yes.

  93. You are going to have a lot of homework.
  94. (Dr Hedges) It may take a little longer to get those figures because of the change in the way that the data is collected. It is a problem.

    Mr Hoban

  95. Can I ask a very stupid question. When you talk about a skills shortage do you actually mean a knowledge shortage?
  96. (Professor O'Reilly) We actually mean in the first instance a shortage of people with the sort of knowledge. The knowledge may be in the community but do enough people have that in order to be able to apply it? When we say "skills" generally speaking we mean people with skills and knowledge in a particular area.

    Dr Iddon

  97. Can you tell us who decided to shift the budget for fusion research in your direction? Why was that decision taken? What difference will it make to fusion research? What involvement do you have with the ITER project?
  98. (Professor O'Reilly) Fusion has, as you know, come across to EPSRC. Peter, again, has been very involved with the details, so in the interests of the time he will answer.

    (Dr Hedges) The decision to move the funding was the result of an internal review conducted by the DTI. There are very good reasons as to why fusion sits quite well with the other portfolio of activities that we have. One of the particular reasons was the feeling that in order to ensure that the UK can best benefit from the ongoing programmes of the Euratom fusion programme it was better to engage the Culham laboratory with the wider university research base. I think that is something which we are working very closely with Culham on to try to start to achieve.

    (Professor O'Reilly) Referring back to the previous question, if I might. For example, one of the first things we did when it came across was allocated some industrial CASE studentships, that is Co-operative Awards in Science and Engineering, to Culham so that they could partner with universities yet more strongly.

  99. And involvement in the ITER project?
  100. (Dr Hedges) Certainly with regards to the ITER programme, Culham will continue to be the UK's major centre for fusion research I would think over the next few years. There is a range of opportunities and the main one which we would highlight would be materials research where the expertise at Culham is not that large but there is a wide range of expertise out in UK universities. That would be one area where we would see there being quite a lot of opportunities for Culham working with universities to gain better value from the Euratom programme.

  101. Apart from the money going into Euratom, which is quite extensive, 14 million going into fusion compared with the 9 million we have been discussing today, there is much criticism of the amount put into fusion. Do you think we could justify that?
  102. (Dr Hedges) I think we certainly could. There have been enormous investments made in fusion in the past and we are now at the stage where fusion research is really moving towards power generation. David King, as Chief Scientific Adviser, has been putting a lot of work in in international discussions about how can we shorten the timescale from where we are now to fusion powered generation being a reality. I think that there is now a real prospect of that happening.

  103. How real? Some people say 50 years away and some people say 30 years away.
  104. (Dr Hedges) I think under certain timescales you would probably say 30 years. The argument is if you want to shorten that period you actually need to invest more so that you are not operating things in a continuous process but in parallel, particularly the materials assessment which is key.

    (Professor O'Reilly) ITER is very important. It is an international collaboration and the way to make rapid progress on this is to brigade everyone together. It is a global problem so we address it globally.

  105. What about alternative fusion research?
  106. (Dr Hedges) There are certainly activities going on, particularly on inertial confinement fusion through the lasers at the Rutherford Laboratory, those are the major activities. There are not that many academics in universities active in fusion research.

    (Professor O'Reilly) The fusion activity at Culham is certainly, on our reading, rated very highly amongst fusion research in the world. I think we do have something that we should be willing to make a commitment to.

    Chairman: This Committee is going to visit it shortly.

    Mr Heath

  107. I wanted to ask about international collaboration but I think to do so in one minute is pushing it a little. Can I ask on EU Framework 6, what is your involvement, what do you see as the opportunities and how is it affecting your strategy?
  108. (Professor O'Reilly) First of all, EPSRC does not have its own research institutes in the main so we would not receive Framework 6 funding, that would go to the academics. What we have done is to draw to the academic community's attention the mechanisms that we have to enable them to get into Framework. That is one of the things that we have been doing over this year and in particular drawing their attention to the new instruments that come in in Framework 6 and making sure that they are briefed on how they can best apply. The research councils together have someone in Brussels, in the Brussels office, to help broker relationships.

    (Dr Hedges) One of the strengths of our consortia building process is that the research consortium we have set up should be very well placed to compete very effectively for funding under the Framework.

    Mr Heath: I think it might be helpful to the Committee to have more detail in writing, if possible, and what other international collaborations you are involved in.

    Bob Spink

  109. Very briefly. We have got 25 per cent generation of nuclear fission. Of course, the Chief Scientific Adviser wants to keep that option open and I believe the Government do and we will see that in the White Paper shortly anyway. You are spending a minuscule amount, less this year than last year, on nuclear fission. Is the amount that you are spending sufficient? How much of the 25 million SUPERGEN will be spent on fission?
  110. (Dr Hedges) Nuclear generation was identified as one of the priorities for our SUPERGEN programme. It is not one that we chose to run with immediately because we were waiting, like everybody else, to see what the outcomes of the Government's energy review were. It is also an area where we are in active discussions with our colleagues in the DTI because I think this is one area where there is good scope for us to be working with them on a joint programme. Certainly it is our intention to do an activity in that area at some time in the near future.

  111. So you see a growth in this activity potentially?
  112. (Dr Hedges) We do.

  113. Okay. There are new reactor technologies coming forward, the Canadian Nuclear Power Company are looking at heavy water, BNFL and Westinghouse are looking at pebble-bed. Do you see yourselves getting involved in any of that detailed fission reactor research and technology via any programmes?
  114. (Dr Hedges) Certainly our understanding is that there is a range of different priorities for research in fission. We would not necessarily see those new reactor technologies as necessarily being the top priority. In principle you could buy a nuclear reactor off the shelf tomorrow, if you wanted to do so. There are lots of other pressing issues concerning waste management, for example, or possibly not the next generation but the next next generation of fission reactors where there are research challenges.

  115. With respect, given that the waste management problem will only be added to by about seven per cent if you replace with nuclear now, and 25 per cent power replacement is a major issue compared with all the minuscule renewable issues, surely you ought to be looking at reactor technology design to make it more modular, safer, cheaper, more operationally cheaper and better to decommission rather than looking at waste management which is there and has got to be dealt with whatever the decision on replacement?
  116. (Professor O'Reilly) There is a need for research in the area of waste management in any case. What I would like to pick up from your question, if I might, referring back, is the issue of skills. This is an area in which we are very, very conscious that whatever decisions are made about nuclear we must have skilled people to be able to address it, whether it is actually new build or dealing with that which we have. I think one of our high priorities and growing priorities is to make sure we have the right skills base.

    Dr Iddon

  117. We have just come back from Japan where we have been studying energy production and energy research and we were very impressed by what we saw. Personally I feel that Japan is streets ahead of what Britain is doing in many ways. I think Bob Spink is nodding. What is your feeling about international comparisons? Are we behind in energy research and, if so, what should we be doing about it?
  118. (Dr Hedges) All of the evaluation activities that we have conducted in recent years indicate that the best UK research is internationally leading, and I do not imagine that is untrue in energy as it is true in all the other areas that we have looked at in detail. Certainly you can highlight fusion as an area where the UK is really leading the world in some areas. There is always the question of whether there is enough and I think that is a separate issue in a way. It is not just the quality of what is going on but how does that compare to the volume as well as the quality of what is going on overseas. I think one of the reasons why we have pursued the joint spending review with our colleagues in the other research councils is the recognition that there is plenty of opportunity to do more and we think that there is still capacity in the research communities to do more high quality research.

    Chairman: The 45 minutes is up with a little added time on, so you can rush off and put the kettle on now and have a cup of tea. I hope there is plenty of electricity. Thank you very much for your time.

    Memorandum submitted by Research Councils (RCUK)

    Examination of Witnesses

    DR PETER HEDGES, Energy and Environment Programme Manager, Engineering and Physical Sciences Research Council, further examined, PROFESSOR DAVID WHITE, Director of Science and Technology, Biotechnology and Biological Sciences Research Council, MR DAVID LYNN, Director, Planning and Communications, Natural Environment Research Council, MR GARY GRUBB, Associate Director, Teaching and Learning, Economic and Social Research Council, and PROFESSOR BILL DAVID, Council for the Central Laboratory of the Research Councils.

    Chairman: Welcome. You have been sitting in during the first half so you have seen the format and sharpness of our questioning. We will try and do some good questioning with you.

    Mr Hoban

  119. There are four research councils and the CCLRC here, you all have your own projects and you work on projects together, how do you co-ordinate your work, firstly, to make sure money is not misspent but also so there is no confusion within the research community?
  120. (Mr Lynn) We do it at a variety of levels. We meet regularly on a working basis to talk about emerging ideas. When we are developing our strategic priorities and plans we consult very closely over those. We also sit on a number of fora which brings all the research councils together with other stakeholders. That helps ensure that there is a co-ordinated approach. Spending reviews have also helped us work more closely together, particularly well ahead of time in developing the programme and thinking about those areas of research that need new injections of money, and the energy area is one such area we focused on in this spending review. I do not know whether my colleagues want to add anything.

    Chairman: We have questions directed to each of you, so you will all get your hour in the sun.

    Mr Hoban

  121. The impression I get from that answer is, yes, you do collaborate but the collaborations have improved recently. Do you think there is still further to go in terms of improving co-ordination?
  122. (Mr Lynn) We all recognise that there is more work to do and RCUK is helpful in that in bringing us together.

  123. What do you need to focus on to improve that collaboration?
  124. (Mr Lynn) I think it is thinking ahead, so we get these plans into all of our financial forecasts, our decision making bodies in good time. That is where the spending review is helpful because we are thinking ahead, two or three years ahead.

  125. Between you, you fund the Tyndall Centre. Who actually decides what projects are dealt with? Is it the funders, is it those you collaborate with? W hat decisions are made as to what to fund?
  126. (Mr Lynn) There are three research councils and the DTI who are the principal funders of Tyndall, and there is a programme management board which helps guide the director. Peter has a very close association with the Tyndall Centre and may want to fill in the detail.

    (Dr Hedges) It is a combination of direction from the funders but also the internal prioritising process which the Tyndall Centre has established. They have a number of key research themes. One, for example, is decarbonising modern society. They have their own process for deciding what projects are funded within those individual themes. In a way, what we have done as research council funders is that we have given the Tyndall Centre a seal of approval, it has been given a strategic steer and within its own mechanisms it then identifies particular projects to support.

  127. If you go in the wrong direction, who gets the blame?
  128. (Dr Hedges) I am pretty confident they will not go in the wrong direction.

  129. Just in case?
  130. (Dr Hedges) Ultimately the assessment of the Tyndall Centre itself is when the budget and the grant funding is assessed, and they determine how well they have spent their funding. The breadth of the research they are funding, and its very multi-disciplinary nature, means we are all very confident they are doing an excellent job.

    Chairman

  131. What about the co-ordination between government departments, agencies and yourselves? Do you feel that is adequate or are there big gaps? It has been alleged by prominent professors it does not happen very much.
  132. (Mr Lynn) There probably is room for improvement there. There has been quite recently a high level energy research group established, chaired by the Chief Scientific Adviser, which brings together three of the research councils with the major funders in government on energy research and some other stakeholders. That is going to be very helpful in ensuring we are much better co-ordinated. That body has had its first meeting very recently.

  133. It is alleged the Carbon Trust has not had all the money which was promised it. Is that true? Is it being adequately funded in your opinion?
  134. (Mr Lynn) We all have connections with the Carbon Trust. We are working with them to look at areas of future collaborative research, particularly of course in low carbon technologies.

  135. I thought the money was coming from the Climate Change Levy. Was it not supposed to come from them?
  136. (Mr Lynn) It does.

    (Dr Hedges) I think it is very difficult to answer your question. You would need to ask the Carbon Trust for their view.

  137. We will. I wondered what your perception of it was.
  138. (Dr Hedges) Our perception is that they are a well-funded organisation and we certainly are in discussions for a joint programme, also again working with our colleagues in NERC.

    Chairman: Ever the diplomat.

    Dr Turner

  139. In the Spending Review 2002, there is a proposal for a joint research council effort, programme, called Towards a Sustainable Energy Economy. Why is it that NERC is going to lead on this initiative when EPSRC is the principal funder of energy research?
  140. (Mr Lynn) In the 2000 Spending Review, NERC was asked to look at the research priorities in the broad area of technology for sustainability and energy. Following that task we have been working hard with the research councils collectively to develop a spending review proposal particularly in energy, because collectively we felt that was the area which needed most urgent attention. I think the reason why NERC was asked to do that job was probably because it ensured that energy research priorities would be placed in the broader environmental context and particularly against the background of the challenges of climate change.

  141. Will this programme incorporate the existing renewable energy projects or not? If not, why not? Should not all energy projects right now have the objective of sustainability built in?
  142. (Mr Lynn) Collectively we believe they should. The proposal, if funded, because it is by no means clear whether it will be funded, would include new areas of research but it would also be hoped it would actually help co-ordinate and build upon some of the existing research which is already going on.

    Geraldine Smith

  143. From your submissions, you appear confident the National Energy Centre will be set up. Who do you think should control this, central government or the research councils, or should it be completely independent?
  144. (Mr Lynn) We have included the suggestion of establishing an Energy Research Centre in our Spending Review proposals, so we see it very much as a research-led centre. To ensure the research was independently procured, we would see it very much as being sponsored and run by the research councils collectively.

  145. Do you see it taking over existing energy research projects, or do you see it representing new money for energy research? Do you envisage industrial funding going into the new centre?
  146. (Mr Lynn) The aspiration would be to attract industrial funding at some stage in the energy centre's life. We would certainly hope it would attract new money as well in terms of the spending review.

  147. How do you see the Centre working with the research councils to establish the priorities?
  148. (Mr Lynn) We have put a lot of work into developing the proposal where we have already begun to consult with very many stakeholders, and I think we would see the Energy Research Centre taking that work forward to then define programmes in more detail. So we would hope they would involve the research councils but clearly work with other stakeholders like the Carbon Trust and other bodies.

  149. Do you see the new Energy Research Centre being on a completely new site or on a number of sites perhaps? What safeguards would you put in place to stop small groups of individuals having too much sway over energy policy?
  150. (Mr Lynn) I think it is too early to say what the structure of an Energy Research Centre might be or might look like. That is something which we have been discussing over the past few months in developing the proposal, but it would probably be something we would invite ideas on, how the Energy Research Centre might be established within a certain framework. One model might be to operate a sort of hub and spoke connecting other organisations, so they were networked into the Centre to help avoid the problems you have identified of limiting it to too narrow a focus or too narrow an interest.

    Dr Iddon

  151. This sounds like "get at NERC day" and I am sorry about that, but you were the only ones represented on the Chief Scientific Adviser's Energy Research Review Team, were you not? This relates to the previous question, was that because you collaborated with the other research councils or did the other research councils get left out there?
  152. (Mr Lynn) I think you will have to ask my colleagues whether they felt left out or not. We tried very hard to include them in those discussions as far as we were able, but you are right, Professor John Lawton, Chief Executive of NERC, was the only research council chief executive on that group.

  153. Can I ask the other research councils for an honest opinion on whether they felt left out by that decision, which was obviously not NERC's decision?
  154. (Dr Hedges) I would not say we felt left out. The key thing is not necessarily who is on the group perhaps but actually the recommendations they generated. We were very happy with the scope and range of the recommendations in the report, so in that sense we did not feel left out at all.

    (Professor White) I would say RCUK has had a policy of trying to get one chief executive to represent the research councils as a whole in very many areas, so this is a thing which may increasingly occur, one chief executive taking on the remit of the whole of the research councils system in particular areas.

    (Mr Grubb) From the ESRC's point of view, communication between research council chief executives has improved under the RCUK framework, and certainly the first recommendation of the Chief Scientific Adviser's report actually covered social science issues and the need for social science research.

    (Professor David) The CCLRC is slightly different from the other research councils and I think we are content with what NERC has done.

  155. The PIU Energy Review is just about to turn itself into a White Paper, hopefully around Christmas, probably in the New Year now, if what we are hearing is true. Will that influence your research priorities greatly or will you carry on more or less as now? If I could just give you an example, if the nuclear option is left out of the White Paper, will that greatly influence your research priorities?
  156. (Mr Lynn) Speaking from an NERC perspective, I do not think it will greatly influence our research priorities in the short term. We consulted very widely when we published our five-year strategy earlier this year and that brought in departmental views, industry views, academic views. For us it has identified four key areas of energy research which we see as growth areas of investment. So from an NERC point of view, we feel we have some priorities to work on. Clearly we will need to look at those in the light of any White Paper which is produced but we believe in the short term, three to five years, we have some priorities to work on.

    (Professor White) I suspect in the short term it will not, but in the longer term it probably will. If the nuclear option is taken out and we stick by the aims which are put forward for getting carbon reduction, there will have to be impetus to achieve that in ways which you would not have to have if you had a nuclear option. So we would expect there to be pressure coming into us from outside in the form of money as well which would require us therefore to develop ideas to a greater extent than perhaps we would without that.

    Chairman

  157. We seem to have plenty of time so we can go off script and pin you down a bit. You have been talking about the sustainability energy programme under the Spending Review 2002, what is that? What are you really doing? Is it just rebadging it or have you got some great ideas you want to try out? You have been vague on it so far, can you be more specific?
  158. (Mr Lynn) It is not rebadging it. It is providing an opportunity to bring the various disciplines together to work very closely together to focus on some of the key challenges of energy.

  159. I am trying to be specific. What?
  160. (Mr Lynn) For example, looking at both the geological aspects - let us take nuclear waste disposal as an example - but actually tying that research very closely to the public acceptability aspects. Where does the research and demonstration potential need to go in order to address some of these very complex issues, some of them physical science, some relating to social and economic science. Rather than do that separately, the proposal would enable us to bring the work together and do it collectively.

  161. So sustainable energy is about nuclear waste, is it?
  162. (Mr Lynn) Not necessarily, I just picked on one.

  163. I know that but that was implied in your answer.
  164. (Mr Lynn) Sustainable energy I think is about a mix of energies, and the Spending Review proposal would look at a whole range of energy options - renewables, hydrogen - but nuclear is in the proposal as well.

  165. You are doing a bit of positive discrimination in those areas, are you? You are really trying to get scientists hyped up to do it. Are they out there wanting to do work?
  166. (Mr Lynn) Some of them are in some areas but in other areas, as you heard in the earlier session, there are skill shortages. That is something which concerns all of us as research councils.

  167. Does it mean more money is going into this? Are we going to get a greater percentage of your money into this arena or will it just be the same percentage and you are rebadging the same thing again?
  168. (Mr Lynn) It is true to say that we are looking for additional investment in this area.

  169. Let me turn to the BBSRC now. You say you are spending 1 million on solar research; at least it says so here. How much of this will be of immediate application or have any application whatsoever, or is it just fun?
  170. (Professor White) The work we are doing on solar research is largely to do with work on photosystems in plants and in green algae. That will have application if we can improve the efficiency of light capture by plants. That has not been the main way in which plants in the green revolution have increased their capacity, it has been much more in other areas. But there are experiments in the States particularly which show you can actually change the photosystem and get improvement in crop reduction. That will be pretty quick. In terms of the other area which we might hope to influence, that is in photovoltaic cells, that will be longer term.

  171. That is 1 million. Who made that decision? Who are the champions for this in this country? It sounds to me somebody has an inside track in this area.
  172. (Professor White) We put more than that into research into a basic understanding of plants in many areas, and you should see it as part of that total which we spend on basic plant science.

    Dr Iddon

  173. I would like to ask the CCLRC a few questions, you have been very quiet so we will bring you in now. You say you have defined the technical and social challenges which need to be addressed if the UK is to move towards a hydrogen economy. Who is going to solve those challenges?
  174. (Professor David) These challenges will be solved through the universities, through the work in universities. These different options are a broad portfolio of research. Whether it is fuel cells, whether it is hydrogen, whether it is other forms of renewable energies, we see the research effort coming through the universities.

  175. Where do you see the hydrogen coming from?
  176. (Professor David) Let me say in Framework 6, for example, as I understand it, we have a strong involvement in the UK with Framework 6, and in terms of the hydrogen options there are something like 200 calls for proposals of which we are a substantial component. Again we see six or seven universities in the country who are leading on that. At Rutherford we have a small unit which is also working on that, who co-ordinate H2 now, but there are universities around the country who are actively involved in this research.

  177. What I am really getting at is, is it coming from water by electrolysis or methane by reforming? What is the prediction?
  178. (Mr Lynn) There are a variety of ways in which one could generate hydrogen. They each have their various pros and cons. This is another example where an energy research centre could help us bring technologies together and mix technologies. For example, if we decided to look at the economics and the sustainability of generating hydrogen by burning fossil fuels but then actually stripping the carbon out of the fossil fuels and sequestering and burying it, that would be one option to look at. At the moment I think it is fair to say we do not really have a clue about what those economics are or what the long term sustainability of taking that option is. That would be one thing an energy research centre could do, help bring together some of those technologies and research themes.

  179. I was going to ask this question in the previous round, so I will pose it here since we were short of time in that round. You were quite keen, I gather from your evidence, on alternative fusion research. Who would fund that in your view? Would your group fund it or would you expect the funding to come from somewhere else for alternative fusion research?
  180. (Mr Lynn) I think, if our spending review proposal is successful, it would not really matter to us where the funding sat for that, but it would enable us to address some of these technologies which could have passed and fallen between cracks, and that is another benefit I think of the spending review and RCUK in bringing this together.

    Dr Turner

  181. I take it that the ESRC will be a component part of the sustainable energy programme in view of the economic and social importance of energy policy. Could I just ask specifically what research ESRC have funded or want to fund into look at the social acceptability of renewable technologies?
  182. (Mr Grubb) We are funding some research at the moment through our new sustainable technologies programme; a 3 million programme. We have just commissioned research in the first wave of that programme, and that does include some work on social acceptability issues. That was also a feature of the Towards a Sustainable Energy Economy spending review proposal, and that is incorporated in that; public acceptability of various different alternative energy scenarios is included in that proposal.

  183. Could you give us an indication of your preliminary findings? How do renewable energies play with the public as opposed to the existing power technologies they are used to?
  184. (Mr Grubb) The research I am talking about unfortunately has only just commenced, so it has not produced findings at the moment.

    Chairman

  185. Do you have a hypothesis at all?
  186. (Mr Grubb) The DTI has funded some work - I think Patricia Hewitt was recently talking about it - on public surveys and public opinions on alternative energy scenarios, which was very interesting and used quite a lot of social science techniques.

    Geraldine Smith

  187. You fund different projects and different technologies, but is it because people come to you and say, "This is what we want to do research on", or is it because you think these technologies are going to be successful? How do you get the balance right? Do you end up funding things because that is what people want to do research into or because it is the technologies we should be looking at? Are there certain trends or fashions?
  188. (Mr Lynn) If I can try and give an answer for all of us, which I suspect is going to be a bit tricky, we consult on research priorities in slightly different ways. Increasingly my council is consulting with the public. This year we have had two workshops with the public relating to energy research, one on energy and the environment, and one on radioactive waste disposal and the research issues there. We have also sponsored a website debate on energy and environmental aspects to see what the broader community is feeling about some of these issues. Those issues are then fed into our decision-making process but of course they have to stand alongside the timeliness and need for the research in a particular area and also the quality of the research applications which are coming in. That is one way of consulting but other research councils might like to add to that.

    (Professor White) We would do that as well but I think both of us would do the following, and that is, we would see it as important that we also get in applications in pure responsive mode where you, as a researcher, have the idea and we respond to it. We would see part of our funding going in the way David has said but we would see it as very important that part of our funding is this freedom for anybody to come with ideas. The best ideas are going to be coming in not from us saying, "You should do that", even with consultation, but from a person sitting in a lab with a really good idea, and they can come to us freely to do that.

    Chairman

  189. How would you respond to the cynic who says, "These scientists are very bright people, they know you guys are helping to deliver on energy through whatever, light-capture plants, so they turn their grant request around to that - we have all done it - to get the money but there is not a hope in hell of it leading to anything for real"? How would you respond to the cynic who says that?
  190. (Professor White) I would say we need to get a balance between the different types of funding and we need to make sure a high proportion of funding goes into where there is reality, but it is important you do let some of those ideas which you say, in your wisdom, have no chance of coming through, come through, because quite a lot of those actually prove you wrong.

  191. Give me an example which the BBSRC has funded.
  192. (Professor White) An example which the BBSRC has funded of something which has come through and was totally wacky? I should probably have to write to you and tell you.

  193. Apart from the chief executives! Okay, that is unfair.
  194. (Professor White) It is not unfair and I can give you an example and one which you know very well yourself. That would be the hypothesis about hydrogen transfer across mitochondria. That was a totally wacky idea at the time yet now it is possible that will become a source of hydrogen through green algae for the future you are talking about. So there was a wacky idea which nobody believed to be true.

    Dr Iddon

  195. Can I extend this discussion and ask each of our guests if they could tell us what success the individual research councils have had in commercialising research, in this area of course. If any has been commercialised, how you have handled the intellectual property rights of that particular piece of research? I am sorry to spring that on you.
  196. (Dr Hedges) Intellectual property is very straightforward. Because we do not have research institutes, we have a very simple IPR policy which is that it rests with the university which conducts the research. We have a range of ways of trying to encourage that IPR to be effectively used and, as has already been said, a very high proportion of the projects we fund in the energy area are collaborative with industry. I cannot off the top of my head, I am afraid, give you a list of technology which has been taken through and exploited, but I am quite confident there is quite a long list. We did a survey recently of spin-out companies from EPSRC, and we wrote to a small number of universities and when the list of spin-outs got to 150, 200, without asking very many, we thought that things were looking pretty good.

    Dr Iddon: Everybody is opening incubators, we have a marvellous incubator in Manchester in the biotechnology area, we have one in textiles starting up in Bolton ---

    Chairman: That is enough advertising!

    Dr Iddon

  197. Do you think we need an incubator in this area, to spin-off companies and to bring wacky ideas, maybe, to fruition for commercial purposes?
  198. (Dr Hedges) There may be scope for that. I think again it is one of the issues which the National Centre could look at quite carefully. We are aware, for example, of the marine demonstration site which has been talked about for Scotland. There is the Scottish Energy Centre which has been talked about. There is the DTI demonstration programme. These are all things which need to be pulled together. It may well be there is a gap in the portfolio of activities which would be filled by an incubator, and there may be other activities as well.

    Dr Turner

  199. We have already asked Peter Hedges earlier for his view on the attainability of the suggested 20 per cent renewables by the year 2020. I would like to ask the rest of you how you see (a) the attainability of that target if the Government firms up on it and what your councils could contribute towards that and (b) if the Government were to be more ambitious and set a more challenging target of, say, 30 per cent, do you think, given the resources, it is attainable and what can your councils as a body contribute towards it?
  200. (Mr Lynn) Would you like us to respond individually?

  201. As you wish.
  202. (Professor White) We can supply the science behind it, we cannot necessarily deliver it. If you take the BBSRC, our main interest is in biomass, and biomass is not economical at the moment. We are only going to get biomass providing you can persuade farmers to go there - the fuels or whatever - and that means they are going to have to have a profit at the end of the day. So that needs a regulation change and a financial change which will have to come from Parliament; it would be a subsidy issue. If the subsidies were there, we could deliver significantly towards that.

    (Professor David) We, at the CCLRC, are providing a facility but of course you never rule out the wacky idea. One of the things our researchers have been involved in is this alternative fusion with a laser and fusion research. So we are facility-oriented but there may well be the wacky idea which comes through.

    (Mr Lynn) I would say that clearly it is a challenging target, it needs a commitment of funding probably over the next 10 to 20 years. We can certainly help with some of the solutions but it needs to be put in the broader picture of fiscal incentives and regulatory regimes. Clearly the target becomes even more challenging if you take nuclear out of the equation.

  203. The nub of the question is, do you think it is technically achievable if the resources are there to back it?
  204. (Mr Lynn) Yes.

  205. And 30 per cent as opposed to 20 per cent?
  206. (Mr Lynn) I would have quite a few question marks against 30 per cent.

    Geraldine Smith

  207. Do you think that 30 per cent would be achievable without nuclear, if the resources were available?
  208. (Mr Lynn) I do not feel qualified to answer that. We have only looked at the 20 per cent target.

    Dr Turner

  209. I do not count nuclear under renewables.
  210. (Mr Grubb) I cannot comment on the technical side of it but certainly the economic and social context would be absolutely crucial. In terms of the policy instruments which are developed to enable that to happen, the ESRC certainly could contribute to future scenarios, economic and social scenarios, which might enable that to be achieved, and the policy issues, and also some of the issues of public acceptability and planning issues and so on which are also important.

  211. Given your brief, Gary, one of the key aspects is in fact the structure of energy markets and other fiscal incentives. Does your Council have any view on the relationship between energy markets, structures and fiscal incentives and renewables deployed?
  212. (Mr Grubb) We do not have a view on that as such but we are certainly funding research which is looking into some of these issues, for example change in the regulation of electricity companies and so on, so we are funding research into some of these issues and some economic modelling issues which are associated with that.

    Chairman

  213. I am not going to give you a chance to ask us questions but you might want to just make a statement. You know we are taking evidence and will produce a report which you will all get a copy of, but we have many other people to see and visits to make and so on. If you have anything you would like to guide us on, I would welcome that as the Chairman of the Committee.
  214. (Dr Hedges) I do not think you asked us the question about the 30 per cent and I would like to add something on that. From our perspective there are three key challenges about how you can integrate a greater proportion of renewables into the energy supply system. There is the challenge of the technology, which will be your wind generator, your tidal generator or your biomass station, so you have to get the technology right first of all. Secondly, you need to get the distribution and management system right. I suspect when you are getting up to 20, 30 per cent, you will need to be looking at intermediate storage, which would probably mean hydrogen integrated into the system in some way. It may well be that when we get to 2020 there will be new, clever ways of managing the electricity grid, but the advice we get at the moment is that that target will be very difficult to achieve with existing technology. The third one which has already been touched on which is really in Gary's area is the markets issue, and that really is a major challenge. There are two factors there. Firstly, there need to be the incentives for companies to invest in the technology in the first place, and in order for them to do that it needs to be profitable. Secondly, there needs to be the actual operating regime which means the stations, once they are running, are going to be viable in the longer term, and there are issues there about getting the regulatory regime right and whether, for example, there is a carbon levy, which is one of the things which has been talked about. You need to have all of those three things in place to achieve 20 per cent, and even more so with 30 per cent.

    Dr Turner

  215. You mentioned the infrastructure problems of the transmission system, it is my impression that certainly the power companies are not investing very much research in transmission technologies. Are you funding any significant basic research into transmission technology?
  216. (Dr Hedges) Yes, we are. One of the initial consortia we are establishing under our SUPERGEN programme is specifically looking at network management and distributed generation and that is involving a wide range of companies and is an absolutely key challenge. We are in discussions with some of the major players- the National Grid, for example - about combining investments in that area. It is a big problem and it is something which needs to be done in parallel with the development of the technology. We see that very much as the shape of the SUPERGEN programme.

    Chairman

  217. Thank you very much indeed. You have given us a lot to think about and you have been most helpful in guiding us. Thank you very much for coming along. It is a discipline as well, the fact you have come together.

(Mr Lynn) Thank you for giving us the opportunity to give evidence collectively.