Economic growth and carbon targets at risk from government cuts

The government runs the risk of jeopardising long-term economic growth and missing its climate targets if it withdraws vital funding from low-carbon technology research and development, warns a new report.

Building a low-carbon economy – the UK’s innovation challenge has been published by a panel of top scientists at the Committee for Climate Change (CCC), formed last year to advise the government on its carbon budgets.

The report warns that “without government support, a range of essential low-carbon technologies are likely to get stuck in a ‘valley of death’… and will fail to make it to market.”

The committee concludes that any reduction in current funding levels (which it estimates at £550m per year) would increase the risk of missing carbon budgets and would see the UK losing out on critical opportunities to build a green economy.

The report also recommends an overhaul of the funding arrangements for green tech, not just to ensure the money keeps flowing but to simplify the complex institutional landscape that “can be difficult for business to navigate”.

A strengthened institutional framework – with clear objectives, desired outcomes and responsibilities, and improved monitoring and information flows – is required to ensure that public money is well spent and to increase investor confidence, says the report.

“We urge the government to put the appropriate low-carbon technology support arrangements in place to unlock environmental and wider economic benefits,” said professor Julia King, a member of the committee.

The report has been welcomed by the government’s chief scientific adviser, professor Sir John Beddington.

“Innovation will be enormously important if the UK is to meet its climate change goals, and to do so affordably,” said Sir John. “We need to develop and deploy the most promising low-carbon technologies quickly across all sectors. In times of austerity we must also make sure we invest public money to maximum effect.”

Support will be required beyond the current economic difficulties, the committee says. Indeed, the report says increased funding will be required over the next decade for difficult technologies, such as marine power generation and electric transport, and for low-carbon innovations.

The committee has identified six technologies which it says government should prioritise:

• Offshore wind – likely to be the least-cost path for decarbonising the power sector and meeting the UK’s 2020 15 per cent renewable energy target. The UK requires 13GW of offshore wind capacity to be developed, requiring up to £50m per annum in funding for R&D.
• Marine (wave and tidal) – the UK has the potential to be a world leader in this area and has significant natural resources, estimated at 65GW per year. UK-based companies have world-leading expertise in marine engineering and design.
• Carbon capture and storage (CCS) – technology to remove carbon from coal and gas power generation will be crucial to meeting the target. The UK is strong on subsurface evaluation and geotechnical engineering because of the North Sea oil and gas developments.
• Smart grids and meters – the UK has research expertise and industrial capabilities in key smart grid technologies including electrical machinery, power electronics and communications.
• Electric vehicles – the UK has the expertise to design and build electric cars. Funding needs to be protected for the purchase of electric cars (£230m) and to support the development of a national battery-charging network (£30m).
• Investment of up to £800m will be required to meet the CCC’s target to have 1.7 million electric cars on the road by 2020.
• Aviation – UK-based companies are globally competitive in design and manufacture of advanced wings and aeroengines. Public support for radical technologies (for example blended wing) will be necessary to achieve UK targets.

The report says the UK should also deploy nuclear power, advanced insulation technologies, CCS for industry, and heat pumps, and should invest in R&D of hydrogen fuel cell vehicles, technologies in agriculture and industry, third-generation photovoltaic technologies, electricity storage and advanced biofuels.