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Government»Funding cuts will finish Britain's clean energy race

»Tuesday, July 20,2010

The UK is losing out to countries with poorer natural resources but greater willingness to invest

In the 1970s the UK invested about 0.15% of GDP each year in research and development (R&D) into providing cheaper and cleaner energy. Britain was putting more public money into nuclear power and other new sources of electricity than almost any other economy.

From the mid-1980s the amount invested each year has fallen almost continuously. The figure today is about 0.01%, one 15th of what it was a generation ago. We now sit at the bottom of the international league. The US, for example, spends three times as much as a percentage of its GDP, Japan nine times as much.

The UK government announced last week that it was cutting yet more money from of the energy R&D budget. Some £34m is to be axed, affecting low-carbon technology programmes including offshore wind, wood fuels, building insulation and geothermal energy. This represents a reduction of just under 20% of total public expenditure on low-carbon technologies. This figure is on top of the cancellation of the £80m loan to Sheffield Forgemasters that would have paid for much of the installation of a new press to make the huge parts necessary for new nuclear power stations.

As the Department of Energy and Climate Change (DECC) swung its axe, the government's own Committee on Climate Change was busy today stressing the need for continued public support for nascent energy technologies. Last week's cuts saw DECC reducing the research expenditure on offshore wind by £3m, just as the CCC suggested that the industry needs £50m a year of public money.

The committee says that the UK needs to increase the percentage of heating needs met from renewable sources from under 1% today to 12% by 2020. But the DECC cuts include a £5m reduction in the programme to increase the use of wood and agricultural wastes as sources of heat. As is so often the case, the government is ignoring the advice of its own experts.

The UK could produce as much as half of its electricity needs from the waters around our islands and although we have several companies with world-leading expertise, we continue to invest less in marine energy than the annual subsidy to London's two main opera houses. The CCC has pointed out that the wave and tidal power industries could be a major source of jobs and income for Britain, but the country needs to invest several hundred millions a year over the next decades for this success to be achieved.

Marine energy was not one of the support programmes sliced last week but there is clearly no prospect of any increase in the minimal sums devoted to supporting the industry. The UK had a fighting chance of becoming the world's major exporter of tidal and wave power equipment but, as with wind power two decades ago, we will lose out to countries with poorer natural resources but greater willingness to invest in hugely expensive R&D.

Nevertheless, the taxpayers who fund public expenditure would be right to ask one simple question about Britain's record. Exactly what did we get from the large sums put into R&D in the 1970s? Did the UK's investments provide a good return then? The answer to this question is an unambiguous no.

Much of the money was spent on nuclear electricity and apart from the single power station at Sizewell it is hard to identify much benefit. Planning delays, cost overruns and public worries over safety meant that the taxpayers' investment was largely wasted. However this does not mean that public R&D should be cut today. Progress in the energy industries around the world has historically been driven by government money.

The Stern review provided cogent reasons for why private R&D will never provide a large share of the many billions needed around the world to shift energy use away from fossil fuels. So although we can be absolutely sure that much public R&D in this country will be misspent, we simply have no alternative but to push ahead with wind, wave, electric cars and carbon capture research.

Without substantial increases in public investment, the £10-20bn a year that has to be spent on energy infrastructure in the next few decades will largely go into fossil fuel technologies, increasing the climate change problem and reducing Britain's energy security.




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