Written evidence submitted by UCL Green Innovation Policy Commission (CGE0009)
Introduction
About the UCL Green Innovation Policy Commission
- The Green Innovation Policy Commission (GIPC) is a group of leading businesses, chaired by John Cridland, former Director-General of the CBI and directed by Professor Paul Ekins, Professor of Resources and Environmental Policy at UCL, which will advise the UK government on the most effective approaches and policy instruments to promote the development and deployment of green innovation. The business-led Commission includes Fujitsu, Veolia, UPS, John Lewis, Northumbria Water, ARUP, and the businesses represented by the Aldersgate Group. The GIPC will be informed by the work of the UCL Institute for Sustainable Resources, the UCL Institute for Innovation and Public Purpose (IIPP) and the Green Alliance. The Commission was launched in the summer of 2018 and is at an early stage of its work.
- The GIPC is pleased to respond to the Committee’s inquiry into technologies for meeting Clean Growth emissions reduction targets, based on the early discussions and initial research and analysis that we have conducted. We have attempted as much as possible to frame our response according to the specific questions asked by the Committee, whilst also including broader reflections arising from our work. The Commission Chair and/or Director will be pleased to give further evidence to the Committee should it so wish.
- The strategy: i) the relative importance of the four main areas identified in the Strategy, and whether the Strategy places the right weight on each of those sectors to deliver emissions reductions; ii) progress on meeting carbon budget targets to date and areas where more progress is needed going forward; iii) the extent to which current and future technologies can help to meet the carbon budgets; and iv) the uncertainty in future technologies’ contribution to emissions reductions, and how that uncertainty can best be incorporated into the Government’s carbon budgets.
- Green innovation has enormous potential to generate business opportunities and environmental benefits for the UK. We see opportunities for the Clean Growth Strategy—and the green innovation agenda more generally—to help address long-standing challenges faced by the UK economy, in terms of weak productivity growth, weak investment in innovation, and imbalances across regions of the UK. At the same time, we recognise that the UK has great strengths on which the Clean Growth Strategy can build: an entrepreneurial business culture, globally excellent universities, a highly skilled workforce, and a strong commitment to long-term carbon reductions. As the 2018 International Panel on Climate Change[1] report has reminded us, the need for strong action is unambiguous, and the UK is well placed both to drive the transition to a low carbon economy, and to seize the economic benefits of doing so.
- The support for research and innovation in the Industrial Strategy and Clean Growth Strategy is very welcome. Public investments in R&D are of course a key element of a policy mix that enables green innovation. Several member companies of the GIPC have participated in collaborative R&D projects funded by Innovate UK that have delivered real progress in terms of green innovation and technological learning on the ground – and these projects would not have been possible without government support[2]. The increases in expenditure on R&D are important, both to enable the development of new technologies, and also to enable business to test and experiment with emerging technologies that are close to market.
- Yet it is also clear that a focus on the supply-side of green innovation will be insufficient if market opportunities for new technologies are constrained by regulatory barriers or unclear, unambitious policies. We agree with the Committee on Climate Change (CCC) that: “To drive commercialisation and cost reduction successfully, [the clean innovation programme] must be supported by funding and policies to drive deployment and learning-by-doing.” In our view, the Clean Growth Strategy must be supported with a strong policy framework to enable and drive the adoption of low-carbon and other environmentally-leading technologies across all sectors of the economy. This requires working across government, to ensure, for example, that technologies being demonstrated and enabled in niche markets are not blocked from wider commercialisation by regulatory or other policy-related barriers.
- In some cases, such a policy framework will require large-scale public investment, but there is also great potential for greater private sector investment where policies provide a clear direction for business. The clean growth strategy recognises that government must “create the best possible environment for the private sector to innovate and invest”. We agree: businesses across the economy will play a central role in developing and deploying the new technologies that are required. The experience of our member businesses is that private sector investment in green innovation is often held back by infrastructure, policy or financing barriers.
- How the development and deployment of technology can best be supported, and the extent to which the Government should support specific technologies or pursue a ‘technology neutral’ approach
- Our members have experienced diverse barriers in their attempts to deploy resource efficient and low-carbon technologies. For example, they have experienced:
- A lack of policy clarity about long-term renewable energy policies. This has hampered investments into renewable energy projects in recent years, leading to a hiatus in technological developments as well as on-the-ground deployment. In contrast, we have noted the transformation in the waste and resources sector that has been enabled by the landfill tax – a clear and stable policy framework that has generated substantial business innovation.
- Market structure and cost barriers that hinder the grid reinforcements required to deploy electric vehicles by fleet operators. We welcome the policy efforts to deliver on-street charging stations, but we note that fleet operators have sometimes struggled to secure the necessary charging infrastructure and particularly grid reinforcement for urban delivery vehicles. We therefore welcome the commitment in The Road to Zero to seek solutions to these problems.
- A planning and permitting regime that hinders the development of new low-carbon or resource-efficient infrastructure projects. Our members have experienced challenges in delivering energy or resource efficiency projects that would deliver both environmental and economic benefits.
- As the work of the GIPC progresses we anticipate that we will generate numerous other insights of this kind that we will be pleased to share. In general, at this early stage in the Commission’s life, we limit ourselves to arguing that government needs to do more to join up R&D funding efforts with measures that enable the adoption and deployment of new technologies. Meeting emissions reductions targets, and stimulating the innovation that will enable this, requires closing the policy gap identified by the CCC.
- The relative priority that should be attached to developing new technologies compared to deploying existing technologies, including consideration of the costs and pollution involved in the decommissioning of technologies or infrastructure
- Deployment often results in technology learning that enables or stimulates the development of new technologies or the enhancement of existing technologies. These two approaches (deployment of existing technologies, and the development of new technologies) should not be seen as alternatives, but rather as complements. New energy technologies are likely to emerge, if the innovation system is supported appropriately, and these can be expected to facilitate faster or cheaper reductions in emissions than are currently possible. But radically new energy technologies—unless they deliver new energy services—tend to take a long time to mature and undergo widespread diffusion into markets. Relying wholly on the development of wholly new and as yet unproven technologies would risk failure to achieve the UK’s carbon budgets.
- Examples of specific technologies whose development and deployment have been effectively supported so far, as well as those that show particular promise for meeting the Government’s carbon emissions targets or supporting the UK’s economy, or which would benefit from specific Government action, in the future
- Though at an early stage of our deliberations, we have identified several technologies we believe to be potentially important for the achievement of the government’s carbon reduction targets. These include several related to road freight: including Electric Vehicles (EVs), e-bikes, e-trikes and e-trailers for last mile and urban delivery; hydrogen and biofuels possibly EVs for long-distance HGVs. We have also identified a potentially pathway for zero carbon steel involving the direct reduction of iron with hydrogen, followed by the use of electric arc furnaces. We also note that a very wide range of energy recovery and recycling technologies and business models—too many to list individually—have been supported by the introduction of the landfill tax. This experience leads us to believe that supportive policies on the demand-side of innovation will be important complements of efforts to identify and prioritise specific technologies.
- The role of the Industrial Strategy ‘Clean Growth Grand Challenge’, and what the Government should do to ensure it contributes effectively to meeting emissions targets.
- The fact that the UK government now has an Industrial Strategy is broadly welcomed by members of the GIPC and the focus on sustainability through the Clean Growth Grand Challenge is an encouraging development. To ensure that this results in meeting our greenhouse gas emission targets it is important that the strategy leads to a roadmap of known policy interventions, with milestones and concrete targets. As described above, its essential for a comprehensive Industrial Strategy to consider both supply- and demand-side drivers and barriers to innovation.
- GIPC commissioner Mariana Mazzucato chairs the ‘UCL Commission on Mission-Oriented Innovation & Industrial Strategy’ (MOIIS) alongside Lord David Willetts. The MOIIS commission has been instrumental in developing the Grand Challenge approach with government, and the framing of ‘missions’ within the Grand Challenges. The MOIIS commission propose that the Grand Challenges’ result in missions which are; (a) bold and inspirational, (b) targeted and measurable, (c) ambitious but realistic, (d) cross-sectoral, and (e) bottom-up solutions.[3] Currently one mission has been announced by the government in the Clean Growth challenge and this relates to the energy efficiency of new buildings, which whilst important is a relatively small component of the entire Grand Challenge. To result in significant emission reductions, it’s clear that further missions must be identified and announced by government to address other important sectors, such as transportation, industry, and energy. As the GIPC’s work progresses we foresee that the commission will be able to identify further missions and advise government on these findings.
Annex: Commission membership
- John Cridland, Chair of GIPC
Paul Ekins, Director of GIPC
Simon Blagden, Chairman, Fujitsu UK
Richard Kirkman, Chief Technology and Innovation Officer, Veolia U.K. and Ireland
Angela Francis, Chief Economist, Green Alliance
Ian Gardner, Director & Global Energy Leader, Arup
Peter Harris, Director of Sustainability, UPS Europe
Benet Northcote, Director, John Lewis
Nick Molho, Executive Director, Aldersgate Group
Mariana Mazzucato, Director, Institute for Innovation & Public Purpose, UCL
Jeremy Oppenheim, Partner, SYSTEMIQ
Graham Southall, Group Commercial Director, Northumbrian Water
- The GIPC receives support from:
Dr Will McDowall, UCL Institute for Sustainable Resources & UCL Energy Institute
Dr Michal Miedzinski, UCL Institute for Sustainable Resources
Dr George Dibb, UCL Public Policy & UCL Institute for Innovation & Public Purpose
Dr Emma Baxter, UCL Public Policy
October 2018