Electricity Market (EAC Report)

Lord Layard Excerpts

Monday 17th July 2017 Lords Chamber

[Lord Layard (Lab)]

My Lords, like other members of the committee, I add my thanks to the noble Lord in front of me for the excellent way in which he has led our committee over the years. I thank him very much.

I will speak about only one recommendation in our report: the last recommendation, about research and development, which I think is one of the most important. It is important for one very simple reason: if we are to prevent disastrous climate change, we have to make clean energy cheaper to produce and to distribute than dirty energy, and the only way to make clean energy cheaper is through research and development.

That is why in 2015 Sir David King and six Members of this House, of whom I was one, proposed what we called the global Apollo programme. The idea was adopted by President Obama under the title Mission Innovation, and in December 2015 in Paris the 22 leading countries in the world other than Russia joined this Mission Innovation consortium. In doing so, they pledged to double their public expenditure on clean energy research and development by 2020. Over the 18 months since Paris, these countries have developed a structure of working parties in which different countries lead on the research areas, which include solar and wind generation, electricity storage, electric vehicles, smart grids, heating and cooling.

The issue for our committee was how the UK could best spend the extra £200 million a year which the Government, in their spending review, have pledged to energy reserves and development by 2020. Our committee recommended a specific approach: that much of the extra money should be devoted to a national energy research centre—a dedicated energy research laboratory. This idea was based on the evidence, which has been referred to, from Sir Richard Friend, the Cavendish professor of physics at Cambridge, and Professor Peter Littlewood, formerly of Cambridge and now head of the Argonne National Laboratory in the United States. The proposal was in fact heavily influenced by the American experience and the fact that they have 15 national energy laboratories, largely financed from public funds and promoting new, disruptive energy technologies.

There are five main arguments for having a new energy research lab, rather than spreading all the money around in many smaller packets. The first is the argument of critical mass, since progress is much more likely when many researchers are tackling the same problem in close contact with each other than when they are scattered abroad. The second argument is passion, since a whole organisation that is determined to solve a problem is more likely to do so than scattered individuals, most of whose colleagues work on other problems.

The third is leadership. The Government, as we have been told, have established an Energy Innovation Board, chaired by the Government Chief Scientific Adviser, to co-ordinate research in the field of clean energy—and spend the extra money. But the chief scientist has lots of concerns, while the additional element of a focused laboratory with a committed leader would add greatly to the chances of progress.

The fourth is training. The laboratory would train up the large research workforce that will be needed in the new energy industries of the future. This proposal could make clean energy research the career of choice for many of our brightest young scientists. If we want to establish the UK as a leader in this huge and rising industry, a dedicated national laboratory would be a key ingredient. It really is in the national interest.

Finally, however, it would work only if it maintains the strongest possible links with business. This is one of the advantages of a national laboratory: it can have sufficient infrastructure to bridge what is commonly called the valley of death—that is, the valley where great ideas die without being translated into operation. This laboratory would have to be a public/private partnership, with both elements being crucial. The public element is crucial, since it is a fallacy to suppose that the private sector will undertake the basic research needed for the breakthroughs that can save our climate. Such research is just too risky for the private sector to finance. That is much recognised by, for example, Bill Gates, who has offered private money to come in behind the public money, a lot of which fails and some of which makes staggering contributions.

At the moment, we find that even in the major international companies which manufacture solar and wind equipment, the ratio of R&D to sales is under 2% compared with, say, 5% in consumer electronics. We know that even in electronics public sector research has played a major role. As is well known, publicly funded R&D has been central to the development of the computer, semiconductors, the internet, broadband and satellite communications. Equally important are the strong links to industry. The steady fall in the price of semi-conductors, known as Moore’s law, has been largely due to the International Technology Roadmap for Semiconductors, which is a public/private partnership using mainly public money, so the concept for a national energy research lab has to be a public/private partnership with mainly public money.

We are not talking about big money. The £200 million—an extraordinary figure to me—which we now spend on clean energy research is 2% of publicly funded R&D in this country, yet clean energy is surely one of the highest-priority areas for research. There is something very self-regarding in the way that research money is spent and fails to be spent on a matter of such incredible consequence for the future of mankind. I believe the committee’s proposal for a national energy research centre is an exciting and inspiring way to spend the money. Surprisingly, the proposal was not mentioned in the Government’s response to our report, but I very much hope the Government will come around to the huge importance of the idea.