Q21 Anne Marie Morris: Everything is driven by money. I understand why. At one level we have a short-term plan, because it is what the Treasury Ministers say they will fund. From the Treasury’s perspective, there also has to be this long-term outlook. At the end of the day, it will still be money. It is not going to be in 2025; it is going to be in 2035 and that has to be on your radar. How does the Treasury look at this in terms of wanting clarity about what you are going to commit to during this spending period, but also what is appropriate or what criteria should be given to your fellow Departments to make sure we actually start the work and the shaping for future years, to get the opportunity for business well out there? It will have to invest now to play its part in 2025 to 2030.
Steve Field: In thinking about the spending part of our net zero strategy, we look to make sure that our spending plans for the next spending review period are consistent with that broader strategy. Spending is obviously only one lever in that strategy. There are lots of other ways that we are supporting the transition to net zero.
Part of the work we did in the run-up to the last spending review was to think about the spending lever alongside those other levers—for example, regulation—and how they would come together to support the transition in different sectors. That is the way we tried to approach it in the last spending review. In any world, some things are going to work and some things are not. Some things will come along that look much more promising than you thought.
The next spending review gives you an opportunity to reassess your plans and think about how your next set of spending plans will support your net zero strategy. You are constantly going to be iterating your approach to get to net zero anyway, because you cannot say what the world is going to be like in 15 years’ time. That is the nature of the net zero strategy and the net zero transition.
Q22 Anne Marie Morris: Mr Pocklington, given that if you are to commercialise these things, it is going to be mission critical to take the investors and private sector businesses with you, how are you taking them on this journey? How are you supporting them to plan beyond 2025, which at the moment, effectively, is where your plan stops?
Jeremy Pocklington: Can I draw a distinction between research and innovation, and commercialisation and deployment? Our plan does not stop in 2025. Our overall plan for achieving net zero—this is really important—and the signals we are providing to private sector investors are over the medium term. That is through our ambitions we have around deployment, what we are saying about carbon capture, usage and storage, what we are saying about solar and renewable technologies, and policies such as the clean heat mechanism and the zero-emission vehicle mandate. They are creating the demand and investment signals to encourage and drive investment from the private sector.
The research and innovation component is one part of that. That is designed to unlock private sector investment in research and innovation. There is then a boundary between the research and innovation and the deployment and commercialisation. That is an important distinction. We need to do everything we can to bridge that boundary and get the feedback loops, so that we are supporting technologies with the most potential. That is how we are aiming to deliver net zero.
Q23 Chair: Can you define what you mean by medium term?
Jeremy Pocklington: I will take power as an example because we recently talked about it. We want to achieve offshore wind by 2030. There is solar. There is the ambition to achieve a decarbonised power sector by 2035. That is the sort of time period that I am talking about. That is the sort of time period that is very useful to investors, setting out the demand signals and a sense of what the pipeline will be for deployment and commercialisation of these technologies that we are talking about here.
Q24 Chair: As Ms Morris has highlighted, with a spending review process you obviously need to look at what you bin and what you carry on with. We have been around the block a few times on this as a Committee, certainly in my time on it. You have the Government of the day—a new Government or the same Government sometimes—suddenly deciding to change their position on something. That means that, really quickly, you can say to business, “You cannot trust Government to continue in the medium to long term.”
I think what Ms Morris has been driving at, which we have not quite had an answer on yet, is how, through this innovation programme, you are mapping that to what certainty businesses need to start doing their own work in this area, so that the two then match up and we can see these quite challenging, in some cases, programmes delivered. Some of them are quite small and they are quite niche businesses. Some will be very big things such as carbon capture.
Jeremy Pocklington: It is not just businesses that we are talking about here; we are talking about the innovation ecosystem as a whole in this country. It is about science and about research and innovation, particularly at lower TRL levels, if I can use that acronym.
Chair: What does TRL mean?
Jeremy Pocklington: It means technology readiness level, which is the accepted way of measuring this. At the one end here, we are talking about money that is supporting scientists in labs. At the other extreme, we are talking about heavy engineering with the oil and gas majors, deploying carbon capture, usage and storage, being an example of where we are now with that. There are lots of examples of that pull-through happening.
Q25 Anne Marie Morris: It is pulling rather than being driven. That is what is bothering us.
Jeremy Pocklington: No, it is being driven. Can I give you a very concrete example of where this is happening, because I think that that would help? I will take hydrogen. You have raised carbon capture, usage and storage. One of the clusters that we are negotiating with is the HyNet cluster in the north-west. There is a hydrogen production plant as part of that cluster. Progressive Energy is developing that plant.
The original design of that plant, what is called the front-end engineering design, was funded by a grant from the predecessor of my Department through the previous round of this in 2015. That funded the design—the up-front engineering—to ensure that that project was viable. We are now pulling that through, as a Department, to commercialisation, through our negotiation around the track-1 cluster, providing a business model through the hydrogen business model, part of a carbon capture programme, to enable that to be economic and for the private sector to invest. That is a very concrete example of pull‑through from high-level R&D, early-stage engineering to something that is now approaching commercialised, first-of-a-kind deployment.
Q26 Anne Marie Morris: We have prototypes. Ms Munby, you of all people will be very conscious of the fact that research is only as good as, at the end of the day, the ultimate deliverable that has commercial viability.
Chair: That is only in this context, before we get lots of academics writing to us about valid research.
Anne Marie Morris: Yes, indeed. In this context, how are you building the pull that Mr Pocklington describes into the projects that you have? How are you looking at not just getting to prototype stage but ensuring that you have sited those businesses as investors longer term? Prototype will not deliver the outcome that we want.
Sarah Munby: It is worth emphasising what Jeremy said. Within any of these individual streams of work that we are talking about, there will be a policy set of levers that belong to the relevant Department that is driving end-stage deployment. Our Department’s responsibility is to govern the end-to-end research and innovation system to make sure that, in a generic sense, that pull-through is happening.
What are the things that make that work? Innovate UK is part of UKRI, so links can be made within that organisation between early‑stage research and commercial support. The work we do on catapults would be a good example of a funding organisation whose direct and exact job is to do that mediation between end-stage research and early-stage deployment. It is practical work where you are looking at individual projects and making sure the right set of businesses is connected to the right set of academic researchers and the right set of projects is being funded.
We were having this conversation in prepping for this hearing. Almost all the catapults across the UK have a significant contribution to make to net zero. Jeremy already mentioned the Energy Systems Catapult, but the others do as well. That is an important part of the system here.
Q27 Anne Marie Morris: Before we move on to the co-ordination, which I think the Chair would like to look at in more detail, can we talk about the other key stakeholder here, which is the consumer? Have you done any assessment of the impact on them, in terms of not just the finances and what they are going to have to contribute financially, but also how this is going to impact their lifestyles? Frankly, are they going to buy into this?
May I, for one moment, look at electric cars? We rolled out the electric cars before we rolled out the charging points and before we even looked at the consequence for our road network. In consequence, we now have people less interested in buying cars, so maybe we should have done it the other way around. The impact on the consumer and their buy-in is mission critical. I would like to understand from Mr Pocklington how you have looked at this whole impact assessment, the consumer, and what you need to do for there to be enough carrot in order to get them to play the part they need to play.
Jeremy Pocklington: That is another excellent question. Public acceptability is incredibly important. We ultimately need to encourage different behaviours. Through this programme, there are a lot of good examples of individual research programmes that have the consumer at their heart. The Energy Systems Catapult, for example, has recently been undertaking work looking at how heat pumps perform in houses that are very hard to insulate. That is ultimately about being able to reassure consumers that heat pumps are a viable technology in a greater range of houses.
It is not your EV example—I will come to that in just a second—but thinking about what consumers actually need must drive a lot of these decisions around research and innovation if we are going to drive acceptability. I have given you a micro-example of that. EVs are incredibly important. A lot of the work takes place in the Department for Transport, which is not actually here today. We have an extensive programme of investment. It is not research and innovation investment, but it is a very significant programme of investment expanding the number of charge points through our rapid programme and our LEVI programme as well, looking at addressing regional inequalities in charging infrastructure. We are making our investments, recognising what it is that consumers need if they are going to adopt new technologies at scale.
Q28 Chair: Figure 7 highlights £315 million for auto and £415 million on road transport. I am not sure exactly what innovation and research might be going on on these. Hydrogen for transport could potentially be in this area. There is still a lot of research and innovation going on.
Jeremy Pocklington: There is a lot in transport. That was one of the recommendations from the Net Zero Innovation Board. A lot of those will be about electric vehicles as well and making sure that, for example, charging can be two way. I could give you some examples of specific bits of work.
Q29 Chair: To pick up on Ms Morris specifically highlighting the consumer, if you are having to charge at home, it is difficult for lots of people.
Jeremy Pocklington: I will see whether Dr Adikaari has an example on that.
Chair: What if you had a battery that you could keep in the back of your car that was safe? We have had batteries catching fire. These are things that put consumers off, exactly as Ms Morris is saying. The consumer has to be the third leg of this stool.
Jeremy Pocklington: I have tried to give you examples of where that issue has driven decisions around research and innovation. I have not necessarily given you examples in that specific area. This is a very broad topic.
Dr Adikaari: There is quite a lot of work that is related to the consumer impact and uptake, and the potential, importantly, of consumer participation in delivering net zero. It is quite important, when we think about a transition of the power system from historically quite a reactive one to an active one, and it will depend on changing generation on the system, which is a completely different way of operating.
In relation to electric vehicles, there is quite a bit of work that the Department for Transport has been doing in terms of deployment. The charge point programme, project rapid, and the other aspects that Mr Pocklington highlighted are progressing very quickly. In addition to that, we have looked at how we can maximise the opportunity from those technologies and create the right frameworks for consumers to partake of the additional benefits that those kind of new technologies might bring—for example, vehicle to grid, or V2X, as we say, to create new ways to provide services to the system and for consumers themselves to benefit from using their assets in an intelligent way.
The technologies are expanding pretty rapidly. Quite a few of them are driven by digital technologies. In a number of places in this programme of work there are trials and programmes to develop frameworks that will directly impact the policy making at the Department. The point to note is that the technologies are moving very fast. Therefore, the innovation investments and the learning from it need to be adapted very quickly as well.
That is one reason why some of those programmes are driven by the Department. If you take the investments that the Department for Transport is doing, some of the work is related to electric vehicles. Some of the work—for example, the Faraday battery challenge—will have an economic input from discovery research and new technologies. If you look at some of the programmes, such as zero emission road freight vehicles, that is where different options are being trialled, which the Department will need to make its decisions on.
All those have a consumer angle to them. Some of them are from a supply end, but there are quite a number of examples where the impact on consumers is tested first in the academic and model-based way, and then by considering the significance that these innovations, even though they are not deployments, could have for consumers quite carefully, and designing and publishing the outcomes.
Mr Pocklington highlighted the Energy Systems Catapult’s work. That was a trial called electrification of heat, where the Government funded the installation of 742 heat pumps in a range of various housing types to understand the impact on consumers.
Anne Marie Morris: That is all very helpful, but doing something that is simply textbook is not the same as seeing the impact on the individual consumer in real life. I am hearing that you are considering the consumer, but technology is first. Consumer and the impact—“How are we going to get them to take part?”—is second. It seems to me that if you want the uptake, it needs to be the other way round.
Let us talk about a couple of examples. I have already explained the cars. If we had the charging points and dealt with the batteries first, we might have a lot more uptake of the electric cars, which is what we want.
A Report by the NAO on smart meters came out yesterday. We can see that smart meters are now not very popular because they do not work. Why did we not think about the benefits and why people should want them? At the moment, most of the benefit is for the company providing the electricity because it does not have to send out meter readers.
My constituency is rural, and many rural communities are absolutely up in arms at this idea that heat pumps are going to be the only way forward. They do not feel that they have been consulted. There are many options as to how we do that, but nobody has even asked.
Apologies, but it seems to me that those are good examples to demonstrate that the consumer, in everything you have done, is not No. 1 here. It is a tail-end Charlie. You consider it, but the technology comes first. If you actually want the thing to deliver, that is not the way forward.
Q30 Sir Geoffrey Clifton-Brown: Good morning, everybody. Mr Pocklington, in January 2020 the Council for Science and Technology called for a clear vision of the system needed to reach net zero to align public and private investment and individual decisions. Yet further on in the Report, paragraph 2.16 says, “DESNZ has at present no central information on the costs of administering the 115 funding programmes and, therefore, whether support is being delivered in the most efficient way”.
Perhaps more damningly still, in paragraph 2.17 it says: “The complexity of public sector funding will make it hard for DESNZ and the Innovation Delivery Board to track spending”. With all your great talents, both of you as Permanent Secretaries and heads of your Departments, is there not a desperate need for somebody in Government to take overall charge of net zero?
Jeremy Pocklington: My Department has overall responsibility for net zero and delivering our carbon budgets.
Sir Geoffrey Clifton-Brown: It should be you then.
Jeremy Pocklington: It needs to be a whole-of-Government effort. You could argue that we need to bring my Department together with transport, the wider science system and oversight of land as well, but it becomes too big. Inevitably, it is going to be a whole-of-Government effort, but my Department has overall oversight of that.
We are advised on this work by the Net Zero Innovation Board, deliberately chaired by the Government chief scientific adviser, to ensure that it becomes a whole-of-Government effort. What we have here is, in many ways, world leading. There is not another country in the world that we are aware of that has as developed a research and development framework around net zero in this way that is based on needs, is anchored in science, has a clear funding programme against it, and has clear oversight and monitoring, evaluation and review around it.
It is, though, based on the ecosystem we have in this country around science, research and innovation. That is a broad, diverse ecosystem that involves a range of bodies and groups, from research councils at one end during pure science through to the Department. Many of those research councils are not just doing net zero. They are doing net zero and other things.
Q31 Sir Geoffrey Clifton-Brown: That is a long answer—I am sorry to stop you—and you have pointed out a lot of the advantages this country has. I accept all that, but this is a highly complex landscape. Therefore, it seems to me that if industry, the research people and, above all, the consumers are to understand what it is, at the moment I do not think that any bits of that would have a full picture of how this country is going to get to net zero in 2050. Ms Munby, how are we going to simplify that and how are we going to make sure that the Government have the most effective and holistic approach possible in order to give us the best chance of getting to net zero in 2050?
Sarah Munby: There are a few layers in what you said there. There is the understanding of consumers of how we are going to get to net zero. There is the understanding of industry of how we get to net zero. These are firmly departmental responsibilities on which—I would say this, given my previous role—really big progress has been made over the last few years. We are very much clearer about both of those questions than we were just a few short years ago. Of course, there is more to do.
Specifically on the complexity of the research and innovation component of this, which it is important to say is one small chunk of the bigger pie, it is of course a complex system because our research and innovation system has many institutions in it. It has many different geographies. It has many different stages of research. This map alone shows you the variety of different kinds of work that are being done, be it consumer-oriented research, extremely early-stage mathematical research or very applied research.
I do not regret or criticise the fact that we have a large number of programmes here built up into a complex system to address a complex problem. What really matters is that we make it accessible and understandable for the people who need to use it. It is not about, “We have to make it simple for simplicity’s sake.”
There are examples of what we are doing on that. If I take academics, UKRI is responsible for a very large number of these programmes and particularly those that are focused towards the academic end of research. There is a whole series of work going on there, particularly under the Simpler and Better Funding programme, which is all about making it easier to find opportunities and apply for those opportunities, reducing the amount of information that you have to supply—those sorts of issues. That is of passionate importance, because that is how you make the inevitable complexity of the system behind accessible.
Innovate UK is doing very similar work for its businesses accessing innovation scheme. It just launched today the latest version of its innovation hub, which brings together Government support for innovative businesses.
Q32 Sir Geoffrey Clifton-Brown: We have heard at length from the two Permanent Secretaries justifying whether their individual Departments should keep doing what they are doing.
Mr Field, getting to 2050 net zero is a highly complex task. It is always going to be complex. There are a lot of spinning wheels. If we are to get the maximum chance of meeting those targets—it is still very much up in the air whether we are going to meet those targets by 2050—it is going to cost a great deal of money to the taxpayer, ultimately. Surely we should have a holistic Government policy with one person in charge, in case one particular part of those cogs is not performing as it should. After all, as Mr Pocklington said, we have a chief scientific officer. We have a chief medical officer. We have a number of other chief officers. Surely, with a task as complex as this, we should have one person in charge who is accountable to Parliament for our progress towards meeting that 2050 target.
Sarah Munby: If I may, we do. That is the Secretary of State for Energy Security and Net Zero, supported by my colleague Jeremy.
Jeremy Pocklington: I think that is what I said. Forgive me, Sir Geoffrey. I am in charge of it.
Q33 Sir Geoffrey Clifton-Brown: Let me ask the question. I ask the questions, Mr Pocklington, and you answer them, hopefully shortly. We have a Secretary of State in charge. What we do not have is a civil servant in charge who is able to pull all the Ministries together. That is what I am trying to get at. At the moment, you are in charge of your two Departments, watching what you are doing, but there is no one person in overall charge.
Chair: To be clear, Mr Pocklington, you said at the beginning that each Department has its own assessment of risk and whether it goes ahead. Sir Geoffrey is absolutely right: there is still a siloing of a lot of these projects, despite the title of your Department.
Jeremy Pocklington: This is like any cross-cutting issue in governance. It is a particularly important one. We have a clear Department in the lead and we have governance and oversight to drive process. I was going to outline how we also want to improve that, because I do not think that we are at the finished article yet.
The governance includes the Net Zero Innovation Board. It includes the Cabinet Committee. It includes the Innovation Delivery Board, which is tracking progress, holding other Departments to account. I do not want the Committee to have the impression that we are all sat in our individual siloes. That is absolutely not how Government work on this issue. There is probably more join-up on this issue than on almost any other issue in Government, given the importance and time criticality of the mission.
There is further to do. I want to come specifically to the point that the Committee has been alluding to. We need to continue to improve this pull-through point that Ms Morris raised earlier. I have given you very concrete examples of how we have done that. It would be sensible for us to go further and for each of the seven sectors in the Report to have a clearer lead who is helping to make sure there is practical, value-adding join-up from research and innovation through to demonstration project and commercialisation as well, all within this overarching governance.
Q34 Sir Geoffrey Clifton-Brown: You have raised the pull-through issue. I was going to raise this a little bit later but, with the Chair’s indulgence, I am going to raise it now. I have a constituent that has given evidence, ZeroAvia, which you may have heard of. It describes itself as the UK-based global leader in delivering zero emission aviation. I have visited it several times. It makes the point that Government fund innovation only up to commercial viability, but it further makes the point that having finance to scale up is becoming increasingly competitive, and increasingly competitive worldwide.
It also says, “At the same time, competing geographies—like the United States’ Title XVII and Inflation Reduction Act, and comparable recent measures by the European Union—mean the UK Government risks failing to capitalise on its investment at the early stages”, and failing to get companies like ZeroAvia fully to the market. What can we do about that?
Jeremy Pocklington: I do not want to talk too much about that specific example without being thoughtfully briefed on it.
Q35 Chair: But the aviation industry is frustrated, because it thinks that it could get ahead of the game if the UK right investment was in. Aside from that one company, I have had similar contact.
Jeremy Pocklington: The key challenge here is that of connectivity between research and innovation and that transition to demonstration, project deployment and full commercialisation. What we are seeking to do in Government is, first of all, make sure we are identifying those barriers and tackling those barriers as it goes beyond the research and innovation stage. Those barriers are partly around finance. The UK Investment Bank has a really important role to play there along with the British Business Bank. My colleague, Mr Field, may want to say more about that.
It is also about ensuring that we have the right business models and market frameworks that enable the pull-through to happen. That could be about carbon markets or the emissions trading scheme. It is also about having the right market mechanisms to make sure this can happen. That could be contracts for difference in relation to renewables. That could be the so-called RAB model, which is essentially the regulated utility model for transport and storage, for carbon capture, usage and storage, and possibly for hydrogen as well.
We need to ensure that those feedback loops are happening as quickly and as effectively as possible. You are right that the race to net zero is accelerating in the long run. It is a good thing that there is more investment in other countries in net zero. What we need to do is to capture as much of the benefit appropriately for the UK.