Q11 Chair: Ms Munby, you have 62 projects that you and your Department are funding.
Sarah Munby: It is important to say that your question is implying that, at this level of the portfolio, lots of change is going to happen. My colleagues talked about how that might work, but for a lot of these things there is a huge portfolio sitting under the individual lines here. It is not the lines where the big iteration is going to be. We are still going to be researching offshore wind. It is the projects underneath that that change and iterate.
Primarily, those individual project selections are done through the usual processes that you would see in any research and innovation system. It is peer review and project-level reviews based on experts who understand the field. The bigger bit of churn or stopping of individual things is happening within these portfolios. There are a small number on this list—we already talked in this hearing about hydrogen for heating—where there are strategic moments at which you might increase or reduce investment in an entire portfolio.
Within all of these, there is change in projects all the time as different technologies look higher potential and start to get more investment behind them. These are different specific technologies, such as, within carbon capture, the specific catalyst or solvent that you are using. Which one is highest potential? That is all going on inside the system and, appropriately, away from direct ministerial control, because it needs to be done by experts.
Q12 Anne Marie Morris: Are you telling me that at no point, whatever the results of these subprojects, will you actually say, “This is a technology that we are not going to pursue”? There are lots of question marks about carbon capture. If enough of these little subprojects come up and there is not a viable option, will you pull the plug?
Sarah Munby: Of course you would. That is a relatively low-probability scenario. What is interesting is what technologies will emerge, at what cost and deployable at what scale. The idea that it is going to be no technologies at any cost at any scale seems unlikely. If that was where the research was tending, you would take it off the list altogether. It is much more likely that you would end up scaling down because you were seeing less progress than you hoped, whereas on something else you had found a new avenue of exploration and needed to increase investment.
Q13 Anne Marie Morris: Risk is often calibrated red, amber and green. You say that there are risk assessments for all these different bits. Is there one piece of paper that calibrates them with that traffic light system that could be put on a piece of paper or, indeed, is on a piece of paper? Dr Adikaari, you are probably more likely to know the answer to that.
Dr Adikaari: The place where we track the progress and the risk is the Innovation Delivery Board. The documentation that we table at the Innovation Delivery Board captures risk, represented by the separate funding body or the senior responsible owner responsible for the specific programme and their interpretation of that, based on the reporting that they have for their individual organisations.
Q14 Anne Marie Morris: The Treasury clearly has a keen interest in all this because this is all about money. What is the Treasury’s appetite for the sorts of risks we are talking about?
Steve Field: As Jeremy was saying, the reason why we are in this space is that there are market failures. That justifies putting public money into research and innovation spending. We are very clear that there are going to have to be innovations to enable our net zero transition.
The framework we have is a good one. It means that I, in the Treasury, am not making those individual judgments about which technology to invest in, because I do not know anything about them and that would be a very bad system. The system we have put in place is a good one that ensures that there is evaluation of the individual projects as they go and expert input into that process. Ahead of the next spending review, we will bring that together and look across the portfolio as a whole. We will get advice from the board and that will inform the decisions that Ministers take at the next spending review.
Q15 Anne Marie Morris: Any reduction in expenditure, or any cuts in any categories, at the end of the day, will be a ministerial decision.
Steve Field: Spending reviews decide the allocation of spending across Departments. The way we conducted the last spending review, which was where this pot of money was allocated, was to ensure that the work on innovation was fully embedded within our net zero strategy, the innovation framework was published alongside the net zero strategy, and that was completely consistent with SR21. We aligned the timetable for that work to make sure that we were funding the right things and that our net zero strategy in the round was properly funded.
Q16 Anne Marie Morris: That was very helpful. Finally—then we will leave risk—how much of what you have said is publicly available information? When you talk about these plans and the calculation of risk, is that available for the public to look at? Is that published in any way?
Dr Adikaari: Some of it is. Some of the investments in the £4.2 billion portfolio are Government major projects, so they are in the Government major projects portfolio. Those programmes and their risk assessments are all in the public domain. Some others are not. For example, the investments in discovery research through research councils are quite complex, wide-ranging investments where the risk perception of those investments is different, so they might not be. If you look at departmental individual programmes, there are business cases and the processes—the departmental aspects—that we follow through, but they are not all in the public domain.
Q17 Anne Marie Morris: Mr Pocklington, can we move on now to timeline? In figure 3, the NAO has very helpfully set out in which decade different technologies will be delivered. Clearly, there is a risk element in all this. How achievable do you think this is? How much rigour have you put into testing whether these timelines will actually work? To what extent are those timelines driven by which you think is the most important to come first and, therefore, you are going to put more effort into? How much of it is driven by the sheer challenge and the current state of the unknown for any of these technologies?
Jeremy Pocklington: There are lots of questions there. To answer your middle one first, absolutely, it is partly driven by what we need to do to deliver our carbon budgets and remain on track for the overall goal of net zero. We will focus more, in terms of the next five years, on technologies that we need sooner on that journey to 2050, but that is because there are feedback loops in the system that mean that our pathway and our policies reflect the technologies that are most advanced today, if that makes sense.
More broadly on timelines, the Net Zero Innovation Board advised us that we needed to rebalance the portfolio to focus more on demonstration projects now, rather than projects that were in the initial research stages.
Secondly, on timelines, where do these come from? They come from a lot of engagement with a whole range of scientific experts. In a way, that is the bigger point to make about the research and investment framework as a whole. This a science-led process, overseen by the Net Zero Innovation Board, chaired by the Government chief scientific adviser, with extensive engagement across the science and innovation system in this country. It is from that advice and expertise that the team have been able to draw out these priorities linked to our missions.
There is more detail around the next five years and the next 10 years. Then, inevitably, it is a higher-level road map out to 2050. That is because there is less certainty about the pathway to 2050. We have a range of possible pathways and it is not right to plan everything now into the 2030s and 2040s.
Q18 Anne Marie Morris: Effectively, short term, we have heat and buildings. Long term, we have aviation and the agricultural issues. Why did we want to do them in that order? Why are we going for heating and houses first, then aviation, transport and most of the rest of it, and then the agricultural piece at the end—the biomass?
Jeremy Pocklington: Partly, that is what the Climate Change Committee is advising us to do through its advice. Essentially, the overwhelming principle behind that is that it is the least-cost pathway to 2050. More simply, we are doing the more feasible areas first—those that are easier to make progress on, where the technologies are closer to being ready for deployment and commercialisation.
Where are we starting? We are starting mostly with the power sector. That is actually where we start, even before we get to heat. It is power first. That is because most of the technologies are deployable today. It is also because power is so foundational to the other sectors. We are seeking to electrify transport mostly. We have talked about electrification, potentially, for heat. We have to produce the hydrogen if we are going to go down that route. Some of it will require electricity as well.
Q19 Anne Marie Morris: Some of these technologies are already more developed and some are less developed. Some of them will fail. Are you going to be progressing all of them, recognising that some will go slightly faster, so that, when one of the ones you thought was going to be “bingo” fails, you have something else in the pipeline? In the bigger picture, is there any possibility that you might look at this in 10 years’ time and say, “Do you know what? We actually have the wrong decade for this particular technology”?
Jeremy Pocklington: The core principle is one of maintaining optionality and different pathways. That is one of the underlying principles that guide this whole framework. That is for exactly the reason that you have highlighted: there is uncertainty. There is uncertainty about technologies. There is uncertainty around cost reduction and public acceptability.
When we are setting our overall policies and trajectories for our carbon budgets, we take quite a cautious approach to research and innovation as part of that. We are not banking on all these research and innovation projects coming to fruition. We assume some cost reduction, but we take quite a cautious approach to the benefits of innovation in setting our carbon budgets and policies. There is then review. That is the key. That is the essence of the strategy that we have: we review every carbon budget period.
Q20 Anne Marie Morris: Let us move on. It is not just that delivery timescale; it is also the impact that has on the way you plan for this. At the moment, you have looked at the different stages, from “good idea” to total commercialisation, and divided up the different phases. The detailed plan is only 2022 to 2025 and that is only going to take us to commercial prototype. Given the importance and the length of this journey, is it not a bit short-sighted to just look at that period without having some sort of plan for the rest? That is not least because if you want industry and the public to buy into all this, they need to nail where we are going.
Jeremy Pocklington: It is a really good question. We have a range of medium-term plans for achieving net zero. We have the net zero strategy. We talked at a recent hearing about strengthening our planning around the power sector and achieving a decarbonised power sector by 2035. There is a lot of connectivity between those medium-term plans and the research and innovation framework. Yes, it needs to be strengthened, but the innovation framework and the delivery plan that we have here reflects the funding that we have in SR21, the most recent spending round.
This is part of a wider series of plans. You could say, “Why do we not bring them all together and have a grand plan?” To an extent, that is what we our job is in the Department on an ongoing basis: making sure that there is that connectivity and join-up, guided by the Net Zero Innovation Board.