Project: ED(SI) Clean Transport Analysis
Reference: CSAU 09007 - SRT 7/5/25
Last update: 20/09/2012 10:55:14
Evidence gathering and analysis to inform a report being prepared by the ED(SI) Clean Transport Sub-Group.
The report will make recommendations on:
. whether the public sector should go further than it does at present in supporting specific technologies over others in the surface transport sectors (rail, road and shipping);
. if so, the criteria that should be used for identifying priority technologies and the support they require; and
. the work needed to allow the recommended approach to be delivered.
Reducing the environmental impact of transport.
What scope is there for the public sector to go further in making technology choices, which could help deliver clean transport and to understand how such an approach could operate.
A number of analyses to inform an ED(SI) Clean Transport Sub-Group report in November 2009 - see question 9.
A final report will be produced, but timing of publication will be subject to the timing of ED(SI) decisions and subsequent announcements.
AEA Technology Environment
Harwell Business Centre, Didcot, Oxfordshire, OX11 0QJ
+44 (0)1235 432201
Cost to the Department: £57,500.00
Actual start date: 28 August 2009
Actual completion date: 30 November 2009
Summary of results
- The UK Government wishes to explore the scope for the public sector to go further in prioritising technology choices in UK surface transport, which could help accelerate a decline in greenhouse gas (GHG) emissions from these sectors, and to understand how such an approach could operate. The purpose of this project (which was carried out by AEA) was to assist the ED(SI) Clean Transport Working Group (CTG) set up to explore this. The findings from this study will inform the work of the Clean Transport Group set up to assist the Chief Scientific Adviser in advising Ministers. To achieve the overall objectives, the work included a survey, review and analysis process including a review of the Research Development, Demonstration and Deployment (RDD&D) landscape and an evaluation of the commonalities between different future scenarios/roadmaps, with technologies grouped into eight families.
The following sections present a summary of the main conclusions and inferences drawn from the surveys, interviews, scenario analysis and other research carried out. This summary also presents AEAs recommendation on a possible way forward based on the studys findings. It should be noted that there was a clear divergence of views from different respondents on certain issues, for example: on the degree to which (a) coordination and collaboration had improved in recent years and (b) on the degree to which there was now more formalised prioritisation occurring in different technology areas. Also, most of the material received in responses focused on the road transport sector and very little was received in particular for the marine transport sector. Although at this stage (assessing the need/desirability of greater prioritisation) this is not a major weakness, if there is a move towards developing a long-term consensus vision/technology roadmap and prioritisation framework it will be critical to obtain better representation from the non-road sectors.
The current UK RDD&D landscape
- The Government currently invests at least £120m per annum in low-carbon transport technology RDD&D, of which around two-thirds is provided via the Technology Strategy Board (TSB) and EPSRC/other Research Councils. The UK public sector has historically taken a broadly technology-neutral approach, both in terms of overall funding for RDD&D and in terms of market pull mechanisms. In principle, the advantages of this approach are that the market and industry are free to find the most (cost-) efficient end solutions to meet the required end-point (i.e. minimising cumulative GHG emissions on the pathway to meeting long term 2050 reduction targets). However, this approach is dependent on a clear and consistent regulatory framework with strong enough market pull incentives towards low GHG technologies. Another point raised is that this approach can potentially take a long time as effort is distributed across alternatives with significantly more waste likely (in terms of failed technologies and total cost) along the way. Finally, the intention to be technology neutral is difficult to achieve in practice since this approach tends to lead to investment being focused into those technologies that happen to be closest to market (rather than necessarily the technologies with the greatest overall potential.
- Individual actors have previously made decisions on funding based on their own priorities, leading to inconsistency in the past between different Government Departments (and other actors), although the extent of this appears to vary for different technology areas. Some areas have received significantly more funding than others (e.g. electric vehicles currently), in some cases even without any formally agreed common criteria (e.g. biofuels). To an extent this is a snapshot of the current situation, with different funding levels in other areas in previous/future years.
- Responses from the interviews indicated that coordination historically also needed to be improved upon between different funding bodies and also across TRLs (Technology Readiness Levels). Previously this led to breaks/misalignment between the push from the bottom of the TRL chain and the pull by market incentives at the top of the TRL chain, and discouraged interactions between industry and academia. Funding decisions were also potentially being aligned against the individual remits and interests of the UKs various funding bodies and geographical regions. Therefore an additional risk was identified: that decisions were not being made in the best interests of the UK as a whole.
- However, there is significant evidence of moves to develop a more focused and consistent approach and improve collaboration between the different actors in the last couple of years. As a result, there is now currently significant coordination in energy innovation generally between public funding bodies supporting low carbon transport innovation. A greater level of collaboration has been achieved through the Low Carbon Vehicle Innovation Platform (LCVIP, launched in September 2007), which has involved all the major public sector actors, academia and industry. Efforts here have been focused on light duty vehicles (LDVs), which account for 67% of GHG emissions from UK surface transport. DfTs involvement in the LCVIP brings not only additional funding but importantly also the policy agenda. Under the LCVIP also sits the Low Carbon Vehicles Integrated Delivery Programme (LCVIDP) (which helps foster greater industry and academia collaboration), which currently receives investment from TSB, EPSRC, DfT and a number of Regional Development Agencies (RDAs). The Low Carbon Innovation Group (LCIG) is another mechanism for improving coordination and for also providing clarity to the outside world on the roles of the different member organisations of the group. The LCIG brings together the UKs three main independent, publicly-backed energy innovation organisations - the Energy Technologies Institute (ETI), the Technology Strategy Board (TSB) and the Carbon Trust - and is soon expected to expand to include the Research Councils and other actors.
- The LCVIP is in the process of delivering the recently developed NAIGT technology roadmap for passenger cars (which accounts for around 80% of its support, with the rest available for more open responses). This has resulted in the current focus on support for electric drivetrains for road transport (at least for LDVs, as summarised in Ultra Low Carbon Vehicles in the UK), which will be needed by most potential future technologies. This, together with the formation of the Office of Low Emission Vehicles (OLEV), appears to be a significant step towards a more collaborative and focused approach for road transport. However, it should be noted that the approaches to heavy-duty vehicles (HDVs), rail and marine (as well as the over-arching approach to intelligent transport systems, ITS) are not nearly as far developed. It is felt the current approach may have gone as far as it can without greater top-down strategic direction (which OLEV is intended help achieve). This could be built upon further generating a more collaborative approach with a wider UK strategy and long-term consensus vision and technology roadmap covering all surface transport.
Benefits and risks of going further in 'making technology choices'
- To meet the UKs overall GHG emission reduction targets, it is crucial that low-carbon technologies are deployed rapidly throughout the surface transport sector. The previous broadly neutral framework for supporting low carbon technologies may not allow all necessary technologies to come through at the speed required. A lack of a clear high-level formalised consensus on the long-term transport technology strategy/roadmap to 2050 has created a feeling of uncertainty among some investors and specific significant barriers need to be overcome (e.g. refuelling infrastructure investment). Whilst this consensus has essentially largely been developed for light-duty vehicles, this is not the case for other surface transport modes (i.e. HDVs, rail and marine) and for over-arching system efficiency through Intelligent Transport Systems (ITS).
- Due to the limited funds available, there is a need for some level of prioritisation of technologies with the greatest (cumulative) potential for GHG emission reductions to take place, emphasising the potential of technologies to offer an economic opportunity for the UK and also to support UK security of supply. This is currently in the process of being applied to LDVs (67% of surface transport GHG emissions), but could be broadened further to surface transport as a whole.
- Increased prioritisation of low carbon transport technologies (coordinated between actors and across TRLs) would better ensure that promising technologies are 'captured' in the early R&D stages and accelerated through to deployment. A more cohesive long-term strategy across surface transport would also help the development of key significant new refuelling/recharging infrastructure and could further improve co-operation/collaboration between industry (via TSB funding) and academia (via EPSRC funding).
- Looking internationally, it is clear that where there has been significant uptake of low carbon technologies or fuels, this is usually a consequence of particular (public sector) support/priority (e.g. biofuels in Brazil, Sweden and Germany; Natural Gas Vehicles in Italy). Equally, where a purely technology-neutral approach has been adopted, no technologies have emerged to compete with conventional petrol and diesel vehicles. It is also clear that varying degrees of technology prioritisation are already taking place in other countries (e.g. lignocellulosic ethanol and the
stimulus package for electric vehicles, battery development and recharging infrastructure in the US). This evidence argues for moving towards a more technology-focused approach.
- The transport sector has particular challenges compared to other sectors, including: high carbon abatement costs (in £/tonne CO2), huge diversity of technologies and vehicle types across different modes, reliance on key infrastructure, relatively slow stock turnover for non-road transport sectors, important links to the energy sector (i.e. likely future dependence on low carbon electricity and competition for biomass resource for bioenergy) and broadly the same needs and characteristics across different countries. This means that the UK will almost certainly have the option of importing a technology to help meet its GHG reduction commitments. At least in light-duty vehicles, the UK has key expertise or significant capability to develop leading expertise in a wide range of important technology areas. However, the UK is also unlikely to be able to set the direction/speed of transport technology development alone, although it will have influence, which will be greatly enhanced through working within the wider European Union and other international fora.
- The risk of over-prioritising a few designated technologies is that by closing off competition from other potential contributors that could reduce emissions from transport, there could be decreased pressure to optimise the performance (in terms of costs and efficiencies in operation) of those technologies that have been chosen. The ultimate risk is the future development of a prioritised technology that significantly underperforms against expectations, leaving few alternatives.
- This risk can be mitigated through the provision of mechanisms to support of free/general research (i.e. into non-prioritised areas as well as 'blue sky' research). Respondents to AEAs survey and interviews also highlighted it would be critical to ensure that the level at which technologies are defined (and therefore prioritised) is high enough to allow competition between technology suppliers, otherwise costs would increase and there would be reduced competitive pressure driving development of technologies in the same "technology family".
If the Government wished to support a more technology-focused approach to UK low carbon transport RDD&D, three up front requirements would be (i) a clear consensus on the technology roadmap for the UK transport sector towards 2050, (ii) a prioritisation framework/criteria that is agreed across funding bodies, and (iii) co-ordination of post-prioritisation mechanisms to support technology progression through TRLs( i.e. push and pull mechanisms and barrier removal).
i) The need for a clear consensus on the 2050 vision/technology roadmap
- A consensus on the technology roadmap/vision of how the transport sector will develop between now and 2050 that is, in broad terms, fixed (i.e. does not shift significantly for a significant time period e.g. 15-20 years) needs to be developed and agreed before the public sector goes any further in prioritising technologies.
- The purpose of the vision would be to identify the key technologies and the development roadmap needed to allow the UK to meet both medium and long-term emission reduction targets, and thereby contribute to the evidence base used to prioritise technologies. Developing a clear, agreed and fixed long-term vision and technology roadmap (together with an appropriate fiscal framework) will also help encourage/develop private investment by generating greater certainty in both the market for developed technologies and the support/barrier removal activities to ensure their successful introduction. It appears a broad consensus on the roadmap for light-duty road transport is being reached (i.e. via NAIGT), but this is not the case for surface transport in general.
- The consensus vision and roadmap would need to set over-arching themes but also remain flexible enough to keep options open for change in clean transport technologies depending on progress in R&D and unexpected technological developments. It would also be critical to consider transport as part of the broader system and ensure that where there are overlaps (e.g. EVs and the electricity supply industry) or competition (e.g. biomethane for transport vs CHP for buildings), cohesive and consistent overall strategies are developed. For example, the environmental case (and optimum introduction timing) for EVs or hydrogen vehicles is dependent on adequate supplies of low-carbon electricity. Part of the purpose of the consensus roadmap is to more clearly set out the steps needed to achieve the desired 2050 end-point. This would identify bottlenecks/the critical development path to help better inform a timed strategy for support/investment in key technology areas at different points and accelerate development and introduction of key technologies to market.
- This vision and roadmap needs to be established as a priority, agreed across all major stakeholder groups and must be consistent with the over-arching international direction. It will also be important to potentially develop and share this with other countries. The multitude of different national and international studies that have already conducted top-down and bottom-up scenario analysis could be used as a starting point for reaching a consensus.
- There is already reasonable consensus about the mix of surface transport technologies that might be important in 2050, but much uncertainty on their relative significance, and (except perhaps for LDVs) on the development pathway to get to 2050. For example, there is a general consensus that vehicles with electric drivetrains will be very significant by 2050, though not on which of battery EVs, hydrogen fuel cell EVs or biofuel powered plug-in hybrid EVs will be dominant.
ii) Prioritisation Framework and Criteria
- There is also a need to agree assessment criteria for technology prioritisation across relevant bodies and across the TRLs. This framework would need to take into account links with RDD&D going on internationally, as well as international markets and links with other sectors.
- Any prioritisation framework should distinguish between earlier stage technologies, where development costs are low but uncertainty is high (arguing for a much larger number of different "technology families" being supported at any given time) and later stage technologies (where greater focus is needed because deployment support costs are high). The technology-focused approach to prioritising low carbon technologies developed by the Carbon Trust, and presented in their recent publication "Focus for Success3" could be used as a model for developing a prioritisation framework that can be applied to surface transport technologies.
Importantly, the Carbon Trust's approach explicitly makes the distinction between earlier and later stage technologies, and Government Departments (including DECC and BIS) contributed to the development of this new framework.
- The (long term/2050) GHG saving potential should be the first criterion that should be used in any assessment of technology prioritisation, but with care to consider the cumulative savings potential rather than fixed horizons (i.e. taking into account the timing and rate of technology penetration). The assessment of GHG emission reduction potential should take into account the technical feasibility of contributory factors that will enable maximum abatement potential to be achieved. For example, the need to decarbonise the electricity sector to achieve the maximum emissions benefits from electric (and/or hydrogen) technologies and determine optimum timing of their introduction (i.e. factoring in additional generation capacity needed to meet transport demand).
- There is also a consensus on the importance of focusing on cost-effectiveness (on both short and long timescales) and on technology families where the UK could see most economic benefit. However, there may also be technology families that would be in the UK's interest to encourage but where it is not possible for the UK to act alone, i.e. needing greater influence via the EU or more internationally. Detailed (cost-benefit) analysis of the potential advantages of UK technology development vs. importing the technology would be needed to provide greater clarity in making the decision as to where public investment is best placed for UK advantage.
- Other criteria (e.g. other environmental impacts, energy security, etc) should be factored in at a lower level to avoid the potential for dilution of the core GHG objective and leading back towards a more technology-neutral approach.
- The final prioritisation process should utilise/build on work already in progress/carried out to avoid duplication of effort, i.e. using existing criteria/mechanisms and assessments where possible. However, it is important that a consistent overall approach is used to assess all technology families.
- Post prioritisation, mechanisms need to be put in place to allow each prioritised technology family to be commercialised including a combination of three elements (highlighted by the Carbon Trust in their "Focus for Success" publication):
1) The traditional technology push innovation activities (e.g. RD&D grants);
2) Other policy instruments to generate the right market pull; and
3) Barrier removal activities (e.g. revenue support, regulatory change, key infrastructure roll-out).
- The precise allocation of resources amongst prioritised clean transport technologies needs to be informed by the requirements of individual technologies themselves because they will each be at different points in their development cycles and because individual support requirements are necessarily technology-specific. However, in general the allocation of resources would be expected to be approximately proportional to the potential UK GHG emission reduction potential of the different technology families.
- Any 'technology focused' approach should also be designed to complement technology-neutral policy instruments and carbon pricing mechanisms, which are designed to stimulate the mass adoption of proven technologies and encourage their development in a competitive environment. For example, fiscal incentives for biofuels more closely aligned with actual net GHG reduction.