Every now and then we all come across someone whose opinions are difficult to counter and who is so blindingly obviously correct you feel obligated to ensure they’re heard loud and clear so that others can benefit from their thinking as well.
In this instance I’m referring to the exceptionally talented economist Professor Marianna Mazzucato of Sussex University.
If you’ve never heard of her then I strongly recommend that if you have any interest at all in innovation then you familiarise yourself with the work she’s been doing on the connections between state support for research and the economic benefits that can bring in terms of growth, employment and so on and so forth.
Mind you, if you’re in the energy sector and you’re not interested in innovation then you’re probably in the wrong job.
In her book “The Entrepreneurial State”, which I’m hoping I’ll be getting a copy of for Christmas, she explains very lucidly that one of the most iconic pieces of modern gadgetry – the iPhone – would not have been developed if it hadn’t been for US Government funding for technologies, including the touch screen, the Internet itself of course, GPS, micro-processors, speech recognition and others.
She also explains that the smart thing that Apple really did was to recognise the potential of all these technologies and cleverly assemble them in a package which under the iPhone brand has become a global success.
Others have, of course, done pretty much the same thing since, just as successfully as Apple, but that doesn’t change the fact that most of the core technologies were developed in US laboratories with US taxpayer’s money.
The US government’s role in the development of new technologies goes back a long way. Its space programme including the historic moon missions resulted in a whole range of new technologies including the ubiquitous Teflon coating used on non-stick cooking pots.
In the energy world the US government has also been funding new technologies both via its own research laboratories and through collaboration with private sector companies.
For example, Washington, through its armed forces, is having a positive impact on the development of technologies such as biofuels by funding both its development and its trials.
Biofuels isn’t of course the only area of involvement.
Now, what I find interesting about the American approach is that government believes it should have a major role in technology development and that it considers this to be a form of long-term investment.
There is then a semi-symbiotic relationship between government and industry that seems to work well and to mutual benefit.
It’s not, however, a perfect relationship in that as Professor Mazzucato points outs: “We have socialised the risk of innovation but privatised the rewards.”
In other words, companies such as Apple which have benefited so much from publicly-funded research haven’t provided a financial return to government.
In fact, I would add that in Apple’s case and indeed other companies as well they actually provided a kick in the particulars for their government by manufacturing so much of their product range overseas in communist China and consequently are paying far less tax than perhaps they should have.
So why am I so interested in all this? Well, apart from the fact that the policies at play here are extremely interesting and I’m (sadly) fascinated by that stuff, it just so happens that Research Councils UK have just published their “Energy Research and Training Prospectus” which is somewhat optimistically entitled “Investing in a brighter energy future”.
So, I read that with a view to trying to understand to what extent it might satisfy Mazzucato’s criteria for the state being the source of a range of new technologies with real commercial potential around which might lead to a UK energy technology revival or – as our glorious Chancellor promised – the rebalancing of the economy.
Bearing in mind that the prospectus includes the contributions from not just the Research Councils themselves, but all other public sector sources including the Technology Strategy Board, the Energy Technologies Institute, and the Carbon Trust and DECC then I was really quite astonished at how small the overall UK budget actually is.
In fact, the estimated budget for 2012 was just £288million, which represents 0.025% of GDP, which according to the prospectus authors means the UK has fallen back to 19th position in the IEA rankings and 14th within Europe in terms of energy RD&D spend per unit of GDP.
This puts the UK just behind Italy and ahead of Belgium. Norway – that small, independent oil rich nation on the other side of the North Sea is 6th.
The prospectus also reports that in its 2012 review of the UK, the IEA noted that “the levels of spending do not seem to match Britain’s ambitious climate policy objectives and its world-renowned academic institutions and capability” and recommended that “the UK acknowledge and publicly fund at world-class levels a focused energy RD&D programme to catalyse a broader United Kingdom innovation agenda that reflects the country’s industrial and intellectual comparative advantage”.
Some hope I think! Because the prospectus also calculates that the UK would need to increase its current public sector energy Research, Development and Demonstration spend by 70% to bring itself back to the median level of IEA countries, and by 200% to get itself on to the top rank.
It is also suggested that “further increases would be necessary if global energy Research, Development and Demonstration budgets were to be aligned with the 2°C climate change objective and, implicitly, UK climate policy”.
So what do we learn from this?
Well, it’s now blindingly obvious that most of what comes out of Westminster in terms of rhetoric on how important carbon reduction, renewables technology and so on and so forth really are is just that – rhetoric… hot air… not backed up with the wherewithal to make anything worthwhile happen.
It’s also now obvious that promises to rebalance the economy and in particular to build on the new industries of which energy is probably the most important were just hogwash.
Mazzucato understands the clear link between state-funded research and economic growth whereas Westminster very obviously either doesn’t or is still ideologically and idiotically opposed to the state doing anything much.
This attitude is hugely damaging to our industrial potential and harms our academic standing. It must change.
Merry Christmas and a more productive New Year to all!
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