Applied research is essential for the Energy Agreement

Monday January 26, 2015 11:46

The government has made substantial cutbacks in the budget for applied research. Paul Korting, CEO of ECN, believes that this is a mistake. Applied research - as well as fundamental research - is important for society. With a limited budget, promising and much-needed technologies cannot reach the market. Moreover, the costs of the implementation are unnecessarily high. If we still want to achieve the goals of the Energy Agreement, we need to invest in applied energy research now.

From ideas to market launch
Applied research performs a bridging function in the conversion of promising ideas into products that can be launched on the market. Nevertheless, the government is making cutbacks amounting to hundreds of millions of euros in the budget for this research - from €950 million in 2011 to less than €500 million in 2016. Even though the two other pillars of innovation policy – fundamental research and support for exploitation – financially speaking still receive adequate funding, the cutbacks in applied research are a problem: a gap is forming in the innovation chain. Without applied research, only a fraction of promising innovations actually reach the market. 

A major impact on the Energy Agreement
This problem is already manifest in energy transition. New technologies in the fields of energy generation, transport and storage remain shelved or are not made sufficiently cost-effective. This is very unfortunate, because innovation and cost reduction are conditions for realising the objectives of the Energy Agreement. For example: an investment of 150-200 million euros in research into wind at sea leads to a cost reduction of 1 cent per kWh. Moreover, a cost reduction of around 5 cent per kWh is needed if offshore wind energy is to compete with conventionally generated electricity. 

The government has tried to compensate for the reduced budget by offering tax benefits to the business community and implementing energy policy aimed at top sectors. However, the idea that top sectors can fill the research gap by stimulating public-private partnerships has proven overambitious; relatively little of the money that was intended to compensate the shortfall in public funding money is flowing from the business sector to the research institutes. The reduced budget means research institutes are no longer able to meet the needs of SMEs, so it is the SMEs in particular who are the victim of these cutbacks. After all, fundamental research is of no great concern to them; they benefit more from applied research. 

Investment is essential
Indeed, if the Netherlands wants to be one of the top 10 CleanTech countries in accordance with the Energy Agreement, and thereby create 15,000 new jobs, investment in applied research is essential. However, up to now public funding for applied research has been historically determined, and in recent years has been determined by politically motivated cutbacks. No-one has ever actually calculated just how much public funding is necessary to realise the innovations needed in order to reach the targets of the Energy Agreement. In fact it is not ECN that is the victim of this, but the SMEs and at the end of the day our society as a whole!

With these thoughts in mind, we will try to draw attention to this issue. The recently adopted motion from Stientje van Veldhoven in which she asked the government to make an estimate of how much money is needed for fundamental and applied research in the coming ten years in order to meet the 2050 targets, and to measure that against current cash flows, is a step in the right direction.

Paul Korting

Category: December, Corporate