Keir Starmer, leader of the UK’s Labour party, has announced plans for a state-owned renewable energy firm. But will it help us meet our climate targets?
During his keynote speech at this year’s Labour Party conference in Liverpool (UK), Keir Starmer, the party’s leader, announced an ambitious new plan to create a state-owned energy firm if the party is elected to power at the next general election. Great British Energy, as it will be known, would be set up with the express aim to take “advantage of opportunities in clean British power” and could, if done right, pave the way for a revolutionary new era of green energy in the UK.
Public ownership of renewables in the UK is nothing new, in fact, a large chunk of the renewable capacity is already owned by the public – just not the British public. A recent analysis by the Common Wealth think-tank, for example, found that the UK’s public stake in offshore wind is a meagre 0.03%. That’s less than the city of Munich, which owns 0.85%, and far less than countries such as Denmark, which owns a sizeable 20.4%.
And it doesn’t stop with wind power either. The Chinese government has significant stakes in the UK nuclear sector and, as it stands, some five million people in Britain pay their energy bills to EDF, a company owned almost entirely by the French government.
“The UK’s public stake in offshore wind is a meagre 0.03%. That’s less than the city of Munich, which owns 0.85%.”
In light of these facts, it does seem somewhat foolish for us to be sending such vast sums of money overseas in the form of energy bills, especially when many people will struggle to even heat their homes this winter due to turbulent global energy markets.
But while the economic benefits of the policy are plain to see, the question remains: Could publicly owned energy generation help us meet our climate goals and, if so, how?
Firstly, let’s address the elephant in the room – the private sector. Many people would be eager to point out that the private sector is accelerating its investments into renewable energy and that this negates the need for any mass public investment. This argument has certainly been bolstered lately due to the unfolding energy crisis; as fossil fuels get more and more expensive, renewables look like an ever more attractive (and stable) option to private investors.
It could be argued that this logic seems to be paying off. Currently the UK is ranked seventh in the world on the energy transition leaderboard, so, the private sector is doing a good job, right?
Well, as ever with these issues the story is not so black and white. Seventh on a leaderboard where almost every country in the world is woefully failing to meet its climate targets is not something to write home about. We’re going to need to aim much higher if we actually want to meet our legally mandated goal of net-zero by 2050. One thing every country ahead of us on the list has in common is a publicly owned energy company, it might be that in order to beat them, we must first join them.
What Great British Energy could offer is lower risk investment in the riskier areas of green infrastructure. The private sector is willing to invest in wind and solar because these technologies are well established, but a 100% clean energy system will require significant investments in the grid, as well as other less mature technologies such as hydrogen and small-scale nuclear reactors. Unshackled from the need to create a profit for shareholders, and with the ability to borrow at lower rates, a government backed energy company could afford to invest in these crucial parts of the network at a much faster pace than could ever be possible for the private sector.
From the government’s perspective there is motivation to be the world leader in this area too. Whoever leads the charge on creating a completely green energy grid will have ample opportunity to outsource their expertise when the rest of the world soon follows suit. Everyone knows how to put up a wind turbine, but very few know how to create a consistent source of green energy at a nationwide level.
Perhaps a more pertinent point against public ownership is that it does not necessarily guarantee a company will behave morally with respect to the climate. For instance, EDF has been caught out for spying on Greenpeace in the past. Meanwhile, Swedish owned Vattenfall famously sold off their coal power stations rather than replacing them with renewables, simply shifting their emissions elsewhere. Labour’s initial policy announcement seems to have placed an emphasis on green energy, but these examples highlight the need for close scrutiny if the plans come to fruition in two years’ time.
“[Jacob Rees-Mogg] is seeking to get ‘every last drop’ of oil out of the North Sea.”
The promise of an eco-centric public energy company, coupled with the recently announced £8 billion green investment fund, have set Labour on a planned course for completely green energy generation by 2030. This is not drastically more ambitious than pledges made by the Conservatives under Boris Johnson, who committed to 95% clean power by 2030 and 100% by 2035.
It remains to be seen whether Liz Truss’ government intends to stick to her predecessor’s commitments. Indeed, climate policy was scarily absent from many of the debates during the recent Tory leadership elections. Initial moves by the new Prime Minister appear to indicate at best a neutral attitude towards climate issues and at worst a flagrant disregard for them. With the moratorium on fracking likely to be lifted, and an energy minister seeking to get “every last drop” of oil out of the North Sea, the hope of a speedy transition away from fossil fuels appears to be dwindling by the day.
Labour’s Great British Energy plan is ambitious, and they’ll have to overcome an unfathomable number of hurdles if they are to stick to their commitments. That will require expert management of a public entity with almost no setbacks along the way – not always something easy to come by in the UK. But what could be the real thorn in their side is another two years of relative passivity on green infrastructure investment. Ultimately, whether Labour can achieve its goal of a green economy in the future, depends on what action is taken today.