(Image courtesy:Stefan Rousseau/PA Wire. Labour Party leader Sir Keir Starmer launches his party's manifesto at Co-op HQ in Manchester, while on the General Election campaign trail.)
The UK has been in dire need of a reformed energy policy according to industry experts. Ever-high energy prices and the public's inability to afford these hefty bills have got everyone focused on the election result. Labour's policies are focused on decarbonising the grid by 2030, reducing energy costs, and promoting sustainability via energy providers. Conservatives seem to focus on pragmatic approaches and energy security by supporting nuclear power and extending renewable energy networks.
Undoubtedly, the new government will have to address many energy challenges. Both sides have well-rehearsed these new challenges. However, a trilemma still exists between achieving net zero emissions, energy affordability, and security of energy supply. Complicated issues such as grid capacity, green subsidies, planning consent, taxes, and supply chain pressure to ensure the achievement of net zero also add to this trilemma.
According to current polls, Labour is set to form the government. This means Labour's policy is most likely to become the energy policy, which is, therefore, the main focus of this article.
Nonetheless, the political parties' approaches to addressing the UK's energy difficulties diverge significantly. One result of the election might be the return of more MPs by other parties that now have little or no parliamentary presence, which would increase the diversity of opinions and the level of debate on energy-related issues in parliament during the next parliamentary term.
Labour's energy discourse has long been positive and ambitious. "Make Britain a Clean Energy Superpower" was the slogan of Labour's paper, which was filled with slogans around green growth such as "Bringing Energy Home" and "Backing the Builders, not the Blockers." However, the efforts were backed by their historic commitment to invest £28bn per annum in green energy.
Rishi Sonak recently termed the policies "unaffordable eco-zealotry." The Labour Party openly favours energy security affordability over the net zero initiative.
Debate on Net Zero Initiative:
Labour and the Conservatives are still committed to achieving net zero emissions by the current legislative deadline of 2050. Conservative net zero policy, however, is highlighted as "pragmatic, proportionate and realistic." It likely allows future flexibility on interim net-zero targets. In contrast, the Liberal Democrats and the SNP vowed to attain net zero by 2045, while the Green Party aims for zero.
Labour's headline near-term net zero goal is to decarbonise the electricity sector by 2030. Several industry experts (including the Conservatives, who have committed to a 2035 deadline) have expressed doubts about the deadline's viability. They have underlined the associated problems of the size of required renewables deployment and infrastructure upgrades, pressures on supply chain capacity, and the potential accelerated danger to oil and gas industry jobs due to meeting the 2030 objective.
Aurora, a power analytics provider, recently conducted a study demonstrating the situation's scale. According to their analysis, energy system decarbonisation would only be realised in 2051 if current trends continue and no significant policy changes or market interventions are implemented. Ed Miliband, Shadow Secretary of State for Climate Change, has stated that his party's approach would be to treat this as a "massive project" akin to the 2012 London Olympics rather than an aspirational target, and has recently emphasised that energy quotes workforce planning and skilling would be an essential part of the government's role in accomplishing that goal. He would have taken hope from former government chief scientific adviser Sir Patrick Vallance's recent statement that he believes the 2030 grid carbon reduction objective is practical.
What about Energy Costs?
At a time when roughly a fifth of UK homes are in energy debt, all of the main political parties have acknowledged that energy costs are a critical issue for voters.
Labour intends to address this challenge in various ways. Its central ambition is that its Green Prosperity Plan, which includes establishing and funding GB energy electricity supplier in UK and the National Wealth Fund, will reduce consumer bills and pass on the value of low-carbon electricity to customers, creating 650,000 jobs over the next parliamentary term. It also vows to lower standing costs and enact tougher rules that "put consumers first."
The Issue of Energy Security?
Labour believes that oil and gas will continue to play a role in the UK's energy mix, both for energy security and to help secure a "phased and responsible transition in the North Sea." In contrast to the Conservatives, Labour has stated that it will not grant new oil and gas licences to energy companies but will not remove existing ones. It would, however, continue the Energy Profits Levy until the end of the next parliament, raise it from 35% to 38%, and eliminate the "unjustifiably generous" investment allowances. It would keep a strategic reserve of gas-fired power plants.
Labour's energy ideology includes clean energy as a critical component of national security. The party emphasises the link between its Green Prosperity Plan and grid decarbonisation by 2030 pledges in energy and national security.
Image courtesy: Harbour Energy
Renewable Energy Development
The establishment, funding, and operation of GB Energy is Labour's signature energy policy. Labour, headquartered in Scotland and publicly owned, has promised to receive £8.3 billion in capital funding over the next parliament. The corporation will "partner with industry and trade unions to deliver clean power by co-investing in leading technologies; will help support capital-intensive projects; and will deploy local energy production to benefit communities across the country."
While GB Energy appears popular among voters in polls, the debate over its potential influence has already begun. Will it be a revolutionary disruptor or just a distraction? Is it large enough to make a substantial difference? Will its investments enable a project to access private money that would otherwise be unavailable? The business electricity suppliers eagerly awaits additional details on its mandate and investment methods.
Regulatory Reforms & Energy Market:
Labour is dedicated to reforming the energy system through stricter regulations, prioritising consumers, and ensuring automatic customer compensation for failure. The Conservatives' reform focus is on establishing more efficient local electricity markets, and they cite an expert study that suggests this will save £20 - £45 per home per year.
The new government will need to work out much more complex details. Still, it is worth noting that Labour manifesto statements on this issue pale compared to Liberal Democrat manifesto commitments to decouple electricity and gas prices, eliminate unfair regional differences in domestic energy bills, and establish local energy grids for the best utility provider.
Conclusion:
As the new legislative term begins, we foresee a greater emphasis on public-private co-investment and new forms of partnership with the private sector to assist in minimising the risk of projects and attract private sector funding and engagement and sharing of energy-related benefits with local communities. We eagerly await the new Energy Independence Act, in which Labour, if elected, has promised to lay out a more thorough framework for its energy and climate policy.
*The information contained in this article is accurate as of its publication date but may not necessarily reflect the current state of laws or regulations. It is important to note that the content is subjective and opinion-based, drawing from a variety of sources for interpretation & analysis.
