The energy sector is one of Labour’s priorities going into the general election. Having pledged to decarbonise UK power by 2030, the party wants to achieve several bold goals simultaneously: delivering energy security, saving money for UK households and creating thousands of jobs, while also positioning the UK as a world leader in clean energy. However, many of the specifics remain open to question. How can the UK truly capitalise on the opportunities presented by the green transition, and how best can policymakers, industry and investors work together?
These were some of the topics under consideration at a New Statesman roundtable event hosted on 27 February, in association with Hitachi Energy. Policymakers and industry experts came together to discuss how the right investment frameworks can support the transition to net zero.
In the view of one MP, this will include well-defined support for businesses and a clear industrial strategy. Labour has said it wants to create a publicly owned clean energy company called Great British Energy, which would support low-carbon projects, as well as a National Wealth Fund that would be used to finance the supporting infrastructure, such as expanded ports. Consistency of approach will be vital, argued the MP, who added that the party will be looking very closely at the Inflation Reduction Act (IRA) in the US.
Challenged on whether Labour could truly compete with the IRA – especially following the demise of its £28bn green pledge – the MP pointed to the ways public funds might crowd in additional private investment. “Certainly, we’re trying to think more imaginatively about how you do secure this investment environment, but I would emphasise that the ambition has not gone,” they said.
A speaker from Hitachi Energy said the UK was well positioned to build on its existing experience, not least in offshore wind, but remarked that the grid will need to be upgraded and extended. They also called for more concrete details around what a long-term plan would look like: “We need to see how that is going be brought into delivery.”
An industry expert remarked that even the original £28bn would not be enough to deliver the energy transition alone (the true cost of the transition is estimated at £1.4trn). Rather, “it’s going to rely on smart policies that attract investments”. They called for Labour to adopt a “delivery mentality from day one”, which identified market failures, called out vested interests and made every day count. Another industry expert warned that the 2030 goal was very much a moon shot, which carries the risk of being weaponised by certain parts of the press.
The discussion moved on to relations with Europe. Several panellists mentioned that the UK needs more efficient ways of trading electricity with the EU. In the words of one MP, this “could solve a lot of problems with security and help net-zero targets become a reality”. They added that better connectivity, far from diminishing the UK’s self-sufficiency, could help it become a major energy exporter.
A mayor pointed out that while the government needs to create the right framework for clean energy, it will fall to the private sector and academia to deliver. They added that the energy transition could function as a “levelling up strategy” for different regions, enabling parts of the north of England to become leaders in fields such as hydrogen manufacturing and sustainable aviation.
Another mayor remarked that, as well as creating more clean energy jobs, the UK needed to show “moral leadership” on the global stage. This would mean acknowledging its role in the climate crisis and implementing green solutions domestically before expounding their benefits elsewhere.
The panellists agreed that the demand side is just as important as the supply side, and that we need to implement a more intelligent energy system that can make better use of the supply we have. “At the moment, there is too much of a siloed approach on energy security,” said an industry expert, who argued that industrial decarbonisation needed to be factored into the 2030 vision.
This being an election year, political realities were never far from the surface. An MP was candid that winning that election was the top priority. They noted that, while people may want political certainty about Labour’s ambitions, “the only thing that I would like to feel politically certain is that we’ll get the chance to do it – how far we get on the £28bn is a secondary issue”.
Another parliamentarian remarked that, before the election, the party will need to be clearer about its strategy; but afterwards the focus will shift to implementing industrial regional strategies. This will involve taking some big decisions to make the 2030 target credible.
Industry experts, however, were clear that Labour needed to strengthen its narrative around net zero. One expert expressed frustration around the removal of the £28bn pledge, remarking that any wishy-washiness around targets sends the wrong signals internationally. “We’ve got to be clear, decisive and robust and bring the things we want to go forward quickly. Time is not our friend,” they said.
One industry expert commented that, going back to basics, the UK needs three things: the right resources in place to build more renewables; an extension to the electricity grid; and market reforms geared around reducing energy prices. As another industry expert put it: “We do need industrial strategy – deliberate, concise, decisive. Choose what we’re going to do, what we’re not going to do, and then go after it.”
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