When Russia invaded Ukraine almost two and a half years ago, British energy prices shot up. But beyond the conflict itself, the sudden crisis was a product of our reliance on natural gas, and our exposure to a volatile international energy market. Our continued dependence on imported fossil fuels leaves the UK vulnerable to this happening again, and the effects of 2022 been felt ever since – prices remain almost 40 per cent higher than they were in 2021. But today, we gained a greater sense of how the new Labour government will guard against such threats in the future: the ambition of making the UK energy independent through Great British Energy and its newly announced partnership with the Crown Estate.
GB Energy is a new publicly owned company set to officially launch later today. It is one of many strands of the Labour party’s “clean energy superpower” policy – a highly ambitious goal it aims to complete within the next six years. First touted by energy secretary Ed Miliband two years ago, GB Energy has long been the jewel in the crown of Labour’s green power mission. Its main goal is to increase “homegrown” renewable energy and to reduce bills. And it will be backed by £8.3bn in government funding over the next five years.
In practice, the company will work as an investment vehicle, channelling funding – both public and private – into a series of renewable energy projects across the country. Through the government’s local power plan (which sits within GB Energy’s remit) councils and community groups will be supported in developing their own clean power projects which will be backed with initial funding from the company. GB Energy will retain a stake in each project and will either return the proceeds to government or invest them in other renewable energy projects. More well-established methods such as solar farms or onshore wind developments will be prioritised first – but GB Energy will later also look to increase investment in emerging technologies such as carbon capture and storage.
A key source of controversy around this plan has been around its cost. In February, following months of back and forth, Labour dropped its pledge to invest £28bn annually into the green transition, much to the consternation of many in the climate and clean power sector. This commitment was reduced to a pledge to invest £8.3bn over a five-year parliament (working out at just £1.66bn per year). And one way the government wants to make this money work harder is through its new collaboration with the Crown Estate – the £15.5bn portfolio of land owned by King Charles (himself something of an environmentalist). The government plans to make use of these royal assets – both on land and on the seabed – to accelerate offshore wind exploration, essentially renting the land from the Estate. The Estate will also benefit from new borrowing powers – announced in the King’s Speech – which the government hopes will help to increase investment in offshore wind.
This element of GB Energy’s operation was not trailed before its launch and has taken some in the energy sector by surprise. One insider told the New Statesman that it has sparked some concern as to whether all seabed licenses will now need to be run through GB Energy. They said the government should publish a locational offshore wind strategy to identify where the company will prioritise and why. And, beyond its patriotic branding, Labour have repeatedly struggled to communicate how GB Energy will interact with consumers. It will not – contrary to some popular misunderstanding – replace existing energy suppliers. No consumer will be able to take out a new energy tariff from GB Energy, and it is highly unlikely energy bills will reduce overnight.
Instead, this is a long-term exercise to improve the UK’s energy security. Ed Miliband clearly understands this – and has adjusted his communications around GB Energy accordingly by weighing more heavily on the company’s importance for the Britain’s strategic autonomy than he did during the election. As he wrote in a column for The Guardian today: “the only way to protect ourselves as a country for the long term is to deliver cleaner, cheap, homegrown energy – boosting our energy independence, creating jobs and tackling the climate crisis”.
But to maintain this momentum, a clear mission statement for GB Energy is essential. Speaking to the New Statesman ahead of the launch, Sam Alvis, director of energy and environment at Public First, said: “If Labour wants GB Energy up, running and delivering projects in this parliament then they need an explicit and powerful founding statement from the top.” Alvis said the direction that GB Energy takes will be essential in ensuring “not just voter confidence, but [from] the private sector too”.
For now though, GB Energy is broadly popular with voters. According to a post-election poll by More in Common for the environmental thinktank E3G, 73 per cent of all voters back the project. But maintaining this popularity as the initiative moves from drawing board to reality is the challenge now, and improving energy security will not happen overnight. Labour must act fast to get the wheels of development turning as quickly as possible, or risk the inevitable backlash faced by any government that leaves grand promises unfulfilled.
Content from our partners
Related
