Post: The future of the UK energy sector post-general election

The future of the UK energy sector post-general election

Following their recent success in the general election, the Labour Party has been handed the responsibility of tackling the continuing challenges faced by the UK’s energy sector. The global target to reach net zero emissions by 2050 under the Paris Agreement is fast approaching and there appears to be a strong commitment by the Labour Party to meet this challenge.

The energy sector had a prominent position within the Labour manifesto, with energy security being the second of Labour’s five key missions. While not firm commitments, the party’s manifesto provides us with an indication of the key policies to be advanced by Labour in office.

In this article we take a closer look at the party’s manifesto pledges on energy and actions the government has taken to date.

Action to date

In written statement on 8 July, Ed Miliband outlined his priorities for the department in a message to staff following his appointment as Secretary of State for Energy Security and Net Zero. These included:

• delivering our mission to boost energy independence and cutting bills through clean power by 2030
• taking back control of our energy with Great British Energy
• upgrading Britain’s homes and cutting fuel poverty through our Warm Homes Plan
• standing up for consumers by reforming our energy system
• creating good jobs in Britain’s industrial heartlands, including a just transition for the industries based in the North Sea
• leading on international climate action, based on our domestic achievements

On 8 July the government published an update to the National Planning Policy Framework (NPPF) which would remove footnotes 57 and 58, effectively lifting the ban on onshore wind introduced in 2015. The government will confirm this position to Parliament on 18 July, following the State Opening. These changes will also be reflected in the forthcoming NPPF update.

It was also announced that through that update the government will go further and set out proposals for wider changes to support renewable energy development. This will include

• a consultation on bringing large onshore proposals into the Nationally Significant Infrastructure Project regime
• a revised National Policy Statement
• an update to the Community Benefits Protocol for Onshore Wind in England

Manifesto pledges

Clean energy superpower

Labour’s main technology focus is clean energy. How these targets will be met has not been explained in detail, but the party has pledged to work with the private sector to develop clean energy capacity and grow the clean energy sector to make the UK a clean energy superpower. To achieve fully ‘clean’ energy by 2030, the new government plans to:

• double onshore wind capacity to 35GW
• triple the UK’s solar power to 50GW
• quadruple offshore wind with an ambition of 55GW

Alongside onshore and offshore wind and solar, Labour plans also contain commitments to invest in carbon capture and storage, hydrogen, marine energy, and energy storage.

Aside from the technologies themselves, there are proposals of note concerning the renewables supply chain. Labour has set out plans to fund and assist with job creation. One example is the “British Jobs Bonus”, which would allocate up to £500M per year from 2026, with the goal of assisting employers to build supply chains.

Labour has also set out plans to establish a “Green Prosperity Plan” which will invest in renewable technologies to assist with creating 650,000 jobs in the sector by 2030.

Great British Energy

Aside from the focus on clean energy, the key policy announcement by Labour is the creation of Great British Energy (GB Energy), a publicly owned energy company. Much of detail regarding GB Energy is still to be revealed but Labour states that GB Energy will facilitate a number of policy goals, including:

• delivering 100% clean power by 2030
• cutting energy bills
• creating thousands of jobs

GB Energy has three initial priorities:

• Co-investing in new technologies like FLOW, tidal power and hydrogen.
• Scaling and accelerating mature technologies such as wind, solar, and nuclear.
• Developing organisational capability to reduce project and construction risk in energy megaprojects like nuclear.
• Locally, GB Energy aims to focus on scaling up municipal and community energy, with goals to develop 8GW of small- and medium-scale community energy projects which return profits to local communities to cut high-energy bills.

In terms of funding, Labour has indicated the new venture will receive £8.3B over the course of the next parliament. £3.3B of the total budget is to be set aside for small solar and onshore wind projects through lending to bodies such as local authorities and community groups.

Fossil fuels and nuclear

The “windfall tax” introduced by the former government is something that Labour has pledged to extend until the end of the next parliament, with an increase in taxation level by 3% to follow. The revenue raised will be used to fund GB Energy.

The manifesto said that the North Sea will be managed in a way that does not jeopardise jobs. While Labour will not revoke existing offshore licences it will not issue new licences to explore new fields. In addition, it will not grant new coal licences and will ban fracking for good.

Labour has committed to increasing the use of nuclear facilities. Specific commitments include extending the lifetime of existing nuclear plants, constructing new nuclear plants (including Sizewell C), and developing small modular reactors in the UK.

Manifestos should not be read as firm commitments but they do contain an indication of what a new government’s approach to certain policy areas may look like and what areas will be prioritised. From the perspective of the energy sector, it is clear that renewables will be the most favoured technology by the new Labour administration.