April 22, 2024

More money isn’t the key to clean power by 2030

Last week was a big one for Labour’s promise of achieving “clean power by 2030”. On Monday, Keir Starmer headed to Wales with the shadow climate change and net zero secretary, Ed Miliband, to see a floating onshore windfarm. They were joined by Vaughan Gething, the new First Minister of Wales, to announce that, if elected, GB Energy — Labour’s proposed publicly owned energy company — will fund the construction of more floating onshore wind farms.

As they toured the facility, a new report from the centre-right think tank Policy Exchange suggested that Labour’s plans to decarbonise the grid will cost around £116bn over the next 11 years. Predictable commentary ensued. “Labour’s unfunded spending commitments just got bigger,” Bim Afolami, the economic secretary to the Treasury, told the Telegraph.

But what the Policy Exchange report — and its coverage in the press — missed out was that Labour’s green transition plans include a high level of private finance. The party has maintained that any initial public investment in the green transition will set the ball rolling to crowd in further private finance. This includes the now-scaled-back £28bn per year pledge. In February, the party said it will instead invest around £24bn in the green transition (around £5bn per year) over the next parliament.

[See also: Two thirds of councils are on course to miss climate targets]

Of course, this investment is going to cost us dear. The mission to achieve clean power by 2030 will involve wholesale systems change. But as Jess Ralston, energy analyst at the Energy and Climate Information Unit told New Statesman Spotlight, “clean power means energy independence…more British renewables means less expensive oil and gas, which will increasingly come from abroad as the North Sea continues its inevitable decline”.

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Ralston pointed out there “moving to an energy system based on British renewables rather than foreign gas” has many economic benefits due to the latter being priced on international markets. And in the current turbulent international climate, the UK has already suffered the consequences of energy dependence. “The reality is that we’ve already been forced to spend a comparable amount, £150bn, on gas over just two and a half years of this [energy] crisis,” Ralston added, “If your aim is energy independence and lower bills, then decarbonising the grid is crucial whenever the target date is.”

And this point around Labour’s aim is an important one. Many in the sector warn that 2030 is going to be an extraordinarily difficult target date to meet. The difficulty, however, is not entirely a question of cost. Any government would probably be able to crowd in private investment for decarbonisation, whether their goal was 2030 or 2035. The bigger problems are systemic barriers, such as a lack of planning capacity. These have a knock-on effect on investment. The real question for Labour is not how much the party is willing to spend, or encourage the private sector to spend, on clean power by 2030. It is how Labour intends to improve the conditions that would make the success of that investment more likely.

[See also: Labour’s Green Prosperity Plan must include nature]

This article was originally published as an edition of the Green Transition, New Statesman Spotlight’s weekly newsletter on the economics of net zero. To see more editions and subscribe, click here.

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