Immediate thoughts on Keir Starmer’s clean energy super-power speech: Big commitments that will require greater clarity to give consumers and investors long term confidence
Written by Lizzy Roberts, Head of Energy and Clean Tech
Today’s speech from Keir Starmer was the first step in demonstrating there’s policy substance to the claims that the Labour party will bring climate and industrial strategy together. Starmer’s speech provided reassurance that a Labour Government is up to speed with the biggest challenges to decarbonising the electricity system by 2030. He said he recognised and would address the long list of obstacles to scaling renewable generation and bringing industrial opportunities to the UK, including barriers in planning, connections to the grid, the skills shortage, and a lack of long-term investor confidence.
Labour set out a three-pronged approach to doing this, namely:
National Wealth Fund
Changes to the CFD
GB Energy
and when elaborating on these policies in today’s speech, Starmer packed in further interesting details.
Greening industry and incentivising local job creation
Starmer directly linked the futures of key sectors here in the UK, like the steel industry, to the decarbonisation of power and emphasised the need to onshore the manufacturing sectors that the UK has so far lost out on. He noted for instance that Britain has the second largest offshore wind capacity in the world (after China), yet in Denmark they have three times the number of jobs in the sector.
To address this, Labour says it will crowd investment in battery gigafactories, green steel plants and ports for offshore wind parts, via the National Wealth Fund (NWF). Crucially, there will be a public ownership element to this fund, with people receiving a stake in the returns of the investments. Clearly more detail on how this will be designed is needed.
Labour will also provide a bonus to developers bidding for CfD-funded projects if they can demonstrate they are actively bringing supply chain benefits to the UK. This is complemented with new CfD requirements for pay and union recognition.
GB Energy, will have a remit and governance structure that sits across the UK’s four nations. It will aim to crowd investment to green industrial sectors, including hydrogen, nuclear, tidal power and energy efficiency.
It was also positive to see the firm recommitment to an end to licenses for new oil and gas exploration, making clear Labour’s position on this issue after a fortnight of intense commentary.
The challenge in maintaining investor confidence
The set of announcements today would be transformational if all are introduced, but if it is to succeed, Labour will have to design policies that create new ownership models while giving the private sector the confidence to accelerate investment. That’s one tricky tightrope to walk.
The speech recognised that businesses want political clarity to invest long term. While this is welcome there is still a lot of detail missing in how Labour will work in partnership, rather than in place of, private investors and businesses.
One area to watch is onshore wind. Starmer announced the pledge to cut bills by scrapping the onshore wind ban with a plan to overcome local opposition by introducing a system to discount bills for residents local to projects. This is a delicate policy to land: Starmer will need to turn previously NIMBY residents into advocates, while still ensuring project developers are suitably incentivised. There’s precedent for similar schemes of this kind from other countries including Denmark and Germany, and public opposition to onshore wind has been overblown by successive Conservative governments. But it’s nonetheless a challenge that needs political prowess to overcome.
Decarbonisation is more than today’s announcement, but it’s a good start
Today’s speech was very much the energy element of Labour’s ‘climate mission’, framed around the electoral tag line of making the UK a ‘clean energy superpower’. However, efforts to decarbonise our economy don’t sit just in the power sector. To provide a truly convincing industrial strategy, while also reassuring those looking for true climate leadership, Labour should set out its approach to decarbonising sectors across the rest of the economy, including ambition in agriculture, transport and housing. Crucially, Labour should also set out the role nature and biodiversity can play in providing solutions.
Those looking to advance decarbonisation have suffered for years from three things:(i) a lack of direction for what the ideal net zero economy looks like, (ii) a lack of innovative thinking for how regulatory change can bring new products to market, and (iii) how investment in skills and supply chain will be delivered. Today’s speech is a good step toward providing the clearer direction that has been missing, but a lot more detail is needed before there’s real confidence that policies will be sophisticated enough to deliver jobs, investment, and net zero.